<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1995
REGISTRATION NO. 33-60085
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 2 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PLAYERS INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 95-41745832
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
------------------------
3900 PARADISE ROAD
SUITE 135
LAS VEGAS, NEVADA 89109
(702) 691-3300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ADDITIONAL REGISTRANTS
ARE SET FORTH ON THE FOLLOWING PAGES
------------------------
PETER J. ARANOW
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
3900 PARADISE ROAD
SUITE 135
LAS VEGAS, NEVADA 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
STEPHEN M. GOODMAN, ESQ.
MORGAN, LEWIS & BOCKIUS
2000 ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103-6993
(215) 963-5000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this
registration statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. INFORMATION CONTAINED HEREIN IS
SUBJECT TO COMPLETION OR AMENDMENT.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
ADDITIONAL REGISTRANTS
(GUARANTORS OF 10 7/8% SENIOR NOTES)
PLAYERS LAKE CHARLES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Louisiana 7933 72-1233908
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
800 Bilbo Street
Lake Charles, Louisiana 70601
(318) 437-1560
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS RIVERBOAT MANAGEMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Nevada 7933 88-0332373
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS RIVERBOAT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Nevada 7933 88-0332372
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS RIVERBOAT, LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
A Louisiana Limited Liability Company 7933 72-1297055
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
800 Bilbo Street
Lake Charles, Louisiana 70601
(318) 437-1560
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
SHOWBOAT STAR PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
A Louisiana General Partnership 7933 72-1246016
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
800 Bilbo Street
Lake Charles, Louisiana 70601
(318) 437-1560
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
<PAGE>
PLAYERS NEVADA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Nevada 7933 88-0318879
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS MESQUITE GOLF CLUB, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Nevada 7933 72-1230796
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS MESQUITE LAND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Nevada 7933 88-0335901
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS INDIANA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Indiana 7933 35-1916353
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS MICHIGAN CITY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Indiana 7933 35-1909688
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
<PAGE>
PLAYERS MICHIGAN CITY MANAGEMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Indiana 7933 61-1283930
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS BLUEGRASS DOWNS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Kentucky 7933 61-1250331
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
150 Downs Drive
Paducah, Kentucky 42001
(502) 444-7117
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
RIVER BOTTOM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Missouri 7933 43-1708876
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS MARYLAND HEIGHTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Missouri 7933 43-1662850
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
SOUTHERN ILLINOIS RIVERBOAT/CASINO CRUISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Illinois 7933 37-1272361
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
109 West 5th Street, 2nd Floor
Metropolis, Illinois 62960
(618) 524-2628
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
<PAGE>
PLAYERS RIVER CITY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Nevada 7933 88-0342230
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS SHREVEPORT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Nevada 7933 Not Available
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS SHUTTLE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Louisiana 7933 72-1304350
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
800 Bilbo Street
Lake Charles, Louisiana 70601
(318) 437-1560
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PLAYERS MARYLAND HEIGHTS NEVADA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Nevada 7933 Not Available
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
(702) 691-3300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
<PAGE>
PLAYERS INTERNATIONAL, INC.
CROSS-REFERENCE TABLE
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
<TABLE>
<S> <C> <C>
ITEM NO. FORM S-4 CAPTION PROSPECTUS CAPTION
Item 1 Forepart of the Registration Statement and Outside Front Cover
Page of Prospectus.............................................. Outside Front Cover Page of
Prospectus
Item 2 Inside Front and Outside Back Cover Pages of Prospectus......... Inside Front and Outside Back Cover
Pages of Prospectus
Item 3 Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information..................................................... Summary; Risk Factors; Selected
Consolidated Financial Data
Item 4 Terms of the Transaction........................................ Summary; The Exchange Offer;
Description of New Notes
Item 5 Pro Forma Financial Information................................. Not Applicable
Item 6 Material Contacts with the Company Being Acquired............... Not Applicable
Item 7 Additional Information Required for Reoffering by Persons and
Parties Deemed to be Underwriters............................... Not Applicable
Item 8 Interests of Named Experts and Counsel.......................... Legal Matters; Experts
Item 9 Disclosure of Commission Position on Indemnification for
Securities Acts Liabilities..................................... Management
Item 10 Information with Respect to S-3 Registrants..................... Summary; Risk Factors;
Capitalization; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Regulatory Matters
Item 11 Incorporation of Certain Information by
Reference....................................................... Incorporation of Certain Documents by
Reference
Item 12 Information with Respect to S-2 or S-3
Registrants..................................................... Not Applicable
Item 13 Incorporation of Certain Information by
Reference....................................................... Incorporation of Certain Documents by
Reference
Item 14 Information with Respect to Registrants Other than S-3 or S-2
Registrants..................................................... Not Applicable
Item 15 Information with Respect to S-3 Companies....................... Not Applicable
Item 16 Information with Respect to S-2 or S-3
Companies....................................................... Not Applicable
Item 17 Information with Respect to Companies Other than S-3 or S-2
Companies....................................................... Not Applicable
Item 18 Information if Proxies, Consents or Authorizations are to be
Solicited....................................................... Not Applicable
Item 19 Information if Proxies, Consents or Authorizations are not to be
Solicited or in an Exchange Offer............................... Management; Incorporation of Certain
Documents by Reference
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 1995
PLAYERS INTERNATIONAL, INC.
OFFER TO EXCHANGE
ALL OUTSTANDING
10 7/8% SENIOR NOTES DUE 2005
($150,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR 10 7/8% SENIOR NOTES DUE 2005
The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on October 16, 1995 (as such date may be extended, the 'Expiration
Date').
Players International, Inc. (the 'Company') hereby offers (the 'Exchange
Offer'), upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the 'Letter of
Transmittal'), to exchange $1,000 in principal amount of its 10 7/8 % Senior
Notes due 2005 (the 'New Notes') for each $1,000 in principal amount of its
outstanding 10 7/8 % Senior Notes due 2005 (the 'Old Notes') (the Old Notes and
the New Notes are collectively referred to herein as the 'Notes') held by
Eligible Holders of which an aggregate principal amount of $150,000,000 is
outstanding. See 'The Exchange Offer.' For purposes of the Exchange Offer,
'Eligible Holder' shall mean the registered owner of any Old Notes that remain
Transfer Restricted Securities as reflected on the records of First Fidelity
Bank, National Association, as registrar for the Old Notes (in such capacity,
the 'Registrar'), or any person whose Old Notes are held of record by the
depository of the Old Notes as of the record date for the Exchange Offer (the
'Record Date'). For purposes of the Exchange Offer, 'Transfer Restricted
Securities' means each Old Note until the earliest to occur of (i) the date on
which such Old Note has been exchanged for a New Note in the Exchange Offer,
(ii) the date on which such Old Note has been effectively registered under the
Securities Act of 1933, as amended (the 'Securities Act'), and disposed of in
accordance with a shelf registration statement, or (iii) the date on which such
Old Note is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
The Company will accept for exchange any and all Old Notes that are validly
tendered prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders
of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Offer is not conditioned upon any
minimum principal amount of the Old Notes being tendered for exchange. However,
the Exchange Offer is subject to certain customary conditions, which may be
waived by the Company, and to the terms and provisions of the Exchange and
Registration Rights Agreement dated as of April 17, 1995 (the 'Registration
Rights Agreement') among the Company, certain subsidiaries of the Company that
have agreed to guarantee the Notes (collectively, the 'Guarantors') and
Donaldson, Lufkin & Jenrette Securities Corporation and Salomon Brothers Inc
(the 'Initial Purchasers'). The Old Notes may be tendered only in multiples of
$1,000. See 'The Exchange Offer.'
The Old Notes were issued in a transaction (the 'Offering') pursuant to
which the Company issued an aggregate of $150 million principal amount of the
Old Notes. The Old Notes were sold by the Company to the Initial Purchasers on
April 17, 1995 (the 'Closing Date') pursuant to a Purchase Agreement, dated
April 10, 1995 (the 'Purchase Agreement') among the Company, the Guarantors and
the Initial Purchasers. The Initial Purchasers subsequently resold the Old Notes
in reliance on Rule 144A and certain other exemptions under the Securities Act.
The Company and the Initial Purchasers also entered into the Registration Rights
Agreement, pursuant to which the Company granted certain registration rights for
the benefit of the holders of the Old Notes. The Exchange Offer is intended to
satisfy certain of the Company's obligations under the Registration Rights
Agreement with respect to the Old Notes. See 'The Exchange Offer--Purpose and
Effect.'
The Old Notes were, and the New Notes will be, issued under the Indenture,
dated as of April 10, 1995 (the 'Indenture'), among the Company, the Guarantors
and First Fidelity Bank, National Association as trustee (in such capacity, the
'Trustee'). The form and terms of the New Notes will be identical in all
material respects to the form and terms of the Old Notes, except that (i) the
New Notes have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof, (ii) holders of New Notes will
not be entitled to the liquidated damages of $.10 per week per $1,000 principal
amount of the Old Notes otherwise payable under the terms of the Registration
Rights Agreement in respect of Old Notes constituting Transfer Restricted
Securities held by such holders during any period in which a Registration
Default (as defined) is continuing (the 'Liquidated Damages') and (iii) holders
of New Notes will not be, and upon the consummation of the Exchange Offer,
Eligible Holders of Old Notes will no longer be, entitled to certain rights
under the Registration Rights Agreement intended for the holders of unregistered
securities; provided, however, that an Eligible Holder of Old Notes who
reasonably determines and notifies the Company within 20 business days of the
consummation of the Exchange Offer that (a) such Eligible Holder is prohibited
by applicable law or Securities and Exchange Commission policy from
participating in the Exchange Offer, or (b) that such Eligible Holder may not
resell the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that this Prospectus is not appropriate or available
for such resales by such Eligible Holder, or (c) that such Eligible Holder is a
broker-dealer registered under the Exchange Act and holds the Old Notes acquired
directly from the Company or one of its affiliates, subject to reasonable
verification by the Company, shall have the right to require the Company to file
a shelf registration statement pursuant to Rule 415 under the Securities Act
solely for the benefit of such Eligible Holder of Old Notes and will be entitled
to receive Liquidated Damages following the occurrence of defined events of
default in connection with the filing of such shelf registration statement. The
Exchange Offer shall be deemed consummated upon the occurrence of the delivery
by the Company to the Registrar under the Indenture of New Notes in the same
aggregate principal amount as the aggregate principal amount of Old Notes that
were tendered by holders thereof pursuant to the Exchange Offer. See 'The
Exchange Offer--Termination of Certain Rights' and '--Procedures for Tendering
Old Notes' and 'Description of New Notes.'
(continued on next page)
------------------------------
SEE 'RISK FACTORS' ON PAGES 14-19 HEREIN FOR A DISCUSSION OF CERTAIN RISKS THAT
SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS IN EVALUATING THE
EXCHANGE OFFER.
------------------------------
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE
------------------------------
NEITHER THE LOUISIANA RIVERBOAT GAMING COMMISSION, THE RIVERBOAT GAMING
ENFORCEMENT DIVISION OF THE LOUISIANA STATE POLICE, THE ILLINOIS GAMING BOARD,
THE NEVADA GAMING CONTROL BOARD, THE NEVADA GAMING COMMISSION NOR ANY
OTHER GAMING AUTHORITY HAS PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS OR THE INVESTMENT MERITS OF
THE SECURITIES OFFERED HEREBY.
------------------------------
The date of this Prospectus is September 19, 1995
<PAGE>
The New Notes will bear interest at a rate equal to 10 7/8 % per annum from
and including their date of issuance. Interest on the New Notes is payable
semiannually on April 15 and October 15 of each year (each, an 'Interest Payment
Date'). Eligible Holders whose Old Notes are accepted for exchange will have the
right to receive interest accrued thereon from the date of their original
issuance or the last Interest Payment Date, as applicable to, but not including,
the date of issuance of the New Notes, such interest to be payable with the
first interest payment on the New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue on the day prior to the issuance of the New Notes.
The New Notes will mature on April 15, 2005. See 'Description of New Notes--
General.'
The New Notes will not be redeemable, in whole or in part, prior to April
15, 2000. Thereafter, the New Notes will be redeemable at the redemption prices
set forth herein, plus interest accrued thereon to the redemption date. Upon the
occurrence of a Change of Control (as defined), each holder of New Notes will
have the right to require the Company to purchase all or a portion of such
holder's New Notes at 101% of the principal amount thereof, plus interest
accrued thereon to the purchase.
The New Notes will be senior unsecured obligations of the Company that rank
pari passu in right of payment with all present and future debt of the Company,
other than future debt that is expressly subordinated to the New Notes. The
payment of the principal of, premium, if any, and interest on the New Notes will
be unconditionally guaranteed on a senior unsecured basis by the Guarantors. The
Indenture permits the Company and the Guarantors to incur additional
indebtedness, subject to certain limitations. See 'Description of New Notes.'
See also 'Management's Discussion and Analysis of Financial Condition and
Results of Operations-- Liquidity and Capital Resources.' As of June 30, 1995,
the Company (i) had an aggregate of $150.03 million of indebtedness outstanding
on a consolidated basis including the Old Notes and (ii) had no indebtedness
that was subordinate to the Old Notes. The New Notes may become effectively
subordinate to secured debt of the Company and secured debt and other
obligations of the Guarantors. See 'Risk Factors--Holding Company Structure and
Ability to Service Debt; Effective Subordination' and '-- Fraudulent Transfer
Considerations.'
Based on an interpretation by the staff of the Securities and Exchange
Commission (the 'Commission') set forth in no-action letters issued to third
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer to an Eligible Holder in exchange for Old Notes may be offered for resale,
resold and otherwise transferred by such Eligible Holder (other than a broker-
dealer who purchased Old Notes directly from the Company for resale pursuant to
Rule 144A under the Securities Act or any other available exemption under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the Eligible Holder is not an
affiliate of the Company, is acquiring the New Notes in the ordinary course of
business and is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of the New Notes. Eligible
Holders wishing to accept the Exchange Offer must represent to the Company, as
required by the Registration Rights Agreement, that such conditions have been
met. Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See 'The Exchange Offer--Resales
of the New Notes.' This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange for Old Notes where such Old Notes were acquired by
such broker-dealer as a result of market-making or other trading activities.
As of September 12, 1995, Cede & Co. ('Cede'), as nominee for The Depository
Trust Company, New York, New York ('DTC'), was the sole registered holder of the
Old Notes and held the Old Notes for 22 of its participants. The Company
believes that no such participant is an affiliate (as such term is defined in
Rule 405 under the Securities Act) of the Company. There has previously been
only a limited secondary market, and no public market, for the Old Notes. The
Old Notes are eligible for trading in the Private Offering, Resales and Trading
through Automatic Linkages ('PORTAL') market. In addition, the Initial
Purchasers have advised the Company that they currently intend to make a market
in the New Notes; however, neither is obligated to do so and any market making
activities may be discontinued by either of the Initial Purchasers at any time.
Therefore, there can be no assurance that an active market for the New Notes
will develop. If such a trading market develops for the New Notes, future
trading prices will depend on many factors, including, among other things,
prevailing interest rates, the Company's results of operations and the market
for similar securities. Depending on such factors, the New Notes may trade at a
discount from their face value. See 'Risk Factors--Lack of Public Market.'
The Company will not receive any proceeds from this Exchange Offer, but,
pursuant to the Registration Rights Agreement, the Company will bear certain
registration expenses. No underwriter is being utilized in connection with the
Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
The Old Notes were issued originally in global form (the 'Global Old
Notes'). The Global Old Note was deposited with, or on behalf of, DTC, as the
initial depository with respect to the Old Notes (in such capacity, the
'Depository'). The Global Old Note is registered in the name of Cede, as nominee
of DTC, and beneficial interests in the Global Old Note are shown on, and
transfers thereof are effected only through, records maintained by the
Depository and its participants. The use of the Global Old Note to represent
certain of the Old Notes permits the Depository's participants, and anyone
holding a beneficial interest in an Old Note registered in the name of such a
participant, to transfer interests in the Old Notes electronically in accordance
with the Depository's established procedures without the need to transfer a
physical certificate. Except as provided below, the New Notes will also be
issued initially as a note in global form (the 'Global New Note', and together
with the Global Old Note, the 'Global Notes') and deposited with, or on behalf
of, the Depository. Notwithstanding the foregoing, holders of Old Notes that
were held, at any time, by a person that is not a qualified institutional buyer
under Rule 144A, (a 'Qualified Institutional Buyer'), and any Eligible Holder
that is not a Qualified Institutional Buyer that exchanges Old Notes in the
Exchange Offer, will receive the New Notes in certificated form and is not, and
will not be, able to trade such securities through the Depository unless the New
Notes are resold to a Qualified Institutional Buyer. After the initial issuance
of the Global New Note, New Notes in certificated form will be issued in
exchange for a holder's proportionate interest in the Global New Note only as
set forth in the Indenture.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 3
Summary........................................ 4
Risk Factors................................... 14
Recent Developments............................ 19
The Exchange Offer............................. 21
Capitalization................................. 28
Selected Consolidated Financial Data........... 29
Management's Discussion and Analysis
of Financial Condition and
Results of Operations........................ 30
PAGE
-----
Business....................................... 36
Regulatory Matters............................. 47
Management..................................... 59
Description of New Notes....................... 61
Incorporation of Certain Documents
By Reference................................. 85
Legal Matters.................................. 85
Experts........................................ 85
Index to Financial Statements.................. F-1
</TABLE>
AVAILABLE INFORMATION
The Company has filed a registration statement on Form S-4 (together with
any amendments thereto, the 'Registration Statement') with the Commission under
the Securities Act with respect to the New Notes. This Prospectus, which
constitutes a part of the Registration Statement, omits certain information
contained in the Registration Statement and reference is made to the
Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the New Notes offered hereby. This
Prospectus contains summaries of the material terms and provisions of certain
documents and in each instance reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such summary is
qualified in its entirety by such reference.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance
therewith, is required to file reports and other information with the
Commission. In addition, upon registration of the guarantees of the Notes in
connection with the Exchange Offer, each subsidiary of the Company that is a
Guarantor will also be subject to the reporting requirements of the Exchange Act
so long as the guarantee of the Guarantor remains outstanding. Upon
effectiveness of the Registration Statement, the Guarantors will be subject to
the reporting requirements of the Exchange Act and the interpretations issued
thereunder by the Commission staff.
ALL DOCUMENTS FILED BY THE COMPANY AND ITS GUARANTORS PURSUANT TO SECTION
13(A), 13(C), 14 OR 15(D) OF THE EXCHANGE ACT SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS AND PRIOR TO THE TERMINATION OF THE EXCHANGE OFFER TO WHICH THIS
PROSPECTUS RELATES SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE HEREIN AND TO
BE A PART HEREOF FROM THE DATE OF THE FILING OF SUCH REPORTS AND DOCUMENTS. THE
COMPANY WILL PROVIDE A COPY OF ANY AND ALL OF SUCH DOCUMENTS (EXCLUSIVE OF
EXHIBITS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
THEREIN) WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS IS
DELIVERED, UPON WRITTEN OR ORAL REQUEST TO PETER J. ARANOW, EXECUTIVE VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER, 3900 PARADISE ROAD, SUITE 135, LAS VEGAS,
NEVADA 89109, (702) 691-3300.
The Registration Statement (including the exhibits and schedules thereto)
and the periodic reports and other information filed by the Company and the
Guarantors with the Commission may be inspected without charge at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Suite 1400, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such materials may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and its public reference facilities in New York, New
York and Chicago, Illinois, at prescribed rates. The Common Stock of the Company
is traded under the symbol 'PLAY' on the Nasdaq National Market. Proxy
statements, reports and other information filed by the Company and the
Guarantors with the Commission and other information can be inspected at the
offices of the National Association of Securities Dealers, Inc., Report Section,
17835 K Street N.W., Washington, D.C. 20006.
3
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements (including notes thereto) appearing
elsewhere in this Prospectus. Capitalized terms that are not defined herein
relating to the Exchange Offer and the terms of the Notes are defined elsewhere
in this Prospectus under the captions 'The Exchange Offer' and 'Description of
New Notes--Certain Definitions', respectively. Throughout this Prospectus,
except where the context otherwise requires, references to the term 'Players' or
the 'Company' refer collectively to Players International, Inc. and its
subsidiaries.
THE COMPANY
Players International, Inc. is a multi-jurisdictional gaming company which
owns and operates the Players Riverboat Casino in Metropolis, Illinois (the
'Metropolis Complex'), two riverboat casinos in Lake Charles, Louisiana, the
Players Riverboat Casino (the 'Players Lake Charles Riverboat') and the Players
Lake Charles Star Riverboat (the 'Lake Charles Star Riverboat') and the Players
Island Resort o Casino o Spa (the 'Players Island Resort') in Mesquite, Nevada.
The Metropolis Complex, which is the only riverboat operating in Southern
Illinois and is one of only ten statutorily authorized Illinois licensees,
commenced operations in February 1993 and has successfully marketed to patrons
of its target markets in Illinois, Indiana, Kentucky, Missouri and Tennessee.
The Players Lake Charles Riverboat, which serves the large Houston gaming
market, commenced operations in December 1993. The Lake Charles Star Riverboat
commenced operations in April 1995. The Players Island Resort features a
fully-contained island resort environment and opened on June 29, 1995 as the
Company's first land based casino complex. For the twelve months ended March 31,
1995, the Company generated net revenues of $223.7 million and Adjusted EBITDA
(as defined in Note 4, page 13) of $80.6 million.
The Company's business strategy, which has been successfully implemented at
its existing operations, emphasizes providing customers with a high quality
entertainment experience, with particular emphasis on customer service. The
Company targets sites that are conveniently located near frequently traveled
interstate highways, and which have easy access and ample parking, in order to
attract local patronage and repeat visitors. The Company's strategy in
developing and constructing facilities is to create a destination complex which
provides a total entertainment experience rather than merely casino gaming.
The Company's marketing strategy focuses on middle-income customers who
live within a 200 mile radius of each of the Company's facilities. The Company
implements this strategy through the use of database marketing, on-site
marketing and bus programs. Through its proprietary database of gaming
enthusiasts, the Company targets gaming customers through frequent mailings
promoting visits to its casino facilities. In addition, the Company employs
on-site marketing techniques including the use of player tracking systems, slot
clubs and preferred player hosts to identify and service patrons. To attract
additional patronage during non-peak hours, the Company utilizes bus tours which
are organized through the Company's direct relationship with tour operators.
The Company employs a disciplined development philosophy consisting of the
following principal components: (i) a thorough analysis of demographic,
regulatory, competitive and other factors to identify niche markets or markets
where the Company believes it will have a dominant position; (ii) the
maintenance of adequate financial resources to enable the Company to respond
quickly to development opportunities in existing and new jurisdictions; (iii)
the investment of significant capital and other resources only after a
determination has been made that a project is attractive; and (iv) the
development of themed projects with a high entertainment component that can be
completed in a desirable time frame.
In addition to the recent opening of the Players Island Resort, the Company
plans to expand existing operations as well as to develop and construct new
casino entertainment facilities. The Company's approximately $130 million
multi-phase expansion of its successful Lake Charles operation, includes the
March 31, 1995 purchase of the Showboat Star Casino riverboat, which in April of
1995 opened in Lake Charles as the Lake Charles Star Riverboat, and planned
facility enhancements and improvements. In August 1995, the Company acquired the
Players Hotel and related property which was previously under lease in Lake
Charles. The Company
4
<PAGE>
expects to reconstruct or substantially improve and expand the hotel and
construct an entertainment barge and a multi-story parking garage.
The Company has entered into a letter of intent to form a joint venture
with Harrah's Entertainment, Inc. ('Harrah's') to co-develop a $200 million four
riverboat casino entertainment complex in Maryland Heights, Missouri (the
'Maryland Heights Project'), which will contain a total of approximately 120,000
square feet of gaming space. The Company and Harrah's individually have been
endorsed by the City of Maryland Heights for separate riverboat projects. The
development and operation of the Maryland Heights Project are conditioned upon
the negotiation and execution of definitive agreements between the Company and
Harrah's. The Company and Harrah's expect to begin construction with an opening
targeted for the Fall of 1996, subject to the receipt of all necessary gaming
and other approvals for the joint development project.
OPERATING CASINOS
Metropolis, Illinois
The Company's Metropolis casino commenced operations on February 23, 1993
and is currently the only riverboat casino in Southern Illinois. The Metropolis
riverboat is a four deck, air conditioned replica of a turn of the century
side-wheeler riverboat. The Metropolis Complex includes a docking site known as
'Merv Griffin's Landing,' which features a bar and grill, buffets, a deli,
meeting rooms and a gift shop. Additionally, the Company has a minority interest
in a 120-room hotel near the docking site which opened in March 1994. To date,
the Metropolis operation's closest gaming competitor operates in Caruthersville,
Missouri, which is approximately 120 miles from Metropolis. A competing
riverboat is expected to open in the fourth quarter of calendar 1995 in
Evansville, Indiana, approximately 110 miles northeast of Metropolis. In order
to maintain its market position in light of potential increased competition, the
Company intends to invest an additional $8 million for further amenities,
attractions, riverfront parking and administrative office space. The Company has
entered into an agreement to purchase a riverboat, at an estimated total cost of
$27 million, which if completed would result in an increase of 7,500 square feet
of gaming space and an increase in gaming positions in the Metropolis Complex.
See 'Recent Developments -- Acquisition Developments.'
Lake Charles, Louisiana; Complex Expansion
The Players Lake Charles Riverboat, which was the second to open in the
state of Louisiana, commenced operations on Lake Charles in Southwestern
Louisiana on December 8, 1993. In order to offer the equivalent of dockside
gaming, expand capacity and strengthen the Company's market position in Lake
Charles, the Company in January 1995 initiated a program to spend approximately
$130 million in Lake Charles for the Lake Charles Star Riverboat and additional
infrastructure expansion and improvements (collectively, the 'Lake Charles
Complex Expansion'). The Company's current Lake Charles facility features a
small pavilion where entertainment and special promotional events are presented,
a ticketing and boarding area, retail space, bars, two full service restaurants
and additional snack facilities.
The Company began the Lake Charles Complex Expansion on March 31, 1995 by
acquiring for approximately $52 million all partnership interests (the
'Interests') in Showboat Star Partnership (the 'Partnership'), a Louisiana
general partnership that owns a fully equipped Las Vegas style riverboat casino
which had previously operated for one and one-half years on Lake Pontchartrain,
Louisiana. In April 1995, the Company opened the Lake Charles Star Riverboat.
With two Lake Charles riverboats operating on staggered cruise schedules, the
Company offers the equivalent of dockside gaming.
As part of the Lake Charles Complex Expansion, approximately $78 million in
additional expansion projects and improvements are budgeted for the development
of a 60,000 square foot themed entertainment center featuring new restaurants, a
sports bar and lounge and banquet facilities; the reconstruction or substantial
improvement and expansion of hotel space; the construction of a new docking
facility and a covered parking facility; public purpose/city infrastructure
contributions; the integration of the Company's island resort theme at the Lake
Charles facility; and additional amenities.
5
<PAGE>
The Lake Charles primary market area includes such population centers as
Houston, Beaumont, Galveston, Orange and Port Arthur, Texas. The Lake Charles
complex draws over half of its patrons from Texas, due in large part to the
current absence of legalized casino gaming in Texas.
Mesquite, Nevada
As part of a strategy to diversify revenue sources, the Company opened on
June 29, 1995 the Players Island Resort, its first land-based casino
entertainment facility, in Mesquite, Nevada. The Players Island Resort features
an island resort theme and is located approximately 70 miles by car from Las
Vegas on Interstate 15 between Las Vegas and Salt Lake City, where an estimated
12,000 cars pass daily. The Players Island Resort is being marketed as a
destination resort for the residents of the Las Vegas area and Southern Nevada,
as well as for tourists from California, Arizona and nearby Utah.
The initial phase of the Players Island Resort project was developed on 45
acres at an estimated cost of $75-80 million and includes a 40,000 square foot
casino; a 500-room hotel with a health spa and swimming pool with waterfalls;
lighted tennis courts; a children's arcade; four detached three-bedroom villas;
and a 50-unit recreational vehicle facility. The resort features four
restaurants, an estimated 400-seat showroom and 10,000 square feet of
banquet/meeting rooms. The resort complex, which has been master-planned to
accommodate further expansion of the casino, hotel and banquet/meeting space,
features a fully-contained island resort environment. The Company has leased
additional land near the Players Island Resort for the development of an 18-hole
golf course during fiscal 1996. The Company estimates that it will incur $6-9
million in expenditures for the golf course development.
PROJECTS UNDER DEVELOPMENT
Maryland Heights, Missouri
The Company entered into a letter of intent with Harrah's on March 3, 1995
to form a joint venture to co-develop the Maryland Heights Project. The Company
and Harrah's will each own and operate two separate riverboat casinos pursuant
to separate gaming licenses but will share equally in the costs of the
development of, as well as any profit or loss associated with, an estimated
300,000 square foot shoreside facility. Although the two riverboat casinos are
expected to be similar in exterior theme and decor, each operator will
individually manage and market its own gaming operations with separate staffing.
In addition to the construction of two riverboats, the shoreside facility is
anticipated to include a hotel facility to be managed by Harrah's, extensive
covered parking and a 95,000 square foot entertainment building. The
entertainment facility will contain upscale restaurants, a buffet, bars, an
entertainment lounge with nightly live music, a preferred players lounge and
gift shops. The Company and Harrah's also are evaluating the development of an
outdoor mall containing themed restaurants and boutique shops similar to the
higher end Las Vegas casinos.
Situated close to Interstate 70 in Maryland Heights, the casino
entertainment complex will be strategically located to attract patrons from a
local population base of approximately 2.3 million in the greater St. Louis
metropolitan region. The site will feature easy accessibility, a high level of
drive-by traffic and close proximity to Interstate 70 and Lambert International
Airport, and will be strategically located near the Riverport amphitheater,
which attracts 500,000 visitors per year. The development and operation of the
Maryland Heights Project are conditioned upon the negotiation and execution of
definitive agreements between the Company and Harrah's. Subject to the receipt
of all necessary gaming and other approvals, the Company has targeted the
opening of the Maryland Heights Project for the Fall of 1996.
OTHER POTENTIAL PROJECTS
The Company currently is evaluating a number of other potential
opportunities to develop riverboat, dockside or land-based gaming facilities in
jurisdictions that currently permit gaming as well as in jurisdictions that have
not yet legalized gaming. See 'Recent Developments--Acquisition Developments.'
6
<PAGE>
SUMMARY OPERATING AND DEVELOPMENT DATA
<TABLE>
<CAPTION>
PROJECTS
UNDER
EXISTING OPERATIONS DEVELOPMENT
---------------------------------------------------------- ------------
PLAYERS LAKE CHARLES PLAYERS LAKE CHARLES
METROPOLIS LAKE CHARLES STAR ISLAND SHORESIDE
COMPLEX RIVERBOAT RIVERBOAT RESORT EXPANSION
----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Remaining expansion, development and opening
costs....................................... $35 million 1)(2) -- -- $25 million(1) $71 million(1)
Approximate Gaming Area (Square Feet) ....... 20,000 27,500 21,730 40,000 --
Approximate number of
slots ...................................... 675 869 778 850 --
Approximate number of
tables...................................... 43 69 45 27 --
Approximate number of gaming
positions................................... 1,011 1,400 1,135 1,062 --
Hotel rooms.................................. 120(4) 130 (5) 130 (5) 500 275(6)
Approximate parking
capacity.................................... 1,000 1,500 (5) 1,500 (5) 1,667 2,500(6)
<CAPTION>
MARYLAND
HEIGHTS
PROJECT
------------
Remaining expansion, development and opening
costs....................................... $100 million(1)
Approximate Gaming Area (Square Feet) ....... 60,000(3)
Approximate number of
slots ...................................... 1,500(3)
Approximate number of
tables...................................... 60(3)
Approximate number of gaming
positions................................... 1,860(3)
Hotel rooms.................................. 300(7)
Approximate parking
capacity.................................... 4,500(7)
</TABLE>
------------------
(1) Reflects currently estimated maximum expansion, development and opening
costs incurred or to be incurred after June 30, 1995.
(2) Includes purchase price and associated costs for proposed President Casino
IV Riverboat acquisition. See 'Recent Developments -- Acquisition
Developments.'
(3) For Players' riverboat casino only.
(4) Operated by a joint venture in which the Company owns a 12.5% equity
interest.
(5) Reflects total hotel rooms and parking currently available to patrons of the
Players Lake Charles Riverboat and Lake Charles Star Riverboat at the
Company's Lake Charles complex.
(6) Reflects hotel capacity after reconstruction or substantial improvement and
expansion of hotel space and expanded total parking capacity after
construction of parking garage, both of which the Company will own and
operate.
(7) To be operated by a joint venture in which the Company will own a 50% equity
interest.
7
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ISSUANCE OF THE OLD NOTES
The outstanding 10 7/8% Senior Notes due 2005 (the 'Old Notes') were
sold by the Company to Donaldson, Lufkin & Jenrette Securities Corporation
and Salomon Brothers Inc (the 'Initial Purchasers'), on April 17, 1995 (the
'Closing Date') pursuant to a Purchase Agreement, dated April 10, 1995 (the
'Purchase Agreement'), among the Company, certain subsidiaries of the
Company that agreed to guarantee the Notes and the Initial Purchasers. The
Initial Purchasers subsequently resold the Old Notes in reliance on Rule
144A under the Securities Act and other available exemptions under the
Securities Act. The Company and the Initial Purchasers also entered into
the Exchange and Registration Rights Agreement, dated as of April 17, 1995
(the 'Registration Rights Agreement'), among the Company, certain
subsidiaries of the Company that agreed to guarantee the Notes and the
Initial Purchasers, pursuant to which the Company granted certain
registration rights for the benefit of the holders of the Old Notes. The
Exchange Offer is intended to satisfy certain of the Company's obligations
under the Registration Rights Agreement with respect to the Old Notes. See
'--The Exchange Offer' and 'The Exchange Offer--Purpose and Effect.'
THE EXCHANGE OFFER
<TABLE>
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The Exchange Offer........... The Company is offering upon the terms and subject
to the conditions set forth herein and in the
accompanying letter of transmittal (the 'Letter of
Transmittal'), to exchange $1,000 in principal
amount of its 10 7/8% Senior Notes due 2005 (the
'New Notes', with the Old Notes and the New Notes
collectively referred to herein as the 'Notes')
for each $1,000 in principal amount of the
outstanding Old Notes (the 'Exchange Offer'). As
of the date of this Prospectus, $150 million in
aggregate principal amount of the Old Notes is
outstanding, the maximum amount authorized by the
Indenture for all Notes. As of September 12, 1995,
there was one registered holder of the Old Notes,
Cede & Co. ('Cede'), which held the Old Notes for
22 of its participants. See 'The Exchange
Offer--Terms of the Exchange Offer.'
Expiration Date.............. 5:00 p.m., New York City time, on October 16, 1995
as the same may be extended. See 'The Exchange
Offer--Expiration Date; Extensions; Amendments.'
Conditions of the Exchange
Offer...................... The Exchange Offer is not conditioned upon any
minimum principal amount of Old Notes being
tendered for exchange. However, the Exchange Offer
is subject to certain customary conditions,
including (i) no legal or governmental action is
pending or threatened with respect to the Exchange
Offer which, in the judgment of the Company, would
make it inadvisable to proceed with the Exchange
Offer, (ii) no statute, rule or regulation with
respect to the Exchange Offer has been enacted
which, in the judgment of the Company, would make
it inadvisable to proceed with the Exchange Offer,
(iii) no banking moratorium or similar event or
international calamity involving the United States
has occurred, and (iv) no governmental approval
deemed necessary by the Company to the Exchange
Offer has been denied. The Company expects that
the foregoing conditions will be satisfied. All
such conditions may be waived by the Company. See
'The Exchange Offer--Conditions of the Exchange
Offer.'
</TABLE>
8
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<S> <C>
Termination of Certain
Rights..................... Pursuant to the Registration Rights Agreement and
the Old Notes, Eligible Holders of Old Notes (i)
have rights to receive the Liquidated Damages and
(ii) have certain rights intended for the holders
of unregistered securities. 'Liquidated Damages'
means damages of $0.10 per week per $1,000
principal amount of Old Notes constituting Tranfer
Restricted Securities during the period in which a
Registration Default is continuing pursuant to the
terms of the Registration Rights Agreement.
Holders of New Notes generally will not be and,
upon consummation of the Exchange Offer, Eligible
Holders of Old Notes will no longer be, entitled
to (i) the right to receive the Liquidated Damages
or (ii) certain other rights under the
Registration Rights Agreement intended for holders
of unregistered securities, except in the case of
an Eligible Holder of Old Notes who timely
notifies the Company concerning applicable
prohibitions against participation in the Exchange
Offer or certain additional compliance or
registration obligations under the Securities Act.
See 'The Exchange Offer--Termination of Certain
Rights' and '--Procedures for Tendering Old
Notes.'
Accrued Interest on the Old
Notes...................... The New Notes will bear interest at a rate equal
to 10 7/8% per annum from and including their date
of issuance. Eligible Holders whose Old Notes are
accepted for exchange will have the right to
receive interest accrued thereon from the date of
their original issuance or the last Interest
Payment Date, as applicable, to, but not
including, the date of issuance of the New Notes,
such interest to be payable with the first
interest payment on the New Notes. Interest on the
Old Notes accepted for exchange, which accrued at
the rate of 10 7/8% per annum, will cease to
accrue on, the day prior to the issuance of the
New Notes.
Procedures for Tendering Old
Notes...................... Unless a tender of Old Notes is effected pursuant
to the procedures for book-entry transfer as
provided herein, each Eligible Holder desiring to
accept the Exchange Offer must complete and sign
the Letter of Transmittal, have the signature
thereon guaranteed if received by the Letter of
Transmittal, and mail or deliver the Letter of
Transmittal, together with the Old Notes or a
Notice of Guaranteed Delivery and any other
required documents (such as evidence of authority
to act, if the Letter of Transmittal is signed by
someone acting in a fiduciary or representative
capacity), to the Exchange Agent (as defined) at
the address set forth on the back cover page of
this Prospectus prior to 5:00 p.m., New York City
time, on the Expiration Date. Any Beneficial Owner
(as defined) of the Old Notes whose Old Notes are
registered in the name of a nominee, such as a
broker, dealer, commercial bank or trust company
and who wishes to tender Old Notes in the Exchange
Offer, should instruct such entity or person to
promptly tender on such Beneficial Owner's behalf.
See 'The Exchange Offer--Procedures for Tendering
Old Notes.'
Guaranteed Delivery
Procedures................. Eligible Holders of Old Notes who wish to tender
their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver
their Old Notes or any other documents required by
the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date (or complete the
procedure for book-entry transfer on a timely
basis), may tender their Old Notes according to
the
</TABLE>
9
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<TABLE>
<S> <C>
guaranteed delivery procedures set forth in the
Letter of Transmittal. See 'The Exchange
Offer--Guaranteed Delivery Procedures.'
Acceptance of Old Notes and
Delivery of New Notes...... Upon satisfaction or waiver of all conditions of
the Exchange Offer, the Company will accept any
and all Old Notes that are properly tendered in
the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will be
delivered promptly after acceptance of the Old
Notes. See 'The Exchange Offer-- Acceptance of Old
Notes for Exchange; Delivery of New Notes.'
Withdrawal Rights............ Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
Expiration Date. See 'The Exchange
Offer--Withdrawal Rights.'
The Exchange Agent........... First Fidelity Bank, National Association is the
exchange agent (in such capacity, the 'Exchange
Agent'). The address and telephone number of the
Exchange Agent are set forth in 'The Exchange
Offer--The Exchange Agent; Assistance.'
Fees and Expenses............ All expenses incident to the Company's
consummation of the Exchange Offer and compliance
with the Registration Rights Agreement will be
borne by the Company or the Guarantors. The
Company will also pay certain transfer taxes
applicable to the Exchange Offer. See 'The
Exchange Offer--Fees and Expenses.'
Resales of the New Notes..... Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to third parties, the Company believes that New
Notes issued pursuant to the Exchange Offer to an
Eligible Holder in exchange for Old Notes may be
offered for resale, resold and otherwise
transferred by such Eligible Holder (other than
(i) a broker-dealer who purchased Old Notes
directly from the Company for resale pursuant to
Rule 144A under the Securities Act or any other
available exemption under the Securities Act, or
(ii) a person that is an affiliate of the Company
within the meaning of Rule 405 under the
Securities Act), without compliance with the
registration and prospectus delivery provisions of
the Securities Act, provided that the Eligible
Holder is acquiring the New Notes in the ordinary
course of business and is not participating, and
has no arrangement or understanding with any
person to participate, in a distribution of the
New Notes. Each broker-dealer that receives New
Notes for its own account in exchange for Old
Notes, where such Old Notes were acquired by such
broker as a result of market-making or other
trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale
of such New Notes. See 'The Exchange Offer--
Resales of the New Notes' and 'Plan of
Distribution.'
</TABLE>
10
<PAGE>
DESCRIPTION OF NEW NOTES
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes, except that (i) the New Notes
have been registered under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, (ii) holders of the New Notes will not
be entitled to Liquidated Damages and (iii) holders of the New Notes will not
be, and upon consummation of the Exchange Offer, Eligible Holders of the Old
Notes will no longer be, entitled to certain rights under the Registration
Rights Agreement intended for the holders of unregistered securities, except in
certain limited circumstances. See 'Exchange Offer--Termination of Certain
Rights.' The Exchange Offer shall be deemed consummated upon the occurrence of
the delivery by the Company to the Registrar under the Indenture of New Notes in
the same aggregate principal amount as the aggregate principal amount of Old
Notes that were tendered by holders thereof pursuant to the Exchange Offer. See
'The Exchange Offer--Termination of Certain Rights' and '--Procedures for
Tendering Old Note;' and 'Description of New Notes.'
<TABLE>
<S> <C>
Maturity Date................ April 15, 2005.
Interest..................... 10 7/8% payable in cash semi-annually in arrears,
calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Interest Payment Dates....... April 15 and October 15, commencing October 15,
1995.
Guarantees................... The New Notes will be guaranteed unconditionally
as to principal, premium, if any, and interest, on
a senior unsecured basis (the 'Guarantees'),
jointly and severally, by the Guarantors.
Ranking...................... The New Notes will be senior unsecured obligations
of the Company and will rank pari passu in right
of payment with all existing and future senior
Indebtedness of the Company and senior to all
future Subordinated Indebtedness of the Company.
The Guarantees will be senior unsecured general
obligations of the Guarantors and will rank pari
passu with all existing and future senior
Indebtedness of the Guarantors and senior to all
future Subordinated Indebtedness of the
Guarantors. However, to the extent that any
Indebtedness of the Company or the Guarantors is
secured by liens on any assets of the Company or
the Guarantors, as will be the case with respect
to Indebtedness under the Bank Facility, the
holders of such Indebtedness will have a prior
claim to such assets and will effectively be
senior to the New Notes.
Change of Control............ Upon the occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase the New Notes at a price equal to 101%
of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date
of repurchase.
Optional Redemption.......... The New Notes will not be redeemable, in whole or
in part, prior to April 15, 2000. Thereafter, the
New Notes will be redeemable from time to time at
the Company's option, in whole or in part, at a
premium over the principal amount thereof,
declining ratably to par, together with accrued
interest to the date of redemption.
Regulatory Redemption........ The New Notes are subject to mandatory disposition
and redemption requirements following certain
determinations under the gaming laws and
regulations of the states in which the Company
conducts gaming operations or following certain
determinations by the Board of Directors of the
Company that a person's status as a holder of the
New Notes (a 'Holder') could adversely affect the
Company's gaming operations.
Other Mandatory Redemption... None.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Certain Covenants............ The Indenture will contain certain covenants that,
among other things, limit the Company's ability to
incur other Indebtedness, issue Disqualified
Capital Stock, engage in transactions with
Affiliates, incur liens, make certain Restricted
Payments, make certain asset sales and permit
certain restrictions on the ability of its
Subsidiaries to make distributions.
Transfer Restrictions;
Absence of a Public Market
for the New Notes.......... The New Notes are a new issue of securities with
no established market. Accordingly, there can be
no assurance as to the development or liquidity of
any market for the New Notes. The Initial
Purchasers have advised the Company that they
currently intend to make a market in the New
Notes. However, neither Initial Purchaser is
obligated to do so, and any market making with
respect to the New Notes may be discontinued at
any time without notice. The Company does not
intend to apply for listing of the New Notes on a
securities exchange.
</TABLE>
12
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT RATIOS AND WIN DATA)
The following Summary Historical Consolidated Financial Data of the Company
are derived from the Company's Historical Consolidated Financial Statements and
should be read in conjunction with 'Selected Consolidated Financial Data,'
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and the Company's Historical Consolidated Financial Statements and
the notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31, JUNE 30,
---------- ---------- --------------------
1994(1) 1995(1) 1994(1) 1995(1)
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Casino revenues............................................ $ 95,873 $ 210,942 $ 44,696 $ 63,110
Total revenues............................................. 107,082 223,695 48,326 65,612
Income from continuing operations before other income
(expense) and provision for income taxes................ 26,888 70,549 15,745 14,105
Net income................................................. 20,952(2) 45,755 10,441 8,018
Ratio of earnings to fixed charges(3)...................... 32:1 107:1 118:1 5:1
OTHER DATA:
Adjusted EBITDA(4)......................................... $ 37,659(5) $ 80,580 $ 17,509 $ 22,372
Pro forma gross interest expense(6)........................ 17,200 17,007 4,219 4,293
Ratio of Adjusted EBITDA to pro forma gross interest
expense(4)(6)........................................... 2.2x 4.7x 4.2x 5.2x
METROPOLIS OPERATING RESULTS:
Casino revenues............................................ $ 65,136 $ 74,857 $ 17,279 $ 19,596
Daily win/slot machine..................................... 182 203 195 219
Daily win/table game....................................... 1,674 1,749 1,604 1,538
LAKE CHARLES OPERATING RESULTS:
Casino revenues............................................ $ 30,737 $ 136,085 $ 27,416 $ 43,448
Daily win/slot machine..................................... 194 276 233 228
Daily win/table game....................................... 2,458 2,475 2,284 1,615
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, AS OF JUNE 30,
---------------------- ----------------------
1994 1995 1994 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities............ $ 77,546 $ 50,332 $ 83,333 $ 159,039
Total assets................................................ 138,565 223,790 159,805 371,383
Long-term debt, including current maturities................ 5,865 8,907 9,035 150,031
Total stockholders' equity.................................. 115,844 176,143 128,986 185,712
</TABLE>
------------------
(1) Information for the fiscal year ended March 31, 1994 includes 12 months and
three months and 24 days of results for the Metropolis Complex and Players
Lake Charles Riverboat, respectively. Information for the fiscal year ended
March 31, 1995 and the three months ended June 30, 1994 and 1995 includes 12
full months and three full months of results, respectively, for each of the
Metropolis Complex and the Players Lake Charles Riverboat. In addition,
information for the three months ended June 30, 1995 includes the first 65
days of results from Lake Charles Star Riverboat, which opened in April
1995, and the first two days of results from the Players Island Resort,
which opened June 29, 1995.
(2) Includes cumulative effect of a change in accounting principle of $3.5
million.
(3) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as income from continuing operations before provision for income
taxes, plus fixed charges. Fixed charges consist of interest expense on all
indebtedness and the portion of operating lease rental expenses that is
representative of the interest factor. The Company previously was engaged in
a line of business that was discontinued in May 1993 and, as a result, the
ratio of earnings to fixed charges is not presented for the periods prior to
fiscal year 1994. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations--General.'
(4) Represents earnings from continuing operations before interest expense,
provision for income taxes, depreciation and amortization, pre-opening
expenses, one-time non-cash compensation expenses during fiscal 1994 and
other income (expense) ('Adjusted EBITDA'). Adjusted EBITDA is not intended
to represent cash flows for the period, nor has it been presented as an
alternative to income from continuing operations as an indicator of
operating performance and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles. EBITDA-based information is presented solely
as supplemental disclosure because EBITDA is frequently used to analyze
companies on the basis of operating performance, leverage and liquidity.
(5) Adjusted EBITDA calculation excludes $2,868 for the year ended March 31,
1994 related to one-time non-cash compensation expenses for the grant of
stock options to non-employee directors and the grant of stock to certain
officers in connection with the execution of employment agreements.
(6) Pro forma gross interest expense reflects interest expense on the Old Notes
and other outstanding indebtedness, without reflecting interest income on
historical cash, cash equivalents and marketable securities and assumes no
return upon the investment of proceeds following the issuance of the Old
Notes. The pro forma calculations have been computed assuming the Old Notes
were outstanding for the entire period presented. The Old Notes actually
were issued on April 17, 1995.
13
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, holders
of Notes should consider carefully the following risk factors affecting the
business of the Company.
INVESTMENT AND EXPANSION
The net proceeds of the Old Note offering (the 'Offering') will be invested
in several major projects currently under development by the Company, including
(i) the purchase and opening at Lake Charles, Louisiana of the Lake Charles Star
Riverboat, the purchase (and subsequent reconstruction or substantial
improvement and expansion) of the Players Hotel and additional expansion
projects and improvements at the Lake Charles complex, (ii) the completion of a
new land-based casino and related resort facilities at Mesquite, Nevada, (iii)
the development of a new riverboat casino and related facilities in Maryland
Heights, Missouri and (iv) additional amenities, attractions and riverfront
parking at the Metropolis Complex. Major construction projects entail
significant risks, including shortages of materials or skilled labor,
engineering, environmental or regulatory problems, work stoppages, weather
interferences and unanticipated cost increases. Construction, equipment and
stoppage problems or difficulties in obtaining any of the required permits or
authorizations from regulatory authorities could increase the completion costs
or prohibit construction of any of the facilities contemplated. See
'--Government Regulation and Regulatory Approvals.' In addition, no assurances
can be given that the openings will occur on schedule or that anticipated
construction costs will not be exceeded.
In addition, the Company has had no experience in developing a land-based
casino, such as the Players Island Resort, or in commencing or conducting
operations at a casino in direct competition with existing casinos. The Players
Island Resort opened in direct competition with established casinos and the Lake
Charles complex has recently undergone increased direct competition. See
'--Increased Competion.' Furthermore, the Metropolis Complex is expected to face
increased competition shortly and the Maryland Heights Project will open in
direct competition with established casinos. Moreover, the Company has limited
experience in the design, development and operation of non-gaming entertainment
facilities. The Company also expects that in the future it will be necessary for
its complexes to offer more amenities in order to attract a suitable level of
patronage as well as to acquire necessary gaming licenses. There can be no
assurance that the entertainment facilities will operate profitably.
Furthermore, in light of the increased competitive conditions and expense
associated with obtaining and developing new gaming sites, including the
projects recently opened and presently under development, there can be no
assurance that, as the Company expands its gaming operations, it will be able to
generate a comparable percentage increase in gaming win or continue to generate
operating income relative to total revenues at levels comparable to or greater
than the fiscal 1995 levels. See 'Recent Developments -- Additional Lake Charles
Competition; Recent Operating Results.'
INCREASED COMPETITION
To date, the Company's casinos have concentrated their marketing efforts on
patrons within a reasonable driving distance from the casinos. A patron's choice
between competing casinos operating in the same primary market area may be
affected significantly by the relative proximity to the patron of the casinos or
other forms of gaming or other casino facilities. These other forms of gaming
include bingo and pull tab games, card clubs, parimutuel betting on horse racing
and dog racing, state-sponsored lotteries and video lottery, video bingo and
video poker terminals. The Company expects that it will experience significant
competition as the emerging casino industry matures.
The Company's riverboat operation in Metropolis currently experiences
limited direct competition in its primary market area. Currently, the closest
legalized gaming facility is located in Caruthersville, Missouri, approximately
120 miles from Metropolis. The Caruthersville facility opened in April 1995.
Other competition comes from Illinois-based riverboats located approximately 160
miles away to the northwest in the greater St. Louis metropolitan area. Indiana
has approved one riverboat in Evansville, which is approximately 110 miles
northeast of Metropolis and is expected to be the closest Indiana riverboat to
compete with the Metropolis Complex. This boat is expected to open in the fourth
quarter of calendar 1995. The Metropolis Complex may face further competition as
additional riverboats become licensed in Southern Indiana. Another Missouri city
in which a proposed future gaming facility is under consideration is Cape
Girardeau, which is approximately 70 miles from Metropolis. The timing of the
opening and licensing of the Cape Girardeau project cannot be determined.
The closest competitors of the Company's Lake Charles operation are the
Grand Casino Coushatta ('Coushatta'), which is located approximately 45 minutes
away by car, and the Isle of Capri Casino, a joint venture of Crown Casinos,
Inc., and Casino America, Inc., which opened on July 29, 1995 in Westlake,
Louisiana, approximately one mile from the Company's Lake Charles facility.
Coushatta, which commenced operations on January 16, 1995 and expanded
operations by increasing gaming space by 27,000 square feet and
14
<PAGE>
adding 750 slot machines and a 12 table poker room in August 1995, currently
offers 71,000 square feet of gaming space, 2,000 slot machines and approximately
65 table games. Coushatta is a land-based gaming facility that is located
northeast of Lake Charles, Louisiana on State Highway 165. A casino operated on
Indian land, like Coushatta, has certain operating advantages that are not
available to the Company, such as exemptions from taxes and cruising
requirements. The Isle of Capri Casino opened in Lake Charles with approximately
26,000 square feet of gaming space, 860 slot machines and 40 table games.
Eastbound travelers from Texas and Western Louisiana on Interstate 10 are able
to access the Isle of Capri Casino prior to reaching the Players facility. The
Company competes to a lesser degree with riverboat operators in Baton Rouge,
approximately 125 miles east of Lake Charles, the New Orleans area, which is
over 200 miles east of Lake Charles, and the Shreveport/Bossier City area,
approximately 180 miles north of Lake Charles. Furthermore, the Louisiana
Riverboat Gaming Commission has the authority to determine the locations of
riverboat casinos. No assurance can be given that a riverboat casino operator
will not seek or receive permission to locate in, or near, the Lake Charles
area. A land-based casino opened, in a temporary location, in New Orleans in May
1995 and such temporary facility and the land-based permanent facility, which is
under construction in New Orleans and will replace the temporary facility, may
produce additional competition.
The primary market area for the Lake Charles riverboats includes the
Houston metropolitan area, other population centers west of the casino such as
Beaumont, Galveston, Orange and Port Arthur, Texas and population centers east
of the complex such as Lafayette and Baton Rouge, Louisiana. Since the Players
Lake Charles Riverboat began operating on December 8, 1993, more than half of
its patrons have come from Texas, with a significant portion coming from the
metropolitan Houston area. Although casino gaming is not currently permitted in
Texas, and the Attorney General of Texas has issued an opinion that gaming in
Texas would require an amendment to the State's Constitution, the Texas
legislature has considered various proposals to authorize casino gaming and two
bills related to gaming were presented in the most recent legislative session
that concluded on May 29, 1995. See 'Business--Lake Charles Operations' and
'Regulatory Matters--Proposed Texas Gaming Legislation.' Additional bills may be
introduced from time to time whenever the legislature is in session. Since the
Texas legislature (which meets every two years in odd-numbered years) did not
pass legislation to amend the Texas State Constitution during the 1995 regular
session, such legislation will have to await the next regular session in 1997,
or a special session of the legislature. Special sessions can only be called by
the Governor for matters that were pending in the regular legislative session.
Governor George Bush has taken a public position against legalized casino
gaming. A constitutional amendment requires a two-thirds vote of those present
and voting in each house of the Texas state legislature and approval by the
electorate at a referendum. If casinos commence operations in Texas in or near
the Company's primary market area, they would be expected to adversely affect
the Company's Lake Charles casino operations and the Company's potential casino
operations in Shreveport, Louisiana. See 'Recent Developments -- Acquisition
Developments.' Federal law permits gaming on cruise ships in international
waters under certain circumstances. One such cruise ship operated out of
Galveston, Texas until October of 1994. No assurances can be given that similar
cruise ships will not seek to operate out of Texas or Louisiana.
The Company believes that the operating revenues and profits generated to
date in its Metropolis and Lake Charles operations are attributable in part to
the limited direct competition that these casinos have experienced historically.
As noted above, competition is expected to increase in Metropolis and has
increased significantly in Lake Charles, which may adversely affect the
Company's operating results at these casinos. See 'Recent Developments --
Additional Lake Charles Competition; Recent Operating Results.' The Company's
Mesquite property opened on June 29, 1995 in direct competition with established
casinos. The Company also anticipates that its project under development in
Maryland Heights, Missouri will compete with other nearby gaming establishments.
See 'Business--Competition.'
Louisiana and Illinois statutes limit the number of riverboat casino
licenses that may be granted in such states, but the number of authorized
licenses may be increased by future legislation. Under Nevada and Missouri law,
the number of authorized gaming licenses is not limited.
HOLDING COMPANY STRUCTURE AND ABILITY TO SERVICE DEBT; EFFECTIVE SUBORDINATION
The Company is a holding company whose operations are conducted through
subsidiaries. The Company, therefore, will be dependent on the earnings and cash
flow of its subsidiaries to meet its debt obligations, including its obligations
with respect to the Notes. The ability of certain subsidiaries of the Company to
make payments to the Company is governed by the gaming laws of certain
jurisdictions, which place limits on the amount of funds which may be
transferred to the Company and may require prior or subsequent approval for any
such payments. See 'Regulatory Matters.' Accordingly, there can be no assurance
that the subsidiaries will be able to, or will be permitted to, pay to the
Company amounts necessary to service the Notes.
15
<PAGE>
The Guarantees of the Notes may provide a basis for a direct claim against
the Guarantors; however, it is possible that the Guarantees may not be
enforceable. See '--Fraudulent Transfer Considerations' and '-- Government
Regulation and Regulatory Approvals.' If the Guarantees are not enforceable, the
Notes will effectively be subordinate to all Indebtedness, trade payables and
other liabilities of the Guarantors. On June 30, 1995, the Company and the
Guarantors had aggregate trade payables of $10.5 million and $0.03 million in
Indebtedness, exclusive of the Old Notes.
Obligations under the Company's $120 million bank facility, (the 'Bank
Facility'), are secured by liens on certain assets of the Company. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources.' Subject to compliance with certain
tests in the Indenture that limit the aggregate amount of senior Indebtedness
that may be incurred by the Company, the Company is entitled to increase the
amounts available for borrowings and outstanding Indebtedness under the Bank
Facility above the initial proposed availability of $120 million, up to the
aggregate amount that is so permitted, from time to time, under such tests. In
such event, such additional Indebtedness would likely be secured by liens on
certain or all of the Company's and its Subsidiaries' assets at such time. Upon
any distribution of the assets of the Company or the Guarantors upon
liquidation, reorganization or insolvency, secured creditors of the Company or
the Guarantors would be entitled to payment in full out of the assets securing
such Indebtedness prior to payment to the Holders of the Notes, and the rights
of the Holders of the Notes are therefore effectively subordinate to the rights
of such creditors. If secured creditors were to foreclose on the collateral
securing such Indebtedness, it is possible that insufficient assets would remain
after satisfaction of such Indebtedness to satisfy fully the claims of the
Holders of the Notes.
GOVERNMENT REGULATION AND REGULATORY APPROVALS
The Company currently holds gaming licenses for the operation of casinos in
Louisiana, Illinois and Nevada as well as a casino service industry license in
New Jersey and a thoroughbred racetrack license in Kentucky. In addition, the
Company has applied for licenses to operate casinos in Missouri and Indiana.
The Company is subject to the laws of each state in which it conducts
business and to Federal law. In addition to being subject to laws applicable to
businesses generally, the Company is subject to regulations that apply
specifically to the gaming industry. All laws are subject to change and
different interpretations, especially laws regulating the gaming industry, where
in many cases the laws and the regulatory agencies that apply them are new.
Changes in laws or their interpretation may result in the imposition of more
stringent, burdensome or expensive requirements or the outright prohibition of
gaming. For example, legislation is pending in Louisiana which would restrict or
prohibit riverboat gaming and legislation is pending in Illinois which would
authorize additional casino gaming. The Company is required to pay gaming fees
and taxes in jurisdictions in which it operates and in which projects are under
development. Such fees and taxes are subject to change over which the Company
has no control. See 'Regulatory Matters.'
The Company must obtain a gaming license for each location at which it
operates a casino. Generally, such licenses are for a fixed term and are subject
to renewal periodically. The Company and each of its officers, directors,
managers and principal stockholders are subject to strict scrutiny and approval
by the gaming regulatory bodies of each jurisdiction in which the Company
conducts or seeks to conduct gaming operations. The issuance of a gaming license
is considered a privilege, not a right, and gaming licenses are subject to
suspension, limitation or revocation if detailed regulatory requirements are not
met. In addition to licenses from the state gaming regulatory agencies, casino
operations also typically require various local governmental approvals and
riverboats need Federal and state environmental approvals and approvals relating
to operations in navigable waters. See 'Regulatory Matters.'
The Missouri Gaming Act does not limit statewide the number of licenses
that may be granted and permits more than one person to be licensed for
operation in any city. Under the Missouri Gaming Act, the number and location of
licensed gaming facilities are determined by the Missouri Gaming Commission,
which has not indicated what number of gaming licenses may be granted statewide
or whether it will limit the number or location of gaming facilities on a
statewide, regional or local basis. See 'Regulatory Matters.' The development
and operation of the Maryland Heights Project requires the receipt of regulatory
approvals from Missouri gaming and other authorities. On May 24, 1995, the
Company's amended application for a gaming license at the Maryland Heights
Project was filed with the Missouri Gaming Commission. The Missouri Gaming
Commission is considering licensing applications for review in selected pools of
three and has chosen the applications of the Company and Harrah's for
consideration in the next such pool. Such applications are currently under
investigation, but no assurances can be given when the Missouri Gaming
Commission or any other governmental agency will act on the applications,
whether all approvals will be obtained or whether any unusually burdensome
restrictions may be imposed on the Company or Harrah's in order to obtain such
approvals. The Company and
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<PAGE>
Harrah's are currently parties to a non-binding letter of intent regarding the
development and operation of the Maryland Heights Project. The development and
operation of the Maryland Heights Project are conditioned upon the negotiation
and execution of definitive agreements between the Company and Harrah's.
The Company's license to operate its riverboat casino at the Metropolis
Complex and the Players Lake Charles Riverboat expire in February 1996 and
December 1998, respectively. The license to operate the Players Star Riverboat
will expire in August 1998. The casino license that was issued on June 21, 1995
to Players Nevada, Inc. ('Players Nevada') to operate the Players Island Resort
does not have a set expiration date, but it is subject to suspension, limitation
or revocation in certain circumstances. The Company also holds a license
expiring January 1996 from Kentucky authorizing it to operate a thoroughbred
racetrack. The loss or suspension of the Illinois, Louisiana, or Nevada
licenses, or the failure to obtain any license from a state in which the Company
plans to operate a casino in the future, including Missouri, or the failure to
obtain the renewal of any license would have a material adverse effect on the
Company's business. In some circumstances, the loss of a license from one
jurisdiction may trigger the loss of a license in another jurisdiction. See
'Regulatory Matters.'
In addition, Guarantees required to be executed in the future by other
Subsidiaries may also be subject to review and approval or disapproval by Gaming
Authorities in applicable jurisdictions, either in connection with such
Subsidiary's application for a gaming license, or as a separate approval item.
No assurances can be given that approval of such Guarantees will be obtained, or
that the existence of such Guarantees will not hinder, delay or prevent
licensure of such other Subsidiaries. If the Company elects not to deliver a
Guarantee from a given Subsidiary, it would be required to designate such
Subsidiary as an Unrestricted Subsidiary. See 'Description of New Notes--Certain
Definitions.'
Certain aspects of the Bank Facility are subject to required disclosure to,
approval of or disapproval by the respective gaming authorities in the states in
which the Company conducts or proposes to conduct gaming operations. The Bank
Facility may be reviewed as part of the Company's application for a gaming
license in a jurisdiction, or if previously licensed, as a separate review item.
The disclosure, review and approval requirements for the Bank Facility in
Illinois, Louisiana, Nevada and Missouri are substantially similar to the
disclosure, review and approval requirements applicable to the Notes and the
Guarantees except that additional disclosure, review and/or approval
requirements may apply with respect to the security provided concerning the Bank
Facility. The Bank Facility has been approved by the Gaming Authorities in
Illinois, Nevada and Louisiana. No assurance can be given that the Bank Facility
and the security for the Bank Facility will receive all required approvals, that
such approvals will be received on a timely basis or that the failure to obtain
all required approvals will not adversely impact the Bank Facility or the
Company's ability to make borrowings thereunder. See 'Regulatory
Matters--Missouri Gaming Regulation.'
Prior to the Company's acquisition of the Interests and relocation of the
Lake Charles Star Riverboat to Lake Charles, the Partnership, while under
control of its prior owners, was the subject of an investigation by the Office
of the District Attorney for Orleans Parish, Louisiana, for failure to cruise
regularly, as required by Louisiana law. Although the Company believes that
prosecution for the Partnership's past failure to cruise while operating on Lake
Pontchartrain is unlikely, no assurances can be given that such prosecution will
not be instituted, or that the Partnership's past failure to cruise would not
constitute a violation of Louisiana law.
LOSS OF RIVERBOAT OR DOCKSIDE FACILITY FROM SERVICE
A riverboat may be lost from service due to many factors, including a
natural disaster. Although the Company maintains insurance it considers adequate
for hull and content damage and liability and business interruption insurance in
the event both the Lake Charles Star Riverboat and Players Lake Charles
Riverboat are not in operation, the Company does not carry comprehensive
business interruption insurance. U.S. Coast Guard regulations require that hulls
of vessels of the type being operated by the Company be inspected every five
years at a U.S. Coast Guard approved dry docking facility, which will cause a
temporary loss of service. A flood, hurricane or other severe weather condition
or low water conditions also could damage or preclude excursions by a cruising
riverboat or could cause the Company to lose the use of a riverboat or dockside
facility for an extended period, which could have a material adverse effect on
operations. When excursions by a cruising riverboat are either legally or
physically impossible, various state laws and regulations may restrict or
prohibit the Company from conducting dockside gaming as an alternative.
The Ohio River occasionally overflows its banks at Metropolis, Illinois,
most often during late winter and early spring. Such flooding may cover a
portion of the Company's existing parking area closest to its landing, but is
not expected to impact the additional riverfront parking that is currently
planned for construction. In designing its riverboat landing, the Company
considered typical flood levels and believes that its existing parking
arrangements provide adequate available parking within reasonable walking
distance of its landing during typical flooding periods. If flooding is
especially severe, it may be impractical for passengers to board the riverboat
at its
17
<PAGE>
normal dock site. In such circumstances, the Company may seek permission from
the Illinois Gaming Board to dock at an alternate landing it has found, where
access is not expected to be restricted by flooding. However, no assurance can
be given that the Illinois Gaming Board would grant permission to dock at the
alternate landing or that an alternate landing acceptable to the Illinois Gaming
Board could be found. Any use of an alternate landing because of flooding may
result in some loss of service and other adverse effects on operations. See
'Regulatory Matters--Illinois Gaming Regulation.'
The Company believes that flooding does not present a significant risk to
its operations in Lake Charles, Louisiana. Flooding may, however, pose a risk to
Company operations at Maryland Heights, Missouri and future water-based gaming
sites.
ILLINOIS DOCKSIDE GAMING
Although the Illinois Riverboat Gambling Act provides that no gambling may
be conducted while a riverboat is docked, Illinois Gaming Board Rule, Section
3000.510, currently permits dockside gaming if the captain of the riverboat
reasonably determines that cruising is unsafe due to inclement weather,
mechanical or structural problems, or river icing. From the commencement of the
Company's Illinois operations in February 1993 through February 28, 1995,
dockside gaming occurred under Illinois Gaming Board Rules, Section 3000.510,
approximately 34% of the time. Recent pronouncements by the Illinois Gaming
Board indicate that the explanations for failure to cruise pursuant to Illinois
Gaming Board Rule, Section 3000.510 will be scrutinized and that any abuse of
the rule will result in disciplinary actions, which may include, among other
things, any of the following: cancellation of future cruises, penalties, fines,
suspension and/or revocation of license. In addition, since commencement of the
Metropolis operations in February 1993, pursuant to Illinois Gaming Board Rule,
Section 3000.500, dockside gaming operations have occurred during the 30 minute
time periods at the beginning and end of a cruise while passengers are embarking
and disembarking. Any change in the membership of the Illinois Gaming Board may
result in a complete prohibition of dockside gaming, The inability to conduct
dockside gaming would result in a material adverse effect on the Metropolis
operation.
Furthermore, the Company's Illinois riverboat cruises on the Ohio River,
which is partially in the Commonwealth of Kentucky. Kentucky does not permit
riverboat gaming. In extreme low-water conditions, the Company's Metropolis
riverboat may not be able to safely cruise the Ohio River without crossing into
Kentucky territory for part of the cruise. In such circumstances, either the
riverboat must cease operations, restrict the distance the riverboat cruises or
conduct dockside gaming. No assurances can be given that the Company would be
able to obtain approval from the Illinois Gaming Board to shorten the riverboat
gaming cruise or conduct dockside gaming. See 'Regulatory Matters--Illinois
Gaming Regulation.'
INFLUENCE BY PRINCIPAL STOCKHOLDERS
The directors and officers of the Company and their respective affiliates
and relatives are among the largest stockholders of the Company. As a result,
they have the power to control or influence control of the Company.
As of August 4, 1995, Edward Fishman, the Chairman and Chief Executive
Officer of the Company, and David Fishman, the Vice Chairman of the Company,
respectively, beneficially owned, as defined in Rule 13d-3 under the Exchange
Act ('Beneficially Owned'), 1,379,959 and 856,672 shares of common stock of the
Company ('Common Stock'). Edward and David Fishman are brothers and Beneficially
Owned, in the aggregate, 2,236,631 or 7.4% of the Common Stock as of August 4,
1995.
As of August 4, 1995, The Griffin Group, Inc., a Connecticut corporation
('The Griffin Group'), and its affiliates Beneficially Owned 5,438,250 shares of
Common Stock or 17.1% of the Company's Common Stock. Mr. Thomas E. Gallagher,
President and Chief Executive Officer of The Griffin Group and of Griffin Gaming
& Entertainment, Inc. (GG&E'), is a director of the Company and the beneficial
owner of certain of the securities described above.
Merv Griffin, the Company's public representative for its riverboat
casinos, participates actively in the Company's efforts to acquire new sites and
licenses, advises the Company on entertainment strategy and assists in
promotion. His name and likeness are utilized by the Company under a license
which provides for certain promotional activities to be performed by Mr. Griffin
on behalf of the Company. The Company's rights to Mr. Griffin's services are
exclusive in the riverboat and dockside casino industry, except that Mr. Griffin
has the right to represent casinos of GG&E (formerly Resorts International
Inc.). Mr. Griffin's only commitment to GG&E relates to GG&E's land-based casino
in Atlantic City, New Jersey, although GG&E is believed to be examining the
possibility of developing riverboat casinos and other land-based casinos at one
or more locations. See 'Business--License with Merv Griffin and The Griffin
Group.' The Company has initiated negotiations with The Griffin Group to retain
Mr. Griffin's services as the Company's public representative for the Players
Island Resort, although no assurance can be given that the Company will be
successful in retaining such services. Mr.
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Griffin is Chairman of the Board and a significant stockholder of GG&E.
Additionally, Thomas E. Gallagher, a director of the Company, is President,
Chief Executive Officer and a director of GG&E.
FRAUDULENT TRANSFER CONSIDERATIONS
The obligation of each of the Guarantors of the Notes may be subject to
review under state or federal fraudulent transfer laws. Under such laws, if a
court in a lawsuit by an unpaid creditor or representative of creditors of a
subsidiary, such as a trustee in bankruptcy or such Guarantor as
debtor-in-possession, were to find that at the time such obligation was
incurred, such Guarantor, among other things, (a) did not receive fair
consideration or reasonably equivalent value therefor and (b) either (i) was
insolvent, (ii) was rendered insolvent, (iii) was engaged in a business or
transaction for which its remaining unencumbered assets constituted unreasonably
small capital or (iv) intended to incur or believed that it would incur debts
beyond its ability to pay such debts as they matured, such court could avoid
such Guarantor's obligation and direct the return of any payments made under the
Guarantee to such Guarantor or to a fund for the benefit of its creditors.
Moreover, regardless of the factors identified in the foregoing clauses (i)
through (iv), such court could avoid such obligation and direct such repayment,
if it found that the obligation was incurred with intent to hinder, delay or
defraud such Guarantor's creditors. In any such event, the holders of the Notes
would have to seek repayment from other Guarantors whose guarantee obligations
had not been avoided.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction being applied. Generally, however, an entity
would be considered insolvent if the sums of its debts is greater than all of
its property at a fair valuation or if the present fair saleable value of its
assets is less than the amount that will be required to pay its probable
liability on its existing debts as they become absolute and matured.
REGULATORY REDEMPTION
If the ownership of any of the Notes by any person or entity will preclude,
interfere with, threaten or delay the issuance, maintenance, existence or
reinstatement of any gaming or liquor license, permit or approval, or result in
the imposition of burdensome terms or conditions on such license, permit or
approval, as determined by any Governmental Authority or the Board of Directors
of the Company, such Holder shall be required to dispose of such Notes within a
specified time and, if the Holder of the Notes fails to dispose of them within
such time, the Company shall have the right to redeem the Notes at a price,
without accrued interest, if any, equal to the lowest of the Holder's cost, the
principal amount of such Notes or the average of the current market prices of
such Notes. See 'Description of New Notes--Regulatory Redemption.'
LACK OF PUBLIC MARKET
The New Notes are a new issue of securities, have no established trading
market and may not be widely distributed. The Company does not intend to apply
to list the New Notes on any stock exchange. The Initial Purchasers have
informed the Company that they intend to make a market in the New Notes as
permitted by applicable laws and regulations; however, the Initial Purchasers
are not obligated to do so and may discontinue such market making activities at
any time without notice to the holders of the New Notes. Accordingly, there can
be no assurance that a trading market for the New Notes will develop or be
maintained. Moreover, if a market for the New Notes does develop, the price of
the New Notes could fluctuate and liquidity may be limited. If a market for the
New Notes does not develop, holders may not be able to resell the New Notes for
an extended period of time, if at all. If a trading market develops for the New
Notes, future trading prices of such securities will depend on many factors,
including, among other things, prevailing interest rates, the Company's results
of operations and the market for similar securities.
RECENT DEVELOPMENTS
Additional Lake Charles Competition; Recent Operating Results. During
August 1995, the Company experienced substantial additional competition after
Coushatta significantly expanded its operations and the Isle of Capri Casino
commenced operations (on July 29, 1995). See 'Risk Factors -- Increased
Competition.' Also, during the Summer of 1995, the Company undertook a
significant project as part of the Lakes Charles Complex Expansion involving
construction of a 600 car parking garage next to the Players Hotel. To provide
alternative parking arrangements, the Company significantly expanded its valet
parking operation. As a result of this additional competition, the disruption to
existing operations associated with construction and, to a certain extent,
additional patronage in July associated with the three-day Fourth of July
weekend, Lake Charles casino revenues declined from $17.6 million in July 1995
to $14.1 million in August 1995. Although construction of the parking facility
is expected to be completed by January 1996, no assurance can be given that
additional projects associated with the Lake Charles Complex Expansion will not
adversely impact Lake Charles short-term results. The Company has begun
providing complimentary admission, beverage and valet parking in Lake Charles in
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response to competitive market conditions, with an associated loss of revenues
from these sources as compared to prior periods. As a result of the foregoing
conditions, increased interest expense related to the Old Notes and additional
depreciation associated with the Lake Charles Star Riverboat, the Company may
experience a decline in net income for the second quarter of fiscal 1996
compared to the second quarter of fiscal 1995. Although the Lake Charles Complex
Expansion is only expected to disrupt operations on a short-term basis, the new
competitive conditions are likely to affect operations on a long-term basis, the
full extent of which cannot be assessed until the Lake Charles Complex Expansion
has been completed. See 'Risk Factors -- Investment and Expansion.'
Acquisition Developments. The Company entered into an agreement on August
10, 1995 to purchase the President Casino IV Riverboat for approximately $18
million, subject to the receipt of regulatory approvals by the Louisiana
Riverboat Gaming Commission, the Louisiana State Police and the U.S. Coast
Guard. Preliminary plans call for the President Casino IV to replace the Players
Lake Charles Riverboat, which would increase gaming space by 4,400 square feet
and add 50 gaming positions at the Company's Lake Charles complex. Subject to
regulatory approval from the Illinois Gaming Board, the Players Lake Charles
Riverboat is expected to be moved to the Company's Metropolis Complex where it
would replace the Company's existing Metropolis riverboat and thereby increase
gaming space, by 7,500 square feet, and add gaming positions. Assuming receipt
of the foregoing approvals, the Company currently anticipates spending an
additional $9 million for the acquisition of the gaming equipment, refitting and
transportation costs and costs associated with receipt of the required
approvals.
A joint venture (the 'Hyatt Joint Venture') between the Company and SDI
Securities 11, Inc., an affiliate of Hyatt Corporation ('Hyatt'), entered into a
letter of intent on July 18, 1995 with an affiliate of Harrah's (the 'Shreveport
Letter of Intent'). Under the terms of the Shreveport Letter of Intent, the
Hyatt Joint Venture will own and operate a riverboat casino using shared
dockside facilities at the current Harrah's riverboat casino site in Shreveport,
Louisiana. The parties have also agreed to invest in shoreside enhancements at
the site. The intended improvements include a hotel with convention facilities,
a restaurant and additional structured parking. The proposed transactions are
subject to the Hyatt Joint Venture's successful acquisition of a casino
riverboat currently located in New Orleans, Louisiana. The Hyatt Joint Venture
entered into an agreement dated August 24, 1995 with Grand Palais Riverboat,
Inc. ('Grand Palais') to acquire the outstanding capital stock of Grand Palais.
Grand Palais is a subsidiary of Hemmeter Enterprises, Inc. Grand Palais (i) owns
a gaming riverboat and is licensed to operate in New Orleans, Louisiana and (ii)
owns an interest in River City Joint Venture, a joint venture between Grand
Palais and Crescent City Capital Development Corp. ('Crescent City'), which owns
certain dockside facilities in New Orleans. Each of Grand Palais, Crescent City
and River City Joint Venture has filed for protection from creditors under Title
11 of the United States Bankruptcy Code.
The transactions contemplated by the Shreveport Letter of Intent are
subject to the negotiation of definitive agreements acceptable to the parties,
approval of the definitive agreements by the respective Boards of Directors of
the Company, Hyatt and Harrah's and the receipt of all required regulatory
approvals and consents. The proposed Grand Palais transaction is subject to
completion of the Company's due diligence review of Grand Palais, approval by
the bankruptcy court in the proceedings involving Grand Palais and receipt of
all required regulatory approvals and consents.
The Company entered into a letter of intent in August 1995 with the
Noteholders Steering Committee of Capital Gaming International, Inc. ('Capital
Gaming') with respect to the proposed acquisition by the Company and Hyatt of
certain of Capital Gaming's assets and the assumption of certain of Capital
Gaming's liabilities. The assets to be acquired include (i) the capital stock of
Crescent City, a subsidiary of Capital Gaming that owns a gaming riverboat
licensed to operate in New Orleans, Louisiana and (ii) Crescent City's interest
in River City Joint Venture, a joint venture between Crescent City and a
subsidiary of Hemmeter Enterprises, Inc. that owns certain dockside facilities
in New Orleans. The liabilities to be assumed would include certain notes
payable to Capital Gaming or its affiliates. If the Capital Gaming transaction
is completed, it is currently expected that the Company would operate the
acquired riverboat casino in New Orleans. The proposed transaction is subject to
negotiation of definitive agreements acceptable to the parties and to Capital
Gaming's creditors, approval of the definitive agreements by the respective
Boards of Directors of the Company and Capital Gaming, completion of the
Company's due diligence review of Capital Gaming, approval by the bankruptcy
court in the proceedings involving Crescent City and River City Joint Venture
and receipt of all required regulatory approvals and consents.
No assurances can be given that the Company will complete these projects
successfully or that the projects, if completed, would have a beneficial impact
on the Company's revenues.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company to the Initial Purchasers on April
17, 1995, pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Old Notes in reliance on Rule 144A under the Securities
Act. The Company and the Initial Purchasers also entered into the Registration
Rights Agreement, pursuant to which the Company agreed, with respect to the Old
Notes and subject to the Company's determination that the Exchange Offer is
permitted under applicable law, to (i) cause to be filed, on or prior to June 1,
1995, a registration statement with the Commission under the Securities Act
concerning the Exchange Offer, (ii) use all reasonable efforts (a) to cause such
registration statement to be declared effective by the Commission as soon as
practicable and (b) to cause the Exchange Offer to remain open for a period of
not less than twenty (20) business days. This Exchange Offer is intended to
satisfy the Company's exchange offer obligations under the Registration Rights
Agreement.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Letter of Transmittal, to exchange $1,000
in principal amount of the New Notes for each $1,000 in principal amount of the
outstanding Old Notes. The Company will accept for exchange any and all Old
Notes that are validly tendered on or prior to 5:00 p.m., New York City time, on
the Expiration Date. Tenders of the Old Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is
not conditioned upon any minimum principal amount of Old Notes being tendered
for exchange. However, the Exchange Offer is subject to certain customary
conditions which may be waived by the Company, and to the terms and provisions
of the Registration Rights Agreement. See 'Conditions of the Exchange Offer.'
Old Notes may be tendered only in multiples of $1,000. Subject to the
foregoing, Eligible Holders may tender less than the aggregate principal amount
represented by the Old Notes held by them, provided that they appropriately
indicate this fact on the Letter of Transmittal accompanying the tendered Old
Notes (or so indicate pursuant to the procedures for book-entry transfer.).
As of the date of this Prospectus, $150 million in aggregate principal
amount of the Old Notes were outstanding, the maximum amount authorized by the
Indenture for all Notes. As of September 12, 1995, there was one registered
holder of the Old Notes, Cede, which held the Old Notes for 22 of its
participants. Solely for reasons of administration (and for no other purpose),
the Company has fixed the close of business on September 12, 1995, as the record
date (the 'Record Date') for purposes of determining the persons to whom this
Prospectus and the Letter of Transmittal will be mailed initially. Only an
Eligible Holder of the Old Notes (or such Eligible Holder's legal representative
or attorney-in-fact) may participate in the Exchange Offer. There will be no
fixed record date for determining Eligible Holders of the Old Notes entitled to
participate in the Exchange Offer. The Company believes that, as of the date of
this Prospectus, no such Eligible Holder is an affiliate (as defined in Rule 405
under the Securities Act) of the Company.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Eligible
Holders of Old Notes and for the purposes of receiving the New Notes from the
Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering Eligible Holder thereof as promptly as
practicable after the Expiration Date.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Expiration Date shall be October 16, 1995 at 5:00 p.m., New York City
time, unless the Company, in its sole discretion, extends the Exchange Offer, in
which case the Expiration Date shall be the latest date and time to which the
Exchange Offer is extended.
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In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 10:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) if any of the
conditions set forth below under 'Conditions of the Exchange Offer' shall not
have been satisfied, to terminate the Exchange Offer, by giving oral or written
notice of such delay, extension, or termination to the Exchange Agent, and (iv)
to amend the terms of the Exchange Offer in any manner. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will promptly disclose such amendments by means of a prospectus
supplement that will be distributed to the registered holders of the Old Notes.
CONDITIONS OF THE EXCHANGE OFFER
The Exchange Offer is not conditioned upon any minimum principal amount of
the Old Notes being tendered for exchange. However, notwithstanding any other
provisions of the Exchange Offer, the Company shall not be required to accept
for exchange, or to issue the New Notes in exchange for, any Old Notes, if any
of the following events shall occur, which occurrence, in the sole judgment of
the Company and regardless of the circumstances (including any action by the
Company) giving rise to any such events, makes it inadvisable to proceed with
the Exchange Offer:
(i) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission (a) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof or (b) resulting in a material delay in the
ability of the Company to accept for exchange or exchange some or all of
the Old Notes pursuant to the Exchange Offer or which, in the judgment of
the Company, might result in the holders of the New Notes having
obligations with respect to resales and transfers of New Notes that are
greater than those described in 'The Exchange Offer--Resales of the New
Notes' or which would otherwise in the judgment of the Company make it
inadvisable to proceed with the Exchange Offer; provided, however, that the
Company will use reasonable efforts to modify or amend the Exchange Offer
or to take such other reasonable steps in order to effectuate the Exchange
Offer;
(ii) any statute, rule, regulation, order or injunction shall be
sought, proposed, introduced, enacted, promulgated or deemed applicable to
the Exchange Offer or any of the transactions contemplated by the Exchange
Offer by any domestic or foreign government or governmental authority, or
any action shall have been taken, proposed or threatened by any domestic or
foreign government or governmental authority that. in the judgment of the
Company, might directly or indirectly result in any of the consequences
referred to in clauses (i)(a) or (i)(b) above or which, in the judgment of
the Company, might result in the holders of the New Notes having
obligations with respect to resales and transfers of New Notes that are
greater than those described in 'Resales of the New Notes' or which would
otherwise in the judgment of the Company make it inadvisable to proceed
with the Exchange Offer; provided, however, that the Company will use
reasonable efforts to modify or amend the Exchange Offer or to take such
other reasonable steps in order to effectuate the Exchange Offer;
(iii) there shall have occurred (a) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or any limitation by any governmental agency or authority which
adversely affects the extension of credit or (b) a commencement of wars,
armed hostilities or other similar international calamity directly or
indirectly involving the United States, or, in the event any of the
foregoing exist at the time of the commencement of the Exchange Offer, a
material acceleration or worsening thereof;
(iv) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
set forth above are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders,
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(ii) extend the Exchange Offer and retain all Old Notes tendered prior to the
Expiration Date, subject however, to the rights of Eligible Holders to withdraw
such Old Notes as described in '--Withdrawal Rights,' or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all validly
tendered Old Notes which have not been withdrawn. If such waiver constitutes a
material change to the Exchange Offer, the Company will promptly disclose such
waiver by means of a public announcement and a prospectus supplement that will
be distributed to the registered holders.
The Company expects that the foregoing conditions will be satisfied. The
foregoing conditions are for the sole benefit of the Company and may be waived
by the Company in whole or in part at any time and from time to time in its sole
discretion. The failure by the Company at any time to exercise any of the
foregoing rights shall not be deemed a waiver of such rights and each such right
shall be deemed an ongoing right which may be asserted at any time and from time
to time. Any determination by the Company concerning the events described above
will be final and binding upon all parties.
TERMINATION OF CERTAIN RIGHTS
The Registration Rights Agreement provides that, subject to certain
expectations, in the event of a Registration Default (as defined below),
Eligible Holders of Old Notes are entitled to receive Liquidated Damages of $.10
per week per $1,000 principal amount of Old Notes held by such holders. A
'Registration Default' with respect to the Exchange Offer shall occur if: (i)
the registration statement concerning the exchange offer (the 'Registration
Statement') has not been filed with the Commission on or prior to June 1, 1995;
or (ii) the Exchange Offer is not consummated by October 14, 1995; or (iii) the
Registration Statement or shelf registration statement required by the
Registration Rights Agreement is filed and declared effective but shall
thereafter cease to be effective without being succeeded within 30 days by an
additional registration statement filed and declared effective under the
Securities Act. Holders of New Notes will not be and, upon consummation of the
Exchange Offer, Eligible Holders of Old Notes will no longer be, entitled to (i)
the right to receive the Liquidated Damages or (ii) certain other rights under
the Registration Rights Agreement intended for holders of Transfer Restricted
Securities; provided, however, that an Eligible Holder of Old Notes who
reasonably determines and notifies the Company within 20 business days of the
consummation of the Exchange Offer that (i) such Eligible Holder is prohibited
by applicable law or Commission policy from participating in the Exchange Offer,
or (ii) that such Eligible Holder may not resell the New Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and that this
Prospectus is not appropriate or available for such resales by such Eligible
Holder, or (iii) that such Eligible Holder is a broker-dealer registered under
the Exchange Act and holds the Old Notes acquired directly from the Company or
one of its affiliates, subject to reasonable verification by the Company, will
retain the right to require the Company to file a shelf registration statement
pursuant to Rule 415 under the Securities Act solely for the benefit of such
Eligible Holder of Old Notes and will be entitled to receive the Liquidated
Damages following the occurrence of defined events of default in connection with
the filing of such shelf registration statement. The Exchange Offer shall be
deemed consummated upon the occurrence of the delivery by the Company to the
Registrar under the Indenture of New Notes in the same aggregate principal
amount as the aggregate principal amount of Old Notes that were tendered by
holders thereof pursuant to the Exchange Offer.
ACCRUED INTEREST ON THE OLD NOTES
The New Notes will bear interest at a rate equal to 10 7/8% per annum from
and including their date of issuance. Eligible Holders whose Old Notes are
accepted for exchange will have the right to receive interest accrued thereon
from the date of their original issuance or the last Interest Payment Date, as
applicable, to, but not including, the date of issuance of the New Notes, such
interest to be payable with the first interest payment on the New Notes.
Interest on the Old Notes accepted for exchange, which interest accrued at the
rate of 10 7/8% per annum, will cease to accrue on the day prior to the issuance
of the New Notes. See 'Description of New Notes-- Principal, Maturity and
Interest.'
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PROCEDURES FOR TENDERING OLD NOTES
The tender of an Eligible Holder's Old Notes as set forth below and the
acceptance thereof by the Company will constitute a binding agreement between
the tendering Eligible Holder and the Company upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, an Eligible Holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit such Old
Notes, together with a properly completed and duly executed Letter of
Transmittal, including all other documents required by such Letter of
Transmittal, to the Exchange Agent at the address set forth on the back cover
page of this Prospectus prior to 5:00 p.m., New York City time, on the
Expiration Date. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE ELIGIBLE HOLDER.
IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL, IT
IS RECOMMENDED THAT THE ELIGIBLE HOLDER USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the Old Notes by
causing DTC to transfer such Old Notes into the Exchange Agent's account in
accordance with DTC's procedures for such transfer. In connection with a
book-entry transfer, a Letter of Transmittal need not be transmitted to the
Exchange Agent, provided that the book-entry transfer procedure must be complied
with prior to 5:00 p.m., New York City time, on the Expiration Date.
Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant hereto are tendered (i) by a registered holder of the Old Notes who has
not completed either the box entitled 'Special Exchange Instructions' or the box
entitled 'Special Delivery Instructions' in the Letter of Transmittal, or (ii)
by an Eligible Institution (as defined). In the event that a signature on a
Letter of Transmittal or a notice of withdrawal, as the case may be, is required
to be guaranteed, such guarantee must be by a firm which is a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or otherwise be an 'eligible guarantor
institution' within the meaning of Rule 17Ad-15 under the Exchange Act
(collectively, 'Eligible Institutions'). If the Letter of Transmittal is signed
by a person other than the registered holder of the Old Notes, the Old Notes
surrendered for exchange must either (i) be endorsed by the registered holder,
with the signature thereon guaranteed by an Eligible Institution, or (ii) be
accompanied by a bond power, in satisfactory form as determined by the Company
in its sole discretion, duly executed by the registered holder, with the
signature thereon guaranteed by an Eligible Institution. The term 'registered
holder' as used herein with respect to the Old Notes means any person in whose
name the Old Notes are registered on the books of the Registrar.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
Old Notes not properly tendered and to reject any Old Notes the Company's
acceptance of which might, in the judgment of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to particular Old Notes
either before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and Conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such period of time as the Company shall determine. The Company
will use reasonable efforts to give notification of defects or irregularities
with respect to tenders of Old Notes for exchange but shall not incur any
liability for failure to give such notification. Tenders of the Old Notes will
not be deemed to have been made until such irregularities have been cured or
waived.
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
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corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
Any beneficial owner of the Old Notes (a 'Beneficial Owner') whose Old
Notes are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender Old Notes in the Exchange
Offer should contact such registered holder promptly and instruct such
registered holder to tender on such Beneficial Owner's behalf. If such
Beneficial Owner wishes to tender directly, such Beneficial Owner must, prior to
completing and executing the Letter of Transmittal and tendering Old Notes, make
appropriate arrangements to register ownership of the Old Notes in such
Beneficial Owner's name. Beneficial Owners should be aware that the transfer of
registered ownership may take considerable time.
By tendering, each registered holder will represent the to the Company
that, among other things (i) the New Notes to be acquired in connection with the
Exchange Offer by the Eligible Holder and each Beneficial Owner of the Old Notes
are being acquired by the Eligible Holder and each Beneficial Owner in the
ordinary course of business of the Eligible Holder and each Beneficial Owner,
(ii) the Eligible Holder and each Beneficial Owner are not participating, do not
intend to participate, and have no arrangement or understanding with any person
to participate, in the distribution of the New Notes, (iii) the Eligible Holder
and each Beneficial Owner acknowledge and agree that any person participating in
the Exchange Offer for the purpose of distributing the New Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the New Notes acquired by
such person and cannot rely on the position of the staff of the Commission set
forth in no-action letters that are discussed herein under 'Resales of New
Notes,' (iv) that if the Eligible Holder is a broker-dealer that acquired Old
Notes as a result of market-making or other trading activities, it will deliver
a prospectus in connection with any resale of New Notes acquired in the Exchange
Offer, (v) the Eligible Holder and each Beneficial Owner understand that a
secondary resale transaction described in clause (iii) above should be covered
by an effective registration statement containing the selling security holder
information required by Item 507 of Regulation S-K of the Commission, and (vi)
neither the Eligible Holder nor any Beneficial Owner is an 'affiliate,' as
defined under Rule 405 of the Securities Act, of the Company except as otherwise
disclosed to the Company in writing. In connection with a book-entry transfer,
each participant will confirm that it makes the representations and warranties
contained in the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
Eligible Holders who wish to tender their Old Notes and (i) whose Old Notes
are not immediately available or (ii) who cannot deliver their Old Notes or any
other documents required by the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date (or complete the procedure for book-entry transfer
on a timely basis), may tender their Old Notes according to the guaranteed
delivery procedures set forth in the Letter of Transmittal. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
and a Notice of Guaranteed Delivery (as defined in the Letter of Transmittal)
must be signed by such Eligible Holder, (ii) on or prior to the Expiration Date,
the Exchange Agent must have received from the Eligible Holder and the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Eligible Holder, the certificate number or numbers of the
tendered Old Notes, and the principal amount of tendered Old Notes, stating that
the tender is being made thereby and guaranteeing that, within four (4) business
days after the date of delivery of the Notice of Guaranteed Delivery, the
tendered Old Notes, a duly executed Letter of Transmittal and any other required
documents will be deposited by the Eligible Institution with the Exchange Agent,
and (iii) such properly completed and executed documents required by the Letter
of Transmittal and the tendered Old Notes in proper form for transfer (or
confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC) must be received by the Exchange Agent within four (4)
business days after the Expiration Date. Any Eligible Holder who wishes to
tender Old Notes pursuant to the guaranteed delivery procedures described above
must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery
and Letter of Transmittal relating to such Old Notes prior to 5:00 p.m., New
York City time, on the Expiration Date.
25
<PAGE>
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all the conditions to the Exchange Offer,
the Company will accept any and all Old Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer will be delivered promptly
after acceptance of the Old Notes. For purposes of the Exchange Offer, the
Company shall be deemed to have accepted validly tendered Old Notes, when, as,
and if the Company has given oral or written notice thereof to the Exchange
Agent.
In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Notes, a properly completed and duly executed
Letter of Transmittal and all other required documents (or of confirmation of a
book-entry transfer of such Old Notes into the Exchange Agent's account at DTC);
provided, however, that the Company reserves the absolute right to waive any
defects or irregularities in the tender or conditions of the Exchange Offer. If
any tendered Old Notes are not accepted for any reason, such unaccepted Old
Notes will be returned without expense to the tendering Eligible Holder thereof
as promptly as practicable after the expiration or termination of the Exchange
Offer.
WITHDRAWAL RIGHTS
Tenders of the Old Notes may be withdrawn by delivery of a written notice
to the Exchange Agent, at its address set forth on the back cover page of this
Prospectus, at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the 'Depositor'), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes, as applicable), (iii) be signed
by the Eligible Holder in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by a bond power in the name of
the person withdrawing the tender, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered holder, with the
signature thereon guaranteed by an Eligible Institution together with the other
documents required upon transfer by the Indenture, and (iv) specify the name in
which such Old Notes are to be re-registered, if different from the Depositor,
pursuant to such documents of transfer. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company, in its sole discretion. The Old Notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Notes which have been tendered for exchange but which
are withdrawn will be returned to the Eligible Holder thereof without cost to
such Eligible Holder as soon as practicable after withdrawal. Properly withdrawn
Old Notes may be retendered by following one of the procedures described under
'The Exchange Offer--Procedures for Tendering Old Notes' at any time on or prior
to the Expiration Date.
THE EXCHANGE AGENT; ASSISTANCE
First Fidelity Bank, National Association is the Exchange Agent. All
tendered Old Notes, executed Letters of Transmittal and other related documents
should be directed to the Exchange Agent. Questions and requests for assistance
and requests for additional copies of the Prospectus, the Letter of Transmittal
and other related documents should be addressed to the Exchange Agent as
follows:
By Hand, Registered or Certified Mail or Overnight Courier:
First Fidelity Bank, National Association
123 South Broad Street, 12th Floor
Philadelphia, Pennsylvania 19109
By Facsimile:
(215) 985-7290
Attention: John H. Clapham
Confirm by Telephone (215) 985-7157
26
<PAGE>
FEES AND EXPENSES
All expenses incident to the Company's consummation of the Exchange Offer
and compliance with the Registration Rights Agreement will be borne by the
Company or the Guarantors, including without limitation: (i) all registration
and filing fees and expenses (including filings made with the National
Association of Securities Dealers, Inc., (including, if applicable, the fees and
expenses of any 'qualified independent underwriter' and its counsel, as may be
required by the rules and regulations of the National Association of Securities
Dealers, Inc.)), (ii) all fees and expenses of compliance with federal
securities or state or other jurisdictions, Blue Sky or securities laws, (iii)
all expenses of printing (including printing certificates for the New Notes and
prospectuses), messenger and delivery services and telephone, (iv) all fees and
disbursements of counsel for the Company and the Guarantors and the fees of one
counsel for the Initial Purchasers with respect to the Registration Statement
and any shelf registration statement, (v) all application and filing fees in the
event the Notes are listed on a national securities exchange or automated
quotation system, and (vi) all fees and disbursements of independent certified
public accountants of the Company and the Guarantors (including the expenses of
any special audit and comfort letters required by or incident to such
performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses of any person, including special
experts, retained by the Company.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss will be recognized by the Company for accounting
purposes. The expenses of the Exchange Offer will be amortized over the term of
the New Notes.
RESALES OF THE NEW NOTES
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that the New
Notes issued pursuant to the Exchange Offer to an Eligible Holder in exchange
for Old Notes may be offered for resale, resold and otherwise transferred by
such Eligible Holder (other than (i) a broker-dealer who purchased Old Notes
directly from the Company for resale pursuant to Rule 144A under the Securities
Act or any other available exemption under the Securities Act, or (ii) a person
that is an affiliate of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the Eligible Holder is acquiring
the New Notes in the ordinary course of business and is not participating, and
has no arrangement or understanding with any person to participate, in the
distribution of the New Notes. However, if any Eligible Holder acquires New
Notes in the Exchange Offer for the purpose of distributing or participating in
a distribution of the New Notes, such Eligible Holder cannot rely on the
position of the staff of the Commission enunciated in Morgan Stanley & Co.,
Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation
(available April 13, 1989), or interpreted in the Commission's letter to
Shearman and Sterling (available July 2, 1993), or similar no-action or
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction, unless an exemption from reason is otherwise available. Each
broker-dealer that receives New Notes for its own amount in exchange for
27
<PAGE>
Old Notes, where such Old Notes were acquired by such broker-dealer as a result
of market-making or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. See 'Plan
of Distribution.'
CAPITALIZATION
The following table sets forth the cash position and capitalization of the
Company at June 30, 1995.
<TABLE>
<CAPTION>
JUNE 30, 1995
--------------
(IN THOUSANDS)
<S> <C>
Cash, cash equivalents and marketable securities.................................................. $ 159,039
--------------
--------------
Long-term debt, including current portion:
Existing debt................................................................................... $ 31
Old Notes....................................................................................... 150,000
--------------
Total long-term debt, including current portion................................................. 150,031
--------------
Stockholders' equity:
Preferred Stock: no par value; 10,000,000 shares authorized; no Preferred Shares issued and
outstanding at June 30, 1995................................................................. --
Common Stock: $0.005 par value; 90,000,000 shares authorized; 29,763,940 shares issued and
outstanding at June 30, 1995................................................................. 149
Unrealized loss on marketable securities.......................................................... (56)
Additional paid-in capital........................................................................ 122,867
Retained earnings................................................................................. 62,752
--------------
Total stockholders' equity................................................................... 185,712
--------------
Total capitalization......................................................................... $ 335,743
--------------
--------------
</TABLE>
28
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of March 31,
1995 has been derived from the Company's consolidated financial statements,
which have been audited by Ernst & Young LLP, independent auditors. The selected
consolidated financial data presented below as of March 31, 1993 and 1994 have
been derived from the Company's consolidated financial statements, which have
been audited by Arthur Andersen LLP, independent public accountants. The
consolidated balance sheets as of March 31, 1994 and 1995 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the years in the three-year period ended March 31, 1995 and the reports
thereon are included elsewhere in this Prospectus. The selected consolidated
financial data presented below as of and for the three months ended June 30,
1994 and 1995, are derived from the Company's unaudited consolidated condensed
financial statements included elsewhere in this Prospectus. In management's
opinion, the Company's unaudited consolidated condensed financial statements as
of and for the three months ended June 30, 1994 and 1995 include all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation.
The data presented below should be read in conjunction with 'Management's
Discussion and Analysis of Financial Condition and Results of Operations,' the
Historical Consolidated Financial Statements and the notes thereto and other
financial information appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31, JUNE 30,
------------------------------- ------------------------
1993 1994 1995 1994 1995
--------- --------- --------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues:
Casino................................................. $ 4,606 $ 95,873 $ 210,942 $ 44,696 $ 63,110
Food and beverage...................................... 546 5,314 7,406 1,947 1,668
Other.................................................. 577 5,895 5,347 1,683 834
--------- --------- --------- ----------- -----------
Total revenues....................................... 5,729 107,082 223,695 48,326 65,612
--------- --------- --------- ----------- -----------
Costs and Expenses:
Casino................................................. 2,177 35,145 74,839 15,671 24,399
Food and beverage...................................... 505 5,094 6,799 2,026 1,547
Other gaming related and general costs................. 1,712 23,680 48,050 10,077 14,496
Corporate administrative expenses...................... -- 2,675 7,276 1,520 1,830
Pre-opening and gaming development costs............... 4,995 7,026 9,117 1,575 5,758
Depreciation and amortization.......................... 180 3,706 7,065 1,712 3,477
Option and stock compensation expense.................. -- 2,868 -- -- --
--------- --------- --------- ----------- -----------
Total costs and expenses............................. 9,569 80,194 153,146 32,581 51,507
--------- --------- --------- ----------- -----------
Income (loss) from continuing operations before other
income (expense) and provision for income taxes........ (3,840) 26,888 70,549 15,745 14,105
--------- --------- --------- ----------- -----------
Other Income (Expense):
Interest income........................................ 6 1,623 3,340 657 2,123
Other income, net...................................... -- 83 275 300 304
Interest expense....................................... (274) (887) (694) (141) (3,388)
--------- --------- --------- ----------- -----------
(268) 819 2,921 816 (961)
--------- --------- --------- ----------- -----------
Income (loss) from continuing operations before provision
for income taxes....................................... (4,108) 27,707 73,470 16,561 13,144
Provision for income taxes............................... 34 10,255 27,715 6,120 5,126
--------- --------- --------- ----------- -----------
Income (loss) from continuing operations................. (4,142) 17,452 45,755 10,441 8,018
--------- --------- --------- ----------- -----------
Loss associated with discontinued operations............. (7,031) -- -- -- --
Cumulative effect of change in accounting principle...... -- 3,500 -- -- --
--------- --------- --------- ----------- -----------
Net income (loss)........................................ $ (11,173) $ 20,952 $ 45,755 $ 10,441 $ 8,018
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
AS OF MARCH 31, AS OF JUNE 30,
------------------------------- ------------------------
1993 1994 1995 1994 1995
--------- --------- --------- ----------- -----------
BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities....... $ 8,791 $ 77,546 $ 50,332 $ 83,333 $ 159,039
Total assets........................................... 26,542 138,565 223,790 159,805 371,383
Long-term debt, including current portion.............. 17,648 5,865 8,907 9,035 150,031
Total stockholders' equity (deficit)................... (86) 115,844 176,143 128,986 185,712
</TABLE>
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company owns and operates one riverboat casino in Metropolis, Illinois,
which commenced operations on February 23, 1993, two riverboat casinos in Lake
Charles, Louisiana, the Players Riverboat Casino, which commenced operations on
December 8, 1993, and the Lake Charles Star Riverboat, which commenced
operations on April 27, 1995, and the Players Island Resort, a land based casino
complex which opened on June 29, 1995 in Mesquite, Nevada. The Company also
operates a horse racetrack in Paducah, Kentucky. The Company's expansion plans
include the Lake Charles Complex Expansion, which began with the opening of the
Lake Charles Star Riverboat, and the Maryland Heights Project, which has a
targeted Fall 1996 opening, subject to receipt of all necessary approvals. The
Company has plans to continue the development and operation of additional casino
complexes. See 'Business--Projects Under Development' and '--Development
Opportunities.'
In May 1993, the Board of Directors of the Company approved a plan that
discontinued the marketing of various services and products relating to the
gaming, travel and entertainment industries. The discontinued businesses include
Players Club and its related travel services, Players World Travel, the 900 Game
Show Network ('900 Network') and International Gaming Promotions, which promoted
and marketed tournaments at gaming destinations. As a result, the Company has
restated, effective as of May 1993, the financial statements previously reported
to reclassify the classification of all prior operations, except for those
relating to casino operations and its Kentucky racetrack, as discontinued
operations. Accordingly, a reserve for loss on disposition of discontinued
operations was established to offset any potential losses from these activities.
Management considers the reserve to be adequate in amount. (See Note 2 of the
Notes to Consolidated Financial Statements.)
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1995, the Company had $159 million in cash and cash
equivalents and marketable investment grade debt securities as compared to $50.3
million at March 31, 1995, reflecting primarily the Company's issuance of $150
million principal amount of Old Notes on April 17, 1995.
During the three month period ended June 30, 1995, the Company used $5
million in its operating activities as compared to the comparable period of the
prior year when $14 million was provided by operating activities. The Company
invested $29.7 million in property and equipment, primarily relating to the
completion of its property in Mesquite, Nevada during the three months ended
June 30, 1995. Cash used in investing activities of $127.7 million for the
quarter also reflects the purchase of $117 million in marketable securities.
Cash provided by financing activities of $142.3 million for the three months
ended June 30, 1995 reflects $150 million in proceeds from the issuance of the
Old Notes offset by the repayment of $8.9 million in long term debt.
For the twelve months ended March 31, 1995, the Company generated $52.1
million in cash from its operating activities as compared to $23.9 million for
the same period of the prior year. The operation of two riverboat facilities for
the entire twelve months ended March 31, 1995 as compared to one facility for
the majority of the prior year period accounted for the increase in cash
generated by operating activities. As of March 31, 1995, the Company had $50.3
million in cash and cash equivalents and marketable investment grade debt
securities as compared to $77.5 million as of March 31, 1994. The decrease in
cash and cash equivalents and marketable investment grade debt securities
reflects the $50 million of cash used in investing activities during fiscal 1995
consisting primarily of $33 million in construction and land costs attributable
to Players Island Resort, $42 million for the purchase of the Interests, and net
proceeds of $36.5 million from the purchases and sales of marketable securities.
The Company is pursuing the development or acquisition of additional gaming
and entertainment facilities which will require extensive amounts of capital.
Based on the projects currently under development, the Company estimates that it
could spend approximately $231 million over the next twelve months. The Company
expects to fund these expenditures with (i) cash on hand, (ii) net proceeds from
the Offering, (iii) cash flow from operations and, if needed, (iv) drawings
available under the Bank Facility.
30
<PAGE>
In June 1994, the Company acquired land to construct and operate a new
casino resort in Mesquite, Nevada in exchange for cash, Common Stock, warrants
to purchase Common Stock and a promissory note. See 'Business--Properties
--Mesquite, Nevada.' On June 29, 1995, the Players Island Resort opened at an
estimated cost of $75-80 million, approximately $64 million of which was
invested through June 30, 1995. The Company has leased additional land near the
Players Island Resort for the development of an 18-hole golf course during
fiscal 1996. The Company estimates that it will incur $6-9 million in additional
expenditures for the golf course development.
In addition to the use of $52 million for the acquisition of Interests
(consisting of $42 million paid on March 31, 1995 and $10 million paid on April
7, 1995), the Company expects to incur approximately $78 million in additional
expenditures to expand its Lake Charles facility.
The Company entered into a letter of intent with Harrah's on March 3, 1995
to co-develop a $200 million riverboat casino entertainment complex in Maryland
Heights, Missouri. The joint venture contemplates that each partner will own and
operate two riverboat casinos pursuant to separate gaming licenses but will
share equally in the costs of development of, as well as any profit or loss
associated with, the operation of the shoreside facility. The Company's share of
the Maryland Heights Project will require an approximately $100 million
investment, including the building of the Company's riverboat casinos,
investment in independently owned facilities and investment in the joint venture
that will develop the entertainment complex, parking facility and docking area.
Assuming completion of this project in the Fall of 1996, the Company anticipates
investing approximately $40 million in its riverboat casinos and other
independently owned facilities and investing approximately $60 million in the
joint venture.
In order to maintain its market position, the Company intends to invest an
additional $8 million for additional amenities, attractions, riverfront parking
and administrative office space at the Metropolis Complex. On August 10, 1995,
the Company entered into an agreement to purchase the President Casino IV
Riverboat for approximately $18 million, subject to the receipt of regulatory
approvals by the Louisiana Riverboat Gaming Commission, the Louisiana State
Police and the U.S. Coast Guard. Assuming receipt of the foregoing approvals,
the Company anticipates spending an additional $9 million for the acquisition of
gaming equipment, refitting and transportation costs associated with receipt of
required approvals. Preliminary plans call for the President Casino IV to
replace the Players Lake Charles Riverboat, which would replace the Metropolis
riverboat, subject to the receipt of all regulatory approvals.
On August 31, 1995, the Company entered into the Bank Facility, a six-year
$120 million facility which will be available for general corporate purposes.
The information set forth in the Prospectus relating to the Bank Facility does
not purport to be complete and is qualified in its entirety by reference to the
related documents filed as exhibits to the Registration Statement. Certain
aspects of the Bank Facility are subject to gaming regulatory approval. See
'Regulatory Matters--Certain Required Approvals Associated with the Bank
Facility.' The Bank Facility is a revolving line of credit for the first two
years after its closing (the 'Bank Closing'). Unless extended, the Bank Facility
will convert to a reducing revolver two years after the Bank Closing. Upon
conversion, availability under the Bank Facility will decline to zero in eight
equal, semi-annual amounts. Obligations outstanding under the Bank Facility are
secured by a first priority lien on all real and personal property related to
gaming operations conducted at the Company's Mesquite, Metropolis and Lake
Charles operations, including, without limitation, all vessels, barges,
leasehold interests, gaming equipment and fixtures. The Bank Facility contains a
negative pledge of all assets of the Company and its subsidiaries. The Bank
Facility is guaranteed by the Company's existing subsidiaries and any subsidiary
organized or acquired during the term of the Bank Facility which has a book
value or fair market value in excess of $1 million (the 'Bank Guarantors'). The
Company has pledged the stock of each of the Company's subsidiaries.
The Bank Facility will require the ongoing satisfaction of certain
financial performance criteria, including a minimum fixed charge coverage ratio,
minimum EBITDA, minimum consolidated tangible net worth and maximum total
indebtedness, and will contain restrictions on new investments or capital
expenditures in excess of $75 million. Certain covenants under the Bank Facility
could limit the Company's incurrence of indebtedness. After giving effect to the
Offering, Company indebtedness at March 31, 1995 and the operation of such
covenants, approximately $44.0 million would be available for borrowing under
the Bank Facility. The Bank Facility also contains covenants and provisions
limiting acquisitions, mergers, stock repurchases, affiliate
31
<PAGE>
transactions and asset sales and dispositions, including (i) a prohibition on
outside dividends, distributions, loans or advances by the Company and the Bank
Guarantors, (ii) limitations on repurchases of the Company's Common Stock, and
(iii) limitations on secured indebtedness. The Bank Facility will be available
for general purposes, including development activities.
On April 17, 1995, the Company completed the Offering and issued the Old
Notes ($150 million of 10 7/8% Senior Notes due April 15, 2005), which are
substantially identical to the New Notes. See 'Description of New Notes.'
RESULTS OF OPERATIONS
The following sets forth certain historical information on the consolidated
operations of the Company for the years ended March 31, 1993, 1994 and 1995.
SELECTED OPERATIONAL DATA
(IN THOUSANDS, EXCEPT FOR EARNINGS PER SHARE AND WIN DATA)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, JUNE 30,
------------------------------- ------------------------
1993 1994 1995 1994 1995
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Casino revenues.......................................... $ 4,606 $ 95,873 $ 210,942 $ 44,696 $ 63,110
Total revenues........................................... $ 5,729 $ 107,082 $ 223,695 $ 48,326 $ 65,612
Total operating expenses................................. $ 9,569 $ 80,194 $ 153,146 $ 32,581 $ 51,507
Income (loss) from continuing operations before other
income (expense) and provision for income tax.......... $ (3,840) $ 26,888 $ 70,549 $ 15,745 $ 14,105
Net income (loss)........................................ $ (11,173) $ 20,952 $ 45,755 $ 10,441 $ 8,018
Earnings (loss) per common share assuming full
dilution............................................... $ (.86) $ .72 $ 1.45 $ .34 $ .25
Metropolis Operating Results:
Casino revenues........................................ $ 4,606 $ 65,136 $ 74,857 $ 17,279 $ 19,956
Average daily win/slot machine......................... $ 110 $ 182 $ 203 $ 195 $ 219
Average daily win/table game........................... $ 1,696 $ 1,674 $ 1,749 $ 1,604 $ 1,538
Lake Charles Operating Results:
Casino revenues........................................ $ -- $ 30,737 $ 136,085 $ 27,416 $ 43,448
Average daily win/slot machine......................... $ -- $ 194 $ 276 $ 233 $ 228
Average daily win/table game........................... $ -- $ 2,458 $ 2,475 $ 2,284 $ 1,615
</TABLE>
PERIOD TO PERIOD COMPARISONS
The table of Selected Operating Data above generally reflects the Company's
opening of its initial riverboat casino in February 1993 and its second
riverboat casino in December 1993. The increases from period to period in
revenues, expenses and net income generally coincide with the opening of the
casino facilities. Following are detailed comparisons of operating results for
the periods presented.
Comparison of Three Months Ended June 30, 1995 to Three Months Ended June 30,
1994
Total revenues increased by 36% to $65.6 million for the quarter ended June
30, 1995 when compared to total revenues of $48.3 million for the comparable
quarter of the prior year. This increase was due primarily to the opening of the
Lake Charles Star Riverboat on April 27, 1995 and its operation for the
remainder of the quarter. The Company's Lake Charles operations, including both
riverboat casinos, generated $43.4 million in casino revenues for the three
months ended June 30, 1995 as compared to $27.4 million for the comparable
period of the previous year. Casino revenues for the Metropolis riverboat
increased to $19.6 million for the June 30, 1995 quarter as compared to $17.3
million for the quarter ended June 30, 1994. The 13% period over period increase
in casino revenues can be attributed to the maturation of the marketing programs
in Metropolis which has resulted in an increased customer base for the facility.
For the quarter ended June 30, 1995, total operating costs increased 58% to
$51.5 million as compared to $32.6 million for the prior year quarter. Again,
the increase in total operating expenses primarily reflected the opening of the
Lake Charles Star Riverboat in April 1995. In addition, operations in Lake
Charles and Metropolis
32
<PAGE>
incurred additional advertising and marketing costs
during the June 30, 1995 quarter as compared to the prior year in anticipation
of increased competition from other casino facilities.
Corporate administrative costs were $1.8 million and $1.5 million for the
three months ended June 30, 1995 and 1994, respectively. The increase reflects
primarily staff expansion and additional administrative activities associated
with the operations of three facilities as compared to two facilities for the
prior period.
Pre-opening and gaming development costs were $5.8 million for the
three months ended June 30, 1995 as compared to $1.6 million for the three
months ended June 30, 1994. Pre-opening expenses for the June 30, 1995 quarter
were $4.8 million, of which $4.5 million related to the opening of Players
Island Resort and the Lake Charles Star Riverboat. In comparison, the Company
incurred pre-opening expenses of $52,000 for the quarter ended June 30, 1994.
Development costs amounted to $1 million for the quarter ended June 30, 1995 as
compared to $1.5 million for the comparable period of the prior year. The
decrease is primarily the result of reduced legislative activity in emerging
jurisdictions.
Depreciation and amortization amounted to $3.5 million and $1.7 million for
the three months ended June 30, 1995 and 1994, respectively. The increase is
primarily due to the amortization of goodwill and increased depreciation expense
associated with the acquisition of the Lake Charles Star Riverboat in April
1995.
For the quarter ended June 30, 1995, the Company recorded other expenses of
$961,000 as compared to other income of $816,000 during the comparable period of
the prior year. Increased interest expense for the quarter ended June 30, 1995
of $3.4 million as compared to $141,000 for the same period of the prior year
was partially offset by an increase in interest income to $2.1 million of the
June 30, 1995 quarter as compared to $657,000 for the prior year period. The
increase in interest expense is the result of the Company issuing $150 million
in Old Notes in April 1995. The increase in interest income was directly related
to the investment of the proceeds from the issuance of the Old Notes in
investment grade debt securities.
The Company's effective net tax rate covering both state and Federal taxes
was 39% for the quarter ended June 30, 1995 as compared to 37% for the
comparable period of the prior year. The increase reflects less tax exempt
income on investments, $52,000 versus $558,000, during the quarter ended June
30, 1995 as compared to the June 1994 quarter.
Consolidated net income was $8.0 million, or $.25 per share, as compared to
$10.4 million, or $.34 per share, for the three months ended June 30, 1995 and
1994, respectively.
Comparison of Fiscal 1995 to Fiscal 1994
The Company's total revenues for fiscal 1995 increased by 109% to $223.7
million when compared to total revenues of $107.1 million for fiscal 1994. This
increase was due primarily to the Players Lake Charles Riverboat, which opened
on December 8, 1993 and was in operation for all of fiscal 1995 as compared to
less than four months of operation during fiscal 1994. Casino revenues for the
Metropolis riverboat improved to $74.9 million for fiscal 1994 as compared to
$65.2 million for the prior fiscal year. The 15% year over year improvement in
casino revenues can be attributed to the maturation of the Company's marketing
program and an increasing customer base. The improvement in casino revenues in
fiscal 1995 more than offset an expected decline in admission revenues. The
Players Lake Charles Riverboat generated casino revenues of $136.1 million as
compared to $30.7 million in revenues for its first 114 days of operation, which
ended March 31, 1994.
For fiscal 1995, total operating costs increased 91% to $153.1 million as
compared to $80.2 million for the prior fiscal year. Increases in total
operating costs reflect the operation of two riverboat facilities for all of
fiscal 1995, as compared to the operation of only the Metropolis facility for
the majority of fiscal 1994.
Corporate administrative expenses for fiscal 1995 increased to $7.3 million
as compared to $2.7 million for the prior fiscal year. The increase of $4.6
million was primarily related to staff expansion, the reassignment of personnel
who were previously employed by the operating properties, and additional
administrative activities associated with the operation of two riverboat
facilities as compared to one facility for most of the prior year period.
The Company recorded pre-opening and gaming development costs of $9.1
million for fiscal 1995 as compared to $7.0 million for the prior fiscal year.
Pre-opening expenses for fiscal 1995 were $3.0 million for
33
<PAGE>
Players Island Resort and the Lake Charles Star Riverboat, while the prior
fiscal year included the majority of the Lake Charles pre-opening costs of $4.2
million. Development costs totaled $6.1 million for fiscal 1995 as compared to
$2.8 million for fiscal 1994 reflecting the Company's development activities in
new and emerging jurisdictions. The increase is primarily the result of the
Company's pursuit of gaming opportunities in Evansville, Indiana and Maryland
Heights, Missouri.
Income from continuing operations before other income and provision for
income taxes increased to $70.5 million for fiscal 1995 as compared to $26.9
million for the prior fiscal year. Income from continuing operations before
other income and provisions for income taxes as a percentage of total revenues
increased from 25.1% for fiscal 1994 to 31.5% for fiscal 1995. These increases
are directly attributable to the operation of the Players Lake Charles Riverboat
for the entire 12 months of fiscal 1995.
The Company's effective net tax rate, including both state and Federal
taxes, increased to 38% for fiscal 1995 as compared to an effective net tax rate
of 37% for fiscal 1994.
Consolidated net income for fiscal 1995 was $45.8 million, or $1.47 per
share ($1.45 per share fully diluted) as compared to $21.0 million, or $.73 per
share ($.72 per share fully diluted) for fiscal 1994.
Comparison of Fiscal 1994 to Fiscal 1993
The Company's total revenues for fiscal 1994 increased to $107.1 million as
compared to $5.7 million for fiscal 1994. This increase reflects 12 months of
operation for the Metropolis Riverboat and the opening of the Players Lake
Charles Riverboat in December 1993 as compared to 37 days of operation for the
Metropolis Riverboat during fiscal 1993. The Metropolis Riverboat recorded
casino revenues of $65.1 million during fiscal 1994 as compared to $4.6 million
during its initial period of operation in fiscal 1993. The Players Lake Charles
Riverboat generated $30.7 million of casino revenues from its opening on
December 8, 1993 through the end of fiscal 1994.
For fiscal 1994, total operating costs were $80.2 million as compared to
$9.6 million for the prior fiscal year. Again, the increases in operating costs
from year to year reflects the full year of operation for the Company's
Metropolis Complex and the opening of its Players Lake Charles Riverboat in
fiscal 1994 as compared to its limited operation in fiscal 1993.
Corporate administrative expenses for fiscal 1994 were $2.7 million and
include the costs of establishing the Company's corporate office in Lake
Charles, Louisiana and related staff expansion to support the development of its
gaming and entertainment operations.
The Company recorded pre-opening and gaming development costs of $7.0
million for fiscal 1994 as compared to $5.0 million for the prior fiscal year.
Pre-opening expenses for fiscal 1994 were $4.2 million and related to the
Players Lake Charles Riverboat, while the prior fiscal year included pre-opening
costs of $5.0 million that related to the opening of the Company's Metropolis
Complex and initial costs associated with the Players Lake Charles Riverboat.
Development costs were $2.8 million for fiscal 1994 reflecting the Company's
development activities in new and emerging jurisdictions principally Evansville,
Indiana and Maryland Heights, Missouri.
Income from continuing operations before other income and provisions for
income taxes increased to $26.9 million for fiscal 1994 as compared to a loss of
$3.8 million for fiscal 1993. The results for fiscal 1993 reflect only 39 days
of operations for the Metropolis Complex as compared to a full 12 months of
operation for the Metropolis Complex along with the opening of the Players Lake
Charles Riverboat in December 1993.
For fiscal 1994, the Company's effective net tax rate covering both state
and Federal taxes was 37%, or $10.3 million as compared to $34,000 for fiscal
1993, which represents a provision for state income taxes only. For Federal tax
purposes, the Company had net operating loss carryforwards of approximately $6.8
million at the close of fiscal 1993.
Consolidated net income for fiscal 1994 was $21.0 million, or $.73 per
share ($.72 per share fully diluted) as compared to a loss of $11.2 million, or
$.86 per share, of which $4.1 million ($.32 per share) related to continuing
operations and $7.0 million ($.54 per share) related to discontinued operations.
34
<PAGE>
UNAUDITED QUARTERLY RESULTS; SEASONALITY
Set forth below are selected statements of operations data for the last
nine fiscal quarters, which represent all of the periods during which the
Company conducted gaming operations. In management's opinion, the results
depicted below have been prepared on the same basis as the audited financial
statements contained herein and include all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the information for
the periods presented when read in conjunction with the Historical Consolidated
Financial Statements and notes thereto contained elsewhere herein. Results of
operations are somewhat seasonal in nature with relatively greater revenues and
net income earned in the second and third quarters of each fiscal year as
compared to the first and fourth quarters of each fiscal year. Results of
operations for any fiscal quarter are not necessarily indicative of results for
any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------------------
MAR. 31,(1) JUNE 30, SEP. 30, DEC. 31, MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31,
1993 1993 1993 1993 1994 1994 1994 1994 1995
----------- --------- --------- --------- ----------- --------- --------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net gaming revenue:
Lake Charles,
Louisiana...... (2) (2) (2) $ 5,115(2) $ 25,622 $ 27,418 $ 35,262 $ 37,262 $ 36,143
Metropolis,
Illinois....... $ 4,608 $ 15,709 $ 18,208 $ 15,880 $ 15,339 $ 17,279 $ 19,827 $ 18,184 $ 19,567
Total Revenues..... $ 5,729 $ 18,310 $ 20,255 $ 23,271 $ 45,246 $ 48,326 $ 58,858 $ 58,665 $ 57,846
Adjusted
EBITDA(3) ....... $ 1,335 $ 7,172 $ 7,552 $ 7,426 $ 15,509 $ 17,509 $ 22,829 $ 19,713 $ 20,529
Income (loss) from
operations before
other income
(expense) and
provision for
income
taxes............ $ (3,430) $ 5,256 $ 5,175 $ 3,522 $ 12,935 $ 15,745 $ 20,907 $ 17,190 $ 16,707
Net income......... $ (3,732) $ 6,397 $ 3,965 $ 2,503 $ 8,087 $ 10,441 $ 13,310 $ 11,575 $ 10,429
<CAPTION>
JUNE 30,
1995(4)
---------
Net gaming revenue:
Lake Charles,
Louisiana...... $ 43,448
Metropolis,
Illinois....... $ 19,596
Total Revenues..... $ 63,110
Adjusted
EBITDA(3) ....... $ 22,372
Income (loss) from
operations before
other income
(expense) and
provision for
income
taxes............ $ 14,105
Net income......... $ 8,018
<CAPTION>
</TABLE>
(1) Includes the first 36 days of results for the Metropolis operation and
excludes results from discontinued operations.
(2) The Players Lake Charles Riverboat did not commence operations until
December 8, 1993.
(3) For an explanation of Adjusted EBITDA, see Note 4 to 'Summary Historical
Consolidated Financial Data.'
(4) Includes the first 65 days of results from the Lake Charles Star Riverboat,
which opened in April 1995, and the first two days of results from the
Players Island Resort, which opened in June 1995.
35
<PAGE>
BUSINESS
GENERAL
Players International, Inc. is a multi-jurisdictional gaming company which
owns and operates the Metropolis Complex in Metropolis, Illinois, two riverboat
casinos in Lake Charles, Louisiana, the Players Lake Charles Riverboat and the
Lake Charles Star Riverboat and the Players Island Resort in Mesquite, Nevada.
The Metropolis Complex, which is the only riverboat operating in Southern
Illinois and is one of only ten statutorily authorized Illinois licensees,
commenced operations in February 1993 and has successfully marketed to patrons
of its target markets in Illinois, Indiana, Kentucky, Missouri and Tennessee.
The Players Lake Charles Riverboat, which serves the large Houston gaming
market, commenced operations in December 1993. The Lake Charles Star Riverboat
commenced operations in April 1995. The Players Island Resort features a
fully-contained island resort environment and opened on June 29, 1995 as the
Company's first land based casino complex. For the twelve months ended March 31,
1995, the Company generated net revenues of $223.7 million and Adjusted EBITDA
of $80.6 million.
The Company plans to expand existing operations as well as to develop and
construct new casino entertainment facilities. The Company's approximately $130
million multi-phase expansion of its successful Lake Charles operation, which
has operated at or near capacity on weekends and holidays, includes the purchase
of the Showboat Star Casino riverboat, which in April 1995 opened in Lake
Charles as the Lake Charles Star Riverboat, and planned facility enhancements
and improvements. In August 1995, the Company acquired the Players Hotel and
related property which was previously under lease in Lake Charles. The Company
expects to reconstruct or substantially improve and expand the hotel and
construct an entertainment barge and a multi-story parking garage. These efforts
are being undertaken in order to offer the equivalent of dockside gaming, expand
capacity and strengthen the Company's market position in Lake Charles in
response to and in anticipation of competition in this market.
The Company has entered into a letter of intent to form a joint venture
with Harrah's to co-develop a $200 million four riverboat casino entertainment
complex in Maryland Heights, Missouri, which will contain a total of 120,000
square feet of gaming space. The Company and Harrah's individually have been
endorsed by the City of Maryland Heights for separate riverboat projects. The
Company and Harrah's expect to begin construction with an opening targeted for
the Fall of 1996, subject to the receipt of all necessary gaming and other
approvals for the joint development project. The Company also plans to invest an
additional $8 million for further amenities, attractions, riverfront parking and
administrative office space at the Metropolis Complex. The Company has entered
into an agreement to purchase, at an estimated total cost of $27 million, the
President Casino IV Riverboat, in order to replace the Players Lake Charles
Riverboat, which would replace the Company's existing Metropolis riverboat,
subject to the receipt of all regulatory approvals. See 'Recent Developments --
Acquisition Developments.'
The Company's principal executive office is located at 3900 Paradise Road,
Suite 135, Las Vegas, Nevada 89109 (Telephone: 702-691-3300).
BUSINESS STRATEGY
The Company's business strategy, which has been successfully implemented at
its existing operations, emphasizes providing customers with a high quality
entertainment experience, with particular emphasis on customer service. The
Company targets sites that are conveniently located near frequently traveled
interstate highways, and which have easy access and ample parking, in order to
attract local patronage and repeat visitors. The Company's strategy in
developing and constructing facilities is to create a destination complex which
provides a total entertainment experience rather than merely casino gaming.
The Company employs a disciplined development philosophy consisting of the
following principal components: (i) a thorough analysis of demographic,
regulatory, competitive and other factors to identify niche markets or markets
where the Company believes it will have a dominant position; (ii) the
maintenance of adequate financial resources to enable the Company to respond
quickly to development opportunities in existing and new jurisdictions; (iii)
the investment of significant capital and other resources only after a
determination has
36
<PAGE>
been made that a project is attractive and (iv) the development of themed
projects with a high entertainment component that can be completed in a
desirable time frame.
MARKETING
The Company's marketing strategy at its existing facilities focuses on
middle-income customers who live within a 200 mile radius of each of the
Company's facilities. The Company implements this strategy through the use of
database marketing, on-site marketing and bus programs. Through its proprietary
database of gaming enthusiasts, the Company targets gaming customers through
frequent mailings promoting visits to its casino facilities. In addition, the
Company employs on-site marketing techniques including the use of player
tracking systems, slot clubs and preferred player hosts to identify and service
patrons. To attract additional patronage during non-peak hours, the Company
utilizes bus tours which are organized through the Company's direct relationship
with tour operators.
METROPOLIS OPERATIONS
The Company's Metropolis Complex, which has been operational since February
23, 1993, is the only riverboat operating in Southern Illinois and has one of a
current maximum of ten statutorily authorized gaming licenses in the state. The
Metropolis riverboat is a four deck, air conditioned replica of a turn of the
century side-wheeler riverboat. The fully-equipped Las Vegas style casino
features over 20,000 square feet of gaming space, with 675 slot machines and 43
table games, for a total of approximately 1,011 of the 1,200 gaming positions
authorized by statute. The Metropolis Complex also includes a docking site known
as 'Merv Griffin's Landing,' which features a bar and grill, a restaurant,
meeting rooms and a gift shop. As part of its plan to offer non-gaming amenities
in Metropolis, the Company acquired a 12 1/2% limited partnership interest in a
joint venture that built a 120-room hotel adjacent to its Metropolis dock site.
The hotel was opened in March 1994. The Company is entitled to a discounted rate
for rooms used for casino guests and employees. The Company also leases, under a
ten year agreement, a 350-seat cabaret style theater adjacent to the hotel,
which is not in active daily operation but is available for use in special
events and promotions. The rental payment for this lease is $3,000 per month.
To date, the Metropolis operation's closest gaming competitor operates in
Caruthersville, Missouri, which is approximately 120 miles from Metropolis. A
competing riverboat is expected to open in the fourth quarter of calendar 1995
in Evansville, Indiana, approximately 110 miles northeast of Metropolis. The
Metropolis Complex may face further competition as additional riverboats become
licensed in Southern Indiana. In order to maintain its market position in light
of potential increased competition, the Company intends to invest an additional
$8 million for further amenities, attractions, riverfront parking and
administrative office space. The Company also has entered into an agreement to
purchase, at an estimated total cost of $27 million, the President Casino IV
Riverboat which, following the receipt of all regulatory approvals and
contemplated transactions, would result in an increase of 7,500 square feet of
gaming space and an increase in gaming positions at the Metropolis Complex. See
'Recent Developments--Acquisition Developments.'
The docking site at Metropolis, named 'Merv Griffin's Landing,' consists of
three permanently moored barges and related structures. One barge, with a total
area of approximately 15,000 square feet on three levels, houses Merv Griffin's
Bar and Grill and the Celebrity Buffet restaurant, as well as meeting rooms. The
dining facilities have the capacity to seat 600 people. The second barge is
approximately 12,000 square feet in size and contains the ticketing area, a gift
shop, waiting areas and restrooms. A special VIP lounge was added recently to
this barge. A third barge is approximately 15,000 square feet and is used as a
queuing area for patrons prior to boarding the riverboat casino. A deli and bar
have been added on this barge for patron convenience. The docking site is
approximately three miles from U.S. Interstate 24, a major highway through
Illinois, Kentucky and Tennessee. The landing is within easy walking distance to
over 1,000 free automobile and bus parking spaces provided by the Company.
Although Illinois law requires persons who enter the casino to be at least 21
years of age, the restaurants and gift shop are open to everyone.
Metropolis, Illinois is near the Southern tip of Illinois on the Ohio River
across from Paducah, Kentucky, approximately 40 miles from the junction of the
Ohio and Mississippi Rivers. Metropolis, with an approximate population of
7,000, is approximately 150 miles northwest of Nashville, 160 miles southeast of
St. Louis and 160 miles northeast of Memphis. The primary market area targeted
by the Company for its Metropolis riverboat
37
<PAGE>
includes Bowling Green, Louisville and Owensboro, Kentucky; Cape Girardeau,
Missouri; Clarksville, Hopkinsville and Nashville, Tennessee; Evansville,
Indiana; and two military bases in Kentucky, Fort Campbell and Fort Knox.
Regional attractions in the area include Fort Massac State Park, Shawnee
National Forest, Cave-In-Rock State Park, Land Between the Lakes, and Crab
Orchard and Rend Lakes.
The Metropolis riverboat departs from its landing for eight cruises daily,
commencing at 9:00 a.m., with an additional midnight cruise on Friday and
Saturday. This schedule may be varied, based on experience and seasonal factors.
The Company adds a midweek midnight cruise during the Summer. There is an
admission charge, which ranges from $2 to $5 per cruise. Once passengers board,
they are permitted to game during the half hour prior to the time the riverboat
departs. After the excursion, passengers are permitted to game for another half
hour before new passengers board, for a total of two hours of gaming per cruise.
The Company may permit passengers to remain on board for additional cruises on a
complimentary basis. In addition, Illinois permits dockside gaming if the
riverboat captain reasonably determines that it is unsafe to cruise due to
inclement weather, mechanical or structural problems or river icing, although
there is a possibility that such authorization may be withdrawn. See 'Risk
Factors--Illinois Dockside Gaming' and 'Regulatory Matters--Illinois Gaming
Regulation.' During dockside gaming, the Metropolis riverboat operates on its
normal schedule and passengers may leave the vessel at any time but may board
only during the half hour prior to the regularly scheduled start of the cruise.
The number of passengers per cruise typically varies, with a higher number
on the weekends than in mid-week. Passenger counts are higher during warmer
weather (from late spring through early fall) than during colder winter months.
The Company anticipates that this trend will continue in the future. The
configuration of the Metropolis riverboat, like the configuration of the Players
Lake Charles Riverboat, is designed to accommodate a maximum number of
passengers comfortably during peak times, recognizing that there may be excess
capacity for the number of passengers during most off-peak cruises. The
Company's goal is to maximize overall gaming win and profit with a relatively
large and well-equipped boat, while providing a pleasurable gaming experience,
and not necessarily to maximize win per slot, win per table or win per square
foot of casino space. Since inception, the Metropolis riverboat typically has
operated at close to full capacity on Friday and Saturday evening cruises and
holidays, with excess capacity on cruises at other times.
LAKE CHARLES OPERATIONS
The Players Lake Charles Riverboat, which was the second to open in the
state of Louisiana, commenced operations on Lake Charles in Southwestern
Louisiana on December 8, 1993. The Players Lake Charles Riverboat, a
fully-equipped Las Vegas style casino, has approximately 27,500 square feet of
gaming space with 869 slot machines and 69 table games, for a total of
approximately 1,400 gaming positions and offers gaming on four air-conditioned
decks.
In order to offer the equivalent of dockside gaming, expand capacity and
strengthen the Company's market position in Lake Charles, the Company in January
1995 initiated the $130 million Lake Charles Complex Expansion. The Company
began the Lake Charles Complex Expansion by acquiring for approximately $52
million all Interests in the Partnership that owns a fully equipped Las Vegas
style riverboat casino which previously operated for one and one-half years on
Lake Pontchartrain, Louisiana. The Company now holds two of the 15 statutorily
authorized riverboat gaming licenses in Louisiana.
In April 1995, the Company opened the Lake Charles Star Riverboat, which
has 21,730 square feet of gaming space on three air-conditioned decks with 778
slot machines and 45 table games for a total of 1,135 gaming positions. Both the
Players Lake Charles Riverboat and the Lake Charles Star Riverboat are approved
to operate eight three-hour cruises seven days a week. The Lake Charles Star
Riverboat currently operates eight three-hour cruises daily, commencing at 9:00
a.m. The Players Lake Charles Riverboat currently operates five three-hour
cruises Sunday through Thursday and eight three-hour cruises Friday and
Saturday. Cruises on the Players Lake Charles Riverboat commence at 10:30 a.m.
With the two Lake Charles riverboats operating on the above staggered cruise
schedules, the Company offers the equivalent of dockside gaming at all times
except 1:30 a.m. through 10:30 a.m. Sunday through Thursday.
As part of the Lake Charles Complex Expansion, approximately $78 million in
additional expansion projects and improvements are budgeted for the development
of a 60,000 square foot themed entertainment center
38
<PAGE>
featuring new restaurants, a sports bar and lounge and banquet
facilities; the reconstruction or substantial improvement and expansion of hotel
space; the construction of a new docking facility and covered parking
facilities; public purpose/city infrastructure contributions; the integration of
the Company's island resort theme at the Lake Charles facility; and additional
amenities.
Prior to the current competitive gaming climate in Lake Charles, the
Company collected an admission charge of $2.00 per cruise on the Players Lake
Charles Riverboat and Lake Charles Star Riverboat, although
promotional discounts were given. See 'Recent Developments--Additional Lake
Charles Competition; Recent Operating Results.' As a result of competition,
admission now is free for passengers on the Players Lake Charles Riverboat and
Lake Charles Star Riverboat. However, the Company continues to pay a $3.00 per
passenger admission tax to the City of Lake Charles. Once passengers board, they
are permitted to game prior to the riverboat's departure. Passengers are
permitted to continue to game until they disembark. At its discretion, the
Company may permit passengers to remain on board for additional cruises.
Louisiana permits dockside gaming if the riverboat captain reasonably determines
that it is unsafe to cruise due to dangerous weather or water conditions.
The Players Lake Charles Riverboat and Lake Charles Star Riverboat depart
from a docking site adjacent to the recently acquired Players Hotel, which
includes dockside and support facilities and adjacent parking areas for the
hotel and casino guests. See '--Properties; Lake Charles, Louisiana'. The
hotel's ground floor includes a pavilion that houses the primary areas for
ticketing, waiting, entertainment and retail space, four bars and additional
snack facilities. The space also includes two full service restaurants, Merv's
Bar & Grill and the Celebrity Buffet and Restaurant, which can seat 125 and 250
people, respectively.
The Company maintains a permanently docked barge of approximately 10,000
square feet, containing a 3,000 square foot VIP waiting lounge, which allows
special access and priority boarding. The barge also provides areas for employee
needs, offices and mechanical rooms. Passengers enter the Players Lake Charles
Riverboat and the Lake Charles Star Riverboat directly from a barge facility
which is connected to the Players Hotel by a covered walkway.
The City of Lake Charles and the surrounding area have a population of
160,000 within a 25 mile radius. The City of Lake Charles is an active community
with a cultural heritage and community resources including the symphony, ballet
and numerous art galleries and museums. The area is also host to seasonal
festivals and special events that highlight Cajun food and music, historic
crafts and water sports. Lake Charles hosts the annual 'Contraband Days,' the
biggest promotional event in Lake Charles, spanning over two weeks and
attracting approximately 200,000 visitors to the City. Lake Charles' Contraband
Days is the second largest festival in Louisiana after New Orleans' Mardi Gras
Festival. In addition, the City of Lake Charles has a civic center that offers a
2,000 seat theater and a 50,000 square foot exhibition hall, used for
conventions, sporting events and entertainment. Lake Charles, which exceeds four
square miles, serves as a recreational area for boating and fishing.
The Lake Charles casino's primary market area includes such population
centers as Houston, Beaumont, Galveston, Orange and Port Arthur, Texas and
Lafayette and Baton Rouge, Louisiana. U.S. Interstate 10 connects Houston,
Beaumont and Lake Charles and is adjacent to the Company's dock site. Since
opening, the Company estimates that the Lake Charles casino has drawn over half
of its patrons from Texas, mainly from the greater Houston area, due in large
part to the current absence of legalized casino gaming in Texas. The Company
recently has begun to experience significant new and additional gaming
competition in the Lake Charles market. See 'Risk Factors--Increased
Competition' 'Recent Developments--Additional Lake Charles Competiton; Recent
Operating Results' and '--Competition.'
MESQUITE OPERATIONS
As part of a strategy to diversify revenue sources, the Company opened on
June 29, 1995 the Players Island Resort, its first land-based casino
entertainment facility, in Mesquite, Nevada. The Players Island Resort features
an island resort theme and is located approximately 70 miles by car from Las
Vegas on Interstate 15 between Las Vegas and Salt Lake City, where an estimated
12,000 cars pass daily. The Players Island Resort is being
39
<PAGE>
marketed as a destination resort for the residents of the Las Vegas area and
Southern Nevada, as well as for tourists from California, Arizona and nearby
Utah.
The initial phase of the Players Island Resort project was developed on 45
acres, at an estimated cost of $75-80 million and includes a 40,000 square foot
casino; a 500-room hotel with a health spa and swimming pool with waterfalls;
lighted tennis courts; a children's arcade; four detached three-bedroom villas;
and a 50-unit recreational vehicle facility. The resort features four
restaurants, an estimated 400-seat showroom and 10,000 square feet of
banquet/meeting rooms. The resort complex, which has been master-planned to
accommodate further expansion of the casino, hotel and banquet/meeting space,
features a fully-contained island resort environment. The Company has leased
additional land near the Players Island Resort for the development of an
18-hole golf course during fiscal 1996. The Company estimates that it will incur
$6-9 million in additional expenditures for the golf course development.
DEVELOPMENT OPPORTUNITIES
Maryland Heights, Missouri
The Company entered into a letter of intent with Harrah's on March 3, 1995
(the 'Harrah's Letter of Intent') to form a joint venture to co-develop a $200
million riverboat casino entertainment complex in Maryland Heights, Missouri,
which will contain a total of 120,000 square feet of gaming space. The Company
and Harrah's would each own and operate two separate riverboat casinos pursuant
to separate gaming licenses but would share in the costs of the development of,
as well as any profit or loss associated with, an estimated 300,000 square foot
shoreside facility. Although the four riverboat casinos are expected to be
similar in exterior theme and decor, each operator would individually manage and
market its own gaming operations with separate staffing. The Company and
Harrah's individually have been endorsed by the City of Maryland Heights for
separate riverboat casino projects and have licensing applications under
consideration by the Missouri Gaming Commission. See 'Risk Factors--Government
Regulation and Regulatory Approvals' and 'Regulatory Matters.' The development
and operation of the Maryland Heights Project are conditioned upon the
negotiation and execution of definitive agreements between the Company and
Harrah's.
In addition to the construction of four riverboats, the shoreside facility
is anticipated to include a hotel facility to be managed by Harrah's, extensive
covered parking and a 95,000 square foot entertainment building. The
entertainment facility is expected to contain upscale restaurants, a buffet,
bars, an entertainment lounge with live music nightly, a preferred players
lounge and gift shops. The Company and Harrah's also are evaluating the
development of an outdoor mall containing themed restaurants and boutique shops
similar to the higher end Las Vegas casinos. Under the Harrah's Letter of Intent
(i) Harrah's and the Company would share each other's development costs
(excluding the costs specified in clause (iii) below, the costs of riverboats to
be separately owned and operated and the costs associated with interior fit-up
of separately controlled space); (ii) Harrah's would have the right to purchase
the Company's interest in the joint venture upon any 'change of ownership' of
Players, on terms subject to negotiation between the parties; and (iii) as
between Harrah's and the Company, the owner of the property ultimately chosen
for development would receive percentage rent from the other joint venture
party, based on net gaming revenues. See '--Properties; Maryland Heights,
Missouri.'
Situated close to Interstate 70 in Maryland Heights, the casino
entertainment complex will be strategically located to attract patrons from a
local population base of approximately 2.3 million in the greater St. Louis
metropolitan region. The site will feature easy accessibility, a high level of
drive-by traffic and close proximity to Interstate 70 and Lambert International
Airport, and will be strategically located near the Riverport amphitheater,
which attracts 500,000 visitors per year. The Company and Harrah's expect to
begin construction with an opening targeted for the Fall of 1996, subject to the
negotiation and execution of definitive agreements for the project and the
receipt of all necessary gaming and other approvals.
Although riverboat gaming is currently offered in the metropolitan St.
Louis region, certain patrons of the Metropolis Complex travel approximately
three hours from St. Louis to Metropolis. In recognition of these valued
customers, the Company intends to introduce cross-marketing programs to St.
Louis area residents for the Metropolis and the proposed Maryland Heights
riverboats to increase repeat patronage at the Company's casino entertainment
facilities.
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Other Potential Projects
The Company currently is evaluating a number of other potential
opportunities to develop riverboat, dockside or land-based gaming facilities in
jurisdictions that currently permit gaming as well as in jurisdictions that have
not yet legalized gaming. See 'Recent Developments--Acquisition Developments.'
COMPETITION
The casino gaming industry includes casinos which are either land-based in
jurisdictions such as Nevada and New Jersey, dockside casinos, riverboat casinos
and land-based casinos on Indian reservations. The gaming industry is highly
competitive and is composed of a large number of companies, many of which have
significantly greater resources than the Company. Numerous states have legalized
gaming and several other states are considering the legalization of gaming in
designated areas. As a result of the proliferation of gaming in new
jurisdictional areas as well as the proliferation of Indian gaming on tribal
land, the Company's operations could be adversely affected in instances where
such other gaming operations are conducted close to the Company's operations.
See 'Risk Factors--Increased Competition.'
The Company's Metropolis Complex currently faces indirect competition from
riverboats in certain parts of Missouri and to a much lesser extent from
dockside casinos in Tunica, Mississippi. In the fourth quarter of calendar 1995,
the Metropolis Complex is expected to become subject to competition from a
riverboat operation in Evansville, Indiana, which is located approximately 110
miles northeast of Metropolis. The Metropolis Complex may face further
competition as additional riverboats become licensed in Southern Indiana. Gaming
has also been authorized in Missouri, and the closest Missouri cities in which
proposed future gaming facilities are under consideration are Cape Girardeau and
Caruthersville, which are approximately 70 and 120 miles, respectively, from
Metropolis. The Caruthersville project opened in April 1995. The timing of the
opening and licensing of the Cape Girardeau project cannot be determined. In
order to maintain its market position, the Company has budgeted additional
amenities and attractions for the Metropolis Complex. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations.'
The Company's Lake Charles operation faces direct competition from the
land-based Coushatta facility in Kinder, Louisiana. The Coushatta facility,
which opened in January of 1995 and expanded in August 1995, is a Las Vegas
style casino that currently offers 71,000 square feet of gaming space, 2,000
slot machines and approximately 65 table games. In addition to the Coushatta
facility, the Company faces direct competition from the Isle of Capri Casino, a
joint venture of Crown Casinos, Inc., and Casino America, Inc., which opened on
July 29, 1995 in Westlake, Louisiana approximately one mile from the Company's
facility. The Isle of Capri Casino in Lake Charles has approximately 26,000
square feet of gaming space, 860 slot machines and 40 table games. Eastbound
travelers from Texas and Western Louisiana on Interstate 10 are able to access
the Isle of Capri Casino prior to reaching the Players facility. The Company's
Lake Charles operations compete to a lesser degree with riverboat operators in
Baton Rouge, approximately 125 miles east of Lake Charles, the New Orleans area,
which is over 200 miles east of Lake Charles, and the Shreveport/Bossier City
area, which is approximately 180 miles north of Lake Charles. A land-based
casino in New Orleans may produce additional competition. See 'Risk
Factors--Increased Competition.'
The Players Island Resort in Mesquite, Nevada competes directly with two
existing properties: the Oasis and the Virgin River, both of which are located
in Mesquite. The larger of the two facilities, the Oasis, has been in operation
for approximately 11 years, and the Virgin River has been in operation for
approximately three years. These two facilities draw a majority of their
patronage from travelers on Interstate 15, the local population base and the
residents of nearby border towns between Utah and Nevada. The Company will
compete directly with these existing properties as well as attempt to expand the
Mesquite market by targeting Las Vegas residents and tour and travel patrons who
otherwise are visiting Las Vegas.
The Company's planned project in Maryland Heights, Missouri will compete
directly with President Riverboats in downtown St. Louis, Alton Belle in Alton,
Illinois, Casino Queen in East St. Louis and St. Charles Station in St. Charles,
Missouri, proposed riverboat casinos in Kimmswick, Missouri and St. Charles
County, Missouri and, potentially, additional riverboats in the St. Louis
metropolitan area.
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EMPLOYEES
At March 31, 1995, the Company had 2,261 employees, including approximately
1,357 and 786 employed in riverboat operations (including land-based activities)
in Lake Charles and Metropolis, respectively, 45 employed at Players Bluegrass
Downs, 32 employed at Players Island Resort and 41 employed in the Company's
executive office. As of July 13, 1995, the Company employed 984 people at
Players Island Resort. The Company believes its relations with its employees are
generally good.
On June 28, 1995, the United Food and Commercial Workers Union, Local 881,
filed a petition with the St. Louis Regional Office of the National Labor
Relations Board (the 'NLRB') requesting the NLRB to conduct an election to
ascertain whether approximately one-half of the employees at the Metropolis
Complex wished to be represented by the union. That election had been scheduled
for August 18, 1995, but was indefinitely postponed pending investigation of
unfair labor practice charges filed by the Local 881. Since the outcome of such
election is unknown, the Company is currently unable to assess the potential
consequences such activity may have on its Metropolis operations.
On May 23, 1995, the Seafarers International Union ('SIU'), A.G.L.I.W.D.,
and the American Maritime Officers ('AMO') union filed petitions to represent
for the purpose of collective bargaining certain marine crewmembers. The AMO
petitioned to represent licensed crewmembers -- captains, mates and chief
engineers. The SIU petitioned to represent unlicensed crew members -- bos'ns,
deckhands and oilers. In total, the petitions affect approximately 70 employees.
Beginning on July 24, 1995, the NLRB conducted a multi-day hearing to
gather evidence concerning the composition of the bargaining unit for purposes
of a union election. Players has taken the position that the licensed
crewmembers and bos'ns are supervisors and not eligible to vote in a union
election. If the NLRB agrees with Players' position, approximately 45 employees
will be affected by the union petitions. The NLRB currently is considering
Players' arguments. In the coming weeks, the NLRB will issue a decision, after
which a union election will take place.
PROPERTIES
Metropolis, Illinois: The Company leases its docking facilities in
Metropolis, which cover 1,810 linear feet of riverfront, from the City of
Metropolis pursuant to a 20-year lease with a 20-year renewal option at an
annual rent of approximately $7,000. The Company also owns several parcels of
land in Metropolis, some with buildings, aggregating approximately eight acres,
and it leases an additional two acres. The owned or leased area is used
primarily for free customer parking or as office space. Some of the land is
being held for development, and some of the current parking area may be
developed, in which event the Company believes suitable replacement parking
space could be obtained.
The Ohio River occasionally overflows its banks at Metropolis, most often
during late winter and early spring. Such flooding may cover a portion of the
Company's closest parking location, although the Company believes that it will
still have adequate available parking within reasonable walking distance of its
landing during typical flooding periods. Although the Ohio River did not
overflow its banks at Metropolis during the flooding that occurred during the
Summer of 1993, there can be no assurance that it will not do so in the future.
If flooding is especially severe, it may be impractical for passengers to board
the riverboat at its normal dock site. The Company has developed an emergency
plan that would permit gaming activities to continue in such circumstances. Any
use of an alternate landing because of flooding may result in some loss of
service. See 'Risk Factors--Loss of Riverboat or Dockside Facility from
Service.'
Lake Charles, Louisiana: On January 25, 1995, the Company entered into a
preliminary agreement (the 'Beeber Agreement') with The Beeber Corporation
('Beeber') to purchase Players Hotel and approximately 15 acres of real estate
comprising the landside facility for the Players Lake Charles Riverboat and the
Lake Charles Star Riverboat (collectively, the 'Property'). Under this
arrangement, the Company agreed to pay a total purchase price of $6.7 million
for the Property consisting of (i) $5.5 million in cash, Common Stock based upon
the per share closing price of Common Stock on January 25, 1995 ($12.17 per
share, post-split adjusted) or a combination of cash and Common Stock to be
determined by Beeber on or prior to July 25, 1995 and (ii) the Company's
assumption of Beeber indebtedness secured by the Property in an amount not to
exceed $1.25
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million. The Beeber Agreement (i) provided that, in the event Beeber chose to
receive any portion of the purchase price in Common Stock, Beeber would have the
right for up to 36 months after the date of closing under the Beeber Agreement
to require the Company to repurchase such Common Stock at a price equal to the
closing price of the Common Stock on January 25, 1995 ($12.17 per share,
post-split adjusted) and (ii) granted Beeber certain piggyback registration
rights to register the resale of Common Stock received as part of the purchase
price. On August 16, 1995, the Company and Beeber entered into a definitive
agreement concerning the Property and closed the Property purchase on August 18,
1995. At such closing, the $6.7 million purchase price was paid by the Company
as follows: (i) by becoming obligated to discharge a promissory note payable in
January 1996 exclusively through delivery of 507,382 shares of Common Stock
(i.e., $6.18 million in Common Stock at the $12.17 per share value set forth in
the Beeber Agreement), (ii) by paying $0.3 million in satisfaction of the
outstanding first mortgage on the Property and (iii) by paying $0.2 million into
escrow to satisfy any applicable liens, adjustments and charges, with any
remaining amounts payable to Beeber after satisfaction of such escrow items. As
additional consideration, the Company is required to continue making certain
payments to Beeber and a third party, which payments are related to a lease
agreement dated May 19, 1993 between the Company and Beeber, as amended (the
'Lake Charles Lease'). Under this arrangement, the Company and such parties have
entered into an agreement whereby the Company is obligated to pay $2.95 for each
passenger who patronizes the Company's Lake Charles riverboats, subject to
certain conditions (the 'Continuing Lease Payments'). See '-- Legal Proceedings;
Jebaco Litigation.
The Company has obtained a commitment for a title insurance policy with
respect to the Property. Such policy contains an exception with respect to a
strip of lakefront land adjacent to and abutting the Property, which was
previously under water, and may be subject, under certain circumstances, to a
claim of ownership by the State of Louisiana by virtue of certain riparian
claims (the 'Lakefront Strip'). The Company has entered into a long-term lease
with the State of Louisiana for the Lakefront Strip in order to obtain whatever
rights the State of Louisiana may have in or to the Lakefront Strip and is
negotiating another long-term lease with the State of Louisiana for certain
waterbottoms (i.e., riparian rights) adjoining the Lakefront Strip (the
'Waterbottoms Lease'). The Company has obtained written notification from the
State of Louisiana concerning the State's affirmative intention to enter into
the Waterbottoms Lease with the Company, and the Company has had preliminary
discussions with the State of Louisiana concerning the terms of the Waterbottoms
Lease. As a result, the Company does not anticipate any difficulty in executing
the Waterbottoms Lease or any material annual payments in connection therewith.
Mesquite, Nevada: The Company owns the 45 acre parcel of real property
that currently constitutes the Players Island Resort. An additional 17 acres of
adjoining property has been acquired for expansion purposes, subject to the
rights of third parties to develop or participate with the Company in a
development, as described below. In addition, the Company has leased 190 acres
of land to develop an 18-hole golf course near the Players Island Resort.
In June 1994, the Company acquired a 45-acre site in Mesquite, Nevada from
Gem Gaming, Inc. ('Gem Gaming'). The site is located just off Interstate 15 near
the Nevada-Utah border, approximately 70 miles northeast of Las Vegas. The
Company also acquired an option to purchase all or part of an adjacent 90-acre
parcel (the '90 Acre Mesquite Option'). As total consideration, the Company paid
approximately $12.5 million to Gem Gaming, comprised of $5 million in cash,
approximately $4.2 million in Company Common Stock and a $3.2 million note,
which was repaid on June 29, 1995. The Company also granted Gem Gaming a five
year warrant to purchase up to 150,000 shares of the Company's Common Stock at
an exercise price of $15.80 per share. The Company has closed an agreement to
(i) exercise the 90 Acre Mesquite Option in part to acquire 17 acres of the 23
acre portion of the subject property that is zoned for casino development (the
'17 Acre Parcel') for approximately $2.6 million, (ii) terminate the option for
the remaining 73 acres of the subject property (the '73 Acre Parcel'),
consisting of 67 acres that are not zoned for casino development and six acres
that are zoned for casino development, (iii) subject the 73 Acre Parcel to a
ten-year restriction against casino development or use and (iv) grant rights to
the owner of the 73 Acre Parcel to, under certain circumstances, (A) participate
(for up to a 40% equity interest) in a joint venture with the Company or its
affiliates in any development of the 17 Acre Parcel by the Company or its
affiliates, (B) acquire the 17 Acre Parcel for an amount equal to the Company's
original purchase price, plus interest on such price at a rate of 8% per annum,
if the Company, or its affiliates, fails to commence the development of such
property within five years of the date of purchase (in which event the
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17 Acre Parcel would be subject to a five-year restriction against
casino-related development or use), and (C) so long as the Company has not yet
commenced development of the 17 Acre Parcel, to require the Company to
contribute the 17 Acre Parcel and participate as a joint venture party in the
development of the entire 90 acre property by the owner of the 73 Acre Parcel,
subject to the Company's reasonable consent, and with percentage interests based
on fair market valuation of the relative contributions to the joint venture.
The Company has also leased additional land adjacent to the Players Island
Resort, together with irrigation water rights for such land, for the development
during fiscal 1996 of an 18-hole golf course, upon which the landlord has
retained rights to develop a golf community housing development. The lease of
the golf course property and related irrigation rights provides for a term of 99
years at a starting annual rent of $216,000, subject to increase every five
years based on the consumer price index. During fiscal 1996, the Company intends
to invest approximately $6-9 million in leasehold improvements related to the
development of the golf course.
Maryland Heights, Missouri: The Company and Harrah's are evaluating two
sites for purposes of developing the Maryland Heights Project, one site which
Harrah's owns (the 'Harrah's Site') and a separate site in which the Company has
certain real property interests (described below). The two sites are not
contiguous. Therefore, if the Maryland Heights Project is developed, only one of
the sites will be utilized.
The Company has acquired options, for which it paid cash of approximately
$1,400,000, to lease and/or purchase and develop two parcels of real estate (the
'Players Option Parcels') aggregating 218 acres located on the Missouri River in
Maryland Heights, Missouri. On March 15, 1995, the Company exercised its option
to lease one of the Players Option Parcels consisting of approximately 132 acres
(the '132 Acre Parcel') at an exercise price of $780,000. By doing so, the
Company became the tenant under an existing lease for the 132 Acre Parcel which
provides, among other things, for maximum annual basic rent of $250,000, maximum
annual percentage rent of $100,000, a 15-year term with four ten-year renewal
options, and an option to purchase the 132 Acre Parcel (the '132 Acre Purchase
Option') for a purchase price of $2,500,000 if exercised during the first lease
year, or $3,000,000 if exercised during the second lease year. On March 17,
1995, the Company exercised the 132 Acre Purchase Option and thereby acquired
title to such property.
While no definitive agreement has been reached, the Company presently
expects that it and Harrah's will develop the Maryland Heights Project at the
Harrah's Site. In such event, the Harrah's Letter of Intent contemplates that
Players would make annual lease payments to Harrah's concerning the Harrah's
Site equal to 2% of the first $50 million of net gaming revenue, as defined by
the Missouri regulatory authorities, at the Company's Maryland Heights riverboat
(the 'Missouri Net Gaming Revenue'); 3% of the Missouri Net Gaming Revenue
between $50 and $100 million; and 4% of the Missouri Net Gaming Revenue in
excess of $100 million.
Bluegrass Downs, Kentucky: In November 1993, the Company acquired
Bluegrass Downs racetrack (currently known as Players Bluegrass Downs), located
in Paducah, Kentucky, in anticipation that the Kentucky legislature would enact
legislation to authorize casino-type gaming, such as slot machines and table
games, at licensed racetracks. If any legislation is adopted permitting
additional forms of gaming at racetracks, the Company currently plans to develop
its track into a facility that would offer all permitted forms of gaming. There
can be no assurance that such legislation will be adopted. The racetrack is
approximately ten miles from the Company's Metropolis docking site. The next
closest Kentucky racetrack to Metropolis is Ellis Park, which is approximately
100 miles from each of Paducah and Metropolis. Bluegrass Downs is on a 70 acre
tract that includes a 5/8 mile oval racetrack; an enclosed 17,000 square foot
clubhouse housing dining, wagering facilities and administrative areas; barns
and related buildings that can accommodate 725 horses; and a parking area for
more than 1,400 cars.
LICENSE WITH MERV GRIFFIN AND THE GRIFFIN GROUP
The Company is a party to a license (the 'Griffin License') with The
Griffin Group, which is a company controlled by Mr. Merv Griffin and a major
stockholder of the Company, under which Mr. Griffin acts as the public
representative for all of the Company's riverboat and dockside casinos. In
addition, Mr. Griffin provides other services, principally of a promotional
nature. This relationship with Mr. Griffin is designed to develop, on the
Company's behalf, a high profile in new markets and access to national media.
The Company features Mr. Griffin in print, radio and television advertisements.
The Company's right to Mr. Griffin's services are exclusive in the riverboat and
dockside casino industry, except that Mr. Griffin has the right to represent
casinos of GG&E.
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GG&E currently has only one land-based casino in Atlantic City, New Jersey,
although GG&E is believed to be examining the possibility of developing
riverboat and other land-based casinos at one or more locations. In
consideration of Mr. Griffin's services under the Griffin License, the Company,
in 1992, issued to The Griffin Group a warrant to purchase 2.1 million shares of
Common Stock an exercise price of $2.67 per share (on a split-adjusted basis).
The warrant currently is outstanding and has not been exercised. In addition,
the Griffin License requires the Company to pay annual fees to The Griffin Group
for each riverboat casino complex equal to the greater of (i) $50,000 or (ii) an
amount based upon a percentage of the respective casino's earnings per fiscal
year before depreciation, interest and taxes ('EBDIT') for the year.
The Griffin License has an initial four-year term expiring December 31,
1996; provided, however, the fee payable under clauses (i) or (ii) is not
payable with respect to the Metropolis Complex and the Players Lake Charles
Riverboat through December 31, 1996. The EBDIT fee payable to The Griffin Group
is payable in the following cumulative amounts: to the extent that EBDIT per
complex is $15 million or less, the payment is two-thirds of 1% of EBDIT
(against which any minimum $50,000 payment for the particular riverboat will be
credited); to the extent that EBDIT per complex is more than $15 million but not
more than $30 million, the additional payment is 1% of EBDIT in excess of $15
million; and to the extent that EBDIT per complex is more than $30 million, the
additional payments will be 1 1/2% of EBDIT in excess of $30 million. The
Griffin Group also is entitled to reimbursement of certain expenses and
indemnification against certain claims. Mr. Griffin will be entitled to
additional compensation, as negotiated in good faith, if he hosts, produces or
performs in any shows at a Company casino. The Company has the right to renew
the Griffin License indefinitely from year-to-year thereafter.
The Company has initiated discussions with The Griffin Group concerning the
extension of the Griffin License to the Company's development projects and to
the Lake Charles Star Riverboat and the Players Island Resort.
LEGAL PROCEEDINGS
Ornstein and Mississippi Gold, Inc. Litigation
On June 7, 1994, Marvin Ornstein and Mississippi Gold, Inc. ('MGI') filed a
lawsuit in the United States District Court for the Southern District of
Illinois against the Company, PCI, Inc. (a subsidiary of the Company), Morton
Friedman, individually and as Chairman-Director of the Illinois Gaming Board,
the Illinois Gaming Board and the Illinois State Police. The complaint alleges
that the Company and PCI, Inc. defamed Mr. Ornstein and MGI as a result of the
publication of certain statements made by the Illinois Gaming Board in 1990
concerning the licensability of Mr. Ornstein. The complaint further alleges that
the defendants conspired to prohibit Mr. Ornstein and MGI from being licensed
for riverboat gaming in Illinois. The complaint requests an unspecified amount
for compensatory damages and punitive damages and seeks recovery of attorneys'
fees and costs. Previous litigation between the Company and Mr. Ornstein and MGI
in New Jersey state court, involving substantially similar factual matters, was
settled by the Company's payment of $10,000 to Mr. Ornstein and MGI.
Poulos and Ahern Litigation
The Company, certain suppliers and distributors of video poker and
electronic slot machines and over forty other casino operators have been named
as defendants in a class action suit filed April 26, 1994 in the United States
District Court, Middle District of Florida, by William Ahern and William H.
Poulos. The plaintiffs allege common law fraud and deceit, mail fraud, wire
fraud and Racketeer Influenced and Corrupt Organizations Act violations in the
marketing and operation of video poker games and electronic slot machines. The
suit seeks unspecified damages and recovery of attorneys' fees and costs. On
December 9, 1994, an Order was entered by the District Court in Florida
transferring the consolidated action to the United States District Court for the
District of Nevada. Motions for class certification and motions to dismiss are
pending. Although discovery is in the preliminary stages, the Company believes
that the claims are wholly without merit and does not expect that the lawsuit
will have a material adverse effect on the Company's financial position or
results of operations.
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Jebaco Litigation
On May 12, 1995, Jebaco, Inc. ('Jebaco') filed suit in Louisiana State
Court for, among other things: injunctive relief to prevent the Company's
purchase of the Property from Beeber; judicial dissolution of the Company's
original acquisition (from Jebaco) of the Company's option to enter into the
Lake Charles Lease; a judicial determination of the amount, manner of
computation and manner of payment of the Continuing Lease Payments; an
accounting; and monetary damages. See '--Properties--Lake Charles, Louisiana'.
Although a temporary restraining order was originally issued against the
Company's purchase of the Property, the Lousiana State Court on May 24, 1995
dissolved the temporary restraining order and refused to issue a preliminary
injunction, thereby permitting the Company's purchase of the Property. On August
18, 1995, the Company acquired the Property. The Company believes that this
litigation represents a dispute primarily between Jebaco and Beeber. The
Company, Beeber and Jebaco have entered into a settlement agreement to resolve
all issues raised in such litigation. Pursuant to this agreement, a stipulation
of dismissal of all claims will be filed in Louisiana State Court. The
settlement agreement provides that the Company will make payments to Jebaco and
Beeber based upon a revised computation related to the number of passengers who
patronize the Company's Lake Charles riverboats. This revised computation
provides for an aggregate Company payment of $2.95 per passenger, based upon
passenger counts reported to the U.S. Coast Guard.
Settlement of Missouri Litigation
Players, Land Property Associates, Inc. ('LPA') and Roy W. Fischer, Jr.
('Fischer') entered into a Settlement Agreement and Release dated as of June 30,
1995 (the 'Settlement Agreement'). Pursuant to the Settlement Agreement: (i)
Players paid Fischer and LPA $30,000, (ii) three lawsuits between the parties,
as well as two additional lawsuits by Fischer against the Missouri Gaming
Commission were dismissed with prejudice, (iii) Fischer and LPA released all
claims against Players, The Promus Companies, Incorporated ('Promus') and
related persons (including Harrah's), (iv) Players and Promus released all
claims against Fischer, LPA and related persons, (v) all agreements between the
parties (with the exception of one lease which expired July 2, 1995) were
terminated by mutual agreement, (vi) Fischer agreed that he would not take any
'public' action during the next five years that would interfere with either the
Maryland Heights Project or any other Players' gaming project in the State of
Missouri, and (vii) Fischer agreed that he would not be involved during the next
five years with any other gaming facility located in the City of Maryland
Heights, Missouri.
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REGULATORY MATTERS
The Company is subject to state and Federal laws which regulate businesses
generally and the gaming business specifically. Below is a brief description of
some of the more significant regulation to which the Company is subject. All
laws are subject to change and different interpretations. This is especially
true with respect to current laws regulating the gaming industry, since in many
cases these laws and the regulatory agencies that apply them are new. Changes in
laws or their interpretation may result in the imposition of more stringent,
burdensome, or expensive requirements, or the outright prohibition of an
activity.
ILLINOIS GAMING REGULATION
The Riverboat Gambling Act of Illinois (the 'Illinois Riverboat Act')
currently authorizes a five-member Illinois Gaming Board to issue up to ten
riverboat gaming licenses. The Illinois Gaming Board issued an owner's license
to a wholly-owned subsidiary of the Company, for its Metropolis operations in
February 1993. This license is subject to renewal, unless revoked, in February
1996 and annually thereafter. As of the date of this Prospectus, the Illinois
Gaming Board has granted licenses to nine other riverboat owners, some with
multiple boats, with dock sites based in Alton, Aurora, East Peoria, East St.
Louis, Elgin, Rock Island, Joliet (two licensees have a dock site based in
Joliet) and East Dubuque.
Each owner's license granted entitles the licensee to own and operate up to
two riverboats (with a combined maximum of 1,200 gaming participants) and
equipment thereon from a specified dock site. The duration of the license
initially runs for a period of three years. Thereafter, the license is subject
to renewal on an annual basis upon, among other things, a determination by the
Illinois Gaming Board that the licensee continues to meet all of the
requirements of the Illinois Riverboat Act and the Illinois Gaming Board's
Rules. All licensees have a continuing duty to maintain suitability for
licensure. There can be no assurance that the Company's license will be renewed,
although the Company is not aware of any reason why it would not be. A license
does not create a property right, but is a revocable privilege granted by the
State of Illinois contingent upon continuing suitability for licensure. The
licensee bears the burden of rebutting by clear and convincing evidence any
charges raised by the Illinois Gaming Board.
The Illinois Riverboat Act grants the Illinois Gaming Board extensive
jurisdiction, specific powers and duties for the purposes of administering,
regulating and enforcing the system of riverboat gaming. Any riverboat operation
not conducted in compliance with the Illinois Riverboat Act may constitute an
illegal gaming place and consequently may be subject to criminal penalties,
including possible seizure, confiscation and destruction of illegal gaming
devices and seizure and sale of riverboats and dock facilities. The Illinois
Riverboat Act also provides for civil penalties, equal to the amount of gross
receipts derived from wagering on the gaming, whether unauthorized or
authorized, conducted on the date of any violation. The Illinois Gaming Board
may revoke or suspend licenses as the Board may see fit and in compliance with
applicable laws of the State of Illinois regarding administrative procedures and
may suspend an owner's license, without notice or hearing, upon a determination
that the safety or health of patrons or employees is jeopardized by continuing a
riverboat's operation. The suspension may remain in effect until the Illinois
Gaming Board determines that the cause for suspension has been abated and it may
revoke the owner's license upon a determination that the owner has not made
satisfactory progress toward abating the hazard.
A holder of an owner's license is required to obtain all licenses from the
Illinois Gaming Board necessary for the operation of a riverboat, including a
liquor license and a license to prepare and serve food and all other necessary
licenses. All sales, use, occupation and excise taxes which apply to food and
beverages apply to sales aboard riverboats.
All riverboats must be accessible to disabled persons, must be either a
replica of a 19th century Illinois riverboat or be of a casino cruise ship
design, and must comply with applicable Federal and state laws, including U.S.
Coast Guard regulations.
A person employed at a riverboat gaming operation must hold an occupation
license from the Illinois Gaming Board which permits the holder to perform only
activities included within such holder's level of occupation license or any
lower level of occupation license. The Illinois Gaming Board also requires that
officers, directors and other key persons of a gaming operation be licensed. In
addition, a riverboat licensee can
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purchase or lease gaming equipment or supplies only from a supplier who has been
issued a supplier's license by the Illinois Gaming Board.
As a condition to maintaining an owner's license, the licensee must, among
other things, submit detailed financial information and other information to the
Illinois Gaming Board including an annual audit by an independent certified
public accountant, selected by the Administrator of the Illinois Gaming Board,
of the financial transactions and conditions of the total operations of a holder
of an owner's license including the condition of the licensee and its internal
control system. The holder of an owner's license must prepare and send to the
Administrator and the independent certified public accountant selected by the
Administrator a written response to issues raised by such accountant's reports
on (i) the procedures required to be performed by such accountant on a quarterly
basis with respect to certain aspects of the licensee's operations and (ii) the
annual audit referred to in the previous sentence. Among other continuing
obligations, the holder of an owner's license has a duty to promptly disclose
any material changes in the information it provides to the Illinois Gaming
Board. The holder of an owner's license must report promptly to the
Administrator of the Illinois Gaming Board any facts which the holder has
reasonable grounds to believe indicate a violation of law (other than minor
traffic violations) or Illinois Gaming Board Rule or a holder's internal
controls committed by suppliers or licensed employees including, without
limitation the performance of licensed activities different than those permitted
under their license. The duty to disclose to the Illinois Gaming Board changes
in information continues throughout the period of licensure. A duty exists to
promptly disclose the identity of a compensated agent acting on behalf of the
holder of an owner's license with regard to action by the Illinois Gaming Board.
A holder of an owner's license is subject to the imposition of fines,
suspension or revocation of its license for any act or failure to act on the
part of the licensee or its agents or employees that is injurious to the public
health, safety, morals, good order or general welfare of the people of the State
of Illinois or that would discredit or tend to discredit the Illinois gaming
industry or the State of Illinois, including, without limitation, (i) failing to
comply with or make provision for compliance with applicable legal requirements
including the Illinois Riverboat Act, the rules promulgated thereunder or any
other applicable Federal, state or local law or regulation or order or failure
by the holder of an owner's license to comply with or make provisions for
complying with the holder's internal controls; (ii) failing to comply with any
rule, order or ruling of the Illinois Gaming Board or its agents pertaining to
gaming; (iii) receiving goods or services from a person or business entity which
does not hold any required supplier's license; (iv) being suspended or ruled
ineligible for a gaming license or having a gaming license revoked or suspended
in any state or gaming jurisdiction; (v) associating with, either socially or in
business affairs, or employing persons of notorious or unsavory reputation or
who have extensive police records or who have failed to cooperate with any
officially constituted investigatory or administrative body if public confidence
and trust in gaming would thereby be adversely affected; and (vi) employing in
any Illinois riverboat's gaming operations any person known to have been found
guilty of cheating or using any improper device in connection with any game.
Minimum and maximum wagers on games are not established by regulation but
are left to the discretion of the licensee; however, wagering may not be
conducted with money or other negotiable currency. Riverboat cruises are limited
to a duration of four hours, and pursuant to the language of the Illinois
Riverboat Act, no gaming may be conducted while the riverboat is docked.
Illinois Gaming Board Rule, Section 3000.500, currently permits gaming during
the 30-minute time periods at the beginning and end of a cruise while the
passengers are embarking and disembarking (total gaming time per cruise is
limited to four hours, however, including the pre- and post-docking periods). In
addition, pursuant to Illinois Gaming Board Rule, Section 3000.510, dockside
gaming is permitted if the captain of the riverboat reasonably determines that
it is unsafe to cruise due to inclement weather, mechanical or structural
problems or river icing. Recent pronouncements by the Illinois Gaming Board
indicate that the explanations for failure to cruise pursuant to Illinois Gaming
Board Rule, Section 3000.510 will be scrutinized and that any abuse of the rule
will result in disciplinary actions, which may include, among other things, any
of the following: cancellation of future cruises, penalties, fines and
suspensions or revocation of license. In such event, the riverboat must be
cleared at least once every four hours, at which time a new gaming session may
commence; patrons may leave the vessel at any time but may only board the vessel
during the first 30 minutes of the gaming session. No person under the age of 21
is permitted to wager, and wagers may only be taken from a person present on a
licensed riverboat. With respect to electronic gaming devices, the payout
percentage may not be less than 80% nor more than 100%.
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The Illinois Riverboat Act imposes a 20% wagering tax on adjusted gross
receipts from gaming. The tax imposed is to be paid by the licensed owner to the
Illinois Gaming Board on the day after the gaming day when the wagers were made.
The Illinois legislation also requires that licensees pay a $2.00 admission tax
for each person admitted to a gaming cruise.
An ownership interest in a business entity (other than a publicly traded
corporation) which has an interest in a holder of an owner's license may only be
transferred or pledged as collateral with leave of the Illinois Gaming Board.
Any person or entity who or which, individually or in association with others,
acquires directly or indirectly, beneficial ownership of more than 5% of any
class of voting securities or non-voting securities convertible into voting
securities of a publicly traded corporation which holds an ownership interest or
a beneficial interest in the holder of an owner's license is required to file a
Personal Disclosure Form 1. (The Illinois Gaming Board, however, takes the
position that it can require any individual or entity seeking a transfer of an
ownership interest in an owner's license to file a personal disclosure Form 1.)
The Personal Disclosure Form 1 forms the basis of investigation by the Illinois
Gaming Board to determine suitability of the person or entity seeking transfer
of an ownership interest. If the Illinois Gaming Board denies an application for
such a transfer, commencing as of the date the Illinois Gaming Board issues a
notice that it denies such application, it will be unlawful for such applicant
to receive any dividends or interest on his shares, to exercise, directly or
indirectly, any right conferred by such shares, or to receive any remuneration
from any person or entity holding any license under the Illinois Riverboat Act
for services rendered. If the Illinois Gaming Board denies an application for
such a transfer and if no hearing is requested or if the Illinois Gaming Board
issues a final order of disqualification, the holder of an owner's license shall
purchase all of the disqualified person's or entity's shares at the lesser of
either the market price or the purchase price for such shares.
A holder of an owner's license can only make distributions to stockholders
to the extent such distributions would not impair the financial viability of the
gaming operation. Factors to be considered should include but not be limited to
the following: (i) working capital requirements, (ii) debt service requirements,
(iii) repairs and maintenance requirements and (iv) capital expenditure
requirements.
Holders of an owner's license must immediately inform the Illinois Gaming
Board and obtain formal approval from the Illinois Gaming Board whenever a
change is proposed in the following areas: key persons; type of entity; equity
and debt capitalization of entity; investors and/or debt holders; sources of
funds; applicant's economic development plan; riverboat capacity or significant
design change; gaming positions; anticipated economic impact; or pro forma
budgets and financial statements.
The Company is subject to certain risks associated with the promulgation of
new or revised rules that could adversely affect the Company's operations. The
Illinois Riverboat Act may be amended, and new or revised rules may be
promulgated, changing the number of available licenses or gaming locations in
Illinois, or otherwise changing Illinois gaming regulations. Although no new or
revised rules have been promulgated in the last 20 months, no assurance can be
given that no such rules would be promulgated, and the Company has no control
over such developments. In addition, uncertainty exists from time to time
regarding the Illinois gaming regulatory environment due to the limited
experience in interpreting the Illinois Riverboat Act and the rules promulgated
thereunder. For example, changes in membership of the Illinois Gaming Board
resulted in a vote being taken to prohibit any dockside gambling which was
narrowly defeated by a vote of three to two. Due to the relative novelty of this
regulatory environment, there can be no assurance that adverse regulatory
developments will not occur in the future or that adverse interpretations of
rules will not be issued.
LOUISIANA GAMING REGULATION
In July 1991, the Louisiana legislature adopted legislation permitting
certain types of gaming activity on certain rivers and waterways in Louisiana.
The legislation granted authority to supervise riverboat gaming activities to
the Louisiana Riverboat Gaming Commission and the Riverboat Gaming Enforcement
Division of the Louisiana State Police (the 'Louisiana Enforcement Division').
The Louisiana Riverboat Gaming Commission is authorized to hear and determine
all appeals relative to the granting, suspension, revocation, condition or
renewal of all licenses, permits and applications. In addition, the Louisiana
Riverboat Gaming Commission must establish regulations concerning authorized
routes, duration of excursions, minimum levels of insurance, construction of
riverboats and periodic inspections. The Louisiana Enforcement Division is
authorized
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to investigate applicants and issue licenses, investigate violations of the
statute and conduct continuing reviews of gaming activities.
The statute authorizes issuance of up to 15 licenses to conduct gaming
activities on a riverboat of new construction in accordance with applicable law.
However, no more than six licenses may be granted to riverboats operating from
any one parish.
In issuing a license, the Louisiana Enforcement Division must find that the
applicant is a person of good character, honesty and integrity and a person
whose prior activities, criminal record, if any, reputation, habits, and
associations do not pose a threat to the public interest of the State of
Louisiana or to the effective regulation and control of gaming, or create or
enhance the dangers of unsuitable, unfair or illegal practices, methods and
activities in the conduct of gaming or the carrying on of business and financial
arrangements in connection therewith. The Louisiana Enforcement Division will
not grant a license unless it finds that: (i) the applicant is capable of
conducting gaming operations, which means that the applicant can demonstrate the
capability, either through training, education, business experience, or a
combination of the above, to operate a gaming casino; (ii) the proposed
financing of the riverboat and the gaming operations is adequate for the nature
of the proposed operation and from a source suitable and acceptable to the
Louisiana Enforcement Division; (iii) the applicant demonstrates a proven
ability to operate a vessel of comparable size, capacity and complexity to a
riverboat so as to ensure the safety of its passengers; (iv) the applicant
submits a detailed plan of design of the riverboat in its application for a
license; (v) the applicant designates the docking facilities to be used by the
riverboat; (vi) the applicant shows adequate financial ability to construct and
maintain a riverboat; and (vii) the applicant has a good faith plan to recruit,
train and upgrade minorities in all employment classifications.
Certain persons affiliated with a riverboat gaming licensee, including
directors and officers of the licensee, directors and officers of any holding
company of the licensee involved in gaming operations, persons holding five
percent or greater interests in the licensee, and persons exercising influence
over a licensee ('Affiliated Gaming Persons'), are subject to the application
and suitability requirements of the Louisiana gaming law.
The Louisiana gaming law specifies certain restrictions and conditions
relating to the operation of riverboat gaming, including the following: (i)
gaming is not permitted while a riverboat is docked, other than the forty-five
minutes between excursions, and during times when dangerous weather or water
conditions exist; (ii) each round-trip riverboat cruise may not be less than
three nor more than eight hours in duration, subject to specified exceptions;
(iii) agents of the Louisiana Enforcement Division are permitted on board at any
time during gaming operations; (iv) gaming devices, equipment and supplies may
only be purchased or leased from permitted suppliers; (v) gaming may only take
place in the designated gaming area while the riverboat is upon a designated
river or waterway; (vi) gaming equipment may not be possessed, maintained or
exhibited by any person on a riverboat except in the specifically designated
gaming area, or a secure area used for inspection, repair or storage of such
equipment; (vii) wagers may be received only from a person present on a licensed
riverboat; (viii) persons under 21 are not permitted in designated gaming areas;
(ix) except for slot machine play, wagers may be made only with tokens, chips or
electronic cards purchased from the licensee aboard a riverboat; (x) licensees
may only use docking facilities and routes for which they are licensed and may
only board and discharge passengers at the riverboat's licensed berth; (xi)
licensees must have adequate protection and indemnity insurance; (xii) licensees
must have all necessary Federal and state licenses, certificates and other
regulatory approvals prior to operating a riverboat; and (xiii) gaming may only
be conducted in accordance with the terms of the license and the rules and
regulations adopted by the Louisiana Enforcement Division.
An initial license to conduct riverboat gaming operations is valid for a
term of five years. The Company was issued an initial operator's license by the
Louisiana Enforcement Division on December 6, 1993. The Louisiana gaming law
provides that a renewal application for the period succeeding the initial five
year term of the operator's license must be made to the Louisiana Enforcement
Division. The application for renewal consists of a statement under oath of any
and all changes in information, including financial information, provided in the
previous application.
The transfer of a license or permit or an interest in a license or permit
is prohibited. The sale, purchase, assignment, transfer, pledge or other
hypothecation, lease, disposition or acquisition (a 'Transfer') by any person of
securities which represent 5% or more of the total outstanding shares issued by
a corporation that holds a license is subject to Louisiana Enforcement Division
disapproval. A security issued by a corporation that holds a license must
generally disclose these restrictions. Prior Louisiana Enforcement Division
approval is required for
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the Transfer of any ownership interest of 5% or more in any non-corporate
licensee or for the Transfer of any 'economic interest' of 5% or more in any
licensee or Affiliated Gaming Person. An 'economic interest' is defined for
purposes of a Transfer as any interest whereby a person receives or is entitled
to receive, by agreement or otherwise, a profit, gain, thing of value, loan,
credit, security interest, ownership interest or other economic benefit.
A licensee must notify the Louisiana Enforcement Division of any
withdrawals of capital, loans, advances or distributions in excess of 5% of
retained earnings for a corporate licensee, or of capital accounts for a
partnership or limited liability company licensee, upon completion of any such
transaction. No prior approval of any such withdrawal, loan, advance or
distribution is required, but any such transaction is ineffective if disapproved
by the Louisiana Enforcement Division within 120 days after the required
notification. In addition, the Louisiana Enforcement Division may issue an
emergency order for not more than 10 days prohibiting payment of profits, income
or accruals by, or investments in, a licensee.
Riverboat gaming licensees and their Affiliated Gaming Persons are required
to notify the Louisiana Enforcement Division within thirty days after the
receipt by any such persons of any loans or extensions of credit. The Louisiana
Enforcement Division is required to investigate the reported loan or extension
of credit, and to either approve or disapprove the transaction. If disapproved,
the loan or extension of credit must be rescinded by the licensee or Affiliated
Gaming Person. The Company is an Affiliated Gaming Person of its Louisiana
subsidiary that is the licensee of the Players Lake Charles Riverboat and the
Players Star Riverboat. On March 23, 1995, the Company received from the
Louisiana Enforcement Division approval of the sale and issuance of the Notes,
the execution and delivery of a Guarantee by the Company's Louisiana
subsidiaries, and the making and repayment of loans from the Company to its
Louisiana subsidiaries, in amounts up to the amount of the Offering. Any other
advances by the Company to its Louisiana subsidiaries in the form of loans or
other intercompany indebtedness are subject to the disapproval power of the
Louisiana Enforcement Division.
Fees for conducting gaming activities on a riverboat include (i) $50,000
per riverboat for the first year of operation and $100,000 per year per
riverboat thereafter plus (ii) 18 1/2% of net gaming proceeds.
In 1995, Louisiana enacted legislation authorizing the governing authority
of Calcasieu Parish to levy an additional admission fee of fifty cents per
passenger, the proceeds of which will be used primarily to fund education in the
parish. This increase is applicable to the Company's two Lake Charles
riverboats.
In July 1991, Louisiana also authorized operation of VLTs at various types
of facilities in the state, including bars, truckstops, racetracks and off-track
betting parlors.
Proposals to amend or supplement Louisiana's riverboat gaming statute are
frequently introduced in the Louisiana state legislature. No assurances can be
given that changes in Louisiana gaming law will not occur, or that such changes
will not have an adverse impact on the Company's business in Louisiana.
NEVADA GAMING REGULATION
The ownership and operation of casino gaming facilities in Nevada are
subject to: (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the 'Nevada Act'); and (ii) various local ordinances
and regulations. Gaming operations in Nevada are subject to the licensing and
regulatory control of the Nevada Gaming Commission ('Nevada Commission'), the
Nevada State Gaming Control Board ('Nevada Board') and various other county and
city regulatory agencies, including the City of Mesquite, collectively referred
to as the 'Nevada Gaming Authorities.'
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) providing a source of state and local revenues
through taxation and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming operations.
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The Company is registered with the Nevada Commission as a publicly traded
corporation (a 'Registered Corporation') and has been found suitable to own the
stock of Players Nevada. Players Nevada is licensed by the Nevada Gaming
Authorities to conduct nonrestricted gaming operations at the Players Island
Resort and is a corporate licensee ('Corporate Licensee') under the terms of the
Nevada Act. No person may become a stockholder of, or receive any percentage of
profits from, a Corporate Licensee without first obtaining licenses and
approvals from the Nevada Gaming Authorities.
The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or Players
Nevada in order to determine whether such individual is suitable or should be
licensed as a business associate of a Corporate Licensee. Officers, directors
and certain key employees of Players Nevada are required to file applications
with the Nevada Gaming Authorities and have been required to be licensed or
found suitable by the Nevada Gaming Authorities. Officers, directors and key
employees of the Company who are actively and directly involved in the
activities of the Corporate Licensee may be required to be licensed or found
suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may
deny an application for licensing for any cause which they deem reasonable. A
finding of suitability is comparable to licensing, and both require submission
of detailed personal and financial information followed by a thorough
investigation. The applicant for licensing or a finding of suitability must pay
all the costs of the investigation. Changes in licensed positions must be
reported to the Nevada Gaming Authorities and in addition to their authority to
deny an application for a finding of suitability or licensure, the Nevada Gaming
Authorities have jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or Players Nevada, the companies involved would
have to sever all relationships with such person. In addition, the Nevada
Commission may require the Company or Players Nevada to terminate the employment
of any person who refuses to file appropriate applications. Determinations of
suitability or of questions pertaining to licensing are not subject to judicial
review in Nevada.
The Company and Players Nevada are required to submit detailed financial
and operating reports to the Nevada Commission. Substantially all material
loans, leases, sales of securities and similar financing transactions by Players
Nevada will be required to be reported to or approved by the Nevada Commission.
If it were determined that the Nevada Act was violated by Players Nevada,
the gaming licenses it holds could be limited, conditioned, suspended or
revoked, subject to compliance with certain statutory and regulatory procedures.
In addition, the Company, Players Nevada and the persons involved could be
subject to substantial fines for each separate violation of the Nevada Act at
the discretion of the Nevada Commission. Further, a supervisor could be
appointed by the Nevada Commission to operate the Players Island Resort and,
under certain circumstances, earnings generated during the supervisor's
appointment (except for reasonable rental value of the casino) could be
forfeited to the State of Nevada. Limitation, conditioning or suspension of the
licenses of Players Nevada could (and revocation of any license of Players
Nevada would) materially adversely affect the Company.
Any beneficial holder of a Registered Corporation's voting securities,
regardless of the number of shares owned, may be required to file an
application, be investigated, and have his suitability as a beneficial holder of
the Registered Corporation's voting securities determined if the Nevada
Commission has reason to believe that such ownership would otherwise be
inconsistent with the declared policies of the State of Nevada. The applicant
must pay all costs of investigation incurred by the Nevada Gaming Authorities in
conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of a
Registered Corporation's voting securities to report the acquisition to the
Nevada Commission. The Nevada Act requires that beneficial owners of more than
10% of a Registered Corporation's voting securities apply to the Nevada
Commission for a finding of suitability within thirty days after the Chairman of
the Nevada Board mails the written notice requiring such filing. Under certain
circumstances, an 'institutional investor,' as defined in the Nevada Act, which
acquires more than 10%, but not more than 15%, of a Registered Corporation's
voting securities may apply to the Nevada Commission for a waiver of such
finding of suitability if such institutional investor holds the voting
securities for
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investment purposes only. An institutional investor shall not be deemed to hold
voting securities for investment purposes unless the voting securities were
acquired and are held in the ordinary course of business as an institutional
investor and not for the purpose of causing, directly or indirectly, the
election of a majority of the members of the board of directors of the
Registered Corporation, any change in the Registered Corporation's corporate
charter, bylaws, management, policies or operations of the Registered
Corporation, or any of its gaming affiliates, or any other action which the
Nevada Commission finds to be inconsistent with holding the Registered
Corporation's voting securities for investment purposes only. Activities which
are not deemed to be inconsistent with holding voting securities for investment
purposes only include: (i) voting on all matters voted on by stockholders; (ii)
making financial and other inquiries of management of the type normally made by
securities analysts for informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other activities as the
Nevada Commission may determine to be consistent with such investment intent. If
the beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within thirty days after being ordered to do so by the Nevada Commission
or the Chairman of the Nevada Board, may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the voting securities
of the Company beyond such period of time as may be prescribed by the Nevada
Commission may be guilty of a criminal offense. The Company is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with the Company or Players
Nevada, it (i) pays that person any dividend or interest upon voting securities
of the Company, (ii) allows that person to exercise, directly or indirectly, any
voting right conferred through securities held by that person, (iii) pays
remuneration in any form to that person for services rendered or otherwise, or
(iv) fails to pursue all lawful efforts to require such unsuitable person to
relinquish his voting securities including, if necessary, the immediate purchase
of said voting securities for cash at fair market value.
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation, such as the holders of the Notes, to
file applications, be investigated and be found suitable to own the debt
security of a Registered Corporation. If the Nevada Commission determines that a
person is unsuitable to own such security, then pursuant to the Nevada Act, the
Registered Corporation can be sanctioned, including the loss of its approvals,
if without the prior approval of the Nevada Commission, it: (i) pays the
unsuitable person any dividend, interest, or any distribution whatsoever; (ii)
recognizes any voting right by such unsuitable person in connection with such
securities; (iii) pays the unsuitable person remuneration in any form; or (iv)
makes any payment to the unsuitable person by pay of principal, redemption,
conversion, exchange, liquidation, or similar transaction.
The Company is required to maintain a current stock ledger in Nevada which
may be examined by the Nevada Gaming Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be required
to disclose the identity of the beneficial owner of the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial owner. The Company is
also required to render maximum assistance to the Nevada Board, upon its
request, to determine the identities of any of its securityholders. The Nevada
Commission has the power to require the stock certificates of the Company to
bear a legend indicating that the securities are subject to the Nevada Act.
However, to date, the Nevada Commission has not imposed such a requirement on
the Company.
The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or proceeds therefrom
are intended to be used to construct, acquire or finance gaming facilities in
Nevada, or to retire or extend obligations incurred for such purposes. The
exchange of the Old Notes for the New Notes (the 'Exchange') qualifies as a
public offering (as such term is defined in the Nevada Act). On June 21, 1995,
the Nevada Commission approved the Exchange and in connection therewith, also
approved (i) the Players Nevada Guarantee of the Notes, (ii) the hypothecation
of the assets of Players Nevada as security for the New Notes and (iii) the
placement of restrictions upon, and the agreement not to encumber, the equity
securities of Players Nevada. Approval of a public offering does not constitute
a finding,
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recommendation or approval by the Nevada Commission or the Nevada Board as to
the accuracy or adequacy of the Prospectus or the investment merits of the
securities offered. Any representation to the contrary is unlawful.
Changes in the control of a Registered Corporation through merger,
consolidation, stock or asset acquisitions, management or consulting agreements,
or any act or conduct by a person whereby he obtains control, may not occur
without the prior approval of the Nevada Commission. Entities seeking to acquire
control of a Registered Corporation must satisfy the Nevada Board and Nevada
Commission in a variety of stringent standards prior to assuming control of such
Registered Corporation. The Nevada Commission may also require controlling
stockholders, officers, directors and other persons having a material
relationship or involvement with the entity proposing to acquire control, to be
investigated and licensed as part of the approval process relating to the
transaction.
The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada corporate gaming licensees, and Registered Corporations
that are affiliated with those operations, may be injurious to stable and
productive corporate gaming. The Nevada Commission has established a regulatory
scheme to ameliorate the potentially adverse effects of these business practices
upon Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming licensees and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Registered Corporation can make exceptional repurchases of
voting securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Registered
Corporation's stockholders for the purposes of acquiring control of the
Registered Corporation.
License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the state of Nevada and to the
counties and cities in which the Corporate Licensee's operations are conducted.
Depending upon the particular fee or tax involved, these fees and taxes are
payable either monthly, quarterly or annually and are based upon either: (i) a
percentage of the gross revenues received up to a maximum of 6.25%; (ii) the
number of gaming devices operated; or (iii) the number of table games operated.
A casino entertainment tax is also paid by casino operations where entertainment
is furnished in connection with the selling of food or refreshments.
Any person who is licensed, required to be licensed, registered, required
to be registered, or is under common control with such persons (collectively,
'Licensees'), and who proposes to become involved in a gaming venture outside of
Nevada, is required to deposit with the Nevada Board, and thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation by
the Nevada Board of their participation in such foreign gaming. The revolving
fund is subject to increase or decrease in the discretion of the Nevada
Commission. Thereafter, Licensees are required to comply with certain reporting
requirements imposed by the Nevada Act. Licensees are also subject to
disciplinary action by the Nevada Commission if they knowingly violate any laws
of the foreign jurisdiction pertaining to the foreign gaming operation, fail to
conduct the foreign gaming operation in accordance with the standards of honesty
and integrity required of Nevada gaming operations, engage in activities that
are harmful to the state of Nevada or its ability to collect gaming taxes and
fees, or employ a person in the foreign operation who has been denied a license
or finding of suitability in Nevada on the ground of personal unsuitability.
MISSOURI GAMING REGULATION
In November 1992, the voters of Missouri approved a referendum authorizing
riverboat gaming in Missouri. In 1993, the Missouri Legislature enacted
legislation which substantially revised the referendum legislation regarding
riverboat gaming and its regulation (the 'Missouri Gaming Act'). The Missouri
Gaming Act established the Missouri Gaming Commission, which has broad
jurisdiction over and supervisory powers concerning gaming operations conducted
under the Missouri Gaming Act. Following a challenge to legislation authorizing
riverboat casino gaming, a January 1994 Missouri Supreme Court ruling created
uncertainties regarding the extent to which casino gaming is constitutional in
Missouri. In February 1994, the Missouri legislature passed legislation which
would permit the voters to amend the State Constitution to permit legislation
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reauthorizing riverboat casino gaming consistent with the State Constitution.
The vote on the proposed State Constitutional amendment was held in April 1994
to permit games of chance on riverboat casinos. In the April 1994 vote, the
State Constitutional amendment was narrowly defeated. As a result of the
Missouri legislature's actions in February 1994, several municipalities in
Missouri which had previously approved local ordinances permitting gaming,
including the City of Maryland Heights resubmitted the local gaming activities
ordinances to the voters in April 1994 as well. The Maryland Heights ordinance
was approved by municipal voters in the April 1994 vote. Subsequently, at the
statewide general election held November 8, 1994, a second proposal to amend the
Missouri Constitution to permit games of chance on riverboats and floating
facilities on the Missouri and Mississippi Rivers was adopted. As a result
thereof, effective December 8, 1994, reel slot machines and other games of
chance were authorized for use in Missouri casinos.
Under the Missouri Gaming Act, gaming is permitted in Missouri only on the
Missouri and Mississippi Rivers. The Missouri Gaming Act calls for licensure of
owners (Class A license), operators (Class B license), suppliers and
gaming-related occupations. There is no statewide numerical limit to the number
of licenses which may be granted. As a result of the Missouri legislature's May
1994 amendments to the Missouri Gaming Act, prior uncertainty regarding whether
any city or county outside of the two major metropolitan areas of Missouri (St.
Louis/St. Louis County and the Kansas City metropolitan area) may be granted
more than one license has been removed. Under the May 1994 amendments to the
Missouri Gaming Act, any city or county may be granted more than one license if
the 'home dock' city or county has authorized more than one excursion gaming
boat. However, within all cities and counties in Missouri the Missouri Gaming
Commission has the ultimate responsibility for setting the number, location and
type of licensed boats. As noted above, excursion gaming boats also must be
authorized by the local home dock city or county.
On May 24, 1995, the Company's amended application for a gaming license at
the Maryland Heights Project was filed with the Missouri Gaming Commission. The
Missouri Gaming Commission is considering licensing applications for review in
selected pools of three and has chosen the Company's and Harrah's applications
for consideration in the next such pool. Such applications are currently under
investigation, but no assurances can be given when the Missouri Gaming
Commission or any other governmental agency will act on the applications,
whether all approvals will be obtained or whether any unusually burdensome
restrictions may be imposed on the Company or Harrah's in order to obtain such
approvals. As of the date of this Prospectus, six gaming licenses have been
issued by the Missouri Gaming Commission, two for the metropolitan St. Louis
area in the eastern part of the state, two for the Kansas City area
(approximately 250 miles west of St. Louis), one for St. Joseph, in the
northwestern part of Missouri, and one for Caruthersville, in the southeastern
part of Missouri. The two licenses in the St. Louis area are based in the City
of St. Louis, approximately 20 miles east of the Company's proposed development
in Maryland Heights, and in St. Charles, across the Missouri River from the
Company's proposed Maryland Heights development. If the Harrah's parcel is
ultimately developed for the Maryland Heights Project, such project would be one
mile across the river from the site of the competing St. Charles licensee. See
'Business -- Properties -- Maryland Heights, Missouri.' The City of Maryland
Heights previously passed ordinances permitting two riverboat casinos to be
based within its city limits and giving preliminary local approval to the
proposed projects of both the Company and Harrah's. The Missouri Gaming Act does
not limit the statewide number of licenses that may be granted. Under the
Missouri Gaming Act, as amended by the Missouri Legislature in May 1994 and as
signed into law by the Missouri Governor shortly thereafter (the 'Amended
Missouri Gaming Act'), multiple riverboat casinos can be licensed for operation
in Maryland Heights. No assurance can be given that the Missouri Gaming
Commission will not limit the number of licenses granted to Maryland Heights, to
the St. Louis metropolitan area in which Maryland Heights is located, or on a
statewide basis.
The Missouri Gaming Act provides a maximum loss limit of $500 per
individual player per gaming excursion. Gaming excursions are required by
regulation to be no less than two hours and no more than four hours in duration.
Excursion gaming boats are required to cruise, unless the Missouri Gaming
Commission determines under applicable criteria to permit gaming at a
continuously docked boat. Such criteria include, among other items, danger to
the boat's passengers because of the location of the dock or excursion cruising
conditions, disruption of interstate commerce, violation of another state's laws
or Federal law, or possible interference with railway or barge transportation.
The U.S. Coast Guard has previously advised the Missouri Gaming Commission
that circumstances generally prevailing on the Missouri River, on which the
Company's excursion gaming boat facility will be
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located if its application is granted, militate against cruising riverboats.
While the Coast Guard has refused to instruct the Missouri Gaming Commission
that all Missouri River operations be continuously docked riverboats, the U.S.
Coast Guard has made clear its need to be advised of all plans to deal with risk
factors from riverboat cruising operations. The U.S. Coast Guard, through the
U.S. Army Corps of Engineers permit process, can veto a cruising riverboat
gaming project for failing to meet its safety requirements. Additionally,
Missouri Gaming Commission regulations provide for dockside operation even for a
cruising riverboat under circumstances of inclement weather, mechanical
difficulty or declaration by the U.S. Army Corps of Engineers that navigation on
the Missouri River is unsafe. Traditionally, between the months of December and
April the U.S. Army Corps of Engineers has 'closed' the Missouri River by
failing to warrant the navigational channel due to low water levels. The
Missouri Gaming Commission has indicated that dockside operation is expected
during this period.
Licensees must establish financial responsibility sufficient to meet
adequately the requirements of the proposed enterprise. Additionally, the
Missouri Gaming Commission's regulations require that if the Company's
application is granted, the Company's licensed subsidiary would be prohibited
from allowing withdrawals of capital by, or making loans, advances, or
distributions of any type of assets to, its owner(s), in excess of 5% of such
entity's accumulated earnings without Missouri Gaming Commission approval.
The Missouri Gaming Act also requires that the excursion gaming boat
resemble historic Missouri riverboats, encourages use of Missouri resources,
goods and services in the operation of the boat, and requires that the boat
provide for nongaming areas, food service and a Missouri theme gift shop. Use of
the space on any vessel and operating criteria are determined in accordance with
rules and regulations of the U.S. Coast Guard. There is no size limit on
Missouri gaming boats and no minimum or maximum space prescribed for gaming
areas.
The Missouri Gaming Act directly subjects the gaming enterprises to various
Missouri taxes. An admission fee of $2.00 per ticket per excursion must be paid
to the Missouri Gaming Commission. Licensees may charge any admission fee above
the $2.00 amount that they desire. Gaming enterprises in Missouri are also
subject to an 'adjusted gross receipts tax' equal to 20 percent of the gross
receipts from licensed gaming games and devices less winnings paid to wagerers.
Owners/operators are subject to all other income taxes, sales taxes, earnings
taxes, use taxes, property taxes or any other tax or fee levied by local, state
or Federal governments.
Transfer of a Class A or Class B gaming license (the type of licenses
applied for in connection with the Maryland Heights application) is not
permitted without approval of the Missouri Gaming Commission, nor may such
interests be pledged as collateral to other than a regulated bank or savings and
loan association without the approval of the Missouri Gaming Commission. No
transfer of an interest of 5% or greater, directly or indirectly, in a publicly
traded company holding a Class A or Class B license shall occur without the
Missouri Gaming Commission's approval. Additionally, the Missouri Gaming
Commission may require a licensee to maintain cash or cash equivalents, in an
amount sufficient to protect patrons against defaults in gaming debts owed by
the licensee.
Application fees are based upon costs of investigation and approval of
licenses. The minimum nonrefundable application fee is $50,000. The initial
owner's Class A license granted and the first subsequent license renewal of an
excursion gaming boat operator is for a period of one year. Thereafter, license
renewal periods are every two years. The annual fee for licensure is $25,000.
KENTUCKY GAMING REGULATION
The Company presently owns and operates Players Bluegrass Downs, a
thoroughbred race track located in Paducah, Kentucky. Pursuant to the Kentucky
statutes governing horseracing, the Kentucky Racing Commission (the 'Racing
Commission') has plenary power to promulgate administrative regulations
prescribing conditions under which all legitimate horse racing and wagering
thereon is conducted. The Racing Commission issues race track licenses on an
annual basis and awards racing dates subsequent to an annual application
required to be filed with the Racing Commission. The Racing Commission may
revoke or suspend a license if the Racing Commission has reason to believe that
any provision of the Kentucky statutes, administrative regulations, or
conditions established by the Racing Commission, has not been satisfied.
PROPOSED TEXAS GAMING LEGISLATION
Since the Players Lake Charles Riverboat began operating on December 8,
1993, more than half of its patrons have come from Texas, with a significant
portion coming from the metropolitan Houston area. Although casino gaming is not
currently permitted in Texas, and the Attorney General of Texas has issued an
opinion that
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gaming in Texas would require an amendment to the State's Constitution, the
Texas legislature has considered various proposals to authorize casino gaming
and two bills related to gaming were presented in the most recent legislative
session that concluded on May 29, 1995. See 'Business--Lake Charles Operations.'
Additional bills may be introduced from time to time whenever the legislature is
in session. Since the Texas legislature (which meets every two years in
odd-numbered years) did not pass legislation to amend the Texas State
Constitution during the 1995 regular session, such legislation will have to
await the next regular session in 1997, or a special session of the legislature.
Special sessions can only be called by the Governor for matters that were
pending in the regular legislative session. Governor George Bush has taken a
public position against legalized casino gaming. A constitutional amendment
requires a two-thirds vote of those present and voting in each house of the
Texas state legislature and approval by the electorate at a referendum.
CERTAIN REQUIRED APPROVALS ASSOCIATED WITH THE BANK FACILITY
Certain aspects of the Bank Facility are subject to required disclosure to,
approval of or disapproval by the respective Gaming Authorities in the states in
which the Company conducts or proposes to conduct gaming operations. The Bank
Facility may be reviewed as part of the Company's application for a gaming
license in a jurisdiction, or if previously licensed, as a separate review item.
The disclosure, review and approval requirements for the Bank Facility in
Illinois, Louisiana, Nevada and Missouri are substantially similar to the
disclosure, review and approval requirements applicable to the Notes and the
Guarantees except that additional disclosure, review and/or approval
requirements may apply with respect to the security for the Bank Facility to be
provided by the Company and its subsidiaries. The Bank Facility has been
approved by the Gaming Authorities in Illinois, Nevada and Louisiana. No
assurance can be given that the Bank Facility and the proposed security for the
Bank Facility will receive all required approvals, that such approvals will be
received on a timely basis or that the failure to obtain all required approvals
will not adversely impact the Bank Facility or the Company's ability to make
borrowings thereunder. See '--Missouri Gaming Regulation.'
U.S. COAST GUARD
Each cruising riverboat also is regulated by the U.S. Coast Guard, whose
regulations affect boat design and stipulate on-board facilities, equipment and
personnel (including requirements that each vessel be operated by a minimum
complement of licensed personnel) in addition to restricting the number of
persons who can be aboard the boat at any one time. All vessels operated by the
Company must hold a Certificate of Inspection. Loss of the Certificate of
Inspection of a vessel would preclude its use as an operating riverboat. The
vessel must be drydocked periodically for inspection of the hull, which will
result in a loss of service that can have an adverse effect on the Company. For
vessels of the Company's type, the inspection cycle is every five years. Less
stringent rules apply to permanently moored vessels such as the dockside barges
used by the Company. The Company believes that these regulations, and the
requirements of operating and managing cruising gaming vessels generally, make
it more difficult to conduct riverboat gaming than to operate land-based
casinos.
All shipboard employees of the Company employed on U.S. Coast Guard
regulated vessels, even those who have nothing to do with the actual operation
of the vessel, such as dealers, cocktail hostesses and security personnel, may
be subject to the Jones Act which, among other things, exempts those employees
from state limits on workers' compensation awards. The Company believes that it
has adequate insurance to cover employee claims.
SHIPPING ACT OF 1916
In order for the Company's vessels to have United States flag registry, the
Company must maintain 'United States citizenship' as defined in the Shipping Act
of 1916, as amended (the 'Shipping Act'), and other applicable statutes. A
corporation operating any vessel in the coastwise trade, such as the Company, is
not considered a United States citizen unless, among other things, United States
citizens own 75% of its outstanding capital stock.
REQUIRED DIVESTITURE OF COMMON STOCK
As noted above, there are various state and Federal regulations on the
ownership of the Company's Common Stock. The Company's Articles of Incorporation
and By-laws provide that if any governmental commission, regulatory authority,
entity, agency or instrumentality (collectively, an 'Authority') having
jurisdiction over the Company or any affiliate of the Company or that has
granted a license, certificate of authority, franchise or similar approval
(collectively, a 'License') to the Company or any affiliate of the Company
orders or requires any stockholder to divest any or all of the shares owned by
such stockholder (a 'Divestiture Order') and the stockholder fails to do so by
the date required by the Divestiture Order (unless
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the Divestiture Order is stayed), the Company will have the right to acquire the
shares from the stockholder that the stockholder failed to divest as required by
such Divestiture Order. If, after reasonable notice and an opportunity for
affected parties to be heard, any Authority determines that continued ownership
of the Company's Common Stock by any stockholder shall be grounds for the
revocation, cancellation, non-renewal, restriction or withholding of any License
granted to or applied for by the Company or any affiliate of the Company, such
stockholder shall divest the shares that provide the basis for such
determination, and if such stockholder fails to divest shares within 10 days
after the date the Authority's determination becomes effective (unless the
determination is stayed), the Company shall have the right to acquire such
shares from the stockholder. If the Company determines that persons who are not
citizens of the United States as determined under the Shipping Act or other
applicable statutes (the 'Foreign Citizens') own more than 25% of the Company's
outstanding Common Stock, the Company may require the Foreign Citizen(s) who
most recently acquired the shares that bring total Foreign Citizen ownership to
more than 25% of the outstanding Common Stock (the 'Excess Shares') to divest
the Excess Shares to persons who are United States citizens. If the Foreign
Citizen(s) so directed fail to divest the Excess Shares to United States
citizens within 30 days after the date on which the Company gives a written
notice to the Foreign Citizen(s) to divest the Excess Shares, the Company shall
have the right to acquire the shares that the Foreign Citizen failed to divest
as required by the Company's notice.
Whenever the Company has the right to acquire shares from a stockholder
pursuant to the provisions described in the preceding paragraph, the Company
will pay the stockholder $.10 per share or such higher price as may be required
by applicable legal requirements. Some state gaming regulations require a
purchase price equal to the fair market value of the shares under certain
circumstances described above. If there is no other applicable legal
requirement, any amount payable to the stockholder in excess of $.10 per share
will be paid in five equal annual installments with interest at the lower of the
prime rate or the LIBOR rate, as published from time to time in the Wall Street
Journal.
When any Divestiture Order is entered or when the Company tenders the
consideration for which it may acquire shares, as described above, the shares in
question shall no longer be entitled to any voting, dividend or other rights
until such time as they have been appropriately divested. The foregoing
provisions of the Company's Articles of Incorporation and By-laws relating to
required divestiture are in addition to, and not in replacement of, any
applicable legal requirements.
The provisions of the Articles of Incorporation and By-laws described above
are uncommon and no controlling precedent has been found to determine how they
would be enforced or whether they are enforceable.
The terms of the Notes feature certain analogous provisions which could
give rise to the obligation of the holder to sell such Notes or the right of the
Company to repurchase the Notes at a price equal to the lowest of the holder's
cost, the principal amount or then current market prices. See 'Description of
New Notes--Regulatory Redemption.'
PAID ADVERTISING AND MARKETING
The Federal Communications Commission ('FCC') prohibits broadcasters from
accepting advertising that actively promotes gaming, although the FCC does not
ban all advertising for casinos. Federal regulation also restricts the
circulation of certain materials related to gaming through the United States
mail.
DISCOURAGEMENT OF SHARE ACCUMULATIONS
Various state limits requiring approvals of shareholdings over certain
thresholds may discourage accumulations over such limits and therefore may
discourage changes in control of the Company. The Federal laws referred to above
may also discourage ownership by stockholders who are not United States
citizens.
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MANAGEMENT
The Company's directors and executive officers are as follows:
<TABLE>
<S> <C> <C> <C>
DIRECTOR PRESENT POSITION
NAME AGE SINCE WITH THE COMPANY
--------------------------- ----------- ----------- ------------------------------------------------------------
Edward Fishman............. 52 1985 Chairman of the Board of Directors and Chief Executive
Officer
David Fishman.............. 47 1985 Vice Chairman of the Board of Directors
Howard Goldberg............ 50 1986 President, Chief Operating Officer and Director
Thomas E. Gallagher........ 50 1992 Director
Marshall S. Geller......... 56 1989 Director
Lee Seidler................ 60 1987 Director
Steven P. Perskie.......... 50 1994 Executive Vice President, General Counsel and Director
Peter J. Aranow............ 49 -- Executive Vice President, Chief Financial Officer and
Secretary
</TABLE>
Edward Fishman has served as Chairman of the Board and Chief Executive
Officer of the Company since 1985 and as President during May 1993. In addition,
he has 16 years of marketing experience in the casino industry, and he has
served as a marketing consultant to Resorts International Casino/Hotel in
Atlantic City and Harrah's East Hotel/Casino.
David Fishman has served as the Company's Vice Chairman of the Board since
1985 and he served as Secretary from 1985 until May 1993. His principal
activities relate to overall supervision of individual casino development and
operations.
Howard Goldberg became President of the Company in May 1993 and Chief
Operating Officer shortly thereafter. Mr. Goldberg's duties are principally
related to long-range development and strategic planning. Prior to joining the
Company, he was the managing shareholder practicing law in the Atlantic City,
New Jersey law firm of Horn, Goldberg, Gorny, Daniels, Plackter & Weiss, which
is outside general counsel to the Company and has represented the Company since
its inception. Since the advent of casino gaming in Atlantic City, Mr. Goldberg
specialized in representing casinos in New Jersey and other jurisdictions for
development and regulatory matters. He remains associated with the law firm, but
he does not currently engage in any firm-related activities other than on an
occasional and incidental basis. The amount of the payments due to him from the
firm are not affected by fees paid by the Company to the firm.
Thomas E. Gallagher has been President and Chief Executive Officer of The
Griffin Group since April 1, 1992. For the preceding 15 years, he was a partner
of the law firm of Gibson, Dunn & Crutcher. Since November 1993, he has served
as a director, and since May 1995, he has served as President and Chief
Executive Officer of Griffin Gaming & Entertainment, Inc. (formerly Resorts
International Inc.).
Marshall S. Geller is the Senior Managing Partner of M. Geller & Co., a
merchant banking investment company. From April 1993 through July 1995, Mr.
Geller was the Senior Managing Partner and founder of Golenberg & Geller, Inc.,
a merchant banking investment company. He served as the Company's interim
President from November 1992 through April 1993. Mr. Geller served as Vice
Chairman of Gruntal & Co., Inc., an investment banking firm, from 1988 to 1990.
From 1967 until 1988, he was a Senior Managing Director of Bear, Stearns & Co.,
Inc., an investment banking firm ('Bear Stearns'). He is currently interim
Co-Chairman of Hexcel Corporation and a director of Value Vision International,
Inc.
Lee Seidler is a private investor. He is affiliated with Bear Stearns as
Managing Director Emeritus. From 1981 to 1989, he was a Senior Managing Director
of Bear Stearns. He is a director of Synthetic Industries, Inc., The Shubert
Organization, Inc. and The Shubert Foundation.
Steven P. Perskie joined the Company's Board of Directors and became a Vice
President and its General Counsel in May 1994 and became Executive Vice
President on March 13, 1995. His responsibilities include the development of
opportunities for the Company in new and emerging gaming jurisdictions and
strategic planning.
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From 1990 to May 1994, he served as Chairman of the New Jersey Casino Control
Commission (the 'NJCCC'). During his tenure as Chairman of the NJCCC, Mr.
Perskie oversaw the restructuring of the composition and focus of the NJCCC.
Prior to joining the NJCCC, he served from January to October 1990 as Chief of
Staff to Governor Jim Florio of the State of New Jersey. From October 1989 to
January 1990, he was the Director of Transition for Governor-Elect Florio. For
several years prior to October 1989, he was a presiding judge in the Superior
Court of the State of New Jersey. He also served for eleven years through 1982
in the New Jersey Legislature, first as a member of the General Assembly and
then as a member of the Senate. As a state legislator, he was the author and
principal sponsor of the New Jersey Casino Control Act in 1977.
Peter J. Aranow joined the Company as an Executive Vice President in May
1993, and he became the Company's Chief Financial Officer and Secretary shortly
thereafter. From 1977 to May 1993, he was employed in the Investment Banking
Department of Bear Stearns in progressively more responsible positions,
including Senior Managing Director. During his tenure with Bear Stearns, one of
Mr. Aranow's specialties was the gaming industry.
Edward and David Fishman are brothers. Howard Goldberg and Lee Seidler are
brothers-in-law.
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DESCRIPTION OF NEW NOTES
The New Notes will be issued pursuant to an Indenture (the 'Indenture')
among the Company, the Guarantors and First Fidelity Bank, National Association
(the 'Trustee'). Except as otherwise indicated below, the following summary
applies to both the Old Notes and the New Notes. As used herein, the term
'Notes' shall mean the Old Notes and the New Notes, unless otherwise indicated.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the 'Trust Indenture Act'). The Notes are subject to all such terms,
and holders of the Notes are referred to the Indenture and the Trust Indenture
Act for a statement thereof.
The form and terms of the New Notes are substantially identical to the form
and terms of the Old Notes, except that the New Notes (i) will be registered
under the Securities Act of 1933, as amended, (ii) will not provide for payment
of penalty interest as Liquidated Damages, which terminate upon consummation of
the Exchange Offer, and (iii) will not bear any legends restricting transfer
thereof. The New Notes will be issued solely in exchange for an equal principal
amount of Old Notes. As of the date hereof, $150 million aggregate principal
amount of Old Notes is outstanding. See 'The Exchange Offer.'
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, including the definitions therein of certain terms used below. A copy of
the Indenture has been filed with the Commission as an exhibit to the
Registration Statement of which this Prospectus is a part. Capitalized terms
used in this section and not otherwise defined below have the respective
meanings assigned to them in the Indenture.
Definitions relating to certain terms are set forth under '--Certain
Definitions' and throughout this description. Capitalized terms used herein
without definition have the meanings ascribed to them in the Indenture. Wherever
particular provisions of the Indenture are referred to in this summary, such
provisions are incorporated by reference as a part of the statements made and
such statements are qualified in their entirety by such reference.
GENERAL
The New Notes will be senior unsecured obligations of the Company, limited
in aggregate principal amount to $150 million, and will rank pari passu in right
of payment with all present and future senior Indebtedness of the Company and
senior to all future Subordinated Indebtedness of the Company. The New Notes
will be jointly and severally guaranteed on a senior unsecured basis by the
Initial Guarantors and all future Subsidiaries of the Company. Upon receipt of
all necessary regulatory approvals and development of the Maryland Heights
Project, the New Notes will also be guaranteed on the same basis by the Maryland
Heights Operating Subsidiary and the Maryland Heights Investment Subsidiary but
not the Maryland Heights Joint Venture Entity. The New Notes and the Guarantees
will effectively be subordinated in right of payment to all secured Indebtedness
of the Company and the Guarantors, such as the Indebtedness under the Credit
Agreement, to the extent of the value of the assets securing such Indebtedness.
The term 'Subsidiaries' does not include Unrestricted Subsidiaries.
The New Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof. Initially,
the New Notes will be issued in global form. See '--Book-Entry; Delivery and
Form.'
The New Notes will mature on April 15, 2005. The New Notes will bear
interest at 10 7/8% per annum from and including the date of issuance or from
the most recent Interest Payment Date for which interest has been paid or
provided for, payable semi-annually on April 15 and October 15 of each year to
the persons in whose names such New Notes are registered at the close of
business on the April 1 or October 1 immediately preceding such Interest Payment
Date. Interest will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Principal of, premium, if any, and interest on the New Notes will be
payable, and the Notes may be presented for registration of transfer or
exchange, at the office or agency of the Company maintained for such purpose,
which office or agency shall be maintained in the Borough of Manhattan, The City
of New York. At the option of the Company, payment of interest may be made by
check mailed to the Holders of the New Notes at the addresses set forth upon the
registry books of the Company. No service charge will be made for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Until otherwise designated by the Company, the
Company's office or agency will be the corporate trust office of the Trustee.
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OPTIONAL REDEMPTION
The New Notes will be redeemable at the option of the Company, in whole or
in part, at any time on or after April 15, 2000 upon not less than 30 nor more
than 60 days' notice to each Holder of the New Notes, at the following
redemption prices (expressed as percentages of the principal amount) if redeemed
during the 12-month period commencing April 15 of the years indicated below, in
each case together with accrued interest thereon to the redemption date:
<TABLE>
<S> <C>
YEAR PERCENTAGE
-------------------------------------------------------------- -----------
2000.......................................................... 104.078%
2001.......................................................... 102.719%
2002.......................................................... 101.359%
2003 and thereafter........................................... 100.000%
</TABLE>
The New Notes will not be subject to redemption pursuant to any mandatory
sinking fund.
Notice of any redemption will be sent by first-class mail at least 30 days
and not more than 60 days prior to the date fixed for redemption, to the Holder
of each New Note to be redeemed at such Holder's last address as then shown upon
the registry books. The notice of redemption must state the date fixed for
redemption, the redemption price and the amount of accrued but unpaid interest
to be paid. Any notice that relates to a New Note to be redeemed in part only
must state the portion of the principal amount equal to the unredeemed portion
thereof and must state that on and after the date fixed for redemption, upon
surrender of such New Note, a new New Note or New Notes in principal amount
equal to the unredeemed portion thereof will be issued. On and after the date
fixed for redemption, interest will cease to accrue on the New Notes or portions
thereof called for redemption so long as the Company has deposited with the
Paying Agent funds in satisfaction of the redemption price pursuant to the
Indenture.
REGULATORY REDEMPTION
The Indenture will provide that if the ownership of any of the New Notes by
any person or entity will preclude, interfere with, threaten or delay the
issuance, maintenance, existence or reinstatement of any gaming or liquor
license, permit or approval, or result in the imposition of burdensome terms or
conditions on such license, permit or approval, as determined by any
Governmental Authority or the Board of Directors of the Company, the Holder
shall be obligated to dispose of such Holder's New Notes (in which event the
Company shall have no obligation to pay any interest to such Holder), and, if
such New Notes are not so disposed of within the required period, the Company
shall have the right to redeem such Holder's New Notes at a redemption price
equal to the lowest of (i) the price at which such Holder or beneficial owner
acquired such New Notes, without accrued interest, if any, (ii) the principal
amount of such New Notes, without accrued interest, if any, and (iii) the
Current Market Price of such New Notes on such redemption date, without accrued
interest, if any. The Indenture will provide that any Holder or beneficial owner
of a New Note required to qualify or be found suitable under applicable Gaming
Laws must pay all investigative fees and costs of the Gaming Authorities in
connection with such application therefor.
CERTAIN COVENANTS
Repurchase of New Notes at the Option of the Holder Upon a Change of Control
In the event that a Change of Control (as defined below) has occurred, each
Holder of New Notes will have the right, at such Holder's option, pursuant to an
irrevocable and unconditional offer by the Company (the 'Change of Control
Offer'), to require the Company to repurchase all or any part of such Holder's
New Notes on the date that is no later than 30 Business Days after the
occurrence of such Change of Control, at a cash price (the 'Change of Control
Offer Price') equal to 101% of the principal amount thereof, together with
accrued interest to the purchase date. The Change of Control Offer shall remain
open for 20 Business Days following its commencement and no longer, except to
the extent that a longer period is required by applicable law (the 'Change of
Control Offer Period'). Upon expiration of the Change of Control Offer Period,
the Company shall purchase all New Notes tendered in response to the Change of
Control Offer.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of the New Notes
to require the Company to repurchase or redeem the New Notes in the event of a
takeover, recapitalization or similar restructuring.
As used herein, a 'Change of Control' means (i) any merger or consolidation
of the Company with or into any person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of the
assets of the Company, on a consolidated basis, in one transaction or a series
of related transactions, if, immediately after giving effect to such transaction
or transactions, any 'person' or 'group' (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) is or
becomes the
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Beneficial Owner, directly or indirectly, of more than 40% of the total voting
power in the aggregate normally entitled to vote in the election of directors,
managers or trustees, as applicable, of the transferee or surviving entity, (ii)
the time that the Company first determines or reasonably should have known that
any 'person' or 'group' (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable) is or becomes the
Beneficial Owner, directly or indirectly, of more than 40% of the total voting
power in the aggregate of all classes of Capital Stock then outstanding of the
Company normally entitled to vote in the election of directors, or (iii) during
any period of 12 consecutive months after the Issue Date, individuals who at the
beginning of any such 12-month period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; provided,
however, that a 'Change of Control' shall not be deemed to occur under clauses
(i) or (ii) above if the 'person' referred to in either such clause is an
Excluded Person, or the 'group' referred to in either such clause consists
exclusively of two or more 'Excluded Persons' who engages or engage in any
transaction or series of transactions or announces or announce any intention to
effect any transaction or series of transactions referred to in clauses (i) or
(ii), unless (y) such transaction or series of transactions is subject to Rule
13e-3 under the Exchange Act, or any similar or successor rule, and (z)
immediately prior to and during the 180-day period following (1) such
transaction or series of related transactions referred to in clause (i), or (2)
the time that the Company first determines or reasonably should have known that
any such Excluded Person or any such 'group' consisting exclusively of two or
more Excluded Persons, is or becomes the Beneficial Owner, directly or
indirectly, of more than 40% of such total voting power, as referred to in
clause (ii), the New Notes are or become rated, in the case of either clause (1)
or (2), 'B+' or below by Standard & Poor's Corporation and 'B1' or below by
Moody's Investors Service, or if either such service or both such services shall
no longer make a rating of the New Notes publicly available, another nationally
recognized securities agency or agencies, as the case may be, selected by the
Company, which shall be substituted for Standard & Poor's Corporation or Moody's
Investors Service or both, as the case may be; provided, further, that the
180-day period referred to in clause (z) shall be extended for so long as the
rating of the New Notes is under publicly announced consideration for possible
downgrade by any such rating agency. On or before the Change of Control Purchase
Date, the Company will (i) accept for payment New Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent U. S. Legal Tender or Cash Equivalents sufficient to pay the Change
of Control Offer Price (together with accrued and unpaid interest) of all New
Notes so tendered and (iii) deliver to the Trustee New Notes so accepted
together with an Officers' Certificate listing the New Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to the
Holders of New Notes so accepted payment in an amount equal to the Change of
Control Offer Price (together with accrued and unpaid interest), and the Trustee
will promptly authenticate and mail or deliver to such Holders a new New Note
equal in principal amount to any unpurchased portion of the New Note
surrendered. Any New Notes not so accepted will be promptly mailed or delivered
by the Company to the Holder thereof. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Offer Period expires.
The Change of Control purchase feature of the New Notes may make more
difficult or discourage a takeover of the Company, and, thus, the removal of
incumbent management. The Change of Control purchase feature resulted from
negotiations between the Company and the Initial Purchasers.
The phrase 'all or substantially all' of the assets of the Company as used
in the Indenture has no clearly established meaning under New York law (which
governs the Indenture), has been the subject of limited judicial interpretation
in few jurisdictions and will be interpreted based upon the particular facts and
circumstances. As a result, there may be a degree of uncertainty in ascertaining
whether a sale or transfer of 'all or substantially all' of the assets of the
Company has occurred and therefore whether a Change of Control has occurred. Any
Change of Control Offer will be made in compliance with all applicable laws,
rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws.
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The repurchase by the Company of the New Notes upon a Change of Control
could violate and result in a default under the Credit Agreement or other
Indebtedness of the Company or its Subsidiaries, even if a Change of Control, in
and of itself, would not cause a default. Any such default would likely give the
lenders under the Credit Agreement the right to proceed against any collateral
securing the Indebtedness thereunder. In any event, such lenders would likely
have the right to seek repayment of such Indebtedness at least on a pari passu
basis with the New Notes. There can be no assurance that the Company will have
sufficient financial resources to effect a repurchase pursuant to a Change of
Control Offer.
Limitation on Sale of Assets and Subsidiary Stock; Event of Loss
The Indenture will provide that, other than upon an Event of Loss, neither
the Company nor any of its Subsidiaries will, in one or a series of related
transactions, convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of its property, business or assets, including, without
limitation, upon any sale or other transfer or issuance of any Capital Stock of
any Subsidiary or any sale and leaseback transaction, whether by the Company or
any such Subsidiary, or through the issuance, sale or transfer of Capital Stock
by a Subsidiary (an 'Asset Sale'), with an aggregate fair market value in excess
of $7.5 million unless (1) within 310 days after the date of such Asset Sale,
the Asset Sale Offer Amount (as defined below), or so much thereof as is
required pursuant to the provisions described below, is applied to the
repurchase of the New Notes with U.S. Legal Tender pursuant to an irrevocable,
unconditional offer (an 'Asset Sale Offer') to repurchase New Notes at a
purchase price (the 'Asset Sale Offer Price') of 100% of principal amount,
together with accrued interest to the date of payment, (2) at least 80% of the
consideration for such conveyance, sale, transfer or other disposition or
issuance (other than assumption of trade indebtedness) consists of U.S. Legal
Tender or Cash Equivalents; provided, however, that for purposes of this clause
(2), the assumption of Indebtedness of the Company or a Subsidiary that is pari
passu with the New Notes shall be deemed to be Cash Equivalents if the Company,
such Subsidiary and all other Subsidiaries of the Company, to the extent any of
the foregoing are liable with respect to such Indebtedness, are expressly
released from all liability for such Indebtedness by the holder thereof in
connection with such Asset Sale, and any securities or notes received by the
Company or such Subsidiary from such transferee that are converted by the
Company or such Subsidiary into U.S. Legal Tender or Cash Equivalents within 10
Business Days of the date of such Asset Sale shall be deemed to be Cash
Equivalents, (3) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma
basis, to, such Asset Sale and (4) the Board of Directors of the Company
determines in good faith that the Company or such Subsidiary, as applicable,
receives not less than fair market value for such Asset Sale. The 'Asset Sale
Offer Amount' shall mean, with respect to any Asset Sale, the product of (A) (1)
the Net Cash Proceeds of such Asset Sale, minus (2) the sum of the amounts that,
within 270 days of such Asset Sale, are (i) invested in assets or property that
is part of a Related Business of the Company or one of its Subsidiaries, (ii)
used to retire Indebtedness outstanding under the Credit Agreement if,
concurrently therewith, the amount of such Indebtedness permitted pursuant to
paragraph (f) of the covenant '--Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock' is permanently reduced by the
amount so retired (and any related revolving or multiple advance arrangement is
permanently reduced by a corresponding amount), or (iii) used to retire
Indebtedness secured by the assets sold (if required by its terms as a result of
the applicable Asset Sale) and any related revolving or multiple advance
arrangement is permanently reduced by a corresponding amount, and pay related
fees and reasonable expenses, multiplied by (B) a fraction, the numerator of
which is the aggregate principal amount of the New Notes outstanding on the date
of such Asset Sale and the denominator of which is the sum of (1) the aggregate
principal amount of the New Notes outstanding on the date of such Asset Sale,
plus (2) the aggregate principal amount of any other Indebtedness of the Company
or its Subsidiaries existing on the date of such Asset Sale that (w) is not
retired under clause (A) (2) (ii) or (iii) of this sentence, (x) is pari passu
with the New Notes, (y) is not assumed by the transferee in such Asset Sale with
a concurrent release in full of the Company and its Subsidiaries therefrom, and
(z) pursuant to the instruments relating thereto, is required to be repaid with
the proceeds of such Asset Sale. The Indenture will provide that an Asset Sale
Offer may be deferred until the accumulated Asset Sale Offer Amounts from Asset
Sales exceed $10.0 million. The Company will be required to keep each Asset Sale
Offer open for 20 Business Days following its commencement and no longer, except
to the extent that a longer period is required by applicable law (the 'Asset
Sale Offer Period'). Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount, plus an amount equal to accrued
interest, to the purchase of all New Notes properly tendered (on a pro rata
basis if the Asset Sale Offer Amount is insufficient to purchase all New Notes
so tendered) at the Asset Sale Offer Price or, if New
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Notes are tendered in an amount less than the Asset Sale Offer Amount, to the
purchase of all New Notes tendered.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Subsidiaries may in the ordinary course of
business, convey, sell, lease, transfer, assign or otherwise dispose of
assets acquired and held for resale in the ordinary course of business;
(ii) the Company and its Subsidiaries may convey, sell, lease,
transfer or otherwise dispose of assets pursuant to and in accordance with
the provisions of the covenant '--Limitation on Mergers, Consolidations and
Sales of Assets;'
(iii) the Company and its Subsidiaries may sell or dispose of damaged,
worn out or other obsolete property in the ordinary course of business so
long as such property is no longer necessary for the proper conduct of the
business of the Company or such Subsidiary, as applicable; and
(iv) the Company and its Subsidiaries may convey, sell, transfer,
assign or otherwise dispose of assets to the Company or any of its
wholly-owned Subsidiaries.
The Indenture will also provide that upon an Event of Loss incurred by the
Company or any of its Subsidiaries resulting in Net Cash Proceeds of more than
$7.5 million, the Company shall make an offer, within 310 days after such Event
of Loss, to purchase (an 'Event of Loss Offer') for U.S. Legal Tender at a
purchase price (the 'Event of Loss Offer Price') of 100% of principal amount
(together with accrued interest to the date of payment) that principal amount of
New Notes equal to the 'Event of Loss Offer Amount' (as defined below). The
'Event of Loss Offer Amount' shall mean, with respect to any Event of Loss, the
product of (A)(1) the Net Cash Proceeds of such Event of Loss, minus (2) the sum
of the amounts that, within 270 days after such Event of Loss, are (i) invested
in assets or property that is part of a Related Business of the Company or one
of its Subsidiaries, (ii) used to retire Indebtedness outstanding under the
Credit Agreement if, concurrently therewith, the amount of such Indebtedness
permitted pursuant to paragraph (f) of the covenant '--Limitation on Incurrence
of Additional Indebtedness and Disqualified Capital Stock' is permanently
reduced by the amount so retired, (and any related revolving or multiple advance
arrangement is permanently reduced by a corresponding amount), or (iii) used to
retire Indebtedness secured by the assets to which such Event of Loss relates
(if required by its terms as a result of the applicable Event of Loss) and any
related revolving or multiple advance arrangement is permanently reduced by a
corresponding amount, and pay related fees and reasonable expenses, multiplied
by (B) a fraction, the numerator of which is the aggregate principal amount of
the New Notes outstanding on the date of such Event of Loss and the denominator
of which is the sum of (1) the aggregate principal amount of the New Notes
outstanding on the date of such Event of Loss, plus (2) the aggregate principal
amount of any other Indebtedness of the Company or its Subsidiaries existing on
the date of such Event of Loss that is not retired under clause (A) (2) (ii) or
(iii) of this sentence, (x) is pari passu with the New Notes and, pursuant to
the instruments relating thereto, is required to be repaid with the proceeds of
such Event of Loss. The Indenture will provide that an Event of Loss Offer may
be deferred until the accumulated Event of Loss Offer Amounts of all Events of
Loss exceeds $10.0 million. The Company will be required to keep each Event of
Loss Offer open for 20 Business Days following its commencement and no longer,
except to the extent that a longer period is required by applicable law (the
'Event of Loss Offer Period'). Upon the expiration of each Event of Loss Offer
Period, the Company shall apply the Event of Loss Offer Amount, plus an amount
equal to accrued interest, to the purchase of all New Notes properly tendered
(on a pro rata basis if the Event of Loss Amount is insufficient to purchase all
New Notes so tendered) or, if New Notes are tendered in an amount less than the
Event of Loss Amount, to the purchase of all the New Notes tendered.
Limitation on Restricted Payments
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, make any Restricted Payment
if, immediately prior thereto and after giving effect thereto on a pro forma
basis, (1) a Default or an Event of Default shall have occurred and be
continuing, (2) the Company could not incur at least $1.00 of additional
Subordinated Indebtedness pursuant to clause (ii) of paragraph (a) of the
covenant described under '--Limitation on Incurrence of Additional Indebtedness
and Disqualified Capital Stock,' or (3) the aggregate amount of all Restricted
Payments made by the Company and its Subsidiaries, including after giving pro
forma effect to such proposed Restricted Payment, from and after the Issue Date,
would exceed the sum of (a) 50% of the aggregate Adjusted Consolidated Net
Income of the Company for the
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period (taken as one accounting period) commencing on the first day of the first
full fiscal quarter that preceded the Issue Date, to and including the last day
of the latest fiscal quarter ended immediately prior to the date of each such
calculation for which financial statements are available (or, in the event
Adjusted Consolidated Net Income for such period is a deficit, then minus 100%
of such deficit), plus (b) the aggregate Net Cash Proceeds received by the
Company as a capital contribution after the Issue Date or from the sale of the
Company's Qualified Capital Stock (other than to a Subsidiary of the Company and
other than in connection with a Qualified Exchange) after the Issue Date.
The foregoing clauses (2) and (3) of the immediately preceding paragraph
will not prohibit (t) Investments in a Maryland Heights Joint Venture Entity in
an amount not in excess of $65.0 million, (u) Investments in one or more persons
in an amount not in excess of $45.0 million in the aggregate at any one time
outstanding for all such Investments made in any one or more persons in reliance
upon this clause (u), for the purpose of developing, constructing or acquiring
(i) a Casino or Casinos or, if applicable, any Related Businesses in connection
with such Casino or Casinos, or (ii) a Related Business to be used primarily in
connection with an existing Casino or Casinos in which the Company or its
Subsidiaries have at least a fifty percent (50%) ownership interest, (v) in the
case of any Subsidiary, pro rata distributions on its Capital Stock, (w) the
payment of any dividend on or redemption of Qualified Capital Stock within 60
days after the date of its declaration or authorization, respectively, if such
dividend or redemption could have been made on the date of such declaration or
authorization, respectively, in compliance with the foregoing provisions, (x)
the redemption or repurchase of any Capital Stock or Indebtedness of the Company
or any of its Subsidiaries (other than any Capital Stock or Indebtedness that is
held or beneficially owned by any Excluded Person) required by the Regulatory
Redemption provisions of the Indenture (or any substantially comparable
provision governing other Indebtedness), or by any Governmental Authority or the
Board of Directors of the Company if, in any such case, the ownership of such
Capital Stock or Indebtedness by the holder thereof will preclude, interfere
with, threaten or delay the issuaance, maintenance, existence or reinstatement
of any gaming or liquor license, permit or approval, or result in the imposition
of burdensome terms or conditions on such license, permit or approval, (y) a
Qualified Exchange or (z) other Restricted Payments which in the aggregate do
not exceed $10.0 million for all such Restricted Payments permitted by this
clause (z) taken together. The full amount of any Restricted Payment made
pursuant to clause (w) or (x), however, will be deducted in the calculation of
the aggregate amount of Restricted Payments available to be made referred to in
clause (3) of the immediately preceding paragraph.
Maintenance of Insurance
The Company will maintain and cause its Subsidiaries to maintain customary
property and comprehensive general liability insurance and (as applicable)
brownwater coverage, in each case on terms and in an amount reasonably
sufficient (taking into account, among other factors, the creditworthiness of
the insurer) to avoid a material adverse change in the financial condition or
results of operation of the Company and its Subsidiaries, taken as a whole.
Limitation on Transactions with Affiliates
The Indenture will provide that neither the Company nor any of its
Subsidiaries or Unrestricted Subsidiaries will be permitted after the Issue Date
to enter into any contract, arrangement, understanding or transaction with an
Affiliate (an 'Affiliate Transaction') or series of related Affiliate
Transactions involving consideration to either party in excess of $5.0 million
except for transactions approved by a majority of the disinterested (as to such
transaction) directors of the Company and evidenced by an Officers' Certificate
addressed and delivered to the Trustee stating that such Affiliate Transaction
has been so approved and is made in good faith and that the terms of such
Affiliate Transaction are fair and reasonable to the Company and such
Subsidiaries and Unrestricted Subsidiaries, as the case may be; provided,
however, that with respect to any Affiliate Transaction (including any series of
related transactions) involving consideration to either party in excess of $10.0
million the Company also must, prior to the consummation thereof, obtain a
written favorable opinion as to the fairness of such transaction to the Company
and such Subsidiaries and Unrestricted Subsidiaries, as the case may be, from a
financial point of view from an independent investment banking firm of national
reputation. Notwithstanding the foregoing, 'Affiliate Transaction,' shall not
include: (a) payments of reasonable and customary compensation, directors' fees
and indemnities of directors, officers and employees, (b) payments under the
Griffin License as in effect on the Issue Date, (c) related party transactions
described under 'Certain Transactions' in the Company's Proxy Statement for its
1994 Annual Meeting of Stockholders as in effect on the Issue Date, (d)
Restricted
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Payments permitted under the covenant '--Limitation on Restricted Payments'
described above, (e) transactions solely between or among the Company and one or
more wholly-owned Guarantors or between or among one or more wholly-owned
Guarantors, and (f) any employment agreement entered into by the Company or any
of its Subsidiaries in the ordinary course of business and consistent with the
past practice of the Company or such Subsidiary.
Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock
The Indenture will provide that, except as set forth below, neither the
Company nor any of its Subsidiaries will, directly or indirectly, issue, assume,
guarantee, incur, become directly or indirectly liable with respect to
(including as a result of an acquisition, merger or consolidation), extend the
maturity of, or otherwise become responsible for, contingently or otherwise
(individually and collectively, to 'incur' or, as appropriate, an 'incurrence'),
any Indebtedness or any Disqualified Capital Stock from and after the Issue
Date. Notwithstanding the foregoing:
(a) The Company and the Guarantors may incur Indebtedness or
Disqualified Capital Stock if (i) no Default or Event of Default shall have
occurred and be continuing at the time of, or would occur after giving
effect on a pro forma basis to, such incurrence of Indebtedness or
Disqualified Capital Stock and (ii) on the date of such incurrence (the
'Incurrence Date'), the Consolidated Coverage Ratio of the Company for the
Reference Period immediately preceding the Incurrence Date, after giving
effect on a pro forma basis to such incurrence of such Indebtedness or
Disqualified Capital Stock, would be at least 3.0 to 1 (or 2.5 to 1 in the
case of the incurrence of Subordinated Indebtedness or Disqualified Capital
Stock);
(b) The Company and the Guarantors may incur Indebtedness evidenced by
the Notes and represented by the Indenture up to the amounts specified
therein as of the Issue Date and the Guarantees thereof;
(c) The Company and its Subsidiaries may incur Purchase Money
Indebtedness to finance the purchase of land, buildings, furnitures,
fixtures or equipment for any Casino owned and operated by the Company that
has at least 200 slot machines and 10 table games; provided, however, that
the aggregate amount of such Indebtedness outstanding at any time pursuant
to this paragraph (c) (including any Indebtedness issued to refinance,
replace or refund such Indebtedness) with respect to any such Casino shall
not exceed $15.0 million.
(d) The Company and its Subsidiaries may incur Refinancing
Indebtedness with respect to any Indebtedness or Disqualified Capital
Stock, as applicable, described in clauses (a), (b) and (c) of this
covenant; provided, however, that in the case of the refinancing of
Indebtedness described in clause (c), such Refinancing Indebtedness is
Non-recourse Indebtedness as to any assets other than with respect to the
assets acquired with the Indebtedness refinanced, replaced or refunded;
(e) The Company and the Guarantors may incur Indebtedness (in addition
to any Indebtedness incurred in accordance with any other provision of this
covenant) in an aggregate amount outstanding at any time (including any
Indebtedness issued to refinance, replace, or refund such Indebtedness) of
up to an aggregate of $10.0 million for the Company and all of its
Subsidiaries taken together, minus the amount of any Indebtedness incurred
pursuant to this clause (e) retired with Net Cash Proceeds from any Asset
Sale or Event of Loss or assumed by a transferee in an Asset Sale;
(f) The Company and its Subsidiaries may incur Indebtedness pursuant
to the Credit Agreement on or after the Issue Date up to an aggregate
amount outstanding (including any Indebtedness issued to refinance, refund
or replace such Indebtedness) at any time equal to the sum of (i) $120.0
million minus the amount of any Indebtedness incurred pursuant to this
clause (f) retired with the Net Cash Proceeds from any Asset Sale or Event
of Loss or assumed by a transferee in an Asset Sale, plus (ii) such
additional amounts as may be deemed to be outstanding in the form of
Interest Swap and Hedging Obligations with lenders party to the Credit
Agreement; provided, however, that the maximum aggregate amount permitted
to be outstanding under this paragraph (f) shall not be deemed to limit
additional Indebtedness under the Credit Agreement to the extent such
additional Indebtedness is permitted pursuant to paragraph (a) hereof; and
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(g) Permitted Indebtedness.
In the event that the Company incurs Indebtedness, or any Subsidiary incurs
Indebtedness or Disqualified Capital Stock, to any wholly-owned Subsidiary
pursuant to clause (b) of the definition of Permitted Indebtedness, and such
latter Subsidiary thereafter ceases to remain a 'Subsidiary' as defined in the
Indenture, the aggregate outstanding amount of such Indebtedness incurred by the
Company, or of such Indebtedness or Disqualified Capital Stock incurred by such
Subsidiary, to the Subsidiary that ceases to so remain a 'Subsidiary' shall be
deemed to be Indebtedness incurred by the Company or such Subsidiary at the time
of such change in Subsidiary status. Indebtedness and Disqualified Capital Stock
issued by any person that is not a Subsidiary, which Indebtedness or
Disqualified Capital Stock is outstanding at the time such person becomes a
Subsidiary of the Company, or is merged into or consolidated with the Company or
a Subsidiary of the Company, shall be deemed to have been incurred at the time
such person becomes a Subsidiary of the Company, or is merged into or
consolidated with the Company or a Subsidiary of the Company. A guarantee by the
Company or a Subsidiary of the Company of Indebtedness incurred by the Company
or a Subsidiary is not considered a separate incurrence for purposes of this
covenant.
Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries
The Indenture will provide that neither the Company nor any of its
Subsidiaries will, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any Subsidiary to pay
dividends or make other distributions to, or to pay any obligation (including,
without limitation, in respect of a Guarantee) to, or to otherwise transfer
assets or make or pay loans or advances to, the Company or any of its
Subsidiaries, except (a) reasonable and customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course of
business, consistent with industry practices, (b) restrictions imposed by
applicable law (including gaming regulations), (c) restrictions under any
Acquired Indebtedness or any agreement relating to any property, asset or
business acquired by the Company or any of its Subsidiaries, which restrictions
existed at the time of acquisition, were not put in place in connection with or
in anticipation of such acquisition and are not applicable to any person, other
than the person acquired or to any property, asset or business other than the
property, assets and business so acquired, (d) restrictions with respect solely
to a Subsidiary of the Company imposed pursuant to a binding agreement (subject
only to reasonable and customary closing conditions and termination provisions)
that has been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets to be sold of such Subsidiary, provided such
restrictions apply solely to the Capital Stock or assets to be sold of such
Subsidiary, and such sale or disposition is permitted under the covenant
'--Limitation on Sale of Assets and Subsidiary Stock; Event of Loss,' (e)
reasonable and customary restrictions on transfers of collateral imposed in
connection with Liens securing Indebtedness, to the extent such Liens are
permitted by the covenant '--Liens' and to the extent such Indebtedness is
permitted by the covenant '-- Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock,' and (f) replacements of
restrictions imposed pursuant to clause (c) and this clause (f) that are not
more restrictive than those being replaced and do not apply to any additional
property or assets.
Liens
The Indenture will provide that neither the Company nor any of its
Subsidiaries, directly or indirectly, create, grant, assume, incur or suffer to
exist any Lien upon any of its property or assets, whether now owned or
hereafter acquired, or any income or profits therefrom, securing Indebtedness,
other than: (i) Permitted Liens; (ii) Liens securing Indebtedness incurred in
accordance with clause (c) of the covenant '--Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock;' (iii) Liens securing
Refinancing Indebtedness in accordance with clause (d) of the covenant
'--Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock' but only if such Liens have the same relative priority and do not extend
to property or assets permitted to be subject to the Liens securing the
Indebtedness being refinanced; (iv) Liens securing Indebtedness incurred in
accordance with clause (f) of the covenant '--Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock' and Liens securing any
increases in the amount of Indebtedness under the Credit Agreement above the
amount of Indebtedness permitted under such clause (f), but only to the extent
that the increase in such Indebtedness is permitted under clause (a) of the
covenant '--Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock' at the time of the incurrence of such additional Indebtedness;
(v) a Lien on the Lake Charles Star Riverboat to secure
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Indebtedness to the seller of the Interests in connection with the purchase of
such Interests by the Company's Subsidiaries in a principal amount not to exceed
$10.0 million and a maturity date no later than December 31, 1995; and (vi)
Liens in favor of the Company. Notwithstanding the foregoing, the Company may
not and may not permit any Subsidiary to, directly or indirectly, create, grant,
assume, incur or suffer to exist any Lien (other than Permitted Liens) upon any
of its property or assets, whether now owned or hereafter acquired, securing
Subordinated Indebtedness.
Limitation on Consolidation, Merger and Sale of Assets
The Indenture will provide that neither the Company nor any Subsidiary may
consolidate with or merge with or into another person or, directly or
indirectly, sell, lease or convey all or substantially all of its assets,
whether in a single transaction or a series of related transactions, to another
Person or group of affiliated Persons, unless (i)if the transaction involves the
Company or a Guarantor, either (a) the Company or such Guarantor, as the case
may be, is the continuing entity, and in the case of a Guarantor, (1) such
Guarantor remains a Subsidiary of the Company, and (2) such Guarantor's
Guarantee remains in full force and effect and the rights of the Holders
thereunder and under the New Notes and the Indenture are not be adversely
affected as a result thereof, or (b) the resulting, surviving or transferee
entity is a corporation organized under the laws of the United States, any state
thereof or the District of Columbia and expressly assumes by supplemental
indenture all of the Obligations of the Company or such Guarantor, as the case
may be, in connection with the New Notes, the Indenture and any applicable
Guarantee, and the rights of the Holders under the New Notes, the Indenture and
any such Guarantee are not adversely affected as a result thereof; (ii) no
Default or Event of Default shall exist or shall occur immediately after giving
effect on a pro forma basis to such transaction; (iii) other than in the case of
a transaction between the Company and a wholly-owned Subsidiary or between
wholly-owned Subsidiaries of the Company, immediately after giving effect to
such transaction on a pro forma basis, the Consolidated Net Worth of the
consolidated surviving or transferee entity is at least equal to the
Consolidated Net Worth of the Company or such Subsidiary, as the case may be,
immediately prior to such transaction; (iv) other than in the case of a
transaction solely between the Company and any wholly-owned Subsidiary or
between wholly-owned Subsidiaries of the Company, the consolidated surviving or
transferee entity would, immediately after giving effect to such transaction on
a pro forma basis, be permitted to incur at least $1.00 of additional
Subordinated Indebtedness pursuant to clause (ii) of paragraph (a) under the
caption '--Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock;' and (v) such transaction will not result in the loss of any
material Gaming License. For purposes of this covenant, the Consolidated
Coverage Ratio shall be determined on a pro forma consolidated basis (giving pro
forma effect to the transaction and any related incurrence of Indebtedness or
Disqualified Capital Stock) for the four fiscal quarters that ended immediately
preceding such transaction for which financial statements are available.
Notwithstanding the foregoing, a Subsidiary shall not be subject to the
foregoing restrictions in circumstances involving the disposition by the Company
of such Subsidiary or a disposition of all or substantially all of the assets of
such Subsidiary in a transaction that is not prohibited by the covenant
'--Limitation on Sale of Assets and Subsidiary Stock; Event of Loss.'
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company or a Guarantor that is subject to the foregoing
restrictions, the successor corporation formed by such consolidation or into
which the Company or such Guarantor, as the case may be, is merged or to which
such transfer is made, shall succeed to, and be substituted for, and may
exercise every right and power of, the Company or such Guarantor, as the case
may be, under the Indenture and the New Notes (including, without limitation,
any Guarantee) with the same effect as if such successor corporation had been
named therein as the Company, or such Guarantor, as the case may be, and the
Company or such Guarantor, as applicable, will be released from its obligations
under the Indenture, the New Notes and any applicable Guarantee, except as to
any obligations that arise from or as a result of such transaction.
Limitation on Lines of Business
The Indenture will provide that neither the Company nor any of its
Subsidiaries or Unrestricted Subsidiaries shall directly or indirectly engage to
any substantial extent in any line or lines of business activity other than in a
Related Business.
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Limitation on Status as Investment Company
The Indenture will prohibit the Company and its Subsidiaries from being
required to register as an 'investment company' (as that term is defined in the
Investment Company Act of 1940, as amended), or from otherwise becoming subject
to regulation under the Investment Company Act.
Restriction on Issuance or Sale of Subsidiary Stock
The Indenture will provide that the Company will not sell, and will not
permit any of its Subsidiaries to issue or sell, any shares of Capital Stock of
any Subsidiary, other than common stock with no special rights and no
preferences, privileges, or redemption or prepayment provisions, to any Person
other than the Company or a wholly-owned Subsidiary. The Indenture will also
provide that all of the Capital Stock of a Subsidiary may be sold in a
transaction that complies with the covenant '--Limitation on Sale of Assets and
Subsidiary Stock; Event of Loss.'
Guarantee by Maryland Heights Investment Subsidiary and Maryland Heights
Operating Subsidiary
The Indenture provides that the Company shall cause the Maryland Heights
Investment Subsidiary and the Maryland Heights Operating Subsidiary, which may
be the same Subsidiary of the Company, to become Guarantors on the same basis as
the Initial Guarantors and to execute supplemental indentures, in the form
prescribed by the Indenture, and a Guarantee evidencing such obligations in the
same form as the Guarantee executed by the Initial Guarantors with respect to
the New Notes, and deliver such executed supplemental indentures and Guarantees
to the Trustee within five Business Days after they become Subsidiaries, subject
to the receipt of any approval required by any Gaming Authority, which the
Company, the Maryland Heights Investment Subsidiary and the Maryland Heights
Operating Subsidiary shall use their best efforts to obtain. The Indenture
further provides that the Company shall cause the Maryland Heights Investment
Subsidiary and the Maryland Heights Operating Subsidiary to be and remain
wholly-owned Subsidiaries of the Company. Under the Indenture, the Company does
not have any obligation to cause the Maryland Heights Joint Venture Entity to
become a Guarantor or execute such a supplemental indenture or Guarantee.
Additional Subsidiary Guarantors
The Indenture provides that the Company shall cause each of its
Subsidiaries created or acquired after the Issue Date to execute a Guarantee and
a supplemental indenture, in the form prescribed by the Indenture, and to
deliver copies thereof to the Trustee, subject to the receipt of any approval
required by any Gaming Authority, which the Company and its Subsidiaries shall
use their best efforts to obtain.
RELEASE OF GUARANTORS
The Indenture provides that if all the Capital Stock of a Guarantor is sold
by the Company or any Subsidiary or upon the consolidation or merger of a
Guarantor with or into any other person other than the Company or a Subsidiary,
in circumstances where such sale, consolidation or merger is not prohibited
under the covenant '--Limitation on Sale of Assets and Subsidiary Stock; Event
of Loss,' such Guarantor shall be deemed automatically and unconditionally
released and discharged from all obligations under its Guarantee and the
Indenture without any further action required on the part of the Trustee or any
Holder.
REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and each Holder, within 15 days after it is or would have been required
to file such with the SEC, annual and quarterly consolidated financial
statements substantially equivalent to financial statements that would have been
included in reports filed with the SEC if the Company was subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
SEC and, in each case, together with a management's discussion and analysis of
financial condition and results of operations as such would be so required.
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EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the Company
to pay any installment of interest on the New Notes as and when due and payable
and the continuance of any such failure for 30 days, (ii) the failure by the
Company to pay all or any part of the principal, or premium, if any, on the New
Notes when and as the same become due and payable at maturity, redemption, by
acceleration or otherwise, including, without limitation, pursuant to any Offer
to Purchase, or otherwise, (iii) the failure by the Company or any Guarantor to
observe or perform any other covenant or agreement contained in the New Notes,
the Indenture or any Guarantee and, subject to certain exceptions, the
continuance of such failure for a period of 30 days after written notice is
given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the New Notes
outstanding, (iv) certain events of bankruptcy, insolvency or reorganization in
respect of the Company, any of its Subsidiaries that individually or as a group
constitute a Significant Subsidiary, (v) a default in the payment of principal,
premium or interest when due which extends beyond any stated period of grace
applicable thereto or an acceleration for any other reason of the maturity of
any Indebtedness of the Company or any of the its Subsidiaries with an aggregate
principal amount in excess of $10.0 million, (vi) final, non-appealable,
unsatisfied judgments not covered by insurance aggregating in excess of $10.0
million, at any one time being rendered against the Company or any of its
Subsidiaries and not stayed, bonded or discharged within 60 days, and (vii) the
loss of the legal right to operate any Casino by the Company or any of its
Subsidiaries and such loss continuing for more than 90 days. The Indenture
provides that if a Default occurs and is continuing, the Trustee must, within 90
days after the occurrence of such default, give to the Holders notice of such
default. Except in the case of a Default in payment of principal of or interest
on any New Note, 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 interest of the Holders.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv) of the preceding paragraph), then in every such
case, unless the principal of all of the New Notes shall have already become due
and payable, either the Trustee or the Holders of 25% in aggregate principal
amount of the New Notes then outstanding, by notice in writing to the Company
(and to the Trustee if given by Holders) (an 'Acceleration Notice'), may declare
all principal and accrued interest thereon to be due and payable immediately. If
an Event of Default specified in clause (iv) in the preceding paragraph occurs,
all principal and accrued interest thereon will be immediately due and payable
on all outstanding New Notes without any declaration or other act on the part of
Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of the New Notes at the time outstanding generally are
authorized to rescind such acceleration if all existing Events of Default, other
than the non-payment of the principal of, premium, if any, and interest on the
New Notes which have become due solely by such acceleration, have been cured or
waived.
Prior to the declaration of acceleration of the maturity of the New Notes,
the Holders of a majority in aggregate principal amount of the New Notes at the
time outstanding may waive on behalf of all the Holders any default, except a
default in the payment of principal of or interest on any New Note not yet
cured, or a default with respect to any covenant or provision that cannot be
modified or amended without the consent of the Holder of each outstanding New
Note affected. Subject to the provisions of the Indenture relating to the duties
of the Trustee, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
of the Holders, unless such Holders have offered to the Trustee reasonable
security or indemnity. Subject to all provisions of the Indenture and applicable
law, the Holders of a majority in aggregate principal amount of the New Notes at
the time outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee. The Indenture will provide that the
Company will be required to file annually with the Trustee a certificate as to
the performance by the Company and the Guarantors of certain of their
obligations under the Indenture and as to any default in such performances.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option at any time elect to have the obligations of
the Company and the Guarantors discharged with respect to the outstanding New
Notes ('Legal Defeasance'). Such Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire indebtedness represented, and
the Indenture shall cease to be of further effect as to all outstanding New
Notes and Guarantees except as to (i) rights of Holders to receive payments in
respect of the principal of, premium, if any, and interest on such New
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Notes when such payments are due, from the funds in the defeasance trust; (ii)
the Company's obligations with respect to such New Notes concerning issuing
temporary New Notes, registration of New Notes, mutilated, destroyed, lost or
stolen New Notes, and the maintenance of an office or agency for payment and
money for security payments held in trust; (iii) the rights, powers, trust,
duties and immunities of the Trustee, and the Company's obligations in
connection therewith; and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company and the Guarantors released with respect to certain
covenants that are described in the Indenture ('Covenant Defeasance') and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the New Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under 'Events of
Default' will no longer constitute an Event of Default with respect to the New
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the New Notes, U.S. Legal Tender, U.S. Government Obligations
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such New Notes on the stated date
for payment thereof or on the redemption date of such principal or installment
of principal of, premium, if any, or interest on such New Notes, and the Trustee
on behalf of the Holders must have a valid, perfected, exclusive security
interest in such trust; (ii) in the case of Legal Defeasance, the Company shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to Trustee confirming that (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling or
(B) since the date of the Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders of such New Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax in the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to such Trustee confirming
that the Holders of such New Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred; (iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a default
under, the Indenture or any other material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee
an Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders of such New Notes over any other
creditors of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and (vii) the Company
shall have delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that all conditions precedent provided for or relating to
the Legal Defeasance or the Covenant Defeasance have been met.
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AMENDMENTS AND SUPPLEMENTS
Except as provided below, with the consent of the Holders of not less than
a majority in aggregate principal amount of the New Notes at the time
outstanding (including consents obtained in connection with a tender offer or
exchange offer for New Notes), the Company, the Guarantors and the Trustee are
permitted to amend or supplement the Indenture or any supplemental indenture or
any Guarantee or modify the rights of the Holders. Notwithstanding the
foregoing, without the consent of the Holders of not less than two-thirds in
aggregate principal amount of the New Notes at any time outstanding, no
amendment or waiver of the Indenture may change any provision relating to (i)
events of default or remedies, (ii) the Guarantees, or (iii) the maturity of any
New Note (except for changes relating to the Stated Maturity, which require the
consent of each Holder). Without the consent of each Holder affected thereby, no
amendment or waiver of the Indenture may: (i) change the Stated Maturity of any
New Note, or reduce the principal amount thereof or the rate (or extend the time
for payment) of interest thereon or alter the redemption thereof (including any
price to be paid by the Company upon any redemption) in a manner adverse to any
Holder, or change the place of payment where, or the coin or currency in which,
any New Note or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), (ii) reduce the percentage in principal amount of the
outstanding New Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the Indenture, (iii)
change the provisions described above under the caption 'Repurchase of New Notes
at the Option of the Holder Upon a Change of Control' in a manner that adversely
affects the rights of any Holder of New Notes, or (iv) change the terms of any
Asset Sale Offer (including, without limitation, the Asset Sale Offer Amount or
Asset Sale Offer Price) or any Event of Loss Offer (including, without
limitation, the Event of Loss Offer Amount or Event of Loss Offer Price) in a
manner that adversely affects the rights of any Holder of New Notes.
Notwithstanding the foregoing, without the consent of any Holder of New
Notes, the Company and the Trustee may amend or supplement the Indenture or the
New Notes for, among other purposes, to cure any ambiguity, defect or
inconsistency, to provide for uncertificated New Notes in addition to or in
place of certificated New Notes, to provide for the assumption of the Company's
Obligations to Holders of the New Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the New Notes or that does not adversely affect the
legal rights under the Indenture of any Holder, to comply with the Trust
Indenture Act, or to set forth such other matters as may be necessary or
desirable in connection with the Exchange Offer.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect when either (a) all such
outstanding New Notes theretofore authenticated and delivered (except lost,
stolen or destroyed New Notes which have been replaced or paid) have been
delivered to the Trustee for cancellation or (b) all such New Notes not
theretofore delivered to the Trustee for cancellation have become due and
payable and the Company has irrevocably deposited or caused to be deposited with
the Trustee funds in an amount sufficient to pay and discharge the entire
indebtedness on the New Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest to the Stated
Maturity of the New Notes; (ii) the Company has paid all other sums payable
under the Indenture; and (iii) the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel each stating that all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
NO PERSONAL LIABILITY OF STOCKHOLDERS, EMPLOYEES, OFFICERS OR DIRECTORS
The Indenture will provide that no direct or indirect stockholder,
incorporator, employee, officer or director, as such, past, present or future of
the Company, the Guarantors or any successor entity shall have any personal
liability in respect of the Obligations of the Company or the Guarantors under
the Indenture or the New Notes by reason of his, her or its status as such
stockholder, incorporator, employee, officer or director.
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CERTAIN DEFINITIONS
'Acquired Indebtedness' with respect to a person means Indebtedness of
another person existing at the time such person becomes a Subsidiary of the
subject person or is merged or consolidated into or with the subject person or
one of its Subsidiaries, and not incurred in connection with or in anticipation
of, such merger or consolidation or such other person becoming a Subsidiary of
such subject person.
'Acquisition' means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.
'Adjusted Consolidated Net Income' means, with respect to any period,
Consolidated Net Income for such period, minus 100% of the amount of any
writedowns, writeoffs or negative extraordinary charges not otherwise reflected
in Consolidated Net Income during such period.
'Affiliate' means (i) any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
of its Subsidiaries, (ii) any spouse, immediate family member or other relative
who has the same principal residence of any person described in clause (i)
above, and (iii) any trust in which any person described in clause (i) or (ii)
above has a beneficial interest. For purposes of this definition, the term
'control' means (a) the power to direct the management and policies of a person,
directly or through one or more intermediaries, whether through the ownership of
voting securities, by contract, or otherwise, or (b) the beneficial ownership of
10% or more of any class of voting Capital Stock of a person (on a fully diluted
basis) or of warrants or other rights to acquire such class of Capital Stock
(whether or not presently exercisable).
'Average Life' means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the date of
each successive scheduled principal (or redemption) payment of such security or
instrument multiplied by the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
'Beneficial Owner' for purposes of the definition of Change of Control has
the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable, 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.
'Business Day' means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
'Capital Stock' means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
'Capitalized Lease Obligation' means rental obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.
'Cash Equivalent' means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit having a maturity not greater than one year of any
domestic commercial bank, or U.S. branch of a foreign bank, of recognized
standing having capital and surplus in excess of $500,000,000, and time deposits
and certificates of deposit having a maturity not greater than one year of other
banks located in jurisdictions where the Company and its Subsidiaries do
business; provided, however, the aggregate amount of all time deposits and
certificates of deposit of such other banks may not exceed $5.0 million, (iii)
commercial paper rated at least A-2 or the equivalent thereof by Standard &
Poor's Corporation or at least P-2 or the equivalent thereof by Moody's
Investors Service, Inc. and maturing within one year after the date of
acquisition, (iv) repurchase obligations with a term of not more than ten days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (ii) above,
(v) marketable obligations issued by any state of the United States of America
or any political subdivision of any such state or any public instrumentality
thereof
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maturing, or payable at the demand of the holder thereof, within one year from
the date of acquisition thereof and, at the time of acquisition, having one of
the three highest ratings obtainable from either Standard & Poor's Corporation
or Moody's Investors Service, Inc.; and (vi) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) through (v) above.
'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.
'Consolidated Coverage Ratio' of any person on any date of determination
(the 'Transaction Date') means, the ratio, on a pro forma basis, of (a) the
aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of prior to the
Transaction Date) to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of prior to the Transaction Date but only to the extent
that the obligations giving rise to such Consolidated Fixed Charges would no
longer be obligations contributing to such person's Consolidated Fixed Charges
subsequent to the Transaction Date) during the Reference Period; provided,
however, that for purposes of such calculation, (i) Acquisitions which occurred
during the Reference Period or subsequent to the Reference Period and on or
prior to the Transaction Date shall be assumed to have occurred on the first day
of the Reference Period, (ii) transactions giving rise to the need to calculate
the Consolidated Coverage Ratio shall be assumed to have occurred on the first
day of the Reference Period, (iii) the incurrence of any Indebtedness or
issuance of any Disqualified Capital Stock during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date (and
the application of the proceeds therefrom to the extent used to refinance or
retire other Indebtedness) shall be assumed to have occurred on the first day of
such Reference Period, and (iv) the Consolidated Fixed Charges of such person
attributable to interest on any Indebtedness or dividends on any Disqualified
Capital Stock bearing a floating interest (or dividend) rate shall be computed
on a pro forma basis as if the average rate in effect from the beginning of the
Reference Period to the Transaction Date had been the applicable rate for the
entire period, unless such person or any of its Subsidiaries is a party to an
Interest Swap and Hedging Obligation (which shall remain in effect for the
12-month period immediately following the Transaction Date) that has the effect
of fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used.
'Consolidated Debt' means, with respect to any person, as of a specific
date, all Indebtedness of such person and its Consolidated Subsidiaries as of
such date, determined in accordance with GAAP.
'Consolidated EBITDA' means, with respect to any person, for any period,
the Consolidated Net Income of such person for such period adjusted to add
thereto (to the extent deducted from net revenues in determining Consolidated
Net Income), without duplication, the sum of (i) consolidated income tax
expense, (ii) consolidated depreciation and amortization expense, (iii)
Consolidated Fixed Charges, and (iv) consolidated preopening expenses.
'Consolidated Fixed Charges' of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expense of such person for such period, whether paid
or accrued (including, in accordance with the following sentence, interest
attributable to Capitalized Lease Obligations), of such person and its
Consolidated Subsidiaries during such period, including, without limitation, to
the extent such expense was deducted in computing Consolidated Net Income for
such period (i) amortization of original issue discount and non-cash interest
payments or accruals on any Indebtedness, (ii) the interest portion of all
deferred payment obligations that constitute Indebtedness, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, (b) one-third of rental expense for such period
attributable to operating leases of such person and its Consolidated
Subsidiaries, and (c) the amount of dividends payable by such person or any of
its Consolidated Subsidiaries in respect of Disqualified Capital Stock (other
than by Subsidiaries of such person to such person or such person's wholly-owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guarantee by such person or
a Subsidiary of such person of an obligation of another person shall be deemed
to be the interest expense attributable to the Indebtedness guaranteed.
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'Consolidated Net Income' means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined in accordance with GAAP) for such period, adjusted to exclude (only
to the extent included in computing such net income (or loss) and without
duplication): (a) all gains (but not losses) which are either extraordinary (as
determined in accordance with GAAP) or are either unusual or nonrecurring
(including, without limitation, from the sale of assets outside of the ordinary
course of business or from the issuance or sale of any Capital Stock), (b) the
net income, if positive, of any person, other than a Consolidated Subsidiary, in
which such person or any of its Consolidated Subsidiaries has an interest,
except to the extent of the amount of any dividends or distributions actually
paid in cash to such person or a Consolidated Subsidiary of such person during
such period, but not in excess of such person's pro rata share of such person's
net income for such period, (c) the net income (or loss) of any person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition, (d) the net income, if positive, of any of such person's
Consolidated Subsidiaries to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or bylaws or any other agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation (other than any Gaming
Law that is generally applicable to all persons operating Casinos through
Subsidiaries in any jurisdiction in which the Company or such Subsidiary is
conducting business so long as there is in effect no specific order, decree or
other prohibition pursuant to such Gaming Law in such jurisdiction limiting the
payment of a dividend or similar distribution by such a Consolidated Subsidiary)
applicable to such Consolidated Subsidiary and (e) the cumulative effect of a
change in accounting principles.
'Consolidated Net Worth' of any person at any date means the aggregate of
capital, surplus and retained earnings of such person and its Consolidated
Subsidiaries, as would be shown on the consolidated balance sheet of such person
prepared in accordance with GAAP adjusted to exclude (to the extent included in
calculating such equity), (a) the amount of capital, surplus and accrued but
unpaid dividends attributable to any Disqualified Capital Stock or treasury
stock of such person or any of its Consolidated Subsidiaries, (b) all upward
revaluations and other write-ups in the book value of any asset of such person
or a Consolidated Subsidiary of such person subsequent to the Issue Date and (c)
all investments in Subsidiaries that are not Consolidated Subsidiaries and in
persons that are not Subsidiaries.
'Consolidated Subsidiary' means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated for financial
statement reporting purposes with the financial statements of such person in
accordance with GAAP.
'Credit Agreement' means the credit agreement contemplated by that certain
letter dated March 15, 1995 to the Company from First Interstate Bank of Nevada,
N.A. and Bankers Trust Company, providing for an aggregate of $120.0 million
revolving credit facility or any substitute therefor, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, as such credit agreement and/or related documents may be
amended, restated, supplemented, renewed, replaced or otherwise modified from
time to time whether or not with the same agent, trustee, representative lenders
or holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term 'Credit Agreement' shall
include agreements in respect of Interest Swap and Hedging Obligations with
lenders party to the Credit Agreement and shall also include any amendment,
amendment and restatement, renewal, extension, restructuring, supplement or
modification to any Credit Agreement and all refundings, refinancings and
replacements of the Credit Agreement, and all refundings, refinancings and
replacements thereafter, including any agreement (i) extending the maturity of
any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers, issuers or guarantors thereunder, so long as such borrowers,
issuers and guarantors include one or more of the Company and its Subsidiaries
and their respective successors and assigns, (iii) increasing the amount of
Indebtedness incurred thereunder or available to be borrowed thereunder,
provided, however, that on the date such additional Indebtedness is incurred the
incurrence thereof is permitted pursuant to paragraph (a) of the covenant
'--Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock,' or (iv) otherwise altering the terms and conditions thereof in a manner
not prohibited by the terms hereof.
'Current Market Price' on any date means the arithmetic mean of the Quoted
Price of the New Notes for the 20 consecutive trading days commencing 30 days
before such date.
'Disqualified Capital Stock' means (a) except as provided in (b), with
respect to any person, Capital Stock of such person that, by its terms or by the
terms of any security into which it is convertible, exercisable or
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exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the New Notes and (b) with respect to any
Subsidiary of such person (including any Subsidiary of the Company), any Capital
Stock other than any common stock with no special rights and no preferences,
privileges, or redemption or repayment provisions; provided, however, that the
Common Stock issued pursuant to, and subject to, the terms of the Beeber
Agreement shall not constitute Disqualified Capital Stock.
'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.
'Excluded Person' means (a) the Company or any wholly-owned Guarantor, (b)
any employee benefit plan of the Company or any wholly-owned Guarantor or any
trustee or similar fiduciary holding Capital Stock of the Company for or
pursuant to the terms of any such plan, (c) Merv Griffin, (d) Edward Fishman,
(e) David Fishman, (f) Howard Goldberg, (g) Thomas E. Gallagher, (h) Marshall S.
Geller, (i) Lee Seidler, (j) Steven P. Perskie, (k) Peter J. Aranow and (l)
members of the immediate families and Affiliates (where the determination of
whether a person is an Affiliate is made without reference to clause (b) of the
definition of such term) of the foregoing persons.
'GAAP' means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
'Gaming Authority' means any Governmental Authority with the power to
regulate gaming in any Gaming Jurisdiction, and the corresponding Governmental
Authorities with the responsibility to interpret and enforce the laws and
regulations applicable to gaming in any Gaming Jurisdiction.
'Gaming Jurisdiction' means any Federal, state or local jurisdiction in
which any entity in which the Company has a direct or indirect beneficial, legal
or voting interest conducts casino gaming, now or in the future.
'Gaming Law' means any law, rule, regulation or ordinance governing gaming
activities (including, without limitation, The Riverboat Gambling Act of
Illinois, The Louisiana Riverboat Economic Development and Gaming Control Act,
the Missouri Riverboat Gaming Act, Mo. Rev. Stat. Section 313.800 et seq. and
the Nevada Gaming Control Act, in each case including all amendments or
modifications thereof), any administrative rules or regulations promulgated
thereunder, and any of the corresponding statutes, rules and regulations in each
Gaming Jurisdiction.
'Gaming Licenses' means every material license, material franchise or other
material authorization required to own, lease, operate or otherwise conduct or
manage riverboat, dockside or land-based gaming in any state or jurisdiction in
which the Company or any of the Guarantors conduct business now or in the future
and any applicable liquor licenses.
'Governmental Authority' means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or foreign government, any state, any province or any city or
other political subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof, and any maritime authority.
'Guarantors' means (1) the Initial Guarantors and (2) all future
Subsidiaries of the Company.
'Guarantees' means the guarantees in favor of the Holders executed by the
Initial Guarantors and to be executed by all future Subsidiaries of the Company.
'Indebtedness' of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid
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for greater than 90 days past their original due date or that are being
contested in good faith and for which adequate reserves have been made) those
incurred in the ordinary course of its business that would constitute ordinarily
a trade payable to trade creditors, (iv) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks, (v) for the payment of money
relating to a Capitalized Lease Obligation, or (vi) evidenced by a letter of
credit or a reimbursement obligation of such person with respect to any letter
of credit; (b) all net obligations of such person under Interest and Hedging
Swap Obligations; (c) all liabilities of others of the kind described in the
preceding clause (a) or (b) that such person has guaranteed or that is otherwise
its legal liability and all obligations to purchase, redeem or acquire any
Capital Stock; (d) all obligations secured by a Lien to which the property or
assets (including, without limitation, leasehold interests and any other
tangible or intangible property rights) of such person are subject, whether or
not the obligations secured thereby shall have been assumed by or shall
otherwise be such person's legal liability, provided, however, that the amount
of such obligations shall be limited to the lesser of the fair market value of
the assets or property to which such Lien attaches and the amount of the
obligation so secured; and (e) any and all deferrals renewals, extensions,
refinancings and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (a), (b), (c) or (d), or this clause (e), whether or not
between or among the same parties.
'Initial Guarantors' means Players Lake Charles, Inc., a Louisiana
corporation; Players Riverboat Management, Inc., a Nevada corporation; Players
Riverboat, Inc., a Nevada corporation; Players Mesquite Golf Club, Inc., a
Nevada corporation; Players Indiana, Inc., an Indiana corporation; Players
Michigan City, Inc., an Indiana corporation; Players Riverboat, LLC, a Louisiana
limited liability company; Players Nevada, Inc., a Nevada corporation; Players
Bluegrass Downs, Inc., a Kentucky corporation; Players Mesquite Land, Inc., a
Nevada corporation; Players Michigan City Management, Inc., an Indiana
corporation; Players Maryland Heights, Inc., a Missouri corporation; River
Bottom, Inc., a Missouri corporation; Showboat Star Partnership, a Louisiana
general partnership; and Southern Illinois Riverboat/Casino Cruises, Inc., an
Illinois corporation.
'Interest Swap and Hedging Obligation' means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
'Investment' by any person in any other person means (without duplication)
(a) the acquisition by such person (whether for cash, property, services,
securities or otherwise) of capital stock, bonds, notes, debentures, partnership
or other ownership interests or other securities, including any options or
warrants, of such other person or any agreement to make any such acquisition;
(b) the making by such person of any deposit with, or advance, loan or other
extension of credit to, such other person (including the purchase of property
from another person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such other person) or any commitment to
make any such advance, loan or extension (but excluding accounts receivable
arising in the ordinary course of business); (c) other than the Guarantees of
the New Notes and guarantees of other Indebtedness of the Company or any
Subsidiary to the extent permitted by the covenant described under '--Limitation
on Incurrence of Additional Indebtedness and Disqualified Capital Stock,' the
entering into by such person of any guarantee of, or other credit support or
contingent obligation with respect to, Indebtedness or other liability of such
other person; (d) the making of any capital contribution by such person to
another person, other than to the Company or a wholly-owned Subsidiary; or (e)
the designation by the Board of Directors of the Company of a person to be an
Unrestricted Subsidiary in accordance with the definition of 'Unrestricted
Subsidiary.' The Company shall be deemed to make an 'Investment' in an amount
equal to the fair market value of the net assets of any person, determined by
the Board of Directors of the Company in good faith at the time that such person
is designated an Unrestricted Subsidiary, and any property transferred to an
Unrestricted Subsidiary from the Company or one of its Subsidiaries, shall be
deemed an Investment valued at its fair market value, determined by the Board of
Directors of the Company in good faith at the time of such transfer.
'Issue Date' means the date of first issuance of the New Notes under the
Indenture.
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'Maryland Heights Investment Subsidiary' means the wholly-owned Subsidiary
of the Company (which may be the Maryland Heights Operating Subsidiary) that
will make the Investment in the Maryland Heights Joint Venture Entity.
'Maryland Heights Joint Venture' means the joint venture and business
operations proposed to be conducted by the Company and its Subsidiaries, as
contemplated by that certain Letter of Intent dated March 3, 1995, among the
Company, The Promus Companies Incorporated (the predecessor of Harrah's before
Harrah's was the subject of a spin-off transaction) and Harrah's Club.
'Maryland Heights Joint Venture Entity' means the entity to be formed
jointly by the Company (or any wholly-owned Subsidiary thereof) and The Promus
Companies Incorporated or any successor thereto (i.e., Harrah's) or any
Affiliate thereof to develop and operate certain shoreside facilities in
connection with the Maryland Heights Joint Venture.
'Maryland Heights Operating Subsidiary' means the wholly-owned Subsidiary
of the Company that will operate a Casino and certain Related Business Assets in
connection with the Maryland Heights Joint Venture.
'Net Cash Proceeds' means the aggregate amount of U.S. Legal Tender or Cash
Equivalents received by the Company, in the case of a sale of Qualified Capital
Stock, and by the Company and its Subsidiaries in respect of an Asset Sale or an
Event of Loss, plus, in the case of an issuance of Qualified Capital Stock upon
any exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of the Company that were issued for
cash on or after the Issue Date, the amount of cash originally received by the
Company upon the issuance of such securities (including options, warrants,
rights and convertible or exchangeable debt), less, in each case, the sum of all
fees, commissions and other expenses incurred in connection with such Asset Sale
or an Event of Loss, and, in the case of an Asset Sale or an Event of Loss only,
less the amount (estimated reasonably and in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its Subsidiaries in connection with such Asset Sale or Event
of Loss.
'Non-recourse Indebtedness' means Indebtedness of a person to the extent
that under the terms thereof (including any related instruments, documents or
filings) (i) no personal recourse shall be had against such person for the
payment of the principal of or interest or premium 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 or the Indebtedness refinanced by such
Indebtedness and as to which neither the Company nor any Subsidiary provides any
credit support.
'Obligation' means any principal, premium, interest, penalties, fees,
reimbursements, damages, indemnification and other liabilities relating to
obligations of the Company or any Guarantor under the New Notes, the Guarantees
or the Indenture, including any liquidated damages pursuant to the Exchange and
Registration Rights Agreement.
'Offer to Purchase' means any Change of Control Offer, Asset Sale Offer or
Event of Loss Offer.
'Paying Agent' means First Fidelity Bank, National Association or any
successor as paying agent under the Indenture.
'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 or junior in right of payment to any Indebtedness
or (ii) is subordinate or junior in right of payment to the same Indebtedness as
is the other, and is so subordinate or junior to the same extent, and is not
subordinate or junior in right of payment to each other or to any Indebtedness
as to which the other is not so subordinate or junior.
'Permitted Indebtedness' means any of the following:
(a) The Company and each of its Subsidiaries may incur Indebtedness
solely in respect of bankers acceptances, letters of credit and performance
bonds (to the extent that such incurrence does not result in the incurrence
of any obligation for the payment of borrowed money of any person other
than the Company or such Subsidiary), all in the ordinary course of
business, in amounts and for the purposes customary in the Company's
industry for gaming operations similar to those of the Company and its
Subsidiaries; provided, however, that the aggregate principal amount
outstanding of such Indebtedness (including any Indebtedness
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issued to refinance, refund or replace such Indebtedness) for the Company
and its Subsidiaries shall at no time exceed $5.0 million;
(b) The Company may incur Indebtedness to any wholly-owned Subsidiary,
and any wholly-owned Subsidiary may incur Indebtedness, or issue
Disqualified Capital Stock, to any other wholly-owned Subsidiary or the
Company; provided, however, that such obligations, in any case where the
Company or a Guarantor is the obligor, shall be subordinated in all
respects to the Company's Obligations pursuant to the New Notes and each
Guarantor's Obligations pursuant to its Guarantee of the Company's
Obligations pursuant to the New Notes, as the case may be; and
(c) The Company and any Subsidiary may post a bond or surety
obligation (or incur an indemnity or similar obligation) in order to
prevent the impairment or loss of or to obtain a Gaming License, to the
extent required by applicable law and consistent in character and amount
with customary industry practice.
'Permitted Liens' means any of the following:
(a) Liens for taxes, assessments or other governmental charges not yet
due or which are being contested in good faith and by appropriate
proceedings by the Company or one or more of its Subsidiaries if adequate
reserves with respect thereto are maintained on the books of the Company or
such Subsidiary or Subsidiaries, as the case may be, in accordance with
GAAP;
(b) Liens of carriers, warehousemen, mechanics, landlords,
materialmen, repairmen and for crew wages or salvage or other like Liens
arising by operation of law in the ordinary course of business and
consistent with industry practices and Liens on deposits made to obtain the
release of such Liens if (i) the underlying obligations are not overdue for
a period of more than 60 days or (ii) such Liens are being contested in
good faith and by appropriate proceedings by the Company or its Subsidiary
and adequate reserves with respect thereto are maintained on the books of
the Company or such Subsidiary, as the case may be, in accordance with
GAAP;
(c) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred or imposed, as
applicable, in the ordinary course of business and consistent with industry
practices which, in the aggregate, are not substantial in amount, and which
do not in any case materially detract from the value of the property
subject thereto (as such property is used by the Company or its Subsidiary)
or interfere with the ordinary conduct of the business of the Company or
such Subsidiary; provided, however, that any such Liens are not incurred in
connection with any borrowing of money or any commitment to loan any money
or to extend any credit;
(d) Liens disclosed on a schedule to the Indenture;
(e) Liens that secure Acquired Indebtedness of the Company or any of
its Subsidiaries, provided, however, in each case, that such Liens do not
secure any other property or assets and were not put in place in connection
with or in anticipation of such acquisition, merger or consolidation;
(f) customary Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance and other types of social
security legislation;
(g) judgment and attachment Liens with respect to judgments and
attachments not giving rise to an Event of Default; and
(h) any Lien in favor of the Company or any wholly-owned Subsidiary
thereof.
'Person' or 'person' means an individual, corporation, partnership,
association, limited liability company, limited liability partnership, trust,
estate or other entity.
'Purchase Money Indebtedness' means any Non-recourse Indebtedness of such
person owed to any seller or other person incurred to finance the acquisition of
any Related Business Assets and incurred substantially concurrently with or
within 30 days following such acquisition.
'Qualified Capital Stock' means any Capital Stock of the Company that is
not Disqualified Capital Stock.
'Qualified Exchange' means any defeasance, redemption, repurchase or other
acquisition of Capital Stock or Subordinated Indebtedness of the Company with
the Net Cash Proceeds received by the Company from the
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substantially concurrent sale of Qualified Capital Stock of the Company or in
exchange for Qualified Capital Stock of the Company.
'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 New Notes are listed or
admitted to trading, or if the New Notes are not listed or admitted to trading
on any national securities exchange, but are traded in the over the counter
market, the closing sale price of the New Notes 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.
'Reference Period' with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
for which financial information is available ended immediately preceding any
date upon which any determination is to be made pursuant to the terms of the New
Notes or the Indenture.
'Refinancing Indebtedness' means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a 'Refinancing'), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock refinanced and (ii) if such Indebtedness being
refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, however, that (A) Refinancing Indebtedness of any Guarantor shall only
be used to refinance outstanding Indebtedness or Disqualified Capital Stock of
such Guarantor, (B) Refinancing Indebtedness shall (x) not have an Average Life
shorter than the Indebtedness or Disqualified Capital Stock to be so refinanced
at the time of such Refinancing and (y) in all respects, be no less
subordinated, if applicable, to the rights of holders of the New Notes than was
the Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have no installment of principal (or redemption)
scheduled to come due earlier than the scheduled maturity of any installment of
principal of the Indebtedness (or Disqualified Capital Stock) to be so
refinanced which was scheduled to come due prior to the Stated Maturity.
'Regulatory Redemption' means (i) a disposition by the Holder of any New
Notes required by any Governmental Authority or the Board of Directors of the
Company or (ii) a redemption or repurchase by the Company of any New Notes
required by any Governmental Authority or the Board of Directors of the Company
if, in either case, the ownership of any of the New Notes by the Holder thereof
will preclude, interfere with, threaten or delay the issuance, maintenance,
existence or reinstatement of any gaming or liquor license, permit or approval,
or result in the imposition of burdensome terms or conditions on such license,
permit or approval.
'Related Business' means the gaming (including parimutuel betting) business
conducted (or proposed to be conducted) by the Company and its Subsidiaries as
of the Issue Date 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.
'Related Business Asset' means property, goods or services pertaining to a
Related Business, other than debt or securities of any other person.
'Restricted Investment' means, in one or a series of related transactions,
any Investment other than in Cash Equivalents and in Investments of the type set
forth in clause (v) of the definition of Cash Equivalents that have a maturity
longer than one year so long as the Average Life of all such Investments does
not exceed 15 months; provided, however, that the extension of credit to
customers of Casinos consistent with industry practice in the ordinary course of
business shall not be a Restricted Investment.
'Restricted Payment' means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Capital Stock of
such person or any Subsidiary of such person, (b) any payment on
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account of the purchase, redemption or other acquisition or retirement for value
of Capital Stock of such person, or any Subsidiary of such person, (c) any
purchase, redemption or other acquisition or retirement for value of, or any
defeasance of, any Subordinated Indebtedness, directly or indirectly, by such
person or a Subsidiary of such person, prior to the scheduled maturity, any
scheduled repayment of principal or any scheduled sinking fund payment, as the
case may be, of such Subordinated Indebtedness (including any payment in respect
of any amendment of the terms of any such Subordinated Indebtedness, which
amendment is sought in connection with any such acquisition of such Indebtedness
or seeks to shorten any such due date), and (d) any Restricted Investment
(including, in any case, the designation of a person as an Unrestricted
Subsidiary) by such person; provided, however, that the term 'Restricted
Payment' does not include (i) any dividend, distribution or other payment on or
with respect to Capital Stock of an issuer to the extent payable solely in
shares of Qualified Capital Stock of such issuer; (ii) any dividend,
distribution or other payment to the Company, or to any of its wholly-owned
Subsidiaries, by any of its Subsidiaries; (iii) Investments in or loans to a
wholly-owned Subsidiary the proceeds of which are used by such Subsidiary in a
Related Business activity of such Subsidiary; (iv) loans or advances to officers
or employees of the Company or any of its Subsidiaries to pay business related
expenses or relocation costs of such officers or employees in connection with
their employment by the Company or any of its Subsidiaries in an aggregate
amount outstanding at any time not exceeding $5.0 million for all such officers
and employers; (v) any Investment received as consideration for any Asset Sale
to the extent that the Company or any of its Subsidiaries is permitted to
receive such Investment without violating the provisions of the covenant
'--Limitation on Sale of Assets and Subsidiary Stock; Event of Loss'; and (vi)
Investments received as part of the settlement of litigation or in satisfaction
of extensions of credit to any Person otherwise permitted under the Indenture
pursuant to the reorganization, bankruptcy or liquidation of such Person.
'Significant Subsidiary' means any Subsidiary that would be a 'significant
subsidiary' as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act of 1933, as amended, as such regulation is in
effect on the date hereof.
'SIRCC' means Southern Illinois Riverboat/Casino Cruises, Inc., an Illinois
corporation.
'Stated Maturity,' when used with respect to the principal of any New Note,
means April 15, 2005 and, with respect to interest on any New Note, means the
scheduled date for payment of such interest.
'Subordinated Indebtedness' means Indebtedness of the Company or a
Guarantor, as applicable, that is subordinated by its express terms in right of
payment to the New Notes or any Guarantee, as applicable, in all respects and
has no scheduled installment of principal due, by maturity, redemption, sinking
fund payment or otherwise, on or prior to the Stated Maturity of the New Notes.
'Subsidiary,' with respect to any person, means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such person,
by such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person or (ii) any other person (other than a corporation)
in which such person, one or more Subsidiaries of such person, or such person
and one or more Subsidiaries of such person, directly or indirectly, at the date
of determination thereof has at least a majority ownership interest. When used
with respect to the Company, Subsidiary shall be deemed to include any direct
Subsidiary of the Company and each indirect Subsidiary that is a direct
Subsidiary of the Company or one or more of its direct or indirect Subsidiaries.
Notwithstanding the foregoing, no Unrestricted Subsidiary shall be a Subsidiary
of the Company or any of its Subsidiaries.
'Unrestricted Subsidiary' means any person that, at the time of
determination, shall be an Unrestricted Subsidiary (as designated by the Board
of Directors of the Company, as provided below) provided that such person shall
not engage, to any substantial extent, in any line or lines of business activity
other than a Related Business. The Board of Directors of the Company may
designate any person (including any newly acquired or newly formed Subsidiary at
or prior to the time it is so formed or acquired) to be an Unrestricted
Subsidiary if (a) such Restricted Payment is not prohibited by the terms of the
covenant '--Limitation on Restricted Payments;' provided, however, that the
determination of whether a Restricted Payment is prohibited under such covenant
may be made without reference to clause (3) of the first paragraph thereof in
the case of an Investment in any person that would be a Subsidiary but for the
designation as an Unrestricted Subsidiary (except that the definition of
'Subsidiary,' solely for purposes of this proviso, shall be modified by
substituting '50% or more' for the words 'a majority' in clause (i) of such
definition and the word 'majority' in clause (ii) of such definition) engaged
solely in, or being formed solely for the purposes of engaging in, the business
of developing,
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constructing, expanding or acquiring (y) a Casino or Casinos and, if applicable,
any Related Businesses in connection with such Casino or Casinos, or (z) a
Related Business to be used primarily in connection with an existing Casino or
Casinos in which the Company or its Subsidiaries have at least a fifty percent
(50%) ownership interest, if (A) the Consolidated Coverage Ratio of the Company
for the Reference Period immediately preceding the date of such designation is
not less than 3.25 to 1; or (B) the ratio of the Consolidated Debt of the
Company as of the date of such designation to Consolidated EBITDA of the Company
for such Reference Period is less than 3.25 to 1; provided, further, that the
full amount of any Restricted Payment pursuant to the foregoing proviso shall be
deducted in the calculation of the aggregate amount of Restricted Payments
available to be made pursuant to clause (3) of the covenant '--Limitation on
Restricted Payments;' (b) such person does not own any Capital Stock of, or own
or hold any Lien on any property of, or hold any debt of, the Company or any
Guarantor and (c) such person does not, at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable with respect to any Indebtedness pursuant to which the
holder of such Indebtedness has recourse to any of the assets of the Company or
any of its Subsidiaries. Any such designation also constitutes a Restricted
Payment for purposes of the covenant '--Limitation on Restricted Payments.' The
Board of Directors of the Company may designate any Unrestricted Subsidiary to
be a Subsidiary, provided, however, that (i) no Default or Event of Default is
existing or will occur as a consequence thereof and (ii) immediately after
giving effect to such designation, on a pro forma basis, the Company could incur
at least $1.00 of additional Subordinated Indebtedness pursuant to clause (ii)
of paragraph (a) of the covenant described under '--Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock.' Each such designation
shall be evidenced by filing with the Trustee a certified copy of the resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. Notwithstanding
anything to the contrary, no Initial Guarantor may be designated an Unrestricted
Subsidiary.
'U.S. Government Obligations' means direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
'U.S. Legal Tender' means such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts.
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes will initially be issued in the
form of one or more registered notes in global form (the 'Global New Notes').
Each Global New Note will be deposited on the Expiration Date with, or on behalf
of, The Depository Trust Company (the 'Depository') and registered in the name
of Cede & Co., as nominee of the Depository.
DTC has advised the Company that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a member of the Federal
Reserve System, (iii) a 'clearing corporation' within the meaning of the Uniform
Commercial Code, as amended, and (iv) a 'Clearing Agency' registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants (collectively, the 'Participants') and facilitates the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes to the accounts of its Participants, thereby
eliminating the need for physical transfer and delivery of certificates. The
Depository's Participants include securities brokers and dealers (including the
Initial Purchasers), banks and trust companies, clearing corporations and
certain other organizations. Access to the Depository's system is also available
to other entities such as banks, brokers, dealers and trust companies
(collectively, the 'Indirect Participants') that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
Holders of Notes that are Participants may elect to hold Notes through the
Depository. Holders of Notes who are not Participants may beneficially own
securities held by or on behalf of the Depository only through Participants or
Indirect Participants.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global New Notes, the Depository will credit
the accounts of Participants which have elected to receive New Notes pursuant to
the Exchange Offer with an interest in the Global New Note and (ii) ownership of
New Notes will be shown on, and the transfer of ownership thereof will be
effected through, records maintained by the Depository (with respect to the
interests of Participants), the Participants and the Indirect Participants. The
laws of some states require that certain persons take physical delivery in
definitive form of securities that they own
83
<PAGE>
and that security interests in negotiable instruments can only be perfected by
delivery of certificates representing the instruments. As a result, the ability
of a person having a beneficial interest in New Notes represented by a Global
New Note to pledge such interest to persons or entities that do not participate
in the Depository's system or to otherwise take actions with respect to such
interest, may be affected by the lack of a physical certificate evidencing such
interest.
So long as the Depository or its nominee is the registered owner of a
Global New Note, the Depository or such nominee, as the case may be, will be
considered the sole owner or Holder of the New Notes represented by the Global
New Note for all purposes under the Indenture. Except as provided below, owners
of beneficial interests in a Global New Note will not be entitled to have New
Notes represented by such Global New Note registered in their names, will not
receive or be entitled to receive physical delivery of Certificated Securities,
and will not be considered the owners or holders thereof under the Indenture for
any purpose, including with respect to the giving of any directions,
instructions or approvals to the Trustee thereunder.
Payments with respect to the principal of, premium, if any, and interest on
any New Notes represented by a Global New Note registered in the name of the
Depository or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of the Depository or its nominee in its capacity
as the registered holder of the Global New Note representing such New Notes
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee may treat the persons in whose names the New Notes, including the Global
New Notes, are registered as the owners thereof for the purpose of receiving
such payments and for any and all other purposes whatsoever. Consequently,
neither the Company nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of New Notes
(including principal, premium, if any, and interest), or to immediately credit
the accounts of the relevant Participants with such payment, in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in the Global New Note as shown on the records of the Depository.
Payments by the Participants and the Indirect Participants to the beneficial
owners of New Notes will be governed by standing instructions and customary
practice and will be the responsibility of the Participants or the Indirect
Participants.
CERTIFICATED SECURITIES
Any person having a beneficial interest in a Global New Note may, upon
request to the Trustee, exchange such beneficial interest for Certificated
Securities. Upon any such issuance, the Trustee is required to register such
Certificated Securities in the name of such person or persons (or the nominee of
any thereof), and cause the same to be delivered thereto. In addition, if (i)
the Company notifies the Trustee in writing that the Depository is no longer
willing or able to act as a depository and the Company is unable to locate a
qualified successor with 90 days or (ii) the Company, at its option, notifies
the Trustee in writing that it elects to cause the issuance of New Notes in
definitive form under the Indenture, then, upon surrender by the Depository of
its Global New Note, Certificated Securities will be issued to each person that
the Depository identifies as the beneficial owner of the New Notes represented
by the Global New Note.
Neither the Company nor the Trustee shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related New Notes and each such person may conclusively
rely on, and shall be protected in relying on, instructions from the Depository
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the New Notes to be issued).
84
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference, the following documents filed
with the Commission under the Exchange Act:
<TABLE>
<S> <C>
(a) The Company's Annual Report on Form 10-K for the year ended March 31, 1995, including all amendments
thereto;
(b) The Company's Current Report on Form 8-K dated July 20, 1995 (regarding the proposed President
Casino IV Riverboat acquisition, Hyatt Joint Venture and Shreveport Letter of Intent);
(c) The description of the Company's Common Stock contained in the Company's General Form for
Registration of Securities (Form 10) dated August 13, 1986, File No. 0-14897, filed by the Company
to register such securities under the Exchange Act, including all amendments and reports filed for
the purpose of updating such description prior to the termination of the Exchange Offer;
(d) The information under the captions entitled 'Compensation Committee Interlocks and Insider
Participation' and 'Certain Transactions' on pages 13-16 of the Company's Proxy Statement dated
August 11, 1995 relating to its 1995 Annual Meeting of Stockholders; and
(e) All documents and reports subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to termination of the Exchange
Offer, shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing of such documents or reports.
</TABLE>
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded, except as so modified or superseded, shall
not be deemed to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any or all of the documents incorporated herein by reference,
other than exhibits to such documents unless they are specifically incorporated
by reference into such documents. Requests for such copies should be directed
to: Peter J. Aranow, Executive Vice President, Chief Financial Officer and
Secretary, Players International, Inc., 800 Bilbo Street, Lake Charles,
Louisiana 70601, (518) 387-1560.
LEGAL MATTERS
The validity of the New Notes will be passed upon for the Company by
Morgan, Lewis & Bockius, Philadelphia, Pennsylvania.
EXPERTS
The consolidated financial statements of Players International, Inc. at
March 31, 1995 and for the year then ended, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and in
the Registration Statement and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
The financial statements of the Company as of and for the years ended March
31, 1993 and 1994 included or incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
85
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1994 AND 1995
YEARS ENDED MARCH 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Auditors.......................................................................... F-2
Report of Independent Public Accountants................................................................ F-3
Audited Financial Statements:
Consolidated Balance Sheets........................................................................... F-4
Consolidated Statements of Operations................................................................. F-5
Consolidated Statements of Stockholders' Equity....................................................... F-6
Consolidated Statements of Cash Flows................................................................. F-7
Notes to Consolidated Financial Statements............................................................ F-9
</TABLE>
The financial statements for the three month periods ended June 30, 1994
and 1995 are unaudited.
<TABLE>
<S> <C>
Unaudited Financial Statements:
Condensed Consolidated Balance Sheet as of June 30, 1995.............................................. F-19
Condensed Consolidated Statements of Operations....................................................... F-21
Condensed Consolidated Statements of Cash Flows....................................................... F-22
Notes to Condensed Consolidated Financial Statements.................................................. F-23
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Players International, Inc.
We have audited the accompanying consolidated balance sheet of Players
International, Inc. as of March 31, 1995 and the related consolidated statements
of operations, stockholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Players International, Inc. as of March 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 19, 1995
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of Players International, Inc.:
We have audited the accompanying consolidated balance sheet of PLAYERS
INTERNATIONAL, INC. (a Nevada corporation) and subsidiaries as of March 31,
1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended March 31, 1994 and 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Players International, Inc.
and subsidiaries as of March 31, 1994, and the results of their operations and
their cash flows for the years ended March 31, 1994 and 1993 in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
May 24, 1994
F-3
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE)
ASSETS
<TABLE>
<CAPTION>
MARCH 31,
----------------------
1994 1995
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................................ $ 13,957 $ 23,886
Marketable securities, net (Note 2).................................................. 63,589 26,446
Accounts receivable, net of allowance for doubtful accounts of $43 at March 31, 1994
and $130 at March 31, 1995........................................................ 949 1,351
Notes receivable..................................................................... 1,320 1,279
Inventories.......................................................................... 494 863
Deferred income tax (Note 5)......................................................... 1,773 2,345
Prepaid expenses and other current assets............................................ 1,415 5,452
---------- ----------
Total current assets.............................................................. 83,497 61,622
---------- ----------
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $3,619 at
March 31, 1994 and $10,248 at March 31, 1995 (Note 4)................................ 46,899 118,105
---------- ----------
DEFERRED INCOME TAX -- long-term (Note 5).............................................. 3,180 1,943
---------- ----------
INTANGIBLES, net (Note 1).............................................................. 1,716 39,130
---------- ----------
OTHER ASSETS........................................................................... 3,273 2,990
---------- ----------
$ 138,565 $ 223,790
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 7)........................................... $ 154 $ 3,375
Accounts payable..................................................................... 2,669 8,233
Accrued liabilities (Note 3)......................................................... 9,877 27,030
Other liabilities.................................................................... 548 669
Income taxes payable (Note 5)........................................................ 2,893 --
---------- ----------
Total current liabilities......................................................... 16,141 39,307
---------- ----------
OTHER LONG-TERM LIABILITIES (Note 6)................................................... 869 2,808
---------- ----------
LONG-TERM DEBT, net of current portion (Note 7)........................................ 5,711 5,532
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, Authorized -- 10,000,000 shares, Issued and
outstanding -- none............................................................... -- --
Common stock, $.005 par value, Authorized -- 90,000,000 shares, Issued and
outstanding -- 26,357,100 shares at March 31, 1994 and 29,672,400 shares at March
31, 1995.......................................................................... 132 148
Additional paid-in capital........................................................... 106,883 121,712
Unrealized loss on marketable securities, net of tax................................. (150) (451)
Retained earnings.................................................................... 8,979 54,734
---------- ----------
Total stockholders' equity........................................................ 115,844 176,143
---------- ----------
$ 138,565 $ 223,790
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Casino................................................................ $ 4,606 $ 95,873 $ 210,942
Food and beverage..................................................... 546 5,314 7,406
Other................................................................. 577 5,895 5,347
------------ ------------ ------------
5,729 107,082 223,695
------------ ------------ ------------
COSTS AND EXPENSES:
Casino................................................................ 2,177 35,145 74,839
Food and beverage..................................................... 505 5,094 6,799
Other gaming related and general costs................................ 1,712 23,680 48,050
Corporate administrative expenses..................................... -- 2,675 7,276
Pre-opening and gaming development costs.............................. 4,995 7,026 9,117
Depreciation and amortization......................................... 180 3,706 7,065
Option and stock compensation expense................................. -- 2,868 --
------------ ------------ ------------
9,569 80,194 153,146
------------ ------------ ------------
Income (loss) from continuing operations before other income (expense)
and provision for income taxes...................................... (3,840) 26,888 70,549
------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest income....................................................... 6 1,623 3,340
Other income, net..................................................... -- 83 275
Interest expense...................................................... (274) (887) (694)
------------ ------------ ------------
(268) 819 2,921
------------ ------------ ------------
Income (loss) from continuing operations before provision for income
taxes............................................................... (4,108) 27,707 73,470
PROVISION FOR INCOME TAXES.............................................. 34 10,255 27,715
------------ ------------ ------------
Income (loss) from continuing operations.............................. (4,142) 17,452 45,755
------------ ------------ ------------
DISCONTINUED OPERATIONS (Note 13):
Loss from discontinued operations..................................... (6,071) -- --
Loss on disposition of discontinued operations, including a provision
of $748 for operating losses during phase out period................ (960) -- --
------------ ------------ ------------
(7,031) -- --
------------ ------------ ------------
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE..................... -- 3,500 --
------------ ------------ ------------
NET INCOME (LOSS)....................................................... $ (11,173) $ 20,952 $ 45,755
------------ ------------ ------------
------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING
(Note 1).............................................................. 13,042,500 28,436,600 31,169,600
------------ ------------ ------------
------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING ASSUMING FULL DILUTION (Note 1)............... 13,042,500 28,987,200 31,636,700
------------ ------------ ------------
------------ ------------ ------------
EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE:
From continuing operations $ (.32) $ .61 $ 1.47
From change in accounting principle................................... -- .12 --
From discontinued operations.......................................... (.54) -- --
------------ ------------ ------------
$ (.86) $ .73 $ 1.47
------------ ------------ ------------
------------ ------------ ------------
EARNINGS PER COMMON SHARE -- ASSUMING FULL DILUTION:
From continuing operations............................................ $ (.32) $ .60 $ 1.45
From change in accounting principle................................... -- .12 --
From discontinued operations.......................................... (.54) -- --
------------ ------------ ------------
$ (.86) $ .72 $ 1.45
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED MARCH 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL ACCUMULATED
-------------------------- PAID-IN UNREALIZED EARNINGS
SHARES AMOUNT CAPITAL LOSS (DEFICIT)
------------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, March 31, 1992........................... 12,417,200 $ 62 $ 2,728 $ -- $ (800)
Shares issued for contract settlement........... 527,100 3 2,282 -- --
Shares issued under stock option plans.......... 423,600 2 322 -- --
Shares issued for warrants exercised............ 2,152,200 11 5,156 -- --
Shares issued in exchange of debentures......... 396,100 2 861 -- --
Shares issued for services...................... 75,000 -- 201 -- --
Proceeds allocated to warrants issued in
conjunction with sale of 15 percent series
A&B exchangeable debentures (Note 9)......... -- -- 257 -- --
Net Loss........................................ -- -- -- -- (11,173)
------------- ----------- ---------- ----------- ------------
BALANCE, March 31, 1993........................... 15,991,200 80 11,807 -- (11,973)
Shares issued under stock option plans.......... 502,800 3 948 -- --
Shares issued for warrants exercised............ 245,100 1 912 -- --
Shares issued in exchange for debentures........ 2,028,700 10 4,413 -- --
Shares sold in public offering and subsequent
registration costs........................... 7,499,300 38 85,935 -- --
Shares issued in connection with employment
contracts.................................... 90,000 -- 1,065 -- --
Compensation in connection with nonemployee
directors' options........................... -- -- 1,803 -- --
Unrealized loss on marketable securities, net of
tax.......................................... -- -- -- (150) --
Net income -- -- -- -- 20,952
------------- ----------- ---------- ----------- ------------
BALANCE, March 31, 1994........................... 26,357,100 132 106,883 (150) 8,979
Shares issued under stock option plans.......... 277,700 1 688 -- --
Shares issued in exchange for land.............. 381,000 2 4,237 -- --
Shares issued for warrants exercised............ 2,656,600 13 7,261 -- --
Tax benefit from exercise of nonqualified
options...................................... -- -- 2,643 -- --
Change in unrealized loss on marketable
securities, net of tax....................... -- -- -- (301) --
Net income...................................... -- -- -- -- 45,755
------------- ----------- ---------- ----------- ------------
BALANCE, March 31, 1995........................... 29,672,400 $ 148 $ 121,712 $ (451) $ 54,734
------------- ----------- ---------- ----------- ------------
------------- ----------- ---------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
-------------------------------
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................................. $ (11,173) $ 20,952 $ 45,755
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization.............................................. 180 3,706 7,065
Option and stock compensation expense...................................... -- 2,868 --
Net benefit realized from deferred tax asset............................... -- (1,299) --
Loss from discontinued operations.......................................... 6,071 -- --
Loss on disposition of discontinued operations............................. 960 -- --
Cumulative effect of change in accounting principle........................ -- (3,500) --
Other...................................................................... -- 141 279
Changes in assets and liabilities, net of effects of discontinued operations:
Accounts and notes receivable.............................................. (19) (2,292) (450)
Inventories................................................................ (135) (349) (369)
Prepaid expenses and other current assets.................................. (335) (1,080) (4,037)
Other assets............................................................... (593) (2,741) 780
Accounts payable........................................................... 1,460 1,211 1,934
Accrued interest........................................................... 880 (880) --
Accrued liabilities........................................................ 1,320 8,871 1,487
Other liabilities.......................................................... 150 1,081 (340)
Net effect of discontinued operations......................................... (2,871) (2,822) --
--------- --------- ---------
Net cash provided by (used in) operating activities........................ (4,105) 23,867 52,104
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property and equipment....................................... (5,195) (33,845) (62,419)
Costs in excess of fair value of tangible assets acquired..................... -- (1,755) (24,090)
Purchases of marketable securities............................................ -- (63,922) (22,970)
Proceeds from sale of marketable securities................................... -- -- 59,509
Other assets -- pre-opening costs -- riverboat................................ 550 -- --
Net effect of discontinued operations......................................... 281 423 --
--------- --------- ---------
Net cash used in investing activities...................................... (4,364) (99,099) (49,970)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt, net of debt issuance costs....................... 6,991 -- --
Payments of long-term debt.................................................... (28) (7,133) (169)
Proceeds allocated to warrants issued in conjunction with sale of 15 percent
series A&B exchangeable debentures (Note 9)................................ 257 -- --
Issuance of common stock for warrants exercised............................... 5,168 263 7,273
Proceeds from sale of common stock, net of all issuance and subsequent
registration costs......................................................... -- 85,973 --
Proceeds from exercise of stock options....................................... 524 1,601 691
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-7
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
-------------------------------
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Net effect of discontinued operations......................................... (219) (306) --
--------- --------- ---------
Net cash provided by financing activities.................................. 12,693 80,398 7,795
--------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS....................................... 4,224 5,166 9,929
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................ 4,567 8,791 13,957
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD...................................... $ 8,791 $ 13,957 $ 23,886
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL CASH FLOW INFORMATION:
CONTINUING OPERATIONS:
Interest paid, including amount capitalized................................... $ 249 $ 2,050 $ 694
Income taxes paid............................................................. -- 8,761 30,102
Debt incurred to purchase property and equipment.............................. 10,513 -- 3,200
Common stock issued for purchase of land...................................... -- -- 4,238
Accrued liabilities incurred to purchase property and equipment............... -- -- 8,005
Accrued liabilities relating to costs in excess of fair value of tangible
assets acquired............................................................ -- -- 13,441
Tax benefit related to exercise of non-qualified stock options................ -- -- 2,643
Debentures exchanged for common stock......................................... 908 4,650 --
Debenture loan costs amortized into additional paid-in capital................ 44 227 --
Land transferred to joint venture............................................. -- 167 --
Unrealized loss on marketable securities, net of tax.......................... -- 150 301
DISCONTINUED OPERATIONS:
Interest paid................................................................. 73 27 --
Taxes paid.................................................................... 34 -- --
Debt incurred to purchase property and equipment.............................. 57 -- --
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-8
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Players International, Inc. ('the Company') through wholly owned
subsidiaries operates three riverboat casinos and a horse racetrack facility.
Through another wholly owned subsidiary, the Company expects to open a
land-based hotel and casino in Mesquite, Nevada on or about July 1, 1995. All
operations include food and beverage facilities. A retail gift shop is also
included in the operations of each casino.
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Certain reclassifications have been made to the consolidated financial
statements as previously presented to conform to the current classifications.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash and cash
equivalents are carried at cost which approximates market value.
Investments
In May, 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115 ('SFAS 115'), 'Accounting for Certain
Investments in Debt and Equity Securities.' The Company adopted the provisions
of the new standard for investments held as of or acquired after March 31, 1994.
Pursuant to SFAS 115, management has determined that the Company's marketable
securities should be classified as available-for-sale. As available-for-sale
investments, these securities are carried at fair value (previously carried at
amortized cost) and unrealized gains and losses are reported in a separate
component of stockholders' equity. The amortized cost of investments is adjusted
for amortization of premiums and the accretion of discounts to maturity. Such
amortization is included in interest income. Realized gains and losses are
included in other income. The cost of securities sold is based on the specific
identification method.
Revenues and Promotional Allowances
Casino revenues are the net of gaming wins less losses. Revenues exclude
the retail value of complimentary admissions, food and beverage and other items
furnished to customers, which totaled approximately $141,000, $3,385,000 and
$9,916,000 for the years ended March 31, 1993, 1994 and 1995, respectively.
The estimated costs of providing such complimentary services are included
in casino costs and expenses through inter-department allocations from the
department granting the services as follows (dollars in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Food and beverage.................................................. $ 70 $ 1,398 $ 5,583
Admissions......................................................... -- 1,548 2,848
Other.............................................................. 49 218 717
--------- --------- ---------
$ 119 $ 3,164 $ 9,148
--------- --------- ---------
--------- --------- ---------
</TABLE>
Pre-opening and Gaming Development Costs
The Company is currently pursuing expansion opportunities in new gaming
jurisdictions. All pre-opening and gaming development costs are expensed as they
are incurred except for the cost of property and equipment which is capitalized.
F-9
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Inventories
Inventories consisting of food, beverage and gift items are stated at the
lower of cost (first-in, first-out) or market.
Depreciation and Amortization
The Company computes depreciation for property and equipment using
primarily the straight-line method over the estimated useful life of the assets.
Amortization of leasehold and land improvements is computed using the
straight-line method over the lesser of the estimated useful life or lease term.
The following estimated useful lives are used:
<TABLE>
<S> <C>
Riverboat..................................... 10 years
Furniture, fixtures and equipment............. 5 to 7 years
Building and improvements..................... 10 to 20 years
</TABLE>
Intangibles
Costs in excess of fair value of tangible assets acquired are recorded as
intangibles on the accompanying consolidated balance sheets and are being
amortized using the straight-line method over 15 years. At March 31, 1995 the
increase in intangibles of $37,531,000 primarily related to the purchase of a
riverboat.
The Company periodically evaluates whether the remaining estimated useful
life of intangibles may warrant revision or the remaining balance of intangibles
may not be recoverable, generally based upon expectations of nondiscounted cash
flows and operating income. Based on present operations and strategic plans, the
Company believes that no impairment of intangibles has occurred.
Per Share Amounts
Per share amounts have been computed based on the weighted average number
of outstanding shares and common stock equivalents, if dilutive, during each
period. All per share amounts and shares outstanding reflect the 3-for-2 stock
split declared on April 26, 1995 for stockholders of record at the close of
business on May 8, 1995. For the year ended March 31, 1993, the effect of
options and warrants was not considered since they were antidilutive. A summary
of the number of shares used in computing primary earnings per share follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Weighted average number of shares
outstanding....................................... 13,042,500 23,669,400 27,233,000
Dilutive effect of options and warrants............. -- 4,767,200 3,936,600
------------ ------------ ------------
Shares used in computing primary earnings per
share............................................. 13,042,500 28,436,600 31,169,600
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The number of shares used in computing fully diluted earnings per share for
the year ended March 31, 1994 includes the conversion of convertible debentures
as of April 1, 1993. Also, net income includes the elimination of interest
expense on the convertible debentures of $116,000, net of tax. Fully diluted
earnings per share reflect additional dilution related to stock options, due to
the use of the market price at the end of the period, when higher than the
average price for the period. As a result, the number of shares used in
computing fully diluted earnings per share is as follows:
F-10
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Weighted average number of shares
outstanding....................................... 13,042,500 23,669,400 27,233,000
Dilutive effect of exchangeable debentures.......... -- 550,600 --
Dilutive effect of options and warrants............. -- 4,767,200 4,403,700
------------ ------------ ------------
Shares used in computing fully diluted earnings per
share............................................. 13,042,500 28,987,200 31,636,700
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
2. MARKETABLE SECURITIES
All marketable securities at March 31, 1994 and 1995 are municipal bonds.
The following is a summary of marketable securities as of March 31, 1994 and
1995 (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Cost.................................................................... $ 63,844 $ 27,165
Gross unrealized losses................................................. (255) (719)
--------- ---------
Estimated fair value.................................................... $ 63,589 $ 26,446
--------- ---------
--------- ---------
</TABLE>
The gross realized gains and (losses) on marketable securities totaled
$136,000 and ($30,000) for the year ended March 31, 1995. There were no realized
gains or (losses) for the years ended March 31, 1994 and 1993.
The contractual maturities of marketable securities at March 31, 1995 were
(dollars in thousands):
<TABLE>
<S> <C> <C>
ESTIMATED
COST FAIR VALUE
--------- -----------
Due in one year or less................................................ $ -- $ --
Due in one year through five years..................................... $ 22,147 $ 21,552
Due after five years................................................... $ 5,018 $ 4,894
</TABLE>
3. ACCRUED LIABILITIES
A summary of the accrued liabilities is as follows (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Medical insurance claims................................................. $ 618 $ 842
Chip and token liability................................................. 245 322
Accrued payroll and related expenses..................................... 3,074 3,253
Accrued expenses......................................................... 5,940 7,197
Current portion of liabilities related to the purchase of a riverboat.... -- 15,416
--------- ---------
$ 9,877 $ 27,030
--------- ---------
--------- ---------
</TABLE>
F-11
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY AND EQUIPMENT
A summary of property and equipment, stated at cost is as follows:
<TABLE>
<CAPTION>
MARCH 31,
----------------------
1994 1995
---------- ----------
<S> <C> <C>
Land.................................................................. $ 1,133 $ 14,828
Riverboat and barges.................................................. 22,798 44,607
Furniture, fixtures and equipment..................................... 16,270 25,975
Leasehold and land improvements....................................... 10,063 12,000
Construction in progress.............................................. 254 30,943
Less -- accumulated depreciation and amortization..................... (3,619) (10,248)
---------- ----------
$ 46,899 $ 118,105
---------- ----------
---------- ----------
</TABLE>
5. INCOME TAXES
Effective April 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by FASB
Statement No. 109, 'Accounting for Income Taxes'. As permitted under the new
rules, prior years' financial statements have not been restated.
The cumulative effect of adopting Statement 109 as of April 1, 1993 was to
increase net income by $3,500,000.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of March 31, 1994 and 1995
are as follows (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Deferred tax assets:
Reserve for discontinued operations...................................... $ 689 $ 607
Pre-opening, development and other costs................................. 3,696 4,422
Unrealized loss on marketable securities................................. 95 268
Accrued liabilities and prepaid expenses................................. -- 1,305
Deferred revenue......................................................... 422 268
Accrual of directors' option expense..................................... 674 558
--------- ---------
Total deferred tax assets............................................. 5,576 7,428
Deferred tax liabilities:
Tax over book depreciation............................................... 616 1,626
Prepaid expenses......................................................... -- 394
Other.................................................................... 7 1,120
--------- ---------
Total deferred tax liabilities........................................ 623 3,140
--------- ---------
Net deferred tax assets.................................................... $ 4,953 $ 4,288
--------- ---------
--------- ---------
</TABLE>
F-12
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. INCOME TAXES--(CONTINUED)
Significant components of the provision for income taxes attributable to
continuing operations are as follows (dollars in thousands):
<TABLE>
<CAPTION>
DEFERRED LIABILITY METHOD
METHOD ------------------------------------
MARCH 31, 1993 MARCH 31, 1994 MARCH 31, 1995
--------------------- ----------------- -----------------
<S> <C> <C> <C>
Current:
Federal............................ $ -- $ 9,324 $ 23,263
State.............................. 34 2,004 4,451
--- ----------------- -----------------
Total current...................... 34 11,328 27,714
Deferred:
Federal............................ -- (873) (89)
State.............................. -- (200) 90
--- ----------------- -----------------
Total deferred....................... -- (1,073) 1
--- ----------------- -----------------
$ 34 $ 10,255 $ 27,715
--- ----------------- -----------------
--- ----------------- -----------------
</TABLE>
The reconciliation of income tax attributable to continuing operations
computed at the Federal statutory rates to income tax expense is:
<TABLE>
<CAPTION>
DEFERRED LIABILITY METHOD
METHOD ------------------------------------------------
MARCH 31, 1993 MARCH 31, 1994 MARCH 31, 1995
--------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Federal statutory rate............... (34%) 35% 35%
State taxes on income, net of Federal
income tax benefit................. 1 4 4
Losses producing no current tax
benefit............................ 32 -- --
Tax exempt interest income from
municipal bonds.................... -- (2) (1)
-- --
---
Financial statement provision rate... (1%) 37% 38%
-- --
---
</TABLE>
6. OTHER LONG-TERM LIABILITIES
A summary of other long-term liabilities follows (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Long-term portion of liabilities related to purchase of a riverboat........ $ -- $ 2,400
Other...................................................................... 869 408
--------- ---------
$ 869 $ 2,808
--------- ---------
--------- ---------
</TABLE>
F-13
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. LONG-TERM DEBT
A summary of long-term debt is as follows (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
First Ships Mortgage, secured by a riverboat, interest at prime plus 2
percent (8 percent at March 31, 1994 and 1995) adjusted every 60
months, payable in monthly installments of $49, due 2013............... $ 5,803 $ 5,669
Note payable to Gem Gaming, Inc., unsecured, interest at 9% per year,
principal due the earlier of the opening of the Mesquite facility or
December 31, 1995...................................................... -- 3,200
Other.................................................................... 62 38
--------- ---------
5,865 8,907
Less -- current portion (154) (3,375)
--------- ---------
$ 5,711 $ 5,532
--------- ---------
--------- ---------
</TABLE>
The aggregate annual maturities of long-term debt at March 31, 1995 are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDING MARCH:
-----------------
<S> <C>
1996........................................................ $3,375
1997........................................................ 164
1998........................................................ 169
1999........................................................ 184
2000........................................................ 199
Thereafter.................................................. 4,816
---------
$8,907
---------
---------
</TABLE>
8. STOCKHOLDERS' EQUITY
In July 1993, the Company issued 7,499,250 shares of its $.005 par value
common stock in a public offering. The price to the public was $12.50 per share.
Net proceeds of the offering, after deducting all associated costs, were
$86,238,400, or $11.50 per newly issued share.
9. COMMON STOCK OPTIONS AND WARRANTS
The Company has four stock option plans, the 1985 Incentive Stock Option
Plan ('1985 Plan') for employees covering 600,000 shares of common stock, the
1990 Incentive Stock Option and Non-Qualified Option Plan covering 1,200,000
shares of common stock ('1990 Plan'), the 1993 Incentive Stock Option and
Non-Qualified Option Plan covering 3,000,000 shares of common stock ('1993
Plan'), and the 1994 Directors Stock Incentive Plan ('1994 Plan') covering
900,000 shares of common stock. As of March 31, 1995, the Company had 116,686,
495,375, 286,500 and 840,000 shares available for issuance in connection with
future options that may be granted under the 1985 Plan, 1990 Plan, 1993 Plan and
1994 Plan, respectively. Options granted are generally exercisable between three
and ten years from date of grant.
F-14
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. COMMON STOCK OPTIONS AND WARRANTS--(CONTINUED)
The following is a summary of the 1985, 1990, 1993, and 1994 Plans:
<TABLE>
<CAPTION>
1985 1990 1993 1994
PLAN PLAN PLAN PLAN SUB-TOTAL
--------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Outstanding March 31, 1992............................. 418,875 -- -- -- 418,875
Granted.............................................. 15,000 936,375 -- -- 951,375
Exercised............................................ (75,000) (12,000) -- -- (87,000)
Expired or canceled.................................. (96,375) (720,000) -- -- (816,375)
--------- --------- ---------- --------- ----------
Outstanding March 31, 1993............................. 262,500 204,375 -- -- 466,875
Granted.............................................. -- 262,500 628,500 -- 891,000
Exercised............................................ (207,170) (48,225) -- -- (255,395)
Expired or canceled.................................. (9,701) (2,250) -- -- (11,951)
--------- --------- ---------- --------- ----------
Outstanding March 31, 1994............................. 45,629 416,400 628,500 -- 1,090,529
Granted.............................................. -- 267,000 1,995,000 60,000 2,322,000
Exercised............................................ (9,652) (12,737) -- -- (22,389)
Expired or canceled.................................. (7,500) (42,750) -- -- (50,250)
--------- --------- ---------- --------- ----------
Outstanding March 31, 1995............................. 28,477 627,913 2,623,500 60,000 3,339,890
--------- --------- ---------- --------- ----------
--------- --------- ---------- --------- ----------
Exercisable at March 31, 1995.......................... 16,327 257,927 439,502 -- 713,756
--------- --------- ---------- --------- ----------
--------- --------- ---------- --------- ----------
</TABLE>
In addition to the foregoing plans, other option and warrant activity is
listed below including total for all plans and the exercise price range per
share:
<TABLE>
<CAPTION>
NON-EMPLOYEE OTHER EXERCISE PRICE
DIRECTORS OPTIONS WARRANTS TOTAL RANGE PER SHARE
------------- ---------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Outstanding March 31, 1992............ -- 1,532,347 -- 1,951,222 $0.33 - $2.83
Granted............................. -- 161,544 7,237,544 8,350,463 $1.19 - $6.92
Exercised........................... -- (336,645) (2,152,161) (2,575,806) $0.33 - $3.00
Expired or canceled................. -- (740,292) -- (1,556,667) $0.33 - $2.50
------------- ---------- ----------- -----------
Outstanding March 31, 1993............ -- 616,954 5,085,383 6,169,212 $0.33 - $6.92
Granted............................. 332,877 -- -- 1,223,877 $6.25 - $17.83
Exercised........................... -- (247,355) (245,088) (747,838) $0.33 - $4.13
Expired or canceled................. -- (8,982) -- (20,933) $0.83 - $11.17
------------- ---------- ----------- -----------
Outstanding March 31, 1994............ 332,877 360,617 4,840,295 6,624,318 $0.33 - $17.83
Granted............................. -- -- 150,000 2,472,000 $11.50 - $16.58
Exercised........................... (112,500) (142,857) (2,740,295) (3,018,041) $0.33 - $11.17
Expired or canceled................. -- (260) -- (50,510) $0.83 - $17.83
------------- ---------- ----------- -----------
Outstanding March 31, 1995............ 220,377 217,500 2,250,000 6,027,767 $0.67 - $17.83
------------- ---------- ----------- -----------
------------- ---------- ----------- -----------
Exercisable at March 31, 1995......... 220,377 217,500 1,612,500 2,764,133
------------- ---------- ----------- -----------
------------- ---------- ----------- -----------
</TABLE>
On June 23, 1992, a subsidiary of the Company sold to accredited investors
15 percent series A&B exchangeable debentures with a face value of $5,815,000,
due April 14, 1997. In addition, 4,750,650 warrants to purchase common stock of
the Company were issued. The debentures were exchangeable for common stock of
the Company at the rate of 417 shares of common stock per $1,000 face value of
debt. The Company called all outstanding debentures for redemption on June 28,
1993. These debentures were exchanged for 2,028,750 shares of the Company's
common stock. The warrants were fully exercised prior to their expiration on
February 23, 1995.
Under a contract with a spokesperson for the riverboats through December
31, 1996, the Company issued 2,100,000 warrants to purchase common stock of the
Company. The warrants, which vest at 25% per year beginning January 1, 1993, are
exercisable at $2.67 per warrant.
F-15
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. EMPLOYEE BENEFIT PLANS
The Company has a defined contribution plan that provides retirement
benefits for eligible employees. Eligible employees may elect to participate by
contributing a percentage of their pre-tax earnings to the plan. Employee
contributions to the plan, up to certain limits, are matched at 25% by the
employer. The expense for the Company's defined contribution plan was $224,000
for the fiscal year ended March 31, 1995. There were no employer contributions
in the prior years.
11. COMMITMENTS AND CONTINGENCIES
The Company leases office space, land and equipment under operating leases
expiring at various dates through December 2011.
The minimum annual payments under noncancelable lease agreements at March
31, 1995 are as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDING MARCH 31:
--------------------
<S> <C>
1996........................................................ $2,180
1997........................................................ 963
1998........................................................ 766
1999........................................................ 440
2000........................................................ 7
Thereafter.................................................. 80
---------
$4,436
---------
---------
</TABLE>
A lease agreement for one of the Company's subsidiaries provided for
contingent payments based on either the greater of the annual minimum rent or
the calculated rent based on adjusted passenger admission. Rent expense for all
operating leases was as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------------
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Minimum rentals.................................................... $ 606 $ 869 $ 2,213
Contingent payments................................................ -- 662 3,236
--------- --------- ---------
$ 606 $ 1,531 $ 5,449
--------- --------- ---------
--------- --------- ---------
</TABLE>
For the fiscal years ended March 31, 1994 and 1995, $203,000 and $101,000,
respectively, of rent expense is included in pre-opening and gaming development
costs in the accompanying consolidated statements of operations.
In 1994, the Company began construction of a land based casino in Mesquite,
Nevada. The total cost of the project is approximately $75-80 million. Costs
incurred through March 31, 1995 were approximately $44 million. The project is
expected to open on or about July 1, 1995.
The Company is a defendant in various lawsuits. In the opinion of
management and counsel, the outcome of these matters will not have a material
adverse effect on the Company's business or results of operations.
12. TRANSACTIONS WITH RELATED PARTIES
A law firm performed legal services for the Company during the fiscal years
ended March 31, 1993, 1994 and 1995 for which it was paid fees in the aggregate
amount of $240,000, $955,000 and $1,293,000, respectively. The President of the
Company was a partner of the firm through May 1993.
A member of the board of directors was paid $70,000 during the year ended
March 31, 1995 in consideration for consulting services rendered.
F-16
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. TRANSACTIONS WITH RELATED PARTIES--(CONTINUED)
The Company purchases promotional items from a company owned by certain
directors and stockholders of the Company. During the years ended March 31,
1993, 1994 and 1995, the Company paid $98,000, $79,000 and $306,000,
respectively, for such materials.
In June 1992, the Company sold $2,250,000 face value of the 15% series A
exchangeable debentures to The Griffin Group, Inc. (Griffin) (see Note 9). One
of the affiliates of Griffin acquired $150,000 face value of debentures and
779,100 of the detachable warrants from Griffin. Subsequent to this purchase, a
representative of Griffin, became a member of the Board of Directors of the
Company. In December 1992, Griffin entered into a contract under which Mr. Merv
Griffin became the spokesperson for the Company's riverboats (see Note 9). In
February 1993, Griffin and its affiliates exercised 622,950 and 107,550,
respectively, of the warrants attached to the debentures and became stockholders
of the Company.
13. DISCONTINUED OPERATIONS
In fiscal year 1993 the Board of Directors of the Company approved a plan
to concentrate its efforts on the development and operation of riverboat casinos
and to discontinue its marketing of various services and products related to
gaming, travel and entertainment industries. The discontinued operations include
the services and products of Players Club International, International Gaming
Promotions, Players World Travel, the 900 Game Show Network and its cash advance
services.
In July 1993, the Company sold substantially all of its assets relating to
(i) its Players Club membership club, which provides discount and other benefits
to individuals who participate in recreational gaming, and (ii) its Players
World Travel travel agency, to Privilege Players Club Group, Inc. ('Privilege
Players'), as assignee of Winners Entertainment Group, Inc. In consideration of
the sale of the Players Club and Players World Travel assets the Company
received $350,000 cash and Privilege Players assumed certain liabilities
relating to such assets.
The consolidated financial statements report separately the operating
results and cash flows of the discontinued operations. There was no operating or
cash flow activity resulting from the discontinued operations for the year ended
March 31, 1995. Summary operating results of the discontinued operations are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------
1993 1994
----------- -----------
<S> <C> <C>
Revenues............................................................. $ 14,640 $ 3,360
Costs and expenses................................................... 20,711 4,376
----------- -----------
Loss before provision for income taxes and loss on disposition of
discontinued operations............................................ (6,071) (1,016)
Provision for income taxes........................................... -- --
----------- -----------
Loss before loss on disposition of discontinued operations........... (6,071) (1,016)
Loss on disposition of discontinued operations....................... (960) --
----------- -----------
Net loss............................................................. $ (7,031) $ (1,016)
----------- -----------
----------- -----------
</TABLE>
The net loss from discontinued operations for the year ended March 31,
1994, had been previously provided for and reflected on the March 31, 1993
financial statements as a net liability for discontinued operations. The
significant components of the net effect of discontinued operations on cash
flows from operating activities are as follows (dollars in thousands):
F-17
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. DISCONTINUED OPERATIONS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------
1993 1994
----------- -----------
<S> <C> <C>
Net loss............................................................. $ (7,031) $ (1,016)
Issuance of common stock under contract settlement................... 2,284 --
Amortization of deferred membership acquisition costs................ 5,756 --
Payment of deferred membership acquisition costs..................... (3,874) --
Other................................................................ 550 163
Changes in net liability of discontinued operations.................. (556) (1,969)
----------- -----------
$ (2,871) $ (2,822)
----------- -----------
----------- -----------
</TABLE>
There were no significant components of the net effect of discontinued
operations on cash flows from investing and financing activities.
14. SUBSEQUENT EVENTS
On April 17, 1995, the Company issued $150,000,000 aggregate principal
amount of 10-7/8% Senior Notes due to mature on April 15, 2005. Interest is
payable in cash semi-annually on April 15 and October 15 commencing October 15,
1995. The Company intends to use the net proceeds for future expansion and
development.
On April 26, 1995, the Board of Directors declared a 3-for-2 stock split
for stockholders of record at the close of business on May 8, 1995. All
references to share data have been retroactively restated to reflect this split.
F-18
<PAGE>
14. SUBSEQUENT EVENTS--(CONTINUED)
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
MARCH 31,
1995
----------- JUNE 30,
1995
-----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.......................................................... $ 23,886 $ 33,398
Marketable securities, net......................................................... 26,446 125,641
Accounts receivable, net of allowance for doubtful accounts of $130 at March 31,
1995 and $125 at June 30, 1995.................................................. 1,351 980
Notes receivable................................................................... 1,279 3,299
Inventories........................................................................ 863 1,921
Deferred income tax................................................................ 2,345 2,110
Prepaid expenses and other current assets.......................................... 5,452 6,763
----------- -----------
Total current assets............................................................ 61,622 174,112
----------- -----------
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $10,248
at March 31, 1995 and $12,764 at June 30, 1995..................................... 118,105 148,332
----------- -----------
DEFERRED INCOME TAX -- long-term..................................................... 1,943 1,943
----------- -----------
INTANGIBLES, net..................................................................... 39,130 38,335
----------- -----------
OTHER ASSETS......................................................................... 2,990 8,661
----------- -----------
TOTAL ASSETS.................................................................... $ 223,790 $ 371,383
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
F-19
<PAGE>
14. SUBSEQUENT EVENTS--(CONTINUED)
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1995 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt.................................................. $ 3,375 $ 31
Accounts payable................................................................... 8,233 10,450
Accrued liabilities................................................................ 27,030 21,670
Other liabilities.................................................................. 669 741
----------- -----------
Total current liabilities....................................................... 39,307 32,892
----------- -----------
OTHER LONG-TERM LIABILITIES........................................................ 2,808 2,779
----------- -----------
LONG-TERM DEBT, net of current portion............................................. 5,532 150,000
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, Authorized -- 10,000,000 shares
Issued and outstanding -- none
Common stock, $.005 par value, Authorized -- 90,000,000 shares
Issued and outstanding --
29,672,400 at March 31, 1995
29,763,940 at June 30, 1995.................................................. 148 149
Additional paid-in capital......................................................... 121,712 122,867
Unrealized loss on marketable securities........................................... (451) (56)
Retained earnings.................................................................. 54,734 62,752
----------- -----------
TOTAL STOCKHOLDERS' EQUITY......................................................... 176,143 185,712
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......................................... $ 223,790 $ 371,383
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
F-20
<PAGE>
14. SUBSEQUENT EVENTS--(CONTINUED)
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<S> <C> <C>
FOR THE THREE MONTHS
ENDED JUNE 30,
------------------------------
1994 1995
-------------- --------------
REVENUES:
Casino...................................................................... $ 44,696 $ 63,110
Food and beverage........................................................... 1,947 1,668
Other....................................................................... 1,683 834
-------------- --------------
48,326 65,612
-------------- --------------
COSTS AND EXPENSES:
Casino...................................................................... 15,671 24,399
Food and beverage........................................................... 2,026 1,547
Other gaming related expenses............................................... 10,077 14,496
Corporate administrative expenses........................................... 1,520 1,830
Pre-opening and gaming development costs.................................... 1,575 5,758
Depreciation and amortization............................................... 1,712 3,477
-------------- --------------
32,581 51,507
-------------- --------------
Income before other income (expense) and provision for income taxes......... 15,745 14,105
-------------- --------------
OTHER INCOME (EXPENSE):
Interest income............................................................. 657 2,123
Other income, net........................................................... 300 304
Interest expense............................................................ (141) (3,388)
-------------- --------------
816 (961)
-------------- --------------
Income before provision for income taxes.................................... 16,561 13,144
PROVISION FOR INCOME TAXES.................................................... 6,120 5,126
-------------- --------------
NET INCOME.................................................................... $ 10,441 $ 8,018
-------------- --------------
-------------- --------------
EARNINGS PER COMMON AND COMMON SHARE EQUIVALENT:
Primary..................................................................... $ 0.34 $ 0.25
Fully diluted............................................................... 0.34 0.25
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES:
Primary..................................................................... 30,846,600 32,473,170
Fully diluted............................................................... 30,846,600 32,473,501
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
F-21
<PAGE>
14. SUBSEQUENT EVENTS--(CONTINUED)
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C> <C>
FOR THE THREE MONTHS
ENDED JUNE 30,
------------------------
1994 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................................... $ 10,441 $ 8,018
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization................................................... 1,712 3,477
Other........................................................................... 51 (547)
Changes in assets and liabilities:
Accounts and notes receivable................................................... (104) (1,631)
Inventories, prepaid expenses and other current assets.......................... (726) (2,153)
Other assets.................................................................... (372) (7,248)
Accounts payable and accrued liabilities........................................ (99) (4,776)
Other liabilities............................................................... (93) 45
Income tax payable.............................................................. 3,317 (217)
----------- -----------
Net cash (used) provided by operating activities................................... 14,127 (5,032)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property and equipment............................................ (8,419) (29,704)
Purchase of marketable securities.................................................. (1,668) (117,277)
Proceeds of sale of marketable securities.......................................... 3,500 19,245
----------- -----------
Net cash used in investing activities.............................................. (6,587) (127,736)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt........................................... -- 150,000
Payments of long-term debt......................................................... (41) (8,876)
Proceeds from exercise of stock options............................................ 493 1,157
Other.............................................................................. (46) (1)
----------- -----------
Net cash provided by financing activities.......................................... 406 142,280
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS............................................ 7,946 9,512
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..................................... 13,957 23,886
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................................... $ 21,903 $ 33,398
----------- -----------
----------- -----------
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid...................................................................... $ 141 $ 187
Income taxes paid.................................................................. 2,800 5,350
Debt incurred to purchase land and equipment....................................... 3,211 --
Stock issued to purchase land...................................................... 4,238 --
Unrealized gain (loss) on marketable securities, net of tax........................ (330) 394
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
F-22
<PAGE>
14. SUBSEQUENT EVENTS--(CONTINUED)
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules and
regulations. It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes thereto included in
the Company's Form 10-K for the year ended March 31, 1995. In the opinion of
management, all adjustments (which include normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows of all periods presented have been made.
The results of operations for the three month period ended June 30, 1995,
are not necessarily indicative of the operating results for the full year.
Certain reclassifications have been made to the financial statements as
previously presented to conform to current classifications.
NOTE 2--CASINO REVENUES AND PROMOTIONAL ALLOWANCES
Casino revenues are the net of gaming wins less losses. Revenues exclude
the retail value of complimentary admissions, food and beverage and other items
furnished to customers, which totaled approximately $1,675,000 and $3,941,000
for the three months ended June 30, 1994 and 1995, respectively.
The estimated cost of providing such complimentary services are included in
casino costs and expenses through inter-department allocations from the
department granting the services as follows (dollars in thousands):
<TABLE>
<S> <C> <C>
FOR THE THREE MONTHS
ENDED JUNE 30,
--------------------
1994 1995
--------- ---------
Food and beverage....................................................... $ 975 $ 2,784
Admissions and other.................................................... 587 810
--------- ---------
$ 1,562 $ 3,594
--------- ---------
--------- ---------
</TABLE>
NOTE 3--PRE-OPENING AND GAMING DEVELOPMENT COSTS
All costs in connection with the identification and development of new
gaming jurisdictions and sites are being expensed except for the cost of
property and equipment, which is capitalized.
NOTE 4--PRIMARY AND FULLY DILUTED SHARES
Per share amounts have been computed based on the weighted average number
of outstanding shares and common stock equivalents, if dilutive, during each
period. A summary of the number of shares used in computing primary earnings per
share follows:
<TABLE>
<S> <C> <C>
FOR THE THREE MONTHS
ENDED JUNE 30,
--------------------------
1994 1995
------------ ------------
Weighted average number of shares outstanding..................... 26,455,050 29,726,225
Dilutive effect of options and warrants........................... 4,391,550 2,746,945
------------ ------------
Shares used in computing primary earnings per share............... 30,846,600 32,473,170
------------ ------------
------------ ------------
</TABLE>
For the three months ended June 30, 1994 and 1995, primary and fully
diluted earnings per share are not materially different.
F-23
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
NOTE 5--LONG-TERM DEBT
On April 17, 1995, the Company issued $150,000,000 aggregate principal
amount of 10 7/8% Senior Notes due to mature on April 15, 2005. Interest is
payable in cash semi-annually on April 15 and October 15 commencing October 15,
1995. The Company intends to use the net proceeds for future expansion and
development.
On June 30, 1995, the Company made aggregate payments of $8,876,000 to pay
off existing debt.
NOTE 6--STOCKHOLDERS' EQUITY
On April 26, 1995, the Board of Directors declared a 3-for-2 stock split
for stockholders of record at the close of business on May 8, 1995. All
references to share data have been retroactively restated to reflect this split.
NOTE 7--SUBSEQUENT EVENTS
The Company entered into an agreement on August 10, 1995 to purchase the
President Casino IV Riverboat, subject to the receipt of regulatory approvals by
the Louisiana Riverboat Gaming Commission, the Louisiana State Police and the
U.S. Coast Guard. Preliminary plans call for the President Casino IV to replace
the Players Lake Charles Riverboat, which would increase gaming space by 4,400
square feet and add 50 gaming positions at the Company's Lake Charles complex.
Subject to regulatory approval from the Illinois Gaming Board, the Players Lake
Charles Riverboat is expected to be moved to the Company's Metropolis complex,
where it would replace the Company's existing Metropolis riverboat. Assuming
receipt of the foregoing approvals, the Company currently anticipates spending
an additional $9 million for the acquisition of the gaming equipment, refitting
and transportation costs and costs associated with receipt of the required
approvals.
F-24
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
All tendered Old Notes, executed Letters of Transmittal and other related
documents should be directed to the Exchange Agent. Questions and requests for
assistance and requests for additional copies of the Prospectus, the Letter of
Transmittal and other related documents should be addressed to the Exchange
Agent as follows:
By Hand, Registered or Certified Mail
or Overnight Carrier:
First Fidelity Bank, National Association
123 South Broad Street, 12th Floor
Philadelphia, Pennsylvania 19109
By Facsimile:
(215) 985-7290
Attention: John H. Clapham
Confirm by telephone: (215) 985-7157
(Originals of all documents submitted by facsimile should be sent promptly by
hand, overnight courier, or registered or certified mail)
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and the
accompanying Letter of Transmittal, and, if given or made, such information or
representation must not be relied upon as having been authorized. Neither this
Prospectus nor the accompanying Letter of Transmittal nor both together
constitute an offer to sell at the solicitation of an offer to buy any
securities other than the securities to which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus or the Letter of Transmittal
or both together nor any exchange made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained herein is
correct as of anytime subsequent to its date.
Until October 14, 1995 (25 days after the date of this Exchange Offer), all
dealers effecting transactions in the New Notes, whether or not participation in
this Exchange Offer, may be required to deliver a Prospectus.
OFFER TO EXCHANGE
ALL OUTSTANDING
10 7/8% SENIOR NOTES DUE 2005
($150,000,000 PRINCIPAL AMOUNT)
FOR 10 7/8% SENIOR NOTES
DUE 2005
PLAYERS INTERNATIONAL, INC.
PAYMENT OF PRINCIPAL AND
INTEREST UNCONDITIONALLY
GUARANTEED BY CERTAIN
OF ITS SUBSIDIARIES
-------------------------------
PROSPECTUS
-------------------------------
SEPTEMBER 19, 1995
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses of the sale and
distribution of the securities being registered, all of which are being borne by
the Company.
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee.............. $ 51,724.15
Trustee's fees and expenses................................ 5,000.00
Printing and engraving fees and expenses................... 75,000.00
Accounting fees and expenses............................... 50,000.00
Legal fees and expenses.................................... 75,000.00
Blue Sky fees and expenses................................. 10,000.00
Miscellaneous.............................................. 15,000.00
-------------
Total................................................. $ 281,724.15
-------------
-------------
</TABLE>
All of the amounts shown are estimates except for the fees payable to the
Securities and Exchange Commission.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
For information regarding provisions under which a director or officer of
the Company may be insured or indemnified in any manner against liability which
he may incur in his capacity as such, reference is made to Section 78.751 of the
Nevada General Corporation Law, as amended, which provides in its entirety as
follows:
'1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, has no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
II-1
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a court
or advanced pursuant to subsection 5, must be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding so orders, by independent legal counsel
in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the act,
suit or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
5. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered
by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the articles of
incorporation or any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, for either an action in his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection 2 or for the
advancement of expenses made pursuant to subsection 5, may not be made to or on
behalf of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.'
ARTICLE IX OF THE COMPANY'S BY-LAWS PROVIDES:
'Section 1--Right to Indemnification:
Each Indemnitee (as defined below) shall be indemnified and held harmless
by the Corporation for all actions taken by him and for all failures to take
action (regardless of the date of any such action or failure to take action) to
the fullest extent permitted by the Nevada General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, the
rights of indemnification provided hereby shall continue as theretofore to the
maximum extent permitted by law notwithstanding such amendment unless such
amendment permits the Corporation to provide broader indemnification rights than
the law permitted the Corporation to provide prior to such amendment), against
all expense, liability and loss (including attorneys' fees, judgments, fines,
Employee Retirement Income Security Act excise taxes or penalties and amounts
paid or to be paid in settlement) actually and reasonably incurred or suffered
by the Indemnitee in connection with any proceeding (as defined below). The
right to indemnification conferred in this Article shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred by
an Indemnitee in defending a civil or criminal action, suit or proceeding as
they are incurred and in advance of the final disposition of such action,
II-2
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
suit or proceeding; provided, however, that, if the Nevada General Corporation
Law continues so to require, the payment of such expenses incurred by an
Indemnitee in advance of the final disposition of such action, suit or
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such Indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by a court of competent
jurisdiction that such Indemnitee is not entitled to be indemnified by the
Corporation under this Article or otherwise.
(ii) Indemnification pursuant to this Section shall continue as to an
Indemnitee who has ceased to be a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators.
(iii) For purpose of this Article, (A), 'Indemnitee' shall mean each
director or officer of the Corporation who was or is a party or is threatened to
be made a party to any Proceeding, by reason of the fact that he is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans; and (B) 'Proceeding' shall mean
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
SECTION 2--INDEMNIFICATION OF EMPLOYEES AND AGENTS:
The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as of the foregoing indemnification of directors and officers.
SECTION 3--NON-EXCLUSIVITY OF RIGHTS:
The rights to indemnification and to the advancement of expenses provided
in this Article shall not be exclusive of any other rights that any person may
have or hereafter acquire under any statute, provision of the Articles of
Incorporation or By-laws, agreement, vote of stockholders or disinterested
directors or otherwise for either an action in his official capacity or an
action in another capacity while holding his office; provided, however, that if
the Nevada General Corporation Law so requires, indemnification, unless ordered
by a court (with respect to a proceeding by or in the right of the Corporation)
or for the advancement of expenses as set forth in Section 1 above, may not be
made to or on behalf of any director or officer if a final adjudication
establishes that his acts or omissions involved intentional misconduct, fraud or
a knowing violation of the law and was material to the cause of action.
SECTION 4--INSURANCE:
The Corporation may purchase and maintain insurance or make any other
financial arrangements permitted by applicable law on behalf of any person who
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise for any liability asserted against him and liability and expenses
incurred by him in his capacity as a director, officer, employee or agent, or
arising out of his status as such, whether or not the Corporation has the
authority to indemnify him against such liability and expenses.'
The Company has purchased directors' and officers' liability insurance.
ITEM 16. EXHIBITS
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
EXHIBIT
NUMBER DESCRIPTION
--------- ----------------------------------------------------------------------------------------------------------------
1* -- Purchase Agreement by Players International, Inc. and certain subsidiaries to Donaldson Lufkin &
Jenrette Securities Corporation and Salomon Brothers Inc.
3.1** -- Articles of Incorporation of Players International, Inc.
3.2(1) -- By-laws of Players International, Inc.
4.1* -- Indenture among Players International, Inc., certain subsidiaries and First Fidelity Bank, National
Association, as Trustee, including form of Note (the 'Senior Note Indenture').
</TABLE>
II-3
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
<TABLE>
<S> <C> <C>
EXHIBIT
NUMBER DESCRIPTION
--------- ----------------------------------------------------------------------------------------------------------------
4.2* -- Exchange and Registration Rights Agreement among Players International, Inc., certain subsidiaries,
Donaldson, Lufkin & Jenrette Securities Corporation and Salomon Brothers Inc.
4.3* -- Form of Letter of Transmittal regarding Exchange Offer concerning Players International, Inc. and
certain subsidiaries regarding 10 7/8% Senior Notes due 2005.
4.4* -- Form of First Supplemental Indenture to the Senior Note Indenture.
4.5* -- Form of Second Supplemental Indenture to the Senior Note Indenture.
5* -- Opinion of Morgan, Lewis & Bockius regarding validity of New Notes.
10.1 -- [Intentionally omitted].
10.2(2) -- The Company's 1985 Incentive Stock Option Plan.
10.3(3) -- Amendment No. 1 to the Company's 1985 Stock Option Plan.
10.4(4) -- The Company's 1990 Incentive Stock Option and Non-Qualified Option Plan, as amended.
10.5(1) -- The Company's 1993 Stock Incentive Plan.
10.6 -- [Intentionally omitted.]
10.7 -- [Intentionally omitted.]
10.8 -- [Intentionally omitted.]
10.9(1) -- Form of Registration Rights Agreement dated as of June 23, 1992 by and among the Company, Southern
Illinois Riverboat/Casino Cruises, Inc., and the purchasers named therein.
10.10(1) -- Agreement dated February 12, 1993 by and between Jebaco, Inc. and the Company with respect to the
assignment of an option agreement relating to the Downtowner Hotel.
10.11(1) -- Forms of Series A, B and C Warrants issued to Jebaco, Inc.
10.12(1) -- Form of Registration Rights Agreement with Jebaco, Inc.
10.13(1) -- Option Agreement dated December 24, 1991 by and among The Beeber Corporation and Elisabeth S.
Woodward and Jebaco, Inc. with respect to the Downtowner Hotel.
10.14(1) -- Amendment to Option Agreement dated March 9, 1993 by and among The Beeber Corporation and Elisabeth
S. Woodward and Players Lake Charles, Inc., a subsidiary of the Company, with respect to the
Downtowner Hotel.
10.15(1) -- License and Services Agreement dated December 8, 1992 by and among The Griffin Group, Inc., the
Company and Southern Illinois Riverboat/Casino Cruises, Inc., as amended.
10.16(1) -- [Intentionally omitted.]
10.17(1) -- Joint Venture Agreement dated May 1993 between Amerihost and a subsidiary of the Company with respect
to the construction of a hotel in Metropolis, Illinois.
10.18(1) -- Form of Employment Agreement with Howard A. Goldberg dated May 19, 1993.
10.19(1) -- Employment Agreement with Peter J. Aranow effective May 26, 1993.
10.20(1) -- [Intentionally omitted.]
10.21 -- [Intentionally omitted.]
10.22(5) -- Lease dated March 19, 1993 by and among the Beeber Corporation and Players Lake Charles, Inc., a
subsidiary of the Company.
10.23 -- [Intentionally omitted.]
10.24 -- [Intentionally omitted.]
10.25 -- [Intentionally omitted.]
10.26 -- [Intentionally omitted.]
10.27 -- [Intentionally omitted.]
10.28 -- [Intentionally omitted.].
10.29 -- [Intentionally omitted.]
10.30 -- [Intentionally omitted.]
</TABLE>
II-4
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
<TABLE>
<S> <C> <C>
EXHIBIT
NUMBER DESCRIPTION
--------- ----------------------------------------------------------------------------------------------------------------
10.31(6) -- Agreement of Purchase and Sale dated June 16, 1994, between Gem Mesquite, Ltd. and Players Nevada,
Inc., a subsidiary of the Company (including form of letter Agreement from the Company to Gem
Mesquite, Ltd. relating to registration rights).
10.32(6) -- Transfer of Data Agreement dated June 16, 1994, between Gem Gaming, Inc. and Players Nevada, Inc.
(including form of Promissory Note).
10.33(6) -- Development Consulting Agreement dated June 16, 1994, between Gem Gaming, Inc. and Players Nevada,
Inc. (including form of 1994 Series G Warrant).
10.34(6) -- Option Transfer Agreement dated June 16, 1994, between Gem Gaming, Inc., Gem Mesquite, Ltd. and
Players Nevada, Inc.
10.35(7) -- Players International, Inc. 1994 Directors Stock Incentive Plan, as adopted April 14, 1994, and as
amended July 14, 1994.
10.36* -- Commitment Letter among Players International, Inc. and certain of its subsidiaries, First Interstate
Bank and certain other financial institutions.
10.37(8) -- Agreement for Sale of Partnership Interests among the Company and certain of its subsidiaries and
Showboat, Inc. and certain of its subsidiaries.
10.38** -- Asset Purchase Agreement dated August 16, 1995 among the Company, Players Lake Charles, Inc. and the
Beeber Corporation.
10.39** -- Form of Credit Agreement ('Credit Agreement') among the Company, First Interstate Bank of Nevada,
N.A., Bankers Trust Company, BT Securities Corporation, and certain other Lenders party thereto.
10.40** -- Form of Revolving Promissory Notes made by the Company in favor of the Lenders party to the Credit
Agreement.
10.41** -- Form of Swing Line Promissory Note made by the Company in favor of First Interstate Bank of Nevada,
N.A.
10.42** -- Form of Guaranty made by Players Lake Charles, Inc., Players Nevada, Inc., Southern Illinois
Riverboat/Casino Cruises, Inc., Players Bluegrass Downs, Inc., Players Riverboat Management, Inc.,
Players Riverboat, Inc., Players Mesquite Golf Club, Inc., Players Indiana, Inc., Players Riverboat,
LLC, Players Mesquite Land, Inc., Players Maryland Heights, Inc., River Bottom Inc. and Showboat Star
Partnership in favor of First Interstate Bank of Nevada, N.A.
10.43** -- Form of Company Pledge Agreement between the Company and First Interstate Bank of Nevada, N.A.
10.44** -- Form of Company Pledge Agreement (Nevada) between the Company and First Interstate Bank of Nevada,
N.A.
10.45** -- Form of First Amendment to Company Pledge Agreement (Nevada) between the Company and First Interstate
Bank of Nevada, N.A.
10.46** -- Form of LLC Membership Interest Security Agreement between Players Riverboat Management, Inc. and
First Interstate Bank of Nevada, N.A.
10.47** -- Form of Company Security Agreement between the Company and First Interstate Bank of Nevada, N.A.
10.48** -- Form of Subsidiary Security Agreement (Nevada) among Players Nevada, Inc., Players Mesquite Golf
Club, Inc., Players Mesquite Land, Inc. and First Interstate Bank of Nevada, N.A.
10.49** -- Form of Subsidiary Security Agreement (Louisiana) among Players Lake Charles, Inc., Showboat Star
Partnership, Players Riverboat LLC and First Interstate Bank of Nevada, N.A.
10.50** -- Form of Subsidiary Security Agreement (Illinois) between Southern Illinois Riverboat/Casino Cruises,
Inc. and First Interstate Bank of Nevada, N.A.
10.51** -- Form of Partnership Interest Security Agreement between Players Riverboat Management, Inc. and First
Interstate Bank of Nevada, N.A.
</TABLE>
II-5
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
<TABLE>
<S> <C> <C>
EXHIBIT
NUMBER DESCRIPTION
--------- ----------------------------------------------------------------------------------------------------------------
10.52** -- Form of Collateral Account Agreement between the Company and First Interstate Bank of Nevada, N.A.
10.53** -- Form of Nevada Deed of Trust, Fixture Filing and Security Agreement with Assignment of Rents relating
to the Credit Agreement.
10.54** -- Form of Louisiana Act of Mortgage, Fixture Filing and Security Agreement between Players Lake
Charles, Inc. and First Interstate Bank of Nevada, N.A.
10.55** -- Form of Illinois Mortgage Fixture Filing and Security Agreement with Assignment of Rents relating to
the Credit Agreement.
10.56** -- Form of First Preferred Ship Mortgage made by Showboat Star Partnership to First Interstate Bank of
Nevada, N.A.
10.57** -- Form of Environmental Indemnity made by the Company to First Interstate Bank of Nevada, N.A.
10.58** -- Form of Master Vessel and Collateral Trust Agreement between First Interstate Bank of Nevada, N.A. as
Administrative Agent and First Interstate Bank of Nevada, N.A. as Trustee and acknowledged and
accepted by the Company.
21(8) -- Subsidiaries of Players International, Inc.
23.1* -- Consent of Morgan, Lewis & Bockius (included in Exhibit 5).
23.2** -- Consent of Arthur Andersen LLP.
23.3** -- Consent of Ernst & Young LLP.
24* -- Powers of Attorney (included on pages II-6 through II-21).
25* -- Statement of Eligibility of First Fidelity Bank, National Association on Form T-1.
</TABLE>
* Previously filed.
** Filed herewith.
------------------
(1) Filed as an exhibit to the Company's Registration Statement on Form S-3,
File No. 33-61026 and incorporated herein by reference.
(2) Filed as an exhibit to the Company's Registration Statement on Form 10 filed
on August 13, 1986, File No. 0-14897, as amended on Form 8 filed October 17,
1987, and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1988 and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1991 and incorporated herein by reference.
(5) Filed as an exhibit to the Company's Registration Statement on Form S-3
filed on February 4, 1994, as amended by Form S-3, File No. 33-75006, and
incorporated herein by reference.
(6) Filed as an exhibit to the Company's Current Report on Form 8-K filed on
June 24, 1994.
(7) Filed as an exhibit to the Company's Registration Statement on Form S-3
filed on July 27, 1994.
(8) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1995.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to
II-6
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
a court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to the
be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-7
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS INTERNATIONAL, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman, Chief Executive Officer and September 13, 1995
Edward Fishman Director (Principal Executive Officer)
* Vice Chairman and Director September 13, 1995
David Fishman
* Director September 13, 1995
Marshall Geller
* President, Chief Operating Officer and September 13, 1995
Howard Goldberg Director
* Director September 13, 1995
Lee Seidler
* Director September 13, 1995
Thomas E. Gallagher
* Executive Vice President, General Counsel September 13, 1995
Steven P. Perskie and Director
/S/PETER J. ARANOW Executive Vice President and Chief September 13, 1995
Peter J. Aranow Financial Officer (Principal Financial
Officer)
* Controller (Principal Accounting Officer) September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-8
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS RIVERBOAT MANAGEMENT, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-9
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS RIVERBOAT, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-10
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS RIVERBOAT, LLC
By: PLAYERS RIVERBOAT MANAGEMENT, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the following
capacities on behalf of Players Riverboat Management, Inc. and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-11
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
SHOWBOAT STAR PARTNERSHIP
By: PLAYERS RIVERBOAT, LLC
By: PLAYERS RIVERBOAT MANAGEMENT, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the following
capacities on behalf of Players Riverboat Management, Inc. and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-12
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS NEVADA, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-13
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS MESQUITE GOLF CLUB, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
/S/HOWARD GOLDBERG President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-14
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS MESQUITE LAND, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-15
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS INDIANA, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-16
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS MICHIGAN CITY, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-17
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS MICHIGAN CITY MANAGEMENT, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-18
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS BLUEGRASS DOWNS, INC.
By: _________________*________________
Howard Goldberg,
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
/S/EDWARD FISHMAN Chairman and Director September 13, 1995
Edward Fishman
/S/DAVID FISHMAN Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-19
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
RIVER BOTTOM, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-20
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS MARYLAND HEIGHTS, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
* President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-21
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
SOUTHERN ILLINOIS RIVERBOAT/CASINO
CRUISES, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
/S/HOWARD GOLDBERG President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-22
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS LAKE CHARLES, INC.
By: _________________*________________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
* Chairman and Director September 13, 1995
Edward Fishman
* Vice Chairman and Director September 13, 1995
David Fishman
/S/HOWARD GOLDBERG President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
* Chief Accounting Officer September 13, 1995
Stephen Radusch
By /S/PETER J. ARANOW
Peter J. Aranow
Attorney-in-fact
</TABLE>
II-23
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS MARYLAND HEIGHTS NEVADA, INC.
By: /S/__EDWARD FISHMAN_______________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
/S/EDWARD FISHMAN Chairman and Director September 13, 1995
Edward Fishman
/S/DAVID FISHMAN Vice Chairman and Director September 13, 1995
David Fishman
/S/HOWARD GOLDBERG President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
/S/STEPHEN RADUSCH Chief Accounting Officer September 13, 1995
Stephen Radusch
</TABLE>
II-24
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS RIVER CITY, INC.
By: /S/__EDWARD FISHMAN_______________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
/S/EDWARD FISHMAN Chairman and Director September 13, 1995
Edward Fishman
/S/DAVID FISHMAN Vice Chairman and Director September 13, 1995
David Fishman
/S/HOWARD GOLDBERG President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
/S/STEPHEN RADUSCH Chief Accounting Officer September 13, 1995
Stephen Radusch
</TABLE>
II-25
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS SHREVEPORT, INC.
By: /S/__EDWARD FISHMAN_______________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
/S/EDWARD FISHMAN Chairman and Director September 13, 1995
Edward Fishman
/S/DAVID FISHMAN* Vice Chairman and Director September 13, 1995
David Fishman
/S/HOWARD GOLDBERG President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
/S/STEPHEN RADUSCH Chief Accounting Officer September 13, 1995
Stephen Radusch
</TABLE>
II-26
<PAGE>
NOTE 7--SUBSEQUENT EVENTS--(CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 2 on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Las Vegas, State of Nevada on
September 13, 1995.
PLAYERS SHUTTLE, INC.
By: /S/__EDWARD FISHMAN_______________
Edward Fishman,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
----------------------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
/S/EDWARD FISHMAN Chairman and Director September 13, 1995
Edward Fishman
/S/DAVID FISHMAN Vice Chairman and Director September 13, 1995
David Fishman
/S/HOWARD GOLDBERG President (Principal Executive Officer) September 13, 1995
Howard Goldberg and Director
/S/PETER J. ARANOW Treasurer (Principal Financial Officer) September 13, 1995
Peter J. Aranow
/S/STEPHEN RADUSCH Chief Accounting Officer September 13, 1995
Stephen Radusch
</TABLE>
II-27
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, made and entered into as of the 16th day of
August 1995, by and between THE BEEBER CORPORATION, a Louisiana corporation
("Seller"), having an office located at 507 North Lake Shore Drive, Lake
Charles, Louisiana 70601, and PLAYERS LAKE CHARLES, INC., a Louisiana
corporation, its assignee or nominee (the "Buyer"), having an address at 800
Bilbo Street, Lake Charles, Louisiana 70601.
R E C I T A L S
A. Seller is the owner of certain lands and premises, together with the
buildings and improvements constructed thereon, and certain property therein
contained or used in the operation thereof, located in the City of Lake Charles,
Calcasieu Parish, Louisiana, from which Seller conducts a hotel business (the
"Business"), as more particularly described in this Agreement.
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller, the above described properties and assets used in such Business, upon
the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the recitals set forth above, which
are incorporated herein by reference, and for the payments, mutual covenants and
agreements herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Sale and Purchase of Assets.
(a) Upon and subject to the terms and conditions set forth in
this Agreement, Seller hereby agrees to sell, transfer and convey to Buyer, and
Buyer hereby agrees to purchase and accept from Seller, all of the following
properties and assets:
(1) All those certain lots, tracts and parcels of
lands and premises, together with the buildings and improvements located
thereon, and all appurtenances thereto, situate at 507 Lake Shore Drive, Lake
Charles, Louisiana, as more particularly described in the legal description
annexed hereto as Exhibit "A", and by this reference made a part hereof
(collectively, the "Premises").
(2) All items of furniture, furnishings,
fixtures, equipment, machinery, parts, tools, vehicles and all other tangible
personal property owned by Seller and located in or about and employed in the
operation of the Premises, a current inventory of which is annexed hereto as
Exhibit "B", and by this reference made a part hereof (the "Personalty"), which
Personalty shall, however, be subject to replacements, substitutions and
additions in the ordinary course of business between the date of this Agreement
and the date of Closing (as hereinafter defined).
1
<PAGE>
AC-57140/3
September 18, 1995
(3) All of Seller's right, title and interest, if
any, in and to the name "Players Lakefront Hotel", or any derivation thereof
(the "Trade Name").
(4) All of Seller's right, title and interest in,
to and under that certain Lease dated May 18 and 19, 1993 between Seller, as
landlord, and Buyer, as tenant, relating to portions of the Premises, as
supplemented and/or amended (the "Lease").
(5) All of Seller's "Inventory of Supplies"
(which term shall include such paper goods, maintenance and cleaning supplies,
towels and linens and similar disposable and expendable supplies employed by
Seller in connection with the operation of the Business) existing on the date of
Closing. Seller shall supply to Buyer on the date of Closing a statement of
Inventory of Supplies then existing.
(6) All of Seller's claims and rights (and
benefits arising therefrom) with or against all persons whomsoever, including,
without limitation, all rights against suppliers under warranties covering any
of the Personalty or Inventory of Supplies or any other Assets described in this
Section 1, and all Permits (as hereinafter defined) and Environmental Permits
(as hereinafter defined), to the extent they are legally transferable by Seller.
(7) All computer software, including all
documentation and source codes with respect to such software and licenses and
leases of software, all marketing and promotional materials, catalogues and
advertising literature, and all telephone numbers of Seller.
(8) Those certain contracts, license agreements,
distribution agreements, sales representative agreements, service agreements,
supply agreements, franchise agreements, computer software agreements and
technical service agreements listed on Exhibit "C", annexed hereto and by this
reference made a part hereof (the "Assigned Contracts").
(9) All customer lists, customer records and
information, and all books and records pertaining to the Assets (as hereinafter
defined).
(b) The sale of the Premises includes all right, title and
interest, if any, of Seller in and to any present or former waterbottom or
interest therein related to the Premises or the operation thereof, and/or any
land lying in the bed of any street, road, highway, avenue or alley (opened or
unopened, existing or proposed, now vacated or hereafter to be vacated) in front
of or adjoining the Premises, to the center line thereof, and all right, title
and interest of Seller in and to any award made or to be made in lieu thereof
and in and to any unpaid award for damage to the Premises by reason of change of
grade of any street, road, highway, avenue or alley; and Seller agrees to
execute and deliver to Buyer, at Closing, or thereafter, on demand, all proper
instruments for the conveyance of such title and the assignment and collection
of any such award.
(c) The Premises, Personalty, Trade Name, Lease,
Inventory of Supplies and any
2
<PAGE>
AC-57140/3
September 18, 1995
other assets or properties described in this Agreement, or which are sold by
Seller and purchased by Buyer pursuant to the terms of this Agreement, are
sometimes collectively referred to herein as the "Assets".
(d) Notwithstanding subsections (a), (b) and (c) hereof, the
Assets shall not include the following assets of Seller (the "Excluded Assets"):
(1) All cash on hand and in banks, cash
equivalents, and investments;
(2) All accounts receivable and accounts payable
and any other obligations of Seller in connection with the Business, except
those which are expressly transferred or assumed by Buyer pursuant to the
provisions of this Agreement;
(3) Seller's corporate charter, minute and stock
record books, income tax returns, corporate seal, checkbooks and canceled
checks;
(4) Any agreements other than the Assigned
Contracts; and
(5) The Excluded Assets, if any, described on
Exhibit "D", annexed hereto and by this reference made a part hereof.
2. Purchase Price for Assets and Manner of Payment.
(a) In exchange for the Assets, Buyer shall pay to Seller, and
Seller shall accept from Buyer, the total purchase price (the "Purchase Price")
consisting of (i) the sum of $6,700,000.00 (the "Fixed Portion"), plus (ii)
those sums due to Seller pursuant to Section 2(b) hereof. No separate or
additional consideration shall be paid for any individual Asset or category of
Assets. The Fixed Portion shall be payable in the following manner:
(1) At the time and place of Closing and passage
of title to the Assets, the sum of $321,040.93, or such other aggregate total
amount (the "Payoff Amount"), of all principal, interest, charges and other sums
necessary to fully satisfy and discharge of record the First Mortgage (as
hereinafter defined), as evidenced by a written payoff statement from the holder
of the First Mortgage (including per diem amounts) to be obtained and produced
by Seller prior to Closing, by Buyer's paying or causing to be paid the Payoff
Amount to the holder of that certain first mortgage encumbering a portion of the
Premises granted by Seller, as mortgagor, to Lakeside National Bank, predecessor
in interest to First National Bank, as mortgagee, dated July 31, 1990, given to
secure payment of a certain Collateral Mortgage Note, dated of even date
therewith, in the original principal sum of $1,600,000.00, as amended (the
"First Mortgage"), copies of which First Mortgage and all related documents have
been delivered by Seller to Buyer prior to the execution hereof.
(2) The balance of the Fixed Portion, after
deduction of the Payoff Amount,
3
<PAGE>
AC-57140/3
September 18, 1995
as follows:
(i) At the time and place of Closing and
passage of title to the Assets, the sum of $204,120.30 (the "Cash Amount"), by
(at Buyer's election) certified or bank cashier's check, or similar check of the
title company conducting Closing, drawn on a member bank of the Federal Reserve
System, or by federal funds wire transfer to such account as Seller shall
designate by written notice to be delivered to Buyer not later than three (3)
business days prior to Closing. Buyer and Seller acknowledge and agree that the
Cash Amount is an amount estimated by Buyer's title agent to be sufficient to
satisfy liens, adjustments and charges, establish a sales tax escrow and to pay
other costs for which Seller may be responsible including those amounts for
which adjustments and apportionment are to be made pursuant to Section 6 hereof.
In lieu of the deduction of the Cash Amount from the Purchase Price otherwise
payable pursuant to the terms of Section 2(a)(2)(ii), below, Seller may deposit
an amount equal to the Cash Amount on account with Buyer's title agent, provided
that (x) such deposit be made by certified or bank cashier's check, drawn on a
member bank of the Federal Reserve System, or by federal funds wire transfer to
such account as Buyer's title agent shall designate, and (y) that such deposit
be made at least one business day prior to the Closing Date. Payment and release
of the Cash Amount to Seller shall be subject to the escrow requirements of
Section 19(m), below.
(ii) On January 15, 1996 (the "Issue
Date") the sum of $6,174,838.80, or such other balance of the Fixed Portion as
shall remain after deducting the Payoff Amount and the Cash Amount, if
appropriate, and any other post-Closing adjustments as may be required
hereunder, by Buyer's causing to be issued to Seller five hundred seven thousand
three hundred eighty two (507,382) shares of the capital stock of Players
International, Inc. ("PII Stock"), at the agreed price of $12.17 per share. The
PII Stock shall be issued and held subject to and in accordance with the
provisions of Section 17, below.
(b) Pursuant to the terms of that certain letter agreement
between Buyer and Seller dated January 25, 1995 (the "Preliminary Agreement")
outlining the general terms of the transactions contemplated by this Agreement,
Buyer and Seller agreed to certain additional consideration for such
transactions. However, the terms of the Preliminary Agreement relating to such
payments were replaced by certain terms of that certain Settlement Agreement by
and among Buyer, Seller, Jebaco, Inc. ("Jebaco") and certain principals of
Seller and Jebaco, entered into as of July 27, 1995 (the "Settlement
Agreement"). Buyer and Seller hereby acknowledge that Buyer's agreement to make
the "Continuing Payments" to Seller under the terms of the Settlement Agreement
was made in recognition of Buyer's agreement under the terms of the Preliminary
Agreement to make certain continuing payments to Seller in consideration of the
transactions contemplated hereby, and as such shall constitute additional
consideration for the transactions contemplated by this Asset Purchase
Agreement.
(c) Seller hereby acknowledges and agrees that Buyer shall
have no responsibility or liability for, under or with respect to any obligation
or liability of Seller other than the First Mortgage, and the Assigned
Contracts, if any. Except for liabilities expressly and specifically assumed
4
<PAGE>
AC-57140/3
September 18, 1995
pursuant to the provisions of this Agreement, Seller shall indemnify, defend and
hold harmless Buyer, and Buyer's employees, agents and directors from and
against any and all liability, loss, damage, claim or expense, including
attorneys' fees, arising under, from or in connection with the liabilities and
obligations of Seller.
3. Closing. The closing and consummation of this transaction (the
"Closing") shall, unless extended by Buyer pursuant to Section 4(d) hereof, take
place at the offices of STOCKWELL, SIEVERT, VICCELLIO, CLEMENTS & SHADDOCK, LLC,
One Lakeside Plaza, Lake Charles, Louisiana 70601, on August 18, 1995 (the
"Closing Date"), commencing at 10:00 a.m., or on such other date, time and/or
place as shall be mutually agreed to in writing between Seller and Buyer.
4. Quality of Title.
(a) Title to the Premises shall be good and marketable and
free and clear of all liens, restrictions, easements, encumbrances, leases,
tenancies and other title objections, and shall be insurable as such at ordinary
rates by any reputable title insurance company selected by Buyer. Title to the
Premises may however be subject to those title matters specified in Exhibit "E",
annexed hereto and by this reference made a part hereof. The foregoing permitted
title exceptions are hereinafter referred to as the "Permitted Encumbrances".
Seller shall employ the proceeds of Closing to discharge or satisfy any lien,
claim or encumbrance not constituting a Permitted Encumbrance. If Seller is
unable to convey title to the Premises to Buyer at Closing in accordance with
the requirements of this Agreement, Buyer shall have the option (1) of taking
such title as Seller is able to convey with abatement of price in the amount
(fixed or ascertainable) of any lien on or claim against the Premises, or (2) of
terminating Buyer's obligations under this Agreement and being repaid all monies
paid by Buyer on account of the purchase price, together with the amount of the
charges incurred by Buyer for searching title, the cost of any plans and surveys
made by Buyer, and the amount of all other fees, costs and expenses incurred by
Buyer in connection with the Premises and Buyer's intended acquisition and
development thereof; in either event Buyer shall also have the right to pursue
such other remedies as may be available to Buyer at law or in equity.
(b) Title to the Personalty shall be free and clear of liens
and encumbrances other than Permitted Encumbrances and any Personalty which is
designated on Exhibit "B", hereto as being subject to a lease, lease purchase or
installment purchase contract, conditional sales or similar agreement.
(c) If on the date of Closing the Premises or any portion
shall have been affected by a municipal or other assessment or assessments,
which have been assessed prior to the date of Closing, or of which the first
installment is then a charge or lien, or has been paid, then for all purposes of
this Agreement all unpaid installments of any such assessment, including those
payable after Closing, shall be deemed to be due and payable and shall
constitute liens upon the Premises as of Closing, and Seller shall pay, or
provide for payment of, all such assessments and installments thereof, whether
due and payable prior to or after the date of Closing. Seller shall, if
necessary,
5
<PAGE>
AC-57140/3
September 18, 1995
employ the proceeds of Closing to satisfy any such assessment(s).
(d) Notwithstanding the foregoing, Seller acknowledges the
existence of: (i) the possibility that the State of Louisiana may assert a claim
against the Premises, or portions thereof, or adjacent lands used in connection
therewith, based upon the possibility that portions of the Premises or such
adjacent lands may have previously been covered or flowed by navigable waters of
Lake Charles (the "Waterfront Strip Claim"); and (ii) certain title defects with
respect to the conveyance of a fifty (50) foot strip of land along the western
boundary of the Premises (the "Conveyance Issues"). Seller acknowledges further
that the Waterfront Strip Claim and the Conveyance Issues do not constitute
Permitted Encumbrances and will, if not fully resolved prior to Closing,
constitute valid objections to title on Buyer's behalf.
(1) Seller acknowledges that Buyer is working to
resolve the Waterfront Strip Claim, but that such efforts by Buyer shall not
waive, limit or impair Buyer's right to enforce its rights and remedies upon any
failure to remove or otherwise resolve such title objections; it being
understood that removal or resolution of the Waterfront Strip Claim is and shall
remain a material obligation of Seller hereunder. If, in order to resolve the
Waterfront Strip Claim, or any portion thereof, Buyer is required to purchase or
lease from the State of Louisiana (or any subdivision, agency or authority
thereof), or otherwise pay for the right to use or occupy, any portion of the
Premises or any land adjacent to the Premises above the mean high water line,
then Buyer shall be entitled to set off the sums required to be so paid against
those payments to Seller under Section 2(b), above. Notwithstanding the
foregoing, Seller's maximum obligation, and Buyer's maximum right of setoff,
with respect to removal or resolution of any part of the Waterfront Strip Claim,
shall be limited to the lesser of those amounts required to be paid to the State
of Louisiana, or such person or entity claiming under the State of Louisiana, in
order to remove or resolve any part of the Waterfront Strip Claim, and the sum
of $1,500,000.00 (if a purchase/lump sum payment) or $75,000.00 per year (if a
lease or other continuing payment obligation).
(2) Seller acknowledges that Buyer is working to
resolve the Conveyance Issues, but that such efforts by Buyer shall not waive,
limit or impair Buyer's right to enforce its rights and remedies upon any
failure to remove or otherwise resolve such title objections; it being
understood that removal or resolution of the Conveyance Issues is and shall
remain a material obligation of Seller hereunder.
(e) Notwithstanding any other provision herein contained, if
at the Closing Date Seller is unable to convey the title to the Assets as
required under this Section 4, then in addition to any of Buyer's other rights
or remedies hereunder, Buyer shall have the right (but not the obligation) to
extend the date for closing for six (6) consecutive 2 month periods of time as
determined by Buyer, in its sole discretion, to permit the removal or resolution
of any remaining objections to title (including, without limitation, the
Waterfront Strip Claim or the Conveyance Issues). This right of extension shall
apply to the original Closing Date, as well as any extended Closing Date
established pursuant to the preceding sentence.
6
<PAGE>
AC-57140/3
September 18, 1995
5. Title Conveyance and Possession. Title to the Assets shall be
conveyed from Seller to Buyer at Closing by General Warranty Deed for the
Premises, general warranty bill of sale for the Personalty and Inventory of
Supplies and by assignment or bill of sale, as appropriate, for such other
Assets as are sold and conveyed by Seller and purchased by Buyer pursuant to the
terms of this Agreement, in each case in proper form for recording, if
appropriate, and duly executed and acknowledged by Seller. If Buyer causes a
survey to be made, the description in such deed shall be based upon the survey.
Actual possession of the Assets shall be delivered to Buyer on the date of
Closing, subject only to the rights of occupancy of transient guests holding
advance reservations and tenants pursuant to written leases disclosed to and
approved by Buyer.
6. Apportionments, Adjustments and Incidental Costs.
(a) At Closing, the following items of income and expense
affecting the Premises and operation of the Assets shall be adjusted and
apportioned pro rata between Buyer and Seller, as of the date of Closing such
that Seller shall be responsible for all such charges allocable to any period
prior to Closing, and Buyer shall be responsible for all such charges allocable
to any period from and after Closing:
(1) All state, parish and local real estate
taxes, personal property taxes, transaction privilege and use taxes, hotel room
or bed taxes, rental taxes or similar taxes, and sewer and water charges, based
on the fiscal year(s) of assessment;
(2) Amounts due and prepaid under the Assigned
Contracts specified in Exhibit "C" hereto;
(3) Seller shall be charged, and Buyer shall
receive a credit, on account of all wages, vacation and holiday pay, payroll
expenses, severance pay, pension and welfare benefits and other hotel employee
benefits accrued and unpaid as of 11:59 p.m., Lake Charles time, on the date
preceding the Closing Date. Seller shall be responsible for all pension plan
withdrawal liability occasioned by the sale of the Assets pursuant to this
Agreement;
(4) All current charges for gas, electricity
(as allocated between Seller and Buyer based on a separate meter) and other
public utilities service and telephone charges with respect to Seller's
operation of the Assets, on a per diem basis based upon the current period's
billings therefor.
Buyer, at its election, may cause Seller to terminate as of the date of Closing
Seller's existing accounts for gas, electricity and other public utilities and
telephone service to the Premises. To such extent, Buyer shall establish, on the
date of Closing, accounts in the name of Buyer for such utility and telephone
service. In such case, all utility charges for periods through 11:59 p.m., Lake
Charles time, on the date preceding the Closing Date shall be the sole and
exclusive responsibility of Seller.
7
<PAGE>
AC-57140/3
September 18, 1995
(b) All receipts from guest room rentals prior to the Closing
Date shall belong to Seller. One half of the guest room rentals, whether in cash
or accounts receivable, arising from occupancy for the entire night beginning on
the day preceding the Closing Date shall be credited to each of Buyer and
Seller. All receipts thereafter (whether for guest room rentals or other goods
or services) shall belong to Buyer. All prepaid rentals, room rental deposits
and all other deposits for advance registration, banquets, or future services
paid to Seller prior to the Closing Date shall be credited to Buyer (the amount
of such charges and deposits shall be determined by reference to the statement
thereof prepared by Seller and provided to Buyer on the date of Closing). Buyer
hereby agrees to indemnify and hold Seller harmless from and against all loss,
cost and expense which may be incurred by Seller as a result of claims made with
respect to the application of such charges and deposits and reservations
represented thereby after the date of Closing. Seller hereby agrees to indemnify
and hold Buyer harmless from and against any loss, cost, liability or expense
incurred by Buyer as a result of any incompleteness or inaccuracy in the
statement of such charges and/or deposits delivered to Buyer.
(c) All petty cash and cash in cash registers as of 11:59
p.m., Lake Charles time, on the day preceding the Closing Date shall remain the
property of Seller.
(d) At Closing, Seller shall provide to Buyer a detailed
schedule of any valuables or other property of hotel guests which have been
checked with or left in the care of Seller, including, without limitation, items
placed in any safe or safe deposit box(es) at the Premises, as of the Closing
Date. Buyer shall not be liable or responsible for any such items not specified
on such list, and Seller shall indemnify and hold harmless Buyer from and
against any liability or responsibility in connection with the theft or
mishandling of such items prior to the Closing Date, and in connection with the
theft, mishandling or other disposition of any such items not specified on such
list, at any time.
(e) Buyer shall pay for the preparation of the deed, bill of
sale and other documents required to transfer to Buyer title to the Assets, and
Buyer's usual and customary Closing costs and its counsel fees. Seller shall pay
for all reasonable costs associated with the curing of any title deficiency
(except as otherwise provided under Section 4(d) hereof) and Seller's usual and
customary Closing costs and its counsel fees. Seller shall pay for any realty
transfer fee, tax or similar charge.
(f) At the time and place of Closing and passage of title to
the Assets, Seller shall pay the sum of $306,830.27, or such other aggregate
total amount of all principal, interest, charges and other sums necessary to
fully satisfy the outstanding principal balance of that certain note delivered
by Seller to Buyer in connection with the settlement of that certain litigation
by and among Buyer, Seller, Jackpot Novelty, Inc. and certain other parties
regarding the operation of video poker devices at the Premises.
(g) In consideration of Seller's agreement to vacate the
Premises within thirty (30) days after the date of Closing, and in consideration
of Seller's waiver of Buyer's obligations under the Preliminary Agreement to
provide Seller with office space for two (2) years after the date of Closing,
8
<PAGE>
AC-57140/3
September 18, 1995
Buyer shall pay to Seller the sum of $26,160.08.
7. Seller's Representations and Warranties. Seller represents
and warrants to Buyer that, except as set forth in the schedule delivered by
Seller to Buyer concurrently herewith and identified as the "Disclosure
Schedule":
(a) Seller is a corporation duly organized, existing and
in good standing, under the laws of the State of Louisiana.
(b) Seller has full corporate power and authority to enter
into and perform (x) this Agreement and (y) all documents and instruments to be
executed by Seller pursuant to this Agreement (collectively, "Seller's Ancillary
Documents"). This Agreement has been, and Seller's Ancillary Documents will be,
duly executed and delivered by duly authorized officers of Seller.
(c) No consent, authorization, order or approval of, or filing
or registration with, any governmental authority or other person is required for
the execution and delivery of this Agreement and Seller's Ancillary Documents
and the consummation by Seller of the transaction contemplated by this Agreement
and Seller's Ancillary Documents.
(d) Neither the execution and delivery of this Agreement and
Seller's Ancillary Documents by Seller, nor the consummation by Seller of the
transaction contemplated hereby, will conflict with or result in a breach of any
of the terms, conditions or provisions of Seller's Articles of Incorporation or
By-laws, or of any statute or administrative regulation, or of any order, writ,
injunction, judgment or decree of any court or any governmental authority or of
any arbitration award.
(e) Seller's books, accounts and records pertaining to the
Assets are, and have been, maintained in Seller's usual, regular and ordinary
manner, in accordance with generally accepted accounting practices and all
transactions to which Seller has been a party are properly reflected therein.
(f) Seller has good and marketable title to, and the corporate
power to sell, the Assets, free and clear of any liens, claims, encumbrances and
security interests, except for liens for non-delinquent taxes. Other than the
First Mortgage, no unreleased mortgage, trust deed, chattel mortgage, security
agreement, financing statement or other instrument encumbering any of the Assets
has been recorded, filed, executed or delivered.
(g) None of Seller's officers, directors, employees or
stockholders or members of their families (or any entity in which any of them
has a material financial interest, directly or indirectly), owns any assets
which are used in the Business, except for assets being transferred to Buyer in
accordance with the provisions hereof.
(h) The Disclosure Schedule correctly and completely
lists and describes all material
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contracts, leases, and agreements to which Seller is a party and which relate to
the conduct of the Business, including, without limitation: employment and
employment related agreements; covenants not to compete; loan agreements; notes;
security agreements; sales representative, distribution, franchise, advertising
and similar agreements; leases and subleases relating to the Personalty or
Premises; license agreements; purchase orders and purchase contracts and sales
orders and sales contracts. All contracts, leases and other instruments referred
to in this Section 7, and all other contracts or instruments to which Seller is
a party, are in full force and binding upon the parties thereto. No default by
Seller has occurred thereunder and, to the best of Seller's knowledge, no
default by the other contracting parties has occurred thereunder. No event,
occurrence or condition exists which, with the lapse of time, the giving of
notice, or both, or the happening of any further event or condition, would
become a default by Seller thereunder.
(i) Seller is not a party to, or bound by, any unexpired,
undischarged or unsatisfied written or oral contract, agreement, indenture,
mortgage, debenture, note or other instrument under the terms of which Seller
may not terminate such agreement or instrument upon Closing hereunder, or under
which performance by Seller according to the terms of this Agreement will be a
default or an event of acceleration, or whereby timely performance by Seller
according to the terms of this Agreement may be prohibited, prevented or
delayed. Seller will terminate any such agreement or instrument (other that
those expressly assumed by Buyer) simultaneously with Closing.
(j) The Disclosure Schedule contains a true and correct copy
of every license, permit, registration and governmental approval, agreement and
consent applied for, pending by, issued or given to Seller, and every agreement
with governmental authorities (Federal, state, local or foreign) entered into by
Seller, which is in effect or has been applied for or is pending, exclusive of
Environmental Permits (as hereinafter defined) (the "Permits"). Such Permits
constitute all licenses, permits, registrations, approvals and agreements and
consents (other than Environmental Permits) which are required in order for the
Seller to conduct the Business as presently conducted.
(k) Attached hereto as Exhibit "F" and made a part hereof is a
complete list of: (i) each labor or employment agreement to which Seller is a
party or by which it is bound; (ii) each employment profit sharing, stock
option, stock purchase, deferred compensation, bonus, pension, retainer,
consulting, retirement, health, welfare, incentive plan or contract or similar
agreement to which Seller is a party or by which it either is or may be bound;
(iii) each plan and agreement under which "fringe benefits" (including, but not
limited to, vacation plans or programs, sick leave plans or programs, dental or
medical plans or programs and related or similar benefits) are afforded to an
employee of Seller; and (iv) the name, job description, salary and fringe
benefits of each employee, agent, or consultant of Seller. Prior to the date of
this Agreement, Seller has delivered or has caused to be delivered to Buyer
true, complete and accurate copies of all such labor or employment agreements
and plans (the "Labor and Employment Agreements and Plans"). Seller has complied
in all material respects with all applicable laws, rules and regulations
relating to (i) the employment of labor, including, without limitation, those
related to wages, hours, collective bargaining and the payment and withholding
of taxes and other sums as required by appropriate governmental authorities, and
(ii) the
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closure of the Business, notice of which was given to all employees on
_____________, 1995, as required by the Federal Worker Adjustment and Retaining
Notification Act ("WARN").
(l) There is no litigation or proceeding, in law or in equity,
and there are no proceedings or governmental investigations before any
commission or other administrative authority, pending, or, to the best of
Seller's knowledge, threatened, against Seller or its affiliates, or with
respect to the consummation of the transaction contemplated hereby, or the use
of the Assets (whether used by Buyer after the Closing or by Seller prior
thereto).
(m) Seller is not a party to, or bound by, any decree, order
or arbitration award (or agreement entered into in any administrative, judicial
or arbitration proceeding with any governmental authority) with respect to its
properties, assets, personnel or business activities.
(n) Seller is not in violation of, or delinquent in respect
to, any decree, order or arbitration award or law, statute, or regulation of or
agreement with, or Permit from, any Federal, state or local governmental
authority (or to which its properties, assets, personnel, business activities or
the Premises are subject or to which it, itself, is subject), including, without
limitation, laws, statutes and regulations relating to equal employment
opportunities, fair employment practices, unfair labor practices, terms of
employment, occupational health and safety, wages and hours and discrimination,
and zoning ordinances and building codes. Copies of all notices of violation of
any of the foregoing which Seller has received within the past three years are
attached to the Disclosure Schedule.
(o) Both Seller and its assets and business (including,
without limitation, the Assets and the Business) are in compliance with all
Environmental Laws (as hereinafter defined) and Environmental Permits (as
hereinafter defined). A copy of any notice, citation, inquiry or complaint which
Seller has received in the past three years of any alleged violation of any
Environmental Law or Environmental Permit is contained in the Disclosure
Schedule. Seller possesses all Environmental Permits which are required for the
operation of the Business, and is in compliance with the provisions of all such
Environmental Permits. Copies of all Environmental Permits issued to Seller are
contained in the Disclosure Schedule. As used in this Agreement, "Environmental
Laws" means all federal, state and local statutes, regulations, ordinances,
rules, regulations and policies, all court orders and decrees and arbitration
awards, and the common law, which pertain to environmental matters or
contamination of any type whatsoever; and "Environmental Permits" means
licenses, permits, registrations, governmental approvals, agreements and
consents which are required under or are issued pursuant to Environmental Laws.
(p) Seller has no agreements, directly or indirectly, with any
present employees, representatives or agents of Seller which would require or
suggest continued employment by or association with Buyer.
(q) To the best of Seller's knowledge, information and
belief, the representations
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and warranties of Seller in this Agreement do not omit to state a material fact
necessary in order to make the representations, warranties or statements
contained herein not misleading.
(r) The copies of all documents furnished by Seller to Buyer
pursuant to the terms of this Agreement are complete and accurate. The
Disclosure Schedule contains complete and accurate copies of all documents
referred to therein. The information contained in the Disclosure Schedule is
complete and accurate.
8. Conduct Prior to the Closing. Between the date hereof and the
Closing Date:
(a) Seller shall give to Buyer's officers, employees,
attorneys, consultants, accountants and lenders reasonable access during normal
business hours to all of the properties, books, contracts, documents, records
and personnel of Seller and shall furnish to Buyer such information pertaining
to the Assets as Buyer may at any time and from time to time reasonably request.
(b) Seller shall use its best efforts and make every good
faith attempt (and Buyer shall cooperate with Seller) to obtain all consents
specified by Buyer to the assignment of, or alternate arrangements satisfactory
to Buyer with respect to, any Assigned Contract, Permit or Environmental Permit,
which is to be assigned to Buyer hereunder and which may be required for such
assignment to be effective (the "Consents").
(c) Seller shall carry on the Business in the usual and
ordinary course of business, consistent with past practices and shall use its
best efforts to preserve its business and the goodwill of its customers,
suppliers and others having business relations with Seller and to retain its
business organization intact, and shall maintain all of its properties in good
operating condition and repair, ordinary wear and tear excepted. Notwithstanding
the foregoing, Seller shall take whatever steps are necessary to terminate the
employment of its employees at the Business, such termination to be effective as
of the Closing Date. Seller may continue to employ such of its employees as it
desires to use in any business of Seller, provided that Seller will employ any
such employee at its sole risk and expense.
(d) No party shall intentionally perform any act which, if
performed, or omit to perform any act which, if omitted to be performed, would
prevent or excuse the performance of this Agreement by any party hereto or which
would result in any representation or warranty herein contained of said party
being untrue in any material respect as if originally made on and as of the
Closing Date.
9. Conditions Precedent to Buyer's Obligations. The obligation of Buyer
to consummate the transaction contemplated hereby is subject to the fulfillment
of all of the following conditions on or prior to the Closing Date, upon the
non-fulfillment of any of which this Agreement may, at Buyer's option, be
terminated pursuant to and with the effect set forth in Section 10:
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(a) Each and every representation and warranty made by Seller
shall have been true and correct when made and shall be true and correct in all
material respects as if originally made on and as of the Closing Date.
(b) All obligations of Seller to be performed hereunder
through, and including on, the Closing Date (including, without limitation, all
obligations which Seller would be required to perform at the Closing if the
transaction contemplated hereby was consummated) shall have been performed.
(c) All Consents necessary for Seller's performance
hereunder shall have been obtained by Seller.
(d) No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or private person on any
grounds to restrain, enjoin or hinder, or to seek material damages on account
of, the consummation of the transaction contemplated hereby.
10. Effect of Termination/Proceeding
(a) Right to Terminate. This Agreement and the transaction
contemplated hereby may be terminated at any time prior to the Closing by prompt
notice given in accordance with Section 19(a):
(1) by the mutual written consent of Buyer and
Seller; or
(2) by either of such parties if the Closing
shall not have occurred at or before 5:00 p.m., Lake Charles time, on the
Closing Date, as the same may have been extended by Buyer pursuant to Section
4(d) hereof or by mutual agreement of the parties; provided, however, that the
right to terminate this Agreement under this Section 10 shall not be available
to any party whose failure to fulfill any material obligation under this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or prior to the aforesaid date.
(b) Remedies. In the event of a breach of this Agreement, the
non-breaching party shall not be limited to the remedy of termination of this
Agreement, but shall be entitled to pursue all available legal and equitable
rights and remedies, and shall be entitled to recover all of its reasonable
costs and expenses incurred in pursuing them (including, without limitation,
reasonable attorneys' fees).
(c) Injunctive Relief. Seller specifically recognizes that any
breach of the provisions of this Agreement will cause irreparable injury to
Buyer and that actual damages may be difficult to ascertain, and in any event,
may be inadequate. Accordingly (and without limiting the availability of legal
or equitable, including injunctive, remedies under any other provisions of this
Agreement), Seller agrees that in the event of any such breach, Buyer shall be
entitled to equitable
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September 18, 1995
relief, including the specific performance of Seller's obligations hereunder,
and such other legal and equitable remedies that may be available.
11. Authority of the Parties. Each of Buyer and Seller represents and
warrants to the other that it is a corporation duly organized and validly
existing under and by virtue of the laws of the State of Louisiana and has full
power and authority to enter into and consummate this Agreement in accordance
with the terms and conditions herein contained, and that there are no
agreements, commitments or contracts, whether oral or written, to which it is a
party, or by which any of its properties and assets are bound, which would
prevent it from performing this Agreement in accordance with the terms and
conditions herein contained.
12. Fire, Other Casualty. All of Seller's fire insurance in force at
the date of this Agreement shall be maintained at the expense of Seller until
Closing. As of the date hereof, Seller's fire insurance policy shall be endorsed
by the insurance company for the benefit of both Seller and Buyer as their
respective interests may appear. Seller agrees that the proceeds of any such
insurance shall be paid or credited to Buyer at Closing and all unpaid claims
and rights in connection with losses will be assigned to Buyer at Closing.
Notwithstanding anything to the contrary contained herein, if any buildings,
improvements and fixtures on the Premises are not in the same condition at the
time of Closing as they are at the date of this Agreement, ordinary wear and
tear expected, Buyer shall have the right, at Buyer's option, to terminate this
Agreement.
13. Condemnation. In the event of the taking of all or any part of the
Premises by eminent domain proceedings or the commencement of any such
proceedings, Buyer shall have the right, at Buyer's option, to terminate this
Agreement by giving written notice to Seller on or before the date fixed for
Closing hereunder. If Buyer does not so terminate this Agreement, the purchase
price for the Premises shall be reduced by the total of any awards or other
process received by Seller with respect to any taking, and at Closing Seller
shall assign to Buyer all rights of Seller in and to any awards or other
proceeds payable by reason of any taking. Seller agrees to notify Buyer of
eminent domain proceedings immediately after Seller learns of any such
proceedings. Buyer shall have the sole right (in the name of Buyer or Seller or
both) to negotiate for, to agree to and to contest all offers and awards.
14. Deliveries.
(a) At Closing Seller shall deliver, or cause to be
delivered, to Buyer the following:
(1) The deed conveying title to the Premises;
(2) The bill of sale to the Personalty and
Inventory of Supplies, in the form of Exhibit "G" hereto;
(3) An assignment, in the form of Exhibit "H"
hereto, of prepaid room
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September 18, 1995
charges and advance deposits held by Seller;
(4) An assignment, in the form of Exhibit "H"
hereto, of all Permits, and of any Assigned Contracts specified in Exhibit "C",
hereto, and renewals thereof;
(5) An assignment, in the form of Exhibit "H"
hereto, of any rights of Seller to the Trade Name;
(6) Resolutions of Seller's Board of Directors,
or certificates of Seller's secretary attesting to the adoption of such
resolutions, evidencing the authority of Seller to consummate this transaction
upon the terms and conditions contained in this Agreement;
(7) The Registration Rights Agreement more
particularly described under Section 17, below;
(8) The Termination and Release more particularly
described under Section 18, below; and
(9) Such other documents and instruments as shall
be reasonably required in order for Seller to consummate this transaction in
accordance with the terms and conditions of this Agreement.
(b) At Closing, Buyer shall deliver, or cause to be
delivered, to Seller, the following:
(1) The Cash Amount, in immediately available
funds, as adjusted in accordance with the provisions of this Agreement;
(2) The Agreement of Players International, Inc. to
issue its common stock representing the balance of the Purchase Price as
provided pursuant to Section 2(a)(2), above;
(3) Resolutions of Buyer's Board of Directors, or
certificates of Buyer's secretary attesting to the adoption of such resolutions,
evidencing the authority of Buyer to consummate this transaction upon the terms
and conditions contained in this Agreement;
(4) The Registration Rights Agreement more
particularly described under Section 17, below;
(5) The Termination and Release more particularly
described under Section 18, below; and
(6) Such other documents and instruments as shall
be reasonably required
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AC-57140/3
September 18, 1995
for Buyer to consummate Closing in accordance with the intents expressed herein.
15. Post-Closing Agreements.
(a) Post-Closing Agreements. From and after the Closing,
the parties shall have the respective rights and obligations which are set forth
in the remainder of this Section 15.
(b) Certain Assignments. Any other provision of this Agreement
to the contrary notwithstanding, this Agreement shall not constitute an
agreement to transfer or assign, or a transfer or assignment of, any claim,
contract, lease, Permit, Environmental Permit, commitment, sales order or
purchase order, or any benefit arising thereunder or resulting therefrom, if an
attempt at transfer or assignment thereof without the consent required or
necessary for such assignment, would constitute a breach thereof or in any way
adversely affect the rights of Buyer or Seller thereunder. If such a consent or
agreement to transfer or assign is not obtained for any reason, Buyer and Seller
shall cooperate in any arrangement Buyer may reasonably request to provide for
Buyer the benefits under such claim, contract, lease, Permit, Environmental
Permit, commitment or order.
(c) Use of Trademarks; References to Seller. Seller shall
cease to use and shall not permit any third party to use the name "Players
Lakefront Hotel", or any version of the "Players" name, or any other name,
slogan, logo or trademark which is similar to any of the foregoing.
(d) Employees. Buyer shall not be obligated to offer
employment to any employee of Seller, but Buyer shall have the right to employ
employees of Seller as of the Closing Date, on terms and conditions established
by Buyer in its sole discretion.
(e) Back-Up. Seller shall, at Buyer's request, furnish such
detailed back-up material with respect to the Assets, the past financial
statements of Seller (to the extent that such statements pertain to the Assets)
and the Assumed Contracts as are in Seller's possession or are reasonably
available to Seller.
(f) Sales and Transfer Taxes and Fees. At Closing, Seller
shall pay in escrow to the authorized agent of the title insurance company
chosen by Buyer, from the Cash Amount, all sales taxes and/or use taxes,
recording fees, personal property title application fees, real property transfer
taxes and fees and all other taxes and fees on transfer of the Assets arising by
virtue of the sale of the Assets to Buyer, regardless of whether the liability
for said taxes or fees is imposed by law upon Seller or upon Buyer.
(g) Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be necessary to transfer and
convey the Assets to Buyer, on the terms herein contained, and to otherwise
comply with the terms of this Agreement and consummate the transaction
contemplated hereby. This provision shall survive Closing hereunder.
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16. Indemnification.
(a) General. From and after the Closing, the parties shall
indemnify each other as provided in this Section 16. For the purposes of this
Section 16, each party shall be deemed to have remade all of its representations
and warranties contained in this Agreement at the Closing with the same effect
as if originally made at the Closing. As used in this Agreement, the term
"Damages" shall mean all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including, without limitation, reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation of any such claim.
(b) Indemnification Obligations of Seller. Seller shall
defend, indemnify, save and keep harmless Buyer and its successors and permitted
assigns against and from all Damages sustained or incurred by any of them
resulting from or arising out of or by virtue of:
(1) any inaccuracy in or breach of any
representation and warranty made by Seller in this Agreement or in any closing
document delivered to Buyer in connection with this Agreement;
(2) any breach by Seller of, or failure by Seller
to comply with, any of its covenants or obligations under this Agreement
(including, without limitation, its obligations under this Section 16);
(3) the failure to discharge when due any
liability or obligation of Seller other than the First Mortgage or the Assigned
Contracts, or any claim against Buyer with respect to any such liability or
obligation or alleged liability or obligation;
(4) any claims by parties other than Buyer to the
extent caused by acts or omissions of Seller on or prior to the Closing Date,
including, without limitation, claims for Damages which arise or arose out of
Seller's operation of the Business or by virtue of Seller's ownership of the
Assets on or prior to the Closing Date; or
(5) any debts, liabilities, penalties, fines,
sanctions, assessments and obligations arising under the Labor and Employment
Agreements and Plans (defined in subsection 7(k)), under WARN (defined in
subsection 7(k)) and other similar laws.
(c) Buyer's Indemnification Covenants. Buyer shall
defend, indemnify, save and keep harmless Seller and its successors and
permitted assigns against and from all Damages sustained or incurred by any of
them resulting from or arising out of or by virtue of:
(1) any inaccuracy in or breach of any
representation and warranty made
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September 18, 1995
by Buyer in this Agreement or in any closing document delivered to Seller in
connection with this Agreement;
(2) any breach by Buyer of, or failure by Buyer
to comply with, any of its covenants or obligations under this Agreement
(including, without limitation, its obligations under this Section 16);
(3) any claims by parties other than Seller to
the extent caused by the acts or omissions of Buyer after the Closing Date and
not constituting an Excluded Liability, including, without limitation, claims
for Damages which arise out of Buyer's operation of the Assets after the Closing
Date.
17. Provisions Governing PII Stock.
(a) Restrictions; Registration. Seller acknowledges and agrees
that the PII Stock issued as part of the Purchase Price under Section 2 hereof
will not be registered under federal securities laws, nor any rules or
regulations of the United States Securities and Exchange Commission.
Accordingly, transfer or other disposition of the PII Stock is restricted under
applicable securities laws, rules and regulations. At Closing, Players
International, Inc. shall enter into a Registration Rights Agreement with
Seller, in the form annexed hereto as Exhibit "I", and by this reference made a
part hereof, pursuant to which Seller shall be granted "piggyback" registration
rights only, subject to certain conditions therein contained.
(b) Put Option.
(1) From the Issue Date through the third
anniversary of the Issue Date, Seller shall have the right and option,
exercisable upon written notice to Buyer ("Put Notice"), to require Players
International, Inc. ("PII") to purchase all, or a minimum of ten percent (10%),
of the PII Stock issued or required to be issued to Seller under Section 2
hereof, for a purchase price, payable by Buyer's check in full at the closing of
such purchase, equal to the value assigned to such PII Stock under Section
2(a)(2)(ii) hereof (such rights referred to as the "Put Rights"). The closing of
any such transaction shall be held at the principal headquarters of Buyer,
within ninety (90) days after Buyer's receipt of the Put Notice. Seller
acknowledges and agrees that PII may designate a nominee or assignee to acquire
Seller's PII Stock.
(2) Seller shall not transfer, convey, pledge or
assign the Put Rights, nor any portion thereof or rights therein, under any
circumstances except as provided for in this Subsection 17(b)(2). At such time
as Seller and Buyer negotiated for the creation of the Put Rights, Seller acted
by and through its shareholders William Woodward, Elizabeth Woodward and Timothy
Vaughan (the "Shareholders"). In contemplation of the potential liquidation of
Seller, Buyer agrees that upon delivery of prior written notice to Seller, Buyer
may transfer, convey, pledge or assign its Put Rights to William Woodward,
Elizabeth Woodward and Timothy Vaughan. Any purported disposition of the
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Put Rights other than in accordance with the foregoing shall be void and of no
effect.
(c) Regulatory Matters.
(1) Buyer is licensed by and/or otherwise
subject to the authority of gaming authorities in various jurisdictions. This
Agreement may be terminated by Buyer without liability on its part if any such
gaming authority requires or recommends the Agreement to be terminated or if the
continuance of this Agreement in the reasonable belief of Buyer will have
detrimental impact on the ability of Buyer to obtain or maintain its licensure
in any jurisdiction.
(2) Buyer is a subsidiary of Players
International, Inc. ("PII"). PII has adopted a Regulatory Compliance Policy
which is applicable to Buyer, a copy of which has previously been delivered to
Seller. Seller agrees to provide for Buyer such documentation, information, and
assurances regarding itself, and its directors, officers, principal
shareholders, and principal employees, as may be reasonably necessary in order
for Buyer to comply with PII's Regulatory Compliance Policy. Buyer may terminate
this Agreement without liability on its part if Seller fails to comply with this
paragraph or if the continuation of this Agreement in the reasonable belief of
Buyer will have a detrimental impact on any governmental approval or licenses
held by Buyer or its affiliates.
18. Provisions Re: Lease.
(a) As of the date of this Agreement, the Premises is subject
to the Lease as modified by the Closing Agreement. Seller and Buyer hereby
specifically agree that the Lease shall terminate and be of no further force or
effect from and after the completion of Closing hereunder; provided, however,
that all agreements of indemnity between Seller and Buyer, as Landlord and
Tenant under the Lease, shall continue in full force and effect as if the Lease
had not been terminated.
(b) Release and Termination. Buyer and Seller agree to execute
and deliver at Closing a Termination and Release with respect to the Lease, in
the form annexed hereto as Exhibit "J", and by this reference made a part
hereof.
19. Miscellaneous.
(a) Notices. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by facsimile, by
nationally recognized overnight courier, or by United States mail. Notices
delivered by mail shall be deemed given three (3) business days after being
deposited in the United States mail, postage prepaid, registered or certified
mail. Notices delivered by hand by facsimile, or by nationally recognized
private carrier shall be deemed given on the first business day following
receipt; provided, however, that a notice delivered by facsimile shall only be
effective if such notice is also delivered by hand, or deposited in the United
States mail, postage prepaid, registered or certified mail, on or before two (2)
business days after its delivery by facsimile.
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All notices shall be addressed as follows:
If to Seller, addressed to:
The Beeber Corporation
P.O. Box 3023
Lake Charles, Louisiana 70602
Attention: William Woodward
Telecopier: (318) 433-5253
with a copy to:
Karl E. Boellert, Esquire
714 Pujo Street
Lake Charles, Louisiana 70601
Telecopier: (318) 433-4169
If to Buyer, addressed to:
Players Lake Charles, Inc.
800 Bilbo Street
Lake Charles, Louisiana 70601
Attention: Dietrich Mayring
Telecopier: (318) 437-1586
with a copy to:
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Patrick H. Madamba, Esq.
Telecopier: (702) 792-9843
and a copy to:
Horn, Goldberg, Gorny, Daniels, Plackter & Weiss
1300 Atlantic Avenue, Suite 500
Atlantic City, New Jersey 08401
Attention: Nicholas Casiello, Jr., Esquire
Telecopier: (609) 348-6834
and/or to such other respective addresses and/or addressees as may be designated
by notice given in
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September 18, 1995
accordance with the provisions of this Section 19(a). Counsel for either party
may give notice hereunder on behalf of such party.
(b) Entire Agreement. This Agreement and the instruments to be
delivered by the parties pursuant to the provisions hereof constitute the entire
agreement between the parties. Upon the execution of this Agreement, the
Preliminary Agreement, and the rights and obligations created thereby, shall be
null and void. Each exhibit, and the Disclosure Schedule, shall be considered
incorporated into this Agreement. Any amendments, or alternative or
supplementary provisions to this Agreement, must be made in writing and duly
executed by an authorized representative or agent of each of the parties hereto.
This Agreement is entered into after full investigation, neither party relying
upon any statement or representation not embodied in this Agreement.
(c) Survival; Non-Waiver. All representations and warranties
shall survive the Closing regardless of any investigation or lack of
investigation by any of the parties hereto. The failure in any one or more
instances of a party to insist upon performance of any of the terms, covenants
or conditions of this Agreement, to exercise any right or privilege in this
Agreement conferred, or the waiver by said party of any breach of any of the
terms, covenants or conditions of this Agreement, shall not be construed as a
subsequent waiver of any such terms, covenants, conditions, right or privileges,
but the same shall continue and remain in full force and effect as if no such
forbearance or waiver had occurred. No waiver shall be effective unless it is in
writing and signed by an authorized representative of the waiving party.
(d) Applicable Law. It is agreed by and between the
parties hereto that this Agreement shall be governed by and construed in
accordance with the laws of the State of Louisiana.
(e) Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer on any person other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
(f) Assignability. Buyer's interest hereunder shall be
assignable, and Seller agrees to convey the Assets to any assignee or nominee of
Buyer.
(g) Headings. The headings contained herein are not part of
this Agreement. They are only for convenience of the parties and do not in any
way modify, amplify or give full notice of any of the terms, covenants or
conditions of this Agreement.
(h) Time of the Essence. The date and time of Closing, and all
other dates and times specified herein for performance by the parties are and
shall be of the essence of this Agreement.
(i) Number and Gender. For the purposes of this
Agreement, the neuter shall be
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September 18, 1995
deemed to include the masculine and the feminine, and the singular shall be
deemed to include the plural, and the plural the singular, as the context may
require.
(j) Counterparts. This Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(k) Brokerage. Seller agrees to indemnify Buyer and hold Buyer
harmless from and against the claims of any and all brokers and other
intermediaries employed by Seller in connection with the sale of the Premises
and/or the other Assets. Buyer agrees to indemnify Seller and hold Seller
harmless from and against the claims of any and all brokers and other
intermediaries employed by Buyer in connection with the sale of the Premises
and/or the other Assets.
(l) Arbitration. Any and all disputes or disagreements
hereunder shall be resolved by arbitration before a single arbitrator, acting
under and pursuant to the commercial arbitration rules of the American
Arbitration Association, venued in Calcasieu Parish, Louisiana. The decision of
such arbitrator may be enforced by any court of competent jurisdiction.
(m) Escrow for Louisiana Bulk Sales and Sales Tax
requirements. Seller agrees that at the time and place of Closing, Seller shall
place in escrow with the authorized agent of Buyer's chosen title insurance
company part of the Cash Amount in the sum of $17,203.35 which Seller represents
and warrants is sufficient to satisfy and protect Buyer and the Assets from
claims of Seller's creditors and/or the State of Louisiana, relating to Seller's
accounts payable and liability for sales tax. Upon Seller's presentation to
Buyer of (1) a receipt from the Secretary of the Louisiana Department of Revenue
showing all sales and use taxes, penalties and interest paid, or a certificate
stating that no such sums are due; and (2) other proof that Seller's trade and
other creditors have been paid in full, the aforesaid escrow may be released to
Seller. Until and unless such proof is given, such amount shall remain in
escrow, and if such proof is not made by Seller within thirty (30) days after
Closing, Buyer may use such amounts to pay and satisfy the tax, trade and other
liabilities of Seller. If the escrow amount is insufficient to satisfy any of
Seller's liabilities as aforesaid, Buyer shall be permitted to setoff such
deficiency against any of Buyer's continuing payments to Seller as contemplated
under Section 2(b) hereof.
20. Survival of Closing. Notwithstanding any presumption to the
contrary, all covenants, conditions and representations contained in this
Agreement, which, by their nature, impliedly or expressly, involve performance,
in any particular, after Closing, or which cannot be ascertained to have been
fully performed until after Closing, shall survive Closing. This provision shall
be effective as to all such covenants, conditions and representations,
notwithstanding that as to some of them, it may be expressly stated that they
survive.
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THUS DONE AND SIGNED in the presence of the undersigned attesting
witnesses and me, Notary Public at _____________________________ on this ____
day of August, 1995.
THE BEEBER CORPORATION, a Louisiana corporation
WITNESSES:
__________________ BY:___________________________
Name: William D. Woodward
Title: President
------------------
---------------------------
NOTARY PUBLIC
THUS DONE AND SIGNED in the presence of the undersigned attesting
witnesses and me, Notary Public at Las Vegas, Nevada on this ____ day of August,
1995.
PLAYERS LAKE CHARLES, INC., a Louisiana corporation
WITNESSES:
__________________ BY:___________________________
David Fishman, President
------------------
---------------------------
NOTARY PUBLIC
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September 18, 1995
JOINDER
Players International, Inc. hereby joins in the execution of this Agreement
for the sole purpose of evidencing its agreement under Section 17(a) and (b)
hereof. Players International, Inc. does not, by its execution hereof, agree to
be bound by or serve as guarantor or endorser of any obligations of Buyer under
the above Agreement.
PLAYERS INTERNATIONAL, INC., a Nevada corporation
ATTEST:
__________________ BY:___________________________
Name: Name:
Title: Title:
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AC-57140/3
September 18, 1995
LIST OF EXHIBITS
"A" Legal Description
"B" Personalty
"C" Assigned Contracts
"D" Excluded Assets
"E" Title Matters
"F" Labor and Employment Agreements and Plans
"G" Bill of Sale
"H" Assignment
"I" Registration Rights Agreement
"J" Termination and Release with respect to the Lease
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AC-57140/3
September 18, 1995
EXHIBIT "A"
The Property shall include all of the following three tracts of land described
as follows:
TRACT #1:
Commencing at the Northwest Corner of a tract of land on Lake Charles being
the Northwest Corner of property acquired by Sam Sonnier by deed recorded in
Book 1068 at Page 49 of the Conveyance Records of Calcasieu Parish, Louisiana,
said point of commencement being on the South right of way line of Highway I-10
and located 925.7 feet West and 726.62 feet South of the Northeast Corner of
South Half of Northwest Quarter (S/2 of NW/4) of Section 31, Township 9 South,
Range 8 West, Louisiana Meridian, thence South 6 degrees 01 minutes West a
distance of 150 feet, being on the same line as established by boundary
agreement bearing File No. 503042 of the records of Calcasieu Parish, Louisiana,
thence South 80 degrees 35 minutes East a distance of 100 feet, thence North 6
degrees 01 minutes East a distance of 150 feet, thence North 80 degrees 35
minutes West a distance of 100 feet to point of commencement, together with the
limited right to non-exclusively use a non-exclusive easement 50 feet in width
along the entire East and South boundary lines of said tract, all as reflected
in that certain deed from Sam D. Sonnier to Cities Service Oil Company recorded
bearing File Number 1163749; together with all rights of ways, privileges and
servitudes thereunder belonging or in any manner appertaining, together will all
buildings and improvements thereon and all fixtures, accessories or other
equipment, including all heating, cooling, laundry, cooking, refrigeration,
ventilating, air conditioning, washing, drying or storage units, equipment or
systems located on, in or attached thereto or dedicated to the use of said
property and which are hereby declared to be immovable by Beeber (all herein
called the "Property").
TRACT #2
A certain tract of land, together with all the appurtenances and
improvements thereon, situated in the Southeast Quarter of the Northwest Quarter
(SE/4 of NW/4) of Section 31, Township 9 South, Range 8 West, Parish of
Calcasieu, State of Louisiana, which is described as follows: For the point of
commencement being 110 feet due West of the Southwest Corner of Block 30 of the
Thomas Bilbo and Ann Lawrence Subdivision in the City of Lake Charles,
Louisiana, and from that point North 57 degrees 50 minutes West 830.5 feet, and
thence North 80 degrees 35 minutes West 200 feet; from the said point of
commencement run North 6 degrees 01 minutes East 337 feet to the right of way of
public highway; thence North 80 degrees 35 minutes West 400 feet along the
Southerly side of the public highway right of way to the most Westerly Corner of
the property acquired by the Department of Highways from John A. Bel, et al, on
March
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AC-57140/3
September 18, 1995
17, 1950; thence South 6 degrees 01 minutes West 337 feet to the bed of Lake
Charles and the common boundary with the State of Louisiana; thence South 80
degrees 35 minutes East 400 feet along the boundary with the State of Louisiana
as fixed by an agreement filed in the Calcasieu Parish Conveyance Records July
26, 1951; bearing File No. 503042 to the said point of commencement; together
with all riparian or other rights appertaining thereto; the aforesaid property
conveyed hereunder being the Westerly 400 feet of the land designated "property
of John Albert Bel, et al" on the plat attached to the aforesaid boundary
agreement bearing File No. 503042;
LESS AND EXCEPT:
Commencing at the Northwest Corner of a tract of land on Lake
Charles being the Northwest Corner of property acquired by Sam Sonnier by deed
recorded in Book 1068 at Page 49 of the conveyance Records of Calcasieu Parish,
Louisiana, said point of commencement being on the South right of way line of
Highway I-10 and located 925.7 feet West and 726.62 feet South of the Northeast
Corner of South Half of Northwest Quarter (S/2 of NW/4) of Section 31, Township
9 South, Range 8 West, Louisiana Meridian, thence South 6 degrees 01 minutes
West a distance of 150 feet, being on the same line as established by boundary
agreement bearing File No. 503042 of the records of Calcasieu Parish, Louisiana,
thence South 80 degrees 35 minutes East a distance of 100 feet, thence North 6
degrees 01 minutes East a distance of 150 feet, thence North 80 degrees 35
minutes West a distance of 100 feet to point of commencement, together with the
limited right to non-exclusively use a non-exclusive easement 50 feet in width
along the entire East and South boundary lines of said tract, all as reflected
in that certain deed from Sam D. Sonnier to Cities Service Oil Company recorded
bearing File No. 1163749;
All as shown on the plat of survey prepared by George F. Webb,
Jr., dated June 8, 1982, which is recorded in Mortgage Book 1137, Page 154, of
the records of Calcasieu Parish, Louisiana, together with all rights of ways,
privileges and servitudes thereunto belonging or in any manner appertaining,
together will all buildings and improvements thereon and all fixtures,
accessories or other equipment, including all heating, cooling, laundry,
cooking, refrigeration, ventilating, air conditioning, washing, drying or
storage units, equipment or systems located on, in or attached thereto or
dedicated to the use of said property and which are hereby declared to be
immovable by Beeber (all herein called the "Property").
TRACT #3
A certain tract or parcel of land situated in the Northwest
Quarter of Section 31, Township 9 South, Range 8 West, Southwestern Land
District of Louisiana, and being
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AC-57140/3
September 18, 1995
more particularly described as follows:
A certain 50 foot strip of right of way beginning at a point
which lies 12.00 feet South of the southerly right of way line of US Highway 90;
thence proceed South 6 degrees 01 minutes West a distance of 325.00 feet to a
point on the lake front of Lake Charles; thence proceed in an easterly direction
to a line parallel and 50.00 feet from the westerly boundary line of said 50.00
foot strip; thence proceed North 6 degrees 01 minutes East a distance of 325.00
feet to a point 12.00 feet from the southerly right of way line of US Highway
90; thence proceed in a westerly direction to the point of beginning; said strip
containing approximately 16,250.0 square feet, as shown on plat attached hereto
and made a part hereof, together with all improvements, servitudes, and
rights-of-way in any wise belonging or appertaining thereto.
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September 18, 1995
EXHIBIT "B"
PERSONALTY
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EXHIBIT "C"
ASSIGNED CONTRACTS
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EXHIBIT "D"
EXCLUDED ASSETS
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EXHIBIT "E"
TITLE MATTERS
Title to the Premises shall be subject to the following Permitted Encumbrances:
1. The following easements to Gulf States Utilities Company:
(a) from Sam D. Sonnier dated 10/27/69 recorded in C.B. 1098, Page 500.
(b) from The Beeber Corporation filed 11/19/93 recorded in C.B. 2398, Page
796. - Page 290
(c) from The Beeber Corporation filed 11/19/93 recorded in C.B. 2398, Page
801.
2. Restrictions as follows:
(a) A building restriction line as established by Legislative Act 1954,
Article 14, Section 44 of the Louisiana Constitution which prevents erection of
any buildings, shelters or other structures within a distance of 200' from the
surveyed centerline of U.S. Highway 90 (Interstate 10).
(b) The restrictions contained in the deed from the State of Louisiana as
set forth in the Deed recorded in C.B. 2387, Page 575 as follows:
The parties hereto specifically agree that, no junk yards, as defined in
Title 23 U.S.C., Section 136, and in Title 48, Section 461.1 of the Louisiana
Revised Statutes, shall hereinafter be established or maintained on the land
conveyed and no signs, billboards, outdoor advertising structures or
advertisement of any kind, as provided for in Title 23. U.S.C., Section 131, and
as provided for in Title 48, Section 461 et seq. of the Louisiana Revised
Statutes, shall be hereinafter erected, displayed, placed or maintained upon or
within the above described land, except that signs may be erected and maintained
to advertise the sale, hire or lease of the property, or the principal
activities conducted upon the land upon which the signs are located.
3. A reservation in the favor of the State of Louisiana as contained in the
Deed in C.B. 2387, Page 575 which provides for the exclusion from the Premises
as Tract #3 of any and all right, title and interest of the State of Louisiana
in, on or under any highway, road, street, alley, railroad or other right of way
upon which the Premises fronts and by which it is bounded.
4. A mineral reservation to the State of Louisiana, if any, under Tract #3
or in favor of the Vendors, Piney Woods Corporation, et al. in the Deed recorded
in C.B. 2387, Page 580 in which the said Vendors reserved to themselves, their
heirs, successors and assigns, any and all
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AC-57140/3
September 18, 1995
rights, if any, which the Vendors may have in any oil, gas or other minerals in,
on or under the property conveyed.
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AC-57140/3
September 18, 1995
EXHIBIT "F"
LABOR AND EMPLOYMENT AGREEMENTS AND PLANS
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September 18, 1995
EXHIBIT "G"
GENERAL WARRANTY BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that THE BEEBER CORPORATION, a Louisiana
corporation having an address at 507 Lake Shore Drive, Lake Charles, Louisiana
70601 ("Seller") , for and in consideration of the sum of $6,700,000 to it in
hand paid or to be paid in accordance with the terms of a certain Asset Purchase
Agreement dated of even date herewith (the "Agreement") by PLAYERS LAKE CHARLES,
INC., a Louisiana corporation having an address at 800 Bilbo Street, Lake
Charles, Louisiana 70601 ("Buyer"), the receipt and sufficiency of which is
hereby acknowledged, Has and does by these presents sell, grant, bargain, assign
and deliver unto Buyer the following:
(1) All items of furniture, furnishings, fixtures, equipment, machinery,
parts, tools, vehicles and all other tangible personal property owned by Seller
and located in or about and employed in the operation of the Premises (as
defined in the Agreement), a current inventory of which is annexed hereto and by
this reference made a part hereof (the "Personalty").
(2) All of Seller's "Inventory of Supplies", which term shall include such
paper goods, maintenance and cleaning supplies, towels and linens and similar
disposable and expendable supplies employed by Seller in connection with the
operation of the Business (as defined in the Agreement) existing on the date
hereof, including, without limitation, the items listed on the statement of
Inventory of Supplies attached hereto and by this reference made a part hereof.
(3) All personal property attached to or used in connection with the
operation of the Premises, including without limitation items which could be
deemed fixtures thereto.
(4) All of Seller's claims and rights (and benefits arising therefrom) with
or against all persons whomsoever, including, without limitation, all rights
against suppliers under warranties covering any of the Personalty or Inventory
of Supplies or any other assets described herein.
TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns,
forever.
AND SELLER, for itself and its affiliates, successors and assigns, and for
the heirs and personal representative of any of the foregoing, does hereby
covenant and agree that it will forever warrant and defend (with full
subrogation to all rights and actions of warranty against all prior owners and
vendors) the foregoing properties and assets unto Buyer, its affiliates,
successors and assigns, and the heirs and personal representative of any of the
foregoing, against the claims and demands of all persons whomsoever.
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AC-57140/3
September 18, 1995
THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses
and me, Notary Public at _____________________________ on this ____ day of
_______ 1995.
THE BEEBER CORPORATION, a Louisiana
corporation
WITNESSES:
__________________ BY:___________________________
Name: William D. Woodward
Title: President
------------------
---------------------------
NOTARY PUBLIC
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at _____________________________ on
this ____ day of _______ 1995.
PLAYERS LAKE CHARLES, INC., a Louisiana corporation
WITNESSES:
__________________ BY:___________________________
David Fishman, President
------------------
---------------------------
NOTARY PUBLIC
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AC-57140/3
September 18, 1995
EXHIBIT "H"
GENERAL WARRANTY ASSIGNMENT
THIS ASSIGNMENT, made this ____ day of _______ 1995, by THE BEEBER
CORPORATION, a Louisiana corporation ("Assignor"), to PLAYERS LAKE CHARLES,
INC., a Louisiana corporation, its assignee or nominee ("Assignee"), for and in
consideration of the sum of $6,700,000.00 to Assignor in hand paid or to be paid
by Assignee to Assignor in accordance with the terms of that certain Asset
Purchase Agreement between Assignor and Assignee of even date herewith (the
"Definitive Agreement"; any capitalized terms not specifically defined herein
shall have the meanings given under the Definitive Agreement), the receipt and
sufficiency of which is hereby acknowledged.
1. Assignment. Assignor does hereby grant, sell, assign, convey, transfer,
set over and deliver to Assignee, all of Assignor's right, title and interest
in, to and under the following:
(a) Any and all prepaid room charges and advance deposits held by Assignor,
a schedule of such prepaid room charges and advance deposits listed on Exhibit
"A" annexed hereto and by this reference made a part hereof;
(b) Any and all licenses, permits, registrations and governmental
approvals, agreements and consents applied for, pending by, issued or given to
Assignor, and every agreement with governmental authorities (Federal, state,
local or foreign) entered into by Assignor, which is in effect or has been
applied for or is pending, including all licenses, permits, registrations,
governmental approvals, agreements and consents which are required under or are
issued pursuant to any applicable federal, state and local environmental
statutes, regulations, ordinances, rules, regulations and policies, all court
orders and decrees and arbitration awards, and the common law, which pertain to
environmental matters or contamination of any type whatsoever;
(c) any and all contracts, license agreements, distribution agreements,
sales representative agreements, service agreements, supply agreements,
franchise agreements, computer software agreements and technical service
agreements listed on Exhibit "B" annexed hereto and by this reference made a
part hereof;
(d) any and all of Seller's right, title and interest in, to and under that
certain Lease dated May 18 and 19, 1993 between Seller, as landlord, and Buyer,
as tenant, relating to portions of the Premises, as supplemented and/or amended;
(e) any and all computer software, including all documentation and source
codes with respect to such software and licenses and leases of software, all
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AC-57140/3
September 18, 1995
marketing and promotional materials, catalogues and advertising literature, and
all telephone numbers of Seller;
(f) any and all customer lists, customer records and information, and all
books and records;
(g) any and all rights of Assignor, if any, in and to the name "Players
Lakefront Hotel";
(h) any and all of Assignor's claims and rights (and benefits arising
therefrom) with or against all persons whomsoever, including, without
limitation, all rights against suppliers under warranties covering any of the
Personalty or Inventory of Supplies or any other Assets; and
(i) any other intangible rights, assets or properties of Seller sold by
Seller to Buyer pursuant to the provisions of the Definitive Agreement.
TO HAVE AND TO HOLD unto Assignee, its successors and assigns, forever.
2. Warranty. Assignor, for itself and its affiliates, successors and
assigns, and for the heirs and personal representative of any of the foregoing,
does hereby covenant and agree that it will forever warrant and defend (with
full subrogation to all rights and actions of warranty against all prior owners
and vendors) the foregoing properties and assets unto Assignee, its affiliates,
successors and assigns, and the heirs and personal representative of any of the
foregoing, against the claims and demands of all persons whomsoever.
3. Incorporation of Definitive Agreement. Each and every provision of the
Definitive Agreement is hereby incorporated in this Assignment as if set forth
here at length. Without limiting the generality of the foregoing, it is
specifically acknowledged and agreed that the representations and warranties,
the indemnification obligations, and any continuing payment obligations of
Assignor and Assignee, and all other provisions of the Definitive Agreement,
shall survive the closing of this transaction and the execution and delivery
hereof.
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September 18, 1995
THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses
and me, Notary Public at _____________________________ on this ____ day of
_______ 1995.
THE BEEBER CORPORATION, a Louisiana corporation
WITNESSES:
__________________ BY:___________________________
Name: William D. Woodward
Title: President
------------------
---------------------------
NOTARY PUBLIC
THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses
and me, Notary Public at _____________________________ on this ____ day of
_______ 1995.
PLAYERS LAKE CHARLES, INC., a Louisiana corporation
WITNESSES:
__________________ BY:___________________________
David Fishman, President
------------------
---------------------------
NOTARY PUBLIC
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September 18, 1995
Exhibit "A" To Assignment
PREPAID ROOM CHARGES AND ADVANCE DEPOSITS
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Exhibit "B" To Assignment
ASSIGNED CONTRACTS, AGREEMENTS, ETC.
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EXHIBIT "I"
REGISTRATION RIGHTS AGREEMENT
PLAYERS INTERNATIONAL, INC.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
August 18, 1995
THE BEEBER CORPORATION
507 North Lake Shore Drive
Lake Charles, Louisiana 70601
ATTENTION: William D. Woodward, President
Dear Sirs:
This will confirm the rights of The Beeber Corporation ("you") to have
shares registered under the Securities Act under the asset purchase agreement of
even date between our corporation ("Players") and you (the "Agreement"), and
certain other matters.
1. Certain Definitions. As used herein, the following terms
shall have the following respective meanings:
"Registration Expenses" means the expenses so described in
Section 7.
"Restricted Stock" means shares of Common Stock of Players
issued to you on even date herewith, the certificates for which are required to
bear the legend set forth in Section 2, excluding shares which may at the time
be sold pursuant to Rule 144 under the Securities Act or which may be otherwise
sold without registration under the Securities Act.
"Securities Act" means the Securities Act of 1933 or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" means the expenses so described in
Section 6.
2. Restrictive Legend. Each Certificate representing shares issued to
you on even date herewith and, except as otherwise provided in Section 3, each
certificate issued upon exchange or registration of transfer of any such shares
shall be stamped or otherwise imprinted with a legend substantially in the
following form:
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September 18, 1995
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "1933 ACT") OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
1933 ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
3. Notice of Proposed Transfer. Prior to any proposed transfer of any
Restricted Stock (other than under the circumstances described in Section 4 and
5), the holder thereof shall give written notice to Players of such holder's
intention to effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer and, if requested by Players, shall
be accompanied by an opinion of the stockholder's counsel reasonably
satisfactory to Players to the effect that the proposed transfer may be effected
without registration under the Securities Act, whereupon the holder of such
Restricted Stock shall be entitled to transfer such Restricted Stock in
accordance with the terms of its notice if such opinion of counsel is
satisfactory in form and substance to counsel for Players. Each certificate
approved for transfer as above provided shall bear the legend set forth in
Section 2, except that such certificate shall not bear such legend if (i) such
transfer is made, in the opinion of Players' counsel, pursuant to an effective
registration statement or in accordance with the provisions of Rule 144 (or any
other statutory provisions or rule permitting public sale without registration
under the Securities Act) or (ii) the opinion of counsel which is satisfactory
in form and substance to Players' counsel is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of Players)
would be entitled to transfer such securities in a public sale without
registration under the Securities Act.
4. Limitation on Registration Rights. Players shall not be required to
register under the Securities Act all or any portion of the shares of Restricted
Stock, except as required in Section 5 hereof. Notwithstanding anything
contained in Section 5 hereof, Players shall not be obligated to register shares
of Restricted Stock hereunder to the extent such shares are salable pursuant to
Rule 144 under the Securities Act. The obligations of Players to register shares
of Restricted Stock hereunder shall terminate on the date on which such shares
may be sold pursuant to Rule 144(k) under the Securities Act. Notwithstanding
anything herein to the contrary, and not in limitation of any of Players' other
rights hereunder, Players' obligations to file a registration statement, or
cause such registration statement to become and remain effective, shall be
suspended for a period not to exceed 90 days if, in the reasonable and good
faith opinion of Players, such registration or the sale of shares of Restricted
Stock pursuant to such registration would not be in the best interest of
Players.
5. Incidental Registration. If Players at any time proposes to register
any of its securities, which are of the same type and class as the Restricted
Stock, under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms S-8, S-4 or another form not
available for registering the Restricted Stock for sale to the public), each
such time it will give written notice to all holders of outstanding Restricted
Stock of its intention so to do. Upon the written request of any such holder,
given within 20 days after receipt of any such notice, to register any of its
Restricted Stock (which
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September 18, 1995
request shall state the intended method of disposition thereof), Players will
use reasonable efforts to cause the Restricted Stock as to which registration
shall have been so requested to be included in the securities to be covered by
the registration statement proposed to be filed by Players. Alternatively,
Players may, in its sole discretion, file a separate registration statement
covering the Restricted Stock as to which registration shall have been
requested. In the event that any registration pursuant to this Section 5 shall
be, in whole or in part, an underwritten public offering of Common Stock, the
Restricted Stock to be registered must be sold through the underwriters and the
number of shares of Restricted Stock to be included in such an underwriting may
be reduced if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold, and the shares selected to be sold shall be selected in
the following order of priority: First, primary financings by Players and shares
of persons who have the right to initiate a registration statement; then to
persons who have "piggyback rights" including, without limitation, rights
generally comparable to those set forth in this Section 5 hereof, pursuant to
agreements entered into prior to the date hereof; then to the holders of
Restricted Stock; then to all other persons who have acquired such "piggyback"
rights pursuant to agreements entered into after the date hereof. If the total
number of shares of Restricted Stock requested to be registered after such
reduction shall still be in excess of the number of shares recommended to be
registered by the underwriters, the number of shares registered, if any, by each
person in the last priority, including a holder of Restricted Stock if such
holders are in the last priority whose shares are to be registered, shall be
reduced pro rata according to the number of shares requested by each such holder
to be registered. Notwithstanding the foregoing provisions, Players may withdraw
any registration statement referred to in this Section 5 without thereby
incurring any liability to the holders of Restricted Stock, and may terminate
any offering after the registration statement becomes effective at any time at
Players' sole discretion.
6. Registration Procedures and Expenses. If and whenever Players is
required by the provisions of Section 5 to offer incidental registration rights
to the holders of Restricted Stock, and such offer is accepted by any such
holder in accordance with the requirements of this Agreement, Players will:
(a) furnish to each seller and to each underwriter such number
of copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or other disposition of the Restricted
Stock covered by such registration statement;
(b) use its good faith efforts to register or qualify the
Restricted Stock covered by such registration statement under the securities or
blue sky laws of such jurisdictions as the sellers of Restricted Stock or the
managing underwriter reasonably shall request; provided, however, that Players
shall not for any such purpose be required to qualify generally to transact
business as a foreign corporation in any jurisdiction where it is not so
qualified or to consent to general service of process or taxation in any such
jurisdiction;
(c) immediately notify each seller of Restricted Stock under
such registration
3
<PAGE>
AC-57140/3
September 18, 1995
statement and each underwriter, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event of which Players has knowledge as a result of which the prospectus
contained in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; upon receipt of such notice, the
holder of registered shares will discontinue any sales of registered stock; upon
giving of such notice Players will file such amendments or supplements to the
registration statement promptly to eliminate such misstatement or omission and
will advise the holder of the registered shares that it has done so, whereupon
the holder may recommence its sale of registered stock; and
(d) make available for inspection by each seller, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of Players, and cause Players' officers, directors and employees
to supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement.
In connection with each registration hereunder, the selling
holders of Restricted Stock will furnish to Players in writing such information
with respect to themselves and the proposed distribution by them as reasonably
shall be necessary in order to assure compliance with federal and applicable
state securities laws.
Players and each seller of Restricted Stock agree to enter
into a written agreement with any managing underwriter selected in the manner
herein provided in such form and containing such provisions as are reasonably
satisfactory to Players and such seller of Restricted Stock and as are customary
in the securities business for such an arrangement between such underwriter,
such seller and companies of Players' size and investment stature.
Players will give the selling holders of Restricted Stock two
days' advance notice of its anticipated filing date of the registration
statement and amendments thereto.
7. Expenses. All expenses incurred by Players in complying with Section
5 hereof, including without limitation all registration and filing fees,
printing expense, fees and disbursements of counsel and independent public
accountants for Players, fees and expenses (including counsel fees) incurred in
connection with complying with state securities or "blue sky" laws (other than
those which by law must be paid by the selling security holders), fees of the
National Association of Securities Dealers, Inc., fees of transfer agents and
registrars, but excluding any Selling Expenses, are called "Registration
Expenses." All underwriting discounts, selling commissions and transfer taxes
applicable to the sale of outstanding shares and any legal fees and expenses of
counsel or other advisers and agents of the holders of outstanding shares of
Restricted Stock being registered are called "Selling Expenses."
4
<PAGE>
AC-57140/3
September 18, 1995
Players will pay all Registration Expenses. All Selling
Expenses shall be borne by the participating sellers, in proportion to the
number of shares sold by each unless they otherwise agree among themselves.
8. Indemnification.
(a) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant hereto, Players will indemnify and hold
harmless each seller of such Restricted Stock thereunder and each other person,
if any, who controls such seller within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
such seller or controlling person may become subject under the Securities Act 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 any material fact contained in any registration statement
under which such Restricted Stock was registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
such seller and each such controlling person 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 Players
will not be liable in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by any such seller of Restricted Stock, any such
underwriter or any such controlling person in writing specifically for use in
such registration statement or prospectus.
(b) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant hereto, each seller of such Restricted
Stock thereunder, severally and not jointly, will indemnify and hold harmless
Players and each person, if any, who controls Players within the meaning of the
Securities Act, each officer of Players who signs the registration statement,
each director of and person who controls Players, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
Players or such officer or director or underwriter or controlling person may
become subject under the Securities Act 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 any material
fact contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant hereto, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse Players and each such
officer, director, controlling person, underwriter and controlling person 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 such seller will be liable hereunder
5
<PAGE>
AC-57140/3
September 18, 1995
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such seller, as such, furnished in
writing to Players by such seller specifically for use in such registration
statement or prospectus.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party, if a claim
in respect thereof is to be made against the indemnifying party hereunder, will
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability that it may have
to any indemnified party under this Section 8, unless such failure shall have
prejudiced the indemnifying party's defense of such claim. In case any such
action shall be brought against any indemnified party, the indemnified party
shall notify the indemnifying party of the commencement thereof and the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 8 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it that are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) No indemnifying party shall be liable for any amounts paid
in a Closing effected without the consent of the indemnifying party, which
consent shall not be withheld unreasonably.
(e) No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
9. Miscellaneous.
(a) All covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not. Without limiting the generality of the foregoing, the
registration rights conferred herein on the holders of Restricted Stock shall
inure to the benefit of any and all proper subsequent holders from time to time
of the Restricted Stock.
6
<PAGE>
AC-57140/3
September 18, 1995
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by first class registered
mail, postage prepaid, addressed as follows:
if to the Company, to it at its office at:
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer;
if to you, at the address stated in this letter;
if to a subsequent holder of Restricted Stock, to it
at such address as may have been furnished to Players in writing by such holder;
or, in any case, at such other address or addresses
as shall have been furnished in writing to Players (in your case or other holder
of Restricted Stock) or to the holders of Restricted Stock or you (in the case
of Players).
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of the holders of at
least a majority in interest of the outstanding shares of Restricted Stock
treated as a single class.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) Notwithstanding anything herein to the contrary, Players
shall not be obligated to include any Restricted Stock in a registration
statement unless the stock has been issued to the person requesting registration
prior to the time the registration statement is initially filed with the
Commission. Players will use reasonable efforts to advise the person requesting
registration of the anticipated filing and effective dates of the registration
statement.
(g) Notwithstanding anything herein to the contrary, the
holder of any Restricted Stock will delay any registered or other sales of
Restricted Stock to the extent required by the managing underwriter of any
underwritten sale of Players Common Stock, for a period of up to 120 days. No
Restricted Stock may be transferred except to a person who undertakes, by a
written instrument satisfactory in form and substance to Players, to be bound by
this Agreement.
(h) Rule 144 Reporting. With a view to making available to
Beeber the benefits of certain rules and regulations of the SEC which may permit
the sale of the Restricted Stock to the public without registration, Players
agrees when required by law:
7
<PAGE>
AC-57140/3
September 18, 1995
(i) To make and keep public information
available, as those terms are understood and defined in SEC Rule 144, at all
times;
(ii) To use its best efforts to file with the SEC
in a timely manner all reports and other documents required of Players under the
Securities and the Securities Exchange Act of 1934;
(iii) So long as Beeber owns any Restricted Stock,
to furnish Beeber forthwith upon its request a written statement by Players as
to its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Securities Exchange Act; a copy of the most recent annual
or quarterly report of Players; and such other reports and documents so filed by
Players as Beeber may reasonably request in availing itself of any rule or
regulation of the SEC allowing Beeber to sell any such securities without
registration.
(i) Conflict. In the event of any conflict between the
terms of this Agreement and the asset purchase agreement, the terms of this
Agreement shall control.
(j) Transfer of Registration Rights. You shall not transfer,
convey, pledge or assign your rights under this Agreement (the "Registration
Rights"), nor any portion thereof or rights therein, under any circumstances
except as specifically permitted under this Subsection 9(j).
(i) Upon delivery of prior written notice to
Players, you may transfer, convey, pledge or assign the Registration Rights to
William Woodward, Elizabeth Woodward, Timothy Vaughan, or to any member of the
immediate family (i.e., parent, spouse, child or grandchild) of any of the
aforenamed, or to a trust for the benefit of any of the foregoing.
(ii) Upon Players' prior written approval, which
approval shall not be unreasonably withheld, you or William Woodward, Elizabeth
Woodward or Timothy Vaughan may pledge the Registration Rights any may have to
any Institutional Lender (as hereinafter defined) to secure any loan to any of
them. An "Institutional Lender" shall mean (i) a federally regulated bank,
savings and loan association, trust company and insurance company, or (ii) any
pension, retirement or welfare fund, or other non-profit organization where the
investment policy and financial condition of the fund or organization is subject
to the supervision or audit of the Banking or Insurance Departments of the State
of Louisiana or the Treasurer of the State of Louisiana.
[SIGNATURE BLOCK ON NEXT PAGE]
8
<PAGE>
AC-57140/3
September 18, 1995
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this Agreement
shall be a binding agreement between Players and you.
Very truly yours,
PLAYERS INTERNATIONAL, INC.
By:____________________________
Name: Howard Goldberg
Title: President
AGREED TO AND ACCEPTED as of the date first above written.
THE BEEBER CORPORATION
BY:_______________________________
William D. Woodward, President
9
<PAGE>
AC-57140/3
September 18, 1995
EXHIBIT "J"
TERMINATION AND RELEASE
THIS TERMINATION AND RELEASE, made as of the ___ day of _______ 1995,
by and between THE BEEBER CORPORATION, a Louisiana corporation having an address
at 507 Lake Shore Drive, Lake Charles, Louisiana 70601 ("Landlord") and PLAYERS
LAKE CHARLES, INC., a Louisiana corporation having an address at 800 Bilbo
Street, Lake Charles, Louisiana 70601 ("Tenant").
RECITALS
WHEREAS, Landlord and Tenant are parties to a certain Lease dated as of
May 18 & 19, 1993, and to certain supplements and amendments thereto, dated as
of various dates, covering certain lands, premises, buildings, improvements and
appurtenances located in Lake Charles, Calcasieu Parish, Louisiana
(collectively, the "Lease"); and
WHEREAS, on even date herewith, Landlord is selling and conveying to
Tenant, and Tenant is purchasing and taking from Landlord, various real and
personal properties, including the Lease, and the "Premises" covered by the
Lease, all pursuant to and in accordance with the terms of a certain Asset
Purchase Agreement dated of even date herewith between Landlord and Tenant (the
"Agreement"; any capitalized terms not specifically defined herein shall have
the meanings given under the Agreement)
WHEREAS, Landlord and Tenant desire to confirm the termination of the
Lease by virtue of such purchase and sale, and the termination of Tenant's
liability thereunder, as and to the extent hereinafter provided:
NOW, THEREFORE, in consideration of the payment of the Purchase Price
and the sale and conveyance of the Assets, and for the other mutual promises,
agreements and payments made or to be made under the terms of the Agreement,
Landlord and Tenant hereby agree as follows:
1. Termination of Lease. Except as specifically set forth in the
Agreement or in any other agreement or instrument between Landlord and Tenant
relating to the Agreement, the Lease is hereby terminated, and shall be of no
further force or effect from and after the date hereof. Notwithstanding the
foregoing, all agreements of indemnity contained in the Lease shall survive the
execution and delivery hereof.
2. Release of Tenant. Landlord, for itself and its successors and
assigns, and for any other party claiming by, through or under Landlord, does
hereby release and forever discharge Tenant, and
1
<PAGE>
AC-57140/3
September 18, 1995
its parent, affiliate and subsidiary companies, and their successors and
assigns, and any and every of the respective officers, agents and employees of
any of the foregoing, of and from any and all claims, demands, damages,
liability, obligations, defaults, Events of Default, actions, causes of action
or suits of whatsoever kind or nature (including, without limitation, the
continuation of any condition or state of facts already claimed by Landlord or
any other party to constitute a default or Event of Default), known and unknown,
arising, directly or indirectly, from, under or in connection with the Lease.
3. Reliance; Enforcement. Landlord acknowledges Tenant's material
reliance upon the provisions of this Termination and Release, and agrees that it
may be specifically enforced in any court of competent jurisdiction.
THUS DONE AND SIGNED in the presence of the undersigned attesting
witnesses and me, Notary Public at _____________________________ on this ____
day of _______ 1995.
THE BEEBER CORPORATION, a Louisiana corporation
WITNESSES:
__________________ BY:___________________________
Name: William D. Woodward
Title: President
------------------
---------------------------
NOTARY PUBLIC
THUS DONE AND SIGNED in the presence of the undersigned attesting
witnesses and me, Notary Public at _____________________________ on this ____
day of _______ 1995.
PLAYERS LAKE CHARLES, INC., a Louisiana corporation
WITNESSES:
__________________ BY:___________________________
David Fishman, President
------------------
---------------------------
NOTARY PUBLIC
2
<PAGE>
Execution Copy
CREDIT AGREEMENT
DATED AS OF AUGUST 25, 1995
AMONG
PLAYERS INTERNATIONAL, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
FIRST INTERSTATE BANK OF NEVADA, N.A.,
Individually and as Administrative Agent, a Managing Agent
and a Co-Arranger,
BANKERS TRUST COMPANY,
Individually and as a Managing Agent,
and
BT SECURITIES CORPORATION,
as a Co-Arranger
<PAGE>
PLAYERS INTERNATIONAL, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
Section 1. DEFINITIONS.................................................................................... 2
1.1 Certain Defined Terms.......................................................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement................................................................................ 34
1.3 Other Definitional Provisions.................................................................. 34
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS..................................................... 34
2.1 Commitments; Making of Loans; Notes............................................................ 34
2.2 Interest on the Loans.......................................................................... 41
2.3 Fees........................................................................................... 45
2.4 Payments, Prepayments and Reductions in Commitments; General
Provisions Regarding Payments.................................................................. 45
2.5 Use of Proceeds................................................................................ 50
2.6 Special Provisions Governing Eurodollar Rate Loans............................................. 51
2.7 Increased Costs; Taxes; Capital Adequacy....................................................... 53
2.8 Obligation of Lenders and Administrative Agent to Mitigate..................................... 57
2.9 Replacement of Lenders......................................................................... 58
Section 3. LETTERS OF CREDIT.............................................................................. 58
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein........................................................................................ 58
3.2 Letter of Credit Fees.......................................................................... 60
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of
Credit......................................................................................... 61
3.4 Obligations Absolute........................................................................... 64
3.5 Indemnification; Nature of Administrative Agent's Duties....................................... 65
3.6 Increased Costs and Taxes Relating to Letters of Credit........................................ 66
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT...................................................... 67
4.1 Conditions to Initial Revolving Loans.......................................................... 67
4.2 Conditions to All Loans........................................................................ 74
4.3 Conditions to Letters of Credit................................................................ 75
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES....................................................... 76
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries................................................................................... 76
5.2 Authorization of Borrowing, etc................................................................ 77
5.3 Financial Condition............................................................................ 78
(i)
<PAGE>
Page
5.4 No Material Adverse Change; No Restricted Payments............................................. 78
5.5 Title to Properties; Liens..................................................................... 79
5.6 Litigation; Adverse Facts...................................................................... 80
5.7 Payment of Taxes............................................................................... 80
5.8 Performance of Agreements; Materially Adverse Agreements....................................... 80
5.9 Governmental Regulation........................................................................ 81
5.10 Securities Activities.......................................................................... 81
5.11 Employee Benefit Plans......................................................................... 81
5.12 Certain Fees................................................................................... 82
5.13 Environmental Protection....................................................................... 82
5.14 Employee Matters............................................................................... 83
5.15 Solvency....................................................................................... 84
5.16 Disclosure..................................................................................... 84
5.17 Compliance With Laws........................................................................... 84
5.18 Representations Relating to Operation of Facilities............................................ 84
5.19 Intangible Property............................................................................ 85
5.20 Rights to Agreements, Permits and Licenses..................................................... 85
5.21 Classification of Ships........................................................................ 85
5.22 Recordation of Ship Mortgages.................................................................. 85
5.23 Policies of Insurance.......................................................................... 86
Section 6. COMPANY'S AFFIRMATIVE COVENANTS................................................................ 86
6.1 Financial Statements and Other Reports......................................................... 86
6.2 Corporate Existence, etc....................................................................... 92
6.3 Payment of Taxes and Claims; Tax Consolidation................................................. 92
6.4 Maintenance of Properties; Insurance........................................................... 93
6.5 Inspection; Lender Meeting..................................................................... 93
6.6 Compliance with Laws, etc...................................................................... 94
6.7 Environmental Disclosure and Inspection........................................................ 94
6.8 Company's Remedial Action Regarding Hazardous Materials........................................ 95
6.9 Post-Closing Matters........................................................................... 96
6.10 New Subsidiaries; New Joint Ventures; Further Assurances....................................... 96
Section 7. COMPANY'S NEGATIVE COVENANTS................................................................... 99
7.1 Indebtedness...................................................................................100
7.2 Liens and Related Matters......................................................................100
7.3 Investments, Loans and Advances; Joint Ventures................................................101
7.4 Contingent Obligations.........................................................................102
7.5 Restricted Payments............................................................................102
7.6 Financial Covenants............................................................................102
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions...............................103
7.8 Transactions with Shareholders and Affiliates..................................................104
7.9 Disposal of Subsidiary Stock...................................................................105
(ii)
<PAGE>
Page
7.10 Conduct of Business............................................................................105
7.11 Tradenames, Trademarks and Servicemarks........................................................105
7.12 Change of Control Offer........................................................................105
7.13 No Amendment of Indenture......................................................................105
7.14 No Movement of Other Barges....................................................................106
Section 8. EVENTS OF DEFAULT..............................................................................106
8.1 Failure to Make Payments When Due..............................................................106
8.2 Default in Other Agreements....................................................................106
8.3 Breach of Certain Covenants....................................................................107
8.4 Breach of Warranty.............................................................................107
8.5 Other Defaults Under Loan Documents............................................................107
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc...........................................107
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.............................................108
8.8 Judgments and Attachments......................................................................108
8.9 Dissolution....................................................................................108
8.10 Employee Benefit Plans.........................................................................108
8.11 Change in Control..............................................................................109
8.12 Impairment of Collateral.......................................................................109
8.13 Loss of Gaming License.........................................................................109
8.14 Invalidity of Guaranty.........................................................................109
8.15 Material Adverse Change........................................................................109
8.16 Remedies.......................................................................................110
Section 9. ADMINISTRATIVE AGENT.........................................................................111
9.1 Appointment....................................................................................111
9.2 Powers; General Immunity.......................................................................111
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness...............................................................................113
9.4 Right to Indemnity.............................................................................113
9.5 Successor Administrative Agent and Swing Line Lender...........................................113
9.6 Collateral Documents...........................................................................114
9.7 Release of Collateral..........................................................................114
Section 10. MISCELLANEOUS..................................................................................115
10.1 Assignments and Participations in Loans and Letters of Credit..................................115
10.2 Expenses.......................................................................................119
10.3 Indemnity......................................................................................119
10.4 Set-Off; Security Interest in Deposit Accounts.................................................120
10.5 Ratable Sharing................................................................................121
10.6 Amendments and Waivers.........................................................................121
10.7 Independence of Covenants......................................................................122
10.8 Notices........................................................................................123
(iii)
<PAGE>
Page
10.9 Survival of Representations, Warranties and Agreements.........................................123
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative..........................................123
10.11 Marshalling; Payments Set Aside................................................................123
10.12 Severability...................................................................................124
10.13 Obligations Several; Independent Nature of Lenders' Rights.....................................124
10.14 Headings.......................................................................................124
10.15 Applicable Law.................................................................................124
10.16 Successors and Assigns.........................................................................125
10.17 Consent to Jurisdiction and Service of Process; Choice of Forum................................125
10.18 Waiver of Jury Trial...........................................................................125
10.19 Confidentiality................................................................................126
10.20 Licensing of Administrative Agent and Lenders..................................................126
10.21 Counterparts; Effectiveness....................................................................127
10.22 Cooperation With Gaming Boards.................................................................127
Signature pages ....................................................................... S-1
</TABLE>
(iv)
<PAGE>
PLAYERS INTERNATIONAL, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of August 25, 1995 and
entered into by and among PLAYERS INTERNATIONAL, INC., a Nevada corporation, as
the borrower ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a "Lender" and
collectively as "Lenders"), FIRST INTERSTATE BANK OF NEVADA, N.A. ("FIB," and,
in its capacity as administrative agent for Lenders, "Administrative Agent"), as
a Lender, Administrative Agent, a Managing Agent and a Co-Arranger, BANKERS
TRUST COMPANY ("BTCo," in its capacity as managing agent for Lenders, a
"Managing Agent", and, collectively with FIB, the "Managing Agents"), as a
Lender and as a Managing Agent, and BT SECURITIES CORPORATION ("BT SECURITIES,"
in its capacity as Co-Arranger, a "Co-Arranger," and, collectively with FIB, the
"Co-Arrangers").
R E C I T A L S
WHEREAS, Company has issued $150,000,000 in principal amount
of 10-7/8% Senior Notes Due 2005 (the "Senior Notes") in order to finance
certain expansions and completions of its existing and future gaming operations,
both on riverboat casinos and an on-land hotel and casino;
WHEREAS, certain of Company's Subsidiaries have jointly and
severally guaranteed without condition the payment of all principal, premium,
and interest, if any, under the Senior Notes;
WHEREAS, Company desires to obtain financing from Lenders so
as to, among other things, have an additional source of funds for its planned
expansion projects and to further other general corporate purposes;
WHEREAS, each Subsidiary of Company existing on the date
hereof or hereafter created that is not an Excluded Subsidiary shall guarantee
the payment of the Loans by Company pursuant to a Guaranty to be executed by
each such party simultaneously herewith; and
WHEREAS, the Loans shall be secured by a lien on all real and
personal property of Company and its Subsidiaries related to the gaming
operations conducted or to be conducted by Company or any of its Subsidiaries at
(a) Players Island Resort in Mesquite, Nevada, (b) the riverboat casino and
related facilities in Metropolis, Illinois and (c) the riverboat casino and
related facilities in Lake Charles, Louisiana, including,
1
<PAGE>
without limitation, a pledge of the capital stock or other equity interest held,
directly or indirectly, by Company in each Subsidiary of Company existing on the
date hereof or hereafter created that is not an Excluded Subsidiary;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders,
Administrative Agent, Managing Agents and Co-Arrangers hereby agree as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the
following meanings:
"Accepting Lender" has the meaning assigned to that term in
subsection 2.1F.
"Acknowledgement and Estoppel Agreements" means those certain
Acknowledgement and Estoppel Agreements by various owners of certain portions of
the Premises, each as a landlord, and certain of Company's Subsidiaries, each as
a tenant, pursuant to which each landlord thereto acknowledges the existence of
Administrative Agent as leasehold mortgagee and certifies the validity of the
leasehold interest held by the applicable Subsidiary of Company.
"Actual Reduction Commencement Date" means the Reduction
Commencement Date, as such date may be affected by the provisions contained
within subsection 2.1F.
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, the rate per annum obtained by dividing (i) the offered quotation, if any,
to FIB (or an Affiliate of FIB) by prime banks in the London interbank market
for Dollar deposits of amounts in same day funds comparable to the principal
amount of the Eurodollar Rate Loan of FIB for which the Adjusted Eurodollar Rate
is then being determined with maturities comparable to such Interest Period as
of approximately 10:00 A.M. (London time) on such Interest Rate Determination
Date by (ii) a percentage equal to 100% minus the stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D).
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"Adjusted Leverage Ratio" means, as of any date of
determination, the Leverage Ratio; provided that Excess Cash and Cash
Equivalents as of such date shall be deducted in calculating the numerator
thereof.
"Administrative Agent" means FIB.
"Affected Lender" has the meaning assigned to that term in
subsection 2.6C.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means (i) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise or (ii) the beneficial ownership of 10% or more of any
class of voting capital stock of a Person (on a fully diluted basis) or of
warrants or other rights to acquire such class of capital stock (whether or not
presently exercisable).
"Agreement" means this Credit Agreement dated as of August 25,
1995, as it may be amended, supplemented or otherwise modified from time to
time.
"Allocated Costs of Internal Counsel" means, as of any date of
determination, the internal costs imputed to in-house counsel employed by
Administrative Agent for the review, negotiation, preparation, execution and
administration of the Loan Documents, as based on the time records submitted to
Company within 90 days of the services performed by such counsel at an hourly
rate not to exceed the then prevailing market rate in Los Angeles, California
for an attorney with a minimum of ten years experience in financing
transactions.
"Applicable Base Rate Margin" means, as of any date of
determination, (i) a percentage per annum as shown below determined by the
Leverage Ratio on the date of the most recent Pricing Determination Certificate
delivered by Company pursuant to subsection 6.1(xvi); provided that the
Applicable Base Rate Margin shall not be adjusted upon receipt of a Pricing
Determination Certificate until the first Business Day of the month following
the date on which such Pricing Determination Certificate is due or (ii) if
Company has failed to provide such certificate within the time period set forth
for such delivery in subsection 6.1(xvi), the Applicable Base Rate Margin shall
be 0.50% on and after the first Business Day following the date on which
delivery of such Pricing Determination Certificate was due until the first
Business Day of the month following the date that such past due certificate is
actually received by Administrative Agent; provided further that on the first
Business Day of the month following receipt of a past due certificate by
Administrative Agent, the Applicable Base Rate Margin shall be determined as set
forth above:
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<TABLE>
<CAPTION>
Leverage Ratio Applicable Base Rate Margin
--------------- ---------------------------
<S> <C>
less than 1.25 0.00%
greater than or equal to 1.25 0.25%
but less than 1.75
greater than or equal to 1.75 0.50%
</TABLE>
"Applicable Commitment Fee Percentage" means, as of any date
of determination, (a) 0.375% per annum during such periods as the Leverage Ratio
on the date of the most recent Pricing Determination Certificate delivered by
Company pursuant to subsection 6.1(xvi) is less than 1.25:1.00 and (b) 0.50% per
annum during such periods as the Leverage Ratio on the date of the most recent
Pricing Determination Certificate delivered by Company pursuant to subsection
6.1(xvi) is greater than or equal to 1.25:1.00; provided that the Applicable
Commitment Fee Percentage shall not be adjusted upon receipt of a Pricing
Determination Certificate until the first Business Day of the month following
the date on which such Pricing Determination Certificate is due or (ii) if
Company has failed to provide such certificate within the time period set forth
for such delivery in subsection 6.1(xvi), the Applicable Commitment Fee
Percentage shall be 0.50% on and after the first Business Day following the date
on which delivery of such Pricing Determination Certificate was due until the
first Business Day of the month following the date that such past due
certificate is actually received by Administrative Agent; provided further that
on the first Business Day of the month following receipt of a past due
certificate by Administrative Agent, the Applicable Commitment Fee Percentage
shall be determined as set forth above.
"Applicable Eurodollar Margin" means, as of any date of
determination, (i) a percentage per annum as shown below determined by the
Leverage Ratio on the date of the most recent Pricing Determination Certificate
delivered by Company pursuant to subsection 6.1(xvi); provided that the
Applicable Eurodollar Margin shall not be adjusted upon receipt of a Pricing
Determination Certificate until the first Business Day of the month following
the date on which such Pricing Determination Certificate is due or (ii) if
Company has failed to provide such certificate within the period set forth for
such delivery in subsection 6.1(xvi), the Applicable Eurodollar Margin shall be
2.25% on and after the first Business Day following the date on which delivery
of such Pricing Determination Certificate was due until the first Business Day
of the month following the date that such past due certificate is actually
received by Administrative Agent; provided further that on the first Business
Day of the month following receipt of a past due certificate by Administrative
Agent, the Applicable Eurodollar Margin shall be determined as set forth above:
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<PAGE>
<TABLE>
<CAPTION>
Leverage Ratio Applicable Eurodollar Margin
-------------- --------------------------
<S> <C>
less than 0.75 1.25%
greater than or equal to 0.75 1.75%
but less than 1.25
greater than or equal to 1.25 2.00%
but less than 1.75
greater than or equal to 1.75 2.25%
</TABLE>
"Assessment" means the obligation of any Person that owns an
equity interest in any legal entity to pay or contribute additional capital to
such entity, whether such obligation arises on a scheduled basis or upon the
occurrence of one or more contingent events.
"Asset Sale" means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of its wholly-owned
Subsidiaries of (i) any of the stock of any of Company's Subsidiaries, (ii) 50%
or more of the assets of Company or any of its Subsidiaries, or (iii) any other
assets used or useful in the operations of Company or its Subsidiaries (whether
tangible or intangible) outside of the ordinary course of business.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"Barges" means, collectively, US Documented Barges and Other
Barges.
"Base Rate" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
"Beeber Lease" has the meaning assigned to that term in
subsection 6.10D.
"Beeber Property" has the meaning assigned to that term in
subsection 6.10D.
"Best Knowledge" means, as applied to Company, (i) actual
knowledge by any Responsible Officer of any fact or (ii) imputed knowledge of
any fact which should, upon the reasonable exercise of diligence (appropriate
for the circumstance in question) by any such Responsible Officer in his or her
employment position, have been known.
"BTCo" has the meaning assigned to that term in the first
paragraph of this Agreement.
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<PAGE>
"BT Securities" has the meaning assigned to that term in the
first paragraph of this Agreement.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of Nevada or is a
day on which banking institutions located in such state are authorized or
required by law or other governmental action to close.
"Capital Lease," as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
"Cash Proceeds" means Cash payments (including any Cash
received by way of deferred payment pursuant to, or monetization of, a note
receivable or otherwise, but only as and when so received) and Cash Equivalents
received by Company or any of its Subsidiaries from any Asset Sale or upon the
occurrence of an Event of Loss.
"Change of Control" means (i) any Person or "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) shall have acquired
"beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Company representing 20% or more
of the combined voting power of all
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<PAGE>
securities of Company entitled to vote in the election of directors; or (ii)
during any period of up to 12 consecutive months, commencing before or after the
date of this Agreement, individuals who at the beginning of such 12-month period
were directors of Company shall cease for any reason to constitute a majority of
the Board of Directors of Company; or (iii) any Person or "group" shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that upon consummation shall result in its or their acquisition of
or control over, securities of Company representing 20% or more of the combined
voting power of all securities of Company entitled to vote in the election of
directors; provided that a Change of Control shall not be deemed to occur under
clauses (i) or (iii) above if the Person referred to in either such clause is an
Excluded Person, or the "group" referred to in either such clause consists
exclusively of two or more Excluded Persons, unless (x) the transaction or
series of transactions that creates the Change of Control is subject to Rule
13e-3 under the Exchange Act or any similar or successor rule and (y)
immediately prior to and during the 180-day period following either (1) such
transaction or series of transactions referred to in clause (x), or (2) the time
that any such Excluded Person or "group" consisting exclusively of two or more
Excluded Persons shall have acquired "beneficial ownership", directly or
indirectly, of 20% or more of such total voting power, as referred to in clause
(iii), the Senior Notes are or become rated, in the case of clause (1) or (2),
"B+" or below by S&P and "B1" or below by Moody's or, if either such rating
agency or both such rating agencies shall no longer make a rating of the Senior
Notes publicly available, the comparable ratings of another nationally
recognized securities rating agency or agencies, as the case may be, selected by
Company, which shall be substituted for S&P or Moody's or both, as the case may
be; provided further that the 180-day period referred to in clause (y) shall be
extended for so long as the rating of the Senior Notes is under publicly
announced consideration for possible downgrade by any such rating agency.
"Closing Date" means the date, on or before September 1, 1995,
upon which all of the conditions to the making of the initial Loans set forth in
subsection 4.1 (other than delivery of environmental assessments required by
subsection 4.1S) are first satisfied or waived.
"Co-Arranger" means either of FIB or BT Securities and
"Co-Arrangers" means FIB and BT Securities, collectively.
"Collateral" means all the real, personal and mixed property
made subject to a Lien pursuant to the Collateral Documents.
"Collateral Account" has the meaning assigned to that term in
the Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account
Agreement executed and delivered by Company and Administrative Agent on the
Closing Date, substantially in the form of Exhibit VIII annexed hereto, pursuant
to which Company may pledge cash to Administrative Agent to secure the
obligations of Company to
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<PAGE>
reimburse Administrative Agent for payments made under one or more Letters of
Credit as provided in Section 8, as such Collateral Account Agreement may
hereafter be amended, supplemented or otherwise modified from time to time.
"Collateral Assignment Agreement" means that certain
Collateral Assignment Agreement between PMGC and Administrative Agent dated the
Closing Date, as it may hereafter be amended, supplemented or otherwise
modified, from time to time.
"Collateral Documents" means the Mortgages, the Ship
Mortgages, the Guaranty, the Company Security Agreement, the Subsidiary Security
Agreements, the Company Pledge Agreements, the LLC Membership Interest Security
Agreements, the Partnership Interest Security Agreements, the Collateral
Assignment Agreement and all other instruments or documents now or hereafter
granting Liens on property of Company or any of its Subsidiaries to
Administrative Agent for benefit of Lenders.
"Commitment" means, the commitment of any Lender, and
"Commitments" means such commitments of all Lenders in the aggregate at the time
of reference.
"Commitment Termination Date" means the fourth anniversary
date of the Actual Reduction Commencement Date.
"Company" means Players International, Inc., a Nevada
corporation.
"Company Pledge Agreements" means those certain Pledge
Agreements between Company and Administrative Agent dated the Closing Date,
substantially in the forms of Exhibit XI and Exhibit XI-A annexed hereto,
respectively, as each such agreement may hereafter be amended, supplemented or
otherwise modified, from time to time.
"Company Security Agreement" means that certain Security
Agreement between Company and Administrative Agent dated the Closing Date,
substantially in the form of Exhibit XVI annexed hereto, as it may hereafter be
amended, supplemented or otherwise modified, from time to time.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit X annexed hereto delivered to Administrative Agent and
Lenders by Company pursuant to subsection 6.1(iii).
"Consolidated Capital Expenditures" means, for any period, the
sum of the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases that is capitalized on the consolidated balance sheet of Company and its
Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "capital
8
<PAGE>
expenditures" or comparable items reflected in the consolidated statement of
cash flows of Company and its Subsidiaries.
"Consolidated EBIDTA" means, for any period Consolidated Net
Income for such period plus, to the extent such items were subtracted in the
determination of Consolidated Net Income, the sum of the amounts for such period
of (i) Consolidated Interest Expense, (ii) provisions for taxes based on income,
(iii) total depreciation expense, (iv) total amortization expense, and (v) other
non-cash items reducing Consolidated Net Income less other non-cash and/or
extraordinary, non-recurring items increasing Consolidated Net Income plus other
extraordinary and non-recurring items decreasing Consolidated Net Income, all of
the foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charges" means, for any period, the sum
(without duplication) of the amounts for such period of (i) Consolidated
Interest Expense, (ii) scheduled payments of principal on the long-term portion
of Consolidated Total Debt, (iii) the principal component of payments on Capital
Leases and (iv) all Assessments payable by Company or any of its Subsidiaries
during such period.
"Consolidated Interest Expense" means, for any period, total
interest expense (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of Company and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to
Administrative Agent and Lenders on or before the Closing Date.
"Consolidated Net Income" means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
Company or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its
Subsidiaries or that Person's assets are acquired by Company or any of its
Subsidiaries, (iii) the income of any Subsidiary of Company to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary, (iv) any
after-tax gains or losses attributable to Asset Sales or returned surplus assets
of any Pension Plan, and (v) (to the extent not included in clauses (i) through
(iv) above) any net extraordinary gains or net non-cash extraordinary losses.
9
<PAGE>
"Consolidated Tangible Net Worth" means, as at any date of
determination, the sum of the par value of Company's capital stock and
additional paid-in capital plus retained earnings (or minus accumulated
deficits) less all intangible assets (including goodwill and excess purchase
price over historical basis entries) of Company and its Subsidiaries on a
consolidated basis determined in conformity with GAAP.
"Consolidated Total Debt" means, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
Company and its Subsidiaries on a consolidated basis in accordance with GAAP.
"Consolidating" means, as used to describe financial
statements referred to in subsections 5.3, 6.1(i), 6.1(ii) and 6.1(xiii), the
separate financial statements reflecting the accounts of Company and its
Subsidiaries.
"Contingent Obligation", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, (iii) under Interest Rate Agreements, (iv) to make an Investment in
any other Person or (v) under any Development Proposal; provided that a
Development Proposal shall not be deemed to constitute a Contingent Obligation
until such time, if ever, as it becomes a Development Commitment. Contingent
Obligations shall include, without limitation, (a) the direct or indirect
guaranty, endorsement (otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with recourse
by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (Y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust,
10
<PAGE>
contract, undertaking, agreement or other instrument to which that Person is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject.
"Deposit Account" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Development Commitment" means a Development Proposal, at the
time, if any, that such Development Proposal is approved by any Governmental
Authority or other Person having jurisdiction over the subject matter of such
proposal and is binding upon Company or any of its Subsidiaries; provided that a
Development Proposal when so approved shall not be deemed to constitute a
Development Commitment until such time as Company and/or any of its Subsidiaries
have expended $5,000,000 in the aggregate in furtherance of such Development
Proposal. The Dollar amount of any Development Commitment as of any date of
determination shall be (X) the amount set forth therein or, if no such amount is
set forth, the good faith estimate of Company's Board of Directors of the amount
necessary to complete the development, expansion or refurbishment (but not
ordinary operating expenses) that is the subject of such Development Commitment
(exclusive of any portion of such amount that has already been expended by
Company or any of its Subsidiaries on such date of determination) minus (Y) the
portion, if any, of such amount that is, pursuant to a binding commitment from a
reputable Person that is not an Affiliate of Company or any of its Subsidiaries,
the sole responsibility of such non-Affiliate to provide, it being understood
that if, at any time on or after such a binding commitment is obtained, Company
or any of its Subsidiaries shall become or remain obligated, directly or
indirectly, to any Person for any such amount described in this clause (Y) other
than solely by virtue of Company's or such Subsidiary's status as a joint
venturer or general partner, such amount shall no longer be deductible in
determining the Dollar amount of such Development Commitment.
"Development Proposal" means an application, bid or other
proposal in any form whatsoever by Company or any of its Subsidiaries to any
Governmental Authority or other Person with respect to the development,
expansion or refurbishment of any casino, hotel, casino/hotel, casino/resort,
riverboat casino, dock casino, any other type of casino, golf course,
entertainment center or similar facility.
"Dollars" and the sign "$" mean the lawful money of the
United States of America.
"Eligible Assignee" means (A)(i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the
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<PAGE>
United States or (y) such bank is organized under the laws of a country that is
a member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities Act)
which extends credit or buys loans as one of its businesses including, but not
limited to, insurance companies, mutual funds and lease financing companies, in
each case (under clauses (i) through (iv) above) that is reasonably acceptable
to and consented to by Managing Agents; and (B) any Lender and any Affiliate of
any Lender; provided that no Affiliate of Company shall be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is, or was at any time, maintained or
contributed to by Company or any of its ERISA Affiliates.
"Environmental Claim" means any accusation, allegation, notice
of viola- tion, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Company, any of
its Subsidiaries, any of their respective Affiliates or any Facility.
"Environmental Indemnity" means the Environmental Indemnity
from Company in favor of Administrative Agent on behalf of Lenders dated as of
the Closing Date, substantially in the form of Exhibit XII annexed hereto,
pursuant to which Company indemnifies Administrative Agent on behalf of Lenders
against environmental risks.
"Environmental Laws" means all statutes, ordinances, orders,
rules, regulations, plans, policies or decrees and the like relating to (i)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened Release of Hazardous
Materials, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Company or any of its Subsidiaries or any of their
respective properties, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the
Federal Water Pollution Control Act ( 33 U.S.C. ss. 1251 et seq.), the Clean Air
Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
ss. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. ss.136 et seq.), the Occupational Safety and Health Act (29
12
<PAGE>
U.S.C. ss. 651 et seq.) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), each as amended or
supplemented, and any analogous future or present local, state and federal
statutes and regulations promulgated pursuant thereto, each as in effect as of
the date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate", as applied to any Person, means (i) any
corporation which is, or was at any time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time, a member; (ii) any trade or
business (whether or not incorporated) which is, or was at any time, a member of
a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is, or was at
any time, a member; and (iii) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is, or was at any time, a member.
"ERISA Event" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in Section 4041(c) of ERISA; (iv)
the withdrawal by Company or any of its ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on Company or any of its ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal by Company or any
of its ERISA Affiliates in a complete or partial withdrawal (within the meaning
of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any
potential liability therefor, or the receipt by Company or any of its ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on
Company or any of its ERISA
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Affiliates of any material fines, penalties, taxes or related charges under
Chapter 43 of the Internal Revenue Code or under Section 409 or 502(c), (i) or
(l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion
of a material claim (other than routine claims for benefits) against any
Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or
against Company or any of its ERISA Affiliates in connection with any such
Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice
of the failure of any Pension Plan (or any other Employee Benefit Plan intended
to be qualified under Section 401(a) of the Internal Revenue Code) to qualify
under Section 401(a) of the Internal Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in
Section 8.
"Event of Loss" means, with respect to any property or asset,
(i) any 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.
"Excess Cash and Cash Equivalents" means, as of any date of
determination, the sum of Cash and Cash Equivalents held by Company and its
Subsidiaries on a consolidated basis as of such date less the greater of (x)
$25,000,000 or (y) five percent (5%) of gross revenues of Company and its
Subsidiaries on a consolidated basis for the consecutive four full Fiscal
Quarters most recently ended on or prior to such date, determined in accordance
with GAAP.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Excluded Person" means (a) Company or any Guarantor
wholly-owned by Company, (b) any employee benefit plan of Company or any
Guarantor wholly-owned by Company or any trustee or similar fiduciary holding
capital stock of Company for or pursuant to the terms of any such plan, (c) Merv
Griffin, (d) Edward Fishman, (e) David Fishman, (f) Howard Goldberg, (g) Thomas
E. Gallagher, (h) Marshall S. Geller, (i) Lee Seidler, (j) Steven P. Perskie,
(k) Peter J. Aranow and (l) members of the immediate families and Affiliates of
any such Person (where the determination of whether a Person is an Affiliate is
made without reference to clause (ii) of the definition of such term).
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"Excluded Subsidiary" means any Subsidiary of Company existing
as of the date hereof or hereafter created the total assets of which do not
have, at any date of determination, either a book value or fair market value in
excess of $1,000,000.
"Facilities" means, collectively, the Illinois Facilities,
the Louisiana Facilities and the Nevada Facilities.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by Agent from three Federal funds brokers of
recognized standing selected by Administrative Agent.
"Fee Letter" means that certain letter, dated March 15, 1995,
executed by the Managing Agents and Company with respect to the payment of
certain fees in connection with the Commitments.
"FF&E" means any and all furniture, fixtures and equipment
which have been installed or are to be installed and used in connection with the
operation of the Improvements located upon any of the Premises and those items
of furniture, fixtures and equipment which have been purchased or leased or are
hereafter purchased or leased in connection with any of the Facilities.
"FIB" has the meaning assigned to that term in the first
paragraph of this Agreement.
"Fiscal Quarter" means the calendar quarters ending on March
31, June 30, September 30 and December 31.
"Fiscal Year" means the fiscal year period beginning April 1
of each calendar year and ending on the following March 31.
"Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of (y) Consolidated EBIDTA for the consecutive four
full Fiscal Quarters most recently ended on or before such date of determination
to (z) Consolidated Fixed Charges for such four Fiscal Quarter period.
"Flood Act" means the National Flood Insurance Act of 1968 as
amended by the Flood Disaster Protection Act of 1973 (42 U.S.C. ss.ss.
4013 et. seq.).
"Former Lender" has the meaning assigned to that term in
subsection 10.1B(iii).
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"Funding and Payment Office" means the office of
Administrative Agent located at the address set forth on the signature pages
hereof.
"Funding Date" means the date of the funding of a Loan or the
issuance of a Letter of Credit.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal or foreign government, any state, province or any city
or other political subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof, including, without limitation,
the Illinois Gaming Authorities, the Louisiana Gaming Authorities and the Nevada
Gaming Authorities, with authority to regulate any gaming operation (or proposed
gaming operation) owned, managed or operated by Company, any of its Subsidiaries
or any New Venture.
"Gaming Laws" means all statutes, rules, regulations,
ordinances, codes and administrative or judicial precedents pursuant to which
any Gaming Authority possesses regulatory, licensing or permit authority over
gambling, gaming or casino activities conducted by Company and its Subsidiaries
within its jurisdiction, including the Illinois Riverboat Gambling Act, the
Louisiana Riverboat Economic Development and Gaming
Control Act and the Nevada Gaming Control Act.
"Governmental Acts" has the meaning assigned to that term in
subsection 3.5A.
"Governmental Authority" means any of the United States
government, the government of any state thereof and any political subdivision,
agency, department, commission, court, board, bureau or instrumentality of any
of them, including any local authorities and any Gaming Authority.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent, order or consent decree of or from any
Governmental Authority, including any Gaming Authority.
"Guarantor" means any of PLC, SIRCC, PBD, PNEV, PRM, PRI,
PMGC, PII, PRLLC, PML, RBI and SSP and "Guarantors" means all of them,
collectively;
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provided, however, that "Guarantors" shall also mean any Person that becomes a
Subsidiary of Company after the Closing Date and is not an Excluded Subsidiary.
"Guaranty" means the Guaranty dated the Closing Date executed
by each Guarantor in favor of Administrative Agent, substantially in the form of
Exhibit XV annexed hereto, as it may hereafter be amended, supplemented or
otherwise modified, from time to time, including, without limitation, by the
inclusion as Guarantors of Persons (other than Excluded Subsidiaries) becoming
Subsidiaries of Company after the Closing Date.
"Hazardous Materials" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "restricted hazardous waste", "infectious waste", "toxic substances" or
any other formulations intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) asbestos in any
form; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; (ix) pesticides; and (x) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority or which may or could pose a hazard
to the health and safety of the owners, occupants or any Persons in the vicinity
of the Facilities.
"Hostile Acquisition" means any acquisition of the outstanding
Securities or capital stock of any corporation, partnership or other Person that
is not an Affiliate of Company other than (i) an acquisition which has been
approved by resolutions of the Board of Directors of the Person being acquired
or by similar action if the Person is not a corporation, and as to which such
approval has not been withdrawn, or (ii) any acquisition of less than twenty
percent (20%) of the outstanding Securities of any class or type of any Person;
provided that an acquisition of Securities described in clause (ii) hereof as to
which Company or any of its Subsidiaries is required to file a statement
containing the information required by Schedule 13D under the Exchange Act shall
not be considered a Hostile Acquisition only if the then currently effective
Schedule 13D of Company or such Subsidiary indicates that Company or such
Subsidiary views the Securities as an attractive Investment and that Company or
such Subsidiary has no plans or proposals which relate to or which would result
in any of the transactions described in paragraphs (b) through (j) of Item 4 of
Schedule 13D.
"Illinois Facilities" means the Illinois Premises and the
Improvements made thereon, along with all other related personal and mixed
property located thereon
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or related thereto, including, without limitation, a four-deck side-wheeler
riverboat casino (the "Metropolis Riverboat"), a docking site (including all
Barges), a cabaret style theater, all related restaurant, bar, recreation and
other facilities and all FF&E and other personal property located therein, as
more fully described on pages 26 and 27 of the Memorandum.
"Illinois Gaming Authorities" means, without limitation, the
Illinois Gaming Board and any other applicable Governmental Authority involved
in the regulation of gaming and gaming activities conducted by Company or any of
its Subsidiaries in the State of Illinois.
"Illinois Mortgage" means that certain Mortgage, Fixture
Filing and Security Agreement with Assignment of Rents, by and among SIRCC, as
mortgagor and owner, in favor of Administrative Agent, as mortgagee, dated the
Closing Date, substantially in the form of Exhibit XIII-A annexed hereto, as it
may hereafter be amended, supplemented or otherwise modified, from time to time.
"Illinois Premises" means the real property owned in fee or
leased by Company or its respective Subsidiaries with respect to the property
commonly known as the Metropolis complex in Metropolis, Illinois, as more fully
described on Schedule A-1 hereto.
"Illinois Riverboat Gambling Act" means the Riverboat Gambling
Act of Illinois, as from time to time amended, or any successor provision of
law, and the regulations promulgated thereunder.
"Illinois Ships" means each of the Metropolis Riverboat and
any other riverboat casino subsequently acquired by Company or any of its
Subsidiaries and operated out of the Illinois Facilities, in each case,
including the engines, boilers, machinery, masts, derricks, drawworks, spars,
boats, anchors, cables, chains, tackle, fittings, pumping equipment and all
other components and appurtenances thereto, whether now owned or hereafter
acquired, whether on board or not, and whether installed by Company, SIRCC or
any other Person, and also any and all changes, improvements, alterations,
additions, renewals and replacements at any time made in or to such units or any
parts thereof.
"Improvements" means all buildings, structures, facilities and
other improvements of every kind and description now or hereafter located on any
of the Premises, including all parking areas, roads, driveways, walks, fences,
walls, beams, recreation facilities, drainage facilities, lighting facilities
and other site improvements, all water, sanitary and storm sewer, drainage,
electricity, steam, gas, telephone and other utility equipment and facilities,
all plumbing, lighting, heating, ventilating, air-conditioning, refrigerating,
incinerating, compacting, fire protection and sprinkler, surveillance and
security, vacuum cleaning, public address and communications equip- ment and
systems, all screens, awnings, floor coverings, partitions, elevators,
escalators,
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motors, machinery, pipes, fittings and other items of equipment and personal
property of every kind and description now or hereafter located on any of the
Premises or attached to the improvements that by the nature of their location
thereon or attachment thereto are real property under applicable law; and
including all materials intended for the construction, reconstruction, repair,
replacement, alteration, addition or improvement of or to such buildings,
equipment, fixtures, structures and improvements.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Any Contingent Obligation shall not constitute
Indebtedness until such time as, and only to the extent that, the underlying
obligation owed by the primary obligor to which such Contingent Obligation
relates has become due and payable and remains unsatisfied after the due date
thereof. Obligations under Interest Rate Agreements constitute Contingent
Obligations.
"Indemnitee" has the meaning assigned to that term in
subsection 10.3.
"Indenture" means that certain Indenture, dated as of April
10, 1995, executed by Company, its Subsidiaries and First Fidelity Bank,
National Association, as trustee, in connection with the issuance of and
governing the terms of the Senior Notes, as in effect on the Closing Date,
except to the extent amended in accordance with subsection 7.13.
"Intellectual Property" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or necessary
for the conduct of the business of Company and its Subsidiaries as currently
conducted that are material to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company and its Subsidiaries,
taken as a whole.
"Interest Payment Date" means (i) with respect to any Base
Rate Loan, each March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Closing Date, and (ii) with
respect to any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided that in the case of each Interest Period of
longer than three months, "Interest Payment Date" shall also include each date
that is three months after the commencement of such Interest Period.
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"Interest Period" has the meaning assigned to that term in
subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect Company or any of its
Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means, with respect to any
Interest Period, the second Business Day prior to the first day of such Interest
Period.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.
"Investment" means (i) any direct or indirect purchase or
other acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person, (ii) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Company from any Person other than Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, or (iii) any direct
or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by Company or any of
its Subsidiaries to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"Investment Measurement Period" means, at any date of
determination, the twelve consecutive month period ending with the month
immediately prior to the month in which Company's direct or indirect investment
in any New Venture exceeds $500,000.
"Joint Venture" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"Landlord Consents" means those certain Landlord's Consents
and Agreements executed by various owners of certain portions of the Premises,
as landlords, each in favor of Administrative Agent, acknowledging and
consenting to, among other things, the granting by certain of Company's
Subsidiaries, as tenants, of Mortgages on the leasehold interests held by such
tenants.
"Lease Amendments" means those certain amendments to lease
agreements between various owners of certain portions of the Premises, each as a
landlord, and
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certain of Company's Subsidiaries, each as a tenant, pursuant to which the
parties thereto have amended certain existing leases related to the Premises for
the benefit of Administrative Agent.
"Leasehold Documents" means, collectively, the Mortgagee
Attornment Agreements, the Landlord Consents, the Lease Amendments and the
Acknowledgement and Estoppel Agreements.
"Lender" and "Lenders" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1, and the term
"Lenders" shall include Swing Line Lender unless the context otherwise requires.
"Lender Assignment Agreement" has the meaning assigned to that
term in subsection 10.1A and a form of which is attached as Exhibit V hereto, as
noted in subsection 10.1B.
"Letter of Credit" or "Letters of Credit" means Standby
Letters of Credit issued or to be issued by Administrative Agent for the account
of Company pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Letters of Credit
then outstanding plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by Administrative Agent and not theretofore reimbursed by Company
(including any such reimbursement out of the proceeds of Loans pursuant to
subsection 3.3B).
"Leverage Ratio" means, as of any date of determination, the
ratio of (y) the sum (without duplication) of the outstanding principal amount
of Other Allowed Indebtedness (Secured) as of such date plus the outstanding
principal amount of Other Allowed Indebtedness (Unsecured) as of such date plus
the average daily Total Utilization of Commitments for the Fiscal Quarter most
recently ended on or prior to such date plus Contingent Obligations as of such
date to (z) Consolidated EBIDTA for the consecutive four full Fiscal Quarters
most recently ended on or prior to such date.
"License Revocation" means the revocation, failure to renew or
suspension of, or the appointment of a receiver, supervisor or similar official
with respect to, any casino, gambling or gaming license issued by any Gaming
Authority covering any casino, gambling or gaming facility owned or operated by
Company, any of its Subsidiaries or any New Venture.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title
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retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"LLC Membership Interest Security Agreements" means those
certain Security Agreements between each of PRI and PRM, and Administrative
Agent, dated the Closing Date, substantially in the form of Exhibit XI-B annexed
hereto, respectively, as each such agreement may hereafter be amended,
supplemented or otherwise modified, from time to time.
"Loan Documents" means this Agreement, any Notes, the Letters
of Credit (and any applications for, or reimbursement agreements or other
documents or certificates executed by Company in favor of Administrative Agent
relating to, the Letters of Credit), the Collateral Account Agreement, the
Collateral Documents and all other instruments or documents executed in
connection therewith.
"Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Commitments, that
Lender's Commitment and (ii) after the termination of the Commitments, the sum
of (a) the aggregate outstanding principal amount of the Loans of that Lender
plus (b) in the event that Lender is Administrative Agent, the aggregate Letter
of Credit Usage in respect of all Letters of Credit issued by that Lender (in
each case net of any participations purchased by other Lenders in such Letters
of Credit or any unreimbursed drawings thereunder) plus (c) the aggregate amount
of all participations purchased by that Lender in any outstanding Letters of
Credit or any unreimbursed drawings under any Letters of Credit plus (d) in the
case of Swing Line Lender, the aggregate outstanding principal amount of all
Swing Line Loans (net of any participations therein purchased by other Lenders)
plus (e) the aggregate amount of all participations purchased by that Lender in
any outstanding Swing Line Loans.
"Loan Party" means any of Company and any Guarantor and "Loan
Parties" means Company and all Guarantors, collectively.
"Loans" means, collectively, all Revolving Loans made pursuant
to subsection 2.1A and all Swing Line Loans made pursuant to subsection 2.1B.
"Louisiana Facilities" means the Louisiana Premises and the
Improvements made thereon, along with all other related personal and mixed
property located thereon or related thereto, including, without limitation, two
four-deck side-wheeler riverboat casinos (individually known as the "Players
Lake Charles Riverboat" and the "Lake Charles Star Riverboat"), a docking site
(including all Barges), a hotel, all related restaurant, bar, recreation and
other facilities and all FF&E and other personal property located therein, as
more fully described on pages 27 and 28 of the Memorandum.
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"Louisiana Gaming Authorities" means, without limitation, the
Louisiana Riverboat Gaming Commission, the Riverboat Gaming Enforcement Division
of the Louisiana State Police and any other applicable Governmental Authority
involved in the regulation of gaming and gaming activities conducted by Company
or any of its
Subsidiaries in the State of Louisiana.
"Louisiana Gaming Control Act" means the Louisiana Riverboat
Economic Development and Gaming Control Act, as from time to time amended, or
any successor provision of law, and the regulations promulgated thereunder.
"Louisiana Mortgage" means that certain Acts of Mortgage,
Fixture Filing and Security Agreement with Pledge and Assignment of Leases and
Rents, among PLC, as mortgagor and owner, in favor of Administrative Agent, as
mortgagee, dated the Closing Date, substantially in the form of Exhibit XIII-B
annexed hereto, as it may hereafter be amended, supplemented or otherwise
modified, from time to time.
"Louisiana Premises" means the real property owned in fee or
leased by Company or its respective Subsidiaries with respect to the property
commonly known as the Lake Charles complex in Lake Charles, Louisiana, as more
fully described on Schedule A-2 hereto.
"Louisiana Ships" means each of the Players Lake Charles
Riverboat, the Lake Charles Star Riverboat and any other riverboat casino
subsequently acquired by Company or any of its Subsidiaries and operated out of
the Louisiana Facilities, in each case, including the engines, boilers,
machinery, masts, derricks, drawworks, spars, boats, anchors, cables, chains,
tackle, fittings, pumping equipment and all other components and appurtenances
thereto, whether now owned or hereafter acquired, whether on board or not, and
whether installed by Company, PLC or any other Person, and also any and all
changes, improvements, alterations, additions, renewals and replacements at any
time made in or to such units or any parts thereof.
"Managing Agent" means either of FIB or BTCo and "Managing
Agents" means FIB and BTCo, collectively.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"Marine Appraiser" means Larry Snyder.
"Maryland Heights Facility" means the riverboat casino
entertainment complex in Maryland Heights, Missouri intended to be developed and
operated by the Riverside Joint Venture.
"Material Adverse Effect" means (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial or
otherwise) or prospects of
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Company and its Subsidiaries, taken as a whole, or (ii) the impairment of the
ability of Company to perform, in any material respect, or of Administrative
Agent or Lenders to enforce, the Obligations.
"Memorandum" means Company's Confidential Offering Memorandum,
dated April 10, 1995, with respect to its issuance of 10-7/8% Senior Notes Due
2005.
"Mortgagee Attornment Agreements" means those certain
Mortgagee Attornment Agreements between various owners of certain portions of
the Premises, each as a landlord, and certain of Company's Subsidiaries, each as
a tenant, for the benefit of Administrative Agent, granting tenants the right to
mortgage the leasehold interests held by such tenants in certain portions of the
Premises.
"Mortgages" means, collectively, the Illinois Mortgage, the
Louisiana Mortgage and the Nevada Mortgages.
"Multiemployer Plan" means a "multiemployer plan", as defined
in Section 3(37) of ERISA, to which Company or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which Company or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"Net Cash Proceeds" means Cash Proceeds received from any
Asset Sale or upon the occurrence of an Event of Loss, in each case, net of the
sum of all bona fide direct fees, commissions and other expenses incurred in
connection therewith less the amount of (estimated reasonably and in good faith
by Company) income, franchise, sales and other applicable taxes required to be
paid by Company or any of its Subsidiaries as a result thereof within two years
of the date of receipt of any such Cash Proceeds.
"Nevada Facilities" means the Nevada Premises and the
Improvements made thereon, along with all other related resort-facilities
personal and mixed property under construction thereon, including, without
limitation, a golf course, all related restaurant, bar, recreation and other
facilities and all FF&E and other personal property located therein, as more
fully described on pages 28 and 29 of the Memorandum.
"Nevada Gaming Authorities" means, without limitation, the
Nevada Gaming Commission, the Nevada State Gaming Control Board and any other
applicable Governmental Authority involved in the regulation of gaming and
gaming activities conducted by Company or any of its Subsidiaries in the State
of Nevada.
"Nevada Gaming Control Act" means the Nevada Gaming Control
Act, as from time to time amended, or any successor provision of law, and the
regulations promulgated thereunder.
"Nevada Mortgages" means those certain Deeds of Trust, Fixture
Filings and Security Agreements with Assignment of Rents, among each of PNEV,
PMGC and
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PML, as trustor and owner, in favor of Chicago Title Insurance Company, as
trustee, for the benefit of Administrative Agent, as beneficiary, each dated the
Closing Date, substantially in the form of Exhibit XIII-C annexed hereto, as any
of them may hereafter be amended, supplemented or otherwise modified, from time
to time.
"Nevada Premises" means the real property owned in fee or
leased by Company or its respective Subsidiaries with respect to the property in
Mesquite, Nevada, as more fully described on Schedule A-3 hereto.
"New Venture" means a casino, hotel, casino/hotel, resort,
casino/resort, riverboat casino, dock casino, any other type of casino, golf
course, entertainment center or similar facility (or any site or proposed site
for any of the foregoing) owned or to be owned in whole or in part by any New
Venture Subsidiary (or owned or to be owned by a Person in which Company or a
New Venture Subsidiary is an owner or investor); provided that a Development
Proposal shall not be deemed to constitute a New Venture until such time, if
any, as it becomes a Development Commitment.
"New Venture Investments" means any capitalization,
Investment, loan, distribution or advance of any kind or character whatsoever
made by Company or any of its Subsidiaries in or to any New Venture or New
Venture Subsidiary.
"New Venture Subsidiary" means PMH and any Subsidiary of
Company created after the Closing Date principally to hold, directly or
indirectly, an interest in a casino, hotel, casino/hotel, resort, casino/resort,
riverboat casino, dock casino, any other type of casino, golf course,
entertainment center or similar facility (or any site or proposed site for any
of the foregoing).
"Notes" means any promissory notes of Company issued pursuant
to subsection 2.1E to evidence the Revolving Loans or Swing Line Loans,
substantially in the form of Exhibit VI or Exhibit VII, respectively, annexed
hereto, as they may be amended, supplemented or otherwise modified from time to
time.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Administrative Agent
pursuant to subsection 2.1C with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit III annexed hereto delivered by Company to
Administrative Agent pursuant to subsection 2.2D with respect to a proposed
conversion or continuation of the applicable basis for determining the interest
rate with respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice
substantially in the form of Exhibit IV annexed hereto delivered by Company to
Administrative Agent
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pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"Notification Date" has the meaning assigned to that term in
subsection 3.1A(iii).
"Obligations" means all obligations of every nature of any
Loan Party, from time to time owed to Administrative Agent, Managing Agents,
Co-Arrangers, Lenders or any of them under the Loan Documents, whether for
principal, interest, reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or president, vice presidents, chief financial officer or
treasurer; provided that every Officers' Certificate with respect to the
compliance with a condition precedent to the making of any Loans hereunder shall
include (i) a statement that the officer or officers making or giving such
Officers' Certificate have read such condition and any definitions or other
provisions contained in this Agreement relating thereto, (ii) a statement that,
in the opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such condition
has been complied with.
"Other Allowed Indebtedness (Secured)" means (a) secured
Interest Rate Agreements with Lenders having a maximum notional amount of no
more than $40,000,000, (b) Purchase Money Debt and Capital Leases not to exceed
$5,000,000 in aggregate principal amount, existing on the Closing Date, (c)
Purchase Money Debt and Capital Leases not to exceed $10,000,000 principal
amount at any time outstanding for each New Venture Subsidiary and for the
operation of the Nevada Facilities and (d) Purchase Money Debt and Capital
Leases of Persons that are acquired in acquisitions and purchases permitted by
subsection 7.7; provided such Purchase Money Debt and Capital Leases were not
incurred in contemplation of such acquisition.
"Other Allowed Indebtedness (Unsecured)" means all unsecured
Indebtedness, whether existing on the Closing Date or subsequently incurred, of
Company or any of its Subsidiaries, including, without limitation, the Senior
Notes.
"Other Barges" means all barges located at or used in
connection with the Illinois Facilities or the Louisiana Facilities other than
US Documented Barges, whether owned on the date hereof or subsequently acquired,
including, without limitation, all barges that are documented, registered or
certified pursuant to the laws of the State of Illinois or the State of
Louisiana.
"Participant Subsidiary" has the meaning assigned to that
term in subsection 6.10B.
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"Partnership Interest Security Agreements" means those certain
Security Agreements between each of PRLLC and PRM, and Administrative Agent,
dated the Closing Date, substantially in the form of Exhibit XVIII annexed
hereto, respectively, as each such agreement may hereafter be amended,
supplemented or otherwise modified, from time to time.
"PBD" means Players Bluegrass Downs, Inc., a Kentucky
corporation.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of Liens
(other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of
the Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges
or claims the
payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent
or being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefor;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 8.8;
(v) leases or subleases granted to others (including, without
limitation, any Subsidiary of Company) not interfering in any material
respect with the ordinary conduct of the business of Company or any of
its Subsidiaries; and
(vi) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar immaterial
charges or encumbrances that (a) arise prior to the Closing Date and
are accepted by Managing Agents as
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exceptions to the Title Policies or (b) arise after the Closing Date
and would not, either individually or in the aggregate, result in a
Material Adverse Effect.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, Joint
Ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, limited liability companies or other organizations, whether or
not legal entities, and governments and agencies and political subdivisions
thereof.
"PII" means Players Indiana, Inc., an Indiana corporation.
"PLC" means Players Lake Charles, Inc., a Louisiana
corporation.
"PMGC" means Players Mesquite Golf Club, Inc., a Nevada
corporation.
"PMH" means Players Maryland Heights, Inc., a Missouri
corporation.
"PMHLP" means Players MH, L.P., a Missouri limited
partnership.
"PMHN" means Players Maryland Heights Nevada, Inc., a Nevada
corporation.
"PML" means Players Mesquite Land, Inc., a Nevada corporation.
"PNEV" means Players Nevada, Inc., a Nevada corporation.
"Policies of Insurance" means the insurance required to be
obtained and maintained by Company throughout the term of this Agreement
pursuant to subsection 6.4B hereof and Schedules 6.4(a) and 6.4(b) annexed
hereto.
"Potential Event of Default" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of Default.
"Premises" means, collectively, the Illinois Premises, the
Louisiana Premises and the Nevada Premises.
"PRI" means Players Riverboat, Inc., a Nevada corporation.
"Pricing Determination Certificate" means an Officers'
Certificate of Company delivered on the Closing Date pursuant to subsection 4.1Q
and thereafter pursuant to subsection 6.1(xvi) setting forth in reasonable
detail the Leverage Ratio which is applicable as of the date on which such
Officers' Certificate is delivered.
"Prime Rate" means the rate that FIB announces from time to
time as its prime rate. The Prime Rate is a reference rate and does not
necessarily represent the
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lowest or best rate actually charged to any customer. FIB or any other Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Rate.
"PRLLC" means Players Riverboat, LLC, a Louisiana limited
liability company.
"PRM" means Players Riverboat Management, Inc., a Nevada
corporation.
"Pro Rata Share" means, with respect to each Lender, the
percentage obtained by dividing (x) the Commitment of that Lender by (y) the
aggregate Commitments of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share of
each Lender is set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.
"Purchase Money Debt" means Indebtedness incurred to finance
the acquisition of assets pertaining to any business reasonably related to any
of Company's or its Subsidiaries' gaming business and necessary for, in support
or anticipation of and ancillary to or in preparation for such gaming business
provided that the amount of such Indebtedness does not exceed eighty percent
(80%) of the purchase price of the asset acquired and provided further that such
Indebtedness is incurred at the time of, or within 30 days following, such
acquisition and provided still further that any Lien securing such Indebtedness
shall attach only to the asset acquired and not to any other asset of the
obligor of such Indebtedness.
"Purchaser" has the meaning assigned to that term in
subsection 6.10D.
"Railroad" has the meaning assigned to that term in
subsection 6.10D.
"RBI" means River Bottom, Inc., a Missouri corporation.
"Reduction Commencement Date" means the last day of the first
calendar quarter occurring after the second anniversary of the Closing Date, as
it may be extended pursuant to subsection 2.1F.
"Refunded Swing Line Loans" has the meaning assigned to that
term in subsection 2.1B.
"Refusing Lender" has the meaning assigned to that term in
subsection 2.1F.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
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"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Related Business" means the gaming business (including
parimutuel betting) conducted (or proposed to be conducted) by Company and its
Subsidiaries as of the Closing Date 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, hotel, casino/hotel, resort,
casino/resort, riverboat casino, dock casino, any other type of casino, golf
course, retail facility, entertainment center or similar facility.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"Requisite Lenders" means Lenders having or holding sixty-six
and two-thirds percent (66-2/3%) of the Loan Exposure, or if no Loans or Letters
of Credit are outstanding, having sixty-six and two-thirds percent (66-2/3%) of
the Commitments.
"Responsible Officer" means each of the following officers of
Company or any of its Subsidiaries, at the time that any individual holds any
such position: the chief executive officer, the president, the chief financial
officer, the treasurer, any vice president, the general counsel and the
corporate secretary.
"Restricted Payment" means (i) any dividend or other
distribution of items of distribution, direct or indirect, on account of any
class of stock of Company in Company now or hereafter outstanding, except a
distribution payable solely in interests of that class of stock to the holders
of that class, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any interests of
any class of stock of Company now or hereafter outstanding, (iii) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire any interests of any class of stock of Company now or
hereafter outstanding, (iv) any payment or prepayment of principal of, premium,
if any, or interest on, or redemption, purchase, retirement, defeasance
(including in substance or legal defeasance), sinking fund or similar payment
with respect to, any subordinated indebtedness, and (v) any payment or
prepayment of principal of, premium, if any, or redemption, purchase, retirement
or defeasance (including in substance or legal defeasance) of the outstanding
principal of any of the Senior Notes other than as required under the Indenture
(after giving effect to any mandatory prepayment pursuant to subsection
2.4A(ii)) upon the occurrence of an Asset Sale or an Event of Loss.
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"Revolving Loans" means the loans made by Lenders pursuant to
subsection 2.1.
"Revolving Note" means any promissory note of Company issued
pursuant to subsection 2.1E to evidence the Revolving Loans of a Lender,
substantially in the form of Exhibit VI annexed hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Riverside Joint Venture" means that certain Joint Venture
between PMHLP and Harrah's Maryland Heights Corporation, a Nevada corporation,
for the development and operation of a riverboat casino entertainment complex in
Maryland Heights, Missouri, as more fully described on page 29 of the
Memorandum.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"Senior Notes" has the meaning assigned to that term in the
first recital to this Agreement.
"Ship Mortgages" means the First Preferred Ship Mortgages by
each of SIRCC, PLC and SSP in favor of the Trustee, for the benefit of
Administrative Agent on behalf of Lenders, substantially in the form of Exhibit
XIV annexed hereto, as such mortgages may hereafter be amended, supplemented or
otherwise modified, from time to time.
"Ships" means, collectively, the Illinois Ships and the
Louisiana Ships.
"SIRCC" means Southern Illinois Riverboat/Casino Cruises,
Inc., an Illinois corporation.
"Solvent" means, with respect to any Person, that as of the
date of determination both (A)(i) the then fair saleable value of the property
of such Person is (y) greater than the total amount of liabilities (including
contingent liabilities with respect to Indebtedness) of such Person and (z) not
less than the amount that will be required to pay the probable liabilities on
such Person's then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to such Person; (ii) such Person's capital is not unreasonably
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small in relation to its business or any contemplated or undertaken transaction;
and (iii) such Person does not intend to incur, or believe (nor should it
reasonably believe) that it will incur, debts beyond its ability to pay such
debts as they become due; and (B) such Person is "solvent" within the meaning
given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
"SSP" means Showboat Star Partnership, a Louisiana general
partnership.
"Standby Letter of Credit" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and
(v) performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry; provided that Standby
Letters of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as that term is
used in Section 547 of the Bankruptcy Code.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association, joint venture or other business entity of
which more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Subsidiary Security Agreements" means those certain Security
Agreement between certain of Company's Subsidiaries and Administrative Agent
dated the Closing Date, substantially in the forms of Exhibit XVII-A, Exhibit
XVII-B and Exhibit XVII-C annexed hereto, as it may hereafter be amended,
supplemented or otherwise modified, from time to time, including, without
limitation, by the inclusion of Subsidiaries of Company formed after the Closing
Date that are not Excluded Subsidiaries.
"Substitute Lender" has the meaning assigned to that term in
subsection 10.1B(iii).
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"Swing Line Lender" means Administrative Agent, or any Person
serving as a successor Administrative Agent hereunder, in its capacity as Swing
Line Lender hereunder.
"Swing Line Loan Commitment" means the commitment of Swing
Line Lender to make Swing Line Loans to Company pursuant to subsection 2.1B.
"Swing Line Loans" means the Loans made by Swing Line Lender
to Company pursuant to subsection 2.1B.
"Swing Line Note" means any promissory note of Company issued
pursuant to subsection 2.1E to evidence the Swing Line Loans of Swing Line
Lender, substantially in the form of Exhibit VII annexed hereto, as it may be
amended, supplemented or otherwise modified from time to time.
"Tax" or "Taxes" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and whatever
called, by any Governmental Authority, on whomsoever and wherever imposed,
levied, collected, withheld or assessed; provided that "Tax on the overall net
income" of a Person shall be construed as a reference to a tax imposed by any
Governmental Authority on all or part of the net income, profits or gains of
that Person (whether worldwide, or only insofar as such income, profits or gains
are considered to arise in or to relate to a particular jurisdiction, or
otherwise).
"Title Company" shall have the meaning assigned to such term
in subsection 4.1G.
"Title Policy" shall have the meaning assigned to such term in
subsection 4.1G.
"Total Utilization of Commitments" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans (other than Revolving Loans made for the purpose of repaying any
Refunded Swing Line Loans or reimbursing Administrative Agent for any amount
drawn under any Letter of Credit but not yet so applied) plus (ii) the aggregate
principal amount of all outstanding Swing Line Loans plus (iii) the Letter of
Credit Usage.
"Trust Agreement" means the Master Vessel and Collateral Trust
Agreement between the Trustee and Administrative Agent on behalf of Lenders,
substantially in the form of Exhibit XIX annexed hereto, as such agreement may
hereafter be amended, supplemented or otherwise modified from time to time.
"Trustee" means FIB, solely in its capacity as trustee under
the Trust Agreement and not in its individual capacity.
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"US Documented Barges" means all barges located at or used in
connection with the Illinois Facilities or the Louisiana Facilities, whether
owned on the date hereof or subsequently acquired, that are subject to a valid
certificate of documentation issued by the United States Coast Guard under the
laws and regulations of the United States and are listed on Schedule 5.5.
"Withdrawal Period" has the meaning assigned to that term in
subsection 10.1B(iii).
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii) and
(xiii) of subsection 6.1 shall be prepared in accordance with GAAP as in effect
at the time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(iv)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3.
1.3 Other Definitional Provisions.
References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural, depending
on the reference.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; Notes.
A. Revolving Loans. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the Loan
Parties set forth in the Loan Documents, each Lender hereby severally agrees,
subject to the limitations set forth below with respect to the maximum amount of
Loans permitted to be outstanding from time to time, to lend to Company from
time to time during the period from the Closing Date to but excluding the
Commitment Termination Date an aggregate amount not exceeding its Pro Rata Share
of the aggregate amount of the Commitments to be used for the purposes
identified in subsection 2.5A. The original amount of each Lender's Commitment
is set forth opposite its name on Schedule 2.1 annexed hereto and the aggregate
original amount of the Commitments is $120,000,000; provided that the
Commitments of Lenders shall be adjusted to give effect to any assignments of
the
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Commitments pursuant to subsection 10.1B; and provided further that the amount
of the Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsections 2.4A and 2.4B(ii). Each Lender's
Commitment shall expire on the Commitment Termination Date and all Revolving
Loans and all other amounts owed hereunder with respect to the Revolving Loans
and the Commitments shall be paid in full no later than that date. Loans made by
Lenders pursuant to this subsection 2.1A are described herein as "Revolving
Loans."
B. Swing Line Loans. Swing Line Lender hereby agrees, subject to the
limitations set forth below with respect to the maximum amount of Swing Line
Loans permitted to be outstanding from time to time and subject to the other
terms and conditions hereof, to make a portion of the Commitments available to
Company from time to time during the period from the Closing Date to but
excluding the Commitment Termination Date by making Swing Line Loans to Company
in an aggregate amount not exceeding the amount of the Swing Line Loan
Commitment to be used for the purposes identified in subsection 2.5A,
notwithstanding the fact that such Swing Line Loans, when aggregated with Swing
Line Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share
of the Letter of Credit Usage then in effect, may exceed Swing Line Lender's
Commitment. The original amount of the Swing Line Loan Commitment is $5,000,000;
provided that any reduction of the Commitments made pursuant to subsec- tion
2.4A or 2.4B(ii) which reduces the aggregate Commitments to an amount less than
the then current amount of the Swing Line Loan Commitment shall result in an
automatic corresponding reduction of the Swing Line Loan Commitment to the
amount of the Commitments, as so reduced, without any further action on the part
of Company or Swing Line Lender. The Swing Line Loan Commitment shall expire on
the fifth Business Day prior to the Commitment Termination Date and all Swing
Line Loans and all other amounts owed hereunder with respect to the Swing Line
Loans shall be paid in full no later than that date. Amounts borrowed under this
subsection 2.1B may be repaid and reborrowed to but excluding the fifth Business
Day prior to the Commitment Termination Date. Swing Line Lender shall not be
obligated to make any Swing Line Loans if it has elected not to do so after the
occurrence and during the continuation of a Potential Event of Default of which
it is aware or an Event of Default.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Loan Commitment shall
be subject to the limitation that in no event shall the Total Utilization of
Commitments at any time exceed the Commitments then in effect.
With respect to any Swing Line Loans which have not been
voluntarily prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender
may, at any time in its sole and absolute discretion, deliver to Lenders (with a
copy to Company), no later than 8:30 A.M. (Pacific time) on the first Business
Day in advance of the proposed Funding Date, a notice (which shall be deemed to
be a Notice of Borrowing given by Company) requesting Lenders to make Revolving
Loans that are Base Rate Loans on such Funding Date in an amount equal to the
amount of such Swing Line Loans (the
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"Refunded Swing Line Loans") outstanding on the date such notice is given which
Swing Line Lender requests Lenders to prepay. Anything contained in this
Agreement to the contrary notwithstanding, (i) the proceeds of Revolving Loans
made by Lenders other than Swing Line Lender shall be immediately delivered to
Swing Line Lender (and not to Company) and applied to repay a corresponding
portion of the Refunded Swing Line Loans and (ii) on the day such Revolving
Loans are made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line
Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by
Swing Line Lender, and such portion of the Swing Line Loans deemed to be so paid
shall no longer be outstanding as Swing Line Loans and shall no longer be due
under the Swing Line Note of Swing Line Lender but shall instead constitute part
of Swing Line Lender's outstanding Revolving Loans and shall be due under the
Revolving Note of Swing Line Lender. Company hereby authorizes Swing Line Lender
to charge Company's account with Swing Line Lender (up to the amount available
in each such account) in order to immediately pay Swing Line Lender the amount
of the Refunded Swing Line Loans to the extent the proceeds of such Revolving
Loans made by Lenders, including the Revolving Loan deemed to be made by Swing
Line Lender, are not sufficient to repay in full the Refunded Swing Line Loans.
If any portion of any such amount paid (or deemed to be paid) to Swing Line
Lender should be recovered by or on behalf of Company from Swing Line Lender in
bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of
the amount so recovered shall be ratably shared among all Lenders in the manner
con- templated by subsection 10.5.
If, as a result of any bankruptcy or similar proceeding with
respect to Company, Revolving Loans are not made pursuant to this subsection
2.1B in an amount sufficient to repay any amounts owed to Swing Line Lender in
respect of any outstanding Swing Line Loans, each Lender shall be deemed to, and
hereby agrees to, have purchased a participation in such outstanding Swing Line
Loans in an amount equal to its Pro Rata Share (calculated without giving effect
to clauses (d) and (e) of the definition of Loan Exposure) of the unpaid amount
together with accrued interest thereon. Upon one Business Day's notice from
Swing Line Lender, each Lender shall deliver to Swing Line Lender an amount
equal to its respective participation in same day funds at the Funding and
Payment Office. In order to evidence such participation each Lender agrees to
enter into a participation agreement at the request of Swing Line Lender in form
and substance reasonably satisfactory to all parties. In the event any Lender
fails to make available to Swing Line Lender the amount of such Lender's
participation as provided in this paragraph, Swing Line Lender shall be entitled
to recover such amount on demand from such Lender together with interest thereon
at the rate customarily used by Swing Line Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate. In the
event Swing Line Lender receives a payment of any amount in which other Lenders
have purchased participations as provided in this paragraph, Swing Line Lender
shall promptly distribute to each such other Lender its Pro Rata Share of such
payment.
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Anything contained herein to the contrary notwithstanding,
each Lender's obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loan pursuant to the second preceding paragraph and each
Lender's obligation to purchase a participation in any unpaid Swing Line Loan
pursuant to the immediately preceding paragraph shall be absolute and
unconditional and shall not be affected by any circumstance, including without
limitation (a) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against Swing Line Lender, Company or any other
Person for any reason whatsoever; (b) the occurrence or continuation of an Event
of Default or a Potential Event of Default; (c) any adverse change in the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company or any of its Subsidiaries; (d) any breach of this
Agreement or any other Loan Document by any party thereto; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided if such unpaid Swing Line Loan increased Total
Utilization of Commitments (after giving effect to the repayment of any
Revolving Loan with the proceeds of such Swing Line Loan), such obligation of
each Lender is subject to the condition that one of the following must have
occurred: (X) Swing Line Lender did not have actual knowledge that any of the
conditions under Section 4 to the making of the applicable unpaid Swing Line
Loans were not satisfied at the time such unpaid Swing Line Loans were made, (Y)
such Lender had actual knowledge by receipt of any notices required to be
delivered to Lenders pursuant to subsection 6.1(ix) or otherwise, that any such
condition had not been satisfied and such Lender failed to notify Swing Line
Lender in writing that it had no obligation to make Revolving Loans until such
condition was satisfied (any such notice to be effective as of the date of
receipt thereof by Swing Line Lender), or (Z) the satisfaction of any such
condition not satisfied had been waived in accordance with subsection 10.6 prior
to or at the time such unpaid Swing Line Loans were made.
C. Borrowing Mechanics. Revolving Loans made on any Funding Date (other
than Revolving Loans made pursuant to a request by Swing Line Lender pursuant to
subsection 2.1B for the purpose of repaying any Refunded Swing Line Loans or
Revolving Loans made pursuant to subsection 3.3B for the purpose of reimbursing
Administrative Agent for the amount of a drawing under a Letter of Credit issued
by it) shall be in an aggregate minimum amount of $1,000,000 and integral
multiples of $100,000 in excess of that amount; provided that Revolving Loans
made on any Funding Date as Eurodollar Rate Loans with a particular Interest
Period shall be in an aggregate minimum amount of $1,000,000 and integral
multiples of $100,000 in excess of that amount. Swing Line Loans made on any
Funding Date shall be in an aggregate minimum amount of $500,000 and integral
multiples of $100,000 in excess of that amount. Whenever Company desires that
Lenders make Revolving Loans it shall deliver to Administrative Agent a Notice
of Borrowing no later than 8:30 A.M. (Pacific time) at least three Business Days
in advance of the proposed Funding Date (in the case of a Eurodollar Rate Loan)
or at least one Business Day in advance of the proposed Funding Date (in the
case of a Base Rate Loan). Whenever Company desires that Swing Line Lender make
a Swing Line Loan, it shall deliver to Administrative Agent a Notice of
Borrowing no later than 8:30 A.M. (Pacific time) on the proposed Funding Date.
Each
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Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be
a Business Day), (ii) the amount and type of Loans requested, (iii) in the case
of Swing Line Loans and any Revolving Loans made on the Closing Date, that such
Loans shall be Base Rate Loans, (iv) in the case of any Revolving Loans not made
on the Closing Date, whether such Loans shall be Base Rate Loans or Eurodollar
Rate Loans, and (v) in the case of any Revolving Loans requested to be made as
Eurodollar Rate Loans, the initial Interest Period requested therefor. Revolving
Loans may be continued as or converted into Base Rate Loans and Eurodollar Rate
Loans in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1C; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Administrative Agent on or
before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1C, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding
of any Loans in the event that any of the matters to which Company is required
to certify in the applicable Notice of Borrowing is no longer true and correct
as of the applicable Funding Date, and the acceptance by Company of the proceeds
of any Loans shall constitute a re-certification by Company, as of the
applicable Funding Date, as to the matters to which Company is required to
certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
D. Disbursement of Funds. All Revolving Loans under this Agreement
shall be made by Lenders simultaneously and proportionately to their respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender be increased or
decreased as a result of a default by any other Lender in that other Lender's
obligation to make a Loan requested hereun- der. Promptly after receipt by
Administrative Agent of a Notice of Borrowing pursuant to subsection 2.1C (or
telephonic notice in lieu thereof), Administrative Agent shall notify each
Lender or Swing Line Lender, as the case may be, of the proposed borrowing. Each
Lender shall make the amount of its Loan available to Administrative Agent not
later than 1:00 P.M. (Pacific time) on the applicable Funding Date, and Swing
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Line Lender shall make the amount of its Swing Line Loan available to
Administrative Agent not later than 1:00 P.M. (Pacific time) on the applicable
Funding Date, in each case in same day funds in Dollars, at the Funding and
Payment Office. Except as provided in subsection 2.1B or subsection 3.3B with
respect to Revolving Loans used to repay Refunded Swing Line Loans or to
reimburse Administrative Agent for the amount of a drawing under a Letter of
Credit issued by it, upon satisfaction or waiver of the conditions precedent
specified in subsections 4.1 (in the case of Loans made on the Closing Date) and
4.2 (in the case of all Loans), Administrative Agent shall make the proceeds of
such Loans available to Company on the applicable Funding Date by causing an
amount of same day funds in Dollars equal to the proceeds of all such Loans
received by Administrative Agent from Lenders or Swing Line Lender, as the case
may be, to be credited to the account of Company at the Funding and Payment
Office.
Unless Administrative Agent shall have been notified by any
Lender prior to the Funding Date for any Revolving Loans that such Lender does
not intend to make available to Administrative Agent the amount of such Lender's
Loan requested on such Funding Date, Administrative Agent may assume that such
Lender has made such amount available to Administrative Agent on such Funding
Date and Administrative Agent may, in its sole discretion, but shall not be
obligated to, make available to Company a corresponding amount on such Funding
Date. If such corresponding amount is not in fact made available to
Administrative Agent by such Lender, Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Funding Date until the date such amount
is paid to Administrative Agent, at the customary rate set by Administrative
Agent for the correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon Administrative Agent's demand therefor, Administrative
Agent shall promptly notify Company and Company shall immediately pay such
corresponding amount to Administrative Agent together with interest thereon, for
each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1D shall be deemed to relieve any Lender
from its obligation to fulfill its Commitment hereunder or to prejudice any
rights that Company may have against any Lender as a result of any default by
such Lender hereunder.
E. Notes. Company shall execute and deliver on the Closing Date
(i) to each Lender (or to Administrative Agent for that Lender) a Revolving
Note substantially in the form of Exhibit VI annexed hereto to evidence that
Lender's Revolving Loans, in the principal amount of that Lender's Commitment
and with other appropriate insertions, and (ii) to Swing Line Lender a Swing
Line Note substantially in the form of Exhibit VII annexed hereto to evidence
Swing Line Lender's Swing Line Loans, in the principal amount of the Swing Line
Loan Commitment and with other appropriate insertions.
Administrative Agent may deem and treat the payee of any Note
as the owner thereof for all purposes hereof unless and until a Lender
Assignment Agreement
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effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent as provided in subsection 10.1B(ii). Any request, authority
or consent of any person or entity who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, assignee or transferee of that Note or of
any Note or Notes issued in exchange therefor.
F. Extension of Reduction Commencement Date. Company may, no earlier
than 365 days and not later than 90 days prior to the then effective Reduction
Commencement Date (as it may be extended from time to time pursuant hereto),
request in writing that the Reduction Commencement Date be extended for an
additional 365-day period (as so extended, the "Actual Reduction Commencement
Date"). After Company's request, each Lender may, in its discretion, agree to
such extension by giving written notice thereof to Administrative Agent as of a
date specified in Company's request which is at least 30 days after the
extension request is delivered. Each Lender's decision as to whether to extend
the Reduction Commitment Date shall be based, in part, on a new credit analysis
utilizing then current information in respect of Company's business, financial
condition and operations and other information furnished by Company.
In order for an extension of the Reduction Commencement Date
to be granted to Company, each Lender must consent to such an extension in
writing (an "Accepting Lender"). In the event that any Lender refuses to agree
to such an extension (a "Refusing Lender"), the Reduction Commencement Date may
still be extended if (i) one or more Accepting Lenders increase their
Commitments in an amount equal to the Commitments of all Refusing Lenders and
buy out the Pro Rata Share of each Refusing Lender or (ii) Company voluntarily
elects to terminate the Commitments of all Refusing Lenders and, on the then
effective Reduction Commencement Date, either (X) repays all principal, interest
and other amounts then owed to each Refusing Lender or (Y) solicits one or more
Eligible Assignees that agree(s) to assume the Commitments of all Refusing
Lenders and assume all obligations of such Refusing Lenders pursuant to a Lender
Assignment Agreement; provided that Requisite Lenders (determined without
reference to the Loan Exposure of the Refusing Lender) consent to such extension
on the terms set forth in clause (i) or (ii) above.
In addition, prior to each extension of the Reduction
Commencement Date, Company must (i) pay to Administrative Agent for the benefit
of Lenders an extension fee in an amount agreed to by Accepting Lenders and
Company, determined with reference to prevailing market conditions, and (ii)
deliver an Officers' Certificate reaffirming that each of Company's
representations and warranties contained in Section 5 are true and correct in
all material respects as of the Reduction Commencement Date in effect prior to
any such extension and attesting as to the absence of any Event of Default or,
to Company's Best Knowledge, a Potential Event of Default, as of such date.
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2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.2B,
2.2E, 2.6 and 2.7, each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate, as the case may be. Subject to the provisions of
subsection 2.7, each Swing Line Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate. The applicable
basis for determining the rate of interest with respect to any Loan shall be
selected by Company initially at the time a Notice of Borrowing is given with
respect to such Loan pursuant to subsection 2.1C. The basis for determining the
interest rate with respect to any Loan may be changed from time to time pursuant
to subsection 2.2D. If on any day a Loan is outstanding with respect to which
notice is required to be delivered to Administrative Agent in accordance with
the terms of this Agreement specifying the applicable basis for determining the
rate of interest but such notice has not been so delivered, then for that day
that Loan shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the
Revolving Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base
Rate plus the Applicable Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Eurodollar Margin.
The Applicable Base Rate Margin and the Applicable Eurodollar
Margin shall automatically be adjusted, in accordance with the Leverage Ratio in
effect as determined by the Pricing Determination Certificate most recently
delivered pursuant to subsection 6.1 (xvi), on the first Business Day of the
month following the date on which such Pricing Determination Certificate is due;
provided that on the Closing Date, the Applicable Base Rate Margin and the
Applicable Eurodollar Margin shall be determined by reference to the Pricing
Determination Certificate delivered by Company to Administrative Agent pursuant
to subsection 4.1Q; provided further that if Company fails to deliver such
Pricing Determination Certificate to Administrative Agent within the required
period set forth in subsection 6.1(xvi), each of the Applicable Base Rate Margin
and the Applicable Eurodollar Margin shall revert to their respective maximum
amounts on the first Business Day following the date on which delivery of such
Pricing Determination Certificate was due and shall remain at such maximum
amounts until the first Business Day of the month following the date that such
past due Pricing Determination Certificate is actually received by
Administrative Agent, at which time each of the Applicable Base Rate Margin and
the Applicable Eurodollar Margin shall be readjusted in accordance with the
Leverage Ratio then in effect until the earlier of (i)
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the first Business Day of the month following the due date of the immediately
succeeding Pricing Determination Certificate, if such certificate is delivered
on or before such due date or (ii) the first Business Day following such due
date, if such certificate is past due.
Subject to the provisions of subsections 2.2E and 2.7, the
Swing Line Loans shall bear interest through maturity at the sum of the Base
Rate plus the Applicable Base Rate Margin.
B. Interest Periods. In connection with each Eurodollar Rate
Loan, Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any Eurodollar Rate Loan
shall commence on the Funding Date in respect of such Loan, in the case
of a Loan initially made as a Eurodollar Rate Loan, or on the date
specified in the applicable Notice of Conversion/Continuation, in the
case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest
Periods applicable to a Eurodollar Rate Loan continued as such
pursuant to a Notice of Conversion/Continuation, each successive
Interest Period shall commence on the day on which the next preceding
Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of
the Revolving Loans shall extend beyond the Commitment Termination
Date;
(vi) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the date on which a permanent
reduction of the Commitments is scheduled to occur unless the sum of
(a) the aggregate principal amount of Revolving Loans that are Base
Rate Loans plus (b) the aggregate
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principal amount of Revolving Loans that are Eurodollar Rate Loans with
Interest Periods expiring on or before such date plus (c) the excess of
the Commitments then in effect over the aggregate principal amount of
Revolving Loans then outstanding equals or exceeds the permanent
reduction of the Commitments that is scheduled to occur on such date;
(vii) there shall be no more than five Interest Periods
outstanding at any time; and
(viii) in the event Company fails to specify an Interest
Period for any Eurodollar Rate Loan in the applicable Notice of
Borrowing or Notice of Conversion/Continuation, Company shall be deemed
to have selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Loans that are Base Rate Loans are
prepaid pursuant to subsection 2.4A(ii) or 2.4B(i), interest accrued on such
Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Revolving Loans equal to $1,000,000 and integral multiples of
$100,000 in excess of that amount from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Loan equal to $1,000,000 and integral multiples of $100,000 in
excess of that amount as a Eurodollar Rate Loan; provided, however, that a
Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (Pacific time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Event of Default or, to Company's Best Knowledge,
no
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Potential Event of Default has occurred and is continuing. In lieu of delivering
the above-described Notice of Conversion/Continuation, Company may give
Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date.
Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of,
a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and
Company shall be bound to effect a conversion or continuation in accordance
therewith.
E. Post-Default Interest. Upon the occurrence and during the
continuation of any Event of Default, the outstanding principal amount of all
Loans and, to the extent permitted by applicable law, the amount of any overdue
interest payments on the Loans or any overdue fees or other amounts owed
hereunder shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate which is 2% per annum in excess of the interest rate
otherwise payable under this Agreement with respect to the applicable Loans (or,
in the case of any such fees and other amounts, at a rate which is 2% per annum
in excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective, such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased rates
of interest provided for in this subsection 2.2E is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.
F. Computation of Interest. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In
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computing interest on any Loan, the date of the making of such Loan or the first
day of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of
such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
2.3 Fees.
A. Unused Commitment Fees. Company agrees to pay to Administrative
Agent, for distribution to each Lender in proportion to that Lender's
Pro Rata Share, commitment fees for the period from and including the Closing
Date to and excluding the Commitment Termination Date equal to (i) the average
of the daily excess of the Commitments over the sum of the aggregate principal
amount of Revolving Loans outstanding plus the Letter of Credit Usage multiplied
by (ii) the Applicable Commitment Fee Percentage, such commitment fees to be
calculated on the basis of a 365-day or 366-day year, as the case may be, and
the actual number of days elapsed and to be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, commencing on the
first such date to occur after the Closing Date, and on the Commitment
Termination Date.
B. Additional Fees.
Company agrees to pay such other fees at such times as are set
forth in the Fee Letter.
2.4 Payments, Prepayments and Reductions in Commitments; General Provisions
Regarding Payments.
A. Scheduled and Mandatory Reductions of Commitments and Mandatory
Prepayments.
(i) Scheduled Commitment Reduction. The Commitments shall be
permanently reduced in eight equal semi-annual installments of
$15,000,000 each, effective on June 30 and December 31 of each year
commencing with the December 31 of the year in which the Actual
Reduction Commencement Date occurs; provided that all amounts owed by
Company hereunder shall in any event be paid in full no later than the
Commitment Termination Date; provided further that the scheduled
reductions of the Commitments set forth above shall be adjusted in
connection with any voluntary reductions of the Commitments in
accordance with subsection 2.4B(ii); provided still further that if the
Commitments
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are reduced by Company's repayment of all amounts owed to a Refusing
Lender pursuant to subsection 2.1F(ii)(X) or as a result of a mandatory
reduction in the Commitments pursuant to subsection 2.4A(ii), then the
amount of such Refusing Lender's Commitment or mandatory Commitment
reduction shall be applied to reduce each of the scheduled reductions
set forth above on a pro rata basis.
(ii) Mandatory Prepayments and Mandatory Reductions of Revolving
Loan Commitments.
(a) Prepayments and Reductions from Asset Sales. If
Company or any of its Subsidiaries receives Cash Proceeds equal
to or in excess of $2,500,000 from any Asset Sale, (X) Company
shall prepay first the Swing Line Loans to the full extent
thereof and second the Revolving Loans, and (Y) the Revolving
Loan Commitments shall be permanently reduced, in the case of
either clause (X) or clause (Y) or, if such Cash Proceeds
exceed the amount of the outstanding Swing Line Loans and are
also applied to prepay Revolving Loans, in the case of both
clauses (X) and (Y), in an aggregate amount equal to the Net
Cash Proceeds from such Asset Sale; provided that Company's
obligation to make such a prepayment and the corresponding
reduction of the Revolving Loan Commitments shall occur with
respect to any portion of such Cash Proceeds on the earlier of
(i) the second Business Day following a determination by a
Responsible Officer that such portion of such Cash Proceeds
will not be invested in assets or property of a Related
Business or (ii) 270 days after the receipt of such Cash
Proceeds, if they have not been so invested in a Related
Business; provided further that in the case of Asset Sales
generating Net Cash Proceeds of less than $2,500,000, Company
may postpone making such prepayment until the second Business
Day following receipt of Cash Proceeds which, together with all
such proceeds received from Asset Sales since the Closing Date
or the most recent payment made pursuant to this subsection
2.4A(ii)(a), exceeds $6,000,000. Concurrently with any
prepayment of the Loans and/or reduction of the Revolving Loan
Commitments pursuant to this subsection 2.4A(ii)(a), Company
shall deliver to Agent an Officers' Certificate demonstrating
the derivation of the Net Cash Proceeds from the correlative
Asset Sale from the gross sales price thereof. In the event
that Company shall, at any time after receipt of Cash Proceeds
from any Asset Sale requiring a prepayment or a reduction of
the Revolving Loan Commitments pursuant to this subsection
2.4A(ii)(a), determine that the prepayments and/or reductions
of the Revolving Loan Commitments previously made in respect of
such Asset Sale were in an aggregate amount less than that
required by the terms of this subsection 2.4A(ii)(a), Company
shall promptly make an additional prepayment of the Swing Line
Loans or Revolving Loans, as the case may be (and the Revolving
Loan Commitments shall be permanently reduced), in the manner
described above in an amount equal to the amount of any such
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deficit, and Company shall concurrently therewith deliver to
Agent an Officers' Certificate demonstrating the derivation of
the additional Net Cash Proceeds resulting in such deficit. Any
mandatory reduction of the Revolving Loan Commitments pursuant
to this subsection 2.4A(ii)(a) shall be applied to reduce each
of the scheduled reductions of the Revolving Loan Commitments
set forth in subsection 2.4A(i) on a pro rata basis.
(b) Prepayments Due to the Occurrence of an Event of
Loss. If Company or any of its Subsidiaries receives Cash
Proceeds equal to or in excess of $2,500,000 from any Event of
Loss, (X) Company shall prepay first the Swing Line Loans to
the full extent thereof and second the Revolving Loans, and (Y)
the Revolving Loan Commitments shall be permanently reduced, in
the case of either clause (X) or clause (Y) or, if such Cash
Proceeds exceed the amount of the outstanding Swing Line Loans
and are also applied to prepay Revolving Loans, in the case of
both clauses (X) and (Y), in an aggregate amount for the Swing
Line Loans and the Revolving Loans equal to the Net Cash
Proceeds from such Event of Loss; provided that Company's
obligation to make such a prepayment and the corresponding
reduction of the Revolving Loan Commitments shall occur with
respect to any portion of such Cash Proceeds on the earlier of
(i) the second Business Day following a determination by a
Responsible Officer that such portion of such Cash Proceeds
will not be invested in assets or property of a Related
Business or (ii) 270 days after the receipt of such Cash
Proceeds, if they have not been so invested in a Related
Business; provided further that in the case of any Event of
Loss generating Net Cash Proceeds of less than $2,500,000,
Company may postpone making such prepayment until the second
Business Day following receipt of Cash Proceeds which, together
with all such proceeds received from Events of Loss since the
Closing Date or the most recent payment made pursuant to this
subsection 2.4A(ii)(b), exceeds $6,000,000. Concurrently with
any prepayment of the Loans and/or reduction of the Revolving
Loan Commitments pursuant to this subsection 2.4A(ii)(b),
Company shall deliver to Agent an Officers' Certificate
demonstrating the derivation of the Net Cash Proceeds from the
correlative Event of Loss. In the event that Company shall, at
any time after receipt of Cash Proceeds from any Event of Loss
requiring a prepayment or a reduction of the Revolving Loan
Commitments pursuant to this subsection 2.4A(ii)(b), determine
that the prepayments and/or reductions of the Revolving Loan
Commitments previously made in respect of such Event of Loss
were in an aggregate amount less than that required by the
terms of this subsection 2.4A(ii)(b), Company shall promptly
make an additional prepayment of the Swing Line Loans or
Revolving Loans, as the case may be (and the Revolving Loan
Commitments shall be permanently reduced), in the manner
described above in an amount equal to the amount of any such
deficit, and Company shall concurrently therewith deliver to
Agent an Officers' Certificate
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demonstrating the derivation of the additional Net Cash
Proceeds resulting in such deficit. Any mandatory reduction of
the Revolving Loan Commitments pursuant to this subsection
2.4A(ii)(b) shall be applied to reduce each of the scheduled
reductions of the Revolving Loan Commitments set forth in
subsection 2.4A(i) on a pro rata basis.
(c) Prepayments Due to Scheduled Reductions of
Revolving Loan Commitments. On each date on which the
Commitments are scheduled to be reduced pursuant to subsection
2.4A(i), Company shall pay the Loans to the extent necessary so
that aggregate outstanding Loans and Letters of Credit do not
exceed the amount of the Commitments after giving effect to the
reduction made on such date.
B. Voluntary Prepayments and Voluntary Reductions in Commitments.
(i) Voluntary Prepayments. Company may, upon written or
telephonic notice to Administrative Agent on or prior to 10:00 A.M.
(Pacific time) on the date of prepayment, which notice, if telephonic,
shall be promptly confirmed in writing, at any time and from time to
time prepay any Swing Line Loan on any Business Day in whole or in part
in an aggregate minimum amount of $500,000 and integral multiples of
$100,000 in excess of that amount. Company may, upon not less than one
Business Day's prior written or telephonic notice, in the case of Base
Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 10:00 A.M. (Pacific time) on the date required
and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time prepay any
Revolving Loans on any Business Day in whole or in part in an aggregate
minimum amount of $1,000,000 and integral multiples of $100,000 in
excess of that amount; provided, however, that a Eurodollar Rate Loan
may only be prepaid on the expiration of the Interest Period applicable
thereto. Any voluntary prepayments made pursuant to this subsection
2.4B(i) shall be applied to the type of Loan directed by Company in the
applicable notice of prepayment provided that in the event Company
fails to specify the Loans to which any such prepayment shall be
applied, such prepayment shall be applied first to repay outstanding
Swing Line Loans to the full extent thereof and second to repay
outstanding Revolving Loans to the full extent thereof.
(ii) Voluntary Reductions of Commitments. Company may, upon not
less than three Business Days' prior written or telephonic notice
confirmed in writing to Administrative Agent (which original written or
telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time
to time terminate in whole or permanently reduce in part, without
premium or penalty, the Commitments in an amount up to
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the amount by which the Commitments exceed the Total Utilization of
Commitments at the time of such proposed termination or reduction;
provided that any such partial reduction of the Commitments shall be in
an aggregate minimum amount of $1,000,000 and integral multiples of
$100,000 in excess of that amount. Company's notice to Administrative
Agent shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and
such termination or reduction of the Commitments shall be effective on
the date specified in Company's notice and shall reduce the Commitment
of each Lender proportionately to its Pro Rata Share. Any such
voluntary reduction of the Commitments shall be applied as directed by
Company to scheduled reductions of the Commitments set forth in
subsection 2.4A(i).
C. Application of Prepayments to Base Rate Loans and Eurodollar Rate
Loans. Considering Revolving Loans being prepaid separately, any prepayment
thereof shall be applied first to Base Rate Loans to the full extent thereof
before application to Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by Company pursuant to
subsection 2.6D.
D. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Notes, if any, shall be made in Dollars in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition,
and delivered to Administrative Agent not later than 10:00 A.M.
(Pacific time) on the date due at the Funding and Payment Office for
the account of Lenders; funds received by Administrative Agent after
that time on such due date shall be deemed to have been paid by Company
on the next succeeding Business Day. Company hereby authorizes
Administrative Agent to charge its accounts with Administrative Agent
in order to cause timely payment to be made to Administrative Agent of
all principal, interest, fees, expenses and other amounts due hereunder
(subject to sufficient funds being available in its accounts for that
purpose).
(ii) Application of Payments to Principal and Interest. Except
as set forth in subsection 2.2C, all payments in respect of the
principal amount of any Loan shall include payment of accrued interest
on the principal amount being repaid or prepaid, and all such payments
shall be applied to the payment of interest before application to
principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned among all outstanding Revolving
Loans to which such payments relate, in each case proportionately to
Lenders' respective Pro Rata Shares. Administrative Agent shall
promptly distribute to each Lender, at its primary address set forth
below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all
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such payments received by Administrative Agent and the commitment fees
of such Lender when received by Administrative Agent pursuant to
subsection 2.3A. Notwithstanding the foregoing provisions of this
subsection 2.4D(iii), if (i) pursuant to the provisions of subsection
2.6C, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender, (ii) any Affected Lender makes Base Rate Loans in
lieu of its Pro Rata Share of any Eurodollar Rate Loans, (iii) Company
repays all amounts owed to a Refusing Lender pursuant to subsection
2.1F(ii)(X), or (iv) Company prepays all amounts owed to a Former
Lender after the expiration of the applicable Withdrawal Period
pursuant to subsection 10.1B(iii), then Administrative Agent shall
give effect thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business
Day, such payment shall be made on the next succeeding Business Day
except as set forth in subsection 2.2B(iii), and such extension of time
shall be included in the computation of the payment of interest
hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Revolving Loans evidenced by that Revolving Note and all
principal payments previously made thereon and of the date to which
interest thereon has been paid; provided that the failure to make (or
any error in the making of) a notation of any Revolving Loan made under
such Revolving Note shall not limit or otherwise affect the obligations
of Company hereunder to the extent of Company's actual indebtedness or
under such Revolving Note with respect to any Revolving Loan or any
payments of principal or interest on such Revolving Note.
2.5 Use of Proceeds.
A. Use of Proceeds. The proceeds of the Loans (including the Swing
Line Loans) shall be applied by Company for general corporate purposes;
provided, however, that Company may not apply all or any portion of the proceeds
of the Loans to fund, directly or indirectly, a Hostile Acquisition.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
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2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 8:30 A.M. (Pacific time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
If, at any time following such a determination, Administrative Agent determines
that such circumstances that affected the interbank Eurodollar market no longer
exist, it shall promptly notify Company and each Lender thereof, at which time
the provisions of clauses (i) and (ii) above shall no longer be effective.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the interbank Eurodollar market
or the position of such Lender in that market, then, and in any such event, such
Lender shall be an "Affected
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Lender" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as,
or to convert Loans to, Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected
Loans") shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender or the occurrence of an event described in subsection 2.6C) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment or other principal payment or
any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any other
default by Company in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement.
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E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of a Potential Event of Default of which it is aware to
its Best Knowledge or an Event of Default, (i) Company may not elect to have a
Loan be made or maintained as, or converted to, a Eurodollar Rate Loan after the
expiration of any Interest Period then in effect for that Loan and (ii) subject
to the provisions of subsection 2.6D, any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to a requested borrowing
or conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall reasonably
determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order adopted after the date hereof, or any
change therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by such
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to
any additional Tax (other than any Tax on the overall net income of
such Lender) with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
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(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected
in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a
Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the interbank Eurodollar
market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other Loan Documents shall be paid free
and clear of and (except to the extent required by law) without any
deduction or withholding on account of any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld
or assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of
Company or by any federation or organization of which the United States
of America or any such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by Company to Administrative
Agent or any Lender under any of the Loan Documents:
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(a) Company shall notify Administrative Agent of any
such requirement or any change in any such requirement as soon
as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on Company) for its own account or
(if that liability is imposed on Administrative Agent or such
Lender, as the case may be) on behalf of and in the name of
Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the
making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from which it
is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which
it is required by clause (b) above to pay, Company shall
deliver to Administrative Agent evidence satisfactory to the
other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing or
other authority.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of
any juris- diction other than the United States or any state or
other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "Non-US Lender") shall deliver to
Administrative Agent for transmission to Company, on or prior
to the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Lender Assignment
Agreement pursuant to which it becomes a Lender (in the case of
each other Lender), and at such other times as may be necessary
in the determination of Company or Administrative Agent (each
in the reasonable exercise of its discretion), (1) two original
copies of Internal Revenue Service Form 1001 or 4224 (or any
successor forms), properly completed and duly executed by such
Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is
not subject to deduction or withholding of United States
federal income tax with respect to any payments to such Lender
of principal, interest, fees or other amounts payable under any
of the Loan Documents or (2) if such Lender is not a "bank" or
other Person described in Section 881(c)(3) of the Internal
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Revenue Code and cannot deliver either Internal Revenue Service
Form 1001 or 4224 pursuant to clause (1) above, a Certificate
re Non-Bank Status together with two original copies of
Internal Revenue Service Form W-8 (or any successor form),
properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued
thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax
with respect to any payments to such Lender of interest payable
under any of the Loan Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to time after the initial
delivery by such Lender of such forms, certificates or other
evidence, whenever a lapse in time or change in circumstances
renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, such Lender shall (1)
deliver to Administrative Agent for transmission to Company two
new original copies of Internal Revenue Service Form 1001 or
4224, or a Certificate re Non-Bank Status and two original
copies of Internal Revenue Service Form W-8, as the case may
be, properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required in order to confirm or establish that such Lender is
not subject to deduction or withholding of United States
federal income tax with respect to payments to such Lender
under the Loan Documents or (2) immediately notify
Administrative Agent and Company of its inability to deliver
any such forms, certificates or other evidence; provided that
Company may continue to rely on any form, certificate or other
evidence delivered to it pursuant to subsection 2.7B(iii)(a)
until such time as it has received information pursuant to this
subsection 2.7B(iii)(b) that is intended to replace or supplant
the information provided on any such previously delivered form
or certificate.
(c) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to satisfy
the requirements of subsection 2.7B(iii)(a); provided that if
such Lender shall have satisfied such requirements on the
Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Lender Assignment
Agreement pursuant to which it became a Lender (in the case of
each other Lender), nothing in this subsection 2.7B(iii)(c)
shall relieve Company of its obligation to pay any additional
amounts pursuant to clause (c) of subsection 2.7B(ii) in the
event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change
in the interpretation, administration or application thereof,
such
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Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to
withholding as described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall reasonably have
determined that the adoption, effectiveness, phase-in or applicability after the
date hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or Letters of
Credit to a level below that which such Lender or such controlling corporation
could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Company from
such Lender of the statement referred to in the next sentence, Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction. Such
Lender shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
2.8 Obligation of Lenders and Administrative Agent to Mitigate.
Each Lender and Administrative Agent agree that, as promptly as
practicable after the officer of such Lender or Administrative Agent responsible
for administering the Loans or Letters of Credit of such Lender or
Administrative Agent becomes aware of the occurrence of an event or the
existence of a condition that would cause such Lender to become an Affected
Lender or that would entitle such Lender to receive payments under subsection
2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Administrative Agent and any applicable legal or
regulatory restrictions, use reasonable efforts (i) to make, issue, fund or
maintain the Commitment of such Lender or Administrative Agent or the affected
Loans of such Lender or Administrative Agent through another lending or letter
of credit office of such Lender or Administrative Agent, or (ii) take such other
measures as such Lender or Administrative Agent may deem reasonable, if as a
result thereof the circumstances which would cause such Lender or Administrative
Agent to be an Affected Lender would cease to exist or the additional amounts
which would otherwise be required to be paid to such Lender or Administrative
Agent pursuant to subsection 2.7
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or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Administrative Agent in its sole discretion, the making, issuing,
funding or maintaining of such Commitment or Loans or Letters of Credit through
such other lending or letter of credit office or in accordance with such other
measures, as the case may be, would not otherwise materially adversely affect
such Commitment or Loans or Letters of Credit or the interests of such Lender or
Administrative Agent; provided that such Lender or Administrative Agent will not
be obligated to utilize such other lending or letter of credit office pursuant
to this subsection 2.8 unless Company agrees to pay all reasonable incremental
expenses incurred by such Lender or Administrative Agent as a result of
utilizing such other lending or letter of credit office as described in clause
(i) above. A certificate as to the amount of any such expenses payable by
Company pursuant to this subsection 2.8 (setting forth in reasonable detail the
basis for requesting such amount) submitted by such Lender or Administrative
Agent to Company (with a copy to Administrative Agent) shall be conclusive
absent manifest error.
2.9 Replacement of Lenders.
In the event Company is required under the provisions of
subsection 2.7 or subsection 3.6 to make payments to any Lender, Company may,
within 120 days after the date any notice or demand requiring such payment under
subsection 2.7 or subsection 3.6 is given and so long as no Event of Default
shall have occurred and be continuing, elect to terminate such Lender as a party
to this Agreement; provided that, concurrently with such termination, (i)
Company shall pay that Lender, without duplication, all principal, interest and
fees and other amounts owed to such Lender through such date of termination,
(ii) another Lender or Eligible Assignee shall agree, as of such date, to become
a Lender for all purposes under this Agreement (whether by assignment or
amendment, if necessary) and to assume all obligations under this Agreement of
the Lender to be terminated as of such date and (iii) all documents and
supporting materials necessary, in the judgment of Administrative Agent to
evidence the substitution of such Lender shall have been received and approved
by Administrative Agent as of such date.
Section 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.
A. Letters of Credit. In addition to Company requesting that Lenders
make Revolving Loans pursuant to subsection 2.1A and that Swing Line Lender make
Swing Line Loans pursuant to subsection 2.1B, Company may request, in accordance
with the provisions of this subsection 3.1, from time to time during the period
from the Closing Date to but excluding the tenth Business Day prior to the
Commitment Termination Date, that Administrative Agent issue Letters of Credit
for the account of Company for the purposes specified in the definition of
Standby Letters of Credit. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, Administrative Agent shall issue such Letters of
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Credit in accordance with the provisions of this subsection 3.1; provided that
Company shall not request that Administrative Agent issue (and Administrative
Agent shall not issue):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Commitments would exceed the
Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $10,000,000;
(iii) any Letter of Credit having an expiration date later than
the earlier of (a) the fifth Business Day prior to the Commitment
Termination Date and (b) the date which is one year from the date of
issuance of such Letter of Credit; provided that the immediately
preceding clause (b) shall not prevent Administrative Agent from
agreeing that a Letter of Credit will automatically be extended for one
or more successive periods not to exceed one year each unless
Administrative Agent elects not to extend for any such additional
period; or
(iv) any Letter of Credit denominated in a currency other than
Dollars.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance
of a Letter of Credit, it shall deliver to Administrative Agent a
Notice of Issuance of Letter of Credit substantially in the form of
Exhibit IV annexed hereto no later than 10:00 A.M. (Pacific time) at
least 5 Business Days, or in each case such shorter period as may be
agreed to by Administrative Agent in any particular instance, in
advance of the proposed date of issuance. The Notice of Issuance of
Letter of Credit shall specify (a) the proposed date of issuance (which
shall be a Business Day), (b) the face amount of the Letter of Credit,
(c) the expiration date of the Letter of Credit, (d) the name and
address of the beneficiary, and (e) the verbatim text of the proposed
Letter of Credit or the proposed terms and conditions thereof,
including a precise description of any documents and the verbatim text
of any certificates to be presented by the beneficiary which, if
presented by the beneficiary prior to the expiration date of the Letter
of Credit, would require Administrative Agent to make payment under the
Letter of Credit; provided that Administrative Agent, in its reasonable
discretion, may require changes in the text of the proposed Letter of
Credit or any such documents or certificates; and provided, further
that no Letter of Credit shall require payment against a conforming
draft to be made thereunder on the same business day (under the laws of
the jurisdiction in which the office of Administrative Agent to which
such draft is required to be presented is located) that such draft is
presented if such presentation is
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made after 10:00 A.M. (in the time zone of such office of
Administrative Agent) on such business day.
Company shall notify Administrative Agent prior to the
issuance of any Letter of Credit in the event that any of the matters
to which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit is no longer true and correct as of the
proposed date of issuance of such Letter of Credit, and upon the
issuance of any Letter of Credit Company shall be deemed to have
re-certified, as of the date of such issuance, as to the matters to
which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit.
(ii) Issuance of Letter of Credit. Upon satisfaction or waiver
(in accordance with subsection 10.6) of the conditions set forth in
subsection 4.3, Administrative Agent shall issue the requested Letter
of Credit in accordance with Administrative Agent's standard operating
procedures.
(iii) Notification to Lenders. Upon the issuance of any Letter
of Credit Administrative Agent shall notify each other Lender of such
issuance, which notice shall be accompanied by a copy of such Letter of
Credit. Promptly after receipt of such notice, Administrative Agent
shall notify each Lender of the amount of such Lender's respective
participation in such Letter of Credit, determined in accordance with
subsection 3.1C.
(iv) Reports to Lenders. Within 15 days after the end of each
calendar quarter of Company ending after the Closing Date, so long as
any Letter of Credit shall have been outstanding during such calendar
quarter, Administrative Agent shall deliver to each Lender a report
setting forth the average for such calendar quarter of the daily
maximum amount available to be drawn under the Letters of Credit issued
by Administrative Agent that were outstanding during such calendar
quarter.
C. Lenders' Purchase of Participations in Letters of Credit.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from Administrative
Agent a participation in such Letter of Credit and drawings thereunder in an
amount equal to such Lender's Pro Rata Share of the maximum amount which is or
at any time may become available to be drawn thereunder.
3.2 Letter of Credit Fees.
Company agrees to pay the following amounts to Administrative
Agent with respect to Letters of Credit issued by it:
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(i) on the date of issuance and of each extension thereof of
each Letter of Credit, (a) a non-refundable letter of credit fee equal
to the Applicable Eurodollar Margin at such time multiplied by the
maximum amount available to be drawn under such Letter of Credit and
(b) a non-refundable fronting letter of credit fee equal to 0.25% per
annum of the maximum amount available to be drawn under such Letter of
Credit, in each case computed on the basis of a 360- day year for the
actual number of days in the term of such Letter of Credit, including
any extension thereof;
(ii) with respect to the amendment or transfer of each Letter
of Credit and each drawing made thereunder (without duplication of the
fees payable under clause (i) above), documentary and processing
charges in accordance with Administrative Agent's standard schedule for
such charges in effect at the time of such issuance, amendment,
transfer or drawing, as the case may be and, to the extent such
amendment increases the maximum amount available to be drawn under any
such Letter of Credit, increased fees in accordance with the formula
set forth in subsection 3.2(i)(a) above.
Promptly upon receipt by Administrative Agent of any amount described in clause
(i)(a) of this subsection 3.2, Administrative Agent shall distribute to each
other Lender its Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit.
A. Responsibility of Administrative Agent With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, Administrative Agent shall be responsible only to determine
that the documents and certificates required to be delivered under such Letter
of Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit.
B. Reimbursement by Company of Amounts Drawn Under Letters of Credit.
In the event Administrative Agent has determined to honor a drawing under a
Letter of Credit issued by it, Administrative Agent shall immediately notify
Company, and Company shall reimburse Administrative Agent on or before the
Business Day immediately following the date on which such drawing is honored
(the "Reimbursement Date") in an amount in Dollars and in same day funds equal
to the amount of such drawing; provided that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent prior to 8:30 A.M. (Pacific time) on the date of
such drawing that Company intends to reimburse Administrative Agent for the
amount of such drawing with funds other than the proceeds of Revolving Loans,
Company shall be deemed to have given a timely Notice of Borrowing to
Administrative Agent requesting Lenders to make Revolving Loans that are Base
Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount
of such drawing and (ii) subject to satisfaction or waiver of the conditions
specified in subsection 4.2B, Lenders shall, on the Reimbursement Date, make
Revolving
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Loans that are Base Rate Loans in the amount of such drawing, the proceeds of
which shall be applied directly by Administrative Agent to reimburse
Administrative Agent for the amount of such drawing; and provided, further that
if for any reason proceeds of Revolving Loans are not received by Administrative
Agent on the Reimbursement Date in an amount equal to the amount of such
drawing, Company shall reimburse Administrative Agent, on demand, in an amount
in same day funds equal to the excess of the amount of such drawing over the
aggregate amount of such Revolving Loans, if any, which are so received. Nothing
in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make Revolving Loans on the terms and conditions set forth in this
Agreement, and Company shall retain any and all rights it may have against any
Lender resulting from the failure of such Lender to make such Revolving Loans
under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Drawings Under Letters of Credit.
(i) Payment by Lenders. In the event that Company shall fail
for any reason to reimburse Administrative Agent as provided in
subsection 3.3B in an amount equal to the amount of any drawing honored
by Administrative Agent under a Letter of Credit issued by it,
Administrative Agent shall promptly notify each other Lender of the
unreimbursed amount of such drawing and of such other Lender's
respective participation therein based on such Lender's Pro Rata Share.
Each Lender shall make available to Administrative Agent an amount
equal to its respective participation, in Dollars and in same day
funds, at the office of Administrative Agent specified in such notice,
not later than 1:30 P.M. (Pacific time) on the first business day
(under the laws of the jurisdiction in which such office of
Administrative Agent is located) after the date notified by
Administrative Agent. In the event that any Lender fails to make
available to Administrative Agent on such business day the amount of
such Lender's participation in such Letter of Credit as provided in
this subsection 3.3C, Administrative Agent shall be entitled to recover
such amount on demand from such Lender together with interest thereon
at the rate customarily used by Administrative Agent for the correction
of errors among banks for three Business Days and thereafter at the
Base Rate. Nothing in this subsection 3.3C shall be deemed to prejudice
the right of any Lender to recover from Administrative Agent any
amounts made available by such Lender to Administrative Agent pursuant
to this subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by Administrative Agent in respect of
which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of Administrative Agent.
(ii) Distribution to Lenders of Reimbursements Received From
Company. In the event Administrative Agent shall have been reimbursed
by other Lenders pursuant to subsection 3.3C(i) for all or any portion
of any drawing honored by Administrative Agent under a Letter of Credit
issued by it, Administrative Agent shall distribute to each other
Lender which has paid all
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amounts payable by it under subsection 3.3C(i) with respect to such
drawing such other Lender's Pro Rata Share of all payments subsequently
received by Administrative Agent from Company in reimbursement of such
drawing when such payments are received. Any such distribution shall be
made to a Lender at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such
Lender may request.
D. Interest on Amounts Drawn Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to
Administrative Agent, with respect to drawings made under any Letters
of Credit issued by it, interest on the amount paid by Administrative
Agent in respect of each such drawing from the date of such drawing to
but excluding the date such amount is reimbursed by Company (including
any such reimbursement out of the proceeds of Revolving Loans pursuant
to subsection 3.3B) at a rate equal to (a) for the period from the date
of such drawing to but excluding the Reimbursement Date, the rate then
in effect under this Agreement with respect to Revolving Loans that are
Base Rate Loans and (b) thereafter, a rate which is 2% per annum in
excess of the rate of interest otherwise payable under this Agreement
with respect to Revolving Loans that are Base Rate Loans. Interest
payable pursuant to this subsection 3.3D(i) shall be computed on the
basis of a 365-day or 366-day year, as the case may be, for the actual
number of days elapsed in the period during which it accrues and shall
be payable on demand or, if no demand is made, on the date on which the
related drawing under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Administrative Agent.
Promptly upon receipt by Administrative Agent of any payment of
interest pursuant to subsection 3.3D(i) with respect to a drawing under
a Letter of Credit issued by it, (a) Administrative Agent shall
distribute to each other Lender, out of the interest received by
Administrative Agent in respect of the period from the date of such
drawing to but excluding the date on which Administrative Agent is
reimbursed for the amount of such drawing (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B), the amount that such other Lender would have been
entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been made under such
Letter of Credit, and (b) in the event Administrative Agent shall have
been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all
or any portion of such drawing, Administrative Agent shall distribute
to each other Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such drawing such other Lender's Pro
Rata Share of any interest received by Administrative Agent in respect
of that portion of such drawing so reimbursed by other Lenders for the
period from the date on which such Administrative Agent was so
reimbursed by other Lenders to and including the date on which such
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portion of such drawing is reimbursed by Company. Any such distribution
shall be made to a Lender at its primary address set forth below its
name on the appropriate signature page hereof or at such other address
as such Lender may request.
3.4 Obligations Absolute.
The obligation of Company to reimburse Administrative Agent for
drawings made under the Letters of Credit issued by it and to repay any
Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations
of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), Administrative Agent or
other Lender or any other Person or, in the case of a Lender, against
Company, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between Company or one of its Subsidiaries and
the beneficiary for which any Letter of Credit was procured);
(iii) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by Administrative Agent under any Letter of Credit
against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or
any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document
by any party thereto;
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing; or
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(viii) the fact that an Event of Default or a Potential Event
of Default shall have occurred and be continuing;
provided, in each case, that payment by Administrative Agent under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of Administrative Agent under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 Indemnification; Nature of Administrative Agent's Duties.
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless Administrative Agent from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and Allocated Costs of Internal
Counsel) which Administrative Agent may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by
Administrative Agent, other than as a result of (a) the gross negligence or
willful misconduct of Administrative Agent as determined by a final judgment of
a court of competent jurisdiction or (b) subject to the following clause (ii),
the wrongful dishonor by Administrative Agent of a proper demand for payment
made under any Letter of Credit issued by it or (ii) the failure of
Administrative Agent to honor a drawing under any such Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or governmental authority (all such acts
or omissions herein called "Governmental Acts").
B. Nature of Administrative Agent's Duties. As between Company and
Administrative Agent, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by Administrative Agent by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, Administrative Agent shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of Administrative Agent,
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including without limitation any Governmental Acts, and none of the above shall
affect or impair, or prevent the vesting of, any of Administrative Agent's
rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions set forth in the first paragraph of this subsection 3.5B,
any action taken or omitted by Administrative Agent under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put Administrative
Agent under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against
Administrative Agent for any liability arising solely out of the gross
negligence or willful misconduct of such Administrative Agent, as determined by
a final judgment of a court of competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
In the event that Administrative Agent or any Lender shall
determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by Administrative Agent
or Lenders with any guideline, request or directive issued or made after the
date hereof by any central bank or other governmental or quasi-governmental
authority (whether or not having the force of law):
(i) subjects Administrative Agent or such Lender (or its
applicable lending or letter of credit office) to any additional Tax
(other than any Tax on the overall net income of Administrative Agent
or such Lender) with respect to the issuing or maintaining of any
Letters of Credit or the purchasing or maintaining of any
participations therein or any other obligations under this Section 3,
whether directly or by such being imposed on or suffered by
Administrative Agent;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement in respect of any Letters of Credit
issued by Administrative Agent or participations therein purchased by
any Lender; or
(iii) imposes any other condition (other than with respect to a
Tax matter) on or affecting Administrative Agent or such Lender (or its
applicable
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lending or letter of credit office) regarding this Section 3 or any
Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to Administrative
Agent or such Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by Administrative Agent
or such Lender (or its applicable lending or letter of credit office) with
respect thereto; then, in any case, Company shall promptly pay to Administrative
Agent or such Lender, upon receipt of the statement referred to in the next
sentence, such additional amount or amounts as may be necessary to compensate
Administrative Agent or such Lender for any such increased cost or reduction in
amounts received or receivable hereunder. Administrative Agent or such Lender
shall deliver to Company a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to Administrative Agent or
such Lender under this subsection 3.6, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Revolving Loans and Swing
Line Loans and the issuance of Letters of Credit hereunder are subject to the
satisfaction of the following conditions.
4.1 Conditions to Initial Revolving Loans and Swing Line Loans.
The obligations of Lenders to make any Revolving Loans or Swing
Line Loans to be made on the Closing Date are, in addition to the conditions
precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. Loan Documents. On or before the Closing Date, all Loan Documents
shall have been prepared by counsel to Administrative Agent and shall be in form
and substance satisfactory to Administrative Agent and Lenders.
B. Company Documents. On or before the Closing Date, Company shall
deliver or cause to be delivered to Lenders (or to Administrative Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following, each, unless otherwise noted, dated the
Closing Date:
(i) Certified copies of its charter documents, together with a
good standing certificate from the Secretary of State of the State of
Nevada and each state in which it is qualified as a foreign corporation
to do business and, to the extent generally available, a certificate or
other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing
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authority of each of such states, each dated a recent date prior to
the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by
its secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement
and the other Loan Documents to which it is a party, certified as of
the Closing Date by its secretary or an assistant secretary as being in
full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents to which it is
a party;
(v) Executed originals of this Agreement, any Notes drawn to
the order of each Lender and Swing Line Lender and with appropriate
insertions and the other Loan Documents to which it is a party; and
(vi) Such other documents as Administrative Agent may
reasonably request.
C. Loan Party Documents. On or before the Closing Date, each Loan
Party shall deliver or cause to be delivered to Lenders (or to Administrative
Agent for Lenders with sufficient originally executed copies, where appropriate,
for each Lender and its counsel) the following, each, unless otherwise noted,
dated the Closing Date:
(i) Certified copies of its Certificate or Articles of
Incorporation or other charter documents, together with a good standing
certificate from the Secretary of State of the state of its
incorporation and each other state in which it is qualified as a
foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the
appropriate taxing authority of each of such states, each dated a
recent date prior to the Closing Date;
(ii) Copies of its Bylaws, if any, certified as of the Closing
Date by its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, certified as of the Closing Date by
its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment;
(iv) Signature and incumbency certificates of its officers
executing the Loan Documents to which it is a party;
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(v) Executed originals of the Loan Documents to which it is a
party; and
(vi) Such other documents as Administrative Agent may
reasonably request.
D. Opinions of Company's Counsel. Lenders and their respective counsel
shall have received (i) originally executed copies of the favorable written
opinion of Horn, Goldberg, Gorny, Daniels, Plackter & Weiss, counsel for
Company, in form and substance reasonably satisfactory to Administrative Agent
and its counsel, dated as of the Closing Date and setting forth substantially
the matters in the opinions designated in Exhibit IX-A annexed hereto and as to
such other matters as Administrative Agent acting on behalf of Lenders may
reasonably request and (ii) opinions from special counsel to Company (including
admiralty counsel) with respect to such matters governed by the laws of the
states of Nevada, Illinois, Louisiana, Indiana, Kentucky, Missouri and by
maritime law as Administrative Agent acting on behalf of Lenders may reasonably
request.
E. Opinions of Administrative Agent's Counsel. Lenders shall have
received originally executed copies of one or more favorable written opinions of
O'Melveny & Myers, counsel to Administrative Agent, dated as of the Closing
Date, substantially in the form of Exhibit IX-B annexed hereto and as to such
other matters as Administrative Agent acting on behalf of Lenders may reasonably
request.
F. Perfection of Security Interests. Loan Parties shall have taken or
caused to be taken such actions in such a manner so that Administrative Agent,
on behalf of Lenders, or the Trustee, solely for the benefit of the
Administrative Agent, on behalf of Lenders, as the case may be, each has a valid
and perfected first priority security interest in all Collateral in which a Lien
is purported to be granted by the Collateral Documents. Such actions shall
include, without limitation: (i) the delivery pursuant to the applicable
Collateral Documents of all instruments (properly endorsed in blank for
transfer, all in form and substance satisfactory to Administrative Agent)
representing all shares of the capital stock of each Guarantor; (ii) the
delivery to Administrative Agent of Uniform Commercial Code financing
statements, executed by Company as to the Collateral granted by Company for all
jurisdictions as may be necessary or desirable to perfect Administrative Agent's
security interest in such Collateral; (iii) evidence that counterparts of the
Mortgages were recorded in all locations to the extent necessary or desirable,
in the reasonable judgment of Administrative Agent, to effectively create a
valid and enforceable first priority Lien (subject only to Permitted
Encumbrances) on the Premises (including the Improvements constructed thereon)
in favor of Administrative Agent for the benefit of Lenders; (iv) evidence
reasonably satisfactory to Administrative Agent that all other filings,
recordings and other actions Administrative Agent deems necessary or advisable
to establish, preserve and perfect the first priority Liens granted to
Administrative Agent in the Collateral shall have been made, including, without
limitation, with respect to any Facilities leased by any Loan Party, evidence
that all consents necessary to or, in the opinion of Administrative Agent,
advisable for the
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granting of a Lien on such Loan Party's interest have been obtained from the
landlord owning such Facilities and that any amendment or other modification to
the leases applicable to such Facilities deemed advisable by Administrative
Agent to make them financable shall have been executed and delivered by all
necessary parties; and (v) the Ship Mortgages shall have been duly filed with
the appropriate office of the United States Coast Guard and shall constitute a
duly perfected first "preferred mortgage" lien on such Ship or US Documented
Barge in favor of the Trustee, solely for the benefit of Administrative Agent on
behalf of Lenders, within the meaning of the Ship Mortgage Act of 1920, as
amended and codified in Chapter 313 of Title 46 of the United States Code.
G. Title Policy. Lenders shall have received an American Land Title
Association Extended Coverage Loan Policy (1990, without modification, revision
or amendment) (the "Title Policy") (with proof of the payment of the premiums
thereon) or commitment therefor in form and substance acceptable to Lenders
issued by a title company approved by Lenders (the "Title Company"), together
with coinsurance and reinsurance from title insurance companies approved by
Lenders, showing the respective Subsidiary as the owner in fee simple, or the
lessee (in the case of real property leased by such Subsidiary) of its Premises,
and insuring the lien of the Mortgages to be a first lien against each of the
Premises, free and clear of all defects, encumbrances and exceptions, except the
Permitted Encumbrances, together with such affirmative insurance as Lenders may
require. The Title Policy shall contain, among other things:
(i) Full coverage against mechanic's liens (filed and
inchoate);
(ii) A reference to the survey but no survey exceptions except
those theretofore approved in writing by Administrative Agent and its
counsel;
(iii) A variable interest rate endorsement;
(iv) A "revolving credit line" endorsement"; and
(v) A "pending disbursements" clause in substantially the
following form:
"Pending disbursement of the full proceeds of the loan secured
by the deed of trust set forth under Schedule A thereof, this policy
insures only to the extent of the amount actually disbursed but
increases as each disbursement is made in good faith and without
knowledge of any defects in, or objections to, the title up to the face
amount of the policy.
At the time of each disbursement of the proceeds of the loan,
the title must be continued down to such time for possible liens or
objections intervening between the date hereof and the date of such
disbursement."
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H. Flood Insurance. Administrative Agent shall have been provided with
satisfactory evidence, which may be in the form of a letter from an insurance
broker, municipal engineer, or other knowledgeable source unaffiliated with
Company, as to whether (a) any of the Premises are located in an area designated
by the Department of Housing and Urban Development as having special flood or
mudslide hazards, and (b) any of the communities in which any of the Facilities
are located is participating in the National Flood Insurance Program. If both of
the aforesaid conditions exist, Administrative Agent shall receive satisfactory
policies of flood insurance covering the applicable Improvements as required by
the Flood Act.
I. UCC and Judgment Searches. Administrative Agent shall have received
current searches of the UCC filing offices and judgment searches with the
Offices of the Secretary of States of Illinois, Louisiana and Nevada, the local
recorders office in each county or parish in which any of the Premises are
located and elsewhere showing no security interests or judgments affecting the
Facilities or any Collateral except to the extent permitted pursuant to
subsection 7.2.
J. Necessary Consents. On or before the Closing Date, each Loan Party
shall have obtained all consents that are required for the operation of the
Facilities, in each case, and the transactions contemplated under this Agreement
and the other Loan Documents of (i) Illinois Gaming Authorities, Louisiana
Gaming Authorities, Nevada Gaming Authorities and other Governmental Authorities
and (ii) any Person required under any Contractual Obligation of any Loan Party,
all of the foregoing in form and substance satisfactory to Administrative Agent.
K. Fees. Company shall have paid to Administrative Agent, for
distribution (as appropriate) to Administrative Agent and Lenders, the fees
payable on the Closing Date referred to in subsection 2.3.
L. Administrative Agent's Counsel Fees. Company shall have paid the
reasonable fees and disbursements of counsel to Administrative Agent.
M. No Material Adverse Effect. Since March 31, 1994, no Material
Adverse Effect (in the sole opinion of each Lender) shall have occurred.
N. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Administrative Agent an Officers' Certificate, in form
and substance satisfactory to Administrative Agent, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete on and as of the Closing Date to the same extent as though made on and
as of that date and that Company shall have performed all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Administrative Agent and each Lender.
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O. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Administrative Agent and such counsel, and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.
P. Insurance. Administrative Agent shall have received original
binders evidencing Company or one or more of its Subsidiaries as named insured
and original certificates of Policies of Insurance, together with loss payable
and mortgagee endorsements specifically including Administrative Agent and
Lenders as mortgagees, loss payees and additional insureds as required by the
applicable insurance provisions set forth in subsection 6.4B hereof and in
Schedules 6.4(a) and 6.4(b) annexed hereto, section 6 of each of the Mortgages
and within each of the Ship Mortgages under the heading "Vessel Insurance
Requirements and Provisions", accompanied by affidavits, certificates, paid
bills or other documents evidencing that all premium payments are current.
Q. Delivery of Pricing Determination Certificate. Administrative Agent
shall have received a Pricing Determination Certificate calculated utilizing the
most recent financial statements delivered to Administrative Agent.
R. Survey. Administrative Agent shall have received and approved a
current boundary and location survey for each of the Premises each of which must
(i) be certified to Administrative Agent and the Title Company and (ii) meet the
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys
established by ALTA and ACSM in 1992.
S. Environmental Assessment. Administrative Agent shall, within 60 days
of the Closing Date, have received written environmental assessment reports and
other information in form, scope and substance satisfactory to Administrative
Agent, independently prepared by an environmental consultant acceptable to
Administrative Agent, evidencing the results of an environmental assessment
performed for the purpose of assessing current environmental liabilities of
Company and its Subsidiaries (including, without limitation, the environmental
condition of the Premises). If such environmental assessment recommends any
action be taken with respect to any of the Premises, Administrative Agent shall
have received evidence satisfactory to Administrative Agent that such action has
been taken.
T. No Disruption of Financial and Capital Markets. There shall have
been no material adverse change since March 15, 1995 to the syndication markets
for credit facilities similar in nature to this credit facility and there shall
not have occurred and be continuing a material disruption of or material adverse
change in financial, banking or
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capital markets that would have an adverse effect on such syndication market, in
each case as determined by Co-Arrangers in their sole discretion.
U. Financial Statements. Administrative Agent shall have received from
Company its audited financial statements for the period ended March 31, 1995 and
its unaudited financial statements for each subsequent Fiscal Quarter prior to
the Closing Date (excluding the Fiscal Quarter ended June 30, 1995).
V. Appraisals. Administrative Agent shall have received appraisals,
including an appraisal by an independent professional Marine Appraiser, in form,
scope and substance satisfactory thereto and satisfying the requirements of any
applicable laws and regulations concerning the real property Collateral, the
Ships and the Barges securing the Loans.
W. Ship Inspection. Administrative Agent shall have received copies of
current certificates of inspection issued by the United States Coast Guard for
each of the Ships.
X. Title to Ships and Barges. Administrative Agent shall have received
evidence satisfactory in form and substance to Administrative Agent that:
(i) SIRCC, PLC, SSP and PRLLC each have good and valid title to
the Ship or Ships and the Barge or Barges owned by it, free and clear
of all liens, charges, encumbrances and security interests;
(ii) each Ship and each US Documented Barge listed on Schedule
5.5 is subject to a valid certificate of documentation identifying
SIRCC, PLC, SSP or PRLLC, as the case may be, as the registered owner
thereof under the laws and regulations of the United States; and
(iii) SIRCC, PLC, SSP and PRLLC each have all necessary
authority required to own and operate the Ship or Ships and the Barge
or Barges owned by it for such Ships' or Barges' intended purposes.
Y. Leases. Administrative Agent shall have received complete copies of
all leases for any of the properties and facilities comprising all or any
portion of the Facilities that are leased by Company or any of its Subsidiaries,
and a "landlord estoppel certificate" for such leases, certifying that no
defaults by the lessee currently exist under any such lease and confirming,
among other things, the annual rental amount paid by Company or its Subsidiaries
to lessor thereunder.
Z. Governmental Authorizations. Administrative Agent shall have
received satisfactory evidence that Company and its Subsidiaries have obtained
all Governmental Authorizations (including, without limitation, Governmental
Authorizations from Gaming Authorities and all zoning approvals, special or
conditional use permits, variances,
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permits, licenses, liquor licenses, certificates of occupancy and franchises)
necessary to permit the use, occupancy and operation of each of the Facilities.
AA. [Intentionally Omitted]
BB. Leasehold Documents. Administrative Agent shall have
received executed copies of each Leasehold Document, each such Leasehold
Document containing terms and provisions in form and substance satisfactory to
Administrative Agent in order to protect the enforceability of the Mortgages to
be granted to Administrative Agent on certain leasehold interests of Company
and its Subsidiaries.
4.2 Conditions to All Loans.
The obligations of Lenders to make Revolving Loans and of Swing
Line Lender to make Swing Line Loans on each Funding Date are subject to the
following further conditions precedent:
A. Administrative Agent shall have received before that Funding
Date, in accordance with the provisions of subsection 2.1C, an originally
executed Notice of Borrowing, in each case signed by the chief executive
officer, the chief financial officer or the treasurer of Company or by any
executive officer of Company designated by any of the above-described officers
on behalf of Company in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Loan Documents shall be true, correct and complete in all
material respects on and as of that Funding Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier
date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or, to
Company's Best Knowledge, a Potential Event of Default;
(iii) Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides
shall be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain any
Lender from
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making the Loans to be made by it on that Funding Date; provided that
any such order, judgment or decree shall only relieve that Lender on
whom such order, judgment or decree is binding from its obligation to
make Loans to Company.
(v) The making of the Loans requested on such Funding Date
shall not violate any law including, without limitation, Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System;
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries that
has not been disclosed by Company in writing pursuant to subsection 5.6
or 6.1(x) prior to the making of the last preceding Loans (or, in the
case of the initial Loans, prior to the execution of this Agreement),
and there shall have occurred no development not so disclosed in any
such action, suit, proceeding, governmental investigation or
arbitration so disclosed, that, in either event, in the opinion of
Administrative Agent or of Requisite Lenders, would be expected to have
a Material Adverse Effect; and no injunction or other restraining order
shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief
as a result of, the transactions contemplated by this Agreement or the
making of Loans hereunder; and
(vii) Since March 31, 1994, no Material Adverse Effect (in the
sole opinion of each Lender) shall have occurred; provided that such
opinion by any Lender as to the occurrence of a Material Adverse Effect
shall only relieve that Lender holding such opinion from its obligation
to make Loans to Company.
C. Neither Administrative Agent nor any Lender has given each
other Lender written notice that it has actual knowledge of the occurrence of
any event that, on such Funding Date, causes any of the representations and
warranties to be made by Company on such date to be untrue in any material
respect as of such date.
4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder is subject to
the following conditions precedent:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, the initial Loans shall have been made.
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B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, signed by the chief executive officer, the chief financial officer or
the treasurer of Company or by any executive officer of Company designated by
any of the above-described officers on behalf of Company in a writing delivered
to Administrative Agent, together with all other information specified in
subsection 3.1B(i) and such other documents or information as Administrative
Agent may reasonably require in connection with the issuance of such Letter of
Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans, to induce Administrative Agent to issue Letters of Credit and to
induce other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the following statements
are true, correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Company has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and to carry out the transactions
contemplated thereby.
B. Qualification and Good Standing. Company is qualified to do business
and in good standing in every jurisdiction where its assets are located and
wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and, to Company's Best Knowledge, will not have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only
in the businesses permitted to be engaged in pursuant to subsection 7.10.
D. Subsidiaries. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
to time pursuant to the provisions of subsection 6.1(xvii). The capital stock of
each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto
(as so supplemented)
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is duly authorized, validly issued, fully paid and nonassessable and none of
such capital stock constitutes Margin Stock. Each of the Subsidiaries of Company
identified in Schedule 5.1 annexed hereto (as so supplemented) is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation set forth therein, has all requisite
corporate power and authority to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted, and is qualified
to do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in each
case except where failure to be so qualified or in good standing or a lack of
such corporate power and authority has not had and, to Company's Best Knowledge,
will not have a Material Adverse Effect. Schedule 5.1 annexed hereto (as so
supplemented) correctly sets forth the ownership interest of Company and each of
its Subsidiaries in each of the Subsidiaries of Company identified therein.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance
of the Loan Documents have been duly authorized by all necessary corporate
action on the part of Company.
B. No Conflict. The execution, delivery and performance by each Loan
Party of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and, to Company's Best Knowledge, will
not (i) violate (X) any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries the violation of
which could have a Material Adverse Effect, (Y) the Certificate or Articles of
Incorporation or Bylaws of Company or any of its Subsidiaries or (Z) any order,
judgment or decree of any court or other agency of government binding on Company
or any of its Subsidiaries the violation of which could have a Material Adverse
Effect, (ii) conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any Contractual Obligation of Company
or any of its Subsidiaries, if the execution of any of the Loan Documents would
afford any party (other than Company) the right (after the giving of notice or
lapse of time or both) to terminate such Contractual Obligation or seek judicial
relief against Company as a result thereof, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of
Company or any of its Subsidiaries (other than any Liens created under any of
the Loan Documents in favor of Administrative Agent on behalf of Lenders), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its Subsidiaries,
except for such approvals or consents which will be obtained on or before the
Closing Date and disclosed in writing to Lenders.
C. Governmental Consents. The execution, delivery and performance by
the Loan Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or
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other governmental authority or regulatory body except (i) those that have been
obtained and copies of which have been delivered to Administrative Agent
pursuant to subsection 4.1J or the absence of which Administrative Agent has
deemed satisfactory pursuant to subsection 4.1J, (ii) those notices or
informational filings or both that will be required to be given to the
Securities and Exchange Commission or any Gaming Board but that are not yet due
and (iii) any right of any Gaming Board to object to any Lender or participant
in the Loans at any future date.
D. Binding Obligation. Each of the Loan Documents has been duly
executed and delivered by the Loan Parties signatory thereto and is the legally
valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
5.3 Financial Condition.
Company has heretofore delivered to Lenders, at Lenders'
request, the following financial statements and information: (i) the audited
consolidated balance sheet of Company and its Subsidiaries as at March 31, 1995
and the related consolidated statements of income, stockholders' equity and cash
flows of Company and its Subsidiaries for the Fiscal Year then ended and (ii)
the unaudited consolidated and Consolidating balance sheets of Company and its
Subsidiaries as at June 30, 1995 and the related unaudited consolidated and
Consolidating statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries for the three months then ended. All such
statements were prepared in conformity with GAAP and fairly present the
financial position (on a consolidated and, where applicable, Consolidating
basis) of the entities described in such financial statements as at the
respective dates thereof and the results of operations and cash flows (on a
consolidated and, where applicable, Consolidating basis) of the entities
described therein for each of the periods then ended, subject, in the case of
any such unaudited financial statements, to changes resulting from audit and
normal year-end adjustments, including the information presented in the
footnotes to Company's audited financial statements. Company does not (and will
not following the funding of the initial Loans) have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto or, following the funding of initial Loans, in
the financial statements required to be delivered pursuant to subsection 6.1 and
which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Company
and its Subsidiaries, taken as a whole.
5.4 No Material Adverse Change; No Restricted Payments.
Since March 31, 1994, no event or change has occurred that has caused
or evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither
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Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Payment or agreed to do so except as permitted by subsection 7.5.
5.5 Title to Properties; Liens.
A. Company and its Subsidiaries have (i) good, sufficient and legal
title to (in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
or (iii) good title to (in the case of all other personal property), all of
their respective properties and assets reflected in the financial statements
referred to in subsection 5.3 or in the most recent financial statements
delivered pursuant to subsection 6.1, in each case except for assets disposed of
since the date of such financial statements in the ordinary course of business
or as otherwise permitted under subsection 7.7. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.
B. (i) All of the assets, of whatever kind and nature, whether
real, personal or mixed property, used in connection with the Illinois
Facilities or placed or located in or on the Illinois Premises are
owned or leased directly by SIRCC and not by Company or any of
Company's other Subsidiaries.
(ii) All of the assets, of whatever kind and nature, whether
real, personal or mixed property, used in connection with the Louisiana
Facilities or placed or located in or on the Louisiana Premises are
owned or leased directly by PLC, SSP or PRLLC and not by Company or any
of Company's other Subsidiaries.
(iii) All of the assets, of whatever kind and nature, whether
real, personal or mixed property, used in connection with the Nevada
Facilities or placed or located in or on the Nevada Premises are owned
or leased directly by PNEV, PMGC or PML and not by Company or any of
Company's other Subsidiaries.
C. (i) SIRCC, PLC, SSP and PRLLC each have good and valid
title to the Ship or Ships and the Barge or Barges owned by it, free
and clear of all liens, charges, encumbrances and security interests;
(ii) each Ship and each US Documented Barge listed on Schedule
5.5, as said Schedule 5.5 may be supplemented from time to time
pursuant to the provisions of subsection 6.1(xx), is subject to a valid
certificate of documentation identifying SIRCC, PLC, SSP or PRLLC, as
the case may be, as the registered owner thereof under the laws and
regulations of the United States; and
(iii) SIRCC, PLC, SSP and PRLLC each have all necessary
authority required to own and operate the Ship or Ships and the Barge
or Barges owned by it for such Ships' or Barges' intended purposes.
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D. On the Closing Date, the only water craft of any nature whatsoever
(whether constituting a vessel, Barge, floating structure or otherwise) owned by
Company or any of its Subsidiaries that is subject to a valid certificate of
documentation pursuant to the laws of the United States of America are the
Players Lake Charles Riverboat, the Lake Charles Star Riverboat, the Metropolis
Riverboat and the US Documented Barges described on Schedule 5.5. All Other
Barges that are located at the Illinois Facilities and the Louisiana Facilities
are documented, registered or certified pursuant to the laws of the state of
Illinois or Louisiana, respectively.
5.6 Litigation; Adverse Facts.
Except as set forth in Schedule 5.6 annexed hereto, there are
no actions, suits, proceedings, arbitrations or, to Company's Best Knowledge,
governmental investigations (whether or not purportedly on behalf of Company or
any of its Subsidiaries) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of Company,
threatened against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
Neither Company nor any of its Subsidiaries is (i) in violation of any
applicable laws that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect or (ii) subject to or in default
with respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, all tax
returns and reports of Company and its Subsidiaries required to be filed by any
of them have been timely filed, and all taxes, assessments, fees and other
governmental charges upon Company and its Subsidiaries and upon their respective
properties, assets, income, businesses and fran- chises which are due and
payable have been paid when due and payable. Company knows of no proposed tax
assessment against Company or any of its Subsidiaries which has not been
provided for or which is not being actively contested by Company or such
Subsidiary in good faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the
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giving of notice or the lapse of time or both, would constitute such a default,
except where the consequences, direct or indirect, of such default or defaults,
if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
5.9 Governmental Regulation.
Neither Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
5.10 Securities Activities.
A. Neither Company nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 Employee Benefit Plans.
A. Company and each of its ERISA Affiliates are in compliance with all
applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit Plan,
and have performed all their obligations under each Employee Benefit Plan.
B. No ERISA Event has occurred or is reasonably expected to occur with
respect to Company or any of its ERISA Affiliates.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employees of Company or any of
its ERISA Affiliates.
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D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $5,000,000.
5.12 Certain Fees.
No broker's or finder's fee or commission will be payable with
respect to this Agreement or any of the transactions contemplated hereby, and
Company hereby indemnifies Administrative Agent, Managing Agents and
Co-Arrangers against, and agrees that it will hold Administrative Agent,
Managing Agents and Co-Arrangers harmless from, any claim, demand or liability
for any such broker's or finder's fees alleged to have been incurred by
Administrative Agent, Managing Agents or Co- Arrangers as the result of any
action or inaction by Company in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.13 Environmental Protection.
Except as set forth in Schedule 5.13 annexed hereto:
(i) the operations of Company and each of its
Subsidiaries (including, without limitation, all operations and
conditions at or in the Facilities) comply in all material respects
with all Environmental Laws;
(ii) Company and each of its Subsidiaries have obtained all
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and all such Governmental Authorizations are in
good standing, and Company and each of its Subsidiaries are in
compliance with all material terms and conditions of such Governmental
Authorizations;
(iii) neither Company nor any of its Subsidiaries has received
(a) any notice or claim to the effect that it is or may be liable to
any Person as a result of or in connection with any Hazardous Materials
or (b) any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. ss. 9604) or comparable state laws, and, to the best of
Company's knowledge, none of the operations of Company or any of its
Subsidiaries is the subject of any federal or state investigation
relating to or in connection with any Hazardous Materials at any
Facility or at any other location;
(iv) none of the operations of Company or any of its
Subsidiaries is subject to any judicial or administrative proceeding
alleging the violation of or liability under any Environmental Laws
which if adversely determined could reasonably be expected to have a
Material Adverse Effect;
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(v) neither Company nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any
outstanding written order or agreement with any governmental authority
or private party relating to (a) any Environmental Laws or (b) any
Environmental Claims;
(vi) neither Company nor any of its Subsidiaries has any
contingent liability in connection with any Release of any Hazardous
Materials by Company or any of its Subsidiaries;
(vii) neither Company nor any of its Subsidiaries nor, to
Company's Best Knowledge, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Law
indicating past or present treatment or Release of Hazardous Materials
at any Facility, and none of Company's or any of its Subsidiaries'
operations involves the generation, transportation, treatment, storage
or disposal of hazardous waste, as defined under 40 C.F.R. Parts
260-270 or any state equivalent;
(viii) no Hazardous Materials exist on, under or about any
Facility in a manner that has a reasonably possibility of giving rise
to an Environmental Claim having a Material Adverse Effect, and neither
Company nor any of its Subsidiaries has filed any notice or report of a
Release of any Hazardous Materials that has a reasonable possibility of
giving rise to an Environmental Claim having a Material Adverse Effect;
(ix) neither Company nor any of its Subsidiaries nor, to
Company's Best Knowledge, any of their respective predecessors has
disposed of any Hazardous Materials in a manner that has a reasonable
possibility of giving rise to an Environmental Claim having a Material
Adverse Effect;
(x) no surface impoundments are on or at any Facility or, to
Company's Best Knowledge, no underground storage tanks are on or at
any Facility; and
(xi) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been
attached to any Facility.
5.14 Employee Matters.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
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5.15 Solvency.
Company and each of its Subsidiaries is and, upon the
incurrence of any Obligations by Company on any date on which this
representation is made, will be, Solvent.
5.16 Disclosure.
No representation or warranty of Company or any of its
Subsidiaries contained in any Loan Document or in any other document,
certificate or written statement furnished to Lenders by or on behalf of Company
or any of its Subsidiaries for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact (known to Company, in the case of any document
not furnished by it) necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances in which the same were
made. Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by
Company to be reasonable at the time made, it being recognized by Lenders that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. To Company's Best Knowledge, no facts exist
(other than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and that have not been disclosed herein or in such other documents, certificates
and statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
5.17 Compliance With Laws.
Company and its Subsidiaries are in compliance with the
requirements of all applicable laws, rules, regulations, ordinances and orders
(including, without limitation, Gaming Laws) if noncompliance would affect the
ability of any such party to operate any of the Facilities or the ability of any
of Company or any of its Subsidiaries to perform their obligations under the
Loan Documents to which it is a party, except where the failure to so comply or
perform would not have a Material Adverse Effect. The use of each of the
Facilities complies with applicable zoning ordinances, regulations, restrictive
covenants and requirements of Governmental Authorizations affecting the
respective Facilities as well as all environmental, ecological, landmark, and
other applicable laws and regulations (including, without limitation, Gaming
Laws); and all requirements for such use have been satisfied, except where the
failure to so comply would not have a Material Adverse Effect.
5.18 Representations Relating to Operation of Facilities.
A. The Nevada Facilities are open to the public and all
authorizations, licenses and permits required by any Governmental Authority for
the use, occupancy and
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operation of the Nevada Premises for the purposes contemplated herein have been
obtained and all requirements for such use have been satisfied.
B. All utility services required to operate each of the Facilities are
available and in adequate supply.
5.19 Intangible Property.
Company and its Subsidiaries are the sole and exclusive owner
or licensee of all trade names, unregistered trademarks and service marks, brand
names, patents, registered and unregistered copyrights, registered trademarks
and service marks, and all applications for any of the foregoing, and all
permits, grants and licenses or other rights with respect thereto, except where
the absence of such sole ownership would not have a Material Adverse Effect.
Schedule 5.19 annexed hereto sets forth a true and complete list of all service
marks and registered trademarks (or trademarks for which registration is
pending) of Company and its Subsidiaries. None of Company and its Subsidiaries
has been charged with any material infringement of any intangible property of
the character described above or been notified or advised of any material claim
of any other Person relating to any of the intangible property.
5.20 Rights to Agreements, Permits and Licenses.
From and after the Closing Date, Company (or its Subsidiaries)
will be the true owner of all rights in and to all existing agreements, permits
and licenses relating to all of its facilities (now or hereafter acquired) and
each of the respective Premises (other than rights of third parties under leases
and agreements permitted hereunder), and will be the true owner of all rights in
and to all future agreements, permits and licenses relating to all of its
facilities (now or hereafter acquired), other than rights of third parties under
leases and agreements permitted hereunder, except where the absence of such true
ownership would not have a Material Adverse Effect. Company's interest in all
such agreements, permits, and licenses is not and, to Company's Best Knowledge,
will not be subject to any present claim (other than under the Loan Documents),
set-off or deduction other than in the ordinary course of business.
5.21 Classification of Ships.
From and after the Closing Date, the American Bureau of
Shipping classification of each Ship shall remain the highest applicable
classification and rating to which a ship of the same age and type as such Ship
can qualify under the rules and standards of the American Bureau of Shipping.
5.22 Recordation of Ship Mortgages.
Each Ship Mortgage is in due form for filing, and has been duly
filed in the appropriate office of the United States Coast Guard. Upon such
filing, each Ship
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Mortgage will constitute a legal, valid and binding first preferred ship
mortgage under the Ship Mortgage Act of 1920, as amended and codified in Chapter
313 of Title 46 of the United States Code, on the applicable Ship or US
Documented Barge in favor of the Trustee as mortgagee under such Ship Mortgage
for the benefit of Administrative Agent on behalf of Lenders. No other filings
or recordings or refilings or re-recordings of any other instruments are
necessary to cause the lien of any of the Ship Mortgages to be legal, valid and
binding on the parties thereto, and to create in favor of the Trustee, as
secured party, for the benefit of the Administrative Agent on behalf of Lenders,
the preferred mortgage which the Ship Mortgages purport to create.
5.23 Policies of Insurance.
Each of the copies of the declaration pages, original binders
and certificates of insurance evidencing the Policies of Insurance delivered to
Administrative Agent pursuant to subsection 4.1P is a true, correct and complete
copy of the respective original thereof as in effect on the date hereof, and no
amendments or modifications of said documents or instruments not included in
such copies have been made. Furthermore, none of such documents or instruments
has been terminated and each is in full force and effect. Neither the Company
nor any of its Subsidiaries are in default in the observance or performance of
their respective obligations under said documents and instruments and Company
and its Subsidiaries have taken all actions required to be performed under all
Policies of Insurance to keep unimpaired their rights thereunder.
Section 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless each Lender shall otherwise give prior written consent, Company
shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 Financial Statements and Other Reports.
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP.
Company will deliver to Administrative Agent and Lenders:
(i) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each of the first three Fiscal Quarters
of each Fiscal Year and, with respect to the fourth Fiscal Quarter of
each Fiscal Year, concurrently with the delivery of financial
statements pursuant to subdivision (ii) below, (a) (1) the consolidated
and Consolidating balance sheets of Company and its Subsidiaries as at
the end of such Fiscal Quarter and the related consolidated and
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Consolidating statements of income, stockholders' equity and cash flows
of Company and its Subsidiaries for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
Fiscal Year and the corresponding figures from the consolidated plan
and financial forecast for the current Fiscal Year delivered pursuant
to subsection 6.1(xiii), all in reasonable detail and certified by the
chief financial officer of Company that they fairly present the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustments and (2) copies of Company's relevant 10-Q
filed with the Securities and Exchange Commission within 15 days of
such filing;
(ii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) (1) the
consolidated and Consolidating balance sheets of Company and its
Subsidiaries as at the end of such Fiscal Year and the related
consolidated and Consolidating statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries for such Fiscal
Year, setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and, when available, the
corresponding figures from the consolidated plan and financial forecast
delivered pursuant to subsection 6.1(xiii) for the Fiscal Year covered
by such financial statements, all in reasonable detail and certified by
the chief financial officer of Company that they fairly present the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, and (2) copies of Company's relevant 10-K filed
with the Securities and Exchange Commission within 15 days of such
filing, and (b) in the case of such consolidated financial statements,
a report thereon of Ernst & Young, LLP or other independent certified
public accountants of recognized national standing selected by Company
and satisfactory to Managing Agents, which report shall be unqualified,
shall not express any doubts about the ability of Company and its
Subsidiaries to continue as a going concern, and shall state that such
consolidated financial statements fairly present the consolidated
financial position of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iii) Officers' and Compliance Certificates: (a) together with
each delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (i) and (ii) above, an Officers' Certificate
of Company stating that the signers have reviewed the terms of this
Agreement and have made, or caused to
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be made under their supervision, a review in reasonable detail of the
transactions and condition of Company and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have actual knowledge of
the existence as at the date of such Officers' Certificate, of any
condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto;
and (b) together with each delivery of financial statements of Company
and its Subsidiaries pursuant to subdivision (i) above, a Compliance
Certificate demonstrating in reasonable detail compliance (X) during
and at the end of the applicable accounting periods with the
restrictions contained in subsections 7.1, 7.3, 7.4 and 7.5 and (Y) at
the end of the applicable accounting periods with the restrictions
contained in subsection 7.6;
(iv) Reconciliation Statements: if, as a result of any change
in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the consolidated financial statements of Company and
its Subsidiaries delivered pursuant to subdivisions (i) and (ii) of
this subsection 6.1 will differ in any material respect from the
consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (i) and (ii)
of this subsection 6.1 following such change, consolidated financial
statements of Company and its Subsidiaries for (y) the current Fiscal
Year to the effective date of such change and (z) the two full Fiscal
Years immediately preceding the Fiscal Year in which such change is
made, in each case prepared on a pro forma basis as if such change had
been in effect during such periods, and (b) together with each delivery
of financial statements pursuant to subdivision (i) and (ii) of this
subsection 6.1 following such change, a written statement of the chief
accounting officer or chief financial officer of Company setting forth
the differences which would have resulted if such financial statements
had been prepared without giving effect to such change;
(v) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries
pursuant to subdivision (ii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a review of the terms
of this Agreement and the other Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with their audit
examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and,
if such a condition or event has come to their attention, specifying
the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure
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to obtain knowledge of any such Event of Default or Potential Event of
Default that would not be disclosed in the course of their audit
examination, and (c) stating that based on their audit examination
nothing has come to their attention that causes them to believe either
or both that the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith
pursuant to clause (b) of subdivision (iii) above for the applicable
Fiscal Year are not stated in accordance with the terms of this
Agreement;
(vi) Accountants' Reports: promptly upon, but in no case later
than 15 calendar days after, receipt thereof (unless restricted by
applicable professional standards), copies of all reports submitted to
Company by independent certified public accountants in connection with
each annual, interim or special audit of the financial statements of
Company and its Subsidiaries made by such accountants, including,
without limitation, any comment letter submitted by such accountants to
management in connection with their annual audit;
(vii) Insurance: as soon as practicable and in any event by the
last day of each Fiscal Year, a report in form and substance
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries (including all coverages referred to in subsection 6.4B
hereof and Schedules 6.4(a) and 6.4(b) annexed hereto, section 6 of
each of the Mortgages and within each of the Ship Mortgages under the
heading "Vessel Insurance Requirements and Provisions") and all
material insurance coverage then planned to be maintained by Company
and its Subsidiaries in the immediately succeeding Fiscal Year, if in
each case there shall be any material changes in such insurance
coverage from the insurance coverage in existence on the date hereof;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available but in any event within 15 days after filing with
the Securities and Exchange Commission, copies of (a) all financial
statements, reports, notices and proxy statements sent or made
available generally by Company to its security holders or by any
Subsidiary of Company to its security holders other than Company or
another Subsidiary of Company, (b) all regular and periodic reports and
all registration statements (other than on Form S-8 or a similar form)
and prospectuses, if any, filed by any of Company's Subsidiaries with
any securities exchange or with the Securities and Exchange Commission
or any governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Company or
any of Company's Subsidiaries to the public concerning material
developments in the business of Company or any of Company's
Subsidiaries;
(ix) Events of Default, etc.: promptly, but in any event
within 5 calendar days, upon Company's Best Knowledge (a) of any
condition or event that
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constitutes an Event of Default or Potential Event of Default, or that
any Lender has given any notice (other than to Administrative Agent) or
taken any other action with respect to a claimed Event of Default or
Potential Event of Default, (b) that any Person has given any notice to
Company or any of its Subsidiaries or taken any other action with
respect to a claimed default or event or condition of the type referred
to in subsection 8.2, (c) of any condition or event that would be
required to be disclosed in a current report filed by Company with the
Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6
of such Form as in effect on the date hereof) if Company were required
to file such reports under the Exchange Act, or (d) of the occurrence
of any event or change that has caused or evidences, either in any case
or in the aggregate, a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Event of
Default, Potential Event of Default, default, event or condition, and
what action Company has taken, is taking and proposes to take with
respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any
Responsible Officer obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"Proceedings") not previously disclosed in writing by Company to
Lenders or (Y) any material development in any Proceeding that, in any
case of (X) or of (Y):
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter of Company, a schedule of all Proceedings involving an
alleged liability of, or claims against or affecting, Company or any of
its Subsidiaries equal to or greater than $10,000,000 in the aggregate,
and promptly after request by Administrative Agent such other
information as may be reasonably requested by Administrative Agent to
enable Administrative Agent and its counsel to evaluate any of such
Proceedings;
(xi) ERISA Events: promptly upon becoming aware of, but in no
case later than 15 calendar days after, the occurrence of or
forthcoming occurrence of
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any ERISA Event, a written notice specifying the nature thereof, what
action Company or any of its ERISA Affiliates has taken, is taking or
proposes to take with respect thereto and, when known, any action taken
or threatened by the Internal Revenue Service, the Department of Labor
or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a)
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) as required to be filed by Company or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each
Pension Plan; (b) all notices received by Company or any of its ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event;
and (c) such other documents or governmental reports or filings
relating to any Employee Benefit Plan as Administrative Agent shall
reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event
no later than 30 days after the beginning of each Fiscal Year, a
consolidated and Consolidating plan and financial forecast for such
Fiscal Year, including without limitation (a) forecasted consolidated
and Consolidating balance sheet and forecasted consolidated statements
of income and cash flows of Company and its Subsidiaries for such
Fiscal Year, together with a pro forma Compliance Certificate for such
Fiscal Year and an explanation of the assumptions on which such
forecasts are based, (b) forecasted consolidated and Consolidating
statements of income and cash flows of Company and its Subsidiaries for
each Fiscal Quarter of each such Fiscal Year, together with an
explanation of the assumptions on which such forecasts are based, (c)
the amount of forecasted unallocated overhead for each such Fiscal
Year, and (d) such other information and projections as any Lender may
reasonably request;
(xiv) Environmental Audits and Reports: as soon as practicable
following receipt thereof, but in no case later than 15 calendar days
after, copies of all environmental audits and reports, whether prepared
by personnel of Company or any of its Subsidiaries or by independent
consultants, with respect to significant environmental matters at any
Facility or which relate to an Environmental Claim which could result
in a Material Adverse Effect;
(xv) Board of Directors: with reasonable promptness,
written notice of any change in the Board of Directors of Company;
(xvi) Pricing Determination Certificate: concurrently with the
delivery of the financial statements for each Fiscal Quarter required
under subsection 6.1(i) and as soon as practicable and in any event no
later than 90 days after the end of each Fiscal Year, Company shall
deliver a Pricing Determination Certificate;
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(xvii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule
5.1 annexed hereto with respect to all Subsidiaries of Company (it
being understood that such written notice shall be automatically deemed
to supplement Schedule 5.1 to this Agreement for all purposes,
including the Guaranty);
(xviii) New Venture Status Reports: as soon as available and in
any event within 45 days after the end of each Fiscal Quarter of each
Fiscal Year, a status report detailing the operations and financial
projections for any New Venture involving the proposed Investment by
Company and its Subsidiaries of an amount in excess of $5,000,000;
(xix) Regulation 6.090 Reports: promptly, but in no case later
than 15 calendar days, after the same are available, copies of the
Nevada "Regulation 6.090 Report" and "6-A Report" and copies of any
written communication to Company or any of its Subsidiaries from any
Gaming Board advising it of a violation of or non-compliance with, any
Gaming Law by Company or any of its Subsidiaries;
(xx) US Documented Barges: promptly upon the acquisition or
documentation by Company or any of its Subsidiaries of any additional
US Documented Barge, a written notice setting forth with respect to
such Person (a) the date on which such barge became a US Documented
Barge and (b) all of the data required to be set forth in Schedule 5.5
annexed hereto with respect to all US Documented Barges (it being
understood that such written notice shall be automatically deemed to
supplement Schedule 5.5 to this Agreement for all purposes); and
(xxi) Other Information: with reasonable promptness, such
other information and data with respect to Company or any of its
Subsidiaries as from time to time may be reasonably requested by
any Lender.
6.2 Corporate Existence, etc.
Except as permitted under subsection 7.7, Company will, and
will cause each of its Subsidiaries to, at all times preserve and keep in full
force and effect its corporate or other legal existence, as applicable, and all
rights and franchises material to its business.
6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or
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assets or in respect of any of its income, businesses or franchises before any
penalty accrues thereon, and all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such tax, charge or claim need be paid if
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance.
A. Company will, and will cause each of its Subsidiaries to, maintain
or cause to be maintained in good repair, working order and condition, ordinary
wear and tear excepted, all material properties used or useful in the business
of Company and its Subsidiaries (including, without limitation, maintenance of
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof.
B. Company will maintain or cause to be maintained, with financially
sound and reputable insurers, throughout the term of this Agreement, all
Policies of Insurance required pursuant to Schedules 6.4(a) and 6.4(b) annexed
hereto and will otherwise comply fully with the terms and conditions provided in
subsection 6 of each of the Mortgages and within each of the Ship Mortgages
under the heading "Vessel Insurance Requirements and Provisions". Each such
policy of insurance shall name Administrative Agent for the benefit of Lenders
as the loss payee thereunder for amounts in excess of $2,500,000 and shall
provide for at least 30 days prior written notice to Administrative Agent of any
modification or cancellation of such policy.
6.5 Inspection; Lender Meeting.
Company shall, and shall cause each of its Subsidiaries to,
permit any authorized representatives designated by any Lender to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
its and their financial and accounting records, and to make copies and take
extracts therefrom, and to discuss its and their affairs, finances and accounts
with its and their officers and independent public accountants (provided that
Company may, if it so chooses, be present at or participate in any such
discussion), all upon reasonable notice and at such reasonable times during
normal business hours and as often as may be reasonably requested. Without in
any way limiting the foregoing, Company will, upon the request of Managing
Agents or Requisite Lenders, participate in a meeting of Managing Agents and
Lenders once during each
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Fiscal Year to be held at Company's corporate offices (or such other location as
may be agreed to by Company and Managing Agents) at such time as may be agreed
to by Company and Managing Agents.
6.6 Compliance with Laws, etc.
Company shall, and shall cause each of its Subsidiaries to,
comply with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority, including all Gaming Laws, and to obtain
and keep in full force and effect any permit, license, consent, or approval
required under this Agreement if such noncompliance or failure to obtain and
keep in full force and effect could reasonably be expected to cause a Material
Adverse Effect. Company shall and shall cause each of its Subsidiaries to comply
with the requirements of all Gaming Laws applicable to such Person.
6.7 Environmental Disclosure and Inspection.
A. Company shall, and shall cause each of its Subsidiaries to, exercise
all due diligence in order to comply and use its best efforts to cause (i) all
tenants under any leases or occupancy agreements affecting any portion of the
Facilities and (ii) all other Persons on or occupying such property, to comply
with all Environmental Laws.
B. Company agrees that Administrative Agent may, once during each
Fiscal Year until the Commitment Termination Date or at any time upon the
occurrence of an Event of Default, retain, at Company's expense, an independent
professional consultant to review any report relating to Hazardous Materials
prepared by or for Company and to conduct its own investigation of any Facility
currently owned, leased, operated or used by Company or any of its Subsidiaries,
and Company agrees to use its best efforts to obtain permission for
Administrative Agent's professional consultant to conduct its own investigation
of any Facility previously owned, leased, operated or used by Company or any of
its Subsidiaries. Company hereby grants to Administrative Agent and its agents,
employees, consultants and contractors the right to enter into or on to the
Facilities currently owned, leased, operated or used by Company or any of its
Subsidiaries to perform such tests on such property as are reasonably necessary
to conduct such a review and/or investigation. Any such investigation of any
Facility shall be conducted, unless otherwise agreed to by Company and
Administrative Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at any such Facility or to cause any damage or loss to any property
at such Facility. Company and Administrative Agent hereby acknowledge and agree
that any report of any investigation conducted at the request of Administrative
Agent pursuant to this subsection 6.7B will be obtained and shall be used by
Administrative Agent and Lenders solely for the purposes of Lenders' internal
credit decisions, to monitor and police the Loans and to protect Lenders'
security interests, if any, created by the Loan Documents. Administrative Agent
agrees to deliver a copy of any such report to Company with the understanding
that Company acknowledges and
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agrees that (i) it will hold harmless Administrative Agent and each Lender from
any costs, losses or liabilities relating to Company's use of or reliance on
such report, (ii) neither Administrative Agent nor any Lender makes any
representation or warranty with respect to such report, and (iii) by delivering
such report to Company, neither Administrative Agent nor any Lender is requiring
or recommending the implementation of any suggestions or recommendations
contained in such report.
C. Company shall promptly advise Lenders in writing and in reasonable
detail of (i) any Release of any Hazardous Materials required to be reported to
any federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, (ii) any and all written communications with
respect to any Environmental Claims that have a reasonable possibility of giving
rise to a Material Adverse Effect or with respect to any Release of Hazardous
Materials required to be reported to any federal, state or local governmental or
regulatory agency, (iii) any remedial action taken by Company or any other
Person in response to (x) any Hazardous Materials on, under or about any
Facility, the existence of which has a reasonable possibility of resulting in an
Environmental Claim having a Material Adverse Effect, or (y) any Environmental
Claim that could have a Material Adverse Effect, (iv) discovery by any
Responsible Officer of any occurrence or condition on any real property
adjoining or in the vicinity of any Facility that could cause such Facility or
any part thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws, and (v) any request
for information from any governmental agency that suggests such agency is
investigating whether Company or any of its Subsidiaries may be potentially
responsible for a Release of Hazardous Materials.
D. Company shall promptly notify Lenders of (i) any proposed
acquisition of stock, assets, or property by Company or any of its Subsidiaries
that could reasonably be expected to expose Company or any of its Subsidiaries
to, or result in, Environmental Claims that could have a Material Adverse Effect
or that could reasonably be expected to have a material adverse effect on any
Governmental Authorization then held by Company or any of its Subsidiaries and
(ii) any proposed action to be taken by Company or any of its Subsidiaries to
commence manufacturing, industrial or other operations that could reasonably be
expected to subject Company or any of its Subsidiaries to additional laws, rules
or regulations, including, without limitation, laws, rules and regulations
requiring additional environmental permits or licenses.
E. Company shall, at its own expense, provide copies of such documents
or information as Administrative Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 6.7.
6.8 Company's Remedial Action Regarding Hazardous Materials.
Company shall promptly take, and shall cause each of its
Subsidiaries promptly to take, any and all necessary remedial action in
connection with the presence, storage, use, disposal, transportation or Release
of any Hazardous Materials on, under or
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about any Facility in order to comply with all applicable Environmental Laws and
Governmental Authorizations. In the event Company or any of its Subsidiaries
undertakes any remedial action with respect to any Hazardous Materials on, under
or about any Facility, Company or such Subsidiary shall conduct and complete
such remedial action in compliance with all applicable Environmental Laws, and
in accordance with the policies, orders and directives of all federal, state and
local governmental authorities except when, and only to the extent that,
Company's or such Subsidiary's liability for such presence, storage, use,
disposal, transportation or discharge of any Hazardous Materials is being
contested in good faith by Company or such Subsidiary.
6.9 Post-Closing Matters.
Company shall, and shall cause its Subsidiaries to, take such
actions as are necessary to satisfy each of the post-closing conditions set
forth in Schedule 6.9 annexed hereto, in each case in the manner and within the
time frames specified in Schedule 6.9 annexed hereto.
6.10 New Subsidiaries; New Joint Ventures; Further Assurances.
A. In the event a Person becomes a Subsidiary of Company after the
Closing Date, Company, upon the request of Administrative Agent, shall and shall
cause such Subsidiary to execute and deliver such guaranties, collateral
documents and such other agreements, pledges, assignments, documents and
certificates (including, without limitation, any amendments to the Loan
Documents) as may be necessary or desirable or as Administrative Agent may
request and do such other acts and things as Administrative Agent reasonably may
request in order to have a lien on the stock of such Subsidiary and to have such
Subsidiary guaranty and/or secure the Obligations and effect fully the purposes
of this Agreement and the other Loan Documents and to provide for payment of the
Obligations in accordance with the terms of this Agreement and the other Loan
Documents; provided that the provisions of this subsection 6.10A shall not apply
to any such Subsidiary during such time that such Subsidiary is an Excluded
Subsidiary.
B. In the event Company or any of its Subsidiaries enters into any
Joint Venture by means of the ownership of any Subsidiary (a "Participant
Subsidiary") that, directly or indirectly, holds stock in a Joint Venture in
corporate form or acts as a partner in a Joint Venture in partnership form, (i)
Company shall, and shall cause each of its Subsidiaries to, pledge its interests
in such Participant Subsidiary that enters into such Joint Venture as
Collateral, (ii) neither Company nor any of its Subsidiaries shall enter into
any other agreement that creates any Lien on the interests that Company or any
such Subsidiary owns in such Participant Subsidiary or Joint Venture and (iii)
neither Company nor any of its Subsidiaries will enter into any agreement that
prohibits, restricts or conditions Lenders' rights to encumber the stock or
ownership interests in such Participant Subsidiary or Joint Venture.
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C. Additionally, Company shall, and shall cause each of its
Subsidiaries to, execute such documents as Administrative Agent reasonably may
request to perfect Administrative Agent's Lien on real or personal property
located at any of the Facilities acquired after the Closing Date, including,
without limitation, the Lake Charles Star Riverboat, Company's interests in the
partnership that owns such riverboat casino, the real property and improvements
thereon acquired as part of the Lake Charles Complex Expansion (as described on
pages 27 and 28 of the Memorandum) and any US Documented Barges to be located at
or on any of the Facilities. Company shall give Administrative Agent notice of
the acquisition by it or any of its Subsidiaries of any individual piece of real
or personal property to be located or used at any of the Facilities and having a
value in excess of $1,000,000 within 30 days of such acquisition.
D. Notwithstanding the generality of subsection 6.10C:
(i) If, and at such time as, SIRCC or any Affiliate of Borrower
purchases any of the parking lots used in connection with the Illinois
Facilities from Burlington Northern Railroad Company (the "Railroad"),
which parking lots SIRCC currently leases from the Railroad, Borrower
shall cause SIRCC or such Affiliate purchasing such parking lot (i) to
grant to Administrative Agent a deed of trust or mortgage, in form and
substance acceptable to Administrative Agent, on such parking lot(s),
(ii) to pay or cause to be paid any monetary Liens then encumbering
such parking lot(s), (iii) to provide Administrative Agent with a
lender's policy of title insurance and any endorsements thereto, in
form and substance acceptable to Administrative Agent (but, subject to
such non-monetary Liens as do not materially affect the use and
operation of such parking lot), insuring such deed of trust or mortgage
as a first priority Lien on such parking lot in favor of Administrative
Agent, and (iv) to execute and deliver such other instruments and
agreements and undertake such other acts as Administrative Agent may
request in connection therewith (including, without limitation,
executing security agreements, fixture filings, and financing
statements with respect to such parking lots); and
(ii) Unless, prior to the Closing Date, PLC shall have purchased the
fee estate in the portion of the Louisiana Premises leased pursuant to
that Lease, dated as of May 18, 1993 (as amended, the "Beeber Lease"),
between The Beeber Corporation, as landlord, and PLC, as tenant (such
portion of the Louisiana Premises being referred to herein as the
"Beeber Property"), Borrower, at such time as PLC or any Affiliate of
Borrower purchases such fee estate (such purchaser being referred to
herein as the "Purchaser"), shall cause the Purchaser (i) to grant to
Administrative Agent a deed of trust or mortgage on the fee estate in
the Beeber Property acquired by the Purchaser, in form and substance
acceptable to Administrative Agent, (ii) to pay or cause to be paid any
monetary Liens then encumbering the Beeber Property, (iii) to provide
to Administrative Agent a lender's policy of title insurance and any
endorsements thereto, in form and substance acceptable to
Administrative Agent (but, subject to such non-
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monetary Liens as do not materially affect the use and operation of the
Beeber Property), insuring such deed of trust or mortgage as a first
priority Lien on such property in favor of Administrative Agent, and
(iv) to execute and deliver such other instruments and agreements and
undertake such other acts as Administrative Agent may request in
connection therewith (including, without limitation, executing security
agreements, fixture filings, and financing statements with respect to
the Beeber Property).
E. Company, Administrative Agent and each of the Lenders will, at the
expense of Company, do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, such amendments or supplements hereto or
to any of the Loan Documents and such further documents, instruments and
transfers as any such party may reasonably require for the curing of any defect
in the execution or acknowledgment hereof or in any of the Loan Documents, or in
the description of the real property or other Collateral or for the proper
evidencing of giving notice of each Lien or security interest securing repayment
of the Obligations. Further, upon the execution and delivery of the Mortgages,
the Ship Mortgages and each of the Loan Documents and thereafter, from time to
time, Company shall cause the Mortgages, the Ship Mortgages and each of the Loan
Documents and each amendment and supplement thereto to be filed, registered and
recorded and to be refiled, re-registered and re- recorded in such manner and in
such places as may be reasonably required by Requisite Lenders or Administrative
Agent, in order to publish notice of and fully protect the Liens of the
Mortgages, the Ship Mortgages and each of the Loan Documents in the Collateral
and to perform or cause to be performed from time to time any other actions
required by law and execute or cause to be executed any and all instruments of
further assurance that may be necessary for such publication, perfection,
continuation and protection.
F. Company shall give Administrative Agent written notice promptly upon
entering into contracts after the Closing Date other than the Excluded Contracts
(as defined below) aggregating more than $10,000,000 with respect to the
construction or renovation of Improvements or any other contracts aggregating
more than $10,000,000 that might give rise to mechanics or other statutory Liens
at any one of the following locations (a) the Illinois Premises, (b) the
Louisiana Premises, (c) the portion of the Nevada Premises insured by Title
Policy #______ issued by Chicago Title Insurance Company or (d) the portion of
the Nevada Premises insured by Title Policy #_____ issued by Chicago Title
Insurance Company, which notice shall include the location at which such
construction or renovation is taking place and a brief description of the nature
of the construction or renovation. Administrative Agent shall promptly transmit
such notice to Lenders and, upon receipt of written requests therefor from
Requisite Lenders, shall request Title Company to issue at Company's expense a
California Land Title Association Form 122 (or comparable) endorsement to the
Title Policy issued at the closing of this Agreement with respect to the
location at which such construction or renovation is being conducted, which
endorsement shall provide insurance against any mechanics or other statutory
liens arising from such construction or renovation; provided
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that Requisite Lenders may request such an endorsement be issued no more often
than quarterly during the period from the date of receipt of such notice from
Company until such date as all of the following have occurred (x) a certificate
of use or occupancy (or comparable certificate in the applicable jurisdiction)
has been issued with respect to such construction or renovation, (y) any
statutory period within which a mechanics Lien could be asserted has expired and
(z) all contractors with respect to such construction or renovation have been
paid in full. Company agrees to cooperate with the Title Company to cause such
endorsements to be issued. For purposes of this Section 6.01C Excluded Contracts
shall mean contracts with respect to which the Title Policies delivered on the
Closing Date provided endorsements as to the absence of mechanics or other
statutory Liens arising in connection with the performance thereof.
G. Upon each exercise of the option in the Waterbottom Lease
(as defined in the Louisiana Mortgage) that permits PLC to lease additional
waterbottom lands from the State of Louisiana, Players shall record, or shall
cause PLC to record, in the land records of Calcasieu Parish, Louisiana, a
memorandum of exercise of option for purposes of putting of record PLC's rights
in such additional lands. Concurrently therewith, Players shall notify the
Administrative Agent in writing and shall execute, deliver, and record any
instruments and agreements and do such other acts as the Administrative Agent
may deem necessary or appropriate to insure the senior priority of the lien of
the Louisiana Mortgage over such additional lands (including, without
limitation, causing the Title Company to issue, at Company's sole cost and
expense, an endorsement to the applicable Title Policy ensuring the senior
priority of the lien of the Louisiana Mortgage on PLC's rights in such
additional lands).
H. At such time as the lessor under the golf course lease that
consists of a portion of the Nevada Facilities acquires title to that certain
real property designated as "Government Lot 2" under Section 31 of such lease,
Players shall notify, or shall cause PMGC, to notify the Administrative Agent,
and Players and PMGC shall execute, deliver, and record any instruments and
agreements and do such other acts as the Administrative Agent may deem necessary
or appropriate to insure the senior priority of the lien of the applicable
Nevada Mortgage over such additional real property (including, without
limitation, causing the Title Company to issue, at Company's sole cost and
expense, an endorsement to the applicable Title Policy ensuring the senior
priority of the lien of the Nevada Mortgage on PMGC's rights in such additional
real property).
Section 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.
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7.1 Indebtedness.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or guaranty, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except (i) the Loans, (ii) the Senior Notes and (iii) so long as
no Event of Default or, to Company's Best Knowledge, Potential Event of Default
shall have occurred and be continuing, or shall be caused thereby, (A) Other
Allowed Indebtedness (Secured) and (B) Company and its Subsidiaries may create,
incur, assume or guaranty or otherwise become or remain liable directly or
indirectly liable with respect to Other Allowed Indebtedness (Unsecured) if,
after giving effect thereto, Company shall be in compliance on a pro forma basis
with the Adjusted Leverage Ratio then applicable pursuant to subsection 7.6C;
provided that the aggregate Indebtedness of Company and its Subsidiaries
outstanding at any time under clauses (i), (ii) and (iii) above shall not exceed
$275,000,000.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any of their respective assets, whether now
owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any of the Collateral under the
Uniform Commercial Code of any State or under any similar recording or notice
statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted or permitted pursuant to the Collateral
Documents;
(iii) Liens to secure Other Allowed Indebtedness (Secured) to
the extent permitted pursuant to the definitions of "Other Allowed
Indebtedness (Secured)" and "Purchase Money Debt";
(iv) Liens existing on the Closing Date and described on
Schedule 7.2 annexed hereto; and
(v) a Lien to be granted by PMH and/or PMHLP, as lessee, on
certain of its gaming equipment and gaming receivables, in favor of the
Riverside Joint Venture, as landlord, to secure the payment by PMH of
certain lease obligations owed to the Riverside Joint Venture in
connection with the operation of the Maryland Heights Facility.
B. No Further Negative Pledges. Except with respect to specific
property encumbered pursuant to subsection 7.2A or to be sold pursuant to an
executed agreement with respect to an Asset Sale, neither Company nor any of its
Subsidiaries
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shall enter into any agreement prohibiting the creation or assumption of any
Lien upon any of its properties or assets, whether now owned or hereafter
acquired.
C. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein, Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
7.3 Investments, Loans and Advances; Joint Ventures.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, make or own any Investment or make any capital
expenditure (including, without limitation, any New Venture Investments) in any
Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments
in Cash Equivalents;
(ii) Company and its Subsidiaries may make intercompany loans
to the extent permitted under subsection 7.1; provided that the
obligations under any such loans are subordinated to the Obligations of
Company or any such Subsidiary under the Loans or the Guaranty, as the
case may be;
(iii) Company and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed hereto;
(iv) Company and its Subsidiaries may make Investments in any
New Venture if the amount of any such Investment in a New Venture does
not exceed either (a) $75,000,000, if Consolidated EBIDTA for the
relevant Investment Measurement Period does not exceed $75,000,000 or
(b) $100,000,000, if Consolidated EBIDTA for such period exceeds
$75,000,000; provided that prior to any Investment by Company or any of
its Subsidiaries in a New Venture that exceeds $5,000,000, Company
shall deliver to Lenders (x) a budget for such New Venture describing
in detail the scope of development activities related to such New
Venture and the itemized amounts to be expended thereon and (y) an
Officers' Certificate demonstrating compliance with clause (a) or (b)
of this subsection 7.3(iv), as applicable; and
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(v) Company and its Subsidiaries may make additional
Investments not to exceed $500,000 on an individual basis or
$1,000,000 in the aggregate.
7.4 Contingent Obligations.
Company shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of Administrative Agent and Requisite
Lenders, directly or indirectly, create or become or remain liable with respect
to any Contingent Obligation, except:
(i) Company and such Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness
of Company or any of its Subsidiaries permitted by subsection 7.1;
(ii) Company and such Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of Letters of Credit;
and
(iii) Company and such Subsidiaries may become and remain
liable for Contingent Obligations to make Investments permitted by
subsection 7.3.
7.5 Restricted Payments.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Payment, except Company may make open-market or private purchases
of its outstanding equity securities (or options or warrants to purchase such
securities) if the aggregate amount to be paid does not exceed $25,000,000 plus
twenty percent (20%) of the sum of Consolidated Net Income for each Fiscal
Quarter ending after the Closing Date and prior to the making of the applicable
Restricted Payment minus all amounts previously paid since the Closing Date for
purchases of such equity securities, options or warrants; provided that nothing
contained in this restriction shall limit Company's ability to repurchase Senior
Notes pursuant to a Regulatory Redemption (as defined in the Indenture).
7.6 Financial Covenants.
A. Minimum Fixed Charge Coverage Ratio. Company shall not permit
the Fixed Charge Coverage Ratio on the last day of each Fiscal Quarter occurring
in a period set forth below to be less than the amount set forth opposite such
period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
July 1, 1995 to June 30, 1996 1.50:1.00
July 1, 1996 to June 30, 1997 1.60:1.00
July 1, 1997 and thereafter 1.75:1.00
</TABLE>
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B. Minimum Consolidated EBIDTA. Company shall not permit Consolidated
EBIDTA for the four consecutive Fiscal Quarters ending on the last day of each
Fiscal Quarter occurring in the period set forth below to be less than the
amount set forth opposite such period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
July 1, 1995 to June 30, 1996 $55,000,000
July 1, 1996 to June 30, 1997 $65,000,000
July 1, 1997 and thereafter $75,000,000
</TABLE>
C. Maximum Adjusted Leverage Ratio. Company shall not permit the
Adjusted Leverage Ratio on the last day of each Fiscal Quarter occurring in the
period set forth below to be more than the amount set forth opposite such
period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
July 1, 1995 to June 30, 1996 2.50:1.00
July 1, 1996 to June 30, 1997 2.25:1.00
July 1, 1997 and thereafter 2.00:1.00
</TABLE>
D. Minimum Consolidated Tangible Net Worth. Company shall not permit
Consolidated Tangible Net Worth on the last day of each Fiscal Quarter to be
less than $132,600,000 plus seventy-five percent (75%) of Consolidated Net
Income earned after the Closing Date (but not net losses) plus fifty percent
(50%) of the net proceeds of any equity offering by Company completed subsequent
to the Closing Date less the aggregate amount expended by Company in connection
with repurchases of its equity securities.
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
Company shall not, and shall not permit any of its
Subsidiaries to, alter the corporate, capital or legal structure of Company or
any of its Subsidiaries, or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, sub-lease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its business, property or fixed assets, whether now owned or
hereafter acquired, or acquire by purchase or otherwise 50% or more of the
business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person or any division or line of business of any Person,
except:
(i) any Subsidiary of Company (other than a Guarantor) may be
merged with or into Company or any wholly-owned Subsidiary of Company,
or be liquidated, wound up or dissolved, or all or any part of its
business, property or
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assets may be conveyed, sold, leased, transferred or otherwise disposed
of, in one transaction or a series of transactions, to Company or any
wholly-owned Subsidiary of Company; provided that, in the case of such
a merger, Company or such wholly-owned Subsidiary shall be the
continuing or surviving corporation; provided further if any Guarantor
or grantor under a Collateral Document is the disappearing entity in a
merger with a wholly-owned Subsidiary that is not a Guarantor or
grantor, the surviving corporation shall execute a Guaranty and/or a
Subsidiary Security Agreement, as the case may be;
(ii) any Subsidiary of Company may change its legal structure
so long as (X) any such modification does not in any manner impair any
Lender's ability to realize the Collateral owned by such Subsidiary
upon an Event of Default and (Y) if such Subsidiary is the disappearing
entity in a merger devised to effect such a structural change, the
surviving entity shall execute a Guaranty and/or a Subsidiary Security
Agreement, as the case may be;
(iii) subject to subsections 7.11 and 2.4A(ii), Company and
its Subsidiaries may make Asset Sales of assets having a fair market
value not in excess of $5,000,000 on an individual basis; provided
that, with respect to the sale of any asset having a fair market value
equal to or exceeding $2,500,000, (x) the consideration received for
such assets shall be in an amount at least equal to the fair market
value thereof and (y) at least eighty percent (80%) of the considera-
tion received shall be Cash;
(iv) Company and its Subsidiaries may make acquisitions of
Securities issued by Company consistent with subsection 7.5; and
(v) RBI may convey real property to PMH or PMHLP or the
Riverside Joint Venture in connection with the operation of the
Maryland Heights Facility.
7.8 Transactions with Shareholders and Affiliates.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) the subject matter of
which involves an amount in excess of $1,000,000 with any holder of 5% or more
of any class of equity Securities of Company or with any Affiliate of Company or
of any such holder, on terms that are less favorable to Company or that
Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such a holder or Affiliate; provided that nothing
contained in the foregoing restriction shall apply to (i) any transaction
between Company and any of its wholly-owned Subsidiaries or between any of its
wholly-owned Subsidiaries or (ii) reasonable and customary fees paid to members
of the Boards of Directors of Company and its Subsidiaries.
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7.9 Disposal of Subsidiary Stock.
Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company, another Subsidiary of
Company, or to qualify directors if required by applicable law.
7.10 Conduct of Business.
From and after the Closing Date, Company shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Company and its Subsidiaries on the Closing Date as
described in the Memorandum and any Related Business and (ii) such other lines
of business as may be consented to by Requisite Lenders.
7.11 Tradenames, Trademarks and Servicemarks.
Company and its Subsidiaries shall not assign or in any other
manner alienate its interest in any tradenames, trademarks or servicemarks
relating or pertaining to any of the Facilities other than (i) as provided on
Schedule 7.11 or (ii) assignments in the ordinary course of Company's business
and similar in nature to the types of assignments undertaken by comparable
gaming entities.
7.12 Change of Control Offer.
Company shall not commence a Change of Control Offer (as
defined in the Indenture) without the consent of Requisite Lenders.
7.13 No Amendment of Indenture.
Company shall not amend the Indenture in any manner without
the prior written consent of Requisite Lenders, which consent shall not be
unreasonably withheld; provided that nothing contained in this restriction shall
apply to any amendment to the Indenture that either (i) does not require the
consent of any holder of Senior Notes or (ii) is required by a final order or
decree of a court of competent jurisdiction.
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7.14 No Movement of Other Barges.
Company and its Subsidiaries shall not permit any Other Barge
to be moved from permanent moorage at the Louisiana Premises or the Illinois
Premises, as applicable, unless and until (i) such Barge is registered with the
United States Coast Guard so as to become a US Documented Barge and (ii) a first
priority Lien has been created for the benefit of the Lenders pursuant to a duly
authorized, executed and delivered Ship Mortgage.
Section 8. EVENTS OF DEFAULT
IF any of the following conditions or events ("Events of
Default") shall occur:
8.1 Failure to Make Payments When Due.
Failure by Company to pay (i) any installment of principal of
or interest on any Loan when due, whether at stated maturity, by acceleration,
by notice of voluntary prepayment, by mandatory prepayment or otherwise; (ii)
when due any amount payable to Administrative Agent in reimbursement of any
drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee
or any other amount due under this Agreement within five days after the date
due; or
8.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to pay when
due (a) any principal of or interest on any Indebtedness (other than
Indebtedness referred to in subsection 8.1) in an individual principal amount of
$2,500,000 or more or any items of Indebtedness with an aggregate principal
amount of $5,000,000 or more or (b) any Contingent Obligation in an individual
principal amount of $2,500,000 or more or any Contingent Obligations with an
aggregate principal amount of $5,000,000 or more, in each case beyond the end of
any grace period provided therefor; or (ii) breach or default by Company or any
of its Subsidiaries with respect to any other material term of (a) any evidence
of any Indebtedness in an individual principal amount of $2,500,000 or more or
any items of Indebtedness with an aggregate principal amount of $5,000,000 or
more or any Contingent Obligation in an individual principal amount of
$2,500,000 or more or any Contingent Obligations with an aggregate principal
amount of $5,000,000 or more or (b) any loan agreement, mortgage, indenture or
other agreement relating to such Indebtedness or Contingent Obligation(s), if
the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf
of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or
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8.3 Breach of Certain Covenants.
Failure of Company to perform or comply with any term or
condition contained in subsection 2.4A(ii),2.5, 6.1(ix)(a), 6.2, 6.4B or Section
7 of this Agreement; or
8.4 Breach of Warranty.
Any representation, warranty, certification or other statement
made or deemed made by Company or any of its Subsidiaries in any Loan Document
or in any statement or certificate at any time given by Company or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date as of which made;
or
8.5 Other Defaults Under Loan Documents.
Company or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in this Agreement or any of
the other Loan Documents, other than any such term referred to in any other
subsection of this Section 8, and such default shall not have been remedied or
waived within 15 days after the earlier of (i) a Responsible Officer becoming
aware of such default or (ii) receipt by Company of notice from Administrative
Agent or any Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Company or any of its Subsidiaries in
an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Subsidiaries, and any such event described in
this clause (ii) shall continue for 45 days unless dismissed, bonded, discharged
or stayed; or
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8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Company or any of its Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Subsidiaries shall
make any assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
8.8 Judgments and Attachments.
Any money judgment, writ or warrant of attachment or similar
process involving (i) in any individual case an amount in excess of $2,500,000
or (ii) in the aggregate at any time an amount in excess of $5,000,000 (in
either case not adequately covered by insurance as to which an unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 45 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or
8.9 Dissolution.
Any order, judgment or decree shall be entered against Company
or any of its Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
8.10 Employee Benefit Plans.
A. There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Company or any of its Subsidiaries or any of their respective ERISA
Affiliates in excess of $5,000,000 during the term of this Agreement.
B. There shall exist an amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for
all Pension Plans (excluding for purposes of such computation any Pension Plans
with respect to which assets exceed benefit liabilities), which exceeds
$5,000,000, and such default shall not have been remedied or waived within 10
days after the earlier of (i) the date that, to
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Company's Best Knowledge, such condition exists or (ii) receipt by Company of
notice from Administrative Agent or any Lender of such default; or
8.11 Change in Control.
A Change of Control shall have occurred; or
8.12 Impairment of Collateral.
(A) A judgment creditor of Company or any of its Subsidiaries
shall obtain possession of any material portion of the Collateral under the
Collateral Documents by any means, including, without limitation, levy,
distraint, replevin or self-help, (B) any substantial portion of the Collateral
shall be taken by eminent domain or condemnation, (C) any of the Collateral
Documents shall cease for any reason (other than an act by Administrative Agent
or any Lender) to be in full force and effect, or any party thereto shall
purport to disavow its obligations thereunder or shall declare that it does not
have any further obligations thereunder or shall contest the validity or
enforceability thereof or Lenders shall cease to have a valid and perfected
first priority security interest in any material Collateral therein, or (D)
Lenders' security interests or liens on any material portion of the Collateral
under the Collateral Documents shall become otherwise impaired or unenforceable;
or
8.13 Loss of Gaming License.
The occurrence of a License Revocation by any Gaming Authority
in a jurisdiction in which Company or any of its Subsidiaries owns or operates a
casino, hotel, casino/hotel, resort, casino/resort, riverboat casino, dock
casino, any other type of casino, golf course, entertainment center or similar
facility; provided that such License Revocation continues for at least five (5)
calendar days; or
8.14 Invalidity of Guaranty.
The Guaranty, for any reason, other than the satisfaction in
full of all Obligations, the termination of this Agreement or the termination of
the Guaranty (or any Guarantor's obligations thereunder) in accordance with its
terms, ceases to be in full force and effect or is declared to be null and void
by final order of a court of competent jurisdiction, or any Guarantor denies
that it has any further liability under the Guaranty or claims that the Guaranty
is void or has no force or effect in whole or in part or gives notice to such
effect; or
8.15 Material Adverse Change.
The occurrence of an event or change that causes or evidences,
either in any case or in the aggregate, a Material Adverse Effect.
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THEN
8.16 Remedies.
At any time, (i) upon the occurrence of any Event of Default
described in subsection 8.6 or 8.7, each of (a) the unpaid principal amount of
and accrued interest on the Loans, (b) an amount equal to the maximum amount
that may at any time be drawn under all Letters of Credit then outstanding
(whether or not any beneficiary under any such Letter of Credit shall have
presented, or shall be entitled at such time to present, the drafts or other
documents or certificates required to draw under such Letter of Credit), and (c)
all other Obligations shall automatically become immediately due and payable,
without presentment, demand, protest or other requirements of any kind, all of
which are hereby expressly waived by Company, and the obligation of each Lender
to make any Loan and the obligation of Administrative Agent to issue any Letter
of Credit shall thereupon terminate, and (ii) upon the occurrence and during the
continuation of any other Event of Default, Administrative Agent shall, upon the
written request or with the written consent of Requisite Lenders, by written
notice to Company, declare all or any portion of the amounts described in
clauses (a) through (c) above to be, and the same shall forthwith become,
immediately due and payable, and the obligation of each Lender to make any Loan
shall thereupon terminate and the obligation of Administrative Agent to issue
any Letter of Credit hereunder shall thereupon terminate; provided, however,
that the foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i) or the obligations of Lenders to purchase participations in
any unpaid Swing Line Loans as provided in subsection 2.1B.
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Collateral Account Agreement and shall be applied as therein
provided.
Notwithstanding anything contained in the second preceding
paragraph, if at any time within 60 days after an acceleration of the Loans
pursuant to such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
that may be made at the election of Requisite Lenders and are not intended to
benefit Company and do not grant Company the right to require Lenders to rescind
or annul any acceleration hereunder, even if the conditions set forth herein are
met.
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Section 9. ADMINISTRATIVE AGENT
9.1 Appointment.
FIB is hereby appointed Administrative Agent hereunder and
under the other Loan Documents and each Lender hereby authorizes Administrative
Agent to act as its agent in accordance with the terms of this Agreement and the
other Loan Documents. Administrative Agent agrees to act upon the express
conditions contained in this Agreement and the other Loan Documents, as
applicable. The provisions of this Section 9 are solely for the benefit of
Administrative Agent, Managing Agents, Co- Arrangers and Lenders and Company
shall have no rights as a third party beneficiary of any of the provisions
thereof. In performing its functions and duties under this Agreement,
Administrative Agent shall act solely as an agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation towards or relationship
of agency or trust with or for Company or any of its Subsidiaries.
9.2 Powers; General Immunity.
A. Duties Specified. Each Lender irrevocably authorizes Administrative
Agent to take such action on such Lender's behalf and to exercise such powers
hereunder and under the other Loan Documents as are specifically delegated to
Administrative Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto. Administrative Agent shall have only those
duties and responsibilities that are expressly specified in this Agreement and
the other Loan Documents and it may perform such duties by or through its agents
or employees. No Managing Agent or Co-Arranger shall have any duty or
responsibility under this Agreement or any Loan Document in its capacity
therein. No Managing Agent, Co- Arranger or Administrative Agent shall have, by
reason of this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Administrative Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. Administrative Agent shall
not be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Administrative Agent to Lenders or by
or on behalf of Company to Administrative Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Administrative
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Agent be required to ascertain or inquire as to the performance or observance of
any of the terms, conditions, provisions, covenants or agreements contained in
any of the Loan Documents or as to the use of the proceeds of the Loans or the
use of the Letters of Credit or as to the existence or possible existence of any
Event of Default or Potential Event of Default. Anything contained in this
Agreement to the contrary notwithstanding, Administrative Agent shall not have
any liability arising from confirmations of the amount of outstanding Loans or
the Letter of Credit Usage or the component amounts thereof.
C. Exculpatory Provisions. Neither Administrative Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Administrative Agent under or in connection with any
of the Loan Documents except to the extent caused by Administrative Agent's
gross negligence or willful misconduct. If Administrative Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any of the other
Loan Documents, Administrative Agent shall be entitled to refrain from such act
or taking such action unless and until Administrative Agent shall have received
instructions from Requisite Lenders. Without prejudice to the generality of the
foregoing, (i) Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for
Company and its Subsidiaries), accountants, experts and other professional
advisors selected by it; and (ii) no Lender shall have any right of action
whatsoever against Administrative Agent as a result of Administrative Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders. Administrative Agent shall be entitled to refrain from exercising any
power, discretion or authority vested in it under this Agreement or any of the
other Loan Documents unless and until it has obtained the instructions of
Requisite Lenders or all Lenders as required or permitted by this Agreement.
Each Lender agrees that it shall not exercise any right of set-off described in
subsection 10.4 without the concurrence of Administrative Agent.
D. Administrative Agent Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Administrative Agent in its individual
capacity as a Lender hereunder. With respect to its participation in the Loans
and the Letters of Credit, Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Administrative Agent in its individual capacity.
Administrative Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
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duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
the Letters of Credit hereunder and that it has made and shall continue to make
its own appraisal of the creditworthiness of Company and its Subsidiaries.
Administrative Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and Administrative Agent
shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify Administrative Agent, to the extent that Administrative
Agent shall not have been reimbursed by Company, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Administrative Agent in performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as
Administrative Agent in any way relating to or arising out of this Agreement or
the other Loan Documents; provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Administrative
Agent's gross negligence or willful misconduct. If any indemnity furnished to
Administrative Agent for any purpose shall, in the opinion of Administrative
Agent, be insufficient or become impaired, Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
9.5 Successor Administrative Agent and Swing Line Lender.
A. Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company, provided that on or before the
effective date of any such resignation, a successor Administrative Agent shall
have been appointed pursuant to this subsection 9.5A. Administrative Agent may
be removed at any time with cause by an instrument or concurrent instruments in
writing delivered to Company
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and Administrative Agent and signed by Requisite Lenders. Upon any such notice
of resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Administrative
Agent. Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
B. Any resignation or removal of Administrative Agent pursuant to
subsection 9.5A shall also constitute the resignation or removal of FIB or its
successor as Swing Line Lender, and any successor Administrative Agent appointed
pursuant to subsection 9.5A shall, upon its acceptance of such appointment,
become the successor Swing Line Lender for all purposes hereunder. In such event
(i) Company shall prepay any outstanding Swing Line Loans made by the retiring
or removed Administrative Agent in its capacity as Swing Line Lender, (ii) upon
such prepayment, the retiring or removed Administrative Agent and Swing Line
Lender shall surrender any Swing Line Note held by it to Company for
cancellation, and (iii) if so requested by the successor Administrative Agent
and Swing Line Lender in accordance with subsection 2.1E, Company shall issue a
new Swing Line Note to the successor Administrative Agent and Swing Line Lender
substantially in the form of Exhibit VII annexed hereto, in the principal amount
of the Swing Line Loan Commitment then in effect and with other appropriate
insertions.
9.6 Collateral Documents.
Each Lender hereby further authorizes Administrative Agent to
enter into the Collateral Documents as secured party on behalf of and for the
benefit of each Lender and agrees to be bound by the terms of the Collateral
Documents; provided that Administrative Agent shall not enter into or consent to
any amendment, modification, termination or waiver of any provision contained in
the Collateral Documents except as set forth in subsection 10.6. Anything
contained in any of the Loan Documents to the contrary notwithstanding, each
Lender agrees that no Lender shall have any right individually to realize upon
any of the collateral under the Collateral Documents, it being understood and
agreed that all rights and remedies under the Collateral Documents may be
exercised solely by Administrative Agent for the benefit of Lenders in
accordance with the terms thereof.
9.7 Release of Collateral.
Administrative Agent may release personal property Collateral
without the consent of any Lender to the extent sold or disposed of by Company
or any of its
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Subsidiaries in a transaction or series of transactions that constitute a
permitted Asset Sale pursuant to subsection 7.7(ii) and that meets all of the
requirements contained therein. Administrative Agent may also, upon Borrower's
request, take such actions as are necessary to terminate any Ship Mortgage
relating to a Barge on file with the United States Coast Guard if, and only if,
(i) such Barge has ceased, or will concurrently with such termination cease, to
be a US Documented Barge and (ii) Administrative Agent shall have received
assurances, reasonably satisfactory to Administrative Agent, that upon giving
effect to such termination, such Barge will be subject to a perfected first
priority Lien in favor of Administrative Agent for the benefit of Lenders.
Section 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit
A. General. Each Lender shall have the right at any time to (i) sell,
assign or transfer to any Eligible Assignee, or (ii) sell participations to any
Person in, all or any part (subject to certain limitations set forth in
subsection 10.1B below) of its Commitment or any Loan or Loans made by it or its
Letters of Credit or participations therein or any other interest herein or in
any other Obligations owed to it; provided that no such sale, assignment,
transfer or participation shall, without the consent of Company, require Company
to file a registration statement with the Securities and Exchange Commission or
apply to qualify such sale, assignment, transfer or participation under the
securities laws of any state; provided, further that no such sale, assignment or
transfer described in clause (i) above shall be effective unless and until a
Lender Assignment Agreement (a "Lender Assignment Agreement") effecting such
sale, assignment or transfer shall have been accepted by Administrative Agent as
provided in subsection 10.1B(ii); provided, further that no such sale,
assignment, transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Commitment and the Loans of
the Lender effecting such sale, assignment, transfer or participation; and
provided, further that, anything contained herein to the contrary
notwithstanding, the Swing Line Loan Commitment may not be sold, assigned or
transferred as described in clause (i) above to any Person other than a
successor Administrative Agent and Swing Line Lender to the extent contemplated
by subsection 9.5. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitment or the Loans or
the other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan,
Letter of Credit or participation therein, or other Obligation may (a)
be assigned in any amount to another Lender or to an Affiliate of the
assigning Lender or
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another Lender, with the giving of notice to Company and Administrative
Agent or (b) be assigned in an aggregate amount of not less than
$5,000,000 (or such lesser amount as shall constitute the aggregate
amount of the Commitment, Loans, Letters of Credit and participations
therein, and other Obligations of the assigning Lender) to any other
Eligible Assignee with the giving of notice to Company and with the
consent of Managing Agents (which consent shall not be unreasonably
withheld). To the extent of any such assignment in accordance with
either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its Commitment, Loans, Letters of
Credit or participations therein, or other Obligations or the portion
thereof so assigned. The parties to each such assignment shall execute
and deliver to Administrative Agent, for its acceptance, a Lender
Assignment Agreement, together with a processing fee of $2,500 and such
forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under
such Lender Assignment Agreement may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery, acceptance and recordation from and after the
effective date specified in such Lender Assignment Agreement, (y) the
assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to
such Lender Assignment Agreement, shall have the rights and obligations
of a Lender hereunder and (z) the assigning Lender thereunder shall, to
the extent that rights and obligations hereunder have been assigned by
it pursuant to such Lender Assignment Agreement, relinquish its rights
and be released from its obligations under this Agreement (and, in the
case of a Lender Assignment Agreement covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto). The
Commitments hereunder shall be modified to reflect the Commitment of
such assignee and any remaining Commitment of such assigning Lender and
the assigning Lender shall, upon the effectiveness of such assignment
or as promptly thereafter as practicable, surrender its Note to
Administrative Agent for cancellation, and thereupon new Notes shall,
if so requested by the assignee and/or the assigning Lender in
accordance with subsection 2.1E, be issued to the assignee and/or to
the assigning Lender, substantially in the form of Exhibit VI or
Exhibit VII, respectively, annexed hereto with appropriate insertions,
to reflect the new Commitments of the assignee and/or the assigning
Lender.
(ii) Acceptance by Administrative Agent. Upon its receipt of a
Lender Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with
the processing fee and any forms, certificates or other evidence with
respect to United States federal income tax withholding matters that
such assignee may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
such Lender Assignment Agreement has been completed and is in
substantially the form of Exhibit V hereto and if Managing Agents have
consented
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to the assignment evidenced thereby (to the extent such consent is
required pursuant to subsection 10.1B(i)), (a) accept such Lender
Assignment Agreement by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required consent of
Administrative Agent to such assignment) and (b) give prompt notice
thereof to Company. Administrative Agent shall maintain a copy of each
Lender Assignment Agreement delivered to and accepted by it as provided
in this subsection 10.1B(ii).
(iii) Mandatory Assignment by Non-Suitable Lender. If any
Lender is required to qualify or be found suitable by the regulations
of any Gaming Authority and does not so qualify or otherwise not meet
the suitability standards pursuant to such regulations (in such case, a
"Former Lender"), such Former Lender shall and hereby agrees to sell
its rights and obligations under this Agreement to Eligible Assignee
(the "Substitute Lender"). The Substitute Lender shall assume the
rights and obligations of the Former Lender under this Agreement
pursuant to a Lender Assignment Agreement, which assumption shall be
required to comply with, and shall become effective in accordance with,
the provisions of subsection 10.1B; provided that the purchase price to
be paid by the Substitute Lender to Administrative Agent for the
account of the Former Lender for such assumption shall equal the sum of
(i) the unpaid principal amount of any Loans held by the Former Lender
plus accrued interest thereon plus (ii) the Former Lender's Pro Rata
Share (through the required purchase of participations pursuant to
subsection 3.1C) of the aggregate amount of drawings under all Letters
of Credit that have not been reimbursed by Company, plus accrued
interest thereon, plus (iii) such Former Lender's pro rata share of
accrued fees to the date of the assumption; provided further that, upon
receipt by the Former Lender of all such amounts, Administrative Agent
shall thereafter pay all obligations owing to the Former Lender under
the Loan Documents to the Substitute Lender. Each Lender agrees that if
it becomes a Former Lender, upon payment to it by Administrative Agent
(upon Administrative Agent's receipt thereof from the Substitute
Lender) of all such amounts, if any, owing to it under the Loan
Documents, it will execute and deliver a Lender Assignment Agreement.
Notwithstanding the foregoing, if any Lender becomes a Former
Lender and fails to find a Substitute Lender within 10 days of being
determined unsuitable or unqualified, or such lesser period of time as
specified by any such Gaming Authority for the withdrawal of a Former
Lender (the "Withdrawal Period"), Company shall have an additional 90
day period, or such lesser period of time as specified by such Gaming
Authority, to find a Substitute Lender, which Substitute Lender shall
assume the rights and obligations of the Former Lender as provided in
the preceding paragraph. In the event that Company shall not have found
a Substitute Lender within such period of time, Company shall
immediately (i) prepay in full the outstanding principal amount of
Loans held by such Former Lender, together with accrued interest
thereon to the earlier of (X) the date of payment or (Y) the last day
of any Withdrawal Period, and (ii) at the option of
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Company either (A) place an amount equal to such Former Lender's Pro
Rata Share in each Letter of Credit issued by Administrative Agent, in
a separate cash collateral account with Administrative Agent for each
outstanding Letter of Credit, which amount will be applied by
Administrative Agent to satisfy Company's reimbursement obligations to
Administrative Agent in respect of unreimbursed drawings under the
applicable Letter of Credit or (B) if no Event of Default then exists,
terminate the Revolving Loan Commitment of such Former Lender, at which
time the other Lenders' Pro Rata Shares will be automatically adjusted
as a result thereof; provided that the option specified in this clause
(B) may only be exercised if, immediately after giving effect thereto,
no Lender's outstanding Revolving Loans, when added to the product of
(a) such Lender's Pro Rata Share and (b) the sum of (I) the aggregate
amount of all outstanding Letters of Credit at such time and (II) the
aggregate amount of all Swing Line Loans then outstanding, would exceed
such Lender's Revolving Loan Commitment at such time. Each Lender
agrees that, to the extent and for so long as required by any
applicable Gaming Authority, such Lender's rights and obligations under
this Agreement are subject to the provisions of this subsection
10.1B(iii) and all restrictions of any applicable Gaming Authority.
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the final maturity of any portion of the
principal amount of or interest on any Loan allocated to such participation or
(ii) a reduction of the principal amount of or the rate of interest payable on
any Loan allocated to such participation, and all amounts payable by Company
hereunder (including without limitation amounts payable to such Lender pursuant
to subsections 2.6D and 2.7) shall be determined as if such Lender had not sold
such participation. Company and each Lender hereby acknowledge and agree that,
solely for purposes of subsections 10.4 and 10.5, (a) any participation will
give rise to a direct obligation of Company to the participant and (b) the
participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Note to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Assignments and Participations Subject to Gaming Laws. Subject to
the last sentence of this subsection 10.1E, each Lender agrees that all
assignments and
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participations made hereunder shall be subject to, and made in compliance with,
all Gaming Laws applicable to Lenders. Company hereby acknowledges that unless
Company has provided Lenders with a written opinion of counsel as to the
suitability standards applicable to Lenders of any relevant Gaming Authority
with jurisdiction over the business of Company and its Subsidiaries, no Lender
shall have the responsibility of determining whether or not a potential assignee
or participant of such Lender would qualify as a suitable Lender under the
Gaming Laws of any such jurisdiction.
F. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
10.2 Expenses.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents; (ii) all the costs of
furnishing all opinions by counsel for Company (including without limitation any
opinions requested by Lenders as to any legal matters arising hereunder) and of
each Loan Party's performance of and compliance with all agreements and
conditions on its part to be performed or complied with under this Agreement and
the other Loan Documents including, without limitation, with respect to
confirming compliance with environmental and insurance requirements; (iii) the
reasonable fees, expenses and disbursements of counsel to Administrative Agent
(including Allocated Costs of Internal Counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
the Loans and any consents, amendments, waivers or other modifications hereto or
thereto and any other documents or matters requested by Company or any other
Loan Party; (iv) all other actual and reasonable costs and expenses incurred by
Administrative Agent, Managing Agents and Co-Arrangers in connection with the
syndication of the Commitments and the negotiation, preparation and execution of
the Loan Documents and the transactions contemplated hereby and thereby; and (v)
after the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including Allocated Costs of Internal Counsel) and
costs of settlement, incurred by Administrative Agent and Lenders in enforcing
any Obligations of or in collecting any payments due from Company or any other
Loan Party hereunder or under the other Loan Documents by reason of such Event
of Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity.
In addition to the payment of expenses pursuant to subsection
10.2, whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Administrative Agent,
Managing
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Agents and Co-Arrangers and Lenders, and the officers, directors, employees,
agents and affiliates of Administrative Agent and Lenders (collectively called
the "Indemnitees") from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including without limitation
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including without limitation securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including without limitation
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds of any of the Loans or the issuance of the Letters of Credit hereunder
or the use or intended use of any of the Letters of Credit) or the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto (collectively called the "Indemnified Liabilities"); provided
that Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction. To the extent that the undertaking to defend, indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, Company shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuation of any Event of Default each Lender (with
the consent of Administrative Agent) is hereby authorized by Company at any time
or from time to time, without notice to Company or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement, the Letters of Credit and participations therein and the other
Loan Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not
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(i) that Lender shall have made any demand hereunder or (ii) the principal of or
the interest on the Loans or any amounts in respect of the Letters of Credit or
any other amounts due hereunder shall have become due and payable pursuant to
Section 8 and although said obligations and liabilities, or any of them, may be
contingent or unmatured. Company hereby further grants to Administrative Agent
and each Lender a security interest in all deposits and accounts maintained with
Administrative Agent or such Lender as security for the Obligations.
10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment, by realization upon security, through the
exercise of any right of set-off or banker's lien, by counterclaim or cross
action or by the enforcement of any right under the Loan Documents or otherwise,
or as adequate protection of a deposit treated as cash collateral under the
Bankruptcy Code, receive payment or reduction of a proportion of the aggregate
amount of principal, interest, amounts payable in respect of Letters of Credit,
fees and other amounts then due and owing to that Lender hereunder or under the
other Loan Documents (collectively, the "Aggregate Amounts Due" to such Lender)
which is greater than the proportion received by any other Lender in respect of
the Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the other
Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by
all Lenders in proportion to the Aggregate Amounts Due to them; provided that if
all or part of such proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the bankruptcy or
reorganization of Company or otherwise, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without interest.
Company expressly consents to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by Company to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
10.6 Amendments and Waivers.
No amendment, modification, termination or waiver of any
provision of this Agreement, the Notes or any other Loan Document, or consent to
any departure by Company therefrom, shall in any event be effective without the
written concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: increases the amount of any
of the Commitments; changes any Lender's Pro Rata Share; changes in any manner
the definition of "Requisite Lenders";
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changes in any manner any provision of this Agreement which, by its terms,
expressly requires the approval or concurrence of all Lenders; postpones the
Commitment Termination Date; postpones the date on which any interest or any
fees are payable; decreases the interest rate borne by any of the Loans (other
than any waiver of any increase in the interest rate applicable to any of the
Loans pursuant to subsection 2.2E) or the amount of any fees payable hereunder;
increases the maximum duration of Interest Periods permitted hereunder; reduces
the amount or postpones the due date of any amount payable in respect of, or
extends the required expiration date of, any Letter of Credit; changes in any
manner the obligations of Lenders relating to the purchase of participations in
Letters of Credit; or changes in any manner the provisions contained in
subsection 8.1 or this subsection 10.6 shall be effective only if evidenced by a
writing signed by or on behalf of all Lenders. In addition, (i) any amendment,
modification, termination or waiver of any of the provisions contained in
Section 4 shall be effective only if evidenced by a writing signed by or on
behalf of Administrative Agent and Requisite Lenders, (ii) no amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the Lender which is the holder of
that Note, (iii) no amendment, modification, termination or waiver of any
provision of subsection 2.1B or any other provision of this Agreement relating
to the Swing Line Loan Commitment or the Swing Line Loans shall be effective
without the written concurrence of Swing Line Lender, (iv) no amendment,
modification, termination or waiver of any provision of Section 3 or of any
Letter of Credit shall be effective without the written concurrence of
Administrative Agent, and (v) no amend- ment, modification, termination or
waiver of any provision of Section 9 or of any other provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of
Administrative Agent shall be effective without the written concurrence of
Administrative Agent. Administrative Agent may, but shall have no obligation to,
with the written concurrence of any Lender, execute amendments, modifications,
waivers or consents on behalf of that Lender. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on Company in any case shall entitle
Company to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
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10.8 Notices.
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, telexed or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or five
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such party in a written
notice delivered to the other parties hereto.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 10.2,
10.3 and 10.4 and the agreements of Lenders set forth in subsections 9.2C, 9.4
and 10.5 shall survive the payment of the Loans, the cancellation or termination
of the Letters of Credit and the reimbursement of any amounts drawn thereunder,
and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Administrative Agent or any
Lender in the exercise of any power, right or privilege hereunder or under any
other Loan Document shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
Neither Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
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preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 Severability.
In case any provision in or obligation under this Agreement or
the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender
shall be responsible for the obligations or Commitment of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no action
taken by Lenders pursuant hereto or thereto, shall be deemed to constitute
Lenders as a partnership, an association, a Joint Venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.
10.14 Headings.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 Applicable Law.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES; PROVIDED
THAT THE EXERCISE OF CERTAIN RIGHTS HEREUNDER OR UNDER THE LOAN DOCUMENTS MAY BE
SUBJECT TO AND/OR REQUIRE COMPLIANCE WITH THE GAMING LAWS.
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10.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lenders (it being understood
that Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 Consent to Jurisdiction and Service of Process; Choice of Forum.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEVADA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION.
Company hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to Company at its address provided in subsection 10.8, such service
upon receipt by Company being hereby acknowledged by Company to be sufficient
for personal jurisdiction in any action against Company in any such court upon
such receipt and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Lender to bring proceedings
against Company in the courts of any other jurisdiction.
10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR
THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party hereto acknowledges
that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on this waiver in entering into this Agreement, and that each will
continue to rely on this
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waiver in their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
10.19 Confidentiality.
Each Lender shall hold all non-public information obtained
pursuant to the requirements of this Agreement which has been identified as
confidential by Company in accordance with such Lender's customary procedures
for handling confidential information of this nature and in accordance with safe
and sound banking practices, it being understood and agreed by Company that in
any event a Lender may make disclosures reasonably required by any bona fide
assignee, transferee or participant in connection with the contemplated
assignment or transfer by such Lender of any Loans or any participation therein
or as required or requested by any governmental agency or representative thereof
or pursuant to legal process; provided that, unless specifically prohibited by
applicable law or court order, each Lender shall notify Company of any request
by any governmental agency or representative thereof (other than any such
request in connection with any examination of the financial condition of such
Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and provided, further that
in no event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries.
10.20 Licensing of Administrative Agent and Lenders.
If an Event of Default shall have occurred hereunder or under
any of the Loan Documents and it shall become necessary, or in the opinion of
Administrative Agent advisable, for an agent, receiver or other representative
of Administrative Agent to become licensed under the provisions of the laws of
the State of Illinois, Louisiana or Nevada, or rules and regulations adopted
pursuant thereto, as a condition to receiving the benefit of any Collateral
encumbered by the Collateral Documents for the benefit of Administrative Agent
on behalf of Lenders or otherwise to enforce their rights hereunder, Company
does hereby give its consent, and agrees to cause its Subsidiaries to give their
consents, to the granting of such license or licenses and agrees to execute such
further documents as may be required in connection with the evidencing of such
consent.
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10.21 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
10.22 Cooperation With Gaming Boards. Administrative Agent and each Lender agree
to cooperate with all Gaming Boards in connection with the administration of
their regulatory jurisdiction over any Loan Party, including the provision of
such documents or other information as may be requested by any such Gaming Board
relating to any Loan Party or to the Loan Documents.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS INTERNATIONAL, INC.,
as Borrower
By:
Title:
Notice Address:
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief
Financial Officer
With copies to:
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
FIRST INTERSTATE BANK OF NEVADA, N.A.,
individually, as Administrative Agent,
a Managing Agent and a Co-Arranger
By:
Title:
Notice Address:
3800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-1
<PAGE>
BANKERS TRUST COMPANY,
individually and as a Managing Agent
By:
Title:
Notice Address:
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Carmen Melendez
With a copy to:
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Edward H. Schweitzer
FIRST NATIONAL BANK OF COMMERCE,
as a Lender
By:
Title:
Notice Address:
210 Baronne Street
New Orleans, Louisiana 70160
Attention: Louis Ballero
S-2
<PAGE>
FIRST NATIONAL BANK OF METROPOLIS,
as a Lender
By:
Title:
Notice Address:
522 Market Street
Metropolis, Illinois 62960
Attention: Robert Williams
MERCANTILE BANK OF ST. LOUIS, N.A.,
as a Lender
By:
Title:
Notice Address:
7th & Washington
St. Louis, Missouri 63101
Attention: David Bentzinger
NBD BANK,
as a Lender
By:
Title:
Notice Address:
611 Woodward Avenue
Detroit, Michigan 48226
Attention: James B. Junker
S-3
<PAGE>
PRIMERIT BANK, FSB,
as a Lender
By:
Title:
Notice Address:
3300 West Sahara, #951
Las Vegas, Nevada 89102
Attention: Robert C. Glaser
S-4
<PAGE>
EXHIBITS
<TABLE>
<S> <C>
I FORM OF NOTICE OF BORROWING
III FORM OF NOTICE OF CONVERSION/CONTINUATION
IV FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
V FORM OF LENDER ASSIGNMENT AGREEMENT
VI FORM OF REVOLVING NOTE
VII FORM OF SWING LINE NOTE
VIII FORM OF COLLATERAL ACCOUNT AGREEMENT
IX-A FORM OF OPINION OF COMPANY COUNSEL
IX-B FORM OF OPINION OF O'MELVENY & MYERS
X FORM OF COMPLIANCE CERTIFICATE
XI FORM OF COMPANY PLEDGE AGREEMENT
XI-A FORM OF COMPANY PLEDGE AGREEMENT (NEVADA)
XI-B FORM OF LLC MEMBERSHIP INTEREST SECURITY
AGREEMENT
XI-C FORM OF FIRST AMENDMENT TO COMPANY PLEDGE
AGREEMENT (NEVADA)
XII FORM OF ENVIRONMENTAL INDEMNITY
XIII-A FORM OF ILLINOIS MORTGAGE
XIII-B FORM OF LOUISIANA MORTGAGE
XIII-C FORM OF NEVADA DEED OF TRUST
XIV FORM OF SHIP MORTGAGE
XV FORM OF GUARANTY
XVI FORM OF COMPANY SECURITY AGREEMENT
XVII-A FORM OF SUBSIDIARY SECURITY AGREEMENT (ILLINOIS)
XVII-B FORM OF SUBSIDIARY SECURITY AGREEMENT (LOUISIANA)
XVII-C FORM OF SUBSIDIARY SECURITY AGREEMENT (NEVADA)
XVIII FORM OF PARTNERSHIP INTEREST SECURITY AGREEMENT
XIX FORM OF MASTER VESSEL AND COLLATERAL TRUST
AGREEMENT
</TABLE>
(v)
<PAGE>
SCHEDULES
<TABLE>
<S> <C>
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF COMPANY
5.5 US DOCUMENTED BARGES
5.6 LITIGATION MATTERS
5.11 ERISA MATTERS
5.13 ENVIRONMENTAL MATTERS
5.19 TRADEMARK MATTERS
6.4(a) MINIMUM INSURANCE REQUIREMENTS
6.4(b) MINIMUM INSURANCE REQUIREMENTS - CONSTRUCTION
6.9 POST-CLOSING CONDITIONS
7.2 LIENS
7.3 INVESTMENTS
7.11 INTELLECTUAL PROPERTY ASSIGNMENTS
A-1 DESCRIPTION OF ILLINOIS PREMISES
A-2 DESCRIPTION OF LOUISIANA PREMISES
A-3 DESCRIPTION OF NEVADA PREMISES
</TABLE>
(vi)
<PAGE>
EXHIBIT 10.40
EXHIBIT VI
[FORM OF REVOLVING NOTE]
PLAYERS INTERNATIONAL, INC.
PROMISSORY NOTE
$ Las Vegas, Nevada
August 30, 1995
FOR VALUE RECEIVED, Players International, Inc., a Nevada
corporation ("Company"), promises to pay to the order of ("Payee") or its
registered assigns, on or before the Commitment Termination Date, the lesser of
(x) DOLLARS AND CENTS ($ . ) and (y) the unpaid principal amount
of all advances made by Payee to Company as Revolving Loans under the Credit
Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of August 25, 1995 by and among Company, the
financial institutions listed therein as Lenders, First Interstate Bank of
Nevada, N.A. ("FIB"), as administrative agent ("Administrative Agent"), FIB and
Bankers Trust Company, as Managing Agents, and FIB and BT Securities
Corporation, as Co-Arrangers (said Credit Agreement, as it may be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined).
This Note is one of Company's "Revolving Notes" in the
aggregate principal amount of $120,000,000 and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Revolving Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this
Revolving Note shall be made in lawful money of the United States of America in
same day funds at the Funding and Payment Office or at such other place as shall
be designated in writing for such purpose in accordance with the terms of the
Credit Agreement. Unless and until a Lender Assignment Agreement effecting the
assignment or transfer of this Revolving Note shall have been accepted by
Administrative Agent as provided in subsection 10.1B(ii) of the Credit
Agreement, Company and Administrative Agent shall be entitled to deem and treat
Payee as the owner and holder of this Revolving Note and the Revolving Loans
evidenced hereby. Payee hereby agrees, by its
<PAGE>
acceptance hereof, that before disposing of this Revolving Note or any part
hereof it will make a notation hereon of all principal payments previously made
hereunder and of the date to which interest hereon has been paid; provided,
however, that the failure to make a notation of any payment made on this
Revolving Note shall not limit or otherwise affect the obligations of Company
hereunder with respect to payments of principal of or interest on this Revolving
Note.
Whenever any payment on this Revolving Note shall be stated to
be due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Revolving Note.
This Revolving Note is subject to mandatory prepayment as
provided in subsection 2.4B(ii) of the Credit Agreement and to prepayment at the
option of Company as provided in subsection 2.4B(i) of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS REVOLVING NOTE SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Revolving Note, together with all accrued and
unpaid interest thereon, may become, or may be declared to be, due and payable
in the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Revolving Note are subject to amendment only
in the manner provided in the Credit Agreement.
This Revolving Note is subject to restrictions on transfer or
assignment as provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Revolving Note or the Credit Agreement shall alter or impair the
obligations of Company, which are absolute and unconditional, to pay the
principal of and interest on this Revolving Note at the place, at the respective
times, and in the currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Revolving Note.
Company and any endorsers of this Revolving Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
VI-2
<PAGE>
IN WITNESS WHEREOF, Company has caused this Revolving Note to
be duly executed and delivered by its officer thereunto duly authorized as of
the date and at the place first written above.
PLAYERS INTERNATIONAL, INC.
By: __________________________
Title: ________________________
VI-3
<PAGE>
TRANSACTIONS
ON
REVOLVING NOTE
<TABLE>
<CAPTION>
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
VI-4
<PAGE>
EXHIBIT 10.41
EXHIBIT VII
[FORM OF SWING LINE NOTE]
PLAYERS INTERNATIONAL, INC.
PROMISSORY NOTE
$5,000,000.00 Las Vegas, Nevada
August 30, 1995
FOR VALUE RECEIVED, Players International, Inc., a Nevada
corporation ("Company"), promises to pay to the order of First Interstate Bank
of Nevada, N.A. ("Payee") or its registered assigns, on or before the fifth
Business Day prior to the Commitment Termination Date, the lesser of (x) FIVE
MILLION DOLLARS AND NO CENTS ($5,000,000.00) and (y) the unpaid principal amount
of all advances made by Payee to Company as Swing Line Loans under the Credit
Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of August 25, 1995 by and among Company, the
financial institutions listed therein as Lenders, Payee, as Administrative
Agent, Payee and Bankers Trust Company, as Managing Agents, and Payee and BT
Securities Corporation, as Co-Arrangers (said Credit Agreement, as it may be
amended, supplemented or otherwise modified from time to time, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined).
This Note is Company's "Swing Line Note" and is issued pursuant
to and entitled to the benefits of the Credit Agreement, to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Swing Line Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Swing
Line Note shall be made in lawful money of the United States of America in same
day funds at the Funding and Payment Office or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
Credit Agreement.
Whenever any payment on this Swing Line Note shall be stated to
be due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day
VII-1
<PAGE>
and such extension of time shall be included in the computation of the payment
of interest on this Swing Line Note.
This Swing Line Note is subject to mandatory prepayment as
provided in subsection 2.4B(ii) of the Credit Agreement and to prepayment at the
option of Company as provided in subsection 2.4B(i) of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS SWING LINE NOTE SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Swing Line Note, together with all accrued and
unpaid interest thereon, may become, or may be declared to be, due and payable
in the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Swing Line Note are subject to amendment only
in the manner provided in the Credit Agreement.
This Swing Line Note is subject to restrictions on transfer or
assignment as provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Swing Line Note or the Credit Agreement shall alter or impair the
obligations of Company, which are absolute and unconditional, to pay the
principal of and interest on this Swing Line Note at the place, at the
respective times, and in the currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Swing Line Note.
Company and any endorsers of this Swing Line Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Swing Line Note to
be duly executed and delivered by its officer thereunto duly authorized as of
the date and at the place first written above.
PLAYERS INTERNATIONAL, INC.
By: __________________________
Title: ________________________
VII-2
<PAGE>
TRANSACTIONS
ON
SWING LINE NOTE
<TABLE>
<CAPTION>
Outstanding
Amount of Amount of Principal
Loan Made Principal Paid Balance Notation
Date This Date This Date This Date Made By
---- --------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
</TABLE>
VII-3
EXHIBIT 10.42
EXHIBIT XV
[FORM OF GUARANTY]
GUARANTY
This GUARANTY is entered into as of August 25, 1995 by the
undersigned (each a "Guarantor" and collectively, "Guarantors") in favor of and
for the benefit of FIRST INTERSTATE BANK OF NEVADA, N.A. ("FIB"), as
administrative agent for and representative of (in such capacity herein called
"Administrative Agent") the financial institutions ("Lenders") party to the
Credit Agreement (as hereinafter defined).
RECITALS
A. Players International Inc., a Nevada corporation
("Company"), has entered into that certain Credit Agreement dated as of August
25, 1995 with Administrative Agent, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers (said
Credit Agreement, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement"; capitalized terms
defined therein and not otherwise defined herein being used herein as therein
defined).
B. A portion of the proceeds of the Loans or Letters of Credit
may be advanced to Guarantors and thus the Guarantied Obligations (as
hereinafter defined) are being incurred for and will inure to the benefit of
Guarantors (which benefits are hereby acknowledged).
C. It is a condition precedent to the making of the initial
Loans and the issuance of the Letters of Credit under the Credit Agreement that
Company's obligations thereunder be guarantied by Guarantors.
D. Guarantors are willing irrevocably and unconditionally to
guaranty such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Lenders and Administrative Agent to enter
into the Credit Agreement and to make the Loans and to issue the Letters of
Credit thereunder, Guarantors hereby agree as follows:
<PAGE>
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Guaranty, the following
terms shall have the following meanings unless the context otherwise requires:
"Guaranteed Principal" has the meaning assigned to that term in
subsection
2.1.
"Guarantied Obligations" has the meaning assigned to that term
in subsection
2.1.
"Guaranty" means this Guaranty dated as of August 25, 1995, as
it may be amended, supplemented or otherwise modified from time to
time.
"payment in full", "paid in full" or any similar term means
payment in full of the Guarantied Obligations including, without
limitation, all principal, interest, costs, fees and expenses
(including, without limitation, legal fees and expenses) of Lenders and
Administrative Agent as required under the Loan Documents.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Guaranty unless
otherwise specifically provided.
(b) In the event of any conflict or inconsistency between the
terms, conditions and provisions of this Guaranty and the terms,
conditions and provisions of the Credit Agreement, the terms,
conditions and provisions of this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guarantied Obligations. Subject to the provisions of
subsection 2.2(a), Guarantors jointly and severally hereby irrevocably and
unconditionally guaranty, as primary obligors and not merely as sureties, the
due and punctual payment in full of all Guarantied Obligations when the same
shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss. 362(a)). The term "Guarantied Obligations" is
used herein in its most comprehensive sense and includes:
(a) any and all Obligations of Company now or hereafter made,
incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, and however arising under or in
connection with the Credit Agreement and the
XV-2
<PAGE>
other Loan Documents, including those arising under successive
borrowing transactions under the Credit Agreement which shall either
continue the Obligations of Company or from time to time renew them
after they have been satisfied; and
(b) those expenses set forth in subsection 2.8 hereof.
Notwithstanding the foregoing, the maximum aggregate liability of each
Guarantor under this Guaranty for the prompt payment in full by Company of all
obligations under the Notes and all outstanding Letters of Credit (collectively,
the "Guaranteed Principal") shall not exceed $120,000,000. In addition to such
amounts, however, each Guarantor irrevocably and unconditionally guarantees the
following obligations and liabilities: (i) any and all interest accruing on the
Guaranteed Principal under any Loan Document; and (ii) any and all fees, charges
and costs of collecting the Guaranteed Principal or otherwise enforcing
Administrative Agent's and Lenders' rights hereunder, including, without
limitation, the reasonable fees and expenses of counsel to Administrative Agent
and each Lender.
2.2 Limitation on Amount Guarantied; Contribution by Guarantors. (a)
Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (x) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (y) under
any guaranty of indebtedness subordinated in manner of payment to the
Obligations which guaranty contains a limitation as to maximum amount similar to
that set forth in this subsection 2.2(a), pursuant to which the liability of
such Guarantor hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, reimbursement, indemnification or contribution of
such Guarantor pursuant to applicable law or pursuant to the terms of any
agreement (including without limitation any such right of contribution under
subsection 2.2(b).
(b) Guarantors under this Guaranty together desire to allocate among
themselves, in a fair and equitable manner, their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this Guaranty (a "Funding Guarantor") that exceeds
its Fair Share (as defined below) as of such date, that Funding Guarantor shall
be entitled to a contribution from each of the other Guarantors in the
XV-3
<PAGE>
amount of such other Guarantor's Fair Share Shortfall (as defined below) as
of such date, with the result that all such contributions will cause each
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share as of
such date. "Fair Share" means, with respect to a Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Guarantor to (y) the aggregate of
the Adjusted Maximum Amounts with respect to all Guarantors, multiplied by (ii)
the aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations guarantied. "Fair
Share Shortfall" means, with respect to a Guarantor as of any date of
determination, the excess, if any, of the Fair Share of such Guarantor over the
Aggregate Payments of such Guarantor. "Adjusted Maximum Amount" means, with
respect to a Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Guarantor under this Guaranty, determined as
of such date in accordance with subsection 2.2(a); provided that, solely for
purposes of calculating the "Adjusted Maximum Amount" with respect to any
Guarantor for purposes of this subsection 2.2(b), any assets or liabilities of
such Guarantor arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall
not be considered as assets or liabilities of such Guarantor. "Aggregate
Payments" means, with respect to a Guarantor as of any date of determination, an
amount equal to (i) the aggregate amount of all payments and distributions made
on or before such date by such Guarantor in respect of this Guaranty (including,
without limitation, in respect of this subsection 2.2(b)) minus (ii) the
aggregate amount of all payments received on or before such date by such
Guarantor from the other Guarantors as contributions under this subsection
2.2(b). The amounts payable as contributions hereunder shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Guarantors of their obligations as set
forth in this subsection 2.2(b) shall not be construed in any way to limit the
liability of any Guarantor hereunder.
2.3 Payment by Guarantors; Application of Payments. Subject to the
provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which
Administrative Agent or any other Person may have at law or in equity against
any Guarantor by virtue hereof, that upon the failure of Company to pay any of
the Guarantied Obligations when and as the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.
362(a)), Guarantors will upon demand pay, or cause to be paid, in cash, to
Administrative Agent for the ratable benefit of Lenders, an amount equal to the
sum of the unpaid principal amount of all Guarantied Obligations then due as
aforesaid, accrued and unpaid interest on such Guarantied Obligations
(including, without limitation, interest which, but for the filing of a petition
in bankruptcy with respect to Company, would have accrued on such Guarantied
Obligations, whether or not a claim is allowed against Company for such interest
in any such bankruptcy proceeding) and all other Guarantied Obligations then
owed to Administrative
XV-4
<PAGE>
Agent and/or Lenders as aforesaid. All such payments shall be applied
promptly from time to time by Administrative Agent:
First, to the payment of the costs and expenses of any
collection or other realization under this Guaranty, including
reasonable compensation to Administrative Agent and its agents and
counsel, and all expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith;
Second, to the payment of all other Guarantied Obligations in
such order as Administrative Agent shall elect; and
Third, after payment in full of all Guarantied Obligations, to
the payment to Guarantors, or their respective successors or assigns,
or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any surplus then
remaining from such payments.
2.4 Liability of Guarantors Absolute. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Administrative Agent may enforce this Guaranty upon the
occurrence of an Event of Default under the Credit Agreement
notwithstanding the existence of any dispute between Lenders and
Company with respect to the existence of such Event of Default.
(c) The obligations of each Guarantor hereunder are independent
of the obligations of Company under the Loan Documents and the
obligations of any other guarantor (including any other Guarantor) of
the obligations of Company under the Loan Documents, and a separate
action or actions may be brought and prosecuted against such Guarantor
whether or not any action is brought against Company or any of such
other guarantors and whether or not Company is joined in any such
action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge
any Guarantor's liability for any portion of the Guarantied Obligations
which has not been paid. Without limiting the generality of the
foregoing, if Administrative Agent is awarded a judgment in any suit
brought to enforce any Guarantor's covenant to pay a portion of the
Guarantied Obligations, such judgment shall not be deemed to release
such
XV-5
<PAGE>
Guarantor from its covenant to pay the portion of the Guarantied
Obligations that is not the subject of such suit, and such judgment
shall not, except to the extent satisfied by such Guarantor, limit,
affect, modify or abridge any other Guarantor's liability hereunder in
respect of the Guarantied Obligations.
(e) Administrative Agent or any Lender, upon such terms as it
deems appropriate, without notice or demand and without affecting the
validity or enforceability of this Guaranty or giving rise to any
reduction, limitation, impairment, discharge or termination of any
Guarantor's liability hereunder, from time to time may (i) renew,
extend, accelerate, increase the rate of interest on, or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (ii) settle, compromise, release or discharge, or accept
or refuse any offer of performance with respect to, or substitutions
for, the Guarantied Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guaranties of the
Guarantied Obligations and take and hold security for the payment of
this Guaranty or the Guarantied Obligations; (iv) release, surrender,
exchange, substitute, compromise, settle, rescind, waive, alter,
subordinate or modify, with or without consideration, any security for
payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person
(including any other Guarantor) with respect to the Guarantied
Obligations; (v) enforce and apply any security now or hereafter held
by or for the benefit of Administrative Agent or any Lender in respect
of this Guaranty or the Guarantied Obligations and direct the order or
manner of sale thereof, or exercise any other right or remedy that
Administrative Agent or Lenders, or any of them, may have against any
such security, as Administrative Agent in its discretion may determine
consistent with the Credit Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one
or more judicial or nonjudicial sales, whether or not every aspect of
any such sale is commercially reasonable, and even though such action
operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of any Guarantor against Company
or any security for the Guarantied Obligations; and (vi) exercise any
other rights available to it under the Loan Documents.
(f) This Guaranty and the obligations of Guarantors hereunder
shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guarantied Obligations),
including without limitation the occurrence of any of the following,
whether or not any Guarantor shall have had notice or knowledge of any
of them: (i) any failure or omission to assert or enforce or agreement
or election not to assert or enforce, or the stay or enjoining, by
order of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Loan Documents, at law, in equity or
otherwise) with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied
XV-6
<PAGE>
Obligations; (ii) any rescission, waiver, amendment or modification of,
or any consent to departure from, any of the terms or provisions
(including without limitation provisions relating to events of default)
of the Credit Agreement, any of the other Loan Documents or any
agreement or instrument executed pursuant thereto, or of any other
guaranty or security for the Guarantied Obligations, in each case
whether or not in accordance with the terms of the Credit Agreement or
such Loan Document or any agreement relating to such other guaranty or
security; (iii) the Guarantied Obligations, or any agreement relating
thereto, at any time being found to be illegal, invalid or
unenforceable in any respect; (iv) the application of payments received
from any source (other than payments received pursuant to the other
Loan Documents or from the proceeds of any security for the Guarantied
Obligations, except to the extent such security also serves as
collateral for indebtedness other than the Guarantied Obligations) to
the payment of indebtedness other than the Guarantied Obligations, even
though Administrative Agent or Lenders, or any of them, might have
elected to apply such payment to any part or all of the Guarantied
Obligations; (v) any Lender's or Administrative Agent's consent to the
change, reorganization or termination of the corporate structure or
existence of Company or any of its Subsidiaries and to any
corresponding restructuring of the Guarantied Obligations; (vi) any
failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations; (vii) any
defenses, set-offs or counterclaims which Company may allege or assert
against Administrative Agent or any Lender in respect of the Guarantied
Obligations, including but not limited to failure of consideration,
breach of warranty, payment, statute of frauds, statute of limitations,
accord and satisfaction and usury; and (viii) any other act or thing or
omission, or delay to do any other act or thing, which may or might in
any manner or to any extent vary the risk of any Guarantor as an
obligor in respect of the Guarantied Obligations.
2.5 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of
Lenders and Administrative Agent:
(a) any right to require Administrative Agent or Lenders, as a
condition of payment or performance by such Guarantor, to (i) proceed
against Company, any other guarantor (including any other Guarantor) of
the Guarantied Obligations or any other Person, (ii) proceed against or
exhaust any security held from Company, any other guarantor (including
any other Guarantor) of the Guarantied Obligations or any other Person,
(iii) proceed against or have resort to any balance of any deposit
account or credit on the books of Administrative Agent or any Lender in
favor of Company or any other Person, or (iv) pursue any other remedy
in the power of Administrative Agent or any Lender whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including,
without limitation, any defense based on or arising out of the lack of
validity or the unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the
XV-7
<PAGE>
cessation of the liability of Company from any cause other than payment
in full of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
(d) any defense based upon Administrative Agent's or any
Lender's errors or omissions in the administration of the Guarantied
Obligations, except behavior which amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of such Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations
affecting such Guarantor's liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims,
and (iv) promptness, diligence and any requirement that Administrative
Agent or any Lender protect, secure, perfect or insure any security
interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the
Credit Agreement or any agreement or instrument related thereto,
notices of any renewal, extension or modification of the Guarantied
Obligations or any agreement related thereto, any Notice of Borrowing
received by Administrative Agent or any Lender, any extension of credit
to Company and notices of any of the matters referred to in subsection
2.4 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty,
including, without limitation, (i) the provisions of Nevada Revised
Statutes Sections 40.430-40.459, 40.475 and 40.485 only to the extent
permitted by Nevada Revised Statutes Section 40.495, and any successor
provisions, and (ii) the provisions of Louisiana Civil Code Title XVI,
including, but not limited to all rights of division and discussion and
any right of any Guarantor to terminate the Guaranty under Louisiana
Civil Code article 3061, it being understood that Administrative Agent
and each Lender have irrevocably changed their respective position by
advancing or agreeing to advance funds to Company under the Credit
Agreement based upon the continued existence of this Guaranty and the
grant of collateral by certain Guarantors to secure their obligations
under this Guaranty.
2.6 Guarantors' Rights of Subrogation, Contribution, Etc. Until the
Guarantied Obligations shall have been paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been terminated
or cancelled, each Guarantor shall
XV-8
<PAGE>
withhold exercise of (a) any claim, right or remedy, direct or indirect,
that such Guarantor now has or may hereafter have against Company or any of its
assets in connection with this Guaranty or the performance by such Guarantor of
its obligations hereunder, in each case whether such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise and
including without limitation (i) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against
Company, (ii) any right to enforce, or to participate in, any claim, right or
remedy that Administrative Agent or any Lender now has or may hereafter have
against Company, and (iii) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by Administrative Agent or any
Lender, and (b) any right of contribution such Guarantor may have against any
other guarantor (including any other Guarantor) of any of the Guarantied
Obligations (including without limitation any such right of contribution. Each
Guarantor further agrees that, to the extent the agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification such Guarantor may have against Company or against any
collateral or security, and any rights of contribution such Guarantor may have
against any such other guarantor, shall be junior and subordinate to any rights
Administrative Agent or Lenders may have against Company, to all right, title
and interest Administrative Agent or Lenders may have in any such collateral or
security, and to any right Administrative Agent or Lenders may have against such
other guarantor. Administrative Agent, on behalf of Lenders, may use, sell or
dispose of any item of collateral or security as it sees fit without regard to
any subrogation rights any Guarantor may have, and upon any such disposition or
sale any rights of subrogation such Guarantor may have shall terminate. If any
amount shall be paid to any Guarantor on account of any such subrogation,
reimbursement or indemnification rights at any time when all Guarantied
Obligations shall not have been paid in full, such amount shall be held in trust
for Administrative Agent on behalf of Lenders and shall forthwith be paid over
to Administrative Agent for the benefit of Lenders to be credited and applied
against the Guarantied Obligations, whether matured or unmatured, in accordance
with the terms hereof.
2.7 Subordination of Other Obligations. Any indebtedness of Company now or
hereafter held by any Guarantor is hereby subordinated in right of payment to
the Guarantied Obligations, and any such indebtedness of Company to such
Guarantor collected or received by such Guarantor after an Event of Default has
occurred and is continuing shall be held in trust for Administrative Agent on
behalf of Lenders and shall forthwith be paid over to Administrative Agent for
the benefit of Lenders to be credited and applied against the Guarantied
Obligations but without affecting, impairing or limiting in any manner the
liability of such Guarantor under any other provision of this Guaranty.
2.8 Expenses. Guarantors jointly and severally agree to pay, or cause to be
paid, on demand, and to save Administrative Agent and Lenders harmless against
liability for, any and all costs and expenses (including fees and disbursements
of counsel and allocated costs of
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internal counsel) incurred or expended by Administrative Agent or any
Lender in connection with the enforcement of or preservation of any rights under
this Guaranty.
2.9 Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in effect until the day following the date that all of the Guarantied
Obligations shall have been paid in full and the Commitments shall have
terminated and all Letters of Credit shall have expired or been terminated or
cancelled; provided, however, that this Guaranty shall, in the event Kentucky
law is (notwithstanding the choice of Nevada law set forth in section 5.6)
deemed applicable hereto, terminate as to Players Bluegrass Downs, Inc. only on
September 30, 2010, if not theretofore terminated as to such Guarantor pursuant
to the preceding provisions of this sentence. Each Guarantor hereby irrevocably
waives any right to revoke this Guaranty as to future transactions giving rise
to any Guarantied Obligations.
2.10 Authority of Guarantors or Company. It is not necessary for Lenders or
Administrative Agent to inquire into the capacity or powers of any Guarantor or
Company or the officers, directors or any agents acting or purporting to act on
behalf of any of them.
2.11 Financial Condition of Company. Any Loans may be granted or Letters of
Credit issued to Company or continued from time to time without notice to or
authorization from any Guarantor regardless of the financial or other condition
of Company at the time of any such grant or continuation. Lenders and
Administrative Agent shall have no obligation to disclose or discuss with any
Guarantor their assessment, or any Guarantor's assessment, of the financial
condition of Company. Each Guarantor has adequate means to obtain information
from Company on a continuing basis concerning the financial condition of Company
and its ability to perform its obligations under the Loan Documents, and each
Guarantor assumes the responsibility for being and keeping informed of the
financial condition of Company and of all circumstances bearing upon the risk of
nonpayment of the Guarantied Obligations. Each Guarantor hereby waives and
relinquishes any duty on the part of Administrative Agent or any Lender to
disclose any matter, fact or thing relating to the business, operations or
conditions of Company now known or hereafter known by Administrative Agent or
any Lender.
2.12 Rights Cumulative. The rights, powers and remedies given to Lenders
and Administrative Agent by this Guaranty are cumulative and shall be in
addition to and independent of all rights, powers and remedies given to Lenders
and Administrative Agent by virtue of any statute or rule of law or in any of
the other Loan Documents or any agreement between any Guarantor and Lenders
and/or Administrative Agent or between Company and Lenders and/or Administrative
Agent. Any forbearance or failure to exercise, and any delay by any Lender or
Administrative Agent in exercising, any right, power or remedy hereunder shall
not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.
2.13 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty. (a) So
long as any Guarantied Obligations remain outstanding, no Guarantor shall,
without the prior
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written consent of Administrative Agent in accordance with the terms of the
Credit Agreement, commence or join with any other Person in commencing any
bankruptcy, reorganization or insolvency proceedings of or against Company. The
obligations of Guarantors under this Guaranty shall not be reduced, limited,
impaired, discharged, deferred, suspended or terminated by any proceeding,
voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of Company or by any defense which
Company may have by reason of the order, decree or decision of any court or
administrative body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any portion
of the Guarantied Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Guarantied Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors and Administrative Agent that the Guarantied Obligations
which are guarantied by Guarantors pursuant to this Guaranty should be
determined without regard to any rule of law or order which may relieve Company
of any portion of such Guarantied Obligations. Guarantors will permit any
trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit
of creditors or similar person to pay Administrative Agent, or allow the claim
of Administrative Agent in respect of, any such interest accruing after the date
on which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations are
paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Administrative Agent or any Lender as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guarantied Obligations for all purposes under this
Guaranty.
2.14 Notice of Events. As soon as any Guarantor obtains knowledge thereof,
such Guarantor shall give Administrative Agent written notice of any condition
or event which has resulted in (a) a material adverse change in the financial
condition of any Guarantor or Company or (b) a breach of or noncompliance with
any term, condition or covenant contained herein or in the Credit Agreement, any
other Loan Document or any other document delivered pursuant hereto or thereto.
2.15 Set Off. In addition to any other rights any Lender or Administrative
Agent may have under law or in equity, if any amount shall at any time be due
and owing by any Guarantor to any Lender or Administrative Agent under this
Guaranty, such Lender or Administrative Agent is authorized at any time or from
time to time, without notice (any such notice being hereby expressly waived), to
set off and to appropriate and to apply any and all deposits (general or
special, including but not limited to indebtedness evidenced by
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certificates of deposit, whether matured or unmatured) and any other
indebtedness of any Lender or Administrative Agent owing to such Guarantor and
any other property of such Guarantor held by any Lender or Administrative Agent
to or for the credit or the account of such Guarantor against and on account of
the Guarantied Obligations and liabilities of such Guarantor to any Lender or
Administrative Agent under this Guaranty.
2.16 Discharge of Guaranty Upon Sale of Guarantor. If all of the stock of
any Guarantor or any of its successors in interest under this Guaranty shall be
sold or otherwise disposed of (including by merger or consolidation) in an Asset
Sale not prohibited by subsection 7.7 of the Credit Agreement or otherwise
consented to by Requisite Lenders and pursuant to which the Net Cash Proceeds of
such Asset Sale are required to be delivered to Secured Party pursuant to
subsection 2.4A(ii)(a) of the Credit Agreement, the Guaranty of such Guarantor
or such successor in interest, as the case may be, hereunder shall automatically
be discharged and released without any further action by Administrative Agent or
any Lender or any other Person effective as of the time of such Asset Sale;
provided that, as a condition precedent to such discharge and release, Secured
Party shall have received evidence satisfactory to it that arrangements
satisfactory to it have been made for delivery to Administrative Agent of the
Net Cash Proceeds of such Asset Sale to the extent required by subsection
2.4A(ii)(a) of the Credit Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders and Administrative Agent to accept this Guaranty
and to enter into the Credit Agreement and to make the Loans and to issue the
Letters of Credit thereunder, each Guarantor hereby represents and warrants to
Lenders that the following statements are true and correct:
3.1 Corporate or Partnership Existence. Such Guarantor is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation (or, in the case of Showboat Star Partnership ("SSP"), is duly
formed, validly existing and in good standing under the laws of its jurisdiction
of formation), has the corporate or, in the case of SSP, partnership power to
own its assets and to transact the business in which it is now engaged and is
duly qualified as a foreign corporation or, in the case of SSP, partnership, and
in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except for failures to be so qualified, authorized or licensed that would not in
the aggregate have a material adverse effect on the business, operations, assets
or financial condition of such Guarantor.
3.2 Corporate or Partnership Power; Authorization; Enforceable Obligations.
Such Guarantor has the corporate or, in the case of SSP, partnership power,
authority and legal right to execute, deliver and perform this Guaranty and all
obligations required hereunder and has taken all necessary corporate or, in the
case of SSP, partnership action to authorize its Guaranty hereunder on the terms
and conditions hereof and its execution,
XV-12
<PAGE>
delivery and performance of this Guaranty and all obligations required
hereunder. No consent of any other Person including, without limitation,
stockholders and creditors of such Guarantor or, in the case of SSP, other
partners, and no license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required by such Guarantor in connection with this
Guaranty or the execution, delivery, performance, validity or enforceability of
this Guaranty and all obligations required hereunder. This Guaranty has been,
and each instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of such Guarantor or, in the case of SSP,
by a duly authorized officer of each of its general partners, and this Guaranty
constitutes, and each instrument or document required hereunder when executed
and delivered by such Guarantor hereunder will constitute, the legally valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
equitable principles relating to or limiting creditors' rights generally.
3.3 No Legal Bar to this Guaranty. The execution, delivery and performance
of this Guaranty and the documents or instruments required hereunder, and the
use of the proceeds of the borrowings under the Credit Agreement, will not
violate any provision of any existing law or regulation binding on such
Guarantor, or any order, judgment, award or decree of any court, arbitrator or
governmental authority binding on such Guarantor, or the certificate of
incorporation or bylaws of such Guarantor or any securities issued by such
Guarantor, or any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which such Guarantor is a party or by which such
Guarantor or any of its assets may be bound, the violation of which would have a
material adverse effect on the business, operations, assets or financial
condition of such Guarantor and will not result in, or require, the creation or
imposition of any Lien on any of its property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.
SECTION 4. AFFIRMATIVE COVENANTS
Each Guarantor covenants and agrees that, unless and until all of the
Guarantied Obligations shall have been paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been terminated
or cancelled, unless Requisite Lenders shall otherwise consent in writing:
4.1 Corporate or Partnership Existence, Etc. Except as permitted by
subsection 7.7 of the Credit Agreement, such Guarantor shall at all times
preserve and keep in full force and effect its corporate or, in the case of SSP,
partnership existence and all rights and franchises material to its business.
XV-13
<PAGE>
4.2 Compliance with Laws, Etc. Such Guarantor shall comply in all material
respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying when due all taxes,
assessments and governmental charges imposed upon it or upon any of its
properties or assets or in respect of any of its franchises, businesses, income
or property before any penalty or interest accrues thereon.
4.3 Books and Records. Such Guarantor shall keep and maintain books of
record and account with respect to its operations in accordance with generally
accepted accounting principles and shall permit Administrative Agent or any
Lender and their respective officers, employees and authorized agents, to the
extent Administrative Agent in good faith deems necessary for the proper
administration of this Guaranty, to examine, copy and make excerpts from the
books and records of such Guarantor and its Subsidiaries and to inspect the
properties of such Guarantor and its Subsidiaries, both real and personal, at
such reasonable times as Administrative Agent may request.
4.4 Reporting Requirements. As soon as possible after the same are
available to such Guarantor, such Guarantor will deliver to Administrative Agent
and Lenders the financial statements required to be delivered by Subsection 6.1
of the Credit Agreement.
SECTION 5. MISCELLANEOUS
5.1 Survival of Warranties. All agreements, representations and warranties
made herein shall survive the execution and delivery of this Guaranty and the
other Loan Documents, any increase in the Commitments under the Credit
Agreement, the making of the Loans and the issuance of the Letters of Credit.
5.2 Notices. Any communications between Administrative Agent and any
Guarantor and any notices or requests provided herein to be given shall be in
writing and may be personally served, telexed or sent by telefacsimile or United
States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or
telex, or five Business Days after depositing it in the United States mail with
postage prepaid and properly addressed. For the purposes hereof, the address of
each Guarantor shall be as set forth under such Guarantor's name on the
signature pages hereof or such other address as shall be designated by such
Guarantor in a written notice delivered to Administrative Agent. All notices
addressed to Administrative Agent should be sent to its address set forth on the
signature pages to the Credit Agreement or to such other address as
Administrative Agent may in writing hereinafter indicate.
5.3 Severability. In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
XV-14
<PAGE>
5.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders under the Credit Agreement and, in the case of
any such amendment or modification, each Guarantor against whom enforcement of
such amendment or modification is sought. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
5.5 Headings. Section and subsection headings in this Guaranty are included
herein for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
5.6 Applicable Law. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
GUARANTORS, ADMINISTRATIVE AGENT AND LENDERS HEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
5.7 Successors and Assigns. This Guaranty is a continuing guaranty and
shall be binding upon each Guarantor and its respective successors and assigns
except as provided in subsection 2.16. This Guaranty shall inure to the benefit
of Lenders, Administrative Agent and their respective successors and assigns. No
Guarantor shall assign this Guaranty or any of the rights or obligations of such
Guarantor hereunder without the prior written consent of all Lenders. Any Lender
may, without notice or consent, assign its interest in this Guaranty in whole or
in part (subject to subsection 10.1 of the Credit Agreement). The terms and
provisions of this Guaranty shall inure to the benefit of any transferee or
assignee of any Loan, and in the event of such transfer or assignment the rights
and privileges herein conferred upon Lenders and Administrative Agent shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
5.8 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY EACH
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY. Each Guarantor
hereby agrees that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return receipt requested, to
such Guarantor at its address as provided in subsection 5.2, such service being
hereby acknowledged by such Guarantor to be sufficient for personal jurisdiction
in any
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action against such Guarantor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Administrative Agent or any Lender to bring proceedings against any
Guarantor in the courts of any other jurisdiction.
5.9 Waiver of Trial by Jury. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, ADMINISTRATIVE AGENT EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each Guarantor and, by its acceptance of the benefits hereof,
Administrative Agent, each (i) acknowledges that this waiver is a material
inducement for such Guarantor and Administrative Agent to enter into a business
relationship, that such Guarantor and Administrative Agent have already relied
on this waiver in entering into this Guaranty or accepting the benefits thereof,
as the case may be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the event of
litigation, this Guaranty may be filed as a written consent to a trial by the
court.
5.10 No Other Writing. This writing is intended by Guarantors and
Administrative Agent as the final expression of this Guaranty and is also
intended as a complete and exclusive statement of the terms of their agreement
with respect to the matters covered hereby. No course of dealing, course of
performance or trade usage, and no parol evidence of any nature, shall be used
to supplement or modify any terms of this Guaranty. There are no conditions to
the full effectiveness of this Guaranty.
5.11 Further Assurances. At any time or from time to time, upon the request
of Administrative Agent or Requisite Lenders, Guarantors shall execute and
deliver such further documents and do such other acts and things as
Administrative Agent or Requisite Lenders may reasonably request in order to
effect fully the purposes of this Guaranty.
5.12 Additional Guarantors. The initial Guarantors hereunder shall be such
of the Subsidiaries of Company as are signatories hereto on the date hereof.
From time to time subsequent to the date hereof, additional Subsidiaries of
Company may become parties hereto, as additional Guarantors (each an "Additional
Guarantor"), by executing a counterpart of this Guaranty. Upon delivery of any
such counterpart to Administrative Agent, notice of which is hereby waived by
Guarantors, each such Additional Guarantor shall be a
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<PAGE>
Guarantor and shall be as fully a party hereto as if such Additional
Guarantor were an original signatory hereof. Each Guarantor expressly agrees
that its obligations arising hereunder shall not be affected or diminished by
the addition or release of any other Guarantor hereunder, nor by any election of
Administrative Agent not to cause any Subsidiary of Company to become an
Additional Guarantor hereunder. This Guaranty shall be fully effective as to any
Guarantor that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Guarantor hereunder.
5.13 Counterparts; Effectiveness. This Guaranty may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become effective
as to each Guarantor upon the execution of a counterpart hereof by such
Guarantor (whether or not a counterpart hereof shall have been executed by any
other Guarantor) and receipt by Administrative Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
PLAYERS LAKE CHARLES, INC.
By ______________________________
Title ____________________________
PLAYERS NEVADA, INC.
By ______________________________
Title ____________________________
SOUTHERN ILLINOIS RIVERBOAT/CASINO
CRUISES, INC.
By ______________________________
Title ____________________________
PLAYERS BLUEGRASS DOWNS, INC.
By ______________________________
Title ____________________________
PLAYERS RIVERBOAT MANAGEMENT, INC.
By ______________________________
Title ____________________________
PLAYERS RIVERBOAT, INC.
By ______________________________
Title ____________________________
S-1
<PAGE>
PLAYERS MESQUITE GOLF CLUB, INC.
By ______________________________
Title ____________________________
PLAYERS INDIANA, INC.
By ______________________________
Title ____________________________
PLAYERS RIVERBOAT, LLC
By ______________________________
Title ____________________________
PLAYERS MESQUITE LAND, INC.
By ______________________________
Title ____________________________
PLAYERS MARYLAND HEIGHTS, INC.
By ______________________________
Title ____________________________
RIVER BOTTOM, INC.
By ______________________________
Title ____________________________
S-2
<PAGE>
SHOWBOAT STAR PARTNERSHIP
By PLAYERS RIVERBOAT, LLC
General Partner
By ____________________________
Title _________________________
By PLAYERS RIVERBOAT MANAGEMENT, INC.
General Partner
By ____________________________
Title _________________________
Notice Address for each Guarantor:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention:President and Chief
Financial Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-3
<PAGE>
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of ______________, .
----------------------------------------
(Name of Additional Guarantor)
By
Title
Notice Address:
S-4
EXHIBIT 10.43
EXHIBIT XI
[FORM OF COMPANY PLEDGE AGREEMENT]
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "Agreement") is dated as of
August 25, 1995 and entered into by and between PLAYERS INTERNATIONAL, INC., a
Nevada corporation ("Pledgor"), and FIRST INTERSTATE BANK OF NEVADA, N.A.
("FIB"), as administrative agent for and representative of (in such capacity
herein called "Secured Party") the financial institutions ("Lenders") party to
the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of (i) the shares
of stock (the "Pledged Shares") described in Part A of Schedule I annexed hereto
and issued by the corporations named therein and (ii) the indebtedness (the
"Pledged Debt") described in Part B of said Schedule I and issued by the
obligors named therein.
B. Secured Party, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have
entered into a Credit Agreement dated as of August 25, 1995 (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Pledgor,
pursuant to which Lenders have made certain commitments, subject to the terms
and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
C. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit and to issue the
Standby Letters of Credit under the Credit Agreement and for other good and
valuable consideration, the receipt
<PAGE>
and adequacy of which are hereby acknowledged, Pledgor hereby agrees with
Secured Party as follows:
SECTION 1. Pledge of Security. Pledgor hereby pledges and
assigns to Secured Party, and hereby grants to Secured Party a security interest
in, all of Pledgor's right, title and interest in and to the following (the
"Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares and any interest of Pledgor in the entries on the books of any
financial intermediary pertaining to the Pledged Shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing the Pledged
Debt, and all interest, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities convertible
into and warrants, options and other rights to purchase or otherwise acquire,
stock of any issuer of the Pledged Shares from time to time acquired by Pledgor
in any manner (which shares shall be deemed to be part of the Pledged Shares),
the certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such additional
shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights;
(d) all additional indebtedness from time to time owed to
Pledgor by any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of Pledgor (which shares shall be deemed to be
part of the Pledged Shares), the certificates or other instruments representing
such shares, securities, warrants, options or other rights and any interest of
Pledgor in the entries on the books of any financial intermediary pertaining to
such shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares,
securities, warrants, options or other rights;
XI-2
<PAGE>
(f) all indebtedness from time to time owed to Pledgor by any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct or indirect Subsidiary of Pledgor, and all interest, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
(g) to the extent not covered by clauses (a) through (c) above,
all proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "proceeds" includes whatever is receivable or received
when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, proceeds of any indemnity or guaranty payable to Pledgor or
Secured Party from time to time with respect to any of the Pledged Collateral.
SECTION 2. Security for Obligations. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all
obligations and liabilities of every nature of Pledgor now or hereafter existing
under or arising out of or in connection with the Credit Agreement and the other
Loan Documents and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
or any Lender as a preference, fraudulent transfer or otherwise (all such
obligations and liabilities being the "Underlying Debt"), and all obligations of
every nature of Pledgor now or hereafter existing under this Agreement (all such
obligations of Pledgor, together with the Underlying Debt, being the "Secured
Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party. Secured Party shall have the right, at any time in its discretion
and without notice to Pledgor, to transfer to or to register in the name of
Secured Party or any of its nominees any or all of the Pledged Collateral,
subject only to the revocable rights specified in Section 7(a). In addition,
Secured Party shall have the right at any time to exchange
XI-3
<PAGE>
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Pledgor represents
and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares have been duly authorized and validly issued and are fully paid
and non-assessable. All of the Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged Shares
constitute all of the issued and outstanding shares of stock of each of the
direct Subsidiaries of Pledgor, and there are no outstanding warrants, options
or other rights to purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares. The Pledged Debt constitutes all of the
issued and outstanding intercompany indebtedness evidenced by a promissory note
of the respective issuers thereof owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the legal,
record and beneficial owner of the Pledged Collateral free and clear of any
Lien except for the security interest created by this Agreement.
(d) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body (including any Gaming Authority) is required for either (i) the
pledge by Pledgor of the Pledged Collateral pursuant to this Agreement and the
grant by Pledgor of the security interest granted hereby, (ii) the execution,
delivery or performance of this Agreement by Pledgor, or (iii) the exercise by
Secured Party of the voting or other rights, or the remedies in respect of the
Pledged Collateral, provided for in this Agreement, except (x) the consent of
the Riverboat Gaming Enforcement Division of the Louisiana State Police or the
Illinois Gaming Board with respect to that portion of the Pledged Collateral
that relates to the Louisiana Facilities or the Illinois Facilities, as the case
may be, which consent has been obtained prior to the date hereof and copies of
which have been delivered to Secured Party, in its capacity as Administrative
Agent, pursuant to subsection 4.1J of the Credit Agreement, and (y) as may be
required in connection with a disposition of Pledged Collateral by laws
affecting the offering and sale of securities generally.
(e) Perfection. The pledge of the Pledged Collateral pursuant
to this Agreement creates a valid and perfected first priority security interest
in the Pledged Collateral, securing the payment of the Secured Obligations.
XI-4
<PAGE>
(f) Margin Regulations. The pledge of the Pledged Collateral
pursuant to this Agreement does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Pledgor with respect to
the Pledged Collateral is accurate and complete in all respects.
SECTION 5. Transfers and Other Liens; Additional Pledged
Collateral; etc. Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreement,
(i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement, or (iii) permit any
issuer of Pledged Shares to merge or consolidate unless all the outstanding
capital stock of the surviving or resulting corporation is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; provided that in the event Pledgor makes an Asset Sale permitted by
the Credit Agreement and the assets subject to such Asset Sale are Pledged
Shares, Secured Party shall release the Pledged Shares that are the subject of
such Asset Sale to Pledgor free and clear of the lien and security interest
under this Agreement concurrently with the consummation of such Asset Sale;
provided, further that, as a condition precedent to such release, Secured Party
shall have received evidence satisfactory to it that arrangements satisfactory
to it have been made for delivery to Secured Party of the Net Cash Proceeds of
such Asset Sale to the extent required by subsection 2.4A(ii)(a) of the Credit
Agreement;
(b) (i) cause each issuer of Pledged Shares not to issue any
stock or other securities in addition to or in substitution for the Pledged
Shares issued by such issuer, except to Pledgor, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer of Pledged Shares,
and (iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock of any Person that, after the
date of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of Pledgor;
(c) (i) pledge hereunder, immediately upon their issuance, any
and all instruments or other evidences of additional indebtedness from time to
time owed to Pledgor by any obligor on the Pledged Debt, and (ii) pledge
hereunder, immediately upon their issuance, any and all instruments or other
evidences of indebtedness from time to time owed to Pledgor by any Person that
after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of Pledgor;
XI-5
<PAGE>
(d) promptly notify Secured Party of any event of which Pledgor
becomes aware causing a material loss or depreciation in the value of the
Pledged Collateral;
(e) promptly deliver to Secured Party all written notices
received by it with respect to the Pledged Collateral; and
(f) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the Pledged
Collateral, except to the extent the validity thereof is being contested in good
faith; provided that Pledgor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against Pledgor or any of the Pledged Collateral as a result of the
failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the expense of
Pledgor, Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral and to preserve, protect and maintain the Pledged
Collateral and the value thereof. Without limiting the generality of the
foregoing, Pledgor will: (i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Secured Party may reasonably request, in order
to perfect and preserve the security interests granted or purported to be
granted hereby and (ii) at the reasonable request of Secured Party, appear in
and defend any action or proceeding that may affect Pledgor's title to or
Secured Party's security interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder
as provided in Section 5(b) or (c), promptly (and in any event within five
Business Days) deliver to Secured Party a Pledge Amendment, duly executed by
Pledgor, in substantially the form of Schedule II annexed hereto (a "Pledge
Amendment"), in respect of the additional Pledged Shares or Pledged Debt to be
pledged pursuant to this Agreement. Pledgor hereby authorizes Secured Party to
attach each Pledge Amendment to this Agreement and agrees that all Pledged
Shares or Pledged Debt listed on any Pledge Amendment delivered to Secured Party
shall for all purposes hereunder be considered Pledged Collateral; provided that
the failure of Pledgor to execute a Pledge Amendment with respect to any
additional Pledged Shares or Pledged Debt pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.
XI-6
<PAGE>
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the terms of this
Agreement or the Credit Agreement; provided, however, that Pledgor
shall not exercise or refrain from exercising any such right if Secured
Party shall have notified Pledgor that, in Secured Party's judgment,
such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof; and provided, further, that
Pledgor shall give Secured Party at least five Business Days' prior
written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right. It is
understood, however, that neither (A) the voting by Pledgor of any
Pledged Shares for or Pledgor's consent to the election of directors at
a regularly scheduled annual or other meeting of stockholders or with
respect to incidental matters at any such meeting nor (B) Pledgor's
consent to or approval of any action otherwise permitted under this
Agreement and the Credit Agreement shall be deemed inconsistent with
the terms of this Agreement or the Credit Agreement within the meaning
of this Section 7(a)(i), and no notice of any such voting or consent
need be given to Secured Party;
(ii) Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all
dividends, interest and other distributions paid in respect of the
Pledged Collateral; provided, however, that any and all dividends and
interest paid or payable other than in cash in respect of any Pledged
Collateral, shall be, and shall forthwith be delivered to Secured Party
to hold as, Pledged Collateral and shall, if received by Pledgor, be
received in trust for the benefit of Secured Party, be segregated from
the other property or funds of Pledgor and be forthwith delivered to
Secured Party as Pledged Collateral in the same form as so received
(with all necessary indorsements); and
(iii) Secured Party shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies,
dividend payment orders and other instruments as Pledgor may from time
to time reasonably request for the purpose of enabling Pledgor to
exercise the voting and other consensual rights which it is entitled to
exercise pursuant to paragraph (i) above and to receive the dividends,
principal or interest payments which it is authorized to receive and
retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an Event of Default:
(i) upon written notice from Secured Party to Pledgor, all
rights of Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled
XI-7
<PAGE>
to exercise pursuant to Section 7(a)(i) shall cease, and all such
rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other
consensual rights;
(ii) all rights of Pledgor to receive the dividends, interest
and other distributions which it would otherwise be authorized to
receive and retain pursuant to Section 7(a)(ii) shall cease, and all
such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to receive and hold as Pledged Collateral
such dividends, interest and other distributions; and
(iii) all payments which are received by Pledgor contrary to
the provisions of paragraph (ii) of this Section 7(b) shall be received
in trust for the benefit of Secured Party, shall be segregated from
other funds of Pledgor and shall forthwith be paid over to Secured
Party as Pledged Collateral in the same form as so received (with any
necessary indorsements).
(c) In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request and (ii) without limiting
the effect of the immediately preceding clause (i), Pledgor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Shares and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including, without limitation, giving or
withholding written consents of shareholders, calling special meetings of
shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares or any officer or agent
thereof), upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:
(a) to file one or more financing or continuation statements, or amendments
thereto, relative to all or any part of the Pledged Collateral without the
signature of Pledgor;
XI-8
<PAGE>
(b) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) to file any claims or take any action or institute any proceedings that
Secured Party may deem necessary or desirable for the collection of any of the
Pledged Collateral or otherwise to enforce the rights of Secured Party with
respect to any of the Pledged Collateral.
SECTION 9. Secured Party May Perform. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 15(b).
SECTION 10. Standard of Care. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Pledged Collateral, it being understood that
Secured Party shall have no responsibility for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Pledged Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (c) taking any necessary steps
to collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Pledged Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether
or not the Code applies to the affected Pledged Collateral),
XI-9
<PAGE>
and Secured Party may also in its sole discretion, without notice except as
specified below, sell the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange or broker's board or at any
of Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral. Secured
Party or any Lender may be the purchaser of any or all of the Pledged Collateral
at any such sale and Secured Party, as Administrative Agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Pledged
Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Pledged
Collateral payable by Secured Party at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of Pledgor, and Pledgor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to Pledgor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Secured Party shall not be obligated
to make any sale of Pledged Collateral regardless of notice of sale having been
given. Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Pledgor hereby waives any claims against Secured Party arising by reason of the
fact that the price at which any Pledged Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if Secured Party accepts the first offer received and does not offer
such Pledged Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Pledged Collateral are insufficient to pay all the
Secured Obligations, Pledgor shall be liable for the deficiency and the fees of
any attorneys employed by Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions contained in
the Securities Act and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances and the registration rights granted to
Secured Party by Pledgor pursuant to Section 12, Pledgor agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
XI-10
<PAGE>
manner and that Secured Party shall have no obligation to engage in public
sales and no obligation to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it.
(c) If Secured Party determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from time to time to furnish
to Secured Party all such information as Secured Party may request in order to
determine the number of shares and other instruments included in the Pledged
Collateral which may be sold by Secured Party in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.
SECTION 12. Registration Rights. If Secured Party shall determine to
exercise its right to sell all or any of the Pledged Collateral pursuant to
Section 11, Pledgor agrees that, upon request of Secured Party (which request
may be made by Secured Party in its sole discretion), Pledgor will, at its own
expense:
(a) execute and deliver, and cause each issuer of the Pledged Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of Secured Party,
advisable to register such Pledged Collateral under the provisions of the
Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of Secured Party,
are necessary or advisable; provided that all such actions required to be taken
under this Section 12(a) shall be performed in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
Secured Party;
(c) cause each such issuer to make available to its security holders, as
soon as practicable, an earnings statement which will satisfy the provisions of
Section 11(a) of the Securities Act;
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
XI-11
<PAGE>
(e) bear all costs and expenses, including reasonable attorneys' fees, of
carrying out its obligations under this Section 12.
Pledgor further agrees that a breach of any of the covenants contained in
this Section 12 will cause irreparable injury to Secured Party, that Secured
Party has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 12 shall be
specifically enforceable against Pledgor, and Pledgor hereby waives and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.
Nothing in this Section 12 shall in any way alter the rights of Secured Party
under Section 11.
SECTION 13. Application of Proceeds. Except as expressly provided elsewhere
in this Agreement, all proceeds received by Secured Party in respect of any sale
of, collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of Secured Party, be held by Secured Party as
Pledged Collateral for, and/or then, or at any time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Pledgor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 15;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and
THIRD: To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
SECTION 14. Regulatory Matters. Pledgor and Secured Party acknowledge and
agree that:
(a) The terms and provisions of this Agreement and the rights and
obligations created hereunder shall be subject to compliance with all applicable
Gaming Laws.
(b) Without limiting the generality of the foregoing, all required prior
approvals under applicable Gaming Laws will be obtained in connection with
Secured Party's
XI-12
<PAGE>
exercise of (A) any of the remedies set forth in Section 11 or (B) any of
the voting and consensual rights afforded Secured Party under Section 7(b)(i)
upon the occurrence of an Event of Default including, without limitation, any
separate prior approvals required in connection with the sale, transfer or other
disposition of the Pledged Collateral; and
(c) Pledgor agrees to assist Secured Party in obtaining all approvals of
the Gaming Authorities or any other Governmental Authority that are required by
law for or in connection with any action or transaction contemplated by this
Agreement and, at Secured Party's reasonable request upon the occurrence and
during the continuation of an Event of Default, to prepare, sign and file with
the appropriate Gaming Authorities the transferor's portion of any application
or applications for consent to the transfer of control thereof necessary or
appropriate under applicable Gaming Laws for approval of any sale or transfer of
the Pledged Collateral pursuant to the exercise of Secured Party's remedies
under Section 11.
SECTION 15. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount of any and
all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (ii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or
(iii) the failure by Pledgor to perform or observe any of the provisions hereof.
(c) In the event of any public sale described in Section 12, Pledgor agrees
to indemnify and hold harmless Secured Party and each of Secured Party's
directors, officers, employees and agents from and against any loss, fee, cost,
expense, damage, liability or claim, joint or several, to which Secured Party or
such other persons may become subject or for which any of them may be liable,
under the Securities Act or otherwise, insofar as such losses, fees, costs,
expenses, damages, liabilities or claims (or any litigation commenced or
threatened in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or other such
document published or filed in connection with such public sale, or any
amendment 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 will
reimburse Secured Party and such other persons for any legal or other expenses
reasonably incurred by Secured Party and such other persons in connection with
any litigation, of any nature whatsoever, commenced
XI-13
<PAGE>
or threatened in respect thereof (including without limitation any
and all fees, costs and expenses whatsoever reasonably incurred by Secured Party
and such other persons and counsel for Secured Party and such other persons in
investigating, preparing for, defending against or providing evidence, producing
documents or taking any other action in respect of, any such commenced or
threatened litigation or any claims asserted). This indemnity shall be in
addition to any liability which Pledgor may otherwise have and shall extend upon
the same terms and conditions to each person, if any, that controls Secured
Party or such persons within the meaning of the Securities Act.
SECTION 16. Continuing Security Interest; Transfer of Loans. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
termination, cancellation or expiration of all outstanding Letters of Credit,
(b) be binding upon Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
termination, cancellation or expiration of all outstanding Letters of Credit,
the security interest granted hereby shall terminate and all rights to the
Pledged Collateral shall revert to Pledgor. Upon any such termination Secured
Party will, at Pledgor's expense, execute and deliver to Pledgor such documents
as Pledgor shall reasonably request to evidence such termination and Pledgor
shall be entitled to the return, upon its request and at its expense, against
receipt and without recourse to Secured Party, of such of the Pledged Collateral
as shall not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 17. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders. Secured Party shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including, without
limitation, the release or substitution of Pledged Collateral), solely in
accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a
XI-14
<PAGE>
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Administrative Agent under subsection 9.5 of the Credit Agreement
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Secured Party under this Agreement, and
the retiring or removed Secured Party under this Agreement shall promptly (i)
transfer to such successor Secured Party all sums, securities and other items of
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the
successor Secured Party under this Agreement, and (ii) execute and deliver to
such successor Secured Party such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
SECTION 18. Amendments; Etc. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 19. Notices. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or five Business Days after depositing it in
the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or, as to either party, such
other address as shall be designated by such party in a written notice delivered
to the other party hereto.
SECTION 20. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 21. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality
XI-15
<PAGE>
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 22. Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 23. Governing Law; Terms. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEVADA. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of Nevada are
used herein as therein defined.
SECTION 24. Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. Pledgor hereby agrees that service of
all process in any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to Pledgor at its address provided
in Section 19, such service being hereby acknowledged by Pledgor to be
sufficient for personal jurisdiction in any action against Pledgor in any such
court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Secured Party to bring proceedings
against Pledgor in the courts of any other jurisdiction.
SECTION 25. Waiver of Jury Trial. PLEDGOR AND SECURED PARTY HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Secured Party each
XI-16
<PAGE>
acknowledge that this waiver is a material inducement for Pledgor and
Secured Party to enter into a business relationship, that Pledgor and Secured
Party have already relied on this waiver in entering into this Agreement and
that each will continue to rely on this waiver in their related future dealings.
Pledgor and Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
SECTION 26. Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
XI-17
<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
PLAYERS INTERNATIONAL, INC.,
as Pledgor
By: ____________________________________
Title: _________________________________
Notice Address:
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief
Financial Officer
With copies to:
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: ____________________________________
Title: __________________________________
Notice Address:
3800 Howard Hughes Parkway, Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-1
<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of August
25, 1995 between Players International, Inc., as Pledgor, and First Interstate
Bank of Nevada, N.A., as Secured Party.
Part A
<TABLE>
<CAPTION>
Class of Stock and Stock Certificated
Stock Issuer Number of Shares Nos. Par Value
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Casino Management 90,000,000: 500 A Cert. #1 void $.01
International,Inc. 45,000,000 Class A 500 B Cert. #1 void
44,999,500 Class B 500 B1 Cert. #1void
500 Class B1lass B
All US par value B
PCI, Inc. 2,500 Common 2,500 - PII None
Cert. #14
Cert. #1-13 void
Players Bluegrass Downs, Inc. 100 Common 100-PII None
Cert. #1 void
Cert. #2
Players Indiana, Inc. 2,500 Common 100 - PII None
Cert. #1 void
Cert. #2
Players Lake Charles, Inc. 2,500 Common 100 - PII None
Cert. #1 None
Players Maryland Heights, Inc. 10,00 Common 100 - PII None
Cert. #1
Players Maryland Heights, Inc. 2,500 Common 100 - PII None
Players Mesquite Golf Club, 2,500 Common 100 - PII None
Inc. Cert. #1 void
Cert. #2
Players Mesquite Land, Inc. 2,500 Common 100 - PII None
Cert. #1
Players Michigan City, Inc. 2,500 Common 100 - PII None
Cert. #1
Players Michigan City 2,500 Common 100 - PII None
Management, Inc. Cert. #1
Players Mississippi 2,500 Common 100 - PII None
Management, Inc. Cert. #1 void
Cert. #2
Players Northern, Inc. 10 Common 10 Shares $10.00
Cert. #1
I-1
<PAGE>
Players Realty, Inc. 2,500 Common 100 - PII None
Cert. #1
Players River City, Inc. 2,500 Common 100 - PII None
Cert. #1
Players Riverboat, Inc. 2,500 Common 100 - PII None
Cert. #1
Players Riverboat 2,500 Common 100 - PII None
Management, Inc. Cert. #1
River Bottom, Inc. 2,500 Common 100 - PII None
Cert. #1
Riverfront Realty Corporation 2,500 Common 100 - SIRCC None
Cert. #1 void
Cert. #2
Southern Illinois Riverboat/ 2,500 Common 100 - PII None
Casino Cruises, Inc. Cert. #1
</TABLE>
Part B
<TABLE>
<CAPTION>
Debt Issuer Amount of Indebtedness
-----------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Aviex 2,530,000.00
2. Hafens 600,000.00
3. Intercompany Obligation
o Players Lake Charles, Inc. 5,916,587.83
o Players Nevada, Inc. 78,627,121.03
o Players Riverboat, Inc. 54,045,715.53
o Players Bluegrass Downs, Inc. 6,828,646.91
o PCI, Inc. 6,262,188.31
o Riverfront Realty, Inc. 589.25
o Players Mesquite Golf Club, Inc. 1,316,332.94
o Players Mesquite Land, Inc. 2,012,206.50
o Players Mississippi Management, Inc. 150,110.32
o Players Indiana, Inc. 2,625,481.51
o Players Michigan City, Inc. 413,396.80
o Players Productions, Inc. 928.28
o Players Realty, Inc. 2,259.71
o Players Maryland Heights, Inc. 5,559,036.17
</TABLE>
I-2
<PAGE>
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__, is delivered pursuant to
Section 6(b) of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement dated
__________, 1995, between the undersigned and First Interstate Bank of Nevada,
N.A. as Secured Party (the "Pledge Agreement," capitalized terms defined therein
being used herein as therein defined), and that the Pledged Shares listed on
this Pledge Amendment shall be deemed to be part of the Pledged Shares and shall
become part of the Pledged Collateral and shall secure all Secured Obligations.
PLAYERS INTERNATIONAL, INC.
By: _____________________________________
Title: ___________________________________
<TABLE>
<CAPTION>
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ ------- ----------- ------ ---------
<S> <C> <C> <C> <C>
</TABLE>
II-1
EXHIBIT 10.44
EXHIBIT XI-A
[FORM OF COMPANY PLEDGE AGREEMENT (NEVADA)]
COMPANY PLEDGE AGREEMENT (NEVADA)
This COMPANY PLEDGE AGREEMENT (this "Agreement") is dated as of August 25,
1995 and entered into by and between PLAYERS INTERNATIONAL, INC., a Nevada
corporation ("Pledgor"), and FIRST INTERSTATE BANK OF NEVADA, N.A. ("FIB"), as
administrative agent for and representative of (in such capacity herein called
"Secured Party") the financial institutions ("Lenders") party to the Credit
Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of (i) the shares of stock
(the "Pledged Shares") described in Part A of Schedule I annexed hereto and
issued by the corporations named therein and (ii) the indebtedness (the "Pledged
Debt") described in Part B of said Schedule I and issued by the obligors named
therein.
B. Secured Party, Lenders, FIB and Bankers Trust Company, as Managing
Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have entered
into a Credit Agreement dated as of August 25, 1995 (said Credit Agreement, as
it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Pledgor, pursuant to
which Lenders have made certain commitments, subject to the terms and conditions
set forth in the Credit Agreement, to extend certain credit facilities to
Pledgor.
C. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit and to issue the Standby
Letters of Credit under the Credit Agreement and for other good and valuable
consideration, the receipt
<PAGE>
and adequacy of which are hereby acknowledged, Pledgor hereby agrees with
Secured Party as follows:
SECTION 1. Pledge of Security. Pledgor hereby pledges and
assigns to Secured Party, and hereby grants to Secured Party a security interest
in, all of Pledgor's right, title and interest in and to the following (the
"Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares and any interest of Pledgor in the entries on the books of any
financial intermediary pertaining to the Pledged Shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing the Pledged
Debt, and all interest, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities convertible
into and warrants, options and other rights to purchase or otherwise acquire,
stock of any issuer of the Pledged Shares from time to time acquired by Pledgor
in any manner (which shares shall be deemed to be part of the Pledged Shares),
the certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such additional
shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights;
(d) all additional indebtedness from time to time owed to
Pledgor by any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of Pledgor (which shares shall be deemed to be
part of the Pledged Shares), the certificates or other instruments representing
such shares, securities, warrants, options or other rights and any interest of
Pledgor in the entries on the books of any financial intermediary pertaining to
such shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares,
securities, warrants, options or other rights;
XI-A-2
<PAGE>
(f) all indebtedness from time to time owed to Pledgor by any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct or indirect Subsidiary of Pledgor, and all interest, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
(g) to the extent not covered by clauses (a) through (c) above,
all proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "proceeds" includes whatever is receivable or received
when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, proceeds of any indemnity or guaranty payable to Pledgor or
Secured Party from time to time with respect to any of the Pledged Collateral.
SECTION 2. Security for Obligations. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all
obligations and liabilities of every nature of Pledgor now or hereafter existing
under or arising out of or in connection with the Credit Agreement and the other
Loan Documents and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
or any Lender as a preference, fraudulent transfer or otherwise (all such
obligations and liabilities being the "Underlying Debt"), and all obligations of
every nature of Pledgor now or hereafter existing under this Agreement (all such
obligations of Pledgor, together with the Underlying Debt, being the "Secured
Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party. Secured Party shall have the right, at any time in its discretion
and without notice to Pledgor, to transfer to or to register in the name of
Secured Party or any of its nominees any or all of the Pledged Collateral,
subject only to the revocable rights specified in Section 7(a). In addition,
Secured Party shall have the right at any time to exchange
XI-A-3
<PAGE>
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Pledgor represents and
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares have been duly authorized and validly issued and are fully paid
and non-assessable. All of the Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged Shares
constitute all of the issued and outstanding shares of stock of each of the
direct Subsidiaries of Pledgor, and there are no outstanding warrants, options
or other rights to purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares. The Pledged Debt constitutes all of the
issued and outstanding intercompany indebtedness evidenced by a promissory note
of the respective issuers thereof owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the legal,
record and beneficial owner of the Pledged Collateral free and clear of any
Lien except for the security interest created by this Agreement.
(d) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body (including any Gaming Authority) is required for either (i) the
pledge by Pledgor of the Pledged Collateral pursuant to this Agreement and the
grant by Pledgor of the security interest granted hereby, (ii) the execution,
delivery or performance of this Agreement by Pledgor, or (iii) the exercise by
Secured Party of the voting or other rights, or the remedies in respect of the
Pledged Collateral, provided for in this Agreement, except (x) the approval of
the Nevada Gaming Authorities with respect to that portion of the Pledged
Collateral that relates to the Nevada Facilities, as the case may be, which
approval with respect to the matters listed in (i) and (ii) above has been
obtained prior to the date hereof and copies of which have been delivered to
Secured Party, in its capacity as Administrative Agent, pursuant to subsection
4.1J of the Credit Agreement, and (y) as may be required in connection with a
disposition of Pledged Collateral by laws affecting the offering and sale of
securities generally.
(e) Perfection. The pledge of the Pledged Collateral pursuant
to this Agreement creates a valid and perfected first priority security interest
in the Pledged Collateral, securing the payment of the Secured Obligations.
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(f) Margin Regulations. The pledge of the Pledged Collateral
pursuant to this Agreement does not violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Pledgor with respect to
the Pledged Collateral is accurate and complete in all respects.
SECTION 5. Transfers and Other Liens; Additional Pledged
Collateral; etc. Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreement,
(i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement, or (iii) permit any
issuer of Pledged Shares to merge or consolidate unless all the outstanding
capital stock of the surviving or resulting corporation is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; provided that in the event Pledgor makes an Asset Sale permitted by
the Credit Agreement and the assets subject to such Asset Sale are Pledged
Shares, Secured Party shall release the Pledged Shares that are the subject of
such Asset Sale to Pledgor free and clear of the lien and security interest
under this Agreement concurrently with the consummation of such Asset Sale;
provided, further that, as a condition precedent to such release, Secured Party
shall have received evidence satisfactory to it that arrangements satisfactory
to it have been made for delivery to Secured Party of the Net Cash Proceeds of
such Asset Sale to the extent required by subsection 2.4A(ii)(a) of the Credit
Agreement;
(b) (i) cause each issuer of Pledged Shares not to issue any
stock or other securities in addition to or in substitution for the Pledged
Shares issued by such issuer, except to Pledgor, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer of Pledged Shares,
and (iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock of any Person that, after the
date of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of Pledgor;
(c) (i) pledge hereunder, immediately upon their issuance, any
and all instruments or other evidences of additional indebtedness from time to
time owed to Pledgor by any obligor on the Pledged Debt, and (ii) pledge
hereunder, immediately upon their issuance, any and all instruments or other
evidences of indebtedness from time to time owed to Pledgor by any Person that
after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of Pledgor;
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(d) promptly notify Secured Party of any event of which
Pledgor becomes aware causing a material loss or depreciation in the value of
the Pledged Collateral;
(e) promptly deliver to Secured Party all written notices
received by it with respect to the Pledged Collateral; and
(f) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the Pledged
Collateral, except to the extent the validity thereof is being contested in good
faith; provided that Pledgor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against Pledgor or any of the Pledged Collateral as a result of the
failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the expense of
Pledgor, Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral and to preserve, protect and maintain the Pledged
Collateral and the value thereof. Without limiting the generality of the
foregoing, Pledgor will: (i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Secured Party may reasonably request, in order
to perfect and preserve the security interests granted or purported to be
granted hereby and (ii) at the reasonable request of Secured Party, appear in
and defend any action or proceeding that may affect Pledgor's title to or
Secured Party's security interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder
as provided in Section 5(b) or (c), promptly (and in any event within five
Business Days) deliver to Secured Party a Pledge Amendment, duly executed by
Pledgor, in substantially the form of Schedule II annexed hereto (a "Pledge
Amendment"), in respect of the additional Pledged Shares or Pledged Debt to be
pledged pursuant to this Agreement. Pledgor hereby authorizes Secured Party to
attach each Pledge Amendment to this Agreement and agrees that all Pledged
Shares or Pledged Debt listed on any Pledge Amendment delivered to Secured Party
shall for all purposes hereunder be considered Pledged Collateral; provided that
the failure of Pledgor to execute a Pledge Amendment with respect to any
additional Pledged Shares or Pledged Debt pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.
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SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the terms of this
Agreement or the Credit Agreement. It is understood that neither (A)
the voting by Pledgor of any Pledged Shares for or Pledgor's consent to
the election of directors at a regularly scheduled annual or other
meeting of stockholders or with respect to incidental matters at any
such meeting nor (B) Pledgor's consent to or approval of any action
otherwise permitted under this Agreement and the Credit Agreement shall
be deemed inconsistent with the terms of this Agreement or the Credit
Agreement within the meaning of this Section 7(a)(i), and no notice of
any such voting or consent need be given to Secured Party;
(ii) Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all
dividends and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
(A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or
in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable
in cash in respect of any Pledged Collateral in connection with
a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-
in-surplus, and
(C) cash paid, payable or otherwise distributed in
respect of principal or in redemption of or in exchange for any
Pledged Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust for
the benefit of Secured Party, be segregated from the other property or funds of
Pledgor and be forthwith delivered to Secured Party as Pledged Collateral in the
same form as so received (with all necessary indorsements); and
(iii) Secured Party shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies,
dividend payment orders and other instruments as Pledgor may from time
to time reasonably request for the purpose of enabling Pledgor to
exercise the voting and other consensual rights which it is entitled to
exercise pursuant to paragraph (i) above and to receive the dividends,
principal or interest payments which it is authorized to receive and
retain pursuant to paragraph (ii) above.
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<PAGE>
(b) Upon the occurrence and during the continuation of an Event of Default:
(i) upon written notice from Secured Party to Pledgor, all
rights of Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to Section
7(a)(i) shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to exercise
such voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) shall cease, and all such rights
shall thereupon become vested in Secured Party who shall thereupon have
the sole right to receive and hold as Pledged Collateral such dividends
and interest payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of
this Section 7(b) shall be received in trust for the benefit of Secured
Party, shall be segregated from other funds of Pledgor and shall
forthwith be paid over to Secured Party as Pledged Collateral in the
same form as so received (with any necessary indorsements).
(c) In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request and (ii) without limiting
the effect of the immediately preceding clause (i), Pledgor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Shares and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including, without limitation, giving or
withholding written consents of shareholders, calling special meetings of
shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares or any officer or agent
thereof), upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:
XI-A-8
<PAGE>
(a) to file one or more financing or continuation statements, or amendments
thereto, relative to all or any part of the Pledged Collateral without the
signature of Pledgor;
(b) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) to file any claims or take any action or institute any proceedings that
Secured Party may deem necessary or desirable for the collection of any of the
Pledged Collateral or otherwise to enforce the rights of Secured Party with
respect to any of the Pledged Collateral.
SECTION 9. Secured Party May Perform. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 15(b).
SECTION 10. Standard of Care. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Pledged Collateral, it being understood that
Secured Party shall have no responsibility for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Pledged Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (c) taking any necessary steps
to collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Pledged Collateral, in addition to all
other rights and
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remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the Uniform Commercial Code as
in effect in any relevant jurisdiction (the "Code") (whether or not the Code
applies to the affected Pledged Collateral), and Secured Party may also in its
sole discretion, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange or broker's board or at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Pledged Collateral. Secured Party or any Lender may be the
purchaser of any or all of the Pledged Collateral at any such sale and Secured
Party, as Administrative Agent for and representative of Lenders (but not any
Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Pledged Collateral sold at any such public sale, to
use and apply any of the Secured Obligations as a credit on account of the
purchase price for any Pledged Collateral payable by Secured Party at such sale.
Each purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of Pledgor, and Pledgor hereby waives (to
the extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Pledgor agrees that, to the
extent notice of sale shall be required by law, at least ten days' notice to
Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Pledgor hereby waives any claims against
Secured Party arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Secured Party accepts
the first offer received and does not offer such Pledged Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Pledged
Collateral are insufficient to pay all the Secured Obligations, Pledgor shall be
liable for the deficiency and the fees of any attorneys employed by Secured
Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions contained in
the Securities Act and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to a registration
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<PAGE>
statement under the Securities Act) and, notwithstanding such circumstances
and the registration rights granted to Secured Party by Pledgor pursuant to
Section 12, Pledgor agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that Secured Party shall have
no obligation to engage in public sales and no obligation to delay the sale of
any Pledged Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from time to time to furnish
to Secured Party all such information as Secured Party may request in order to
determine the number of shares and other instruments included in the Pledged
Collateral which may be sold by Secured Party in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.
SECTION 12. Registration Rights. If Secured Party shall determine to
exercise its right to sell all or any of the Pledged Collateral pursuant to
Section 11, Pledgor agrees that, upon request of Secured Party (which request
may be made by Secured Party in its sole discretion), Pledgor will, at its own
expense:
(a) execute and deliver, and cause each issuer of the Pledged Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of Secured Party,
advisable to register such Pledged Collateral under the provisions of the
Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of Secured Party,
are necessary or advisable; provided that all such actions required to be taken
under this Section 12(a) shall be performed in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
Secured Party;
(c) cause each such issuer to make available to its security holders, as
soon as practicable, an earnings statement which will satisfy the provisions of
Section 11(a) of the Securities Act;
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(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
(e) bear all costs and expenses, including reasonable attorneys' fees, of
carrying out its obligations under this Section 12.
Pledgor further agrees that a breach of any of the covenants contained in
this Section 12 will cause irreparable injury to Secured Party, that Secured
Party has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 12 shall be
specifically enforceable against Pledgor, and Pledgor hereby waives and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.
Nothing in this Section 12 shall in any way alter the rights of Secured Party
under Section 11.
SECTION 13. Application of Proceeds. Except as expressly provided elsewhere
in this Agreement, all proceeds received by Secured Party in respect of any sale
of, collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of Secured Party, be held by Secured Party as
Pledged Collateral for, and/or then, or at any time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Pledgor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 15;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and
THIRD: To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
SECTION 14. Regulatory Matters. Pledgor and Secured Party acknowledge and
agree that:
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(a) The terms and provisions of this Agreement and the rights and
obligations created hereunder shall be subject to compliance with all applicable
gaming laws, rules and regulations of the Nevada Gaming Authorities (the "Nevada
Gaming Laws").
(b) Without limiting the generality of the foregoing:
(i) all required prior approvals under applicable Nevada Gaming
Laws will be obtained in connection with Secured Party's exercise of
(A) any of the remedies set forth in Section 11 or (B) any of the
voting and consensual rights afforded Secured Party under Section
7(b)(i) upon the occurrence of an Event of Default including, without
limitation, any separate prior approvals required in connection with
the sale, transfer or other disposition of the Pledged Collateral; and
(ii) the approval of this Agreement under the Nevada Gaming
Laws shall not be deemed to constitute an approval, either express or
implied, of any of the actions of Secured Party permitted hereunder to
the extent that such actions require a separate prior approval under
the Nevada Gaming Laws, and in the event such separate prior approval
is required, Secured Party shall not take such action without prior
receipt of such separate approval.
(c) Pledgor agrees to assist Secured Party in obtaining all approvals of
the Nevada Gaming Authorities or any other Governmental Authority that are
required by law for or in connection with any action or transaction contemplated
by this Agreement and, at Secured Party's reasonable request upon the occurrence
and during the continuation of an Event of Default, to prepare, sign and file
with the appropriate Nevada Gaming Authorities the transferor's portion of any
application or applications for consent to the transfer of control thereof
necessary or appropriate under applicable Nevada Gaming Laws for approval of any
sale or transfer of the Pledged Collateral pursuant to the exercise of Secured
Party's remedies under Section 11.
SECTION 15. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount of any and
all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged
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Collateral, (ii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iii) the failure by Pledgor to perform or observe
any of the provisions hereof.
(c) In the event of any public sale described in Section 12, Pledgor agrees
to indemnify and hold harmless Secured Party and each of Secured Party's
directors, officers, employees and agents from and against any loss, fee, cost,
expense, damage, liability or claim, joint or several, to which Secured Party or
such other persons may become subject or for which any of them may be liable,
under the Securities Act or otherwise, insofar as such losses, fees, costs,
expenses, damages, liabilities or claims (or any litigation commenced or
threatened in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or other such
document published or filed in connection with such public sale, or any
amendment 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 will
reimburse Secured Party and such other persons for any legal or other expenses
reasonably incurred by Secured Party and such other persons in connection with
any litigation, of any nature whatsoever, commenced or threatened in respect
thereof (including without limitation any and all fees, costs and expenses
whatsoever reasonably incurred by Secured Party and such other persons and
counsel for Secured Party and such other persons in investigating, preparing
for, defending against or providing evidence, producing documents or taking any
other action in respect of, any such commenced or threatened litigation or any
claims asserted). This indemnity shall be in addition to any liability which
Pledgor may otherwise have and shall extend upon the same terms and conditions
to each person, if any, that controls Secured Party or such persons within the
meaning of the Securities Act.
SECTION 16. Continuing Security Interest; Transfer of Loans. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
termination, cancellation or expiration of all outstanding Letters of Credit,
(b) be binding upon Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
termination, cancellation or expiration of all outstanding Letters of Credit,
the security interest granted hereby shall terminate and all rights to the
Pledged Collateral shall revert to Pledgor. Upon any such termination Secured
Party will, at Pledgor's expense, execute and deliver to Pledgor such documents
as Pledgor shall reasonably request to evidence such termination and Pledgor
shall be entitled to the return, upon its request and at its expense, against
receipt and without
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recourse to Secured Party, of such of the Pledged Collateral as shall not
have been sold or otherwise applied pursuant to the terms hereof.
SECTION 17. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders. Secured Party shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including, without
limitation, the release or substitution of Pledged Collateral), solely in
accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
SECTION 18. Amendments; Etc. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 19. Notices. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served, telexed
or sent by
XI-A-15
<PAGE>
telefacsimile or United States mail or courier service and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of telefacsimile or telex, or five Business Days after depositing it in the
United States mail with postage prepaid and properly addressed. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or, as to either party, such other
address as shall be designated by such party in a written notice delivered to
the other party hereto.
SECTION 20. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 21. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 22. Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 23. Governing Law; Terms. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. Unless otherwise defined
herein or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of Nevada are used herein as therein defined.
SECTION 24. Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. Pledgor hereby agrees that service of
all process in any such proceeding in any such
XI-A-16
<PAGE>
court may be made by registered or certified mail, return receipt
requested, to Pledgor at its address provided in Section 19, such service being
hereby acknowledged by Pledgor to be sufficient for personal jurisdiction in any
action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of Secured
Party to bring proceedings against Pledgor in the courts of any other
jurisdiction.
SECTION 25. Waiver of Jury Trial. PLEDGOR AND SECURED PARTY HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Secured Party each
acknowledge that this waiver is a material inducement for Pledgor and Secured
Party to enter into a business relationship, that Pledgor and Secured Party have
already relied on this waiver in entering into this Agreement and that each will
continue to rely on this waiver in their related future dealings. Pledgor and
Secured Party further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
SECTION 26. Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
XI-A-17
<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
PLAYERS INTERNATIONAL, INC.,
as Pledgor
By: ____________________________________
Title: _________________________________
Notice Address:
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: ____________________________________
Title: __________________________________
Notice Address:
3800 Howard Hughes Parkway, Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-1
<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of August
25, 1995 between Players International, Inc., as Pledgor, and First Interstate
Bank of Nevada, N.A., as Secured Party.
Part A
<TABLE>
<CAPTION>
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ----------- ----- --------
<S> <C> <C> <C> <C>
Players Nevada, Inc. 1 None 100
</TABLE>
Part B
<TABLE>
<CAPTION>
Amount of
Debt Issuer Indebtedness
-----------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Aviex 2,530,000.00
2. Hafens 600,000.00
3. Intercompany Obligation
o Players Lake Charles, Inc. 5,916,587.83
o Players Nevada, Inc. 78,627,121.03
o Players Riverboat, Inc. 54,045,715.53
o Players Bluegrass Downs, Inc. 6,828,646.91
o PCI, Inc. 6,262,188.31
o Riverfront Realty, Inc. 589.25
o Players Mesquite Golf Club, Inc. 1,316,332.94
o Players Mesquite Land, Inc. 2,012,206.50
o Players Mississippi Management, Inc. 150,110.32
o Players Indiana, Inc. 2,625,481.51
o Players Michigan City, Inc. 413,396.80
o Players Productions, Inc. 928.28
o Players Realty, Inc. 2,259.71
o Players Maryland Heights, Inc. 5,559,036.17
</TABLE>
I-1
<PAGE>
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__, is delivered pursuant to
Section 6(b) of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement dated
__________, 1995, between the undersigned and First Interstate Bank of Nevada,
N.A. as Secured Party (the "Pledge Agreement," capitalized terms defined therein
being used herein as therein defined), and that the Pledged Shares listed on
this Pledge Amendment shall be deemed to be part of the Pledged Shares and shall
become part of the Pledged Collateral and shall secure all Secured Obligations.
PLAYERS INTERNATIONAL, INC.
By: _____________________________________
Title: ___________________________________
<TABLE>
<CAPTION>
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
--------------- ------- ----------- ----- ---------
<S> <C> <C> <C> <C>
</TABLE>
II-1
EXHIBIT 10.45
EXHIBIT XI-C
[FORM OF FIRST AMENDMENT TO COMPANY PLEDGE
AGREEMENT (NEVADA)]
PLAYERS INTERNATIONAL, INC.
FIRST AMENDMENT
TO COMPANY PLEDGE AGREEMENT (NEVADA)
This FIRST AMENDMENT TO COMPANY PLEDGE AGREEMENT (NEVADA) (this
"Amendment") is dated as of August 25, 1995 and entered into by and between
PLAYERS INTERNATIONAL, INC., a Nevada corporation ("Pledgor"), and FIRST
INTERSTATE BANK OF NEVADA, N.A. ("FIB"), as administrative agent for and
representative of (in such capacity herein called "Secured Party" or
"Administrative Agent") the financial institutions ("Lenders") party to the
Credit Agreement dated as of August 25, 1995 by and among Pledgor, Lenders,
Administrative Agent, FIB and Bankers Trust Company, each as a Managing Agent
for Lenders, and FIB and BT Securities Corporation, each as a Co-Arranger.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement. This Amendment is made with
reference to, and amends, that certain Company Pledge Agreement (Nevada) dated
as of August 25, 1995 by and among Pledgor and Secured Party (the "Pledge
Agreement").
RECITALS
WHEREAS, Pledgor and Secured Party desire to amend the
provisions contained in Sections 7(a)(ii) and 7(b)(ii) of the Pledge Agreement;
and
WHEREAS, the Nevada Gaming Commission ("NGC") must approve any
such amendment to the Pledge Agreement prior to the effectiveness thereof;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
Section 1. AMENDMENTS TO THE PLEDGE AGREEMENT
A. Section 7(a) of the Pledge Agreement is hereby amended by
deleting paragraph (ii) thereof in its entirety and substituting therefor the
following:
<PAGE>
"(ii) Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all
dividends, interest and other distributions paid in respect of the
Pledged Collateral; provided, however, that any and all dividends and
interest paid or payable other than in cash in respect of any Pledged
Collateral, shall be, and shall forthwith be delivered to Secured Party
to hold as, Pledged Collateral and shall, if received by Pledgor, be
received in trust for the benefit of Secured Party, be segregated from
the other property or funds of Pledgor and be forthwith delivered to
Secured Party as Pledged Collateral in the same form as so received
(with all necessary indorsements); and"
B. Section 7(b) of the Pledge Agreement is hereby amended by deleting
paragraph (ii) thereof in its entirety and substituting therefor the following:
"(ii) all rights of Pledgor to receive the dividends, interest
and other distributions which it would otherwise be authorized to
receive and retain pursuant to Section 7(a)(ii) shall cease, and all
such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to receive and hold as Pledged Collateral
such dividends, interest and other distributions; and"
Section 2. PLEDGOR'S REPRESENTATIONS AND WARRANTIES
In order to induce Administrative Agent to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, Pledgor represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. Corporate Power and Authority. Pledgor has all requisite corporate power
and authority to enter into this Amendment and to carry out the transactions
contemplated by, and perform its obligations under, the Pledge Agreement as
amended by this Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Pledgor.
C. Binding Obligation. This Amendment has been duly executed and delivered
by Pledgor, and this Amendment and the Amended Agreement constitute the legal,
valid and binding obligation of Pledgor enforceable against Pledgor in
accordance with their respective terms.
<PAGE>
Section 3. CONDITIONS TO EFFECTIVENESS
The amendments to the Pledge Agreement set forth in Section 1 hereof shall
become effective upon such time, and only upon such time, as either:
A. (i) The NGC shall have approved this Amendment and the Amended Agreement
and shall not have placed any conditions, contingencies or restrictions on the
effectiveness of the Amended Agreement; and
(ii) Administrative Agent shall have received a certified copy of all
documents or instruments evidencing such approval by the NGC, which documents or
instruments shall state that the Amended Agreement may become effective under
the rules and regulations of the NGC; or
B. Pledgor and Administrative Agent shall have received a written ruling
from either the NGC or the Nevada State Gaming Control Board to the effect that
no approval from the Nevada Gaming Authorities is required in order for Section
1 of this Amendment and for the Amended Agreement to become effective.
Section 4. MISCELLANEOUS
A. Reference to and Effect on the Pledge Agreement and the Other Loan
Documents.
(i) On and after the effectiveness hereof, each reference in
the Pledge Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Pledge Agreement, and
each reference in the other Loan Documents to the "Pledge Agreement",
"thereunder", "thereof" or words of like import referring to the Pledge
Agreement shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Pledge Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy
of Secured Party under, the Pledge Agreement or any of the other Loan
Documents.
B. Fees and Expenses. Pledgor acknowledges that all costs, fees and
expenses as described in subsection 15 of the Pledge Agreement incurred by Agent
and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Pledgor.
<PAGE>
C. Headings. Section and subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment shall become effective upon the execution of a
counterpart hereof by Pledgor and Secured Party and receipt by Secured Party of
written or telephonic notification of such execution and authorization of
delivery thereof.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
PLAYERS INTERNATIONAL, INC.,
as Pledgor
By: ____________________________________
Title: _________________________________
Notice Address:
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: ____________________________________
Title: __________________________________
Notice Address:
3800 Howard Hughes Parkway, Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
1
EXHIBIT 10.46
EXHIBIT XI-B
[FORM OF LLC MEMBERSHIP INTEREST SECURITY AGREEMENT]
LLC MEMBERSHIP INTEREST SECURITY AGREEMENT
This LLC MEMBERSHIP INTEREST SECURITY AGREEMENT (this
"Agreement") is dated as of August 25, 1995 and entered into by and between
__________________________________ , a Nevada corporation ("Grantor"), and FIRST
INTERSTATE BANK OF NEVADA, N.A. ("FIB"), as administrative agent for and
representative of (in such capacity herein called "Secured Party") the financial
institutions ("Lenders") party to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Grantor is a party to that certain Operating Agreement,
dated April 1, 1995 (as amended to the date hereof and as it may hereafter be
amended, supplemented or otherwise modified from time to time, the "LLC
Agreement"), and Grantor is a member of Players Riverboat, LLC, a Louisiana
limited liability company formed pursuant thereto ("Company");
B. Secured Party, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have
entered into a Credit Agreement dated as of even date herewith (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Players
International, Inc., a Nevada corporation ("Players") that owns all of the
outstanding capital stock of Grantor, pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Players.
C. Grantor has executed and delivered a Guaranty dated as of
even date herewith (said Guaranty, as it may hereafter be amended, supplemented
or otherwise modified from time to time, being the "Guaranty") in favor of
Secured Party for the benefit of Lenders, pursuant to which Grantor has
guarantied the prompt payment and performance when due of all obligations of
Players under the Credit Agreement.
D. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Grantor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit and to issue the
Standby Letters of Credit under the Credit Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantor hereby agrees with Secured Party as follows:
SECTION 1. Grant of Security. Grantor hereby assigns to Secured
Party, and hereby grants to Secured Party a security interest in, all of
Grantor's right, title and interest in and to the following (the "Collateral"):
(a) all of Grantor's right, title and interest as a member in
Company, whether now owned or hereafter acquired, including without limitation
all of Grantor's right, title and interest in, to and under the LLC Agreement
(including without limitation Grantor's right to vote and to manage and
administer the business of Company), together with all other rights, interests,
claims and other property of Grantor in any manner arising out of or relating to
its membership interest in Company, whatever their respective kind or character,
whether they are tangible or intangible property, and wheresoever they may exist
or be located, and further including, without limitation, all of the rights of
Grantor as a member: (i) to (x) receive money due and to become due (including
without limitation dividends, distributions, interest, income from Company
properties and operations, proceeds of sale of Company assets and returns of
capital) under or pursuant to the LLC Agreement, (y) receive payments upon
termination of the LLC Agreement, and (z) receive any other payments or
distributions, whether cash or noncash, in respect of Grantor's membership
interest evidenced by the LLC Agreement; (ii) in and with respect to claims and
causes of action arising out of or relating to Company; and (iii) to have access
to Company's books and records and to other information concerning or affecting
Company;
(b) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(c) all proceeds, products, rents and profits of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
SECTION 2. Security for Obligations. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of
XI-B-2
<PAGE>
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
ss.362(a)), of all obligations and liabilities of every nature of Grantor now or
hereafter existing under or arising out of or in connection with the Guaranty
and all extensions or renewals thereof, whether for principal, interest
(including without limitation interest that, but for the filing of a petition in
bankruptcy with respect to Grantor, would accrue on such obligations),
reimbursement of amounts drawn under Letters of Credit, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Lender as
a preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "Underlying Debt"), and all obligations of every nature of
Grantor now or hereafter existing under this Agreement (all such obligations of
Grantor, together with the Underlying Debt, being the "Secured Obligations").
SECTION 3. No Assumption. Notwithstanding any of the foregoing,
this Agreement shall not in any way be deemed to obligate Secured Party, any
Lender or any purchaser at a foreclosure sale under this Agreement to assume any
of Grantor's obligations, duties, expenses or liabilities under the LLC
Agreement (including without limitation Grantor's obligations as a member for
the debts and obligations of Company and to manage the business and affairs of
Company) or under any and all other agreements now existing or hereafter drafted
or executed (collectively, the "Grantor Obligations") unless Secured Party, any
Lender or any such purchaser otherwise expressly agrees to assume any or all of
said Grantor Obligations in writing. In the event of foreclosure by Secured
Party on behalf of Lenders, Grantor shall remain bound and obligated to perform
the Grantor Obligations and neither Secured Party nor any Lender shall be deemed
to have assumed any of such Grantor Obligations except as provided in the
preceding sentence. Without limiting the generality of the foregoing, neither
the grant of the security interest in the Collateral in favor of Secured Party
as provided herein nor the exercise by Secured Party of any of its rights
hereunder nor any action by Secured Party in connection with a foreclosure on
the Collateral shall be deemed to constitute Secured Party or any Lender a
member of Company; provided, however, that in the event Secured Party or any
purchaser of Collateral at a foreclosure sale elects to become a substituted
member of Company in place of Grantor, Secured Party or such purchaser, as the
case may be, shall adopt in writing the LLC Agreement and agree to be bound by
the terms and provisions thereof.
SECTION 4. Representations and Warranties. Grantor represents
and warrants as follows:
(a) Membership Interests in Company. Schedule A annexed hereto
correctly sets forth the membership interests of all members of Company as of
the Closing Date. The membership interests described in Schedule A annexed
hereto together constitute 100% of the membership interests in Company.
XI-B-3
<PAGE>
(b) LLC Agreement. The LLC Agreement, a true and complete
copy of which has been furnished to Secured Party, has been duly authorized,
executed and delivered by Grantor and is in full force and effect and has not
been amended or modified except as disclosed in writing to Secured Party. No
default by Grantor exists under the LLC Agreement and no event has occurred or
exists which, with notice or lapse of time or both, would constitute a default
by Grantor thereunder. No default by any other member exists under the LLC
Agreement and no event has occurred or exists which, with notice or lapse of
time or both, would constitute a default by any other member thereunder.
(c) Ownership of Collateral. Grantor is the legal and
beneficial owner of the Collateral free and clear of any Lien except for the
security interest created by this Agreement and any Liens permitted pursuant to
Section 7.2 of the Credit Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office except such as may have been filed in
favor of Secured Party relating to this Agreement.
(d) Office Locations; Other Names. The chief place of
business, the chief executive office and the office where Grantor keeps its
records regarding the Collateral is, and has been for the four month period
preceding the date hereof, located at ___________________________________.
Grantor has not in the past done, and does not now do, business under any other
name (including any trade-name or fictitious business name).
(e) Consents or Governmental Authorizations. No consent of
any other Person (including without limitation any other member of Company or
any creditor of Grantor), and no authorization, approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required for either (i) the grant by Grantor of the security interest granted
hereby, (ii) the execution, delivery or performance of this Agreement by
Grantor, or (iii) the perfection of or the exercise by Secured Party of its
rights and remedies hereunder (except (x) authorization from any Gaming
Authorities for the exercise by Secured Party of certain of its rights and
remedies hereunder, (y) the filing of Uniform Commercial Code financing
statements with the Secretary of State of Nevada and the Clerk of Court of any
Louisiana parish (or recorder of mortgages for Orleans Parish) and (z) as has
been previously taken by or at the direction of Grantor).
(f) Perfection. This Agreement creates a valid and
enforceable security interest in the Collateral, securing the payment of the
Secured Obligations. Upon the filing of UCC-1 financing statements with the
Secretary of State of Nevada and the Clerk of Court of any Louisiana parish (or
recorder of mortgages for Orleans Parish), Secured Party shall also have a
perfected and first priority security interest in the Collateral, subject only
to Permitted Encumbrances, securing the payment of the Secured Obligations.
XI-B-4
<PAGE>
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Grantor with respect to
the Collateral is accurate and complete in all respects.
SECTION 5. Further Assurances.
(a) Grantor agrees that from time to time, at the expense of
Grantor, Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral and to preserve, protect and maintain the Collateral and the
value thereof. Without limiting the generality of the foregoing, Grantor will:
(i) at the reasonable request of Secured Party, mark conspicuously each of its
records pertaining to the Collateral with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, and (iii) at the reasonable request of Secured
Party, appear in and defend any action or proceeding that may affect Grantor's
title to or Secured Party's security interest in all or any part of the
Collateral.
(b) Grantor hereby authorizes Secured Party to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of Grantor. Grantor
agrees that a carbon, photographic or other reproduction of this Agreement or of
a financing statement signed by Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantor. Grantor shall:
(a) not (i) cancel or terminate the LLC Agreement or consent
to or accept any cancellation or termination thereof, (ii) sell, assign (by
operation of law or otherwise) or otherwise dispose of any part of its
membership interest in Company, (iii) amend, supplement or otherwise modify the
LLC Agreement (as in effect on the date hereof) except as otherwise permitted
pursuant to the Credit Agreement, (iv) waive any default under or breach of the
LLC Agreement or waive, fail to enforce, forgive or release any right, interest
or entitlement of any kind, howsoever arising, under or in respect of the LLC
Agreement or vary or agree to
XI-B-5
<PAGE>
the variation in any respect of any of the provisions of the LLC Agreement or of
the performance of any other Person under the LLC Agreement, or (v) petition,
request or take any other legal or administrative action which seeks, or may
reasonably be expected, to rescind, terminate or suspend the LLC Agreement or to
amend or modify the LLC Agreement;
(b) at its expense (i) perform and comply in all material
respects with all terms and provisions of the LLC Agreement required to be
performed or complied with by it, (ii) maintain the LLC Agreement in full force
and effect, (iii) enforce the LLC Agreement in accordance with its terms, and
(iv) take all such action to that end as from time to time may be reasonably
requested by Secured Party;
(c) not create or suffer to exist any Lien upon or with
respect to any of the Collateral to secure the indebtedness or other obligations
of any Person, except for the security interest created by this Agreement and
any Lien permitted pursuant to Section 7.2 of the Credit Agreement;
(d) not permit Company to enter into any transaction of
merger or consolidation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution);
(e) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
(f) give Secured Party 30 days' prior written notice of any
change in Grantor's chief place of business, chief executive office or residence
or the office where Grantor keeps its records regarding the Collateral; and
(g) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the
Collateral, except to the extent the validity thereof is being contested in good
faith; provided that Grantor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against Grantor or any of the Collateral as a result of the failure to
make such payment.
SECTION 7. Voting Rights; Profits, Interest and Dividends.
(a) So long as no Event of Default shall have occurred and
be continuing:
(i) Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or any
part thereof (including without limitation rights of approval arising
under the LLC Agreement and the right to manage and administer the
business of Company) for any purpose not inconsistent with the terms of
this Agreement or the Credit Agreement; provided, however, that Grantor
XI-B-6
<PAGE>
shall give Secured Party at least five Business Days' prior written
notice of the manner in which it intends to exercise, or the reasons
for refraining from exercising, any such right; and provided, further,
that Grantor's consent to or approval of any action otherwise permitted
under this Agreement and the Credit Agreement shall not be deemed
inconsistent with the terms of this Agreement or the Credit Agreement
within the meaning of this Section 7(a)(i) and no notice of any such
voting or consent need be given to Secured Party;
(ii) Grantor shall be entitled to receive and retain, and
to utilize free and clear of the lien of this Agreement, any and all
payments, including but not limited to profits, dividends and other
distributions, paid in respect of the Collateral; provided, however,
that any and all profits, dividends, and other distributions paid or
payable other than in cash in respect of any Collateral, shall be, and
shall forthwith be delivered to Secured Party to hold as, Collateral
and shall, if received by Grantor, be received in trust for the benefit
of Secured Party, be segregated from the other property or funds of
Grantor and be forthwith delivered to Secured Party as Collateral in
the same form as so received (with all necessary endorsements); and
(iii) Secured Party shall execute and deliver (or cause
to be executed and delivered) to Grantor all such proxies and other
instruments as Grantor may from time to time reasonably request for the
purpose of enabling Grantor to exercise the voting and other consensual
rights that it is entitled to exercise pursuant to Section 7(a)(i) and
to receive the profits, dividends and other distributions that it is
authorized to receive and retain pursuant to Section 7(a)(ii).
(b) Upon the occurrence and during the continuation of an
Event of Default:
(i) upon written notice from Secured Party to Grantor, any
or all rights of Grantor to exercise the voting and other consensual
rights, and the rights to manage and administer the business and
affairs of Company, that it would otherwise be entitled to exercise
pursuant to Section 7(a)(i) shall cease, and all such rights (or such
of those rights as Secured Party may have elected) shall thereupon
become vested in Secured Party who shall thereupon have the sole right
to exercise such voting and other consensual rights;
(ii) all rights of Grantor to receive any and all payments
under or in connection with the LLC Agreement, including but not
limited to the profits, dividends, and other distributions which it
would otherwise be authorized to receive and retain pursuant to
Section 7(a)(ii), shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have the sole right
to receive and hold such payments as Collateral; and
XI-B-7
<PAGE>
(iii) all payments which are received by Grantor contrary
to the provisions of Section 7(b)(ii) shall be received in trust for
the benefit of Secured Party, shall be segregated from other funds of
Grantor and shall be forthwith paid over to Secured Party as
Collateral in the same form as so received (with any necessary
endorsement).
SECTION 8. Secured Party Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints Secured Party as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse and collect all instruments made
payable to Grantor representing any payment of profits, dividends or any other
distribution in respect of any of the Collateral;
(c) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral; and
(d) to do, at Secured Party's option and Grantor's expense,
at any time or from time to time, all acts and things that Secured Party deems
necessary to protect, preserve or realize upon the Collateral and Secured
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as Grantor might do.
SECTION 9. Secured Party May Perform. If Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the reasonable expenses of Secured
Party incurred in connection therewith shall be payable by Grantor under Section
13 hereof.
SECTION 10. Standard of Care. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession
and the accounting for monies actually received by it hereunder, Secured Party
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining to
any Collateral. Secured Party shall be deemed to have exercised reasonable care
in the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property of a similar nature.
XI-B-8
<PAGE>
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing,
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (or, in the case of
Louisiana, the Louisiana Commercial Laws - Secured Transactions (Louisiana
Revised Statutes, Title 10, Chapter 9))(the "Code") (whether or not the Code
applies to the affected Collateral), and Secured Party may also in its sole
discretion, without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange
or broker's board or at any of Secured Party's offices or elsewhere, for cash,
on credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Secured Party may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
the Collateral. Secured Party or any Lender may be the purchaser of any or all
of the Collateral at any such sale and Secured Party, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Grantor, and Grantor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Grantor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Grantor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantor shall be liable for
the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency.
(b) Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Collateral conducted without prior registration or qualification of such
Collateral under the Securities Act and/or such state securities laws, to limit
purchasers to those who will agree, among other things, to acquire the
Collateral for
XI-B-9
<PAGE>
their own account, for investment and not with a view to the distribution
or resale thereof. Grantor acknowledges that any such private sales
may be at prices and on terms less favorable than those obtainable through a
public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances, Grantor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit Company to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if Company would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or
all of the Collateral, upon written request, Grantor shall and shall cause
Company from time to time to furnish to Secured Party all such information as
Secured Party may reasonably request in order to determine the number and nature
of the interests included in the Collateral which may be sold by Secured Party
in exempt transactions under the Securities Act and the rules and regulations of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.
(d) Further, as to all Collateral now or hereafter located in the
State of Louisiana, or as to which the laws of the State of Louisiana may now be
or hereafter become applicable, Grantor hereby acknowledges the Secured
Obligations, whether now existing or to arise hereafter, and confesses judgment
thereon if the Secured Obligations are not paid at maturity, and does by these
presents consent, agree and stipulate that if any portion of the Secured
obligations is not promptly and fully paid when due, or if there should occur an
Event of Default, the Secured Obligations shall, at the option of the Secured
Party become immediately due and payable and it shall be lawful for the Secured
Party, without making a demand and without notice or putting in default, the
same being hereby expressly waived, to cause all and singular the Collateral to
be seized and sold by executory process, without appraisement (appraisement
being hereby expressly waived), either in its entirety or in lots or parcels, as
the Secured Party may determine, to the highest bidder for cash, or on such
terms as plaintiff in such proceedings may direct.
Grantor hereby expressly waives: (a) the benefit of appraisement, as
provided in Articles 2332, 2336, 2723 and 2724, Louisiana Code of Civil
Procedure, and all other laws conferring the same; (b) the demand and three (3)
days delays accorded by Articles 2639 and 2721, Louisiana Code of Civil
Procedure; (c) the notice of seizure required by Articles 2293 and 2721,
Louisiana Code of Civil Procedure; (d) the three (3) days delay provided by
Articles 2331 and 2722, Louisiana Code of Civil Procedure; and (e) the benefit
of the other provisions of Articles 2331, 2722 and 2723, Louisiana Code of Civil
Procedure, and the benefit of any other Articles or laws relating to rights of
appraisement, notice, or delay not specifically mentioned above; and Grantor
expressly agrees to the immediate seizure of the Collateral in the event of suit
herein. Further, Grantor acknowledges that Secured Party shall have all rights
to appointment of a keeper in connection with any action to foreclose the lien
XI-B-10
<PAGE>
hereof, all in accordance with Louisiana Revised Statutes 9:5136 et
seq. The compensation of the keeper is hereby fixed at 1% of the amount due or
sued for or claimed or sought to be protected or enforced, and shall constitute
a portion of the Secured Obligations secured by the lien hereof.
SECTION 12. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured Party
as Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 13;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and
THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
SECTION 13. Indemnity and Expenses.
(a) Grantor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (ii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iii) the
failure by Grantor to perform or observe any of the provisions hereof.
XI-B-11
<PAGE>
SECTION 14. Regulatory Matters. Grantor and Secured Party acknowledge
and agree that:
(a) The terms and provisions of this Agreement and the rights and
obligations created hereunder shall be subject to compliance with all applicable
Gaming Laws.
(b) Without limiting the generality of the foregoing, all required
prior approvals under applicable Gaming Laws will be obtained in connection with
Secured Party's exercise of any of the remedies set forth in Section 11 upon the
occurrence of an Event of Default including, without limitation, any separate
prior approvals required in connection with the sale, transfer or other
disposition of the Collateral; and
(c) Grantor agrees to assist Secured Party in obtaining all approvals
of the Gaming Authorities or any other Governmental Authority that are required
by law for or in connection with any action or transaction contemplated by this
Agreement and, at Secured Party's reasonable request upon the occurrence and
during the continuation of an Event of Default, to prepare, sign and file with
the appropriate Gaming Authorities the transferor's portion of any application
or applications for consent to the transfer of control thereof necessary or
appropriate under applicable Gaming Laws for approval of any sale or transfer of
the Collateral pursuant to the exercise of Secured Party's remedies under
Section 11.
SECTION 15. Continuing Security Interest; Transfer of Loans. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the indefeasible payment in full
of the Secured Obligations, the cancellation or termination of the Commitments
and the cancellation or expiration of all outstanding Letters of Credit, (b) be
binding upon Grantor, its successors and assigns, and (c) inure, together with
the rights and remedies of Secured Party hereunder, to the benefit of Secured
Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the indefeasible payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such termination Secured Party will, at Grantor's
expense, execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.
SECTION 16. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or
XI-B-12
<PAGE>
refrain from taking any action (including, without limitation, the release or
substitution of Collateral), solely in accordance with this Agreement
and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of such successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 17. Amendments; Etc. No amendment or waiver of any provision
of this Agreement, or consent to any departure by Grantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
SECTION 18. Notices. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 19. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Secured Party in the exercise of any power,
right or
XI-B-13
<PAGE>
privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 20. Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 21. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 22. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEVADA. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of Nevada are
used herein as therein defined.
SECTION 23. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT GRANTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Grantor hereby
agrees that service of all process in any such proceeding in any such court may
be made by registered or certified mail, return receipt requested, to Grantor at
its address provided in Section 18, such service being hereby acknowledged by
Grantor to be sufficient for personal jurisdiction in any action against Grantor
in any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of Secured Party to bring
proceedings against Grantor in the courts of any other jurisdiction.
XI-B-14
<PAGE>
SECTION 24. Waiver of Jury Trial. GRANTOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Grantor and Secured Party each
acknowledge that this waiver is a material inducement for Grantor and Secured
Party to enter into a business relationship, that Grantor and Secured Party have
already relied on this waiver in entering into this Agreement and that each will
continue to rely on this waiver in their related future dealings. Grantor and
Secured Party further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
SECTION 25. Counterparts. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XI-B-15
<PAGE>
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS RIVERBOAT MANAGEMENT, INC.,
as Grantor
By: ____________________________________
Title: _________________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief
Financial Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: ____________________________________
Title: __________________________________
Notice Address:
3800 Howard Hughes Parkway, Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-1
<PAGE>
SCHEDULE A
Membership Interests
<TABLE>
<CAPTION>
Member Percentage Interest
------ -------------------
<S> <C>
Players Riverboat, Inc. 99%
Players Riverboat Management, Inc. 1%
</TABLE>
A-1
<PAGE>
EXHIBIT 10.47
EXHIBIT XVI
[FORM OF COMPANY SECURITY AGREEMENT]
COMPANY SECURITY AGREEMENT
This COMPANY SECURITY AGREEMENT (this "Agreement") is dated as of
August 25, 1995 and entered into by and between PLAYERS INTERNATIONAL, INC., a
Nevada corporation ("Grantor"), and FIRST INTERSTATE BANK OF NEVADA, N.A.
("FIB"), as administrative agent for and representative of (in such capacity
herein called "Secured Party") the financial institutions ("Lenders") party to
the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have
entered into a Credit Agreement dated as of even date herewith (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Grantor,
pursuant to which Lenders have made certain commitments, subject to the terms
and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Grantor.
B. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Grantor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit and to issue the
Standby Letters of Credit under the Credit Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantor hereby agrees with Secured Party as follows:
SECTION 1. Grant of Security. Grantor hereby assigns to Secured
Party, and hereby grants to Secured Party a security interest in, all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
<PAGE>
(a) all present and future chattels, furniture, furnishings,
goods, equipment, fixtures and all other tangible personal property, of whatever
kind and nature, now or hereafter used in connection with or placed or located
within or on any part of any of the Facilities (including, without limitation,
any building or structure that is now or that may hereafter be erected within or
on any of the Facilities), including, but not limited to, machinery, materials,
goods and equipment now or hereafter used in the construction or operation of
any of the Facilities including, without limitation, air conditioning, heating,
electrical, lighting, fire fighting and fire prevention, food and beverage
service, laundry, plumbing, refrigeration, security, sound, signaling,
telephone, television, window washing and other equipment and fixtures, of
whatever kind or nature, including generators, transformers, switching gear,
boilers, burners, furnaces, piping, sprinklers, sinks, tubs, valves,
compressors, motors, carts, dumb waiters, elevators and other lifts, floor
coverings, hardware, keys, locks, organs, pianos, planters, railings, scales,
shelving, signs, tools, machinery, molds, dies, drills, presses, planers, saws,
furniture, business fixtures, trade fixtures, electric, gas and other motor
vehicles, uniforms, vacuum cleaners, hotel furniture, furnishings and equipment,
bathroom furniture and furnishings (including towels, bathmats, hamperettes,
shower curtains and other bath linens), beds and bedding (including mattresses,
springs, pillows, bed pads, sheets, blankets, comforters, spreads and other bed
linens and furnishings), bric-a-brac, chairs, chests, vanities, secretaries,
bureaus, chiffonniers, love seats, benches, costumers, smoking stands, sand
jars, desks, dressers, hangings, paintings, pictures, frames, sculptures, lamps,
light bulbs, mirrors, night stands, ornaments, radios, stereo equipment, sofas,
statuary, tables, telephones, televisions, vases, window coverings, foodstuffs,
beverages (including beer, wine, liquor and other alcoholic beverages), and
other consumables (including soap, shampoo, cleaning supplies and paper goods),
cutlery, cooking, baking and other kitchen utensils and apparatus (including
crockery, fryers, grills, kettles, mixers, pots, pans, pails, racks, steamers
and toasters), china and other dishes, flatware, glassware, hollowware, serving
pieces, trays, table linens, washers, dryers, irons, ironing boards and other
ironing equipment, cables, outlets, plugs, wiring and related apparatus and
fixtures, card readers, cash registers, adding machines, calculators, computers,
keyboards, monitors, printers, printing equipment, envelopes, stationery,
posting machines, blank forms, typewriters, typewriter stands, other office and
accounting equipment and supplies, time stamps, time recorders, bookkeeping
machines, checking machines, payroll machines, computer reservations systems,
equipment used in the operation of casinos within or on any of the Facilities
(including but not limited to, gaming devices and associated equipment (as
defined in Nevada Revised Statutes Chapter 463, Louisiana Revised Statutes
4:504) and gaming equipment/supplies (as defined in Section 3000.100 of the
Rules of the Illinois Gaming Board), including but not limited to, slot
machines, cards, poker chips and gaming tables) and all other goods, equipment,
furnishings, apparatus and fixtures that are now or may hereafter be located at
or used within, at or in connection with any of the Facilities) and all other
tangible personal property used or to be used at or in connection with, or
placed or to be placed in, rooms, halls, lounges, offices, lobbies, lavatories,
basements, cellars, vaults or other portions of any of the Facilities or of any
other building or buildings hereafter constructed or erected thereon, whether
herein enumerated or not, and whether or not contained in any such building, and
which are used or
XVI-2
<PAGE>
to be used or useful in the operation and maintenance thereof, or in any bar,
casino, hotel, restaurant, store, health spa, salon or other business conducted
thereon, together with all replacements and substitutions for any and all
personal property in which Grantor has an interest, including without limitation
such goods and equipment as shall from time to time be located, placed,
installed or used in or upon, or procured for use, or to be used or useful in
connection with the operation of the whole, or any part of, any of the
Facilities and all parts thereof and all accessions thereto (any and all such
equipment, replacements, substitutions, parts and accessions being the
"Equipment");
(b) all present and future inventory and merchandise in all of
its forms used in connection with or placed or located within or on any part of
any of the Facilities (including, but not limited to, (i) all goods held by
Grantor for sale or lease or to be furnished under contracts of service or so
leased or furnished, (ii) all raw materials, work in process, finished goods,
and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in Grantor's business, (iii) all goods in which
Grantor has an interest in mass or a joint or other interest or right of any
kind, (iv) all goods that are returned to or repossessed by Grantor, and (v) all
packing materials, supplies and containers relating to or used in connection
with any of the foregoing, and all accessions thereto and products thereof (all
such inventory, accessions and products being the "Inventory") and all
negotiable documents of title (including without limitation warehouse receipts,
dock receipts and bills of lading) issued by any person covering any of the
foregoing (any such negotiable document of title being a "Negotiable Document of
Title");
(c) all present and future accounts, accounts receivable,
rentals, revenues, receipts, payments, and income of any nature whatsoever
derived from or received with respect to rooms, banquet facilities, convention
facilities, retail premises, bars, restaurants, casinos, parking lots and
garages and any other facilities within or on any of the Facilities and services
and amenities provided in connection therewith, all agreements, contracts,
leases, contract rights, rights to payment, instruments, documents, chattel
paper, security agreements, guaranties, undertakings, surety bonds, insurance
policies, condemnation deposits and awards, notes and drafts, securities,
certificates of deposit and the right to receive all payments thereon or in
respect thereof (whether principal, interest, fees or otherwise), contract
rights (other than rights under contracts or governmental permits that may not
be transferred by law), including, without limitation, rights to all deposits
from tenants and other users of any of the Facilities, rights under all
contracts relating to the construction, renovation or restoration of any of the
improvements now or hereafter located within or on any of the Facilities or the
financing thereof and all rights under payment or performance bonds, warranties,
and guaranties, and all rights to payment from any credit/charge card
organization or entity such as or similar to, and including, without limitation,
the organizations or entities that sponsor and administer, respectively, the
American Express Card, the Carte Blanche Card, the Diners Club Card, the
Discover Card, the MasterCard and the Visa Card, books of account, and
principal, interest and payments due on account of goods sold, services
rendered, loans made or credit extended, within, on or in connection with any of
the Facilities
XVI-3
<PAGE>
and all forms of obligations owing to and rights of Grantor or in which Grantor
may have any interest, however created or arising (any and all such accounts,
contract rights, chattel paper, documents, instruments, general intangibles and
other obligations being the "Accounts", and any and all such security
agreements, leases and other contracts being the "Related Contracts");
(d) the agreements listed in Schedule I annexed hereto, as each
such agreement may be amended, supplemented or otherwise modified from time to
time (said agreements, as so amended, supplemented or otherwise modified, being
referred to herein individually as an "Assigned Agreement" and collectively as
the "Assigned Agreements"), including without limitation (i) all rights of
Grantor to receive moneys due or to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii)
all claims of Grantor for damages arising out of any breach of or default under
the Assigned Agreements, and (iv) all rights of Grantor to terminate, amend,
supplement, modify or exercise rights or options under the Assigned Agreements,
to perform thereunder and to compel performance and otherwise exercise all
remedies thereunder;
(e) all present and future right, title and interest of Grantor
in and to all leases, subleases, licenses, concessions, franchises and other use
or occupancy agreements (except, however, agreements made by Grantor in the
ordinary course of business for short-term use by members of the public of any
guest rooms and public rooms, including banquet and meeting facilities, located
within or on any of the Facilities, and any amendments, modifications,
extensions or renewals thereof (collectively, "Leases"), whether or not
specifically herein described, that now or may hereafter pertain to or affect
any of the Facilities or any portion thereof and all amendments to the same,
including, but not limited to, the following: (i) all payments due and to become
due under such Leases, whether as rent, damages, insurance payments,
condemnation awards, or otherwise; (ii) all claims, rights, powers, privileges
and remedies under such Leases; and (iii) all rights of Grantor under such
Leases to exercise any election or option (including, without limitation, any
right of Grantor under any ground lease to purchase the fee interest of the
lessor thereunder (the "Options")), or to give or receive any notice, consent,
waiver or approval, or to accept any surrender of the premises or any part
thereof, together with full power and authority in the name of Grantor, or
otherwise, to demand and receive, enforce and collect any receipt for any or all
of the foregoing, to endorse or execute any checks or any instruments or orders,
to file any claims, and to take any other action that Secured Party may deem
necessary or advisable in connection therewith;
(f) all present and future deposit accounts of Grantor,
including, without limitation, those deposit accounts set forth on Schedule II
hereto, any demand, time, savings, passbook or like account maintained by
Grantor with any bank, savings and loan association, credit union or like
organization, and all money, cash and cash equivalents of Grantor, whether or
not deposited in any such deposit account and all such accounts maintained with
Secured Party;
XVI-4
<PAGE>
(g) all present and future general intangibles (including but
not limited to all governmental permits relating to construction or other
activities within or on any of the Facilities), the Options, all tax refunds of
every kind and nature to which Grantor now or hereafter may become entitled,
however arising, all other refunds, and all deposits, goodwill, choses in
action, rights to payment or performance, gambling debts or gaming debts owed to
Grantor by Grantor's patrons (whether or not evidenced by a note), judgments
taken on any rights or claims included in the Collateral, trade secrets,
computer programs, software, customer lists, business names, trademarks, trade
names and service marks (including, but not limited to: "World Championship of
Blackjack," "Players Club International," "Players Riverboat Casino" (and
design), "Players Club," "Players Club Preferred," "Players Riverboat Casino,"
"Players Riverboat Hotel Casino" (and design) "Players Island Resort," "Players
Island Resort Casino Hotel," "Players Island Resort Casino Spa" (and design 1),
"Players Island Resort Casino Spa" (and design 2), "Players Island Resort o
Casino o Spa" and any derivation thereof, including any and all state and
federal applications and registrations thereof), patents, patent applications,
licenses, copyrights, registration and franchise rights, technology, processes,
proprietary information, insurance proceeds and all goodwill associated with any
of the foregoing;
(h) all present and future books and records, including,
without limitation, books of account and ledgers of every kind and nature,
ledger cards, computer programs, tapes, disks and other information storage
devices, all related data processing software, and all electronically recorded
data relating to Grantor or its business related to any of the Facilities, all
receptacles and containers for such records, and all files and correspondence;
(i) all present and future maps, plans, specifications,
surveys, studies, reports, data and drawings (including, without limitation,
architectural, structural, mechanical and engineering plans and specifications,
studies, data and drawings) prepared for or relating to the development of any
of the Facilities or the construction, renovation or restoration of any
improvements within or on any of the Facilities or the extraction of minerals,
sand, gravel or other valuable substances from the Facilities, together with all
amendments and modifications thereto;
(j) all present and future licenses, permits, variances,
special permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including options, option rights and
contract rights), other than those (including non-transferrable gaming permits)
that may not be transferred by law, now or hereafter obtained by Grantor from
any governmental authority having or claiming jurisdiction over any of the
Facilities or any other element of the Collateral or providing access thereto,
or the operation of any business within, on, at, or from any of the Facilities;
(k) all present and future goods, including, without limitation,
all consumer goods, inventory, equipment, and other supplies, of whatever kind
or nature, and any and all
XVI-5
<PAGE>
other goods, wherever located, used or to be used in connection with or in the
conduct of Grantor's business or any of the Facilities;
(l) all present and future stocks, securities (except any voting
stock or securities if consent is required from the applicable Gaming
Authorities and not obtained), bonds, debentures, subscription rights, options,
warrants, puts, calls, certificates, partnership interests, joint venture
interests, investments, brokerage accounts and all rights, preferences,
privileges, dividends, distributions, redemption payments and liquidation
payments received or receivable with respect thereto;
(m) all present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and improvements to or of or with respect to any of the foregoing;
(n) all other fixtures and storage and office facilities, and all
accessions thereto and products thereof and all water stock relating to any of
the Facilities;
(o) to the extent not covered by any of the preceding clauses,
any and all of Grantor's present and future machinery, equipment, furniture,
furnishings and fixtures, of every type and description, now or hereafter
located on any of the Ships or Barges or used in connection therewith, together
with all accessories, attachments, accessions, substitutions, replacements and
additions thereto;
(p) all other tangible and intangible personal property of
Grantor used in connection with or placed or located within or on any part of
any of the Facilities;
(q) all rights, remedies, powers and privileges of Grantor with
respect to any of the foregoing; and
(r) any and all proceeds, products, rents, income and profits of
any of the foregoing, including, without limitation, all money, accounts,
general intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds (whether or not Secured Party is the loss payee), and
any other tangible or intangible property received upon the sale or disposition
of any of the foregoing (it being agreed, for purposes hereof, that the term
"proceeds" includes whatever is receivable or received when any of the
Collateral is sold, collected, exchanged or otherwise disposed of, whether such
disposition is voluntary or involuntary).
Notwithstanding anything to the contrary contained herein,
Secured Party acknowledges that it has no security interest in any cash of
Grantor described in clauses (f), (g) and (l) above, to the extent such a
security interest is prohibited by any Gaming Laws.
SECTION 2. Security for Obligations. This Agreement secures, and
the Collateral is collateral security for, the prompt payment or performance in
full when due,
XVI-6
<PAGE>
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. ss.362(a)), of all obligations and liabilities of every nature
of Grantor now or hereafter existing under or arising out of or in connection
with the Credit Agreement and the other Loan Documents and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
Grantor, would accrue on such obligations), reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnities or otherwise, whether voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender as a preference, fraudulent transfer
or otherwise (all such obligations and liabilities being the "Underlying Debt"),
and all obligations of every nature of Grantor now or hereafter existing under
this Agreement (all such obligations of Grantor, together with the Underlying
Debt, being the "Secured Obligations").
SECTION 3. Grantor Remains Liable. Anything contained herein to
the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement or otherwise, nor shall Secured Party be obligated to perform any of
the obligations or duties of Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
SECTION 4. Representations and Warranties. Grantor represents and
warrants as follows:
(a) Ownership of Collateral. Except for the security interest
created by this Agreement and any Liens permitted pursuant to subsection 7.2A of
the Credit Agreement, Grantor owns the Collateral free and clear of any Lien.
Except such as may have been filed in favor of Secured Party relating to this
Agreement, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office.
(b) Location of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, located at the places specified in Schedule
III annexed hereto.
XVI-7
<PAGE>
(c) Office Locations; Other Names. The chief place of business,
the chief executive office and the office where Grantor keeps its records
regarding the Accounts is, and has been for the four month period preceding the
date hereof, located at 3900 Paradise Road, Suite 135, Las Vegas, Nevada.
Grantor has not in the past done, and does not now do, business under any other
name (including any trade-name or fictitious business name) except Players Club
International, Inc.
(d) Delivery of Certain Collateral. All chattel paper and all
notes and other instruments (excluding checks) comprising any and all items of
Collateral have been delivered to Secured Party duly endorsed and accompanied by
duly executed instruments of transfer or assignment in blank.
(e) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Grantor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Grantor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except (v) authorization from
applicable Gaming Authorities for the use of certain voting stock and other
securities as collateral, which authorization has been obtained prior to the
date hereof, (w) authorization from any Gaming Authorities for the exercise by
Secured Party of certain of its rights and remedies hereunder, (x) the report
required to be filed by Grantor pursuant to Nevada Gaming Commission Regulation
8.130, (y) the filing of Uniform Commercial Code financing statements with the
Secretary of States of Illinois or Nevada or the Clerk of Court of any Louisiana
parish (or recorder of mortgages for Orleans Parish) and the Mortgages with the
Massac County, Illinois Recorder of Deeds, the Clark County, Nevada Recorder or
the recorder of mortgages for Calcasieu Parish, Louisiana and (z) as has been
previously taken by or at the direction of Grantor).
(f) Perfection. This Agreement creates a valid and enforceable
security interest in the Collateral, securing the payment of the Secured
Obligations. Upon the filing of a UCC-1 financing statement describing the
Collateral with the Secretary of States of Illinois and Nevada and with the
Clerk of Court of any Louisiana parish (or recorder of mortgages for Orleans
Parish) and the Mortgages with the Massac County, Illinois Recorder of Deeds,
the Clark County, Nevada Recorder or the recorder of mortgages for Calcasieu
Parish, Louisiana, as the case may be, Secured Party shall also have a perfected
and first priority security interest in the Collateral, subject only to
Permitted Encumbrances, securing the payment of the Secured Obligations.
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Grantor with respect to
the Collateral is accurate and complete in all respects.
XVI-8
<PAGE>
SECTION 5. Further Assurances.
(a) Grantor agrees that from time to time, at the expense of
Grantor, Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral and to preserve, protect and maintain the Collateral and the
value thereof. Without limiting the generality of the foregoing, Grantor will:
(i) at the reasonable request of Secured Party mark conspicuously each item of
chattel paper included in the Accounts, each Related Contract and, at the
reasonable request of Secured Party, each of its records pertaining to the
Collateral, with a legend, in form and substance satisfactory to Secured Party,
indicating that such Collateral is subject to the security interest granted
hereby, (ii) if any Account shall be evidenced by a promissory note or other
instrument (excluding checks) or chattel paper, deliver and pledge to Secured
Party hereunder such note or instrument or the original counterpart of such
chattel paper, duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Secured Party,
(iii) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may reasonably request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iv)
promptly after the acquisition by Grantor of any item of Equipment which is
covered by a certificate of title under a statute of any jurisdiction under the
law of which indication of a security interest on such certificate is required
as a condition of perfection thereof, execute and file with the registrar of
motor vehicles or other appropriate authority in such jurisdiction an
application or other document requesting the notation or other indication of the
security interest created hereunder on such certificate of title, (v) at any
reasonable time, upon reasonable request by Secured Party, exhibit the
Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, and (vi) at the reasonable request of
Secured Party, appear in and defend any action or proceeding that may affect
Grantor's title to or Secured Party's security interest in all or any part of
the Collateral.
(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
(c) Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
XVI-9
<PAGE>
(d) Grantor agrees, after an Event of Default or Potential Event
of Default, in the event that Secured Party shall apply for or appoint an agent
to apply for a gaming or liquor license with any Gaming Authority or
Governmental Authority or seek to obtain consent from any Gaming Authority to
foreclose on the Collateral (including all gaming permits) and operate any of
the Facilities or otherwise seek to enforce its rights hereunder, Grantor shall
provide such cooperation as is necessary in order for Secured Party to obtain
the full benefits of this Agreement. Without limiting the generality of the
foregoing, if any Gaming Authority or any Governmental Authority shall require
any amendments to the Collateral Documents or require Grantor to execute such
other documents as a condition to or as a part of such approval process, Grantor
shall consent to such amendments and/or execute such documents promptly.
SECTION 6. Certain Covenants of Grantor. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any
change in Grantor's chief place of business, chief executive office or residence
or the office where Grantor keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith and
for which adequate reserves have been established; provided that Grantor shall
in any event pay such taxes, assessments, charges, levies or claims not later
than five days prior to the date of any proposed sale under any judgement, writ
or warrant of attachment entered or filed against Grantor or any of the
Collateral as a result of the failure to make such payment.
SECTION 7. Special Covenants With Respect to Equipment and
Inventory. Grantor shall:
(a) keep the Equipment and Inventory at the places therefor
specified on Schedule III annexed hereto or, upon 30 days' prior written notice
to Secured Party, at such other places in jurisdictions where all action that
may be necessary or desirable, or that
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<PAGE>
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Equipment and Inventory shall have been taken;
(b) cause the Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with Grantor's past practices, and shall forthwith,
or, in the case of any loss or damage to any of the Equipment when subsection
(c) or (d) of Section 8 is not applicable, as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Grantor shall promptly furnish to Secured Party a statement respecting any
material loss or damage to any of the Equipment (the requirements under this
subsection 7(b) being supplemental to and not exclusive of the requirements
under Section 6.4 of the Credit Agreement relating to maintenance of property);
(c) provide prompt written notice to Secured Party of any breach
or default by any party to any Assigned Agreement;
(d) notify Secured Party of the establishment of any deposit
accounts after the date hereof and take such steps as may be reasonably
requested by Secured Party to perfect Secured Party's lien therein;
(e) perform all acts that are necessary or desirable to cause all
licenses, permits, variances, special permits, franchises, certificates,
rulings, certifications, validations, exemptions, filings, registrations,
authorizations, consents, approvals, waivers, orders, rights, and agreements in
which a security interest has been conveyed to Secured Party pursuant to
subsection 1(j) to remain in full force and effect;
(f) keep correct and accurate records of the Inventory, itemizing
and describing the kind, type and quantity of Inventory, Grantor's cost therefor
and (where applicable) the current list prices for the Inventory substantially
consistent with the practice of other gaming institutions in connection with
their gaming operations in the States of Illinois, Louisiana or Nevada, as the
case may be;
(g) upon the occurrence of an Event of Default, if any Inventory
is in possession or control of any of Grantor's agents or processors, instruct
such agent or processor to hold all such Inventory for the account of Secured
Party and subject to the instructions of Secured Party; and
(h) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title (other than any one or more Negotiable Documents of
Title covering Inventory which, in the ordinary course of business, is in
transit either (i) from a supplier to
XVI-11
<PAGE>
Grantor or (ii) to customers of Grantor), deliver such Negotiable Document of
Title to Secured Party.
SECTION 8. Insurance.
(a) Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement, this Section 8 and the Mortgages. Such insurance shall
include, without limitation, property damage insurance and liability insurance.
Each policy for property damage insurance shall provide for all losses (except
for losses of less than $2,500,000 per occurrence) to be paid directly to
Secured Party as provided in clauses (c) and (d) below. Each policy shall in
addition name Grantor and Secured Party as insured parties thereunder (without
any representation or warranty by or obligation upon Secured Party) as their
interests may appear and have attached thereto a loss payable clause acceptable
to Secured Party that shall (i) contain an agreement by the insurer that any
loss thereunder shall be payable to Secured Party notwithstanding any action,
inaction or breach of representation or warranty by Grantor, (ii) provide that
there shall be no recourse against Secured Party for payment of premiums or
other amounts with respect thereto, and (iii) provide that at least 30 days'
prior written notice of cancellation, material amendment, reduction in scope or
limits of coverage or of lapse shall be given to Secured Party by the insurer.
Grantor shall, if reasonably requested by Secured Party, deliver to Secured
Party original or duplicate policies of such insurance and, as often as Secured
Party may reasonably request, a report of a reputable insurance broker with
respect to such insurance. Further, Grantor shall, at the reasonable request of
Secured Party, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of subsection 5(a) and cause
the respective insurers to acknowledge notice of such assignment. The
requirements under this subsection 8(a) shall be supplemental to and not
exclusive of the requirements under Section 6.4 of the Credit Agreement relating
to insurance.
(b) Reimbursement under any liability insurance maintained by
Grantor pursuant to this Section 8 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) or (d) of this Section 8 is
not applicable, Grantor shall make or cause to be made the necessary repairs to
or replacements of such Equipment or Inventory, and any proceeds of insurance
maintained by Grantor pursuant to this Section 8 shall be paid to Grantor as
reimbursement for the costs of such repairs or replacements.
(c) Upon the occurrence of any Event of Loss involving Equipment
or Inventory and pursuant to which Grantor or any of its Subsidiaries receives
Net Cash Proceeds equal to or in excess of $2,500,000, all insurance payments in
respect of such Equipment or Inventory shall be paid to and applied by Secured
Party as specified in subsection 2.4A(ii)(b) of the Credit Agreement.
XVI-12
<PAGE>
(d) Notwithstanding the provisions of Section 8(c), upon the
occurrence and during the continuation of any Event of Default, all insurance
payments in respect of any Equipment or Inventory shall be paid to and applied
by Secured Party as specified in Section 18.
SECTION 9. Special Covenants with respect to Accounts and Related
Contracts.
(a) Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts at the location therefor specified in Section 4
or, upon 30 days' prior written notice to Secured Party, at such other location
in a jurisdiction where all action that may be necessary or desirable, or that
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Grantor
will hold and preserve such records and will permit representatives of Secured
Party at any time during normal business hours to inspect and make abstracts
from such records, and Grantor agrees to render to Secured Party, at Grantor's
cost and expense, such clerical and other assistance as may be reasonably
requested with regard thereto. Promptly upon the request of Secured Party,
Grantor shall deliver to Secured Party complete and correct copies of each
Related Contract.
(b) Grantor shall, for not less than 5 years from the date on
which such Account arose, maintain (i) complete records of each Account,
including records of all payments received, credits granted and merchandise
returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to Grantor under the Accounts (but, other than with respect to security
deposits, in no event more than one month in advance) and Related Contracts. In
connection with such collections, Grantor may take (and, at Secured Party's
direction, shall take) such action as Grantor or Secured Party may deem
necessary or advisable to enforce collection of amounts due or to become due
under the Accounts; provided, however, that Secured Party shall have the right
at any time, upon the occurrence and during the continuation of an Event of
Default or a Potential Event of Default and upon written notice to Grantor of
its intention to do so, to notify the account debtors or obligors under any
Accounts of the assignment of such Accounts to Secured Party and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to Grantor thereunder directly to Secured Party, to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Secured Party and, upon such notification and at the expense of Grantor, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment
XVI-13
<PAGE>
thereof, in the same manner and to the same extent as Grantor might have done.
After receipt by Grantor of the notice from Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by Grantor in respect of the Accounts and
the Related Contracts shall be received in trust for the benefit of Secured
Party hereunder, shall be segregated from other funds of Grantor and shall be
forthwith paid over or delivered to Secured Party in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 18, and (ii) Grantor shall not adjust, settle or
compromise the amount or payment of any Account, or release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon.
SECTION 10. Special Provisions With Respect to the Assigned
Agreements.
(a) Grantor shall at its expense:
(i) perform and observe all terms and provisions of
the Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to
such end as may be from time to time reasonably requested by Secured
Party; and
(ii) furnish to Secured Party, promptly upon receipt
thereof, copies of all notices of default received by Grantor under or
pursuant to the Assigned Agreements, and from time to time (A) furnish
to Secured Party such information and reports regarding the Assigned
Agreements as Secured Party may reasonably request and (B) upon
reasonable request of Secured Party make to the appropriate
counterparty to an Assigned Agreement such demands and requests for
information and reports or for action as Grantor is entitled to make
under the Assigned Agreements.
(b) Grantor shall not, without the prior written consent of
Requisite Lenders, which consent shall not be unreasonably withheld:
(i) cancel or terminate any of the Assigned Agreements
or consent to or accept any cancellation or termination thereof if such
cancellation or termination, together with all other such cancellations
or terminations, would result in a Material Adverse Effect;
(ii) amend or otherwise modify the Assigned Agreements
or give any consent, waiver or approval thereunder if the effect of
such amendment or modification, together with all other amendments,
modifications, consents, waivers or approvals made or consents, waivers
or approvals given, is to increase materially the obligations of
Grantor thereunder or to confer any additional rights on the
XVI-14
<PAGE>
counterparties to such Assigned Agreements that could reasonably be
expected to be materially adverse to Grantor or Lenders;
(iii) waive any default under or breach of the
Assigned Agreements;
(iv) consent to or permit or accept any prepayment of
amounts to become due under or in connection with the Assigned
Agreements, except as expressly provided therein; or
(v) take any other action in connection with the
Assigned Agreements that would impair the value of the interest or
rights of Grantor thereunder or that would impair the interest or
rights of Secured Party.
SECTION 11. Deposit Accounts. Upon the occurrence and during the
continuation of an Event of Default, Secured Party and each Lender may exercise
dominion and control over, and refuse to permit further withdrawals (whether of
money, securities, instruments or other property) from any deposit accounts
maintained with Secured Party or such Lender constituting part of the
Collateral.
SECTION 12. License of Patents, Trademarks, Copyrights, etc.
Grantor hereby assigns, transfers and conveys to Secured Party, effective upon
the occurrence of any Event of Default, the nonexclusive right and license to
use all trademarks, tradenames, service marks, copyrights, customers lists,
patents or technical processes owned or used by Grantor that relate to the
Collateral and any other collateral granted by Grantor as security for the
Secured Obligations, together with any goodwill associated therewith, all to the
extent necessary to enable Secured Party to use, possess and realize on the
Collateral and to enable any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all successors,
assigns and transferees of Secured Party and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to Grantor.
SECTION 13. Transfers and Other Liens. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
or
(b) except for the security interest created by this Agreement
and the interests disclosed in Schedule IV hereto which are permitted by the
Credit Agreement, create or suffer to exist any Lien upon or with respect to any
of the Collateral to secure the indebtedness or other obligations of any Person.
XVI-15
<PAGE>
SECTION 14. Secured Party Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints Secured Party as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Secured Party pursuant to Section 8;
(b) to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a) and (b)
above;
(d) to file any claims or take any action or institute any
proceedings (including, without limitation, any proceeding before any Gaming
Authority) that Secured Party may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of Secured Party
with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of Grantor to Secured Party, due and payable immediately without demand;
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) upon the occurrence and during the continuation of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and Grantor's expense, at any time or from time to
time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as Grantor might do.
SECTION 15. Secured Party May Perform. If Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such
XVI-16
<PAGE>
agreement, and the expenses of Secured Party incurred in connection therewith
shall be payable by Grantor under Section 20.
SECTION 16. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 17. Remedies.
(a) Notwithstanding any other provision hereof, if Secured
Party elects, upon any Event of Default, to sell real property and any
of the Collateral together under any of the Mortgages and applicable
law, then the terms of such Mortgage shall, with respect to such sale
and Collateral, control and supersede any terms in this Agreement with
respect to such sale and Collateral; provided that Secured Party's
election to exercise remedies under such Mortgage shall have no effect
on the terms contained in this Agreement with respect to any Collateral
as to which Secured Party has not so elected.
(b) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (or, in the case of Louisiana, the Louisiana
Commercial Laws - Secured Transactions (Louisiana Revised Statutes,
Title 10, Chapter 9)) (the "Code") (whether or not the Code applies to
the affected Collateral), and also may (a) require Grantor to, and
Grantor hereby agrees that it will at its expense and upon request of
Secured Party forthwith, assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured Party at a
place to be designated by Secured Party that is reasonably convenient
to both parties, (b) enter onto the property where any Collateral is
located and take possession thereof with or without judicial process,
(c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems
appropriate, (d) take possession of Grantor's premises or place
custodians in exclusive control thereof, remain on such premises and
use the same and any of Grantor's equipment for the purpose of
completing any work in process, taking any actions described in the
preceding clause (c) and collecting any Secured Obligation, and (e)
without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any
of
XVI-17
<PAGE>
Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon
such other terms as Secured Party may deem commercially reasonable.
Secured Party or any Lender may be the purchaser of any or all of the
Collateral at any such sale and Secured Party, as administrative agent
for and representative of Lenders (but not any Lender or Lenders in its
or their respective individual capacities unless Requisite Lenders
shall otherwise agree in writing), shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Collateral payable by Secured Party at such
sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Grantor, and
Grantor hereby waives (to the extent permitted by applicable law) all
rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now
existing or hereafter enacted. Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to
Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned. Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral
may have been sold at such a private sale was less than the price which
might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to
more than one offeree. If the proceeds of any sale or other disposition
of the Collateral are insufficient to pay all the Secured Obligations,
Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
Further, as to all Collateral now or hereafter located in the
State of Louisiana, or as to which the laws of the State of Louisiana
may now be or hereafter become applicable, the Grantor hereby
acknowledges the Secured Obligations, whether now or existing or to
arise hereafter, and confesses judgment thereon if the Secured
Obligations are not paid at maturity, and does by these presents
consent, agree and stipulate that if any portion of the Secured
obligations is not promptly and fully paid when due, or if there should
occur an Event of Default, the Secured Obligations shall, at the option
of the Secured Party become immediately due and payable and it shall be
lawful for the Secured Party, without making a demand and without
notice or putting in default, the same being hereby expressly waived,
to cause all and singular the Collateral to be seized and sold by
executory process, without appraisement (appraisement being hereby
expressly waived), either in its entirety or in lots or parcels, as the
Secured Party may determine, to the highest bidder for cash, or on such
terms as plaintiff in such proceedings may direct.
XVI-18
<PAGE>
Grantor hereby expressly waives: (a) the benefit of
appraisement, as provided in Articles 2332, 2336, 2723 and 2724,
Louisiana Code of Civil Procedure, and all other laws conferring the
same; (b) the demand and three (3) days delays accorded by Articles
2639 and 2721, Louisiana Code of Civil Procedure; (c) the notice of
seizure required by Articles 2293 and 2721, Louisiana Code of Civil
Procedure; (d) the three (3) days delay provided by Articles 2331 and
2722, Louisiana Code of Civil Procedure; and (e) the benefit of the
other provisions of Articles 2331, 2722 and 2723, Louisiana Code of
Civil Procedure, and the benefit of any other Articles or laws relating
to rights of appraisement, notice, or delay not specifically mentioned
above; and Grantor expressly agrees to the immediate seizure of the
Collateral in the event of suit herein. Further, Grantor acknowledges
that Secured Party shall have all rights to appointment of a keeper in
connection with any action to foreclose the lien hereof, all in
accordance with Louisiana Revised Statutes 9:5136 et seq. The
compensation of the keeper is hereby fixed at 1% of the amount due or
sued for or claimed or sought to be protected or enforced, and shall
constitute a portion of the Secured Obligations secured by the lien
hereof.
Notwithstanding anything to the contrary contained herein, if,
upon an Event of Default hereunder or under the Credit Agreement and
foreclosure upon any gaming permits pledged and assigned herein,
Secured Party is not qualified under the Gaming Laws to hold such
gaming permits, then Secured Party shall designate an appropriately
qualified third party to which an assignment of such gaming permits can
be made in compliance with the Gaming Laws.
SECTION 18. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured Party
as Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 20;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and
XVI-19
<PAGE>
THIRD: To the payment to or upon the order of Grantor, or to
whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 19. Regulatory Matters. Grantor and Secured Party
acknowledge and agree that:
(a) The terms and provisions of this Agreement and the rights and
obligations created hereunder shall be subject to compliance with all applicable
Gaming Laws.
(b) Without limiting the generality of the foregoing, all
required prior approvals under applicable Gaming Laws will be obtained in
connection with Secured Party's exercise of any of the rights set forth in
Section 15 or the remedies set forth in Section 17 upon the occurrence of an
Event of Default including, without limitation, any separate prior approvals
required in connection with the sale, transfer or other disposition of the
Collateral; and
(c) Grantor agrees to assist Secured Party in obtaining all
approvals of the Gaming Authorities or any other Governmental Authority that are
required by law for or in connection with any action or transaction contemplated
by this Agreement and, at Secured Party's reasonable request upon the occurrence
and during the continuation of an Event of Default, to prepare, sign and file
with the appropriate Gaming Authorities the transferor's portion of any
application or applications for consent to the transfer of control thereof
necessary or appropriate under applicable Gaming Laws for approval of any sale
or transfer of the Collateral pursuant to the exercise of Secured Party's
remedies under Section 17.
SECTION 20. Indemnity and Expenses.
(a) Grantor agrees to indemnify Secured Party and each Lender
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral, (ii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or
(iii) the failure by Grantor to perform or observe any of the provisions hereof.
XVI-20
<PAGE>
SECTION 21. Continuing Security Interest; Transfer of Loans or
Letters of Credit. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of the Secured Obligations, the cancellation or
termination of the Commitments and the termination, cancellation or expiration
of all outstanding Letters of Credit, (b) be binding upon Grantor, its
successors and assigns, and (c) inure, together with the rights and remedies of
Secured Party hereunder, to the benefit of Secured Party and its successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), but subject to the provisions of subsection 10.1 of the Credit Agreement,
any Lender may assign or otherwise transfer any Loans held by it or
Administrative Agent may assign any Letters of Credit issued by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
indefeasible payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the termination, cancellation or expiration
of all outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantor. Upon any
such termination Secured Party will, at Grantor's expense, execute and deliver
to Grantor such documents as Grantor shall reasonably request to evidence such
termination.
SECTION 22. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party
XVI-21
<PAGE>
of the security interests created hereunder, whereupon such retiring or
removed Secured Party shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Secured Party, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Secured Party hereunder.
SECTION 23. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Grantor herefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Grantor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 24. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or five Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 25. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 26. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 27. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 28. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE
XVI-22
<PAGE>
EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEVADA. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
Nevada are used herein as therein defined.
SECTION 29. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT GRANTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Grantor hereby
agrees that service of all process in any such proceeding in any such court may
be made by registered or certified mail, return receipt requested, to Grantor at
its addresses as provided in Section 24, such service being hereby acknowledged
by Grantor to be sufficient for personal jurisdiction in any action against
Grantor in any such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Secured Party to bring
proceedings against Grantor in the courts of any other jurisdiction.
SECTION 30. Waiver of Jury Trial. GRANTOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Grantor and Secured Party
each acknowledge that this waiver is a material inducement for Grantor and
Secured Party to enter into a business relationship, that Grantor and Secured
Party have already relied on this waiver in entering into this Agreement and
that each will continue to rely on this waiver in their related future dealings.
Grantor and Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
XVI-23
<PAGE>
SECTION 31. Counterparts. This Agreement may be executed in one
or more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XVI-24
<PAGE>
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS INTERNATIONAL, INC.,
as Grantor
By: ____________________________________
Title: _________________________________
Notice Address:
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-1
<PAGE>
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: ____________________________________
Title: _________________________________
Notice Address:
800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-2
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
Assigned Agreements
A. ILLINOIS PROJECT AGREEMENTS:
1. Purchase Agreement dated as of June 23, 1992 by and among Players
International, Inc. ("PII"), Southern Illinois Riverboat/Casino Cruises,
Inc. ("SIRCC") and The Griffin Group, Inc. ("TGG").
2. 1992 Series A Exchangeable Debenture of SIRCC issued to TGG on June 23,
1992 in the aggregate principal amount of $2,250,000.
3. 1992 Series A Warrant of PII to purchase 1,948,000 shares of common
stock issued to TGG on June 23, 1992.
4. Registration Rights Agreements dated June 23, 1992 between PII and TGG.
5. Joint Venture Agreement dated May 6, 1993 between SIRCC and Amerihost
Development, Inc.
6. Lease Agreement by and between Riverfront Realty Corporation ("RRC")
and Burlington Northern Railroad Company dated as of August 1, 1992.
7. Lease Agreement by and among Burlington Northern Railroad Company and
SIRCC dated May 27, 1992 and assigned to RRC by Assignment of Lease
dated September 16, 1992.
8. Purchase Agreement dated June 23, 1992 by and among SIRCC, PII and
certain Purchasers.
9. 1992 Series B Exchangeable Debenture of SIRCC.
10. 1992 Series B Warrant to Purchase Common Stock of PII.
11. Lease dated December 10, 1990 by and between PCI and the City of
Metropolis, Amendment to Lease dated May 26, 1992, Amendment and
Assignment of Lease dated August 25, 1995.
12. Agreement of Limited Partnership of Metropolis, IL 1292 Limited
Partnership.
XVI-I-1
<PAGE>
B. PRINCIPAL OFFICE AGREEMENTS:
13. Act of Lease dated July 29, 1993 by and between Players Lake Charles,
Inc. ("PLCI") and the Housing Authority of the City of Lake Charles.
14. Lease Agreement dated _________________ by and between Players Nevada, Inc.
("PNI") and _________________ [Office Space 1].
15. Lease Agreement dated ____________________ by and between PNI and
_________________ [Office Space 2].
C. LOUISIANA PROJECT AGREEMENTS:
16. Lease by J.A. Bel Heirs, et al. to PLCI dated April 29, 1993.
17. Lease Agreement by Opal Gray Trust, et al. to PLCI dated October 26, 1993.
18. Lease between The Beeber Corporation ("Beeber") and PLCI dated May 19, 1993
(with PII Joinder).
19. Escrow Agreement dated May 20, 1993 by and among PLCI, Beeber and First
National Bank of Lake Charles.
20. Non-Disturbance and Attornment Agreement by and among Lakeside National
Bank of Lake Charles, PLCI, PII, Beeber and Elisabeth S. Woodward
dated May 20, 1993.
21. Agreement dated February 12, 1993 by and between Jebaco, Inc. and PII.
22. Development and Exchange Agreement dated November 16, 1993 by and among
Anthony Phillip Leonards, PLCI, the City of Lake Charles and the State of
Louisiana, together with executed Construction Lease dated November 17,
1993 by and between the City of Lake Charles, Louisiana, as Lessor, and
Players Lake Charles, Inc., as Lessee.
23. Agreement dated December 1, 1994 by and between PLCI and Richard D.
Shetler.
24. Video Lottery Terminal Agreement dated December 1, 1994 by and between PLCI
and Richard D. Shetler.
25. Preliminary Purchase Agreement dated as of January 25, 1995 by and among
PLCI and Beeber.
XVI-I-2
<PAGE>
26. Development Agreement dated as of January 27, 1995 by and among PII and the
City of Lake Charles.
27. Construction Contract between Charles Miller Construction Co., Inc. and
PLCI.
D. INDIANA PROJECT AGREEMENTS:
28. Agreement dated April 20, 1993 by and between B.B. Riverboats, Inc. and PII
as amended by First Amendment to Agreement dated January 10, 1995 and
letter agreement dated March 6, 1995.
29. Option Agreement dated July 30, 1993 between Earl Harp and PII as amended
by First Amendment to Option Agreement dated April 29, 1994.
30. Assignment of Rents dated May 4, 1994 between Earl Harp and PII.
31. Option Agreement dated July 15, 1993 between Evansville Federal Savings
Bank and PII as amended by First Amendment to Option Agreement dated
April 14, 1994.
32. Option To Enter Into Lease dated May 5, 1995 between Inland Marina, Inc.
and Players Indiana, Inc.
E. MISSOURI PROJECT AGREEMENTS:
33. Letter of Intent dated March 3, 1995 by and among PII, The Promus Companies
Incorporated and Harrah's Club.
F. NEVADA PROJECT AGREEMENTS:
34. Option Transfer Agreement dated June 16, 1994 by and among GGI., Gem
Mesquite, Ltd. and PNI.
35. Development Consulting Agreement dated June 16, 1994 by and between GGI and
PNI.
36. 1994 Series G Warrant of PII to purchase 100,000 shares of common stock
issued to GGI on June 16, 1994.
37. Joint Declaration of Covenants and Restrictions dated June 2, 1995 by and
among Bryan K. Hafen and Dawn N. Hafen (the "Hafens"), PNI, and Players
Mesquite Land, Inc.
XVI-I-3
<PAGE>
38. Agreement Concerning Development of Golf Course and Residential Housing
dated February 3, 1995 by and between Players Mesquite Golf Club, Inc.
("PMGC") and River View Limited Liability Company ("RVLLC"), as amended by
Agreement of June 2, 1995.
39. Lease Agreement between PMGC and RVLLC.
40. Loan Agreement dated June 2, 1995 between PMGC and RVLLC.
41. Promissory Note dated June 2, 1995 in the amount of $650,000.00 by RVLLC in
favor of PMGC.
42. Deed of Trust and Assignment of Rents dated June 2, 1995 naming RVLLC as
Trustor, Fidelity National Title Agency of Nevada, Inc. as Trustee, and
PMGC as Beneficiary.
G. KENTUCKY PROJECT AGREEMENTS:
43. Agreement dated _________________, 1995 by and between Players Bluegrass
Downs, Inc. and United Tote Company.
H. GENERAL PII AGREEMENTS:
44. Various Employment Agreements.
45. Stock Option Plans and Summaries .
46. Commitment Letter for bank facility by and among PII, Bankers Trust Company
and First Interstate Bank of Nevada.
47. Aircraft Lease Agreement dated March 28, 1994 by and between Aviex Jet,
Inc. and PII.
48. Security Agreement given by Aviex Jet, Inc. ("Aviex") to PII dated March
28, 1994 to secure debt in principal amount of $1,250,000.00 as amended by
Amendment to Security Agreement dated April __, 1995.
49. Promissory Note made by Aviex in favor of PII in principal amount of
$1,250,000.00 as amended and replaced by Replacement of Promissory Note
dated April __, 1995.
50. Aircraft Lease Agreement dated April __, 1995 by and between Aviex and PII.
XVI-I-4
<PAGE>
51. Security Agreement given by Aviex to PII dated April __, 1995 to secure
debt in principal amount of $1,450,000.00.
52. Promissory Note made by Aviex in favor of PII in principal amount of
$1,450,000.00.
53. Indenture dated April 10, 1995 issued by PII, with certain named
guarantors and First Fidelity Bank as Trustee.
XVI-I-5
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
Players International, Inc.
<TABLE>
<S> <C> <C>
Carneigie Hill Investment 8001-0032616150
202 Carnegie Ctr.
Princeton, NJ 08540
(609) 520-0500
Chemical Bank Disbursement 6301-816512-508
1201 Market Street
Wilmington, DE 19801
1(800) 368-9997
Dreyfus Basic U.S. Investment 124-3339619904
Government
Money Market Fund
Bank of New York
P.O. Box 9671
Providence, RI 02940
(800) 645-6561
First Interstate Bank Checking 1840101329
P.O. Box 98588 Corporate Payrll 1840110866
Las Vegas, NV 89123-98588 Concentration 1840110858
(702) 385-8821 BGD Disbursement 4309613802
Mesquite Disbursement 4309613794
Lake Charles Disbursement 4309613786
Metropolis Disbursement 4309613778
Corporate Disbursement 4309613752
Insurance Claims 4309613760
First National Bank of Lake Escrow Account 0002-91471
Charles Concentration Account 0002-94101
P.O. Box 1889 Insurance Claims 0002-98085
Lake Charles, LA 70602 Corporate Payroll 0002-94330
(318) 475-2384
Marquis Investment Investment 093-585092
P.O. Box 61239
New Orleans, LA 70161
(800) 462-9511
</TABLE>
XVI-II-1
<PAGE>
SCHEDULE III
TO SECURITY AGREEMENT
Locations of Equipment:
3900 Paradise Road, Suite 135
Las Vegas, NV 89109
(720) 792-9998
Locations of Inventory:
3900 Paradise Road, Suite 135
Las Vegas, NV 89109
(720) 792-9998
XVI-III-1
<PAGE>
SCHEDULE IV
TO SECURITY AGREEMENT
Existing Permitted Liens
Nevada
Secretary of State
Financing Statement #95-02872
Dated: 3/2/95
Secured Party: Business Credit Leasing
Nevada
Secretary of State
Financing Statement #95-04600
Dated: 4/3/95
Secured Party: Skipco
Assignee: Business Credit Leasing
XVI-IV-1
<PAGE>
EXHIBIT 10.48
EXHIBIT XVII-C
[FORM OF SUBSIDIARY SECURITY AGREEMENT (NEVADA)]
SUBSIDIARY SECURITY AGREEMENT (NEVADA)
This SUBSIDIARY SECURITY AGREEMENT (this "Agreement") is dated
as of August 25, 1995 and entered into by and between PLAYERS NEVADA, INC., a
Nevada corporation ("PNEV"), PLAYERS MESQUITE GOLF CLUB, INC., a Nevada
corporation ("PMGC"), PLAYERS MESQUITE LAND, INC., a Nevada corporation ("PML",
each of PNEV, PMGC, and PML being referred to herein as a "Grantor" and
collectively, "Grantors"), and FIRST INTERSTATE BANK OF NEVADA, N.A. ("FIB"), as
administrative agent for and representative of (in such capacity herein called
"Secured Party") the financial institutions ("Lenders") party to the Credit
Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have
entered into a Credit Agreement dated as of even date herewith (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Players
International, Inc., a Nevada corporation ("Company"), of which each Grantor is
a wholly-owned subsidiary, pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
B. Grantors have delivered a Guaranty dated as of even date
herewith (said Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty") in favor of Secured
Party for the benefit of Lenders, pursuant to which Grantors, along with other
Subsidiaries of Company, have guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement.
C. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Grantors shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit and to issue the
Standby Letters of Credit under the Credit Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantors hereby agree with Secured Party as follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
such Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which such Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
(a) all present and future chattels, furniture, furnishings,
goods, equipment, fixtures and all other tangible personal property, of whatever
kind and nature, now or hereafter used in connection with or placed or located
within or on any part of the Nevada Facilities (including, without limitation,
any building or structure that is now or that may hereafter be erected within or
on the Nevada Facilities), including, but not limited to, machinery, materials,
goods and equipment now or hereafter used in the construction or operation of
the Nevada Facilities (including, without limitation, air conditioning, heating,
electrical, lighting, fire fighting and fire prevention, food and beverage
service, laundry, plumbing, refrigeration, security, sound, signaling,
telephone, television, window washing and other equipment and fixtures, of
whatever kind or nature, including generators, transformers, switching gear,
boilers, burners, furnaces, piping, sprinklers, sinks, tubs, valves,
compressors, motors, carts, dumb waiters, elevators and other lifts, floor
coverings, hardware, keys, locks, organs, pianos, planters, railings, scales,
shelving, signs, tools, machinery, molds, dies, drills, presses, planers, saws,
furniture, business fixtures, trade fixtures, electric, gas and other motor
vehicles, uniforms, vacuum cleaners, hotel furniture, furnishings and equipment,
bathroom furniture and furnishings (including towels, bathmats, hamperettes,
shower curtains and other bath linens), beds and bedding (including mattresses,
springs, pillows, bed pads, sheets, blankets, comforters, spreads and other bed
linens and furnishings), bric-a-brac, chairs, chests, vanities, secretaries,
bureaus, chiffonniers, love seats, benches, costumers, smoking stands, sand
jars, desks, dressers, hangings, paintings, pictures, frames, sculptures, lamps,
light bulbs, mirrors, night stands, ornaments, radios, stereo equipment, sofas,
statuary, tables, telephones, televisions, vases, window coverings, foodstuffs,
beverages (including beer, wine, liquor and other alcoholic beverages), and
other consumables (including soap, shampoo, cleaning supplies and paper goods),
cutlery, cooking, baking and other kitchen utensils and apparatus (including
crockery, fryers, grills, kettles, mixers, pots, pans, pails, racks, steamers
and toasters), china and other dishes, flatware, glassware, hollowware, serving
pieces, trays, table linens, washers, dryers, irons, ironing boards and other
ironing equipment, cables, outlets, plugs, wiring and related apparatus and
fixtures, card readers, cash registers, adding machines, calculators, computers,
keyboards, monitors, printers, printing equipment, envelopes, stationery,
posting machines, blank forms, typewriters, typewriter stands, other office and
accounting equipment and supplies, time stamps, time recorders, bookkeeping
XVII-C-2
<PAGE>
machines, checking machines, payroll machines, computer reservations systems,
equipment used in the operation of casinos within or on the Nevada Facilities
(including but not limited to, gaming devices and associated equipment (as
defined in Nevada Revised Statutes Chapter 463), including but not limited to,
slot machines, cards, poker chips and gaming tables) and all other goods,
equipment, furnishings, apparatus and fixtures that are now or may hereafter be
located at or used within, at or in connection with the Nevada Facilities) and
all other tangible personal property used or to be used at or in connection
with, or placed or to be placed in, rooms, halls, lounges, offices, lobbies,
lavatories, basements, cellars, vaults or other portions of the Nevada
Facilities or of any other building or buildings hereafter constructed or
erected thereon, whether herein enumerated or not, and whether or not contained
in any such building, and which are used or to be used or useful in the
operation and maintenance thereof, or in any bar, casino, hotel, restaurant,
store, health spa, salon or other business conducted thereon, together with all
replacements and substitutions for any and all personal property in which such
Grantor has an interest, including without limitation such goods and equipment
as shall from time to time be located, placed, installed or used in or upon, or
procured for use, or to be used or useful in connection with the operation of
the whole, or any part of, the Nevada Facilities and all parts thereof and all
accessions thereto (any and all such equipment, replacements, substitutions,
parts and accessions being the "Equipment");
(b) all present and future inventory and merchandise in all of
its forms used in connection with or placed or located within or on any part of
the Nevada Facilities (including, but not limited to, (i) all goods held by such
Grantor for sale or lease or to be furnished under contracts of service or so
leased or furnished, (ii) all raw materials, work in process, finished goods,
and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in such Grantor's business, (iii) all goods in which
such Grantor has an interest in mass or a joint or other interest or right of
any kind, (iv) all goods that are returned to or repossessed by such Grantor,
and (v) all packing materials, supplies and containers relating to or used in
connection with any of the foregoing, and all accessions thereto and products
thereof (all such inventory, accessions and products being the "Inventory") and
all negotiable documents of title (including without limitation warehouse
receipts, dock receipts and bills of lading) issued by any person covering any
of the foregoing (any such negotiable document of title being a "Negotiable
Document of Title");
(c) all present and future accounts, accounts receivable,
rentals, revenues, receipts, payments, and income of any nature whatsoever
derived from or received with respect to hotel rooms, banquet facilities,
convention facilities, retail premises, bars, restaurants, casinos, parking lots
and garages and any other facilities within or on the Nevada Facilities and
services and amenities provided in connection therewith, all agreements,
contracts, leases, contract rights, rights to payment, instruments, documents,
chattel paper, security agreements, guaranties, undertakings, surety bonds,
insurance policies, condemnation deposits and awards, notes and drafts,
securities, certificates of deposit and the right to receive all payments
thereon or in respect thereof (whether principal, interest, fees or otherwise),
contract rights (other than rights under contracts or governmental permits that
XVII-C-3
<PAGE>
may not be transferred by law), including, without limitation, rights to all
deposits from tenants and other users of the Nevada Facilities, rights under all
contracts relating to the construction, renovation or restoration of any of the
improvements now or hereafter located within or on the Nevada Facilities or the
financing thereof and all rights under payment or performance bonds, warranties,
and guaranties, and all rights to payment from any credit/charge card
organization or entity such as or similar to, and including, without limitation,
the organizations or entities that sponsor and administer, respectively, the
American Express Card, the Carte Blanche Card, the Diners Club Card, the
Discover Card, the MasterCard and the Visa Card, books of account, and
principal, interest and payments due on account of goods sold, services
rendered, loans made or credit extended, within, on or in connection with the
Nevada Facilities and all forms of obligations owing to and rights of such
Grantor or in which such Grantor may have any interest, however created or
arising (any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "Accounts", and
any and all such security agreements, leases and other contracts being the
"Related Contracts");
(d) the agreements listed in Schedule I annexed hereto, as each
such agreement may be amended, supplemented or otherwise modified from time to
time (said agreements, as so amended, supplemented or otherwise modified, being
referred to herein individually as an "Assigned Agreement" and collectively as
the "Assigned Agreements"), including without limitation (i) all rights of such
Grantor to receive moneys due or to become due under or pursuant to the Assigned
Agreements, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) all claims of such Grantor for damages arising out of any
breach of or default under the Assigned Agreements, and (iv) all rights of such
Grantor to terminate, amend, supplement, modify or exercise rights or options
under the Assigned Agreements, to perform thereunder and to compel performance
and otherwise exercise all remedies thereunder;
(e) all present and future right, title and interest of such
Grantor in and to all leases, subleases, licenses, concessions, franchises and
other use or occupancy agreements (except, however, agreements made by such
Grantor in the ordinary course of business for short-term use by members of the
public of any, guest rooms and public rooms, including banquet and meeting
facilities, located within or on the Nevada Facilities, and any amendments,
modifications, extensions or renewals thereof (collectively, "Leases"), whether
or not specifically herein described, that now or may hereafter pertain to or
affect the Nevada Facilities or any portion thereof and all amendments to the
same, including, but not limited to, the following: (i) all payments due and to
become due under such Leases, whether as rent, damages, insurance payments,
condemnation awards, or otherwise; (ii) all claims, rights, powers, privileges
and remedies under such Leases; and (iii) all rights of such Grantor under such
Leases to exercise any election or option (including without limitation, any
right of Grantor under any ground lease to purchase the fee interest of the
lessor thereunder (the "Options")), or to give or receive any notice, consent,
waiver or approval, or to accept any surrender of the premises or any part
thereof, together with full power and authority in the
XVII-C-4
<PAGE>
name of such Grantor, or otherwise, to demand and receive, enforce and collect
any receipt for any or all of the foregoing, to endorse or execute any checks or
any instruments or orders, to file any claims, and to take any other action that
Secured Party may deem necessary or advisable in connection therewith;
(f) all present and future deposit accounts of such Grantor,
including, without limitation, those deposit accounts set forth on Schedule II
hereto, any demand, time, savings, passbook or like account maintained by such
Grantor with any bank, savings and loan association, credit union or like
organization, and all money, cash and cash equivalents of such Grantor, whether
or not deposited in any such deposit account and all such accounts maintained
with Secured Party;
(g) all present and future general intangibles (including but
not limited to all governmental permits relating to construction or other
activities within or on the Nevada Facilities), the Options, all tax refunds of
every kind and nature to which such Grantor now or hereafter may become
entitled, however arising, all other refunds, and all deposits, goodwill, choses
in action, rights to payment or performance, gambling debts or gaming debts owed
to such Grantor by its patrons (whether or not evidenced by a note), judgments
taken on any rights or claims included in the Collateral, trade secrets,
computer programs, software, customer lists, business names, trademarks, trade
names and service marks (including, but not limited to: "Players Island" and
"Players Island Resort.Casino.Spa" and any derivations thereof, including any
and all state and federal applications and registrations thereof), patents,
patent applications, licenses, copyrights, registration and franchise rights,
technology, processes, proprietary information, insurance proceeds and all
goodwill associated with any of the foregoing;
(h) all present and future books and records, including,
without limitation, books of account and ledgers of every kind and nature,
ledger cards, computer programs, tapes, disks and other information storage
devices, all related data processing software, and all electronically recorded
data relating to such Grantor or its business related to the Nevada Facilities,
all receptacles and containers for such records, and all files and
correspondence;
(i) all present and future maps, plans, specifications,
surveys, studies, reports, data and drawings (including, without limitation,
architectural, structural, mechanical and engineering plans and specifications,
studies, data and drawings) prepared for or relating to the development of the
Nevada Facilities or the construction, renovation or restoration of any
improvements within or on the Nevada Facilities or the extraction of minerals,
sand, gravel or other valuable substances from the Nevada Facilities, together
with all amendments and modifications thereto;
(j) all present and future licenses, permits, variances,
special permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including options, option rights and
contract rights), other than those (including non-transferrable gaming
XVII-C-5
<PAGE>
permits) that may not be transferred by law, now or hereafter obtained by such
Grantor from any governmental authority having or claiming jurisdiction over the
Nevada Facilities or any other element of the Collateral or providing access
thereto, or the operation of any business within, on, at, or from the Nevada
Facilities;
(k) all present and future goods, including, without
limitation, all consumer goods, inventory, equipment, and other supplies, of
whatever kind or nature, and any and all other goods, wherever located, used or
to be used in connection with or in the conduct of such Grantor's business or
the Nevada Facilities;
(l) all present and future stocks, securities (except any
voting stock or securities if consent is required from the applicable Gaming
Authorities and not obtained), bonds, debentures, subscription rights, options,
warrants, puts, calls, certificates, partnership interests, joint venture
interests, investments, brokerage accounts and all rights, preferences,
privileges, dividends, distributions, redemption payments and liquidation
payments received or receivable with respect thereto;
(m) all present and future accessions, appurtenances,
components, repairs, repair parts, spare parts, replacements, substitutions,
additions, issue and improvements to or of or with respect to any of the
foregoing;
(n) all other fixtures and storage and office facilities, and
all accessions thereto and products thereof and all water stock relating to the
Nevada Facilities;
(o) all other tangible and intangible personal property of
such Grantor used in connection with or placed or located within or on any part
of the Nevada Facilities;
(p) all rights, remedies, powers and privileges of such
Grantor with respect to any of the foregoing;
(q) all water rights and rights to the use of water now or
hereafter appurtenant to or used in connection with any of the Nevada Facilities
(including, without limitation, seven (7) shares in the Mesquite Irrigation
Company, a Nevada corporation, owned by Grantor, and one hundred twenty (120)
shares leased by Grantor from River View Limited Liability Company, a Nevada
limited liability company, pursuant to any ground lease, which water rights
consist of a portion of Proof of Appropriation No. 01968, as more particularly
set forth in the action entitled "In the Matter of the Determination of the
Relative Rights of Claimants and Appropriators in and to the Waters of the
Virgin River in Clark County, State of Nevada, entered May 14, 1927", together
with Permits 3085, 7626 and 15619 issued by the Nevada State Engineer); and
(r) any and all proceeds, products, rents, income and profits
of any of the foregoing, including, without limitation, all money, accounts,
general intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds (whether or not
XVII-C-6
<PAGE>
Secured Party is the loss payee), and any other tangible or intangible property
received upon the sale or disposition of any of the foregoing (it being agreed,
for purposes hereof, that the term "proceeds" includes whatever is receivable or
received when any of the Collateral is sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary).
Notwithstanding anything to the contrary contained herein,
Secured Party acknowledges that it has no security interest in any cash of any
Grantor described in clauses (f), (g) and (l) above, to the extent such a
security interest is prohibited by the Nevada Gaming Control Act.
SECTION 2. Security for Obligations. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and
liabilities of every nature of Grantors now or hereafter existing under or
arising out of or in connection with the Guaranty and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to any
Grantor, would accrue on such obligations), reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnities or otherwise, whether voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender as a preference, fraudulent transfer
or otherwise (all such obligations and liabilities being the "Underlying Debt"),
and all obligations of every nature of any Grantor now or hereafter existing
under this Agreement (all such obligations of Grantors, together with the
Underlying Debt, being the "Secured Obligations").
SECTION 3. Grantors Remain Liable. Anything contained herein to
the contrary notwithstanding, (a) Grantors shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of their duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement or otherwise, nor shall Secured Party be obligated to perform any of
the obligations or duties of Grantors thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
XVII-C-7
<PAGE>
SECTION 4. Representations and Warranties. Each Grantor
represents and warrants as follows:
(a) Ownership of Collateral. Except for the security interest
created by this Agreement and any Liens permitted pursuant to subsection 7.2A of
the Credit Agreement, such Grantor owns the Collateral owned by it free and
clear of any Lien. Except such as may have been filed in favor of Secured Party
relating to this Agreement, no effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
filing or recording office.
(b) Location of Equipment and Inventory. All of the Equipment
and Inventory is, as of the date hereof, located at the places specified in
Schedule III annexed hereto.
(c) Office Locations; Other Names. The chief place of business,
the chief executive office and the office where such Grantor keeps its records
regarding the Accounts is, and has been for the four month period preceding the
date hereof, located at the place listed on Schedule IV annexed hereto. No
Grantor has in the past done, and does not now do, business under any other name
(including any trade-name or fictitious business name).
(d) Delivery of Certain Collateral. All chattel paper and all
notes and other instruments (excluding checks) comprising any and all items of
Collateral have been delivered to Secured Party duly endorsed and accompanied by
duly executed instruments of transfer or assignment in blank.
(e) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by such Grantor of the
security interest granted hereby, (ii) the execution, delivery or performance of
this Agreement by such Grantor, or (iii) the perfection of or the exercise by
Secured Party of its rights and remedies hereunder (except (w) authorization
from the Nevada Gaming Authorities for the exercise by Secured Party of certain
of its rights and remedies hereunder, (x) the filing of a Uniform Commercial
Code financing statement with the Secretary of State of Nevada and the Nevada
Mortgages with the Clark County, Nevada Recorder, (y) the report required to be
filed by Company pursuant to Nevada Gaming Commission Regulation 8.130 and (z)
as has been previously taken by or at the direction of such Grantor).
(f) Perfection. This Agreement creates a valid and enforceable
security interest in the Collateral, securing the payment of the Secured
Obligations. Upon the filing of a UCC-1 financing statement describing the
Collateral with the Secretary of State of Nevada and the Nevada Mortgages with
the Clark County, Nevada Recorder, Secured Party shall also have a perfected and
first priority security interest in the Collateral, subject only to Permitted
Encumbrances, securing the payment of the Secured Obligations.
XVII-C-8
<PAGE>
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of such Grantor with
respect to the Collateral is accurate and complete in all respects.
SECTION 5. Further Assurances.
(a) Each Grantor agrees that from time to time, at the expense
of such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral and to preserve, protect and maintain the
Collateral and the value thereof. Without limiting the generality of the
foregoing, each Grantor will: (i) at the reasonable request of Secured Party
mark conspicuously each item of chattel paper included in the Accounts, each
Related Contract and, at the reasonable request of Secured Party, each of its
records pertaining to the Collateral, with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) if any Account shall be evidenced by a
promissory note or other instrument (excluding checks) or chattel paper, deliver
and pledge to Secured Party hereunder such note or instrument or the original
counterpart of such chattel paper, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Secured Party, (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (iv) promptly after the acquisition by such
Grantor of any item of Equipment which is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, (v) at any reasonable time, upon
reasonable request by Secured Party, exhibit the Collateral to and allow
inspection of the Collateral by Secured Party, or persons designated by Secured
Party, and (vi) at the reasonable request of Secured Party, appear in and defend
any action or proceeding that may affect such Grantor's title to or Secured
Party's security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes Secured Party to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of such Grantor. Each
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by such Grantor shall be sufficient
as a financing statement and may be filed as a financing statement in any and
all jurisdictions.
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<PAGE>
(c) Each Grantor will furnish to Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(d) Each Grantor agrees, after an Event of Default or Potential
Event of Default, in the event that Secured Party shall apply for or appoint an
agent to apply for a gaming or liquor license with any Nevada Gaming Authority
or any Governmental Authority or seek to obtain consent from any Nevada Gaming
Authority to foreclose on the Collateral (including all gaming permits) and
operate the Nevada Facilities or otherwise seek to enforce its rights hereunder,
such Grantor shall provide such cooperation as is necessary in order for Secured
Party to obtain the full benefits of this Agreement. Without limiting the
generality of the foregoing, if any Nevada Gaming Authority or any Governmental
Authority shall require any amendments to the Collateral Documents or require
such Grantor to execute such other documents as a condition to or as a part of
such approval process, such Grantor shall consent to such amendments and/or
execute such documents promptly.
SECTION 6. Certain Covenants of Grantors. Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any
change in such Grantor's chief place of business, chief executive office or
residence or the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes; and
(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith and
for which adequate reserves have been established; provided that such Grantor
shall in any event pay such taxes, assessments, charges, levies or claims not
later than five days prior to the date of any proposed sale under any judgement,
writ or warrant of attachment entered or filed against such Grantor or any of
the Collateral as a result of the failure to make such payment.
XVII-C-10
<PAGE>
SECTION 7. Special Covenants With Respect to Equipment and
Inventory. Each Grantor shall:
(a) keep the Equipment and Inventory at the places therefor
specified on Schedule III annexed hereto or, upon 30 days' prior written notice
to Secured Party, at such other places in jurisdictions where all action that
may be necessary or desirable, or that Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby, or to enable Secured Party to exercise and enforce its rights
and remedies hereunder, with respect to such Equipment and Inventory shall have
been taken;
(b) cause the Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with such Grantor's past practices, and shall
forthwith, or, in the case of any loss or damage to any of the Equipment when
subsection (c) of Section 8 is not applicable, as quickly as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements and
other improvements in connection therewith that are necessary or desirable to
such end. Each Grantor shall promptly furnish to Secured Party a statement
respecting any material loss or damage to any of the Equipment (the requirements
under this subsection 7(b) being supplemental to and not exclusive of the
requirements of Company under Section 6.4 of the Credit Agreement relating to
maintenance of property);
(c) provide prompt written notice to Secured Party of any
breach or default by any party to any Assigned Agreement;
(d) notify Secured Party of the establishment of any deposit
accounts after the date hereof and take such steps as may be reasonably
requested by Secured Party to perfect Secured Party's lien therein;
(e) perform all acts that are necessary or desirable to cause
all licenses, permits, variances, special permits, franchises, certificates,
rulings, certifications, validations, exemptions, filings, registrations,
authorizations, consents, approvals, waivers, orders, rights, and agreements in
which a security interest has been conveyed to Secured Party pursuant to
subsection 1(j) to remain in full force and effect;
(f) keep correct and accurate records of the Inventory,
itemizing and describing the kind, type and quantity of Inventory, such
Grantor's cost therefor and (where applicable) the current list prices for the
Inventory substantially consistent with the practice of other gaming
institutions in connection with their gaming operations in the State of Nevada;
(g) upon the occurrence of an Event of Default, if any
Inventory is in possession or control of any of such Grantor's agents or
processors, instruct such agent or processor to hold all such Inventory for the
account of Secured Party and subject to the instructions of Secured Party; and
XVII-C-11
<PAGE>
(h) promptly upon the issuance and delivery to such Grantor of
any Negotiable Document of Title (other than any one or more Negotiable
Documents of Title covering Inventory which, in the ordinary course of business,
is in transit either (i) from a supplier to Grantor or (ii) to customers of
Grantor), deliver such Negotiable Document of Title to Secured Party.
SECTION 8. Insurance.
(a) Each Grantor shall, at its own expense, maintain insurance
with respect to the Equipment and Inventory in accordance with the terms imposed
on Company by the Credit Agreement, this Section 8 and the Nevada Mortgages.
Such insurance shall include, without limitation, property damage insurance and
liability insurance. Each policy for property damage insurance shall provide for
all losses (except for losses of less than $2,500,000 per occurrence) to be paid
directly to Secured Party as provided in clauses (c) and (d) below. Each policy
shall in addition name such Grantor and Secured Party as insured parties
thereunder (without any representation or warranty by or obligation upon Secured
Party) as their interests may appear and have attached thereto a loss payable
clause acceptable to Secured Party that shall (i) contain an agreement by the
insurer that any loss thereunder shall be payable to Secured Party
notwithstanding any action, inaction or breach of representation or warranty by
such Grantor, (ii) provide that there shall be no recourse against Secured Party
for payment of premiums or other amounts with respect thereto, and (iii) provide
that at least 30 days' prior written notice of cancellation, material amendment,
reduction in scope or limits of coverage or of lapse shall be given to Secured
Party by the insurer. Each Grantor shall, if so reasonably requested by Secured
Party, deliver to Secured Party original or duplicate policies of such insurance
and, as often as Secured Party may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Further, each Grantor shall, at
the reasonable request of Secured Party, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of
subsection 5(a) and cause the respective insurers to acknowledge notice of such
assignment. The requirements under this subsection 8(a) shall be supplemental to
and not exclusive of the requirements imposed on Company under Section 6.4 of
the Credit Agreement relating to insurance.
(b) Reimbursement under any liability insurance maintained by
each Grantor pursuant to this Section 8 may be paid directly to the Person who
shall have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when subsection (c) or (d) of this
Section 8 is not applicable, the Grantor owning such Collateral shall make or
cause to be made the necessary repairs to or replacements of such Equipment or
Inventory, and any proceeds of insurance maintained by such Grantor pursuant to
this Section 8 shall be paid to such Grantor as reimbursement for the costs of
such repairs or replacements.
(c) Upon the occurrence of any Event of Loss involving
Equipment or Inventory and pursuant to which any Grantor receives Net Cash
Proceeds equal to or in
XVII-C-12
<PAGE>
excess of $2,500,000, all insurance payments in respect of such Equipment or
Inventory shall be paid to and applied by Secured Party as specified in
subsection 2.4A(ii)(b) of the Credit Agreement.
(d) Notwithstanding the provisions of Section 8(c), upon the
occurrence and during the continuation of any Event of Default, all insurance
payments in respect of any Equipment or Inventory shall be paid to and applied
by Secured Party as specified in Section 18.
SECTION 9. Special Covenants with respect to Accounts and
Related Contracts.
(a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts at the location therefor specified in Section 4
or, upon 30 days' prior written notice to Secured Party, at such other location
in a jurisdiction where all action that may be necessary or desirable, or that
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and will permit representatives of
Secured Party at any time during normal business hours to inspect and make
abstracts from such records, and each Grantor agrees to render to Secured Party,
at such Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Promptly upon the request of Secured
Party, each Grantor shall deliver to Secured Party complete and correct copies
of each Related Contract.
(b) Each Grantor shall, for not less than 5 years from the date
on which such Account arose, maintain (i) complete records of each Account,
including records of all payments received, credits granted and merchandise
returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts (but, other than with respect to
security deposits, in no event more than one month in advance) and Related
Contracts. In connection with such collections, each Grantor may take (and, at
Secured Party's direction, shall take) such action as such Grantor or Secured
Party may deem necessary or advisable to enforce collection of amounts due or to
become due under the Accounts; provided, however, that Secured Party shall have
the right at any time, upon the occurrence and during the continuation of an
Event of Default or a Potential Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the account debtors or obligors
under any Accounts of the assignment of such Accounts to Secured Party and to
direct such account debtors or obligors to make payment of all amounts due or to
become due to such Grantor thereunder directly to Secured Party, to
XVII-C-13
<PAGE>
notify each Person maintaining a lockbox or similar arrangement to which account
debtors or obligors under any Accounts have been directed to make payment to
remit all amounts representing collections on checks and other payment items
from time to time sent to or deposited in such lockbox or other arrangement
directly to Secured Party and, upon such notification and at the expense of such
Grantor, to enforce collection of any such Accounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by such Grantor of the
notice from Secured Party referred to in the proviso to the preceding sentence,
(i) all amounts and proceeds (including checks and other instruments) received
by such Grantor in respect of the Accounts and the Related Contracts shall be
received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or
delivered to Secured Party in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section
18, and (ii) such Grantor shall not adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 10. Special Provisions With Respect to the Assigned
Agreements.
(a) Each Grantor shall at its expense:
(i) perform and observe all terms and provisions of
the Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to
such end as may be from time to time reasonably requested by Secured
Party; and
(ii) furnish to Secured Party, promptly upon receipt
thereof, copies of all notices of default received by such Grantor
under or pursuant to the Assigned Agreements, and from time to time (A)
furnish to Secured Party such information and reports regarding the
Assigned Agreements as Secured Party may reasonably request and (B)
upon reasonable request of Secured Party make to the appropriate
counterparty to an Assigned Agreement such demands and requests for
information and reports or for action as such Grantor is entitled to
make under the Assigned Agreements.
(b) No Grantor shall, without the prior written consent of
Requisite Lenders, which consent shall not be unreasonably withheld:
(i) cancel or terminate any of the Assigned Agreements
or consent to or accept any cancellation or termination thereof if such
cancellation or termination, together with all other such cancellations
or terminations, would result in a Material Adverse Effect;
XVII-C-14
<PAGE>
(ii) amend or otherwise modify the Assigned Agreements
or give any consent, waiver or approval thereunder if the effect of
such amendment or modification, together with all other amendments,
modifications, consents, waivers or approvals made or consents, waivers
or approvals given, is to increase materially the obligations of such
Grantor thereunder or to confer any additional rights on the
counterparties to such Assigned Agreements that could reasonably be
expected to be materially adverse to such Grantor or Lenders;
(iii) waive any default under or breach of the
Assigned Agreements;
(iv) consent to or permit or accept any prepayment of
amounts to become due under or in connection with the Assigned
Agreements, except as expressly provided therein; or
(v) take any other action in connection with the
Assigned Agreements that would impair the value of the interest or
rights of such Grantor thereunder or that would impair the interest or
rights of Secured Party.
SECTION 11. Deposit Accounts. Upon the occurrence and during the
continuation of an Event of Default, Secured Party and each Lender may exercise
dominion and control over, and refuse to permit further withdrawals (whether of
money, securities, instruments or other property) from any deposit accounts
maintained with Secured Party or such Lender constituting part of the
Collateral.
SECTION 12. License of Patents, Trademarks, Copyrights, etc. Each
Grantor hereby assigns, transfers and conveys to Secured Party, effective upon
the occurrence of any Event of Default, the nonexclusive right and license to
use all trademarks, tradenames, service marks, copyrights, customers lists,
patents or technical processes owned or used by such Grantor that relate to the
Collateral and any other collateral granted by such Grantor as security for the
Secured Obligations, together with any goodwill associated therewith, all to the
extent necessary to enable Secured Party to use, possess and realize on the
Collateral and to enable any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all successors,
assigns and transferees of Secured Party and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to such Grantor.
SECTION 13. Transfers and Other Liens. No Grantor shall:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
or
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<PAGE>
(b) except for the security interest created by this Agreement
and the interests disclosed in Schedule V hereto which are permitted by the
Credit Agreement, create or suffer to exist any Lien upon or with respect to any
of the Collateral to secure the indebtedness or other obligations of any Person.
SECTION 14. Secured Party Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained by
such Grantor or paid to Secured Party pursuant to Section 8;
(b) to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a) and (b)
above;
(d) to file any claims or take any action or institute any
proceedings (including, without limitation, any proceeding before any Nevada
Gaming Authority) that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of such Grantor to Secured Party, due and payable immediately without demand;
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) upon the occurrence and during the continuation of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and such Grantor's expense, at any time or from
time to time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security
XVII-C-16
<PAGE>
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
SECTION 15. Secured Party May Perform. If any Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall be payable by such Grantor under Section 20.
SECTION 16. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 17. Remedies.
(a) Notwithstanding any other provision hereof, if Secured
Party elects, upon any Event of Default, to sell real property and any
of the Collateral together under the Nevada Mortgages and applicable
law, then the terms of the Nevada Mortgages shall, with respect to such
sale and Collateral, control and supersede any terms in this Agreement
with respect to such sale and Collateral; provided that Secured Party's
election to exercise remedies under the Nevada Mortgages shall have no
effect on the terms contained in this Agreement with respect to any
Collateral as to which Secured Party has not so elected.
(b) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "Code") (whether or not the Code applies to
the affected Collateral), and also may (a) require any Grantor to, and
Grantors hereby agree that they will at their expense and upon request
of Secured Party forthwith, assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured Party at a
place to be designated by Secured Party that is reasonably convenient
to both parties, (b) enter onto the property where any Collateral is
located and take possession thereof with or without judicial process,
(c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems
appropriate, (d) take possession of any Grantor's premises or place
custodians in exclusive control thereof, remain on such premises and
use the same and any of such
XVII-C-17
<PAGE>
Grantor's equipment for the purpose of completing any work in process,
taking any actions described in the preceding clause (c) and collecting
any Secured Obligation, and (e) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or
times and at such price or prices and upon such other terms as Secured
Party may deem commercially reasonable. Secured Party or any Lender may
be the purchaser of any or all of the Collateral at any such sale and
Secured Party, as administrative agent for and representative of
Lenders (but not any Lender or Lenders in its or their respective
individual capacities unless Requisite Lenders shall otherwise agree in
writing), shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of
the Secured Obligations as a credit on account of the purchase price
for any Collateral payable by Secured Party at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of Grantors, and each Grantor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such
Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned. Each Grantor hereby waives any claims against Secured
Party arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such
Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Collateral are insufficient to pay all the
Secured Obligations, Grantors shall be jointly and severally liable for
the deficiency and the fees of any attorneys employed by Secured Party
to collect such deficiency.
Notwithstanding anything to the contrary contained herein, if,
upon an Event of Default hereunder or under the Credit Agreement and
foreclosure upon any gaming permits pledged and assigned herein,
Secured Party is not qualified under the Nevada Gaming Control Act to
hold such gaming permits, then Secured Party shall designate an
appropriately qualified third party to which an assignment of such
gaming permits can be made in compliance with the Nevada Gaming Control
Act.
SECTION 18. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the
XVII-C-18
<PAGE>
discretion of Secured Party, be held by Secured Party as Collateral for,
and/or then, or at any other time thereafter, applied in full or in part by
Secured Party against, the Secured Obligations in the following order
of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantors, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 20;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and
THIRD: To the payment to or upon the order of the Grantor who
owned the Collateral in issue, or to whomsoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.
SECTION 19. Regulatory Matters. Each Grantor and Secured Party
acknowledge and agree that:
(a) The terms and provisions of this Agreement and the
rights and obligations created hereunder shall be subject to compliance
with the Nevada Gaming Control Act.
(b) Without limiting the generality of the foregoing,
all required prior approvals under the Nevada Gaming Control Act will
be obtained in connection with Secured Party's exercise of any of the
rights set forth in Section 15 or the remedies set forth in Section 17
upon the occurrence of an Event of Default including, without
limitation, any separate prior approvals required in connection with
the sale, transfer or other disposition of the Collateral; and
(c) Each Grantor agrees to assist Secured Party in
obtaining all approvals of the Nevada Gaming Authorities or any other
Governmental Authority that are required by law for or in connection
with any action or transaction contemplated by this Agreement and, at
Secured Party's reasonable request upon the occurrence and during the
continuation of an Event of Default, to prepare, sign and file with the
appropriate Nevada Gaming Authorities the transferor's portion of any
application or applications for consent to the transfer of control
thereof necessary or appropriate under the Nevada Gaming Control Act
for approval of any sale or transfer of the Collateral pursuant to the
exercise of Secured Party's remedies under Section 17.
XVII-C-19
<PAGE>
SECTION 20. Indemnity and Expenses.
(a) Grantors agree to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in
any way relating to, growing out of or resulting from this Agreement
and the transactions contemplated hereby (including, without
limitation, enforcement of this Agreement), except to the extent such
claims, losses or liabilities result solely from Secured Party's or
such Lender's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantors shall pay to Secured Party upon demand
the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that
Secured Party may incur in connection with (i) the custody,
preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (ii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iii)
the failure by any Grantor to perform or observe any of the provisions
hereof.
SECTION 21. Continuing Security Interest; Transfer of Loans or
Letters of Credit. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of the Secured Obligations, the cancellation or
termination of the Commitments and the termination, cancellation or expiration
of all outstanding Letters of Credit, (b) be binding upon each Grantor, its
successors and assigns, and (c) inure, together with the rights and remedies of
Secured Party hereunder, to the benefit of Secured Party and its successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), but subject to the provisions of subsection 10.1 of the Credit Agreement,
any Lender may assign or otherwise transfer any Loans held by it or
Administrative Agent may assign any Letters of Credit issued by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
indefeasible payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the termination, cancellation or expiration
of all outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantors. Upon any
such termination Secured Party will, at Grantors' expense, execute and deliver
to each Grantor such documents as such Grantor shall reasonably request to
evidence such termination.
SECTION 22. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall
have the right hereunder, to make demands, to give notices, to exercise
or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or
substitution of Collateral), solely in accordance with this Agreement
and the Credit Agreement.
XVII-C-20
<PAGE>
(b) Secured Party shall at all times be the same
Person that is Administrative Agent under the Credit Agreement. Written
notice of resignation by Administrative Agent pursuant to subsection
9.5 of the Credit Agreement shall also constitute notice of resignation
as Secured Party under this Agreement; removal of Administrative Agent
pursuant to subsection 9.5 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and
appointment of a successor Administrative Agent pursuant to subsection
9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of
any appointment as Administrative Agent under subsection 9.5 of the
Credit Agreement by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or
removed Secured Party under this Agreement, and the retiring or removed
Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of
Collateral held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance
of the duties of the successor Secured Party under this Agreement, and
(ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may
be necessary or appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder,
whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any
retiring or removed Administrative Agent's resignation or removal
hereunder as Secured Party, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by
it under this Agreement while it was Secured Party hereunder.
SECTION 23. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by Secured Party and, in the case of any
such amendment or modification, by such Grantor. Any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.
SECTION 24. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or five Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or such other
address as shall be designated by such party in a written notice delivered to
the other parties hereto.
SECTION 25. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any
XVII-C-21
<PAGE>
such power, right or privilege preclude any other or further exercise
thereof or of any other power, right or privilege. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
SECTION 26. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 27. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 28. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEVADA. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of Nevada are used herein as therein defined.
SECTION 29. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT EACH GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Each Grantor hereby agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
requested, to such Grantor at its addresses as provided in Section 24, such
service being hereby acknowledged by such Grantor to be sufficient for personal
jurisdiction in any action against such Grantor in any such court and to be
otherwise effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Secured Party to bring proceedings against any Grantor in the
courts of any other jurisdiction.
XVII-C-22
<PAGE>
SECTION 30. Waiver of Jury Trial. EACH GRANTOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Each Grantor and Secured
Party each acknowledge that this waiver is a material inducement for such
Grantor and Secured Party to enter into a business relationship, that such
Grantor and Secured Party have already relied on this waiver in entering into
this Agreement and that each will continue to rely on this waiver in their
related future dealings. Each Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 31. Counterparts. This Agreement may be executed in one
or more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XVII-C-23
<PAGE>
IN WITNESS WHEREOF, Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS NEVADA, INC.,
as a Grantor
By ______________________________
Title ____________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
1
<PAGE>
IN WITNESS WHEREOF, Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS MESQUITE GOLF CLUB, INC.,
as a Grantor
By ______________________________
Title ___________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
2
<PAGE>
IN WITNESS WHEREOF, Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS MESQUITE LAND, INC.,
as a Grantor
By ______________________________
Title ___________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
3
<PAGE>
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: _______________________________
Title: ____________________________
Notice Address:
3800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
4
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
Assigned Agreements
Players Nevada, Inc.
Players Mesquite Golf Club, Inc.
Players Mesquite Land, Inc.
XVII-C-I-1
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
Deposit Accounts
Players Nevada, Inc.
Players Mesquite Golf Club, Inc.
Players Mesquite Land, Inc.
XVII-C-II-1
<PAGE>
SCHEDULE III
TO SECURITY AGREEMENT
Locations of Equipment:
PNEV
PMGC
PML
Locations of Inventory:
PNEV
PMGC
PML
XVII-C-III-1
<PAGE>
SCHEDULE IV
TO SECURITY AGREEMENT
Chief Executive Offices
Players Nevada, Inc.
Players Mesquite Golf Club, Inc.
Players Mesquite Land, Inc.
XVII-C-IV-1
<PAGE>
SCHEDULE V
TO SECURITY AGREEMENT
Existing Permitted Liens
Players Nevada, Inc.
Players Mesquite Golf Club, Inc.
Players Mesquite Land, Inc.
XVII-C-V-1
<PAGE>
EXHIBIT 10.49
EXHIBIT XVII-B
[FORM OF SUBSIDIARY SECURITY AGREEMENT (LOUISIANA)]
SUBSIDIARY SECURITY AGREEMENT (LOUISIANA)
This SUBSIDIARY SECURITY AGREEMENT (this "Agreement") is dated
as of August 25, 1995 and entered into by and between PLAYERS LAKE CHARLES,
INC., a Louisiana corporation ("PLC"), SHOWBOAT STAR PARTNERSHIP, a Louisiana
general partnership ("SSP"), PLAYERS RIVERBOAT, LLC, a Louisiana limited
liability company ("PRLLC", each of PRLLC, PLC and SSP being referred to herein
as a "Grantor" and collectively, "Grantors"), and FIRST INTERSTATE BANK OF
NEVADA, N.A. ("FIB"), as administrative agent for and representative of (in such
capacity herein called "Secured Party") the financial institutions ("Lenders")
party to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have
entered into a Credit Agreement dated as of even date herewith (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Players
International, Inc., a Nevada corporation ("Company"), of which each Grantor is
a wholly-owned subsidiary, pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
B. Grantors have delivered a Guaranty dated as of even date
herewith (said Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty") in favor of Secured
Party for the benefit of Lenders, pursuant to which Grantors, along with other
Subsidiaries of Company, have guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement.
C. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Grantors shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit and to issue the
Standby Letters of Credit under the Credit Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantors hereby agree with Secured Party as follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
such Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which such Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
(a) All present and future interest in and to those certain
barges and vessels presently moored, anchored or otherwise located on or around
the Louisiana Facilities or otherwise used in connection with the Louisiana
Facilities, whether such barges or vessels in the present state of impoundment
are deemed real, personal or mixed property, which barges and vessels are
described as follows: (i) that certain vessel Star Casino having Official No.
D997578, built in 1993 in Brathwaite, Louisiana, formerly having its home port
at _______, _________, its present home port being New Orleans, Louisiana, and
having its hailing port at _______, _______, and (ii) that certain vessel
Players Riverboat Casino II having Official No. D997773, built in 1993 in
Jennings, Louisiana, its present home port being New Orleans, Louisiana,
together with (iii) all equipment, earnings, proceeds arising from operation of
any business upon such barges and vessels, parts, attachments and all other
property, whether real, personal or mixed, now or hereafter located thereon,
derived therefrom or used in connection therewith, including, but not limited
to, all moorings, cells, cofferdam enclosures and related ancillary improvements
(collectively, the "Barges");
(b) all present and future chattels, furniture, furnishings,
goods, equipment, fixtures and all other tangible personal property, of whatever
kind and nature, now or hereafter used in connection with or placed or located
within or on any part of the Louisiana Facilities (including, without
limitation, any building or structure that is now or that may hereafter be
erected within or on the Louisiana Facilities), including, but not limited to,
machinery, materials, goods and equipment now or hereafter used in the
construction or operation of the Louisiana Facilities (including, without
limitation, air conditioning, heating, electrical, lighting, fire fighting and
fire prevention, food and beverage service, laundry, plumbing, refrigeration,
security, sound, signaling, telephone, television, window washing and other
equipment and fixtures, of whatever kind or nature, including generators,
transformers, switching gear, boilers, burners, furnaces, piping, sprinklers,
sinks, tubs, valves, compressors, motors, carts, dumb waiters, elevators and
other lifts, floor coverings, hardware, keys, locks, organs, pianos, planters,
railings, scales, shelving, signs, tools, machinery, molds, dies, drills,
presses, planers, saws, furniture, business fixtures, trade fixtures, electric,
gas and other motor vehicles, uniforms, vacuum cleaners, hotel or Ship
furniture, furnishings and equipment, bathroom furniture and furnishings
(including towels, bathmats, hamperettes,
XVII-B-2
<PAGE>
shower curtains and other bath linens), beds and bedding (including mattresses,
springs, pillows, bed pads, sheets, blankets, comforters, spreads and other bed
linens and furnishings), bric-a-brac, chairs, chests, vanities, secretaries,
bureaus, chiffonniers, love seats, benches, costumers, smoking stands, sand
jars, desks, dressers, hangings, paintings, pictures, frames, sculptures, lamps,
light bulbs, mirrors, night stands, ornaments, radios, stereo equipment, sofas,
statuary, tables, telephones, televisions, vases, window coverings, foodstuffs,
beverages (including beer, wine, liquor and other alcoholic beverages), and
other consumables (including soap, shampoo, cleaning supplies and paper goods),
cutlery, cooking, baking and other kitchen utensils and apparatus (including
crockery, fryers, grills, kettles, mixers, pots, pans, pails, racks, steamers
and toasters), china and other dishes, flatware, glassware, hollowware,
serving pieces, trays, table linens, washers, dryers, irons, ironing
boards and other ironing equipment, cables, outlets, plugs, wiring and related
apparatus and fixtures, card readers, cash registers, adding machines,
calculators, computers, keyboards, monitors, printers, printing equipment,
envelopes, stationery, posting machines, blank forms, typewriters, typewriter
stands, other office and accounting equipment and supplies, time stamps, time
recorders, bookkeeping machines, checking machines, payroll machines, computer
reservations systems, equipment used in the operation of casinos within or on
the Louisiana Facilities (including but not limited to, gaming devices and
associated equipment (as defined in La.R.S. 4:504), including but not limited
to, slot machines, cards, poker chips and gaming tables) and all other goods,
equipment, furnishings, apparatus and fixtures that are now or may hereafter be
located at or used within, at or in connection with the Louisiana Facilities)
and all other tangible personal property used or to be used at or in connection
with, or placed or to be placed in, rooms, halls, lounges, offices, lobbies,
lavatories, basements, cellars, vaults or other portions of the Louisiana
Facilities or of any other building or buildings hereafter constructed or
erected thereon, whether herein enumerated or not, and whether or not contained
in any such building, and which are used or to be used or useful in the
operation and maintenance thereof, or in any bar, casino, hotel, restaurant,
store, health spa, salon or other business conducted thereon, together with all
replacements and substitutions for any and all personal property in which such
Grantor has an interest, including without limitation such goods and equipment
as shall from time to time be located, placed, installed or used in or upon, or
procured for use, or to be used or useful in connection with the operation of
the whole, or any part of, the Louisiana Facilities and all parts thereof and
all accessions thereto (any and all such equipment, replacements, substitutions,
parts and accessions being the "Equipment");
(c) all present and future inventory and merchandise in all of
its forms used in connection with or placed or located within or on any part of
the Louisiana Facilities (including, but not limited to, (i) all goods held by
such Grantor for sale or lease or to be furnished under contracts of service or
so leased or furnished, (ii) all raw materials, work in process, finished goods,
and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in such Grantor's business, (iii) all goods in which
such Grantor has an interest in mass or a joint or other interest or right of
any kind, (iv) all goods that are returned to or repossessed by such Grantor,
and (v) all packing materials, supplies and containers
XVII-B-3
<PAGE>
relating to or used in connection with any of the foregoing, and all accessions
thereto and products thereof (all such inventory, accessions and products being
the "Inventory") and all negotiable documents of title (including without
limitation warehouse receipts, dock receipts and bills of lading) issued by any
person covering any of the foregoing (any such negotiable document of title
being a "Negotiable Document of Title");
(d) all present and future accounts, accounts receivable,
rentals, revenues, receipts, payments, and income of any nature whatsoever
derived from or received with respect to hotel rooms, rooms on any Ship, banquet
facilities, convention facilities, retail premises, bars, restaurants, casinos,
parking lots and garages, and any other facilities within or on the Louisiana
Facilities and services and amenities provided in connection therewith, all
agreements, contracts, leases, contract rights (including, without limitation,
that Development and Exchange Agreement dated as of November 16, 1993, among
Anthony Phillip Leonards, Mortgager, the City of Lake Charles, Louisiana, and
the State of Louisiana), rights to payment, instruments, documents, chattel
paper, security agreements, guaranties, undertakings, surety bonds, insurance
policies, condemnation deposits and awards, notes and drafts, securities,
certificates of deposit and the right to receive all payments thereon or in
respect thereof (whether principal, interest, fees or otherwise), contract
rights (other than rights under contracts or governmental permits that may not
be transferred by law), including, without limitation, rights to all deposits
from tenants and other users of the Louisiana Facilities, rights under all
contracts relating to the construction, renovation or restoration of any of the
improvements now or hereafter located within or on the Louisiana Facilities or
the financing thereof and all rights under payment or performance bonds,
warranties, and guaranties, and all rights to payment from any credit/charge
card organization or entity such as or similar to, and including, without
limitation, the organizations or entities that sponsor and administer,
respectively, the American Express Card, the Carte Blanche Card, the Diners Club
Card, the Discover Card, the MasterCard and the Visa Card, books of account, and
principal, interest and payments due on account of goods sold, services
rendered, loans made or credit extended, within, on or in connection with the
Louisiana Facilities and all forms of obligations owing to and rights of such
Grantor or in which such Grantor may have any interest, however created or
arising (any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "Accounts", and
any and all such security agreements, leases and other contracts being the
"Related Contracts");
(e) the agreements listed in Schedule I annexed hereto, as each
such agreement may be amended, supplemented or otherwise modified from time to
time (said agreements, as so amended, supplemented or otherwise modified, being
referred to herein individually as an "Assigned Agreement" and collectively as
the "Assigned Agreements"), including without limitation (i) all rights of such
Grantor to receive moneys due or to become due under or pursuant to the Assigned
Agreements, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) all claims of such Grantor for damages arising out of any
breach of or default under the Assigned Agreements, and (iv) all rights of such
Grantor to terminate,
XVII-B-4
<PAGE>
amend, supplement, modify or exercise rights or options under the Assigned
Agreements, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder;
(f) all present and future right, title and interest of such
Grantor in and to all leases, subleases, licenses, concessions, franchises and
other use or occupancy agreements (excepting, however, agreements made by such
Grantor in the ordinary course of business for short-term use by members of the
public of any guest rooms and public rooms, including banquet and meeting
facilities, located within or on the Louisiana Facilities, and any amendments,
modifications, extensions or renewals thereof (collectively, "Leases"), whether
or not specifically herein described, that now or may hereafter pertain to or
affect the Louisiana Facilities or any portion thereof and all amendments to the
same, including, but not limited to, the following: (i) all payments due and to
become due under such Leases, whether as rent, damages, insurance payments,
condemnation awards, or otherwise; (ii) all claims, rights, powers, privileges
and remedies under such Leases; and (iii) all rights of such Grantor under such
Leases to exercise any election or option (including, without limitation, any
right of Grantor under any ground lease to purchase the fee interest of the
lessor thereunder (the "Options")), or to give or receive any notice, consent,
waiver or approval, or to accept any surrender of the premises or any part
thereof, together with full power and authority in the name of such Grantor, or
otherwise, to demand and receive, enforce and collect any receipt for any or all
of the foregoing, to endorse or execute any checks or any instruments or orders,
to file any claims, and to take any other action that Secured Party may deem
necessary or advisable in connection therewith;
(g) all present and future deposit accounts of such Grantor,
including, without limitation, those deposit accounts set forth on Schedule II
hereto, any demand, time, savings, passbook or like account maintained by such
Grantor with any bank, savings and loan association, credit union or like
organization, and all money, cash and cash equivalents of such Grantor, whether
or not deposited in any such deposit account and all such accounts maintained
with Secured Party;
(h) all present and future general intangibles (including but
not limited to all governmental permits relating to construction or other
activities within or on the Louisiana Facilities), the Options, all tax refunds
of every kind and nature to which such Grantor now or hereafter may become
entitled, however arising, all other refunds, and all deposits, goodwill, choses
in action, rights to payment or performance, gambling debts or gaming debts owed
to such Grantor by Grantor's patrons (whether or not evidenced by a note),
judgments taken on any rights or claims included in the Collateral, trade
secrets, computer programs, software, customer lists, business names,
trademarks, trade names and service marks (including, but not limited to: "Star
Casino," "Players Riverboat Casino II," "Players Riverboat Hotel" and any
derivation thereof, including any and all state and federal applications and
registrations thereof), patents, patent applications, licenses, copyrights,
registration and franchise rights, technology, processes, proprietary
information, insurance proceeds and all goodwill associated with any of the
foregoing;
XVII-B-5
<PAGE>
(i) all present and future books and records, including,
without limitation, books of account and ledgers of every kind and nature,
ledger cards, computer programs, tapes, disks and other information storage
devices, all related data processing software, and all electronically recorded
data relating to such Grantor or its business related to the Louisiana
Facilities, all receptacles and containers for such records, and all files and
correspondence;
(j) all present and future maps, plans, specifications,
surveys, studies, reports, data and drawings (including, without limitation,
architectural, structural, mechanical and engineering plans and specifications,
studies, data and drawings) prepared for or relating to the development of the
Louisiana Facilities or the construction, renovation or restoration of any
improvements within or on the Louisiana Facilities or the extraction of
minerals, sand, gravel or other valuable substances from the Louisiana
Facilities, together with all amendments and modifications thereto;
(k) all present and future licenses, permits, variances,
special permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including options, option rights and
contract rights), other than those (including non-transferrable gaming permits)
that may not be transferred by law, now or hereafter obtained by such Grantor
from any governmental authority having or claiming jurisdiction over the
Louisiana Facilities or any other element of the Collateral or providing access
thereto, or the operation of any business within, on, at, or from the Louisiana
Facilities;
(l) all present and future goods, including, without
limitation, all consumer goods, inventory, equipment, and other supplies, of
whatever kind or nature, and any and all other goods, wherever located, used or
to be used in connection with or in the conduct of such Grantor's business or
the Louisiana Facilities;
(m) all present and future stocks, bonds, debentures,
securities, subscription rights, options, warrants, puts, calls, certificates,
partnership interests, joint venture interests, investments, brokerage accounts
and all rights, preferences, privileges, dividends, distributions, redemption
payments and liquidation payments received or receivable with respect thereto;
(n) all present and future accessions, appurtenances,
components, repairs, repair parts, spare parts, replacements, substitutions,
additions, issue and improvements to or of or with respect to any of the
foregoing;
(o) all other fixtures and storage and office facilities, and
all accessions thereto and products thereof and all water stock relating to the
Louisiana Facilities;
(p) to the extent not covered by any of the preceding clauses,
any and all of such Grantor's present and future machinery, equipment,
furniture, furnishings and fixtures, of every type and description, now or
hereafter located on any of the Louisiana Ships or any
XVII-B-6
<PAGE>
Barge or used in connection therewith, together with all accessories,
attachments, accessions, substitutions, replacements and additions thereto;
(q) all other tangible and intangible personal property of
such Grantor used in connection with or placed or located within or on any part
of the Louisiana Facilities;
(r) all rights, remedies, powers and privileges of such
Grantor with respect to any of the foregoing; and
(s) any and all proceeds, products, rents, income and profits
of any of the foregoing, including, without limitation, all money, accounts,
general intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds (whether or not Secured Party is the loss payee), and
any other tangible or intangible property received upon the sale or disposition
of any of the foregoing (it being agreed, for purposes hereof, that the term
"proceeds" includes whatever is receivable or received when any of the
Collateral is sold, collected, exchanged or otherwise disposed of, whether such
disposition is voluntary or involuntary).
Notwithstanding anything to the contrary contained herein,
Secured Party acknowledges that it has no security interest in any cash of any
Grantor described in clauses (f), (g) and (l) above, to the extent such a
security interest is prohibited by the Louisiana Gaming Control Act.
SECTION 2. Security for Obligations. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and
liabilities of every nature of Grantors now or hereafter existing under or
arising out of or in connection with the Guaranty and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to any
Grantor, would accrue on such obligations), reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnities or otherwise, whether voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender as a preference, fraudulent transfer
or otherwise (all such obligations and liabilities being the "Underlying Debt"),
and all obligations of every nature of any Grantor now or hereafter existing
under this Agreement (all such obligations of Grantors, together with the
Underlying Debt, being the "Secured Obligations").
XVII-B-7
<PAGE>
SECTION 3. Grantors Remain Liable. Anything contained herein to
the contrary notwithstanding, (a) Grantors shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of their duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement or otherwise, nor shall Secured Party be obligated to perform any of
the obligations or duties of Grantors thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 4. Representations and Warranties. Each Grantor
represents and warrants as follows:
(a) Ownership of Collateral. Except for the security interest
created by this Agreement and any Liens permitted pursuant to subsection 7.2A of
the Credit Agreement, such Grantor owns the Collateral owned by it free and
clear of any Lien. Except such as may have been filed in favor of Secured Party
relating to this Agreement, no effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
filing or recording office.
(b) Location of Equipment and Inventory. All of the Equipment
and Inventory is, as of the date hereof, located at the places specified in
Schedule III annexed hereto.
(c) Office Locations; Other Names. The chief place of business,
the chief executive office and the office where such Grantor keeps its records
regarding the Accounts is, and has been for the four month period preceding the
date hereof, located at the place listed on Schedule IV annexed hereto. No
Grantor has in the past done, and does not now do, business under any other name
(including any trade-name or fictitious business name) except "Star Casino,"
"Players Casino II" and "Players Island."
(d) Delivery of Certain Collateral. All chattel paper and all
notes and other instruments (excluding checks) comprising any and all items of
Collateral have been delivered to Secured Party duly endorsed and accompanied by
duly executed instruments of transfer or assignment in blank.
(e) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by such Grantor of the
security interest granted hereby, (ii) the execution, delivery or performance of
this Agreement by such Grantor, or (iii) the perfection of or the exercise by
Secured Party of its rights and remedies hereunder (except (x) authorization
from the Louisiana Gaming Authorities for the exercise by Secured Party of
certain of its rights and remedies hereunder, (y) the filing of a Uniform
Commercial Code
XVII-B-8
<PAGE>
financing statement with the Clerk of Court of any Louisiana parish (or recorder
of mortgages for Orleans Parish) and the Louisiana Mortgage with the recorder of
mortgages for Calcasieu Parish, Louisiana and (z) as has been previously taken
by or at the direction of such Grantor).
(f) Perfection. This Agreement creates a valid and enforceable
security interest in the Collateral, securing the payment of the Secured
Obligations. Upon the filing of a UCC-1 financing statement describing the
Collateral with the Clerk of Court of any Louisiana parish (or with the recorder
of mortgages for Orleans Parish) and the Louisiana Mortgage with the recorder of
mortgages for Calcasieu Parish, Louisiana, Secured Party shall also have a
perfected and first priority security interest in the Collateral, subject only
to Permitted Encumbrances, securing the payment of the Secured Obligations.
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of such Grantor with
respect to the Collateral is accurate and complete in all respects.
SECTION 5. Further Assurances.
(a) Each Grantor agrees that from time to time, at the expense
of such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral and to preserve, protect and maintain the
Collateral and the value thereof. Without limiting the generality of the
foregoing, each Grantor will: (i) at the reasonable request of Secured Party
mark conspicuously each item of chattel paper included in the Accounts, each
Related Contract and, at the reasonable request of Secured Party, each of its
records pertaining to the Collateral, with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) if any Account shall be evidenced by a
promissory note or other instrument (excluding checks) or chattel paper, deliver
and pledge to Secured Party hereunder such note or instrument or the original
counterpart of such chattel paper, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Secured Party, (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (iv) promptly after the acquisition by such
Grantor of any item of Equipment which is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, (v) at any reasonable time, upon
reasonable request by Secured Party, exhibit the Collateral to and allow
inspection of the
XVII-B-9
<PAGE>
Collateral by Secured Party, or persons designated by Secured Party, and (vi) at
the reasonable request of Secured Party, appear in and defend any action or
proceeding that may affect such Grantor's title to or Secured Party's security
interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes Secured Party to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of such Grantor. Each
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by such Grantor shall be sufficient
as a financing statement and may be filed as a financing statement in any and
all jurisdictions.
(c) Each Grantor will furnish to Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(d) Each Grantor agrees, after an Event of Default or Potential
Event of Default, in the event that Secured Party shall apply for or appoint an
agent to apply for a gaming or liquor license with any Louisiana Gaming
Authority or any Governmental Authority or seek to obtain consent from any
Louisiana Gaming Authority to foreclose on the Collateral (including all gaming
permits) and operate the Louisiana Facilities or otherwise seek to enforce its
rights hereunder, such Grantor shall provide such cooperation as is necessary in
order for Secured Party to obtain the full benefits of this Agreement. Without
limiting the generality of the foregoing, if any Louisiana Gaming Authority or
any Governmental Authority shall require any amendments to the Collateral
Documents or require such Grantor to execute such other documents as a condition
to or as a part of such approval process, such Grantor shall consent to such
amendments and/or execute such documents promptly.
SECTION 6. Certain Covenants of Grantors. Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity, corporate or partnership structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any
change in such Grantor's chief place of business, chief executive office or
residence or the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
XVII-B-10
<PAGE>
(d) if Secured Party gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes; and
(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith and
for which adequate reserves have been established; provided that such Grantor
shall in any event pay such taxes, assessments, charges, levies or claims not
later than five days prior to the date of any proposed sale under any judgement,
writ or warrant of attachment entered or filed against such Grantor or any of
the Collateral as a result of the failure to make such payment.
SECTION 7. Special Covenants With Respect to Equipment and
Inventory. Each Grantor shall:
(a) keep the Equipment and Inventory at the places therefor
specified on Schedule III annexed hereto or, upon 30 days' prior written notice
to Secured Party, at such other places in jurisdictions where all action that
may be necessary or desirable, or that Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby, or to enable Secured Party to exercise and enforce its rights
and remedies hereunder, with respect to such Equipment and Inventory shall have
been taken;
(b) cause the Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with such Grantor's past practices, and shall
forthwith, or, in the case of any loss or damage to any of the Equipment when
subsection (c) or (d) of Section 8 is not applicable, as quickly as practicable
after the occurrence thereof, make or cause to be made all repairs, replacements
and other improvements in connection therewith that are necessary or desirable
to such end. Each Grantor shall promptly furnish to Secured Party a statement
respecting any material loss or damage to any of the Equipment (the requirements
under this subsection 7(b) being supplemental to and not exclusive of the
requirements of Company under Section 6.4 of the Credit Agreement relating to
maintenance of property);
(c) provide prompt written notice to Secured Party of any
breach or default by any party to any Assigned Agreement;
(d) notify Secured Party of the establishment of any deposit
accounts after the date hereof and take such steps as may be reasonably
requested by Secured Party to perfect Secured Party's lien therein;
(e) perform all acts that are necessary or desirable to cause
all licenses, permits, variances, special permits, franchises, certificates,
rulings, certifications, validations, exemptions, filings, registrations,
authorizations, consents, approvals, waivers, orders, rights,
XVII-B-11
<PAGE>
and agreements in which a security interest has been conveyed to Secured Party
pursuant to subsection 1(j) to remain in full force and effect;
(f) keep correct and accurate records of the Inventory,
itemizing and describing the kind, type and quantity of Inventory, such
Grantor's cost therefor and (where applicable) the current list prices for the
Inventory substantially consistent with the practice of other gaming
institutions in connection with their gaming operations in the State of
Louisiana;
(g) upon the occurrence of an Event of Default, if any
Inventory is in possession or control of any of such Grantor's agents or
processors, instruct such agent or processor to hold all such Inventory for the
account of Secured Party and subject to the instructions of Secured Party; and
(h) promptly upon the issuance and delivery to such Grantor of
any Negotiable Document of Title (other than any one or more Negotiable
Documents of Title covering Inventory which, in the ordinary course of business,
is in transit either (i) from a supplier to Grantor or (ii) to customers of
Grantor), deliver such Negotiable Document of Title to Secured Party.
SECTION 8. Insurance.
(a) Each Grantor shall, at its own expense, maintain insurance
with respect to the Equipment and Inventory in accordance with the terms imposed
on Company by the Credit Agreement, this Section 8 and the Louisiana Mortgage.
Such insurance shall include, without limitation, property damage insurance and
liability insurance. Each policy for property damage insurance shall provide for
all losses (except for losses of less than $2,500,000 per occurrence) to be paid
directly to Secured Party as provided in clauses (c) and (d) below. Each policy
shall in addition name such Grantor and Secured Party as insured parties
thereunder (without any representation or warranty by or obligation upon Secured
Party) as their interests may appear and have attached thereto a loss payable
clause acceptable to Secured Party that shall (i) contain an agreement by the
insurer that any loss thereunder shall be payable to Secured Party
notwithstanding any action, inaction or breach of representation or warranty by
such Grantor, (ii) provide that there shall be no recourse against Secured Party
for payment of premiums or other amounts with respect thereto, and (iii) provide
that at least 30 days' prior written notice of cancellation, material amendment,
reduction in scope or limits of coverage or of lapse shall be given to Secured
Party by the insurer. Each Grantor shall, if so reasonably requested by Secured
Party, deliver to Secured Party original or duplicate policies of such insurance
and, as often as Secured Party may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Further, each Grantor shall, at
the reasonable request of Secured Party, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of
subsection 5(a) and cause the respective insurers to acknowledge notice of such
assignment. The requirements under this subsection 8(a) shall be supplemental to
and not
XVII-B-12
<PAGE>
exclusive of the requirements imposed on Company under Section 6.4 of the Credit
Agreement relating to insurance.
(b) Reimbursement under any liability insurance maintained by
each Grantor pursuant to this Section 8 may be paid directly to the Person who
shall have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when subsection (c) or (d) of this
Section 8 is not applicable, the Grantor owning such Collateral shall make or
cause to be made the necessary repairs to or replacements of such Equipment or
Inventory, and any proceeds of insurance maintained by such Grantor pursuant to
this Section 8 shall be paid to such Grantor as reimbursement for the costs of
such repairs or replacements.
(c) Upon the occurrence of any Event of Loss involving
Equipment or Inventory and pursuant to which any Grantor receives Net Cash
Proceeds equal to or in excess of $2,500,000, all insurance payments in respect
of such Equipment or Inventory shall be paid to and applied by Secured Party as
specified in subsection 2.4A(ii)(b) of the Credit Agreement.
(d) Notwithstanding the provisions of Section 8(c), upon the
occurrence and during the continuation of any Event of Default, all insurance
payments in respect of any Equipment or Inventory shall be paid to and applied
by Secured Party as specified in Section 18.
SECTION 9. Special Covenants with respect to Accounts and
Related Contracts.
(a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts at the location therefor specified in Section 4
or, upon 30 days' prior written notice to Secured Party, at such other location
in a jurisdiction where all action that may be necessary or desirable, or that
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and will permit representatives of
Secured Party at any time during normal business hours to inspect and make
abstracts from such records, and each Grantor agrees to render to Secured Party,
at such Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Promptly upon the request of Secured
Party, each Grantor shall deliver to Secured Party complete and correct copies
of each Related Contract.
(b) Each Grantor shall, for not less than 5 years from the date
on which such Account arose, maintain (i) complete records of each Account,
including records of all
XVII-B-13
<PAGE>
payments received, credits granted and merchandise returned, and (ii) all
documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts (but, other than with respect to
security deposits, in no event more than one month in advance) and Related
Contracts. In connection with such collections, each Grantor may take (and, at
Secured Party's direction, shall take) such action as such Grantor or Secured
Party may deem necessary or advisable to enforce collection of amounts due or to
become due under the Accounts; provided, however, that Secured Party shall have
the right at any time, upon the occurrence and during the continuation of an
Event of Default or a Potential Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the account debtors or obligors
under any Accounts of the assignment of such Accounts to Secured Party and to
direct such account debtors or obligors to make payment of all amounts due or to
become due to such Grantor thereunder directly to Secured Party, to notify each
Person maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Secured Party and, upon such notification and at the expense of such Grantor, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. After receipt by such Grantor of the notice from
Secured Party referred to in the proviso to the preceding sentence, (i) all
amounts and proceeds (including checks and other instruments) received by such
Grantor in respect of the Accounts and the Related Contracts shall be received
in trust for the benefit of Secured Party hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over or delivered to
Secured Party in the same form as so received (with any necessary endorsement)
to be held as cash Collateral and applied as provided by Section 18, and (ii)
such Grantor shall not adjust, settle or compromise the amount or payment of any
Account, or release wholly or partly any account debtor or obligor thereof, or
allow any credit or discount thereon.
SECTION 10. Special Provisions With Respect to the Assigned
Agreements.
(a) Each Grantor shall at its expense:
(i) perform and observe all terms and provisions of
the Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to
such end as may be from time to time reasonably requested by Secured
Party; and
XVII-B-14
<PAGE>
(ii) furnish to Secured Party, promptly upon receipt
thereof, copies of all notices of default received by such Grantor
under or pursuant to the Assigned Agreements, and from time to time (A)
furnish to Secured Party such information and reports regarding the
Assigned Agreements as Secured Party may reasonably request and (B)
upon reasonable request of Secured Party make to the appropriate
counterparty to an Assigned Agreement such demands and requests for
information and reports or for action as such Grantor is entitled to
make under the Assigned Agreements.
(b) No Grantor shall, without the prior written consent of
Requisite Lenders, which consent shall not be unreasonably withheld:
(i) cancel or terminate any of the Assigned Agreements
or consent to or accept any cancellation or termination thereof if such
cancellation or termination, together with all other such cancellations
or terminations, would result in a Material Adverse Effect;
(ii) amend or otherwise modify the Assigned Agreements
or give any consent, waiver or approval thereunder if the effect of
such amendment or modification, together with all other amendments,
modifications, consents, waivers or approvals made or consents, waivers
or approvals given, is to increase materially the obligations of such
Grantor thereunder or to confer any additional rights on the
counterparties to such Assigned Agreements that could reasonably be
expected to be materially adverse to such Grantor or Lenders;
(iii) waive any default under or breach of the
Assigned Agreements;
(iv) consent to or permit or accept any prepayment of
amounts to become due under or in connection with the Assigned
Agreements, except as expressly provided therein; or
(v) take any other action in connection with the
Assigned Agreements that would impair the value of the interest or
rights of such Grantor thereunder or that would impair the interest or
rights of Secured Party.
SECTION 11. Deposit Accounts. Upon the occurrence and during the
continuation of an Event of Default, Secured Party and each Lender may exercise
dominion and control over, and refuse to permit further withdrawals (whether of
money, securities, instruments or other property) from any deposit accounts
maintained with Secured Party or such Lender constituting part of the
Collateral.
SECTION 12. License of Patents, Trademarks, Copyrights, etc. Each
Grantor hereby assigns, transfers and conveys to Secured Party, effective upon
the occurrence of any Event of Default, the nonexclusive right and license to
use all trademarks, tradenames,
XVII-B-15
<PAGE>
service marks, copyrights, customers lists, patents or technical
processes owned or used by such Grantor that relate to the Collateral and any
other collateral granted by such Grantor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the extent
necessary to enable Secured Party to use, possess and realize on the Collateral
and to enable any successor or assign to enjoy the benefits of the Collateral.
This right and license shall inure to the benefit of all successors, assigns and
transferees of Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license is
granted free of charge, without requirement that any monetary payment whatsoever
be made to such Grantor.
SECTION 13. Transfers and Other Liens. No Grantor shall:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
or
(b) except for the security interest created by this Agreement
and the interests disclosed in Schedule V hereto which are permitted by the
Credit Agreement, create or suffer to exist any Lien upon or with respect to any
of the Collateral to secure the indebtedness or other obligations of any Person.
SECTION 14. Secured Party Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained by
such Grantor or paid to Secured Party pursuant to Section 8;
(b) to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a) and (b)
above;
(d) to file any claims or take any action or institute any
proceedings (including, without limitation, any proceeding before any Louisiana
Gaming Authority) that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
XVII-B-16
<PAGE>
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of such Grantor to Secured Party, due and payable immediately without demand;
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) upon the occurrence and during the continuation of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and such Grantor's expense, at any time or from
time to time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.
SECTION 15. Secured Party May Perform. If any Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall be payable by such Grantor under Section 20.
SECTION 16. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 17. Remedies.
(a) Notwithstanding any other provision hereof, if Secured
Party elects, upon any Event of Default, to sell real property and any
of the Collateral together under the Louisiana Mortgage and applicable
law, then the terms of the Louisiana Mortgage shall, with respect to
such sale and Collateral, control and supersede any terms in this
Agreement with respect to such sale and Collateral; provided that
Secured Party's election to exercise remedies under the Louisiana
Mortgage shall have
XVII-B-17
<PAGE>
no effect on the terms contained in this Agreement with respect to any
Collateral as to which Secured Party has not so elected.
(b) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (or, in the case of Louisiana, the Louisiana
Commercial Laws - Secured Transactions (La.R.S., Title 10, Chapter 9))
(the "Code") (whether or not the Code applies to the affected
Collateral), and also may (a) require any Grantor to, and Grantors
hereby agree that they will at their expense and upon request of
Secured Party forthwith, assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured Party at a
place to be designated by Secured Party that is reasonably convenient
to both parties, (b) enter onto the property where any Collateral is
located and take possession thereof with or without judicial process,
(c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems
appropriate, (d) take possession of any Grantor's premises or place
custodians in exclusive control thereof, remain on such premises and
use the same and any of such Grantor's equipment for the purpose of
completing any work in process, taking any actions described in the
preceding clause (c) and collecting any Secured Obligation, and (e)
without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any
of Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and
upon such other terms as Secured Party may deem commercially
reasonable. Secured Party or any Lender may be the purchaser of any or
all of the Collateral at any such sale and Secured Party, as
administrative agent for and representative of Lenders (but not any
Lender or Lenders in its or their respective individual capacities
unless Requisite Lenders shall otherwise agree in writing), shall be
entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at
any such public sale, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable
by Secured Party at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the
part of Grantors, and each Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. Each
Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to such Grantor of the time and place of
any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and
XVII-B-18
<PAGE>
place to which it was so adjourned. Each Grantor hereby waives any
claims against Secured Party arising by reason of the fact that the
price at which any Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public
sale, even if Secured Party accepts the first offer received and does
not offer such Collateral to more than one offeree. If the proceeds of
any sale or other disposition of the Collateral are insufficient to pay
all the Secured Obligations, Grantors shall be jointly and severally
liable for the deficiency and the fees of any attorneys employed by
Secured Party to collect such deficiency.
Further, as to all Collateral now or hereafter located in the
State of Louisiana, or as to which the laws of the State of Louisiana
may now be or hereafter become applicable, each Grantor hereby
acknowledges the Secured Obligations, whether now or existing or to
arise hereafter, and confesses judgment thereon if the Secured
Obligations are not paid at maturity, and does by these presents
consent, agree and stipulate that if any portion of the Secured
obligations is not promptly and fully paid when due, or if there should
occur an Event of Default, the Secured Obligations shall, at the option
of the Secured Party become immediately due and payable and it shall be
lawful for the Secured Party, without making a demand and without
notice or putting in default, the same being hereby expressly waived,
to cause all and singular the Collateral to be seized and sold by
executory process, without appraisement (appraisement being hereby
expressly waived), either in its entirety or in lots or parcels, as the
Secured Party may determine, to the highest bidder for cash, or on such
terms as plaintiff in such proceedings may direct.
Each Grantor hereby expressly waives: (a) the benefit of
appraisement, as provided in Articles 2332, 2336, 2723 and 2724,
Louisiana Code of Civil Procedure, and all other laws conferring the
same; (b) the demand and three (3) days delays accorded by Articles
2639 and 2721, Louisiana Code of Civil Procedure; (c) the notice of
seizure required by Articles 2293 and 2721, Louisiana Code of Civil
Procedure; (d) the three (3) days delay provided by Articles 2331 and
2722, Louisiana Code of Civil Procedure; and (e) the benefit of the
other provisions of Articles 2331, 2722 and 2723, Louisiana Code of
Civil Procedure, and the benefit of any other Articles or laws relating
to rights of appraisement, notice, or delay not specifically mentioned
above; and each Grantor expressly agrees to the immediate seizure of
the Collateral in the event of suit herein. Further, each Grantor
acknowledges that Secured Party shall have all rights to appointment of
a keeper in connection with any action to foreclose the lien hereof,
all in accordance with Louisiana Revised Statutes 9:5136 et seq. The
compensation of the keeper is hereby fixed at 1% of the amount due or
sued for or claimed or sought to be protected or enforced, and shall
constitute a portion of the Secured Obligations secured by the lien
hereof.
Notwithstanding anything to the contrary contained herein, if,
upon an Event of Default hereunder or under the Credit Agreement and
foreclosure upon any gaming permits pledged and assigned herein,
Secured Party is not qualified under the
XVII-B-19
<PAGE>
Louisiana Gaming Control Act to hold such gaming permits, then Secured
Party shall designate an appropriately qualified third party to which
an assignment of such gaming permits can be made in compliance with the
Louisiana Gaming Control Act.
SECTION 18. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured Party
as Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantors, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 20;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and
THIRD: To the payment to or upon the order of the Grantor who
owned the Collateral in issue, or to whomsoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.
SECTION 19. Regulatory Matters. Each Grantor and Secured Party
acknowledge and agree that:
(a) The terms and provisions of this Agreement and the rights and
obligations created hereunder shall be subject to compliance with the Louisiana
Gaming Control Act.
(b) Without limiting the generality of the foregoing, all
required prior approvals under the Louisiana Gaming Control Act will be obtained
in connection with Secured Party's exercise of any of the remedies set forth in
Section 17 upon the occurrence of an Event of Default including, without
limitation, any separate prior approvals required in connection with the sale,
transfer or other disposition of the Collateral; and
(c) Each Grantor agrees to assist Secured Party in obtaining all
approvals of the Louisiana Gaming Authorities or any other Governmental
Authority that are required by law for or in connection with any action or
transaction contemplated by this Agreement and,
XVII-B-20
<PAGE>
at Secured Party's reasonable request upon the occurrence and during
the continuation of an Event of Default, to prepare, sign and file with
the Louisiana Gaming Authorities the transferor's portion of any application or
applications for consent to the transfer of control thereof necessary or
appropriate under the Louisiana Gaming Control Act for approval of any sale or
transfer of the Collateral pursuant to the exercise of Secured Party's remedies
under Section 17.
SECTION 20. Indemnity and Expenses.
(a) Grantors agree to indemnify Secured Party and each Lender
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantors shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral, (ii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or
(iii) the failure by any Grantor to perform or observe any of the provisions
hereof.
SECTION 21. Continuing Security Interest; Transfer of Loans or
Letters of Credit. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of the Secured Obligations, the cancellation or
termination of the Commitments and the termination, cancellation or expiration
of all outstanding Letters of Credit, (b) be binding upon each Grantor, its
successors and assigns, and (c) inure, together with the rights and remedies of
Secured Party hereunder, to the benefit of Secured Party and its successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), but subject to the provisions of subsection 10.1 of the Credit Agreement,
any Lender may assign or otherwise transfer any Loans held by it or
Administrative Agent may assign any Letters of Credit issued by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
indefeasible payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the termination, cancellation or expiration
of all outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantors. Upon any
such termination Secured Party will, at Grantors' expense, execute and deliver
to each Grantor such documents as such Grantor shall reasonably request to
evidence such termination.
XVII-B-21
<PAGE>
SECTION 22. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
SECTION 23. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by Secured Party and, in the case of any
such amendment or modification, by such Grantor. Any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.
SECTION 24. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or five Business Days
after depositing it in the United States mail with postage prepaid and properly
XVII-B-22
<PAGE>
addressed. For the purposes hereof, the address of each party hereto
shall be as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such party in a written
notice delivered to the other parties hereto.
SECTION 25. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 26. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 27. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 28. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEVADA. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of Nevada are used herein as therein defined.
SECTION 29. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT EACH GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Each Grantor hereby agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
XVII-B-23
<PAGE>
requested, to such Grantor at its addresses as provided in Section 24,
such service being hereby acknowledged by such Grantor to be sufficient
for personal jurisdiction in any action against such Grantor in any
such court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Secured Party to bring proceedings
against any Grantor in the courts of any other jurisdiction.
SECTION 30. Waiver of Jury Trial. EACH GRANTOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Each Grantor and Secured
Party each acknowledge that this waiver is a material inducement for such
Grantor and Secured Party to enter into a business relationship, that such
Grantor and Secured Party have already relied on this waiver in entering into
this Agreement and that each will continue to rely on this waiver in their
related future dealings. Each Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 31. Counterparts. This Agreement may be executed in one
or more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XVII-B-24
<PAGE>
IN WITNESS WHEREOF, Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS LAKE CHARLES, INC.,
as a Grantor
By ______________________________
Title ____________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-1
<PAGE>
IN WITNESS WHEREOF, Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
SHOWBOAT STAR PARTNERSHIP,
as a Grantor
By PLAYERS RIVERBOAT, LLC
General Partner
By ____________________________
Title _________________________
By PLAYERS RIVERBOAT MANAGEMENT, INC.
General Partner
By ____________________________
Title _________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-2
<PAGE>
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: __________________________
Title: ________________________
Notice Address:
3800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-3
<PAGE>
PLAYERS RIVERBOAT, LLC,
as a Grantor
By ______________________________
Title ____________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-4
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
Assigned Agreements
Players Lake Charles, Inc.
Showboat Star Partnership
Players Riverboat, LLC
S-5
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
Deposit Accounts
Players Lake Charles, Inc.
Showboat Star Partnership
Players Riverboat, LLC
XVII-B-II-1
<PAGE>
SCHEDULE III
TO SECURITY AGREEMENT
Locations of Equipment:
PLC
SSP
PRLLC
Locations of Inventory:
PLC
SSP
PRLLC
XVII-B-III-1
<PAGE>
SCHEDULE IV
TO SECURITY AGREEMENT
Chief Executive Offices
Players Lake Charles, Inc.
Showboat Star Partnership
Players Riverboat, LLC
XVII-B-IV-1
<PAGE>
SCHEDULE V
TO SECURITY AGREEMENT
Existing Permitted Liens
Players Lake Charles, Inc.
Showboat Star Partnership
Players Riverboat, LLC
XVII-B-V-1
<PAGE>
EXHIBIT 10.50
EXHIBIT XVII-A
[FORM OF SUBSIDIARY SECURITY AGREEMENT (ILLINOIS)]
SUBSIDIARY SECURITY AGREEMENT (ILLINOIS)
This SUBSIDIARY SECURITY AGREEMENT (this "Agreement") is dated
as of August 25, 1995 and entered into by and between SOUTHERN ILLINOIS
RIVERBOAT/CASINO CRUISES, INC., an Illinois corporation ("Grantor") and FIRST
INTERSTATE BANK OF NEVADA, N.A. ("FIB"), as administrative agent for and
representative of (in such capacity herein called "Secured Party") the financial
institutions ("Lenders") party to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have
entered into a Credit Agreement dated as of even date herewith (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Players
International, Inc., a Nevada corporation ("Company"), of which Grantor is a
wholly-owned subsidiary, pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
B. Grantor has delivered a Guaranty dated as of even date
herewith (said Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty") in favor of Secured
Party for the benefit of Lenders, pursuant to which Grantor, along with other
Subsidiaries of Company, has guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement.
C. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Grantor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit and to issue the
Standby Letters of Credit under the Credit Agreement and for other good and
valuable consideration, the receipt
<PAGE>
and adequacy of which are hereby acknowledged, Grantor hereby agrees with
Secured Party as follows:
SECTION 1. Grant of Security. Grantor hereby assigns to Secured
Party, and hereby grants to Secured Party a security interest in, all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
(a) all present and future interest in and to those certain
barges and vessels presently moored, anchored or otherwise located on or around
the land or otherwise used in connection with the Illinois Facilities, whether
such barges or vessels in the present state of impoundment are deemed real,
personal or mixed property, which barges and vessels are described as follows:
(i) that certain vessel Players Riverboat Casino I having Official No. 989886,
built in Mermentau, Louisiana, formerly having its home port at St. Louis,
Missouri, together with (ii) all equipment, earnings, proceeds arising from
operation of any business upon such barges and vessels, parts, attachments and
all other property, whether real, personal or mixed, now or hereafter located
thereon, derived therefrom or used in connection therewith, including, but not
limited to, all moorings, cells, cofferdam enclosures and related ancillary
improvements (collectively, the "Barges").
(b) all present and future chattels, furniture, furnishings,
goods, equipment, fixtures and all other tangible personal property, of whatever
kind and nature, now or hereafter used in connection with or placed or located
within or on any part of the Illinois Facilities (including, without limitation,
any building or structure that is now or that may hereafter be erected within or
on the Illinois Facilities), including, but not limited to, machinery,
materials, goods and equipment now or hereafter used in the construction or
operation of the Illinois Facilities including, without limitation, air
conditioning, heating, electrical, lighting, fire fighting and fire prevention,
food and beverage service, laundry, plumbing, refrigeration, security, sound,
signaling, telephone, television, window washing and other equipment and
fixtures, of whatever kind or nature, including generators, transformers,
switching gear, boilers, burners, furnaces, piping, sprinklers, sinks, tubs,
valves, compressors, motors, carts, dumb waiters, elevators and other lifts,
floor coverings, hardware, keys, locks, organs, pianos, planters, railings,
scales, shelving, signs, tools, machinery, molds, dies, drills, presses,
planers, saws, furniture, business fixtures, trade fixtures, electric, gas and
other motor vehicles, uniforms, vacuum cleaners, hotel or Ship furniture,
furnishings and equipment, bathroom furniture and furnishings (including towels,
bathmats, hamperettes, shower curtains and other bath linens), beds and bedding
(including mattresses, springs, pillows, bed pads, sheets, blankets, comforters,
spreads and other bed linens and furnishings), bric-a-brac, chairs, chests,
vanities, secretaries, bureaus, chiffonniers, love seats, benches, costumers,
smoking stands, sand jars, desks, dressers, hangings, paintings, pictures,
frames, sculptures, lamps, light bulbs, mirrors, night stands, ornaments,
radios, stereo equipment, sofas, statuary, tables, telephones, televisions,
vases, window coverings, foodstuffs, beverages
XVII-A-2
<PAGE>
(including beer, wine, liquor and other alcoholic beverages), and other
consumables (including soap, shampoo, cleaning supplies and paper goods),
cutlery, cooking, baking and other kitchen utensils and apparatus (including
crockery, fryers, grills, kettles, mixers, pots, pans, pails, racks, steamers
and toasters), china and other dishes, flatware, glassware, hollowware,
serving pieces, trays, table linens, washers, dryers, irons, ironing
boards and other ironing equipment, cables, outlets, plugs, wiring and related
apparatus and fixtures, card readers, cash registers, adding machines,
calculators, computers, keyboards, monitors, printers, printing equipment,
envelopes, stationery, posting machines, blank forms, typewriters, typewriter
stands, other office and accounting equipment and supplies, time stamps, time
recorders, bookkeeping machines, checking machines, payroll machines, computer
reservations systems, equipment used in the operation of casinos within or on
the Illinois Facilities (including but not limited to, gaming equipment/supplies
(as defined in Section 3000.100 of the Rules of the Illinois Gaming Board),
including but not limited to, slot machines, cards, poker chips and gaming
tables) and all other goods, equipment, furnishings, apparatus and fixtures that
are now or may hereafter be located at or used within, at or in connection with
the Illinois Facilities) and all other tangible personal property used or to be
used at or in connection with, or placed or to be placed in, rooms, halls,
lounges, offices, lobbies, lavatories, basements, cellars, vaults or other
portions of the Illinois Facilities or of any other building or buildings
hereafter constructed or erected thereon, whether herein enumerated or not, and
whether or not contained in any such building, and which are used or to be used
or useful in the operation and maintenance thereof, or in any bar, casino,
hotel, restaurant, store, health spa, salon or other business conducted thereon,
together with all replacements and substitutions for any and all personal
property in which Grantor has an interest, including without limitation such
goods and equipment as shall from time to time be located, placed, installed or
used in or upon, or procured for use, or to be used or useful in connection with
the operation of the whole, or any part of, the Illinois Facilities and all
parts thereof and all accessions thereto (any and all such equipment,
replacements, substitutions, parts and accessions being the "Equipment");
(c) all present and future inventory and merchandise in all of
its forms used in connection with or placed or located within or on any part of
the Illinois Facilities (including, but not limited to, (i) all goods held by
Grantor for sale or lease or to be furnished under contracts of service or so
leased or furnished, (ii) all raw materials, work in process, finished goods,
and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in Grantor's business, (iii) all goods in which
Grantor has an interest in mass or a joint or other interest or right of any
kind, (iv) all goods that are returned to or repossessed by Grantor, and (v) all
packing materials, supplies and containers relating to or used in connection
with any of the foregoing, and all accessions thereto and products thereof (all
such inventory, accessions and products being the "Inventory") and all
negotiable documents of title (including without limitation warehouse receipts,
dock receipts and bills of lading) issued by any person covering any of the
foregoing (any such negotiable document of title being a "Negotiable Document of
Title");
XVII-A-3
<PAGE>
(d) all present and future accounts, accounts receivable,
rentals, revenues, receipts, payments, and income of any nature whatsoever
derived from or received with respect to hotel rooms, rooms on any Ship, banquet
facilities, convention facilities, retail premises, bars, restaurants, casinos
parking lots and garages and any other facilities within or on the Illinois
Facilities and services and amenities provided in connection therewith, all
agreements, contracts, leases, contract rights, rights to payment, instruments,
documents, chattel paper, security agreements, guaranties, undertakings, surety
bonds, insurance policies, condemnation deposits and awards, notes and drafts,
securities, certificates of deposit and the right to receive all payments
thereon or in respect thereof (whether principal, interest, fees or otherwise),
contract rights (other than rights under contracts or governmental permits that
may not be transferred by law), including, without limitation, rights to all
deposits from tenants and other users of the Illinois Facilities leased by
Grantor, rights under all contracts relating to the construction, renovation or
restoration of any of the improvements now or hereafter located within or on the
Illinois Facilities or the financing thereof and all rights under payment or
performance bonds, warranties, and guaranties, and all rights to payment from
any credit/charge card organization or entity such as or similar to, and
including, without limitation, the organizations or entities that sponsor and
administer, respectively, the American Express Card, the Carte Blanche Card, the
Diners Club Card, the Discover Card, the MasterCard and the Visa Card, books of
account, and principal, interest and payments due on account of goods sold,
services rendered, loans made or credit extended, within, on or in connection
with the Illinois Facilities and all forms of obligations owing to and rights of
Grantor or in which Grantor may have any interest, however created or arising
(any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "Accounts", and
any and all such security agreements, leases and other contracts being the
"Related Contracts");
(e) the agreements listed in Schedule I annexed hereto, as each
such agreement may be amended, supplemented or otherwise modified from time to
time (said agreements, as so amended, supplemented or otherwise modified, being
referred to herein individually as an "Assigned Agreement" and collectively as
the "Assigned Agreements"), including without limitation (i) all rights of
Grantor to receive moneys due or to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii)
all claims of Grantor for damages arising out of any breach of or default under
the Assigned Agreements, and (iv) all rights of Grantor to terminate, amend,
supplement, modify or exercise rights or options under the Assigned Agreements,
to perform thereunder and to compel performance and otherwise exercise all
remedies thereunder;
(f) all present and future right, title and interest of Grantor
in and to all leases, subleases, licenses, concessions, franchises and other use
or occupancy agreements (excepting, however, agreements made by Grantor in the
ordinary course of business for short-term use by members of the public of any
guest rooms and public rooms, including banquet and meeting facilities, located
within or on the Illinois Facilities, and any amendments, modifications,
extensions or renewals thereof (collectively, "Leases"), whether
XVII-A-4
<PAGE>
or not specifically herein described, that now or may hereafter pertain to or
affect the Illinois Facilities or any portion thereof and all amendments to the
same, including, but not limited to, the following: (i) all payments due and to
become due under such Leases, whether as rent, damages, insurance payments,
condemnation awards, or otherwise; (ii) all claims, rights, powers, privileges
and remedies under such Leases; and (iii) all rights of Grantor under such
Leases to exercise any election or option (including without limitation, any
right of Grantor under any ground lease to purchase the fee interest of the
lessor thereunder (the "Options")), or to give or receive any notice, consent,
waiver or approval, or to accept any surrender of the premises or any part
thereof, together with full power and authority in the name of Grantor, or
otherwise, to demand and receive, enforce, and collect any receipt for any or
all of the foregoing, to endorse or execute any checks or any instruments or
orders, to file any claims, and to take any other action that Secured Party may
deem necessary or advisable in connection therewith;
(g) all present and future deposit accounts of Grantor,
including, without limitation, those deposit accounts set forth on Schedule II
hereto, any demand, time, savings, passbook or like account maintained by
Grantor with any bank, savings and loan association, credit union or like
organization, and all money, cash and cash equivalents of Grantor, whether or
not deposited in any such deposit account and all such accounts maintained with
Secured Party;
(h) all present and future general intangibles (including but
not limited to all governmental permits relating to construction or other
activities within or on the Illinois Facilities), the Options, all tax refunds
of every kind and nature to which Grantor now or hereafter may become entitled,
however arising, all other refunds, and all deposits, goodwill, choses in
action, rights to payment or performance, gambling debts or gaming debts owed to
Grantor by Grantor's patrons (whether or not evidenced by a note), judgments
taken on any rights or claims included in the Collateral, trade secrets,
computer programs, software, customer lists, business names, trademarks, trade
names and service marks (including, but not limited to: "Players Riverboat
Casino," "Merv's Landing," and "Players' Show Lounge" and any derivation
thereof, including any and all state and federal applications and registrations
thereof), patents, patent applications, licenses, copyrights, registration and
franchise rights, technology, processes, proprietary information, insurance
proceeds and all goodwill associated with any of the foregoing;
(i) all present and future books and records, including,
without limitation, books of account and ledgers of every kind and nature,
ledger cards, computer programs, tapes, disks and other information storage
devices, all related data processing software, and all electronically recorded
data relating to Grantor or its business related to the Illinois Facilities, all
receptacles and containers for such records, and all files and correspondence;
(j) all present and future maps, plans, specifications,
surveys, studies, reports, data and drawings (including, without limitation,
architectural, structural, mechanical and engineering plans and specifications,
studies, data and drawings) prepared for or relating
XVII-A-5
<PAGE>
to the development of the Illinois Facilities or the construction, renovation or
restoration of any improvements within or on the Illinois Facilities or the
extraction of minerals, sand, gravel or other valuable substances from the
Illinois Facilities, together with all amendments and modifications thereto;
(k) all present and future licenses, permits, variances,
special permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including options, option rights and
contract rights), other than those (including non-transferrable gaming permits)
that may not be transferred by law, now or hereafter obtained by Grantor from
any governmental authority having or claiming jurisdiction over the Illinois
Facilities or any other element of the Collateral or providing access thereto,
or the operation of any business within, on, at, or from the Illinois
Facilities;
(l) all present and future goods, including, without
limitation, all consumer goods, inventory, equipment, and other supplies, of
whatever kind or nature, and any and all other goods, wherever located, used or
to be used in connection with or in the conduct of Grantor's business or the
Illinois Facilities;
(m) all present and future stocks, bonds, debentures,
securities, subscription rights, options, warrants, puts, calls, certificates,
partnership interests, joint venture interests, investments, brokerage accounts
and all rights, preferences, privileges, dividends, distributions, redemption
payments and liquidation payments received or receivable with respect thereto;
(n) all present and future accessions, appurtenances,
components, repairs, repair parts, spare parts, replacements, substitutions,
additions, issue and improvements to or of or with respect to any of the
foregoing;
(o) all other fixtures and storage and office facilities, and
all accessions thereto and products thereof and all water stock relating to
the Illinois Facilities;
(p) to the extent not covered by any of the preceding clauses,
any and all of Grantor's present and future machinery, equipment, furniture,
furnishings and fixtures, of every type and description, now or hereafter
located on any of the Illinois Ships or any Barge or used in connection
therewith, together with all accessories, attachments, accessions,
substitutions, replacements and additions thereto;
(q) all other tangible and intangible personal property of
Grantor used in connection with or placed or located within or on any part of
the Illinois Facilities;
(r) all rights, remedies, powers and privileges of Grantor
with respect to any of the foregoing; and
XVII-A-6
<PAGE>
(s) any and all proceeds, products, rents, income and profits
of any of the foregoing, including, without limitation, all money, accounts,
general intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds (whether or not Secured Party is the loss payee), and
any other tangible or intangible property received upon the sale or disposition
of any of the foregoing (it being agreed, for purposes hereof, that the term
"proceeds" includes whatever is receivable or received when any of the
Collateral is sold, collected, exchanged or otherwise disposed of, whether such
disposition is voluntary or involuntary).
Notwithstanding anything to the contrary contained herein,
Secured Party acknowledges that it has no security interest in any cash of
Grantor described in clauses (f), (g) and (l) above, to the extent such a
security interest is prohibited by the Illinois Riverboat Gambling Act.
SECTION 2. Security for Obligations. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and
liabilities of every nature of Grantor now or hereafter existing under or
arising out of or in connection with the Guaranty and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to Grantor,
would accrue on such obligations), reimbursement of amounts drawn under Letters
of Credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender as a preference, fraudulent transfer
or otherwise (all such obligations and liabilities being the "Underlying Debt"),
and all obligations of every nature of Grantor now or hereafter existing under
this Agreement (all such obligations of Grantor, together with the Underlying
Debt, being the "Secured Obligations").
SECTION 3. Grantor Remains Liable. Anything contained herein to
the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement or otherwise, nor shall Secured Party be obligated to perform any of
the obligations or duties of Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
XVII-A-7
<PAGE>
SECTION 4. Representations and Warranties. Grantor represents
and warrants as follows:
(a) Ownership of Collateral. Except for the security interest
created by this Agreement and any Liens permitted pursuant to subsection 7.2A of
the Credit Agreement, Grantor owns the Collateral free and clear of any Lien.
Except such as may have been filed in favor of Secured Party relating to this
Agreement, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office.
(b) Location of Equipment and Inventory. All of the Equipment
and Inventory is, as of the date hereof, located at the places specified in
Schedule III annexed hereto.
(c) Office Locations; Other Names. The chief place of business,
the chief executive office and the office where Grantor keeps its records
regarding the Accounts is, and has been for the four month period preceding the
date hereof, located at the place listed on Schedule IV annexed hereto. Grantor
has not in the past done, and does not now do, business under any other name
(including any trade-name or fictitious business name).
(d) Delivery of Certain Collateral. All chattel paper and all
notes and other instruments (excluding checks) comprising any and all items of
Collateral have been delivered to Secured Party duly endorsed and accompanied by
duly executed instruments of transfer or assignment in blank.
(e) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Grantor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Grantor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except (w) authorization from the
Illinois Gaming Authorities for the grant of security interest in part of the
Illinois Facilities, which authorization has been obtained prior to the date
hereof, (x) authorization from the Illinois Gaming Authorities for the exercise
by Secured Party of certain of its rights and remedies hereunder, (y) the filing
of a Uniform Commercial Code financing statement with the Secretary of State of
Illinois and the Illinois Mortgage with the Massac County, Illinois Recorder of
Deeds and (z) as has been previously taken by or at the direction of Grantor).
(f) Perfection. This Agreement creates a valid and enforceable
security interest in the Collateral, securing the payment of the Secured
Obligations. Upon the filing of a UCC-1 financing statement describing the
Collateral with the Secretary of State of Illinois and the Illinois Mortgage
with the Massac County, Illinois Recorder of Deeds, Secured Party shall also
have a perfected and first priority security interest in the Collateral, subject
only to Permitted Encumbrances, securing the payment of the Secured Obligations.
XVII-A-8
<PAGE>
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Grantor with respect to
the Collateral is accurate and complete in all respects.
SECTION 5. Further Assurances.
(a) Grantor agrees that from time to time, at the expense of
Grantor, Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral and to preserve, protect and maintain the Collateral and the
value thereof. Without limiting the generality of the foregoing, Grantor will:
(i) at the reasonable request of Secured Party mark conspicuously each item of
chattel paper included in the Accounts, each Related Contract and, at the
reasonable request of Secured Party, each of its records pertaining to the
Collateral, with a legend, in form and substance satisfactory to Secured Party,
indicating that such Collateral is subject to the security interest granted
hereby, (ii) if any Account shall be evidenced by a promissory note or other
instrument (excluding checks) or chattel paper, deliver and pledge to Secured
Party hereunder such note or instrument or the original counterpart of such
chattel paper, duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Secured Party,
(iii) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may reasonably request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iv)
promptly after the acquisition by Grantor of any item of Equipment which is
covered by a certificate of title under a statute of any jurisdiction under the
law of which indication of a security interest on such certificate is required
as a condition of perfection thereof, execute and file with the registrar of
motor vehicles or other appropriate authority in such jurisdiction an
application or other document requesting the notation or other indication of the
security interest created hereunder on such certificate of title, (v) at any
reasonable time, upon reasonable request by Secured Party, exhibit the
Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, and (vi) at the reasonable request of
Secured Party, appear in and defend any action or proceeding that may affect
Grantor's title to or Secured Party's security interest in all or any part of
the Collateral.
(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
XVII-A-9
<PAGE>
(c) Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantor. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any
change in Grantor's chief place of business, chief executive office or residence
or the office where Grantor keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith and
for which adequate reserves have been established; provided that Grantor shall
in any event pay such taxes, assessments, charges, levies or claims not later
than five days prior to the date of any proposed sale under any judgement, writ
or warrant of attachment entered or filed against Grantor or any of the
Collateral as a result of the failure to make such payment.
SECTION 7. Special Covenants With Respect to Equipment and
Inventory. Grantor shall:
(a) keep the Equipment and Inventory at the places therefor
specified on Schedule III annexed hereto or, upon 30 days' prior written notice
to Secured Party, at such other places in jurisdictions where all action that
may be necessary or desirable, or that Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby, or to enable Secured Party to exercise and enforce its rights
and remedies hereunder, with respect to such Equipment and Inventory shall have
been taken;
(b) cause the Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear and tear
excepted, and in
XVII-A-10
<PAGE>
accordance with Grantor's past practices, and shall forthwith, or, in the case
of any loss or damage to any of the Equipment when subsection (c) or (d) of
Section 8 is not applicable, as quickly as practicable after the occurrence
thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Grantor shall promptly furnish to Secured Party a statement respecting any
material loss or damage to any of the Equipment (the requirements under this
subsection 7(b) being supplemental to and not exclusive of the requirements of
Company under Section 6.4 of the Credit Agreement relating to maintenance of
property);
(c) provide prompt written notice to Secured Party of any
breach or default by any party to any Assigned Agreement;
(d) notify Secured Party of the establishment of any deposit
accounts after the date hereof and take such steps as may be reasonably
requested by Secured Party to perfect Secured Party's lien therein;
(e) perform all acts that are necessary or desirable to cause
all licenses, permits, variances, special permits, franchises, certificates,
rulings, certifications, validations, exemptions, filings, registrations,
authorizations, consents, approvals, waivers, orders, rights, and agreements in
which a security interest has been conveyed to Secured Party pursuant to
subsection 1(j) to remain in full force and effect;
(f) keep correct and accurate records of the Inventory,
itemizing and describing the kind, type and quantity of Inventory, Grantor's
cost therefor and (where applicable) the current list prices for the Inventory
substantially consistent with the practice of other gaming institutions in
connection with their gaming operations in the State of Illinois;
(g) upon the occurrence of an Event of Default, if any
Inventory is in possession or control of any of Grantor's agents or processors,
instruct such agent or processor to hold all such Inventory for the account of
Secured Party and subject to the instructions of Secured Party; and
(h) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title (other than any one or more Negotiable Documents of
Title covering Inventory which, in the ordinary course of business, is in
transit either (i) from a supplier to Grantor or (ii) to customers of Grantor),
deliver such Negotiable Document of Title to Secured Party.
SECTION 8. Insurance.
(a) Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms imposed on
Company by the Credit Agreement, this Section 8 and the Illinois Mortgage. Such
insurance shall include, without limitation, property damage insurance and
liability insurance. Each policy for
XVII-A-11
<PAGE>
property damage insurance shall provide for all losses (except for losses of
less than $2,500,000 per occurrence) to be paid directly to Secured Party as
provided in clauses (c) and (d) below. Each policy shall in addition name
Grantor and Secured Party as insured parties thereunder (without any
representation or warranty by or obligation upon Secured Party) as their
interests may appear and have attached thereto a loss payable clause acceptable
to Secured Party that shall (i) contain an agreement by the insurer that any
loss thereunder shall be payable to Secured Party notwithstanding any action,
inaction or breach of representation or warranty by Grantor, (ii) provide that
there shall be no recourse against Secured Party for payment of premiums or
other amounts with respect thereto, and (iii) provide that at least 30 days'
prior written notice of cancellation, material amendment, reduction in scope or
limits of coverage or of lapse shall be given to Secured Party by the insurer.
Grantor shall, if reasonably requested by Secured Party, deliver to Secured
Party original or duplicate policies of such insurance and, as often as Secured
Party may reasonably request, a report of a reputable insurance broker with
respect to such insurance. Further, Grantor shall, at the reasonable request of
Secured Party, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of subsection 5(a) and cause
the respective insurers to acknowledge notice of such assignment. The
requirements under this subsection 8(a) shall be supplemental to and not
exclusive of the requirements imposed on Company under Section 6.4 of the Credit
Agreement relating to insurance.
(b) Reimbursement under any liability insurance maintained by
Grantor pursuant to this Section 8 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) or (d) of this Section 8 is
not applicable, Grantor shall make or cause to be made the necessary repairs to
or replacements of such Equipment or Inventory, and any proceeds of insurance
maintained by Grantor pursuant to this Section 8 shall be paid to Grantor as
reimbursement for the costs of such repairs or replacements.
(c) Upon the occurrence of any Event of Loss involving
Equipment or Inventory and pursuant to which Grantor receives Net Cash Proceeds
equal to or in excess of $2,500,000, all insurance payments in respect of such
Equipment or Inventory shall be paid to and applied by Secured Party as
specified in subsection 2.4A(ii)(b) of the Credit Agreement.
(d) Notwithstanding the provisions of Section 8(c), upon the
occurrence and during the continuation of any Event of Default, all insurance
payments in respect of any Equipment or Inventory shall be paid to and applied
by Secured Party as specified in Section 18.
SECTION 9. Special Covenants with respect to Accounts and Related
Contracts.
(a) Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related
XVII-A-12
<PAGE>
Contracts at the location therefor specified in Section 4 or, upon 30 days'
prior written notice to Secured Party, at such other location in a jurisdiction
where all action that may be necessary or desirable, or that Secured Party may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable Secured Party to
exercise and enforce its rights and remedies hereunder, with respect to such
Accounts and Related Contracts shall have been taken. Grantor will hold and
preserve such records and will permit representatives of Secured Party at any
time during normal business hours to inspect and make abstracts from such
records, and Grantor agrees to render to Secured Party, at Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto. Promptly upon the request of Secured Party, Grantor shall
deliver to Secured Party complete and correct copies of each Related Contract.
(b) Grantor shall, for not less than 5 years from the date on
which such Account arose, maintain (i) complete records of each Account,
including records of all payments received, credits granted and merchandise
returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c),
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to Grantor under the Accounts (but, other than with respect to
security deposits, in no event more than one month in advance) and Related
Contracts. In connection with such collections, Grantor may take (and, at
Secured Party's direction, shall take) such action as Grantor or Secured Party
may deem necessary or advisable to enforce collection of amounts due or to
become due under the Accounts; provided, however, that Secured Party shall have
the right at any time, upon the occurrence and during the continuation of an
Event of Default or a Potential Event of Default and upon written notice to
Grantor of its intention to do so, to notify the account debtors or obligors
under any Accounts of the assignment of such Accounts to Secured Party and to
direct such account debtors or obligors to make payment of all amounts due or to
become due to Grantor thereunder directly to Secured Party, to notify each
Person maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Secured Party and, upon such notification and at the expense of Grantor, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Grantor
might have done. After receipt by Grantor of the notice from Secured Party
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by Grantor in respect
of the Accounts and the Related Contracts shall be received in trust for the
benefit of Secured Party hereunder, shall be segregated from other funds of
Grantor and shall be forthwith paid over or delivered to Secured Party in the
same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 18, and (ii) Grantor shall not
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
XVII-A-13
<PAGE>
SECTION 10. Special Provisions With Respect to the Assigned
Agreements.
(a) Grantor shall at its expense:
(i) perform and observe all terms and provisions of
the Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to
such end as may be from time to time reasonably requested by Secured
Party; and
(ii) furnish to Secured Party, promptly upon receipt
thereof, copies of all notices of default received by Grantor under or
pursuant to the Assigned Agreements, and from time to time (A) furnish
to Secured Party such information and reports regarding the Assigned
Agreements as Secured Party may reasonably request and (B) upon
reasonable request of Secured Party make to the appropriate
counterparty to an Assigned Agreement such demands and requests for
information and reports or for action as Grantor is entitled to make
under the Assigned Agreements.
(b) Grantor shall not, without the prior written consent of
Requisite Lenders, which consent shall not be unreasonably withheld:
(i) cancel or terminate any of the Assigned Agreements
or consent to or accept any cancellation or termination thereof if such
cancellation or termination, together with all other such cancellations
or terminations, would result in a Material Adverse Effect;
(ii) amend or otherwise modify the Assigned Agreements
or give any consent, waiver or approval thereunder if the effect of
such amendment or modification, together with all other amendments,
modifications, consents, waivers or approvals made or consents, waivers
or approvals given, is to increase materially the obligations of
Grantor thereunder or to confer any additional rights on the
counterparties to such Assigned Agreements that could reasonably be
expected to be materially adverse to Grantor or Lenders;
(iii) waive any default under or breach of the
Assigned Agreements;
(iv) consent to or permit or accept any prepayment of
amounts to become due under or in connection with the Assigned
Agreements, except as expressly provided therein; or
XVII-A-14
<PAGE>
(v) take any other action in connection with the
Assigned Agreements that would impair the value of the interest or
rights of Grantor thereunder or that would impair the interest or
rights of Secured Party.
SECTION 11. Deposit Accounts. Upon the occurrence and during the
continuation of an Event of Default, Secured Party and each Lender may exercise
dominion and control over, and refuse to permit further withdrawals (whether of
money, securities, instruments or other property) from any deposit accounts
maintained with Secured Party or such Lender constituting part of the
Collateral.
SECTION 12. License of Patents, Trademarks, Copyrights, etc.
Grantor hereby assigns, transfers and conveys to Secured Party, effective upon
the occurrence of any Event of Default, the nonexclusive right and license to
use all trademarks, tradenames, service marks, copyrights, customers lists,
patents or technical processes owned or used by Grantor that relate to the
Collateral and any other collateral granted by Grantor as security for the
Secured Obligations, together with any goodwill associated therewith, all to the
extent necessary to enable Secured Party to use, possess and realize on the
Collateral and to enable any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all successors,
assigns and transferees of Secured Party and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to Grantor.
SECTION 13. Transfers and Other Liens. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
or
(b) except for the security interest created by this Agreement
and the interests disclosed in Schedule V hereto which are permitted by the
Credit Agreement, create or suffer to exist any Lien upon or with respect to any
of the Collateral to secure the indebtedness or other obligations of any Person.
SECTION 14. Secured Party Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints Secured Party as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Secured Party pursuant to Section 8;
XVII-A-15
<PAGE>
(b) to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a) and (b)
above;
(d) to file any claims or take any action or institute any
proceedings (including, without limitation, any proceeding before any Illinois
Gaming Authority) that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of Grantor to Secured Party, due and payable immediately without demand;
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) upon the occurrence and during the continuation of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and Grantor's expense, at any time or from time to
time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as Grantor might do.
SECTION 15. Secured Party May Perform. If Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall be payable by Grantor under Section 20.
SECTION 16. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody
XVII-A-16
<PAGE>
and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which Secured Party
accords its own property.
SECTION 17. Remedies.
(a) Notwithstanding any other provision hereof, if Secured
Party elects, upon any Event of Default, to sell real property and any
of the Collateral together under the Illinois Mortgage and applicable
law, then the terms of the Illinois Mortgage shall, with respect to
such sale and Collateral, control and supersede any terms in this
Agreement with respect to such sale and Collateral; provided that
Secured Party's election to exercise remedies under the Illinois
Mortgage shall have no effect on the terms contained in this Agreement
with respect to any Collateral as to which Secured Party has not so
elected.
(b) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "Code") (whether or not the Code applies to
the affected Collateral), and also may (a) require Grantor to, and
Grantor hereby agrees that it will at its expense and upon request of
Secured Party forthwith, assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured Party at a
place to be designated by Secured Party that is reasonably convenient
to both parties, (b) enter onto the property where any Collateral is
located and take possession thereof with or without judicial process,
(c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems
appropriate, (d) to the extent permitted by applicable law, take
possession of Grantor's premises or place custodians in exclusive
control thereof, remain on such premises and use the same and any of
Grantor's equipment for the purpose of completing any work in process,
taking any actions described in the preceding clause (c) and collecting
any Secured Obligation, and (e) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or
times and at such price or prices and upon such other terms as Secured
Party may deem commercially reasonable. Secured Party or any Lender may
be the purchaser of any or all of the Collateral at any such sale and
Secured Party, as administrative agent for and representative of
Lenders (but not any Lender or Lenders in its or their respective
individual capacities unless Requisite Lenders shall otherwise agree in
writing), shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of
the Secured Obligations as a credit on account of the purchase price
for any Collateral payable by Secured Party at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the
XVII-A-17
<PAGE>
part of Grantor, and Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted. Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten days'
notice to Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned. Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral
may have been sold at such a private sale was less than the price which
might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to
more than one offeree. If the proceeds of any sale or other disposition
of the Collateral are insufficient to pay all the Secured Obligations,
Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
Notwithstanding anything to the contrary contained herein, if,
upon an Event of Default hereunder or under the Credit Agreement and
foreclosure upon any gaming permits pledged and assigned herein,
Secured Party is not qualified under the Illinois Riverboat Gambling
Act to hold such gaming permits, then Secured Party shall designate an
appropriately qualified third party to which an assignment of such
gaming permits can be made in compliance with the Illinois Riverboat
Gambling Act.
SECTION 18. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured Party
as Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 20;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and
XVII-A-18
<PAGE>
THIRD: To the payment to or upon the order of Grantor, or to
whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 19. Regulatory Matters. Grantor and Secured Party
acknowledge and agree that:
(a) The terms and provisions of this Agreement and the rights and
obligations created hereunder shall be subject to compliance with the Illinois
Riverboat Gambling Act.
(b) Without limiting the generality of the foregoing, all
required prior approvals under the Illinois Riverboat Gambling Act will be
obtained in connection with Secured Party's exercise of any of the rights set
forth in Section 15 or the remedies set forth in Section 17 upon the occurrence
of an Event of Default including, without limitation, any separate prior
approvals required in connection with the sale, transfer or other disposition of
the Collateral; and
(c) Grantor agrees to assist Secured Party in obtaining all
approvals of the Illinois Gaming Authorities or any other Governmental Authority
that are required by law for or in connection with any action or transaction
contemplated by this Agreement and, at Secured Party's reasonable request upon
the occurrence and during the continuation of an Event of Default, to prepare,
sign and file with the Illinois Gaming Authorities the transferor's portion of
any application or applications for consent to the transfer of control thereof
necessary or appropriate under the Illinois Riverboat Gambling Act for approval
of any sale or transfer of the Collateral pursuant to the exercise of Secured
Party's remedies under Section 17.
SECTION 20. Indemnity and Expenses.
(a) Grantor agrees to indemnify Secured Party and each Lender
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral, (ii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or
(iii) the failure by Grantor to perform or observe any of the provisions hereof.
XVII-A-19
<PAGE>
SECTION 21. Continuing Security Interest; Transfer of Loans or
Letters of Credit. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of the Secured Obligations, the cancellation or
termination of the Commitments and the termination, cancellation or expiration
of all outstanding Letters of Credit, (b) be binding upon Grantor, its
successors and assigns, and (c) inure, together with the rights and remedies of
Secured Party hereunder, to the benefit of Secured Party and its successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), but subject to the provisions of subsection 10.1 of the Credit Agreement,
any Lender may assign or otherwise transfer any Loans held by it or
Administrative Agent may assign any Letters of Credit issued by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
indefeasible payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the termination, cancellation or expiration
of all outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantor. Upon any
such termination Secured Party will, at Grantor's expense, execute and deliver
to Grantor such documents as Grantor shall reasonably request to evidence such
termination.
SECTION 22. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party
XVII-A-20
<PAGE>
of the security interests created hereunder, whereupon such retiring or
removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Secured Party, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Secured Party hereunder.
SECTION 23. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Grantor herefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Grantor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 24. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or five Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 25. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 26. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 27. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 28. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE
XVII-A-21
<PAGE>
EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEVADA. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
Nevada are used herein as therein defined.
SECTION 29. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT GRANTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Grantor hereby
agrees that service of all process in any such proceeding in any such court may
be made by registered or certified mail, return receipt requested, to Grantor at
its addresses as provided in Section 24, such service being hereby acknowledged
by Grantor to be sufficient for personal jurisdiction in any action against
Grantor in any such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Secured Party to bring
proceedings against Grantor in the courts of any other jurisdiction.
SECTION 30. Waiver of Jury Trial. GRANTOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all- encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Grantor and Secured Party
each acknowledge that this waiver is a material inducement for Grantor and
Secured Party to enter into a business relationship, that Grantor and Secured
Party have already relied on this waiver in entering into this Agreement and
that each will continue to rely on this waiver in their related future dealings.
Grantor and Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
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<PAGE>
SECTION 31. Counterparts. This Agreement may be executed in one
or more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
SOUTHERN ILLINOIS RIVERBOAT/CASINO
CRUISES, INC.,
as Grantor
By ______________________________
Title ____________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-1
<PAGE>
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: ________________________________
Title; ______________________________
Notice Address:
3800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-2
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
Assigned Agreements
A. ILLINOIS PROJECT AGREEMENTS:
1. Purchase Agreement dated as of June 23, 1992 by and among Players
International, Inc. ("PII"), Southern Illinois Riverboat/Casino Cruises,
Inc. ("SIRCC") and The Griffin Group, Inc. ("TGG").
2. 1992 Series A Exchangeable Debenture of SIRCC issued to TGG on June 23,
1992 in the aggregate principal amount of $2,250,000.
3. 1992 Series A Warrant of PII to purchase 1,948,000 shares of common stock
issued to TGG on June 23, 1992.
4. Registration Rights Agreements dated June 23, 1992 between PII and TGG.
5. Joint Venture Agreement dated May 6, 1993 between SIRCC and Amerihost
Development, Inc.
6. Lease Agreement by and between Riverfront Realty Corporation ("RRC") and
Burlington Northern Railroad Company dated as of August 1, 1992.
7. Lease Agreement by and among Burlington Northern Railroad Company and SIRCC
dated May 27, 1992 and assigned to RRC by Assignment of Lease dated
September 16, 1992.
8. Purchase Agreement dated June 23, 1992 by and among SIRCC, PII and certain
Purchasers.
9. 1992 Series B Exchangeable Debenture of SIRCC.
10. 1992 Series B Warrant to Purchase Common Stock of PII.
11. Lease dated December 10, 1990 by and between PCI and the City of
Metropolis, Amendments to Lease dated May 26, 1992, Amendment and
Assignment of Lease dated August 25, 1995.
12. Agreement of Limited Partnership of Metropolis, IL 1292 Limited
Partnership.
XVI-I-1
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SCHEDULE II
TO SECURITY AGREEMENT
Deposit Accounts
XVI-II-1
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SCHEDULE III
TO SECURITY AGREEMENT
Locations of Equipment:
Locations of Inventory:
XVI-III-1
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SCHEDULE IV
TO SECURITY AGREEMENT
Chief Executive Offices
XVI-III-2
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SCHEDULE V
TO SECURITY AGREEMENT
Existing Permitted Liens
XVI-IV-1
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EXHIBIT 10.51
EXHIBIT XVIII
[FORM OF PARTNERSHIP INTEREST SECURITY AGREEMENT]
PARTNERSHIP INTEREST SECURITY AGREEMENT
This PARTNERSHIP INTEREST SECURITY AGREEMENT (this "Agreement")
is dated as of August 25, 1995 and entered into by and between ________________,
a ("Grantor"), and FIRST INTERSTATE BANK OF NEVADA, N.A. ("FIB"), as
administrative agent for and representative of (in such capacity herein called
"Secured Party") the financial institutions ("Lenders") party to the Credit
Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Grantor is a party to that certain Partnership Agreement,
dated August 23, 1995 (as amended to the date hereof and as it may hereafter be
amended, supplemented or otherwise modified from time to time, the "Partnership
Agreement"), and Grantor is a general partner of Showboat Star Partnership, a
Louisiana general partnership formed pursuant thereto ("Company");
B. Secured Party, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have
entered into a Credit Agreement dated as of even date herewith (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Players
International, Inc., a Nevada corporation ("Players") that owns all of the
outstanding capital stock of Grantor, pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Players.
C. Grantor has executed and delivered a Guaranty dated as of
even date herewith (said Guaranty, as it may hereafter be amended, supplemented
or otherwise modified from time to time, being the "Guaranty") in favor of
Secured Party for the benefit of Lenders, pursuant to which Grantor has
guarantied the prompt payment and performance when due of all obligations of
Players under the Credit Agreement.
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D. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Grantor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit and to issue the
Standby Letters of Credit under the Credit Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantor hereby agrees with Secured Party as follows:
SECTION 1. Grant of Security. Grantor hereby assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
Grantor's right, title and interest in and to the following (the "Collateral"):
(a) all of Grantor's right, title and interest as a general
partner in Company, whether now owned or hereafter acquired, including without
limitation all of Grantor's right, title and interest in, to and under the
Partnership Agreement (including without limitation Grantor's right to vote and
to manage and administer the business of Company), together with all other
rights, interests, claims and other property of Grantor in any manner arising
out of or relating to its general partnership interest in Company, whatever
their respective kind or character, whether they are tangible or intangible
property, and wheresoever they may exist or be located, and further including,
without limitation, all of the rights of Grantor as a general partner: (i) to
(x) receive money due and to become due (including without limitation dividends,
distributions, interest, income from partnership properties and operations,
proceeds of sale of partnership assets and returns of capital) under or pursuant
to the Partnership Agreement, (y) receive payments upon termination of the
Partnership Agreement, and (z) receive any other payments or distributions,
whether cash or noncash, in respect of Grantor's general partnership interest
evidenced by the Partnership Agreement; (ii) in and with respect to claims and
causes of action arising out of or relating to Company; and (iii) to have access
to Company's books and records and to other information concerning or affecting
Company;
(b) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(c) all proceeds, products, rents and profits of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
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SECTION 2. Security for Obligations. This Agreement secures, and
the Collateral is collateral security for, the prompt payment or performance in
full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and liabilities of
every nature of Grantor now or hereafter existing under or arising out of or in
connection with the Guaranty and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Grantor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
or any Lender as a preference, fraudulent transfer or otherwise (all such
obligations and liabilities being the "Underlying Debt"), and all obligations of
every nature of Grantor now or hereafter existing under this Agreement (all such
obligations of Grantor, together with the Underlying Debt, being the "Secured
Obligations").
SECTION 3. No Assumption. Notwithstanding any of the foregoing,
this Agreement shall not in any way be deemed to obligate Secured Party, any
Lender or any purchaser at a foreclosure sale under this Agreement to assume any
of Grantor's obligations, duties, expenses or liabilities under the Partnership
Agreement (including without limitation Grantor's obligations as a general
partner for the debts and obligations of Company and to manage the business and
affairs of Company) or under any and all other agreements now existing or
hereafter drafted or executed (collectively, the "Grantor Obligations") unless
Secured Party, any Lender or any such purchaser otherwise expressly agrees to
assume any or all of said Grantor Obligations in writing. In the event of
foreclosure by Secured Party on behalf of Lenders, Grantor shall remain bound
and obligated to perform the Grantor Obligations and neither Secured Party nor
any Lender shall be deemed to have assumed any of such Grantor Obligations
except as provided in the preceding sentence. Without limiting the generality of
the foregoing, neither the grant of the security interest in the Collateral in
favor of Secured Party as provided herein nor the exercise by Secured Party of
any of its rights hereunder nor any action by Secured Party in connection with a
foreclosure on the Collateral shall be deemed to constitute Secured Party or any
Lender a general partner of Company; provided, however, that in the event
Secured Party or any purchaser of Collateral at a foreclosure sale elects to
become a substituted general partner of Company in place of Grantor, Secured
Party or such purchaser, as the case may be, shall adopt in writing the
Partnership Agreement and agree to be bound by the terms and provisions thereof.
SECTION 4. Representations and Warranties. Grantor represents and
warrants as follows:
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(a) Partnership Interests in Company. Schedule A annexed hereto
correctly sets forth the general partnership interests of all general partners
of Company as of the Closing Date. The general partnership interests described
in Schedule A annexed hereto together constitute 100% of the partnership
interests in Company.
(b) Partnership Agreement. The Partnership Agreement, a true and
complete copy of which has been furnished to Secured Party, has been duly
authorized, executed and delivered by Grantor and is in full force and effect
and has not been amended or modified except as disclosed in writing to Secured
Party. No default by Grantor exists under the Partnership Agreement and no event
has occurred or exists which, with notice or lapse of time or both, would
constitute a default by Grantor thereunder. No default by any other partner
exists under the Partnership Agreement and no event has occurred or exists
which, with notice or lapse of time or both, would constitute a default by any
other partner thereunder.
(c) Ownership of Collateral. Grantor is the legal and beneficial
owner of the Collateral free and clear of any Lien except for the security
interest created by this Agreement and any Liens permitted pursuant to Section
7.2 of the Credit Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office except such as may have been filed in
favor of Secured Party relating to this Agreement.
(d) Office Locations; Other Names. The chief place of business,
the chief executive office and the office where Grantor keeps its records
regarding the Collateral is, and has been for the four month period preceding
the date hereof, located at ___________________________________. Grantor has not
in the past done, and does not now do, business under any other name (including
any trade-name or fictitious business name).
(e) Consents or Governmental Authorizations. No consent of any
other Person (including without limitation any other partner of Company or any
creditor of Grantor), and no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for either (i) the grant by Grantor of the security interest granted
hereby, (ii) the execution, delivery or performance of this Agreement by
Grantor, or (iii) the perfection of or the exercise by Secured Party of its
rights and remedies hereunder (except (x) authorization from any Gaming
Authorities for the exercise by Secured Party of certain of its rights and
remedies hereunder, (y) the filing of Uniform Commercial Code financing
statements with the Secretary of State of Nevada and the Clerk of Court of any
Louisiana parish (or recorder of mortgages for Orleans Parish), as the case may
be, and (z) as has been previously taken by or at the direction of Grantor).
(f) Perfection. This Agreement creates a valid and enforceable
security interest in the Collateral, securing the payment of the Secured
Obligations. Upon the filing of a UCC-1 financing statement with the Secretary
of State of Nevada and the Clerk of
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Court of any Louisiana parish (or recorder of mortgages for Orleans Parish),
Secured Party shall also have a perfected and first priority security interest
in the Collateral, subject only to Permitted Encumbrances, securing the payment
of the Secured Obligations.
(g) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Grantor with respect to
the Collateral is accurate and complete in all respects.
SECTION 5. Further Assurances.
(a) Grantor agrees that from time to time, at the expense of
Grantor, Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral and to preserve, protect and maintain the Collateral and the
value thereof. Without limiting the generality of the foregoing, Grantor will:
(i) at the reasonable request of Secured Party, mark conspicuously each of its
records pertaining to the Collateral with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, and (iii) at the reasonable request of Secured
Party, appear in and defend any action or proceeding that may affect Grantor's
title to or Secured Party's security interest in all or any part of the
Collateral.
(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
(c) Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantor. Grantor shall:
(a) not (i) cancel or terminate the Partnership Agreement or
consent to or accept any cancellation or termination thereof, (ii) sell, assign
(by operation of law or otherwise) or otherwise dispose of any part of its
general partnership interest in Company,
XVIII-A-5
<PAGE>
(iii) amend, supplement or otherwise modify the Partnership Agreement (as in
effect on the date hereof) except as otherwise permitted pursuant to the Credit
Agreement, (iv) waive any default under or breach of the Partnership Agreement
or waive, fail to enforce, forgive or release any right, interest or entitlement
of any kind, howsoever arising, under or in respect of the Partnership Agreement
or vary or agree to the variation in any respect of any of the provisions of the
Partnership Agreement or of the performance of any other Person under the
Partnership Agreement, or (v) petition, request or take any other legal or
administrative action which seeks, or may reasonably be expected, to rescind,
terminate or suspend the Partnership Agreement or to amend or modify the
Partnership Agreement;
(b) at its expense (i) perform and comply in all material
respects with all terms and provisions of the Partnership Agreement required to
be performed or complied with by it, (ii) maintain the Partnership Agreement in
full force and effect, (iii) enforce the Partnership Agreement in accordance
with its terms, and (iv) take all such action to that end as from time to time
may be reasonably requested by Secured Party;
(c) not create or suffer to exist any Lien upon or with respect
to any of the Collateral to secure the indebtedness or other obligations of any
Person, except for the security interest created by this Agreement and any Lien
permitted pursuant to Section 7.2 of the Credit Agreement;
(d) not permit Company to enter into any transaction of merger or
consolidation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution);
(e) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
(f) give Secured Party 30 days' prior written notice of any
change in Grantor's chief place of business, chief executive office or residence
or the office where Grantor keeps its records regarding the Collateral; and
(g) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Collateral, except
to the extent the validity thereof is being contested in good faith; provided
that Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgement, writ or warrant of attachment entered or filed against Grantor or any
of the Collateral as a result of the failure to make such payment.
SECTION 7. Voting Rights; Profits, Interest and Dividends.
(a) So long as no Event of Default shall have occurred and be
continuing:
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(i) Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or any
part thereof (including without limitation rights of approval arising
under the Partnership Agreement and the right to manage and administer
the business of Company) for any purpose not inconsistent with the
terms of this Agreement or the Credit Agreement; provided, however,
that Grantor shall give Secured Party at least five Business Days'
prior written notice of the manner in which it intends to exercise, or
the reasons for refraining from exercising, any such right; and
provided, further, that Grantor's consent to or approval of any action
otherwise permitted under this Agreement and the Credit Agreement shall
not be deemed inconsistent with the terms of this Agreement or the
Credit Agreement within the meaning of this Section 7(a)(i) and no
notice of any such voting or consent need be given to Secured Party;
(ii) Grantor shall be entitled to receive and retain, and
to utilize free and clear of the lien of this Agreement, any and all
payments, including but not limited to profits, dividends and other
distributions, paid in respect of the Collateral; provided, however,
that any and all profits, dividends, and other distributions paid or
payable other than in cash in respect of any Collateral, shall be, and
shall forthwith be delivered to Secured Party to hold as, Collateral
and shall, if received by Grantor, be received in trust for the benefit
of Secured Party, be segregated from the other property or funds of
Grantor and be forthwith delivered to Secured Party as Collateral in
the same form as so received (with all necessary endorsements); and
(iii) Secured Party shall execute and deliver (or cause to
be executed and delivered) to Grantor all such proxies and other
instruments as Grantor may from time to time reasonably request for the
purpose of enabling Grantor to exercise the voting and other consensual
rights that it is entitled to exercise pursuant to Section 7(a)(i) and
to receive the profits, dividends and other distributions that it is
authorized to receive and retain pursuant to Section 7(a)(ii).
(b) Upon the occurrence and during the continuation of an Event
of Default:
(i) upon written notice from Secured Party to Grantor,
any or all rights of Grantor to exercise the voting and other
consensual rights, and the rights to manage and administer the business
and affairs of Company, that it would otherwise be entitled to exercise
pursuant to Section 7(a)(i) shall cease, and all such rights (or such
of those rights as Secured Party may have elected) shall thereupon
become vested in Secured Party who shall thereupon have the sole right
to exercise such voting and other consensual rights;
(ii) all rights of Grantor to receive any and all
payments under or in connection with the Partnership Agreement,
including but not limited to the profits, dividends, and other
distributions which it would otherwise be authorized to receive
XVIII-A-7
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and retain pursuant to Section 7(a)(ii), shall cease, and all such
rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to receive and hold such payments as
Collateral; and
(iii) all payments which are received by Grantor contrary
to the provisions of Section 7(b)(ii) shall be received in trust for
the benefit of Secured Party, shall be segregated from other funds of
Grantor and shall be forthwith paid over to Secured Party as Collateral
in the same form as so received (with any necessary endorsement).
SECTION 8. Secured Party Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints Secured Party as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse and collect all instruments made payable
to Grantor representing any payment of profits, dividends or any other
distribution in respect of any of the Collateral;
(c) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral; and
(d) to do, at Secured Party's option and Grantor's expense, at
any time or from time to time, all acts and things that Secured Party deems
necessary to protect, preserve or realize upon the Collateral and Secured
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as Grantor might do.
SECTION 9. Secured Party May Perform. If Grantor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Secured Party
incurred in connection therewith shall be payable by Grantor under Section 13
hereof.
SECTION 10. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for monies actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of
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any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment substantially equal
to that which Secured Party accords its own property of a similar nature.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (or, in the case of
Louisiana, the Louisiana Commercial Laws - Secured Transactions (Louisiana
Revised Statutes, Title 10, Chapter 9))(the "Code") (whether or not the Code
applies to the affected Collateral), and Secured Party may also in its sole
discretion, without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange
or broker's board or at any of Secured Party's offices or elsewhere, for cash,
on credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Secured Party may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
the Collateral. Secured Party or any Lender may be the purchaser of any or all
of the Collateral at any such sale and Secured Party, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Grantor, and Grantor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Grantor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Grantor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantor shall be liable for
the
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deficiency and the fees of any attorneys employed by Secured Party to collect
such deficiency.
(b) Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Collateral conducted without prior registration or qualification of such
Collateral under the Securities Act and/or such state securities laws, to limit
purchasers to those who will agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Grantor acknowledges that any such private sales
may be at prices and on terms less favorable than those obtainable through a
public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances, Grantor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit Company to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if Company would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any
or all of the Collateral, upon written request, Grantor shall and shall cause
Company from time to time to furnish to Secured Party all such information as
Secured Party may reasonably request in order to determine the number and nature
of the interests included in the Collateral which may be sold by Secured Party
in exempt transactions under the Securities Act and the rules and regulations of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.
(d) Further, as to all Collateral now or hereafter located in the
State of Louisiana, or as to which the laws of the State of Louisiana may now be
or hereafter become applicable, Grantor hereby acknowledges the Secured
Obligations, whether now or existing or to arise hereafter, and confesses
judgment thereon if the Secured Obligations are not paid at maturity, and does
by these presents consent, agree and stipulate that if any portion of the
Secured obligations is not promptly and fully paid when due, or if there should
occur an Event of Default, the Secured Obligations shall, at the option of the
Secured Party become immediately due and payable and it shall be lawful for the
Secured Party, without making a demand and without notice or putting in default,
the same being hereby expressly waived, to cause all and singular the Collateral
to be seized and sold by executory process, without appraisement (appraisement
being hereby expressly waived), either in its entirety or in lots or parcels, as
the Secured Party may determine, to the highest bidder for cash, or on such
terms as plaintiff in such proceedings may direct.
Grantor hereby expressly waives: (a) the benefit of appraisement,
as provided in Articles 2332, 2336, 2723 and 2724, Louisiana Code of Civil
Procedure, and all other laws conferring the same; (b) the demand and three (3)
days delays accorded by Articles 2639 and 2721, Louisiana Code of Civil
Procedure; (c) the notice of seizure
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required by Articles 2293 and 2721, Louisiana Code of Civil Procedure;
(d) the three (3) days delay provided by Articles 2331 and 2722,
Louisiana Code of Civil Procedure; and (e) the benefit of the other provisions
of Articles 2331, 2722 and 2723, Louisiana Code of Civil Procedure, and the
benefit of any other Articles or laws relating to rights of appraisement,
notice, or delay not specifically mentioned above; and Grantor expressly agrees
to the immediate seizure of the Collateral in the event of suit herein. Further,
Grantor acknowledges that Secured Party shall have all rights to appointment of
a keeper in connection with any action to foreclose the lien hereof, all in
accordance with Louisiana Revised Statutes 9:5136 et seq. The compensation of
the keeper is hereby fixed at 1% of the amount due or sued for or claimed or
sought to be protected or enforced, and shall constitute a portion of the
Secured Obligations secured by the lien hereof.
SECTION 12. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured Party
as Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 13;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and
THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
SECTION 13. Indemnity and Expenses.
(a) Grantor agrees to indemnify Secured Party and each Lender
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
XVIII-A-11
<PAGE>
(b) Grantor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (ii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iii) the
failure by Grantor to perform or observe any of the provisions hereof.
SECTION 14. Regulatory Matters. Grantor and Secured Party
acknowledge and agree that:
(a) The terms and provisions of this Agreement and the rights and
obligations created hereunder shall be subject to compliance with all applicable
Gaming Laws.
(b) Without limiting the generality of the foregoing, all
required prior approvals under applicable Gaming Laws will be obtained in
connection with Secured Party's exercise of any of the remedies set forth in
Section 11 upon the occurrence of an Event of Default including, without
limitation, any separate prior approvals required in connection with the sale,
transfer or other disposition of the Collateral; and
(c) Grantor agrees to assist Secured Party in obtaining all
approvals of the Gaming Authorities or any other Governmental Authority that are
required by law for or in connection with any action or transaction contemplated
by this Agreement and, at Secured Party's reasonable request upon the occurrence
and during the continuation of an Event of Default, to prepare, sign and file
with the appropriate Gaming Authorities the transferor's portion of any
application or applications for consent to the transfer of control thereof
necessary or appropriate under applicable Gaming Laws for approval of any sale
or transfer of the Collateral pursuant to the exercise of Secured Party's
remedies under Section 11.
SECTION 15. Continuing Security Interest; Transfer of Loans. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the indefeasible payment in full
of the Secured Obligations, the cancellation or termination of the Commitments
and the cancellation or expiration of all outstanding Letters of Credit, (b) be
binding upon Grantor, its successors and assigns, and (c) inure, together with
the rights and remedies of Secured Party hereunder, to the benefit of Secured
Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the indefeasible payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such
XVIII-A-12
<PAGE>
termination Secured Party will, at Grantor's expense, execute and
deliver to Grantor such documents as Grantor shall reasonably request to
evidence such termination.
SECTION 16. Secured Party as Agent.
(c) Secured Party has been appointed to act as Secured Party
hereunder by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement.
(d) Secured Party shall at all times be the same Person that is
Agent under the Credit Agreement. Written notice of resignation by Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Secured Party under this Agreement; removal of Agent pursuant
to subsection 9.5 of the Credit Agreement shall also constitute removal as
Secured Party under this Agreement; and appointment of a successor Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of such successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Secured Party
hereunder.
SECTION 17. Amendments; Etc. No amendment or waiver of any
provision of this Agreement, or consent to any departure by Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by Secured Party, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
SECTION 18. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or five
XVIII-A-13
<PAGE>
Business Days after depositing it in the United States mail with postage
prepaid and properly addressed. For the purposes hereof, the address of
each party hereto shall be as set forth under such party's name on the signature
pages hereof or, as to either party, such other address as shall be designated
by such party in a written notice delivered to the other party hereto.
SECTION 19. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 20. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 21. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 22. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEVADA. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of Nevada are used herein as therein defined.
SECTION 23. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT GRANTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND
XVIII-A-14
<PAGE>
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Grantor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Grantor at its address provided in Section 18, such
service being hereby acknowledged by Grantor to be sufficient for personal
jurisdiction in any action against Grantor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Secured Party to bring proceedings against Grantor in the courts of any
other jurisdiction.
SECTION 24. Waiver of Jury Trial. GRANTOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all- encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Grantor and Secured Party
each acknowledge that this waiver is a material inducement for Grantor and
Secured Party to enter into a business relationship, that Grantor and Secured
Party have already relied on this waiver in entering into this Agreement and
that each will continue to rely on this waiver in their related future dealings.
Grantor and Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
SECTION 25. Counterparts. This Agreement may be executed in one
or more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XVIII-A-15
<PAGE>
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS RIVERBOAT, LLC,
as Grantor
By: ____________________________________
Title: _________________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-1
<PAGE>
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS RIVERBOAT MANAGEMENT, INC.,
as Grantor
By: ____________________________________
Title: _________________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-1
<PAGE>
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Secured Party
By: ____________________________________
Title: __________________________________
Notice Address:
3800 Howard Hughes Parkway, Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-2
<PAGE>
SCHEDULE A
Partnership Interests
<TABLE>
<CAPTION>
Partner Percentage Interest
------- -------------------
<S> <C>
Players Riverboat, LLC 99%
Players Riverboat Management, Inc. 1%
</TABLE>
A-1
<PAGE>
EXHIBIT 10.52
EXHIBIT VIII
[FORM OF COLLATERAL ACCOUNT AGREEMENT]
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated
as of August 25, 1995 and entered into by and between PLAYERS INTERNATIONAL,
INC., a Nevada corporation ("Pledgor"), and FIRST INTERSTATE BANK OF NEVADA,
N.A. ("FIB"), as administrative agent for and representative of (in such
capacity herein called "Secured Party") the financial institutions ("Lenders")
party to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party, Lenders, FIB and Bankers Trust Company, as
Managing Agents, and FIB and BT Securities Corporation, as Co-Arrangers, have
entered into a Credit Agreement dated as of August 25, 1995 (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Pledgor
pursuant to which Lenders have made certain commitments, subject to the terms
and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
B. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. Certain Definitions. The following terms used in
this Agreement shall have the following meanings:
"Collateral" means (i) the Collateral Account, (ii) all amounts
on deposit from time to time in the Collateral Account, (iii) all interest,
cash, instruments, securities and other
VIII-1
<PAGE>
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Collateral, and (iv) to the
extent not covered by clauses (i) through (iii) above, all proceeds of any or
all of the foregoing Collateral.
"Collateral Account" means the restricted deposit account
established and maintained by Pledgor with Secured Party pursuant to Section
2(a).
"Secured Obligations" means all obligations and liabilities of
every nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and all
extensions or renewals thereof, whether for principal, interest (including
without limitation interest that, but for the filing of a petition in bankruptcy
with respect to Pledgor, would accrue on such obligations), reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnities or otherwise,
whether voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a preference, fraudu-
lent transfer or otherwise, and all obligations of every nature of Pledgor now
or hereafter existing under this Agreement.
SECTION 2. Establishment and Operation of Collateral Account.
(a) Pledgor hereby authorizes and directs Secured Party to
establish and maintain at its office at the Funding and Payment Office, as a
blocked account in the name of Pledgor but under the sole dominion and control
of Secured Party, a restricted deposit account designated as "Players
International, Inc. Collateral Account".
(b) The Collateral Account shall be operated in accordance with
the terms of this Agreement.
(c) Secured Party shall be fully protected and shall suffer no
liability in acting in accordance with any written instructions reasonably
believed by it to have been given by Pledgor with respect to any aspect of the
operation of the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
VIII-2
<PAGE>
SECTION 3. Deposits of Cash Collateral.
(a) All deposits of funds in the Collateral Account shall be made
by wire transfer (or, if applicable, by intra-bank transfer from another account
of Pledgor) of immediately available funds, in each case addressed as follows:
Account No.:
ABA No.:
Reference:
Attention:
Pledgor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount (the "Aggregate Available Amount") equal to the maximum
amount that may at any time be drawn under all Letters of Credit then
outstanding under the Credit Agreement, Pledgor shall deliver funds in such an
amount for deposit in the Collateral Account in accordance with Section 3(a). If
for any reason the aggregate amount delivered by Pledgor for deposit in the
Collateral Account as aforesaid is less than the Aggregate Available Amount, the
aggregate amount so delivered by Pledgor shall be apportioned among all
outstanding Letters of Credit for purposes of this Section 3(b) in accordance
with the ratio of the maximum amount available for drawing under each such
Letter of Credit (as to such Letter of Credit, the "Maximum Available Amount")
to the Aggregate Available Amount. Upon any drawing under any outstanding Letter
of Credit in respect of which Pledgor has deposited in the Collateral Account
any amounts described above, Secured Party shall apply such amounts to reimburse
itself, as Administrative Agent, for the amount of such drawing. In the event of
termination, cancellation or expiration of any Letter of Credit in respect of
which Pledgor has deposited in the Collateral Account any amounts described
above, or in the event of any reduction in the Maximum Available Amount under
such Letter of Credit, Secured Party shall apply the amount then on deposit in
the Collateral Account in respect of such Letter of Credit (less, in the case of
such a reduction, the Maximum Available Amount under such Letter of Credit
immediately after such reduction) first, to the payment of any amounts payable
to Secured Party pursuant to Section 13, second, to the extent of any excess, to
the cash collateralization pursuant to the terms of this Agreement of any
outstanding Letters of Credit in respect of which Pledgor has failed to pay all
or a portion of the amounts described above (such cash collateralization to be
apportioned among all such Letters of Credit in the manner described above),
third, to the extent of any further excess, to the payment of any other
outstanding Secured Obligations, and fourth, to the extent of any further
excess, to the payment to whomsoever shall be lawfully entitled to receive such
funds.
VIII-3
<PAGE>
SECTION 4. Pledge of Security for Secured Obligations. Pledgor
hereby pledges and assigns to Secured Party, and hereby grants to Secured Party
a security interest in, all of Pledgor's right, title and interest in and to the
Collateral as collateral security for the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations.
SECTION 5. No Investment of Amounts in the Collateral Account;
Interest on Amounts in the Collateral Account.
(a) Cash held by Secured Party in the Collateral Account shall not
be invested by Secured Party but instead shall be maintained as a cash deposit
in the Collateral Account pending application thereof as elsewhere provided in
this Agreement.
(b) To the extent permitted under Regulation Q of the Board of
Governors of the Federal Reserve System, any cash held in the Collateral Account
shall bear interest at the standard rate paid by Secured Party to its customers
for deposits of like amounts and terms.
(c) Subject to Secured Party's rights under Section 12, any
interest earned on deposits of cash in the Collateral Account in accordance with
Section 5(b) shall be deposited directly in, and held in the Collateral Account
and applied in accordance with Section 3(b).
SECTION 6. Representations and Warranties. Pledgor represents and
warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of
transfer thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free and
clear of any Lien except for the security interest created by this Agreement.
(b) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except (i) the report required to be
filed by Pledgor pursuant to Nevada Gaming Commission Regulation 8.130, (ii)
authorization from any Gaming Authorities for the exercise by Secured Party of
certain of its rights and remedies hereunder, and (iii) as may have been taken
by or at the direction of Pledgor).
VIII-4
<PAGE>
(c) Perfection. The pledge and assignment of the Collateral
pursuant to this Agreement creates, to the extent permitted by applicable law
(including Gaming Laws) a valid and perfected first priority security interest
in the Collateral, securing the payment of the Secured Obligations.
(d) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Pledgor with respect to
the Collateral is accurate and complete in all respects.
SECTION 7. Further Assurances. Pledgor agrees that from time to
time, at the expense of Pledgor, Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Secured Party may request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, Pledgor will: (a) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Secured Party may request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
and (b) at Secured Party's request, appear in and defend any action or
proceeding that may affect Pledgor's title to or Secured Party's security
interest in all or any part of the Collateral.
SECTION 8. Transfers and other Liens. Pledgor agrees that it will
not (a) sell, assign (by operation of law or otherwise) or otherwise dispose of
any of the Collateral or (b) create or suffer to exist any Lien upon or with
respect to any of the Collateral, except for the security interest under this
Agreement.
SECTION 9. Secured Party Appointed Attorney-in-Fact. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Collateral without the
signature of Pledgor.
SECTION 10. Secured Party May Perform. If Pledgor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 13.
SECTION 11. Standard of Care. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody
VIII-5
<PAGE>
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, Secured Party shall have no duty as to any Collateral,
it being understood that Secured Party shall have no responsibility for (a)
taking any necessary steps (other than steps taken in accordance with the
standard of care set forth above to maintain possession of the Collateral) to
preserve rights against any parties with respect to any Collateral or (b) taking
any necessary steps to collect or realize upon the Secured Obligations or any
guarantee therefor, or any part thereof, or any of the Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property of like kind.
SECTION 12. Remedies.
(a) If any Event of Default or Potential Event of Default shall
have occurred and be continuing, Secured Party may (i) transfer any or all of
the Collateral to an account established in Secured Party's name (whether at
Secured Party or otherwise) or (ii) otherwise register title to any Collateral
in the name of Secured Party or one of its nominees or agents, without reference
to any interest of Pledgor.
(b) If any Event of Default shall have occurred and be continuing,
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether
or not the Code applies to the affected Collateral).
(c) If the proceeds of any disposition of the Collateral are
insufficient to pay all the Secured Obligations, Pledgor shall be liable for the
deficiency and the fees of any attorneys employed by Secured Party to collect
such deficiency.
(d) Anything contained herein to the contrary notwithstanding, any
of the Collateral consisting of cash held by Secured Party in the Collateral
Account shall be subject to Secured Party's rights of set-off under subsection
10.4 of the Credit Agreement.
SECTION 13. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Secured Party and each Lender from
and against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
VIII-6
<PAGE>
(b) Pledgor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Pledgor to
perform or observe any of the provisions hereof.
SECTION 14. Continuing Security Interest; Transfer of Loans. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the indefeasible payment in full
of the Secured Obligations, the cancellation or termination of the Commitments
and the cancellation or expiration of all outstanding Letters of Credit, (b) be
binding upon Pledgor, its successors and assigns, and (c) inure, together with
the rights and remedies of Secured Party hereunder, to the benefit of Secured
Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the indefeasible payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Pledgor. Upon any such termination Secured Party shall, at Pledgor's
expense, execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence such termination and Pledgor shall be entitled to
the return, upon its request and at its expense, against receipt and without
recourse to Secured Party, of such of the Collateral as shall not have been
otherwise applied pursuant to the terms hereof.
SECTION 15. Secured Party as Administrative Agent.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a
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successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Administrative Agent under subsection 9.5 of the Credit Agreement
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Secured Party under this Agreement, and
the retiring or removed Secured Party under this Agreement shall promptly (i)
transfer to such successor Secured Party all sums held by Secured Party
hereunder (which shall be deposited in a new Collateral Account established and
maintained by such successor Secured Party), together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Secured Party under this Agreement, and (ii) execute and
deliver to such successor Secured Party such amendments to financing statements,
and take such other actions, as may be necessary or appropriate in connection
with the assignment to such successor Secured Party of the security interests
created hereunder, whereupon such retiring or removed Secured Party shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Administrative Agent's resignation or removal hereunder as
Secured Party, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
SECTION 16. Amendments; Etc. No amendment or waiver of any
provision of this Agreement, or consent to any departure by Pledgor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by Secured Party, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
SECTION 17. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or five Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 18. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
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SECTION 19. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 20. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE
OF NEVADA. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the Uniform Commercial Code in the State of Nevada
are used herein as therein defined.
SECTION 22. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 17, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any action against Pledgor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Secured Party to bring proceedings against Pledgor in the courts of any
other jurisdiction.
SECTION 23. Waiver of Jury Trial. PLEDGOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of
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any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Pledgor and Secured Party each acknowledge that this waiver is
a material inducement for Pledgor and Secured Party to enter into a business
relationship, that Pledgor and Secured Party have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Pledgor and Secured Party further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 24. Counterparts. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
PLAYERS INTERNATIONAL, INC., as Pledgor
By: __________________________________
Title:
Notice Address:
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and
Chief Financial Officer
With copies to:
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
and
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
FIRST INTERSTATE BANK OF NEVADA, N.A., as
Secured Party
By: __________________________________
Title:
Notice Address:
3800 Howard Hughes Parkway, Suite 400
Las Vegas, Nevada 89109
S-1
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Attention: Steve Byrne
S-2
<PAGE>
EXHIBIT 10.53
EXHIBIT XIII-C
FORM OF NEVADA DEED OF TRUST
Recording requested by:
This Instrument prepared by, and when recorded mail to:
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071-2899
Attention: Dean Adam Willis, Esq.
(267,718-007)
(Space above line is for Recorder's use)
DEED OF TRUST, FIXTURE FILING
AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
NOTICE: THE OBLIGATIONS SECURED HEREBY INCLUDE REVOLVING CREDIT OBLIGATIONS
WHICH PERMIT BORROWING, REPAYMENT AND REBORROWING. INTEREST ON OBLIGATIONS
SECURED HEREBY ACCRUES AT RATES WHICH MAY FLUCTUATE FROM TIME TO TIME. THIS
INSTRUMENT SECURES FUTURE ADVANCES. THIS DEED OF TRUST SHALL BE DEEMED TO BE A
CONSTRUCTION MORTGAGE UNDER NEVADA REVISED STATUTES 104.9313(1)(c).
THIS DEED OF TRUST, FIXTURE FILING AND SECURITY AGREEMENT WITH
ASSIGNMENT OF RENTS (this "Deed of Trust"), made as of the _____ day of
_______________, 1995, by and among ________________________
______________________________, a ________________________, as debtor and
trustor ("Trustor"), ________________________________________, a _______________
corporation, as trustee ("Trustee"), and FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Administrative Agent on behalf of itself and each of the Lenders (as defined
and described hereinbelow), as secured party and beneficiary ("Beneficiary"),
W I T N E S S E T H:
THAT TRUSTOR HEREBY:
Grants, bargains, sells, transfers, conveys and assigns the following
described real property and related collateral to Trustee, IN TRUST, WITH POWER
OF SALE, to have and to hold the same unto Trustee and its successors in
interest, for the benefit of and on behalf of Beneficiary, upon the trusts,
covenants and agreements herein expressed:
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DESCRIPTION OF REAL PROPERTY COLLATERAL
All of the following real property, and the interests of Trustor
therein, situate in the County of Clark, State of Nevada: (i) those certain
parcels of real property leased by Trustor pursuant to, and all of Trustor's
rights under the leasehold estates and other interests arising out of, those
certain lease agreements set forth on Exhibit B attached hereto and incorporated
herein by reference (the "Ground Leases"), as the same may hereafter be amended,
supplemented, extended, renamed or otherwise modified or assigned, which parcels
are more particularly described in Exhibit A-1 attached hereto and incorporated
herein by reference (the "Leased Land"), and (ii) those certain parcels of real
property owned by Trustor and more particularly described on Exhibit A-2
attached hereto and incorporated herein by reference (the "Fee Land"; the Leased
Land and the Fee Land being hereinafter referred to collectively as the "Land");
Together with all right, title and interest of Trustor, now owned or
hereafter acquired, in and to any land lying within the right-of-way of any
street, open or proposed, adjoining any of the Land and any and all sidewalks,
bridges, elevated walkways, tunnels, alleys, strips and gores of land adjacent
to, connecting or used in connection with any of the Land, with appurtenances
("Adjacent Interests");
Together with all buildings, structures and all other improvements and
fixtures that are or may hereafter be erected or placed on or in the Land and
all rights and interests of Trustor in and to all buildings, structures and
other improvements and fixtures that are or may hereafter be erected or placed
on or in Adjacent Interests (collectively, the "Improvements");
Together with all and singular the easements, tenements, hereditaments
and appurtenances belonging or in anywise appertaining to any of the Land,
Adjacent Interests or Improvements (collectively, the "Appurtenances");
Together with all rents, issues, profits, royalties and other income
of or from any of the foregoing or of or from any of the Leases, as hereinafter
defined (collectively, the "Rents"), subject, however, in the case of Rents, to
the absolute assignment given to Beneficiary in Section 12 hereof, to which
Section 12 this grant to the Trustee is subject and subordinate;
Together with any right of Trustor under any Ground Lease to purchase
the fee interest of the lessor thereunder (the "Options");
Together with all leasehold estate, right, title and interest of
Trustor in and to all leases, subleases, licenses, concessions, franchises and
other use or occupancy agreements (excepting, however, agreements made by
Trustor in the ordinary course of business for short-term use by members of the
public of guest rooms and public rooms, including banquet and meeting
facilities, located in the Improvements), and any amendments, modifications,
extensions or renewals thereof (collectively, "Leases") covering any of the
Land, Adjacent Interests, Improvements or Appurtenances, now or hereafter
existing or entered into, and all right, title and interest of Trustor
thereunder, including, without limitation, the right to all security deposits,
advance rentals, other deposits, and all payments of similar nature, relating
thereto;
Together with all water rights and rights to the use of water now or
hereafter appurtenant to or used in connection with any of the Land, Adjacent
Interests, Improvements or Appurtenances ("Water Rights");
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Together with any and all other estate, right, title, interest,
property, possession, claim or demand, in law or in equity, which Trustor now
has or may hereafter acquire in or to any of the Land, Adjacent Interests,
Improvements, Appurtenances, Rents, Options, Leases, Ground Leases, and Water
Rights, or pertaining or appurtenant thereto (including, without limitation, any
fee interest of a lessor under a Ground Lease that may hereafter be acquired
upon Trustor exercising an Option or otherwise acquiring any fee interest of a
lessor under a Ground Lease) and all right, title, and interest of Trustor in
and to the agreements listed on Exhibit C attached hereto and incorporated
herein by reference (the "Development Contracts") and all reversions and
remainders thereof, and all tenements, hereditaments and appurtenances thereunto
belonging or in any wise appertaining thereto ("Other Interests") (said Land,
Adjacent Interests, Improvements, Appurtenances, Rents, Options, Leases, Ground
Leases, Water Rights and Other Interests may be referred to herein as the "Real
Property"); and
THAT TRUSTOR HEREBY:
Grants a security interest, pursuant to the Nevada Uniform Commercial
Code -- Secured Transactions, to Beneficiary, on the terms and provisions (by
this reference incorporated herein with respect to the security interest herein
granted and the rights and obligations of the parties with respect to the
Personal Property, as hereinafter defined, but for no other purpose) set forth
in that certain Subsidiary Security Agreement dated as of even date herewith by
and between Trustor, as Grantor and Debtor, and Beneficiary, as Secured Party
(the "Security Agreement"), in all of the following described personal property,
and the interests of Trustor therein, whether now owned or hereafter acquired
(collectively, the "Personal Property"):
DESCRIPTION OF PERSONAL PROPERTY COLLATERAL
(a) All present and future chattels, furniture, furnishings, goods,
equipment, fixtures and all other tangible personal property, of whatever kind
and nature, now or hereafter used in connection with or placed or located in or
on any part of the Real Property (including, without limitation, any building or
structure that is now or that may hereafter be erected on the Real Property),
including, but not limited to, machinery, materials, goods and equipment now or
hereafter used in the construction or operation of the hotel, casino,
restaurant, entertainment and shopping complex constructed and to be constructed
on the Real Property or portions thereof (the "Project") (including, without
limitation, air conditioning, heating, electrical, lighting, fire fighting and
fire prevention, food and beverage service, laundry, plumbing, refrigeration,
security, sound, signaling, telephone, television, window washing and other
equipment and fixtures, of whatever kind or nature, including generators,
transformers, switching gear, boilers, burners, furnaces, piping, sprinklers,
sinks, tubs, valves, compressors, motors, carts, dumb waiters, elevators and
other lifts, floor coverings, hardware, keys, locks, organs, pianos, planters,
railings, scales, shelving, signs, tools, machinery, molds, dies, drills,
presses, planers, saws, furniture, business fixtures, trade fixtures, electric,
gas and other motor vehicles, uniforms, vacuum cleaners, hotel furniture,
furnishings and equipment, bathroom furniture and furnishings (including towels,
bathmats, hamperettes, shower curtains and other bath linens), beds and bedding
(including mattresses, springs, pillows, bed pads, sheets, blankets, comforters,
spreads and other bed linens and furnishings), bric-a-brac, chairs, chests,
vanities, secretaries, bureaus, chiffonniers, love seats, benches, costumers,
smoking stands, sand jars, desks, dressers, hangings, paintings, pictures,
frames, sculptures, lamps, light bulbs, mirrors, night stands, ornaments,
radios, stereo equipment, sofas, statuary, tables, telephones,
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televisions, vases, window coverings, foodstuffs, beverages (including beer,
wine, liquor and other alcoholic beverages), and other consumables (including
soap, shampoo, cleaning supplies and paper goods), cutlery, cooking, baking and
other kitchen utensils and apparatus (including crockery, fryers, grills,
kettles, mixers, pots, pans, pails, racks, steamers and toasters), china and
other dishes, flatware, glassware, hollowware, serving pieces, trays, table
linens, washers, dryers, irons, ironing boards and other ironing equipment,
cables, outlets, plugs, wiring and related apparatus and fixtures, card readers,
cash registers, adding machines, calculators, computers, keyboards, monitors,
printers, printing equipment, envelopes, stationary, posting machines, blank
forms, typewriters, typewriter stands, other office and accounting equipment and
supplies, time stamps, time recorders, bookkeeping machines, checking machines,
payroll machines, computer reservations systems, equipment used in the operation
of casinos on the Real Property (including but not limited to, gaming devices
and associated equipment (as defined in Nevada Revised Statutes Chapter 463),
including but not limited to, slot machines, cards, poker chips and gaming
tables) and all other goods, equipment, furnishings, apparatus and fixtures that
are now or may hereafter be located at or used at or in connection with the Real
Property) and all other tangible personal property used or to be used at or in
connection with, or placed or to be placed in, rooms, halls, lounges, offices,
lobbies, lavatories, basements, cellars, vaults or other portions of the Project
or of any other building or buildings hereafter constructed or erected thereon,
whether herein enumerated or not, and whether or not contained in any such
building, and which are used or to be used or useful in the operation and
maintenance thereof, or in any bar, casino, hotel, restaurant, store, health
spa, salon or other business conducted thereon, together with all replacements
and substitutions for any and all personal property in which Trustor has an
interest, including without limitation such goods and equipment as shall from
time to time be located, placed, installed or used in or upon, or procured for
use, or to be used or useful in connection with the operation of the whole, or
any part of, the Project and all parts thereof and all accessions thereto;
(b) All present and future goods, including, without limitation, all
consumer goods, inventory, equipment, and other supplies, of whatever kind or
nature, and any and all other goods, wherever located, used or to be used in
connection with or in the conduct of Trustor's business;
(c) All present and future inventory and merchandise in all of its
forms (including, but not limited to, (i) all goods held by Trustor for sale or
lease or to be furnished under contracts of service or so leased or furnished,
(ii) all raw materials, work in process, finished goods, and materials used or
consumed in the manufacture, packing, shipping, advertising, selling, leasing,
furnishing or production of such inventory or otherwise used or consumed in
Trustor's business, (iii) all goods in which Trustor has an interest in mass or
a joint or other interest or right of any kind, (iv) all goods that are returned
to or repossessed by Trustor, and (v) all packing materials, supplies and
containers relating to or used in connection with any of the foregoing, and all
accessions thereto and products thereof and all negotiable documents of title
(including without limitation warehouse receipts, dock receipts and bills of
lading) issued by any person covering any of the foregoing;
(d) All present and future accounts, accounts receivable, rentals,
revenues, receipts and income of any other nature derived from or received with
respect to rooms, banquet facilities, convention facilities, retail premises,
bars, restaurants, casinos, parking lots and garages and any other facilities on
the Real Property and services and amenities provided in connection therewith,
agreements, contracts, leases, contract rights, rights to payment, instruments,
documents, chattel paper, security agreements, guaranties, undertakings, surety
bonds, insurance policies, condemnation deposits and awards, notes and drafts,
securities, certificates of deposit and the right to receive all payments
thereon or
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in respect thereof (whether principal, interest, fees or otherwise), contract
rights (other than rights under contracts or governmental permits that may not
be transferred by law), including, without limitation, rights to all deposits
from tenants and other users of the Project, rights under all contracts relating
to the construction, renovation or restoration of any of the improvements now or
hereafter located on the Real Property or the financing thereof, all rights
under payment or performance bonds, and all rights under the Development
Contracts, warranties, guaranties and the Options, and all rights to payment
from any credit/charge card organization or entity such as or similar to, and
including, without limitation, the organizations or entities that sponsor and
administer, respectively, the American Express Card, the Carte Blanche Card, the
Diners Club Card, the Discover Card, the MasterCard and the Visa Card, books of
account, and principal, interest and payments due on account of goods sold,
services rendered, loans made or credit extended, on or in connection with the
Project and all forms of obligations owing to and rights of Trustor or in which
Trustor may have any interest, however created or arising;
(e) All present and future general intangibles (including but not
limited to all governmental permits relating to construction or other activities
on the premises), the Options, all tax refunds of every kind and nature to which
Trustor now or hereafter may become entitled, however arising, all other
refunds, and all deposits, goodwill, choses in action, rights to payment or
performance, gambling debts or gaming debts owed to Trustor by Trustor's patrons
(whether or not evidenced by a note), judgments taken on any rights or claims
included in the Property (as hereinafter defined), trade secrets, computer
programs, software, customer lists, business names, trademarks, trade names and
service marks (including, but not limited to: "____________________________" and
any derivation thereof, including any and all state and federal applications and
registrations thereof), patents, patent applications, licenses, copyrights,
technology, processes, proprietary information and insurance proceeds;
(f) All present and future deposit accounts of Trustor, including,
without limitation, [the _______________________________ Account maintained at
the office of Beneficiary,] any demand, time, savings, passbook or like account
maintained by Trustor with any bank, savings and loan association, credit union
or like organization, and all money, cash and cash equivalents of Trustor,
whether or not deposited in any such deposit account;
(g) All present and future books and records, including, without
limitation, books of account and ledgers of every kind and nature, ledger cards,
computer programs, tapes, disks and other information storage devices, all
related data processing software, and all electronically recorded data relating
to Trustor or its business or the Project, all receptacles and containers for
such records, and all files and correspondence;
(h) All present and future stocks, bonds, debentures, securities,
subscription rights, options, warrants, puts, calls, certificates, partnership
interests, joint venture interests, investments, brokerage accounts and all
rights, preferences, privileges, dividends, distributions, redemption payments
and liquidation payments received or receivable with respect thereto;
(i) All present and future right, title and interest of Trustor in and
to all Leases, whether or not specifically herein described, that now or may
hereafter pertain to or affect the Real Property or any portion thereof, and all
amendments to the same, including, but not limited to, the following: (aa) all
payments due and to become due under such Leases and Ground Leases, whether as
rent, damages, insurance payments, condemnation awards, or otherwise; (bb) all
claims, rights, powers,
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privileges and remedies under such Leases and Ground Leases; and (cc) all rights
of the Trustor under such Leases and Ground Leases to exercise any election or
option (including, without limitation, the Options), or to give or receive any
notice, consent, waiver or approval, or to accept any surrender of the premises
or any part thereof, together with full power and authority in the name of the
Trustor, or otherwise, to demand and receive, enforce, collect, and receipt for
any or all of the foregoing, to endorse or execute any checks or any instruments
or orders, to file any claims, and to take any other action that Beneficiary may
deem necessary or advisable in connection therewith;
(j) All present and future maps, plans, specifications, surveys,
studies, reports, data and drawings (including, without limitation,
architectural, structural, mechanical and engineering plans and specifications,
studies, data and drawings) prepared for or relating to the development of the
Project or the construction, renovation or restoration of any improvements on
the Real Property or the extraction of minerals, sand, gravel or other valuable
substances from the Real Property, together with all amendments and
modifications thereto;
(k) All present and future licenses, permits, variances, special
permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including options, option rights and
contract rights), other than those (including non-transferable gaming permits)
that may not be transferred by law, now or hereafter obtained by Trustor from
any governmental authority having or claiming jurisdiction over the Project, the
Real Property or any other element of the Property or providing access thereto,
or the operation of any business on, at, or from the Project;
(l) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and improvements to or of or with respect to any of the foregoing;
(m) All other fixtures and storage and office facilities, and all
accessions thereto and products thereof and all water stock relating to the Real
Property;
(n) All other tangible and intangible personal property of Trustor;
(o) All rights, remedies, powers and privileges of Trustor with
respect to any of the foregoing; and
(p) Any and all proceeds, products, rents, income and profits of any
of the foregoing, including, without limitation, all money, accounts, general
intangibles, deposit accounts, documents, instruments, chattel paper, goods,
insurance proceeds (whether or not the Beneficiary is the loss payee), and any
other tangible or intangible property received upon the sale or disposition of
any of the foregoing (it being agreed, for purposes hereof, that the term
"proceeds" includes whatever is receivable or received when any of the Property
is sold, collected, exchanged or otherwise disposed of, whether such disposition
is voluntary or involuntary)
(The Real Property, the Personal Property and all of the other
collateral described above may hereinafter be collectively referred to as the
"Property".)
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FOR THE PURPOSE OF SECURING:
First: Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. 362(a)), of all obligations and
liabilities of every nature of Trustor now or hereafter existing under or
arising out of or in connection with that certain Guaranty of even date herewith
executed by Trustor (and others) in favor of Beneficiary (as the same may be
amended, modified or supplemented from time to time, the "Guaranty"). The
Guaranty guaranties the obligations of Players International, Inc., a Nevada
corporation ("Borrower") under that certain Credit Agreement executed
concurrently herewith by Borrower, First Interstate Bank of Nevada, N.A., and
Bankers Trust Company, as Managing Agents, BT Securities Corporation, as a
Co-Arranger, and the Lenders listed therein as lenders (the "Lenders") and First
Interstate Bank of Nevada, N.A., as a Co-Arranger and Administrative Agent,
together with any and all renewals, extensions, amendments, modifications,
rearrangements, replacements, restatements, substitutions and addendums thereof
or thereto (herein referred to as the "Credit Agreement"), and the promissory
notes issued to the Lenders to evidence such obligations and liabilities,
together with any and all renewals, extensions, amendments, modifications,
rearrangements, replacements, restatements, substitutions and addendums thereof
or thereto (herein referred to as the "Notes"), whether for principal in the
amount of One Hundred Twenty Million Dollars ($120,000,000) or such principal
amount as may be advanced and remain unpaid or for interest (including, without
limitation, interest that, but for the filing of a petition in bankruptcy with
respect to Trustor, would accrue on such obligations), reimbursement of amounts
drawn under letters of credit, fees, expenses, indemnities or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Beneficiary or any such Lender as a preference,
fraudulent transfer or otherwise.
Second: Payment and performance of every obligation, covenant, promise
and agreement of Trustor herein contained (excepting, however, the obligations
of Trustor under Section 5(c) hereof), or incorporated herein by reference,
including any sums paid or advanced by Beneficiary or Trustee pursuant to the
terms hereof.
Third: Payment of the expenses and costs incurred or paid by
Beneficiary in the preservation and enforcement of the rights and remedies of
Beneficiary and the duties and liabilities of Trustor hereunder, including, but
not by way of limitation, attorneys' fees, court costs, witness fees, expert
witness fees, collection costs, Trustee's fees and costs of a Trustee's Sale
Guarantee, and costs and expenses paid by Beneficiary in performing for
Trustor's account any obligation of Trustor.
Fourth: Payment of additional sums and interest thereon which may
hereafter be loaned to Trustor by the Lenders when evidenced by a promissory
note or notes or other agreement between Trustor and the Lenders that recites
that this Deed of Trust is security therefor.
Fifth: Performance of every obligation, warranty, representation,
covenant, agreement and promise of Trustor contained in the Guaranty.
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The foregoing are described herein as the "Secured Obligations". All
persons who may have or acquire an interest in all or any part of the Property
will be considered to have notice of, and will be bound by, the terms of the
Secured Obligations and each other agreement or instrument made or entered into
in connection with each of the Secured Obligations. Such terms include any
provisions in the Notes or the Credit Agreement which permit borrowing,
repayment and reborrowing, or the making of future advances, or which provide
that the interest rate on one or more of the Secured Obligations may vary from
time to time.
THIS DEED OF TRUST FURTHER WITNESSETH THAT, IN CONNECTION WITH AND IN
FURTHERANCE OF THE FOREGOING GRANTS, AND THE ENCUMBRANCES, LIENS AND SECURITY
INTERESTS CREATED THEREBY, TRUSTOR COVENANTS AND AGREES AS FOLLOWS:
1. Certain Representations and Warranties of Trustor. Trustor
represents, warrants and covenants that, except as previously disclosed to
Beneficiary in a writing making reference to this Section 1:
(a) Trustor lawfully possesses and holds fee simple absolute
title to all of the Fee Land and Improvements;
(b) Trustor lawfully possesses and holds leasehold title as
lessee under the Ground Leases to all of the Leased Land and Improvements;
(c) Trustor has or will have good title to all Property other
than the Land and Improvements;
(d) Trustor has the full and unlimited power, right and authority
to encumber the Property and assign the Rents;
(e) This Deed of Trust creates a first priority lien on the
Property;
(f) The Property includes all property and rights which may be
reasonably necessary to promote the present and any reasonable future
beneficial use and enjoyment of the Land, the Improvements and the Project;
(g) Trustor owns the Personal Property free and clear of any
security agreements, reservations of title or conditional sales contracts
and there is no financing statement affecting the Personal Property on file
in any public office other than one filed to perfect the Security Interest
herein granted; and
(h) Trustor's place of business, or its chief executive office if
it has more than one place of business, is located at the address of
Trustor specified in the Guaranty.
2. Payment of Obligations. Trustor shall pay when due the Secured
Obligations under the Guaranty and hereunder; the principal of and interest on
any future advances secured by this Deed of Trust; and the principal of and
interest on any other indebtedness guaranteed by the Guaranty or
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otherwise secured by this Deed of Trust.
3. Compliance with Laws. Trustor shall not commit, suffer or permit
any act to be done, or condition to exist, on, or with respect to, the Property
which violates or is prohibited by any law, statute, code, act, ordinance,
order, judgment, decree, injunction, rule, regulation, permit, license,
authorization or direction of any government or subdivision thereof, whether it
be federal, state, county or municipal (collectively, the "Legal Requirements"),
which is applicable to the Property, or any part thereof, now or at any time
hereafter.
4. Maintenance of Property. Trustor agrees: (a) properly to care for
and keep the Property in good condition and repair; (b) not to remove, demolish
or substantially alter any building on the Real Property except upon the prior
written consent of Beneficiary; (c) to complete promptly and in a good and
workmanlike manner any building or other improvement which may be constructed
thereon, to restore promptly in like manner any portion of the Improvements
which may be damaged or destroyed from any cause whatsoever, and to pay when due
all claims for labor performed and materials furnished therefor; (d) to comply
with all Legal Requirements and covenants, conditions and restrictions now or
hereafter affecting the Property or any part thereof, including any which
require alteration or improvement thereof, and with all requirements of
insurance companies insuring the Property or any portion thereof and of any
bureau or agency which establishes standards of insurability; (e) not to commit
or permit any waste or deterioration of the Property; (f) to keep and maintain
abutting grounds, sidewalks, roads, parking and landscaped areas in good and
neat order and repair; (g) not to apply for, willingly suffer or permit any
change in zoning, subdivision, or land use regulations affecting the Property
without the prior written consent of Beneficiary; (h) not to drill or extract or
enter into any lease for the drilling for or extraction of oil, gas or other
hydrocarbon substances or any mineral of any kind or character on or from the
Property or any part thereof without the prior written consent of Beneficiary;
and (i) to do all other acts, in a timely and proper manner, which, from the
character or use of the Property, may be reasonably necessary to maintain and
preserve its value, the specific enumerations herein not excluding the general.
5. Environmental Obligations.
(a) Trustor shall comply with any and all Environmental Laws (as
hereinafter defined) regarding the presence or removal of Hazardous Material on
or in the Property, shall pay immediately, when due, the costs of removal from
the Property and disposal of any Hazardous Material which is required to be
removed pursuant to any Environmental Laws and shall keep the Property free of
any lien which may arise pursuant to any such Environmental Laws. Trustor shall
not, and shall not permit any person or entity to release, discharge, or dispose
of any Hazardous Material on the Real Property except in compliance with all
Environmental Laws and, if the same shall exist, Trustor shall immediately
remove or cause to be removed from the Real Property such Hazardous Material to
the extent required to be removed pursuant to any Environmental Laws.
(b) As used herein, the term "Hazardous Material" shall means: (i) any
chemical, material or substance at any time defined as or included in the
definition of "hazardous substances", "hazardous materials", hazardous wastes",
"extremely hazardous waste", "restricted hazardous waste", "infectious waste",
"toxic substances" or any other formulations intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any
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applicable Environmental Law or publication promulgated pursuant thereto; (ii)
any oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any
drilling fluids, produced waters or other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (iv) any flammable substances or explosives; (v) any radioactive
materials; (vi) asbestos in any form; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing poly-chlorinated biphenyls in excess of fifty parts per million; (ix)
pesticides; (x) all hazardous substances defined in NRS 40.504 ("NRS" means
Nevada Revised Statutes), and (xi) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority or which may or could pose a hazard to human health or safety or the
environment if released into the workplace or the environment; the term
"Environmental Law" means all statutes, ordinances, orders, rules, regulations,
plans, policies or decrees and the like relating to: (aa) environmental matters,
including, without limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses or injuries resulting
from the Release or threatened Release of Hazardous Material, (bb) the
generation, use, storage, transportation or disposal of Hazardous Materials, or
(cc) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner applicable
to any of the Property, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42
U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et seq.),
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 136 et seq.),
the Occupational Safety and Health Act (29 U.S.C. 651 et seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), each as
amended and supplemented, and any analogous future or present local, state and
federal statutes, ordinances and other laws, and rules and regulations
promulgated pursuant thereto, each as in effect as of the date of determination;
and the term "Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, dispersal, discharge, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any of the Property, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
(c) Trustor hereby agrees to indemnify, hold harmless and defend
Beneficiary, its directors, officers, employees, agents, successors and assigns
from and against any and all claims, losses, damages, demands, liabilities,
fines, penalties, assessments, charges, administrative and judicial proceedings
and orders, judgments, remedial action requirements, enforcement actions of any
kind, and all costs and expenses incurred in connection therewith (including but
not limited to attorneys' and consultants' fees and expenses), arising directly
or indirectly, in whole or in part, out of (i) the presence on or under the
Property of any Hazardous Material, or any Release of any Hazardous Material on,
under or from the Property, or (b) any activity carried on or undertaken on or
off the Property until the Secured Obligations have been fully and finally
satisfied, and whether by Trustor or any employees, agents, contractors or
subcontractors of Trustor or any third persons occupying or present on the
Property, in connection with the use, holding, handling, treatment, removal,
storage, decontamination, cleanup, transport, Release, processing or abatement
of any Hazardous Material located or present in, on or under the Property. The
foregoing indemnity shall further apply to any residual contamination in, on or
under the Property, or affecting any natural resources, and to any contamination
of any property or natural resources arising in connection with the generation,
use, handling, storage, transport or disposal
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of any such Hazardous Material, and irrespective of whether any of such
activities are undertaken in accordance with applicable Environmental Laws.
Trustor hereby acknowledges and agrees that, notwithstanding any other provision
of this Deed of Trust to the contrary, the obligations of Trustor under this
Section 5(c) shall be unlimited personal obligations of Trustor, shall not be
secured by this Deed of Trust and shall survive any foreclosure under this Deed
of Trust, any transfer in lieu thereof, and any satisfaction of the Secured
Obligations. The defense to be provided under this Section 5(c) shall be
conducted by counsel reasonably satisfactory to Beneficiary; provided however,
that Beneficiary shall have the right to be represented by advisory counsel of
its own selection and at its own expense; and provided further, that Beneficiary
may appoint its own counsel, at Trustor's sole cost and expense, if Trustor
fails to assume promptly any obligations under this Section 5(c) (and in any
event within ten (10) days of being notified of the existence of a claim) or if
different, additional, or inconsistent defenses exist from those available to
Trustor with respect to any claim for which the indemnity in this Section 5(a)
is implicated.
6. Insurance.
(a) Types and Amounts Required. During the continuance of this Trust,
Trustor shall at all times provide, maintain and keep in force, at no expense to
Trustee or Beneficiary, for the benefit of Trustor and Beneficiary, as their
respective interests may appear, the following policies of insurance:
(i) During the course of any construction or repair of Improvements
on the Property, (x) builder's completed value risk insurance against "all
risks of physical loss" (including fire and extended coverage, and
endorsements extending coverage for vandalism and malicious mischief,
collapse and property in transit, offsite storage, delay of opening
(business interruption), demolition and debris removal, flood, and, if
reasonably available, earthquake), in non-reporting form, covering 100% of
the anticipated construction cost, including "soft costs," with not more
than $100,000 deductible from the loss payable for any casualty and no more
than thirty (30) days for delay of opening; said policy to contain a
"permission to occupy upon completion of work or occupancy" endorsement and
waiver of subrogation endorsement acceptable to Beneficiary, and
replacement cost coverage in an agreed amount, and (y) an "owner/contractor
protective liability" policy, providing separate liability coverage for
Trustor and Beneficiary, with a limit of not less than $5,000,000;
(ii) Insurance against loss or damage to the Improvements and
Personal Property by fire and any of the other risks covered by insurance
of the type now known as "all risks of physical loss" (including flood,
and, if reasonably available, earthquake coverage (the sublimit for flood
and earthquake insurance shall be no less than $10,000,000)) in an amount
not less than 100% of the then replacement cost of the Improvements and
Personal Property (exclusive of the cost of excavations, pilings,
foundations, footings and other underground improvements lying below the
lowest basement level) without deduction for physical depreciation; with an
Agreed Amount endorsement (waiving co-insurance), a Replacement Cost
Valuation endorsement, a waiver of subrogation endorsement, coverage for
the cost of removing damaged property, and, if Beneficiary shall so
require, coverage for demolition and increased cost of construction
occasioned by operation of any law or ordinance regulating the
construction, use or repair of the Improvements; and with not more than
$350,000 deductible per occurrence and $500,000 for the perils of flood and
earthquake, if a sub-deductible applies;
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(iii) Mechanical breakdown insurance (also known as "boiler and
machinery" insurance) covering pressure vessels, air tanks, boilers,
machinery, pressure piping, heating, air conditioning and elevator
equipment and escalator equipment, if the Improvements contain equipment of
such nature, and insurance against loss of occupancy or use arising from
any such breakdown, written on a comprehensive form with a combined direct
and indirect limit of $25,000,000; the policy shall include an Agreed
Amount endorsement (waiving co-insurance), a Replacement Cost Valuation
endorsement, and coverage for increased cost of construction occasioned by
operation of any law or ordinance regulating the construction, use or
repair of the Improvements; the policy may contain deductibles of no
greater than $100,000 for direct damage and seventy-two hours or the
average value of receipts for three (3) days, whichever is less, for
indirect loss;
(iv) Commercial general liability insurance (1988 Form or subsequent
revisions of the same), written on an "occurrence basis," against claims
for death, bodily injury, personal injury and property damage occurring in,
on or about the Real Property or the adjoining streets, sidewalks and
passageways, or arising from or connected with the use, conduct or
operation of Trustor's business or interest (including, without limitation,
products liability coverage; blanket contractual liability coverage,
including both oral and written contracts; broad form property damage
coverage; coverage against liability for injury or property damage arising
out of the use, by or on behalf of the Trustor or any other person or
organization, of any owned, non-owned, leased or hired automotive equipment
in the conduct of any and all operations of Trustor; coverage for "liquor
legal liability," and "employee benefits legal liability;" coverage for all
professional liability exposures associated with the operation of the
health spa; coverage for those hazards commonly known in the insurance
industry as explosion, collapse and underground property damage; owners'
and contractors' protective coverage; coverage for elevators, escalators
and garage/parking operations, if any, on the Real Property; if such policy
contains a self-insured retention, (A) such self-insured retention shall be
no greater than $250,000 per occurrence, and (B) Trustor shall be solely
responsible for the payment of all amounts due within said self-insured
retention, and the indemnification provisions contained in this Deed of
Trust shall include all liability associated with said self-insured
retention;
(v) Comprehensive business automobile liability insurance, written
under Coverage Symbol "1," covering all owned, non-owned and hired or
borrowed vehicles of Trustor used in connection with any of the
construction, maintenance and operation of the Improvements, naming Trustor
as the named insured and covering Beneficiary as additional insured,
insuring against liability for bodily injury and death and/or for property
damage in an amount not less than $1,000,000 combined single limit per
accident; (if the policy contains a self-insured retention, (A) such
self-insured retention shall be no greater than $250,000 per occurrence,
and (B) Trustor shall be solely responsible for the payment of all amounts
due within said self-insured retention, and the indemnification provisions
contained in this Deed of Trust shall include all liability associated with
said self-insured retention); in addition to said automobile liability
insurance, Trustor must provide, maintain and keep in effect (x) garage
liability insurance, providing $1,000,000 combined single limit for bodily
injury and property damage for the parking garage operation, and (y)
garagekeepers legal liability insurance, providing $500,000 limit for
comprehensive and collision coverages for physical damage to vehicles in
Trustor's care, custody and control, with a deductible no greater than
$25,000 for each loss;
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(vi) A standard Worker's Compensation policy covering the State of
Nevada and Employer's Liability coverage subject to a limit of no less than
$1,000,000 for each employee, $1,000,000 for each accident, and a
$1,000,000 policy limit, which policy shall include endorsements for
Voluntary Compensation and Employer's Liability Coverage and Stop Gap
Liability; if Trustor elects to self-insure Worker's Compensation coverage
in the State of Nevada, Beneficiary must be furnished with a copy of the
certificate from the state permitting self insurance and evidence of a stop
loss/aggregate Excess Worker's Compensation policy with a specific
retention of no greater than $300,000 per occurrence;
(vii) An Umbrella Liability policy with a limit of no less than
$100,000,000 providing excess coverage over all limits and coverages set
forth in paragraphs (iv), (v) and (vi) above, which limits can be obtained
by a combination of Primary and Excess Umbrella policies, provided that all
layers follow form with the underlying policies set forth in paragraphs
(iv), (v) and (vi) and are written on an "occurrence form;"
(viii) Business interruption insurance/extra expense and loss of
"rental value" insurance, including coverage for off-premises power losses
and an extended period of indemnity endorsement for at least 180 days, in
an amount representing not less than 100% percent of the annual net profit
plus continuing expenses (including debt service) for the Project, as such
net profit and continuing expenses are reasonably projected by Trustor and
consented to by Beneficiary (or, in the absence of such a projection, as
reasonably projected by Beneficiary), with a deductible of no greater than
seventy-two (72) hours or the average value of receipts for three (3) days,
whichever is less.
(ix) If the Property is located in an area identified by the
Secretary of Housing and Urban Development as a flood hazard area and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968, flood insurance covering the Improvements, in an
amount, available under the Act, satisfactory to Beneficiary;
(x) A comprehensive crime policy, including the following
coverages: (A) Employee Dishonesty: $2,500,000; (B) Money & Securities
(inside): $500,000; (C) Money & Securities (outside): $500,000; (D)
Depositors Forgery: $1,000,000; and (E) Computer Fraud: $1,000,000; such
policy shall be amended so that the term "money" is defined therein to
include "chips," the policy may contain deductibles of no more than
$250,000 for all other agreements listed above; and
(xi) Such other insurance and in such amounts, and such additional
amounts of the foregoing insurance, as may reasonably be required by
Beneficiary, in its sole discretion, from time to time, due consideration
being given to standard practices in the industry and to the risks involved
in Trustor's business, operations or interest.
(b) Uniform Policy Requirements. All policies of insurance required by
the terms of this Deed of Trust:
(i) shall be issued by insurance companies licensed and admitted to
do
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business in the State of Nevada, and rated no lower than A-XII in the most
recent edition of A.M. Best's and AA in the most recent edition of Standard
& Poor's, and in such form and amounts as are satisfactory to Beneficiary
from time to time;
(ii) shall contain an endorsement or agreement by the insurer that
any loss shall be payable in accordance with the terms of such policy
notwithstanding any act, failure to act, negligence or breach of
representation or warranty of Trustor, or of any party holding under
Trustor, which might otherwise result in forfeiture of said insurance;
(iii) shall contain a waiver by the insurer of all rights of setoff,
counterclaim and deduction against Trustor;
(iv) shall contain a waiver of subrogation by the insurer in favor
of Beneficiary and a clause providing that the policy is primary and that
any other insurance of Beneficiary with respect to the matters covered by
such policy shall be excess and non-contributing;
(v) shall, in the case of policies affording liability insurance
coverage, name Beneficiary (and Beneficiary's officers, directors,
employees, agents and representatives) as additional insured by an
endorsement satisfactory to Beneficiary and contain cross-liability and
severability of interest clauses satisfactory to Beneficiary, and, in the
case of other policies, shall name Beneficiary as a loss payee and have
attached thereto a lender's loss payable endorsement, for the benefit of
Beneficiary, in form satisfactory to Beneficiary (Form 438 BFU, unless
otherwise specified by Beneficiary); and
(vi) shall contain a provision that, notwithstanding any contrary
agreement between Trustor and insurance company, such policies will not be
canceled, fail to be renewed or materially amended (which term shall
include any reduction in the type, scope or limits of coverage) without at
least thirty (30) days prior written notice to Beneficiary.
(c) Blanket and Umbrella Policies. If Beneficiary consents, Trustor or
Borrower may provide any of the required insurance through an umbrella policy or
policies or through blanket policies carried by Trustor and covering more than
one location, or by policies procured by a tenant or other party holding under
Trustor; provided, however, that the amount of the total insurance allocated to
the Real Property and available with respect to occurrences required to be
insured against shall be such as to furnish protection the equivalent of
separate policies in the amounts herein required, and provided further, that, in
all other respects, any such policy or policies shall comply with all of the
other provisions of this Deed of Trust.
(d) Evidence of Insurance. At Beneficiary's option, Trustor shall
furnish Beneficiary with certified copies of all policies of insurance required
under this Section or with a certificate of insurance for each required policy
setting forth the coverage, the limits of liability, the deductibles, if any,
the name of the carrier, the policy number, and the period of coverage, which
certificates shall be executed by authorized officials of the companies issuing
such insurance, or by agents or attorneys-in-fact authorized to issue said
certificates (in which event each such certificate shall be accompanied by a
notarized affidavit, agency agreement or power of attorney evidencing the
authority of the signatory to issue such certificate on behalf of the insurer
named therein). Trustor shall furnish to Beneficiary annually, within ten days
after the date hereof, or more often if Beneficiary shall so request,
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a certificate of Trustor specifying all insurance policies with respect to the
Property and all other policies required hereby then outstanding and in force,
and stating whether or not such insurance complies with the requirements of this
Section and, if it does not, the manner in which it does not comply. At least
ten (10) days prior to the expiration of each required policy, Trustor shall
deliver to Beneficiary evidence satisfactory to Beneficiary of the payment of
premium and the renewal or replacement of such policy continuing insurance in
force as required by this Deed of Trust.
(e) Procurement by Beneficiary. If Trustor fails to provide, maintain,
keep in force or deliver to Beneficiary the policies of insurance required by
this Deed of Trust, Beneficiary may (but shall have no obligation to) procure
such insurance, or single interest insurance for such risks covering
Beneficiary's interests, and Trustor will pay all premiums therefor promptly
upon demand by Beneficiary; and until such payment is made by Trustor, the
amount of all such premiums, together with interest thereon at an annual rate
equal to the rate specified in Section 2.2E. (Post-Default Interest) of the
Credit Agreement (or if such provision is hereafter replaced or renumbered, the
equivalent section) (the "Agreed Rate"), shall be secured by this Deed of Trust.
(f) Reserve Fund. Upon request by Beneficiary following an Event of
Default (as defined in Section 23 hereof), Trustor shall pay to Beneficiary an
initial cash reserve in an amount adequate to pay all insurance premiums due
within the next succeeding twelve calendar months on all policies of insurance
required by this Deed of Trust (or such lesser amount as may then be specified
by Beneficiary), and shall thereafter deposit with Beneficiary each month,
commencing with the first month after such request by Beneficiary and continuing
until all sums secured hereby are paid in full or Beneficiary notifies Trustor
to cease making such deposits, an amount equal to one-twelfth of the aggregate
annual insurance premiums on all policies of insurance required by this Deed of
Trust, as reasonably estimated by Beneficiary. In such event Trustor further
agrees to cause all bills, statements or other documents relating to the
foregoing insurance premiums to be sent or mailed directly to Beneficiary. Upon
receipt of such bills, statements or other documents evidencing that a premium
for a required policy is then payable, and providing Trustor has deposited
sufficient funds with Beneficiary pursuant to this Section, Beneficiary shall
pay such amounts as may be due thereunder out of the funds so deposited with
Beneficiary. If at any time and for any reason the funds deposited with
Beneficiary are or will be insufficient to pay such amounts as may be then or
subsequently due, Beneficiary may notify Trustor and Trustor shall immediately
deposit an amount equal to such deficiency with Beneficiary. Notwithstanding the
foregoing, nothing contained herein shall cause Beneficiary to be deemed a
trustee of said funds or to be obligated to pay any amounts in excess of the
amount of funds deposited with Beneficiary pursuant to this Section, nor shall
anything contained herein modify the obligation of Trustor to maintain and keep
in force at all times such insurance as is required by this Deed of Trust.
Beneficiary may commingle said reserve with its own funds and Trustor shall be
entitled to no interest thereon. Trustor hereby waives the provisions of NRS
106.105 and 100.091 to the maximum extent permitted by law.
(g) Replacement Cost. Whenever Beneficiary requires insurance with
full replacement cost protection, such full replacement cost shall be determined
annually (except in the event of substantial changes, alterations or additions
to the Improvements or in the event of new construction undertaken by the
Trustor, in which event such full replacement cost shall be determined from time
to time as required to assure full replacement cost coverage). Such
determination of full replacement cost shall be made by written agreement of the
insurance carrier and Trustor, subject to the approval of Beneficiary. If they
cannot agree or the value shall not be approved by Beneficiary within thirty
(30)
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days after such request, such full replacement cost shall be determined by
an appraiser, architect or contractor who shall be acceptable to Beneficiary. No
omission on the part of Beneficiary to request any such determination shall
relieve Trustor of its obligations hereunder, and any such determination to the
contrary notwithstanding, Beneficiary may require Trustor to obtain additional
insurance as provided in this Section.
(h) Separate Insurance. Trustor shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required by
this Section to be furnished by Trustor unless Beneficiary is a named insured
therein, with loss payable as provided herein. Trustor shall immediately notify
Beneficiary of the taking out of any such separate insurance and shall cause the
original policies in respect thereof or certificates therefor to be delivered to
Beneficiary.
(i) Compliance with Insurance Requirements. Trustor shall observe and
comply with the requirements of all policies of insurance required to be
maintained in accordance with this Deed of Trust and shall cause the
requirements of the companies writing such policies to be so performed and
satisfied that at all times companies of good standing satisfactory to
Beneficiary shall be willing to write and to continue such insurance.
Notwithstanding any approval, disapproval, acceptance or acquiescence by
Beneficiary with respect to such insurance, or Beneficiary's obtaining or
failure to obtain any insurance, Beneficiary shall incur no liability as to the
form or legal sufficiency of insurance contracts, the solvency of any insurer or
the payment of any loss, and Trustor hereby expressly assumes full
responsibility therefor.
(j) Assignment of Policies upon Foreclosure. In the event of
foreclosure of this Deed of Trust or other transfer of title or assignment of
any of the Property in extinguishment, in whole or in part, of the debt
guaranteed by the Guaranty and secured hereby, all right, title and interest of
Trustor in and to all policies of insurance required by this Section with
respect to such Property and any unearned premiums paid thereon shall, without
further act, be assigned to and shall inure to the benefit of and pass to the
successor in interest to Trustor or the purchaser or grantee of the Property,
and Trustor hereby appoints Beneficiary its lawful attorney-in-fact to execute
an assignment thereof and any other document necessary to effect such transfer.
(k) Waiver of Subrogation. Trustor waives any and all right to claim
or recover against Beneficiary, its directors, officers, employees, agents and
representatives, for loss of or damage to Trustor, the Property, any other
property of Trustor, or any property of others under Trustor's control, from any
cause insured against or required to be insured against by the provisions of
this Deed of Trust.
(l) Requirements Supplemental. The requirements of this Deed of Trust
with respect to insurance and maintenance of the Property shall be supplemental
to and not exclusive of the requirements of the Credit Agreement and the
Security Agreement relating thereto.
7. Casualties; Insurance Proceeds.
(a) Notice of Casualties. Trustor shall give prompt written notice
thereof to Beneficiary after the happening of any material casualty to or in
connection with the Property or any part thereof, whether or not such casualty
is covered by insurance.
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(b) Payment of Proceeds. Prior to any Event of Default, proceeds of
insurance in an amount not greater than $2,500,000 payable in connection with
any casualty affecting all or any portion of the Property shall be payable to
Trustor. Proceeds in any greater amount and, after an Event of Default, all
proceeds, payable in connection with any casualty affecting all or any portion
of the Property shall be payable to Beneficiary. Trustor hereby authorizes and
directs any affected insurance company to make payment of such proceeds directly
to Beneficiary. If Trustor receives any proceeds of insurance resulting from a
casualty which, pursuant to this Deed of Trust, are to be paid to Beneficiary,
Trustor shall promptly pay over such proceeds to Beneficiary. Trustor shall not
settle, adjust or compromise any claims for loss, damage or destruction of the
Property or any part thereof under any policy or policies of insurance in
connection with a loss in an amount greater than $500,000 without the prior
written consent of Beneficiary to such settlement, adjustment or compromise;
and, if Trustor is then in default hereunder, Beneficiary shall have the sole
and exclusive right, and Trustor hereby authorizes and empowers Beneficiary, to
settle, adjust or compromise any such claims.
(c) Use in Restoration. In the event of any damage to or destruction
of the Property, and provided that (i) at the time of such damage or destruction
or thereafter, an Event of Default does not exist hereunder, and (ii)
application of insurance proceeds to restoration of the Property will not, in
Beneficiary's reasonable judgment, impair Beneficiary's security for the
obligations secured hereby, insurance proceeds payable in connection with such
damage or destruction shall be applied, first, toward reimbursement of all of
Beneficiary's reasonable costs and expenses of recovering the proceeds,
including reasonable attorneys' fees; then, to payment of all sums advanced by
Beneficiary to protect the Property or the security for the Secured Obligations;
then, to payment of obligations then due under the Guaranty; then, to
restoration of the Property, upon such reasonable conditions as Beneficiary
shall determine (it being expressly understood and agreed that Beneficiary may
condition disbursement of such proceeds for restoration upon, among other
things: delivery to Beneficiary by Trustor of detailed plans and specifications
providing for restoration in accordance with all applicable Legal Requirements
of all governmental authorities having jurisdiction over the Project, together
with a detailed estimate of the cost of the work and schedule therefor and a
construction contract satisfactory to Beneficiary, with a contractor
satisfactory to Beneficiary, for performance of the work within the budgeted
amount, and within the scheduled time for completion; proof that the insurance
required hereby is in force; proof that an amount equal to the sum which
Beneficiary is requested to disburse has theretofore been paid by Trustor, or is
then due and payable, for materials theretofore installed or work theretofore
performed upon the Property and properly includable in the cost of repair,
reconstruction or restoration thereof; proof that, after repair or
reconstruction, the Property will be at least as valuable as it was immediately
before the damage or condemnation occurred; and proof that the insurance
proceeds available for repair or restoration are sufficient, in Beneficiary's
determination, to pay for the total cost of repair or reconstruction, including
all associated development costs and interest projected to be payable on the
Secured Obligations until the repair or reconstruction is complete, or Trustor
must provide its own funds in an amount equal to the difference between the
proceeds available for repair or restoration and a reasonable estimate, made by
Trustor and found acceptable by Beneficiary, of the total cost of repair or
reconstruction); and, upon completion of the work of restoration and payment of
the cost thereof, any balance of such proceeds shall be applied to the
indebtedness guaranteed by the Guaranty, in such order as Beneficiary, in its
sole discretion, shall determine; and, if any then remains, it shall be paid
over to Trustor.
(d) Application by Beneficiary. If (i) at the time of such damage or
destruction or thereafter, an Event of Default exists hereunder, or (ii)
application of insurance proceeds to restoration
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will, in Beneficiary's reasonable judgment, impair Beneficiary's security for
the obligations secured hereby, Beneficiary shall have the option, in its sole
and absolute discretion, (1) to apply all or any portion of such proceeds to any
indebtedness guaranteed by the Guaranty and in such order as Beneficiary may
determine, notwithstanding that said indebtedness or the performance of said
obligation may not be due according to the terms thereof, or (2) to apply all or
any portion of such proceeds to the restoration of the Property, subject to such
conditions as Beneficiary shall determine, or (3) to deliver all or any portion
such proceeds to Trustor, subject to such conditions as Beneficiary may
determine.
(e) Duty to Restore. Nothing in this Deed of Trust shall be deemed to
excuse Trustor from restoring, repairing and maintaining the Property, as herein
provided, regardless of whether or not insurance proceeds are available for
restoration, whether or not any such proceeds are sufficient in amount, or
whether or not the Property can be restored to the same condition and character
as existed prior to such damage or destruction.
8. Taxes and Impositions.
(a) Payment by Trustor. Trustor shall pay, or cause to be paid, at
least ten (10) days prior to delinquency, all real property taxes and
assessments, general and special, and all other taxes and assessments of any
kind or nature whatsoever, including, without limitation, non-governmental
levies or assessments such as maintenance charges, owner association dues or
charges or fees, levies or charges resulting from covenants, conditions or
restrictions affecting the Property, which are assessed or imposed upon the
Property, or become due and payable, and which create, may create or appear to
create a lien upon the Property, or any part thereof, or upon any personal
property, equipment or other facility used in the operation or maintenance
thereof (all of which taxes, assessments and charges, together with any and all
other taxes, and charges of a similar kind or nature are collectively referred
to hereinafter as "Impositions"); provided, however, that if, by law, any such
Imposition is payable, or may at the option of the taxpayer be paid, in
installments, Trustor may pay the same or cause it to be paid, together with any
accrued interest on the unpaid balance of such Imposition, in installments as
the same become due and before any fine, penalty, interest or cost may be added
thereto for the nonpayment of any such installment and interest.
(b) New Impositions. If at any time after the date hereof there shall
be assessed or imposed (i) a tax or assessment on the Property in lieu of or in
addition to the Impositions payable by Trustor pursuant to Subsection (a) of
this Section, or (ii) a license fee, tax or assessment imposed on Beneficiary
and measured by or based in whole or in part upon the amount of the Notes or
other obligations secured hereby, then all such taxes, assessments or fees shall
be deemed to be included within the term "Impositions" as defined in Subsection
(a) of this Section, and Trustor shall pay and discharge the same as herein
provided with respect to the payment of Impositions, if Trustor is permitted by
law to pay the same. If Trustor is prohibited by law from paying such
Impositions, then, at the option of Beneficiary, the indebtedness guaranteed by
the Guaranty and all other obligations secured hereby, together with all accrued
interest thereon, shall immediately become due and payable. Anything to the
contrary herein notwithstanding, Trustor shall have no obligation to pay any
franchise, estate, inheritance, income, excess profits or similar tax levied on
Beneficiary or on the obligations secured hereby.
(c) Proof of Payment. Subject to the provisions of Subsection (d) of
this Section, Trustor shall deliver to Beneficiary, within seven (7) days after
the date upon which any Imposition is
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due and payable by Trustor in accordance with this Deed of Trust, official
receipts of the appropriate taxing authority, or other proof satisfactory to
Beneficiary, evidencing the payment thereof.
(d) Contest of Assessments. Trustor shall have the right before any
delinquency occurs to contest or object to the amount or validity of any such
Imposition by appropriate legal proceedings, but this shall not be deemed or
construed in any way as relieving, modifying or extending Trustor's covenant to
pay any such Imposition at the time and in the manner provided in this Section
unless Trustor has given prior written notice to Beneficiary of Trustor's intent
so to contest or object to an Imposition, and unless, at Beneficiary's sole
option, (i) Trustor shall demonstrate to Beneficiary's satisfaction that the
legal proceedings shall conclusively operate to prevent the sale of the
Property, or any part thereof, to satisfy such Imposition prior to final
determination of such proceedings; or (ii) Trustor shall furnish a good and
sufficient bond or surety as requested by and satisfactory to Beneficiary; or
(iii) Trustor shall demonstrate to Beneficiary's satisfaction that Trustor has
provided a good and sufficient undertaking as required or permitted by law to
accomplish a stay of any such sale.
(e) Reserve Fund. Upon request by Beneficiary following an Event of
Default, Trustor shall pay to Beneficiary an initial cash reserve in an amount
adequate to pay all Impositions for the ensuing tax fiscal year (or such lesser
amount as may then be specified by Beneficiary), and shall thereafter deposit
with Beneficiary each month, commencing with the first month after such request
by Beneficiary and continuing until all sums guaranteed by the Guaranty or
otherwise secured hereby are paid in full or Beneficiary gives notice to Trustor
to cease making such deposits, an amount equal to one-twelfth of the sum of the
annual Impositions, as reasonably estimated by Beneficiary. In such event,
Trustor further agrees to cause all bills, statements or other documents
relating to Impositions to be sent or mailed directly to Beneficiary. Upon
receipt of such bills, statements or other documents evidencing that Impositions
are then payable, and providing Trustor has deposited sufficient funds with
Beneficiary pursuant to this Section, Beneficiary shall pay such amounts as may
be due thereunder out of the funds so deposited with Beneficiary. If at any time
and for any reason the funds deposited with Beneficiary are or will be
insufficient to pay such amounts as may then or subsequently be due, Beneficiary
may notify Trustor and upon such notice Trustor shall immediately deposit an
amount equal to such deficiency with Beneficiary. Notwithstanding the foregoing,
nothing contained herein shall cause Beneficiary to be deemed a trustee of said
funds or to be obligated to pay any amounts in excess of the amount of funds
deposited with Beneficiary pursuant to this Section, nor shall anything
contained herein modify the obligation of Trustor to pay, or cause to be paid,
all Impositions. Beneficiary may commingle said reserve with its own funds and
Trustor shall be entitled to no interest thereon. Beneficiary may impound or
reserve for future payment of Impositions such portion of such payments as
Beneficiary may in its absolute discretion deem proper, applying the balance
upon any indebtedness guaranteed by the Guaranty or other obligation secured
hereby in such order as Beneficiary may determine, notwithstanding that said
indebtedness or the performance of said obligation may not yet be due according
to the terms thereof. Should Trustor fail to deposit with Beneficiary (exclusive
of that portion of said payments which has been applied by Beneficiary upon any
indebtedness guaranteed by the Guaranty or other obligation secured hereby) sums
sufficient to fully pay such Impositions at least thirty (30) days before
delinquency thereof, Beneficiary may, at Beneficiary's election, but without any
obligation so to do, advance any amounts required to make up the deficiency,
which advances, if any, together with interest thereon at an annual rate equal
to the Agreed Rate, shall be secured hereby and shall be repayable to
Beneficiary upon demand; or, at the option of Beneficiary, Beneficiary may,
without making any advance whatever, apply any sums held by it upon any
indebtedness guaranteed by the Guaranty or other obligation secured hereby, in
such order as Beneficiary may determine, notwithstanding that said indebtedness
or the
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performance of said obligation may not yet be due according to the terms
thereof. Trustor hereby waives the provisions of NRS 106.105 AND 100.091 to the
maximum extent permitted by law.
(f) Joint Assessment. Trustor shall not initiate, and, to the maximum
extent permitted by law, shall not suffer or permit the joint assessment of any
real and personal property which may constitute all or a portion of the Property
or any other procedure whereby the lien of real property taxes and the lien of
personal property taxes shall be assessed, levied or charged to the Property as
a single lien.
(g) Tax Service. Trustor shall cause to be furnished to Beneficiary a
tax reporting service, covering the Property, of the type and duration, and with
a company, satisfactory to Beneficiary.
9. Liens. Trustor shall pay and promptly discharge, at Trustor's cost
and expense, all liens, encumbrances and charges upon the Property, or any part
thereof or interest therein. If Trustor shall fail to remove and discharge any
such lien, encumbrance or charge, then, in addition to any other right or remedy
of Beneficiary, Beneficiary may, but shall not be obligated to, discharge the
same, either by paying the amount claimed to be due, or by procuring the
discharge of such lien, encumbrance or charge by depositing in a court a bond or
the amount claimed or otherwise giving security for such claim, or by procuring
such discharge in such manner as is or may be prescribed by law. Trustor shall,
immediately upon demand therefor by Beneficiary, pay to Beneficiary an amount
equal to all costs and expenses incurred by Beneficiary in connection with the
exercise by Beneficiary of the foregoing right to discharge any such lien,
encumbrance or charge, together with interest thereon from the date of such
expenditure at an annual rate equal to the Agreed Rate.
10. Leaseholds, Leases, Easements, and Servitudes.
(a) Leaseholds and Leases.
i) Trustor agrees to duly and punctually pay when due all rents
and other payments due under each of the Ground Leases; to at all times
perform all covenants, agreements, terms and conditions imposed on or
assumed by Trustor as lessee under each of the Ground Leases; to cause each
of the Ground Leases to remain in effect so long as any portion of any
indebtedness guaranteed by the Guaranty or otherwise secured hereby shall
be unpaid; to pay or cause the lessor under each such Ground Lease (the
"Ground Lessor") or any prior lessees of the Property to pay any portion of
the impositions, including taxes, assessments, rates and charges to be
borne by such Ground Lessor or such other lessees that have or might become
a lien on the Property or the leasehold estate; to do all things necessary
to keep unimpaired Trustor's right in and to the estate created by each of
the Ground Leases; to refrain from doing anything which would impair
Trustor's right in and to the estate of each of the Ground Leases or which
would be grounds for declaring a forfeiture or causing a termination or
cancellation of any of the Ground Leases. To prevent any default thereunder
or forfeiture or impairment thereof, Trustor shall not, except with the
prior written consent of the Beneficiary:
a) Cancel, terminate, abandon, or surrender any of the
Ground Leases, or consent to or accept any cancellation or termination
thereof, or permit any condition or event to exist which would
terminate or cancel the same, or permit such termination or
cancellation;
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b) Amend, modify, change, supplement or alter ("Amendments")
any of the Ground Leases, whether orally or in writing if the effect
of such Amendment, together with all other Amendments, is to increase
materially the obligations of Trustor thereunder or to confer any
additional rights on the Ground Lessor of such Ground Lease that could
reasonably be expected to be materially adverse to Trustor or
Beneficiary, but Trustor shall not make any Amendments to the rent,
term, or use or development provisions of any Ground Lease without the
prior written consent of Beneficiary; or
c) Take any action in connection with any of the Ground
Leases which would presently or hereafter have the effect of impairing
the value of Trustor's interest thereunder, or of the Property, or of
impairing the interest of Beneficiary in any of the Ground Leases or
in the Property.
ii) Trustor further agrees that it will promptly deliver to
Beneficiary an exact copy of any notice, communication, plan, specification
or other instrument or document received or given by Trustor in any way
relating to or affecting any of the Ground Leases or the Property which may
concern or affect the estate of the lessor in or under any of the Ground
Leases or in the Property; and upon the failure of Trustor with respect to
any of the covenants and agreements in this Section 10, Beneficiary may, at
its option, declare all sums guaranteed by the Guaranty or otherwise
secured by this Deed of Trust or by any other Loan Document (as defined in
the Credit Agreement) to be immediately due and payable, and avail itself
of any remedies provided for herein; and neither the exercise nor the
failure to exercise the foregoing option by Beneficiary shall be deemed a
waiver or release of its right thereafter to declare an Event of Default
under this Deed of Trust or any other Loan Document by reason of said
failure of Trustor to keep, observe and perform its obligations under such
Loan Document, or be deemed an election of remedies by Beneficiary.
iii) As further security for all indebtedness guaranteed by the
Guaranty or otherwise secured hereby, and for the performance of covenants
herein contained and in each of the Ground Leases contained, Trustor hereby
assigns to Beneficiary all of Trustor's rights, privileges and prerogatives
as lessee under each of the Ground Leases, whether now existing or
hereafter acquired, to terminate, cancel, modify, change, supplement,
alter, amend or extend any of the Ground Leases or to purchase the demised
premises of any of the Ground Leases. Any such termination, cancellation,
modification, change, supplement, alteration, amendment, or extension of
any of the Ground Leases without the prior written consent thereto by
Beneficiary shall be void and of no force and effect.
iv) Any waiver or forbearance of enforcement by Beneficiary with
respect to any default in any of Trustor's obligations under any of the
Ground Leases, whether pursuant to the Ground Lease, or otherwise, shall
not release Trustor of any of its obligations under this Deed of Trust,
including its obligations with respect to payment of rentals as provided in
each of the Ground Leases and the performance of all of the terms,
provisions, covenants, conditions and agreements contained in each of the
Ground Leases to be performed by Trustor.
v) Upon Trustor's failure to perform any of its covenants,
agreements, terms or conditions imposed on or assumed by Trustor as lessee
under any of the Ground Leases, Beneficiary may, at its option, but shall
not be obligated to, take any action Beneficiary deems
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necessary or desirable to cure any default by Trustor in the performance of
or compliance with any of Trustor's covenants or obligations under any of
the Ground Leases. Upon receipt by Beneficiary of any written notice from
any Ground Lessor of any default by the Trustor as lessee thereunder,
Beneficiary may rely thereon and take any action as aforesaid to cure any
such alleged default if, in Beneficiary's sole judgment, such alleged
default could result in immediate termination of such Ground Lease even
though the existence of such default or the nature thereof is questioned or
denied by Trustor or by any party acting on behalf of Trustor. Trustor
hereby grants to Beneficiary and agrees that Beneficiary, its officers,
employees, agents, and workmen shall have the absolute and immediate right
to enter in and on the Property to the extent and as often as Beneficiary,
in its sole discretion, deems necessary for the purpose of taking such
action as provided in the preceding sentence. Any expenditure or payments
made or incurred by Beneficiary in curing or commencing to cure any such
alleged default or potential default shall be an advance secured by the
lien of this Deed of Trust, and shall bear interest at the Agreed Rate from
the date of such advance, and shall, at the option of Beneficiary, be
immediately repayable upon demand. Should Trustor fail to repay Beneficiary
any such advance with interest as herein provided within ten (10) days
after demand of the same, Beneficiary may, at its option, declare all sums
guaranteed by the Guaranty or otherwise secured by this Deed of Trust or by
any other Loan Document to be immediately due and payable, and avail itself
of any remedies provided for herein; and neither the exercise nor the
failure to exercise the foregoing option by Beneficiary shall be deemed a
waiver or release of its right thereafter to declare an Event of Default
under this Deed of Trust by reason of said failure of Trustor to keep,
observe and perform its obligations under each of the Ground Leases or
hereunder, or be deemed an election of remedies by Beneficiary. Any such
action of Beneficiary to cure a default of Trustor under a Ground Lease
shall not without Beneficiary's consent, remove or waive the corresponding
Event of Default under the terms hereof.
vi) If both the lessor's and lessee's estates under the Ground
Lease shall at any time become vested in one owner, this Deed of Trust and
the lien created hereby shall not be destroyed or terminated by application
of the doctrine of merger; and in such event, Beneficiary shall continue to
have and to enjoy all of the rights, title interest and privileges of
Beneficiary as to the separate estates. In the event that Trustor shall
acquire fee simple title to the Property at any time prior to the payment
in full of all indebtedness guaranteed by the Guaranty or otherwise secured
by this Deed of Trust, such fee simple title shall not merge with the
leasehold estate encumbered by this Deed of Trust, but such fee simple
title shall, without further action on the part of Trustor, continue to be
subject to the lien and security interest hereof. In the event of such
acquisition by Trustor, Trustor agrees to execute and deliver to
Beneficiary such further instruments, covenants, and assurances as
Beneficiary may reasonably require in order to further confirm and assure
that the fee simple title so acquired by Trustor is and continues to be
subject to the covenants, terms, agreements, conditions, lien and security
interest of this Deed of Trust. In addition, if both the lessor's and
lessee's estates under any of the Ground Leases shall at any time become
vested in one owner, any Leases then existing shall not be destroyed or
terminated by application of the law of merger or as a matter of law unless
Beneficiary shall so elect in writing.
vii) Notwithstanding anything to the contrary herein contained
with respect to any Ground Lease:
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a) The lien of this Deed of Trust attaches to all of
Trustor's rights and remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11 U.S.C. Sections 101 et
seq. (the "Bankruptcy Code"), including, without limitation, all of
Trustor's rights to remain in possession of the Property.
b) Trustor shall not, without Beneficiary's written consent,
elect to treat any of the Ground Leases as terminated under subsection
365(h)(1) of the Bankruptcy Code. Any such election made without
Beneficiary's prior written consent shall be void.
c) As security for the Secured Obligations, Trustor hereby
unconditionally assigns, transfers and sets over to Beneficiary all of
Trustor's claims and rights to the payment of damages arising from any
rejection by any lessor of any of the Ground Leases under the
Bankruptcy Code. Beneficiary and Trustor shall proceed jointly or in
the name of Trustor in respect of any claim, suit, action or
proceeding relating to the rejection of any Ground Lease, including,
without limitation, the right to file and prosecute any proofs of
claim, complaints, motions, applications, notices and other documents
in any case in respect of such lessor under the Bankruptcy Code. This
assignment constitutes a present, irrevocable and unconditional
assignment of the foregoing claims, rights and remedies, and shall
continue in effect until all of the Secured Obligations shall have
been satisfied and discharged in full. Any amounts received by
Beneficiary or Trustor as damages arising out of the rejection of any
Ground Lease as aforesaid shall be applied first to all costs and
expenses of Beneficiary (including, without limitation, attorneys'
fees and costs) incurred in connection with the exercise of its rights
or remedies under this Section 10.(a) and then in accordance with the
other applicable provisions of this Deed of Trust.
d) If, pursuant to subsection 365(h)(1) of the Bankruptcy
Code, Trustor seeks to offset against the rent reserved in any Ground
Lease the amount of any damages caused by the nonperformance by the
lessor thereunder of such lessor's obligations under such Ground Lease
after the rejection by lessor of such Ground Lease under the
Bankruptcy Code, Trustor shall, prior to effecting such offset, notify
Beneficiary in writing of its intent so to do, setting forth the
amounts proposed to be so offset, and, in the event Beneficiary
objects, Trustor shall not effect offset of the amounts so objected to
by Beneficiary. If Beneficiary has failed to object as aforesaid
within ten days after notice from Trustor in accordance with the first
sentence of this Section 10(a)(vii)(4), Trustor may proceed to offset
the amounts set forth in Trustor's notice.
e) If any action, proceeding, motion or notice shall be
commenced or filed in respect of any lessor or the Property or any
portion thereof in connection with any case under this Bankruptcy
Code, Beneficiary and Trustor shall cooperatively conduct and control
any such litigation with counsel agreed upon between Trustor and
Beneficiary in connection therewith. Trustor shall, upon demand, pay
to Beneficiary all costs and expenses (including reasonable attorneys'
fees and costs) paid or incurred by Beneficiary in connection with the
cooperative prosecution or conduct of any such proceedings. All such
costs and expenses shall be secured by the lien of this Deed of Trust.
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f) Trustor shall promptly, after obtaining knowledge
thereof, notify Beneficiary orally of any filing by or against any
lessor of a petition under the Bankruptcy Code. Trustor shall
thereafter promptly give written notice of such filing to Beneficiary,
setting forth any information available to Trustor as to the data of
such filing, the court in which such petition was filed, and the
relief sought therein. Trustor shall promptly deliver to Beneficiary,
following its receipt thereof, any and all notices, summonses,
pleadings, applications and other documents received by Trustor in
connection with any such petition and any proceedings relating
thereto.
viii) To the extent permitted by law, the price payable by
Trustor or any other party in the exercise of the right of redemption, if
any, from any sale under or decree of foreclosure of this Deed of Trust
shall include all rents and other amounts paid and other sums advanced by
Beneficiary on behalf of Trustor as the lessee under the Ground Leases.
ix) Trustor hereby grants and assigns to Beneficiary a security
interest in all prepaid rent and security deposits and all other security
which the lessors under the Ground Leases may hold now or later for the
performance of Trustor's obligations as the lessee under the Ground Leases.
x) Trustor shall not, without Beneficiary's written consent, fail
to exercise any option or right to renew or extend the term of any Ground
Lease at least six months prior to the date of termination of any such
option or right, shall give immediate written notice thereof to
Beneficiary, and shall execute, acknowledge, deliver and record any
document reasonably requested by Beneficiary to evidence the lien of this
Deed of Trust on such extended or renewed lease term. If Trustor shall fail
to exercise any such option or right as aforesaid, Beneficiary may exercise
the option or right as Trustor's agent and attorney-in-fact pursuant to
Section 10(a)(xiii) below of this Deed of Trust, or in Beneficiary's own
name or in the name of and on behalf of a nominee of Beneficiary, as
Beneficiary may determine in the exercise of its sole and absolute
discretion.
xi) All subleases entered into by Trustor (and all existing
subleases modified or amended by Trustor) shall provide that such subleases
are subordinate to the lien of this Deed of Trust and any extensions,
replacements and modifications of this Deed of Trust and the obligations
secured hereby and that if Beneficiary forecloses under this Deed of Trust
or enters into a new lease with any lessor under a Ground Lease pursuant to
the provisions for a new lease, if any, contained in the applicable Ground
Lease or any document supplementing the Ground Lease, then the sublessee
shall attorn to Beneficiary or its assignee and the sublease will remain in
full force and effect in accordance with its terms and notwithstanding the
termination of the applicable Ground Lease.
xii) Trustor shall not waive, excuse, condone or in any way
release or discharge the lessor under any Ground Lease of or from such
lessor's material obligations, covenants and/or conditions under the Ground
Lease without the prior written consent of Beneficiary.
xiii) If any default under any Ground Lease shall have occurred
and be continuing, Trustor shall promptly execute, acknowledge and deliver
to Beneficiary such
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instruments as may reasonably be required to permit Beneficiary to cure
such default under such Ground Lease or permit Beneficiary to take such
other action required to enable Beneficiary to cure or remedy the matter in
default and preserve the security interest of Beneficiary under this Deed
of Trust with respect to such Ground Lease. Trustor hereby irrevocably
appoints Beneficiary as its true and lawful attorney-in-fact to do, in its
name or otherwise, any and all acts and to execute any and all documents
which are necessary to preserve any rights of Trustor under or with respect
to any of the Ground Leases, including, without limitation, the right to
effectuate any extension or renewal of any of the Ground Leases, or to
preserve any rights of Trustor whatsoever in respect of any part of any of
the Ground Leases (and the above powers granted to Trustor are coupled with
an interest and shall be irrevocable).
The generality of the provisions of this Section 10(a) relating to the Ground
Leases shall not be limited by other provisions of this Deed of Trust setting
forth particular obligations of Trustor which are also required of Trustor with
respect to the Ground Leases or the Property.
(b) Easement. If an easement or other incorporeal right constitutes a
portion of the Real Property, Trustor agrees not to terminate or materially
amend, change, or modify such easement or other right or interest, or any right
thereto or interest therein, without the prior written consent of Beneficiary.
Consent to one amendment, change, agreement or modification shall not be deemed
to be a waiver of the right to require consent to other, future or successive
amendments, changes, agreements or modifications. Trustor agrees to perform all
obligations and agreements with respect to said easement or other right or
interest and shall not take any action or omit to take any action which would
effect or permit the termination thereof. Trustor agrees to promptly notify
Beneficiary in writing with respect to any default or alleged default by any
party thereto and to deliver to Beneficiary copies of all notices, demands,
complaints or other communications received or given by Trustor with respect to
any such default or alleged default. Beneficiary shall have the option to cure
any such default and to perform any or all of Trustor's obligations thereunder
or with respect thereto. All sums expended by Beneficiary in curing any such
default shall be secured hereby and shall be immediately due and payable without
demand or notice and shall bear interest from date of expenditure at an annual
rate equal to the Agreed Rate.
11. Further Acts. Trustor shall do and perform all acts necessary to
keep valid and effective the charges and lien hereof, to carry into effect its
object and purposes, to protect the lawful owners of the Guaranty and other
obligations secured hereby; shall execute and deliver to Beneficiary at any
time, upon request of Beneficiary, all other and further instruments in writing
necessary to vest in and secure to Trustee each and every part of the Real
Property and to Beneficiary the Rents therefrom and rights and interest of
Beneficiary therein or with respect thereto; and, upon request by the
Beneficiary, shall supply evidence of fulfillment of each of the covenants
herein contained concerning which a request for such evidence has been made.
12. Assignment of Rents.
(a) Assignment to Beneficiary; Trustor's Limited License to Collect
Prior to Default. Notwithstanding any language contained herein, or in any other
document, to the contrary, Trustor hereby irrevocably and absolutely assigns and
transfers to Beneficiary, without having to first take possession of the
Property, all Rents, including all present and future Leases and other rental
agreements, reserving unto Trustor a license to collect such Rents prior to
written notice to Trustor of
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the occurrence of any Event of Default. Subsequent to the occurrence of an Event
of Default, and written notice to Trustor thereof, any Rents, including those
past due, unpaid or undetermined, may be collected by Beneficiary or its agent,
and any amount so collected shall be applied, less costs and expenses of
operation and collection, including reasonable attorneys' fees, to any
indebtedness guaranteed by the Guaranty and/or other obligations secured hereby,
and in such order as Beneficiary shall determine. The collection of such Rents,
and the application thereof as aforesaid, shall not cure or constitute a waiver
of any default or notice of default hereunder or invalidate any act done
pursuant to such notice. Trustor and Beneficiary intend that this assignment
shall be a present, absolute and unconditional assignment, not an assignment for
additional security only, and shall, immediately upon the execution hereof,
subject to the license granted above, give Beneficiary, and its agent, the right
to collect the Rents and to apply them as aforesaid. Nothing contained herein,
nor any collection of Rents by Beneficiary, or its agent or a receiver, shall be
construed to make Beneficiary (i) a "Mortgagee-in-Possession" of the Property so
long as Beneficiary has not itself entered into actual possession of the
Property; (ii) responsible for performing any of the obligations of the lessor
under any Lease; (iii) responsible for any waste committed by lessees or any
other parties, any dangerous or defective condition of the Property, or any
negligence in the management, upkeep, repair or control of the Property; or (iv)
liable in any manner for the Property or the use, occupancy, enjoyment or
operation of all or any part of it.
(b) No Other Assignments. Trustor hereby represents to Beneficiary
that there is no assignment or pledge of any Leases of, or Rentals from, the
Property now in effect, and covenants that, until the Notes are fully paid and
the other Secured Obligations are fully satisfied, Trustor will not make any
such assignment or pledge to anyone other than Beneficiary nor will it accept
any periodic payments which are to be made pursuant to such Leases or Rents more
than ten (10) days in advance of the date on which such payments are due.
13. Actions Affecting Property. Trustor shall give Beneficiary and
Trustee prompt written notice of the assertion of any claim with respect to, or
the filing of any action or proceeding affecting or purporting to affect, the
Property, or title thereto or any right of possession thereof, or this Deed of
Trust or the security hereof or the rights or powers of Beneficiary or Trustee
hereunder. Trustor shall appear in and contest any such action or proceeding at
Trustor's sole expense; and shall pay all costs and expenses, including cost of
evidence of title and attorneys' fees, in any such action or proceeding in which
Beneficiary or Trustee may appear.
14. Eminent Domain. If any proceeding or action be commenced for the
taking of the Property, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, condemnation or otherwise,
or if the same be taken or damaged by reason of any public improvement or
condemnation proceeding, or in any other manner, or should Trustor receive any
notice or other information regarding such proceeding, action, taking or damage
(including, without limitation, a proposal to purchase the Property or some
portion thereof in lieu of condemnation), Trustor shall give prompt written
notice thereof to Beneficiary. Beneficiary shall be entitled, at its option,
without regard to the adequacy of its security, to investigate and negotiate
with the condemnor concerning the proposed taking, to commence, appear in and
prosecute in its own name any such action or proceeding, and, if an Event of
Default then exists hereunder, to make any compromise or settlement in
connection with such taking or damage. Trustor shall not compromise or settle
any such action or proceeding or agree to any sale in lieu of condemnation
without the prior written consent of Beneficiary. All compensation, awards,
damages, rights of action and proceeds awarded to Trustor by reason of any such
taking, transfer or damage (the "Award") are hereby assigned to Beneficiary and
Trustor agrees to execute such further
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assignments of the Award as Beneficiary or Trustee may require. After deducting
therefrom all costs and expenses (regardless of the particular nature thereof
and whether incurred with or without suit), including attorneys' fees, incurred
by it in connection with any such negotiations, action or proceeding (whether or
not prosecuted to judgment), Beneficiary shall, if (i) an Event of Default does
not then exist hereunder, and (ii) if application of the Award to restoration of
the Property will not, in Beneficiary's reasonable judgment, impair
Beneficiary's security for the Secured Obligations, apply the Award to the
restoration of the Property, subject to such conditions as Beneficiary shall
determine (it being expressly understood and agreed that Beneficiary may
condition disbursement of such proceeds for restoration upon proof that an
amount equal to the sum which Beneficiary is requested to disburse has
theretofore been paid by Trustor without reimbursement therefor, or is then due
and payable, for materials theretofore installed or work theretofore performed
upon the Property and properly includable in the cost of repair, reconstruction
or restoration thereof). If, at the time of receipt by Beneficiary of such
proceeds, (i) an Event of Default then exists hereunder, or (ii) application of
the Award to restoration will, in Beneficiary's reasonable judgment, impair
Beneficiary's security for the Secured Obligations, Beneficiary shall have the
option, in its sole and absolute discretion, (1) to apply all or any portion of
the Award upon any indebtedness guaranteed by the Guaranty and in such order as
Beneficiary may determine, notwithstanding that said indebtedness or the
performance of said obligation may not be due according to the terms thereof, or
(2) to apply all or any portion of the Award to the restoration of the Property,
subject to such conditions as Beneficiary may determine, or (3) to deliver all
or any portion of the Award, after such deductions, to Trustor, subject to such
conditions as Beneficiary may determine (and, if the Award is not sufficient to
satisfy the Secured Obligations in full, Trustor shall immediately pay any
remaining balance, together with all accrued interest thereon). Nothing herein
contained shall be deemed to excuse Trustor from restoring, repairing and
maintaining the Property, as herein provided, regardless of whether or not the
Award is available for restoration, whether or not any such Award is sufficient
in amount, or whether or not the Property can be restored to the same condition
and character as existed prior to such damage or partial taking. Trustor hereby
specifically, unconditionally and irrevocably waives all rights of a property
owner under all laws, including NRS 37.115, as amended or recodified from time
to time, which provide for allocation of condemnation proceeds between a
property owner and a lienholder.
15. Due on Sale. Except as otherwise permitted by the Credit
Agreement, if Trustor shall sell or convey, or create or permit to exist any
mortgage, pledge, security interest or other encumbrance on, or in any other
manner alienate or otherwise "transfer" the Real Property hereby encumbered or
any part thereof or any interest therein, or shall enter into any agreement for
the same, or shall be divested of its title in any manner or way, whether
voluntary or involuntary or by merger, without the written consent of
Beneficiary being first had and obtained, any indebtedness guaranteed by the
Guaranty or other obligation secured hereby, irrespective of the maturity dates
expressed in the Notes or any other notes evidencing the same, at the option of
Beneficiary, and without demand or notice, shall immediately become due and
payable. Consent to one such transaction shall not be deemed to be a waiver of
the right to require consent to future or successive transactions. Beneficiary
may grant or deny such consent in its sole discretion and, if consent should be
given, any such transfer shall be subject to this Deed of Trust, and any such
transferee shall assume all obligations hereunder and agree to be bound by all
provisions contained herein. Such assumption shall not, however, release Trustor
or any maker or guarantor of any Secured Obligation from any liability with
respect thereto without the prior written consent of Beneficiary. As used
herein, "transfer" includes the direct or indirect sale, agreement to sell,
transfer, conveyance, pledge, collateral assignment or hypothecation of the Real
Property, or any portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, the
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execution of any installment land sale contract or similar instrument affecting
all or a portion of the Real Property, or the lease of all or substantially all
of the Real Property. The term "transfer" shall also include the direct or
indirect transfer, assignment, hypothecation or conveyance of legal or
beneficial ownership of any stock in Trustor.
16. Partial or Late Payments. By accepting payment of any indebtedness
guaranteed by the Guaranty after its due date, Beneficiary does not waive its
right either to require prompt payment, when due, of all other indebtedness so
secured or to declare default, as herein provided, for failure to so pay.
17. Reconveyance By Trustee. Upon receipt of written request from
Beneficiary reciting that all sums guaranteed by the Guaranty or otherwise
secured hereby have been paid and upon surrender of this Deed of Trust and the
Guaranty secured hereby to Trustee for cancellation and retention, or such other
disposition as Trustee, in its sole discretion, may choose, and upon payment of
its fees, the Trustee shall reconvey, without warranty or recourse, the Property
then held hereunder. The recitals in such reconveyance of any matters of fact
shall be conclusive proof of the truth thereof. The grantee in such reconveyance
may be described in general terms as "the person or persons legally entitled
thereto".
18. Right of Beneficiary and Trustee to Appear. If, during the
existence of the trust created hereby, there be commenced or pending any suit or
action materially and adversely affecting the Property, or any part thereof, or
the title thereto, or if any adverse claim for or against the Property, or any
part thereof, be made or asserted, the Trustee or Beneficiary may appear or
intervene in the suit or action and retain counsel therein and, unless such suit
or action is being diligently contested in good faith by Trustor and Trustor
shall have established and maintained adequate reserves with Beneficiary for the
full payment and satisfaction of such suit or action if determined adversely to
Trustor, may defend same, or otherwise take such action therein as the Trustee
or Beneficiary may be advised and may pay and expend such sums of money as the
Trustee or Beneficiary may deem to be necessary and Trustor shall pay all
reasonable costs and expenses of Trustee and Beneficiary incurred in connection
therewith.
19. Performance by Trustee or Beneficiary. If Trustor fails to make
any payment or perform any act as and in the manner provided in any of the Loan
Documents, then the Trustee or Beneficiary, at the election of either of them
and without any obligation to do so, after the giving of reasonable notice to
the Trustor, or any successor in interest of the Trustor, or any of them and
without releasing Trustor from any obligation hereunder, may make such payment
or perform such act and incur any liability, or expend whatever amounts, in its
absolute discretion, it may deem necessary therefor. In connection therewith
(without limiting their general and other powers, whether conferred herein, in
another Loan Document or by law), Beneficiary and Trustee, and each of them,
shall have and are hereby given the right, but not the obligation, (i) to enter
upon and take possession of the Property; (ii) to make additions, alterations,
repairs and improvements to the Property which they or either of them may
consider necessary or proper to keep the Property in good condition and repair;
(iii) to appear and participate in any action or proceeding affecting or which
may affect the security hereof or the rights or powers of Beneficiary or
Trustee; (iv) to pay, purchase, contest or compromise any encumbrance, claim,
charge, lien or debt which in the judgment of either may affect or appears to
affect the security of this Deed of Trust or to be prior or superior hereto; and
(v) in exercising such powers, to pay necessary expenses, including employment
of counsel and other necessary or desirable consultants. All sums incurred or
expended by the Trustee or Beneficiary, under the terms hereof (including,
without limiting
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the generality of the foregoing, costs of evidence of title, court costs,
appraisals, surveys, and receiver's, Trustee's and attorneys' fees, costs and
expenses (including, without limitation, the fees and expenses of attorneys for
Trustee), whether or not an action is actually commenced in connection
therewith), shall become due and payable by Trustor to Trustee within ten (10)
days and shall bear interest until paid at an annual percentage rate equal to
the Agreed Rate. In no event shall payment by Trustee or Beneficiary be
construed as a waiver of the default occasioned by Trustor's failure to make
such payment or payments.
20. Inspections. Beneficiary, or its agents, representatives or
workers, are authorized to enter at any reasonable time upon or in any part of
the Property for the purpose of inspecting the same and for the purpose of
performing any of the acts it is authorized to perform hereunder or under the
terms of any of the Loan Documents.
21. Invalidity of Lien. If the lien of this Deed of Trust is invalid
or unenforceable as to any part of the debt, or if the lien is invalid or
unenforceable as to any part of the Property, the unsecured or partially secured
portion of the debt shall be completely paid prior to the payment of the
remaining and secured or partially secured portion of the debt, and all payments
made on the debt, whether voluntary or under foreclosure or other enforcement
action or procedure, shall be considered to have been first paid on and applied
to the full payment of that portion of the debt which is not secured or is not
fully secured by the lien of this Deed of Trust.
22. Subrogation. To the extent that any sums advanced by Beneficiary
are used to pay any outstanding lien, charge or prior encumbrance against the
Property, such sums shall be deemed to have been advanced by Beneficiary at
Trustor's request and Beneficiary shall be subrogated to any and all rights and
liens held by any owner or holder of such outstanding liens, charges and prior
encumbrances, regardless of whether said liens, charges or encumbrances are
released.
23. Events of Default. Trustor will be in default under this Deed of
Trust upon the occurrence of any one or more of the following events (some or
all collectively, "Events of Default"; any one singly, an "Event of Default"):
(a) Failure to Pay. Any amount due under any of the Notes, the
Guaranty, the Credit Agreement, this Deed of Trust or any other Loan Document,
or any other amount the payment of which is secured hereby, is not paid when
due; or
(b) Other Breaches Hereof. A breach by Trustor of any representation,
warranty or covenant in this Deed of Trust which is not cured within any
applicable notice and cure period provided in the Credit Agreement with respect
to such breach; or
(c) Defaults Under Other Loan Documents. The occurrence under any of
the Loan Documents of an "Event of Default" (as defined therein).
24. Remedies. At any time after an Event of Default, Beneficiary and
Trustee will be entitled to invoke any and all of the following rights and
remedies, all of which will be cumulative, and the exercise of any one or more
of which shall not constitute an election of remedies:
(a) Acceleration. Beneficiary may declare any or all of the Secured
Obligations to
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be due and payable immediately, without presentment, demand, protest or notice
of any kind.
(b) Receiver. Beneficiary may apply to any court of competent
jurisdiction for, and obtain appointment of, a receiver for the Property or any
part thereof, without notice to Trustor or anyone claiming under Trustor, and
without regard to the then value of the Property or the adequacy of any security
for the Secured Obligations, and Trustor hereby irrevocably consents to such
appointment and waives notice of any application therefor. Any such receiver or
receivers shall have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of Beneficiary in case of entry as
provided herein and in the Credit Agreement and shall continue as such and
exercise all such powers until the later of (i) the date of confirmation of sale
of all of the Property; (ii) the disbursement of all proceeds of the Property
collected by such receiver and the payment of all expenses incurred in
connection therewith; or (iii) the termination of such receivership with the
consent of Beneficiary or pursuant to an order of a court of competent
jurisdiction. Beneficiary may also request, in connection with any foreclosure
proceeding hereunder, that the Nevada Gaming Commission petition a District
Court of the State of Nevada for the appointment of a supervisor to conduct the
normal gaming activities on the Property following such foreclosure proceeding.
(c) Entry. Beneficiary, in person, by agent or by court-appointed
receiver, may enter, take possession of, manage and operate all or any part of
the Property, subject to applicable Gaming Laws (as defined in the Credit
Agreement), and may also do any and all other things in connection with those
actions that Beneficiary may, in its sole discretion, consider necessary and
appropriate to protect the security of this Deed of Trust. Such other things may
include, among other things, any of the following: taking and possessing all of
Trustor's or the then owner's books and records; entering into, enforcing,
modifying, or canceling Leases on such terms and conditions as Beneficiary may
consider proper; obtaining and evicting tenants; fixing or modifying Rents;
collecting and receiving any payment of money owing to Trustor; completing
construction; and contracting for and making repairs and alterations. If
Beneficiary so requests, Trustor shall assemble all of the Property that has
been removed from the Real Property and make all of it available to Beneficiary
at the site of the Real Property. Trustor hereby irrevocably constitutes and
appoints Beneficiary as Trustor's attorney-in-fact to perform such acts and
execute such documents as Beneficiary in its sole discretion may consider to be
appropriate in connection with taking these measures, including endorsement of
Trustor's name on any instruments. Regardless of any provision of this Deed of
Trust or the Credit Agreement, Beneficiary shall not be considered to have
accepted any property other than cash or immediately available funds in
satisfaction of any obligation of Trustor to Beneficiary, unless Beneficiary has
given express written notice of Beneficiary's election of that remedy in
accordance with the Nevada Uniform Commercial Code, as it may be amended or
recodified from time to time.
(d) Cure; Protection of Security. Either Beneficiary or Trustee may
cure any breach or default of Trustor, and if it chooses to do so in connection
with any such cure, Beneficiary or Trustee may also, enter the Property and,
whether or not Beneficiary or Trustee enter the Property, do any and all other
things which it, in its sole discretion, may consider necessary and appropriate
to protect the security of this Deed of Trust, including, without limitation,
the right to complete the Improvements. Such other things may include: appearing
in and/or defending any action or proceeding which purports to affect the
security of, or the rights or powers of Beneficiary or Trustee under, this Deed
of Trust; paying, purchasing, contesting or compromising any encumbrance,
charge, lien or claim of lien which in Beneficiary's or Trustee's sole judgment
is or may be senior in priority to this Deed of Trust, such judgment of
Beneficiary or Trustee to be conclusive as among the parties to this Deed of
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Trust; obtaining insurance and/or paying any premiums or charges for insurance
required to be carried under this Deed of Trust; otherwise caring for and
protecting any and all of the Property; and employing counsel, accountants,
contractors and other appropriate persons to assist Beneficiary or Trustee.
Beneficiary and Trustee may take any of the actions permitted under this
Subsection either with or without giving notice to any person.
(e) Uniform Commercial Code Remedies. With respect to Personal
Property, Beneficiary may exercise any or all of the remedies granted to a
secured party under NRS Article 104.9101 et seq. (the Nevada enactment of the
Uniform Commercial Code), together with any and all other rights and remedies
provided in the Security Agreement.
(f) Judicial Action. Beneficiary may bring an action in any court of
competent jurisdiction to foreclose this Deed of Trust or to obtain specific
enforcement of any of the covenants or agreements of this Deed of Trust or for
any other remedy provided herein, in the Guaranty, in the Credit Agreement, in
any Loan Document or otherwise provided by law or in equity.
(g) Power of Sale. Under the power of sale herein granted, Beneficiary
shall have the discretionary right to cause some or all of the Property,
including any Property which constitutes personal property, to be sold or
otherwise disposed of in any combination and in any manner permitted by
applicable law.
(i) Sales of Personal Property.
(A) For purposes of the power of sale herein granted,
Beneficiary may elect to treat as personal property any Property which
is intangible or which can be severed from the Land or Improvements
without causing structural damage. If Beneficiary chooses to do so,
Beneficiary may dispose of any personal property separately from the
sale of real property, in any manner permitted by or under the NRS,
including any public or private sale, or in any manner permitted by
any other applicable law.
(B) The following provision shall apply in the absence of
any specific statutory requirement which permits or requires a
different notice period: In connection with any sale or other
disposition of such Property, Trustor agrees that the following
procedures constitute a commercially reasonable sale: Beneficiary
shall mail written notice of the sale to Trustor not later than
fifteen (15) days prior to such sale. Not less than once per week
during the two weeks (fourteen (14) days) immediately preceding such
sale, Beneficiary will publish notice of the sale in a local daily
newspaper of general circulation. Upon receipt of any written request,
Beneficiary will, to the extent reasonably practicable, make the
Property available to any bona fide prospective purchaser for
inspection during reasonable business hours prior to the sale.
Notwithstanding any provision to the contrary, Beneficiary shall be
under no obligation to consummate a sale if, in its judgment, none of
the offers received by it equals the fair value of the Property
offered for sale. The foregoing procedures do not constitute the only
procedures that may be commercially reasonable.
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(ii) Trustee's Sales of Real Property or Mixed Collateral.
(A) Beneficiary may choose to dispose of some or all of the
Property which consists solely of real property in any manner then
permitted by applicable law. In its discretion, Beneficiary may also
or alternatively choose to dispose of some or all of the Property, in
any combination consisting of both real and personal property,
together in one sale to be held in accordance with the law and
procedures applicable to real property. Trustor agrees that any sale
of personal property together with real property constitutes a
commercially reasonable sale of the personal property. For purposes of
this power of sale, either a sale of real property alone, or a sale of
both real and personal property together in accordance with law, will
sometimes be referred to as a "Trustee's Sale."
(B) Before any Trustee's Sale, Beneficiary or Trustee shall
give and record such notice of default and election to sell as may
then be required by law. When all time periods then legally mandated
have expired, and after such notice of sale as may then be legally
required has been given, Trustee shall sell the property being sold at
a public auction to be held at the time and place specified in the
notice of sale. Neither Trustee nor Beneficiary shall have any
obligation to make demand on Trustor before any Trustee's Sale. From
time to time, in accordance with then applicable law, Trustee may, and
in any event at Beneficiary's request shall, postpone any Trustee's
sale by public announcement at the time and place noticed for that
sale, or may, in its discretion, give a new notice of sale.
(C) At any Trustee's Sale, Trustee shall sell to the highest
bidder at public auction for cash in lawful money of the United
States. Trustee shall execute and deliver to the purchaser(s) a deed
or deeds conveying the property being sold without any covenant or
warranty whatsoever, express or implied. The recitals in any such deed
of any matters or facts, including any facts bearing upon the
regularity or validity of any Trustee's Sale, shall be conclusive
proof of their truthfulness. Any such deed shall be conclusive against
all persons as to the facts recited in it.
(h) Single or Multiple Foreclosure Sales. If the Property at the time
of sale or other disposition consists of more than one lot, parcel or item of
property, Beneficiary may:
(i) Designate the order in which the lots, parcels or items shall
be sold or disposed of or offered for sale or disposition; and
(ii) Elect to dispose of the lots, parcels or items through a
single consolidated sale or disposition to be held or made under the
power of sale herein granted, or in connection with judicial
proceedings, or by virtue of a judgment and decree of foreclosure and
sale; or through two or more such sales or dispositions; or in any
other manner that Beneficiary may deem to be in its best interests
(any such sale or disposition, a "Foreclosure Sale;" any two or more,
"Foreclosure Sales").
If Beneficiary chooses to have more than one Foreclosure Sale, Beneficiary at
its option may cause the
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Foreclosure Sales to be held simultaneously or successively, on the same day, or
on such different days and at such different times and in such order as
Beneficiary may deem to be in its best interests. No Foreclosure Sale shall
terminate or affect the liens of this Deed of Trust on any part of the Property
which has not been sold, until all of the Secured Obligations have been paid in
full.
25. Costs of Enforcement. If any Event of Default occurs, Beneficiary
and Trustee, and each of them, may employ an attorney or attorneys to protect
their rights hereunder. Trustor promises to pay to Beneficiary, on demand, the
fees and expenses of such attorneys and all other costs of enforcing the
obligations secured hereby, including but not limited to, recording fees, the
expense of a Trustee's Sale Guarantee, Trustee's fees and expenses, receivers'
fees and expenses, and all other expenses, of whatever kind or nature, incurred
by Beneficiary and Trustee, and each of them, in connection with the enforcement
of the obligations secured hereby, whether or not such enforcement includes the
filing of a lawsuit. Until paid, such sums shall be secured hereby and shall
bear interest, from date of expenditure, at an annual rate equal to the Agreed
Rate.
26. Remedies Cumulative and Not Exclusive. Trustee and Beneficiary,
and each of them, shall be entitled to enforce payment and performance of any
indebtedness guaranteed by the Guaranty or other obligations secured hereby and
to exercise all rights and powers under this Deed of Trust, any agreement
secured hereby or any other agreement, or under any laws now or hereafter in
force, notwithstanding some or all of the said indebtedness guaranteed by the
Guaranty and other obligations secured hereby may now or hereafter be otherwise
secured, whether by mortgage, deed of trust, pledge, lien, assignment or
otherwise. Neither the acceptance of this Deed of Trust nor its enforcement
whether by court action or pursuant to the power of sale or other powers herein
contained, shall prejudice or in any manner affect Trustee's or Beneficiary's
right to realize upon or enforce any other security now or hereafter held by
Trustee or Beneficiary, it being agreed that Trustee and Beneficiary, and each
of them, shall be entitled to enforce this Deed of Trust and any other security
now or hereafter held by Beneficiary or Trustee in such order and manner as they
or either of them may in their absolute discretion determine. No remedy herein
conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive
of any other remedy herein or by law provided or permitted, but each shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute. Every power or remedy
given by any other instrument or agreement to Trustee or Beneficiary or to which
either of them may be otherwise entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by
Trustee or Beneficiary and either of them may pursue inconsistent remedies.
27. Credit Bids. At any Foreclosure Sale, any person, including
Trustor, Trustee or Beneficiary, may bid for and acquire the Property or any
part thereof to the extent permitted by then applicable law. Instead of paying
cash for such property, Beneficiary may settle therefor by crediting such
portion of the following obligations against the sales price of the property as
is necessary to equal such price:
(a) First, the portion of the Secured Obligations attributable to the
expenses of sale, costs of any action and any other sums for which Trustor is
obligated to pay or reimburse Beneficiary or Trustee hereunder or under any
other Loan Document; and
(b) Second, any of the other Secured Obligations, in any order and
proportion as Beneficiary, in its sole discretion, may elect.
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28. Application of Foreclosure Sale Proceeds. Beneficiary and Trustee
shall apply the proceeds of any Foreclosure Sale in the following manner:
(a) First, to pay the portion of the Secured Obligations attributable
to the expenses of sale, costs of any action and any other sums for which
Trustor is obligated to reimburse Beneficiary or Trustee hereunder or under any
other Loan Document;
(b) Second, to pay the portion of the Secured Obligations attributable
to any sums expended or advanced by Beneficiary or Trustee under the terms of
this Deed of Trust which then remain unpaid;
(c) Third, to pay any and all other Secured Obligations, in any order
and proportion as Beneficiary, in its sole discretion, may elect; and
(d) Fourth, the remainder, if any, shall be remitted to the person or
persons entitled to it.
29. Application of Rents and Other Sums. Beneficiary shall apply any
and all Rents collected by it, and any and all sums, other than proceeds of a
Foreclosure Sale, which Beneficiary may receive or collect, in the following
manner:
(a) First, to pay the portion of the Secured Obligations attributable
to the costs and expenses of operation and collection that may be incurred by
Trustee, Beneficiary or any receiver;
(b) Second, to pay any and all other Secured Obligations in any order
and proportion as Beneficiary, in its sole discretion, may elect; and
(c) Third, the remainder, if any, shall be remitted to the person or
persons entitled to it.
Beneficiary shall have no liability for any funds which it does not actually
receive.
30. Incorporation of Certain Nevada Covenants. The following
covenants, Nos. 1, 3, 4 (at the Agreed Rate), 6, 7 (reasonable), 8 and 9 of NRS
107.030, where not in conflict with the provisions of the Loan Documents, are
hereby adopted and made a part of this Deed of Trust. Upon any Event of Default
by Trustor hereunder, Beneficiary may (a) declare all sums secured immediately
due and payable without demand or notice or (b) have a receiver appointed as a
matter of right without regard to the sufficiency of said property or any other
security or guaranty and without any showing as required by NRS 107.100. All
remedies provided in this Deed of Trust are distinct and cumulative to any other
right or remedy under this Deed of Trust or afforded by law or equity and may be
exercised concurrently, independently or successively. The sale of said property
conducted pursuant to Covenants Nos. 6, 7 and 8 of NRS 107.030 may be conducted
either as to the whole of said property or in separate parcels and in such order
as Trustee may determine.
31. Substitution of Trustee. Beneficiary or assigns may, from time to
time, by a written instrument executed and acknowledged by Beneficiary, recorded
in the county in which the Real
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Property is located and otherwise complying with applicable law, appoint a
successor trustee or trustees to any Trustee named herein or acting hereunder,
to execute the trust created by the Deed of Trust or other conveyance in trust.
Upon the recording of such instrument, the new trustee or trustees shall,
without conveyance from the predecessor trustee, be vested with all the title,
estate, interest, rights, powers, duties and trusts in the premises vested in or
conferred upon the predecessor trustee. If there be more than one trustee,
either may act alone and execute the trusts upon the request of the Beneficiary,
and all his acts thereunder shall be deemed to be the acts of all trustees, and
the recital in any conveyance executed by such sole trustee of such request
shall be conclusive evidence thereof, and of the authority of such sole trustee
to act.
32. Binding Nature. This Deed of Trust applies to, inures to the
benefit of and binds Trustor and the heirs, legatees, devisees, administrators,
personal representatives, executors and the successors and assigns thereof,
Trustee and Beneficiary. As used herein, the term "Beneficiary" shall include
the owners and holders of the Notes and other Secured Obligations from time to
time, whether or not named as Beneficiary herein (it being expressly agreed,
however, that Beneficiary may act through an agent; that only the signature of
such agent is required on any amendment hereof or any consent, approval or other
action hereunder; and that First Interstate Bank of Nevada, N.A., is the initial
agent hereunder); the term "Trustee" shall mean the trustee appointed hereunder
from time to time, whether or not notice of such appointment is given; and the
term "Trustor" shall mean the Trustor named herein and the
successors-in-interest, if any, of said named Trustor, in and to the Property or
any part thereof. If there be more than one Trustor hereunder, their obligations
hereunder shall be joint and several. It is expressly agreed that the Trust
created hereby is irrevocable by Trustor.
33. Acceptance of Trust; Resignation by Trustee. Trustee accepts this
trust when this Deed of Trust, duly executed and acknowledged, is made a public
record as provided by law, reserving, however, unto the Trustee, the right to
resign from the duties and obligations imposed herein whenever Trustee, in its
sole discretion, deems such resignation to be in the best interest of the
Trustee. Written notice of such resignation shall be given to Trustor and
Beneficiary.
34. Full Performance Required; Survival of Warranties. All
representations, warranties and covenants of Trustor contained in any loan
application or made to Beneficiary in or in connection with the Guaranty or any
of the Loan Documents or incorporated by reference in any of them, shall survive
the execution and delivery of this Deed of Trust and shall remain continuing
obligations, warranties and representations of Trustor so long as any portion of
the obligations secured by this Deed of Trust remains outstanding.
35. Waiver of Certain Rights By Trustor. Trustor waives, to the extent
permitted by law, (i) the benefit of all laws now existing or that may hereafter
be enacted providing for any appraisement before sale of any portion of the
Property, (ii) all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the secured
indebtedness and marshalling in the event of foreclosure of the liens hereby
created, and (iii) all rights and remedies which Trustor may have or be able to
assert by reason of the laws of the State of Nevada pertaining to the rights and
remedies of sureties. Without limiting the generality of the foregoing, Trustor
waives, to the extent permitted by law, all rights (including any rights
provided by NRS 100.040 and 100.050) to direct the order in which any of the
Property shall be sold in the event of any sale or sales pursuant hereto and to
have any of the Property or any other property now or hereafter constituting
security for the indebtedness guaranteed by the Guaranty marshalled upon any
foreclosure of this Deed of Trust or of any
35
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other security for any of such indebtedness.
36. Construction. The language in all parts of this Deed Of Trust
shall be in all cases construed simply according to its fair meaning and not
strictly for or against any of the parties hereto. Headings at the beginning of
Sections, Subsections, paragraphs and subparagraphs of this Deed of Trust are
solely for the convenience of the parties, are not a part hereof and shall not
be used in construing this Deed of Trust. The preamble, any recitals and all
exhibits and schedules to this Deed of Trust are part of this Deed of Trust and
are incorporated herein by this reference. When required by the context:
whenever the singular number is used in this Deed of Trust, the same shall
include the plural, and the plural shall include the singular; and the masculine
gender shall include the feminine and neuter genders and vice versa. Unless
otherwise required by the context (or otherwise provided herein): the words
"herein", "hereof" and "hereunder" and similar words shall refer to this Deed of
Trust generally and not merely to the provision in which such term is used; the
word "person" shall include individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority and other entity of whatever
nature; the words "including", "include" or "includes" shall be interpreted in a
non-exclusive manner as though the words "but [is] not limited to" or "but
without limiting the generality of the foregoing" or "without limitation"
immediately followed the same; the word "month" shall mean calendar month; and
the term "business day" shall mean any day other than a Saturday, Sunday or
legal holiday under the laws of the State of Nevada. If the day on which
performance of any act or the occurrence of any event hereunder is due is not a
business day, the time when such performance or occurrence shall be due shall be
the first business day occurring after the day on which performance or
occurrence would otherwise be due hereunder. All times provided in this Deed of
Trust for the performance of any act will be strictly construed, time being of
the essence hereof.
37. Priority. This Deed of Trust is intended to have, and retain,
priority over all other liens and encumbrances upon the Real Property, excepting
only: (i) such Impositions as, at the date hereof, have, or, by law, gain,
priority over the lien created hereby; (ii) covenants, conditions, restrictions,
easements, rights of way and Leases which are of record or are disclosed of
record and which, on the date hereof, affect the Real Property and are superior
in right to or have priority over this Deed of Trust and (iii) Leases, liens,
encumbrances and other matters as to which Beneficiary hereafter expressly
subordinates the lien of this Deed of Trust by written instrument in recordable
form. Under no circumstances shall Beneficiary be obligated or required to
subordinate the lien hereof to any lien, encumbrance, covenant or other matter
affecting the Real Property or any portion thereof. Beneficiary may, however, at
Beneficiary's option, exercisable in its sole and absolute discretion,
subordinate the lien of this Deed of Trust, in whole or in part, to any or all
Leases, liens, encumbrances or other matters affecting all or any portion of the
Real Property, by executing and recording, in the Office of the County Recorder
of the county or counties in which the Real Property is located, a unilateral
declaration of such subordination specifying the Lease, lien, encumbrance or
other matter or matters to which this Deed of Trust shall thereafter be
subordinate.
38. Amendments. This Deed of Trust cannot be waived, changed,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of any waiver, change, discharge or
termination is sought.
39. Financing Statement. Portions of the Personal Property (and
portions of the
36
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Real Property) are goods which are or are to become fixtures on or relating to
the Real Property. This Deed of Trust constitutes a financing statement filed as
a fixture filing in the Official Records of the County Recorder of the County in
which the Property is located with respect to any and all fixtures included
within the term "Property" as used herein and with respect to any goods or other
Personal Property that may now be or hereafter become such fixtures. The address
of Beneficiary, from which information concerning the security interest granted
hereunder may be obtained, is:
First Interstate Bank of Nevada, N.A.
Gaming Industry Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attn: Steve Byrne, V.P.
The address of Trustor, from which information concerning the security interest
granted hereunder may be obtained, is:
-------------------------------
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: President and Chief Operating Officer
With respect to the Leased Land, the address of the record owner(s), from which
information concerning the security interest granted hereunder may be obtained,
is:
-------------------------------
-------------------------------
-------------------------------
-------------------------------
Attn: ________________________
40. Attorney-in-Fact. Trustor hereby appoints Beneficiary the
attorney-in-fact of Trustor to prepare, sign, file and record one or more
financing statements; any documents of title or registration, or like papers,
and to take any other action deemed necessary, useful or desirable by
Beneficiary to perfect and preserve Beneficiary's security interest against the
rights or interests of third persons.
41. Releases, Extensions, Modifications and Additional Security.
(a) From time to time, Beneficiary may perform any of the following
acts without incurring any liability or giving notice to any person, and without
affecting the personal liability of any person for the payment of the Secured
Obligations (except as provided below), and without affecting the security
hereof for the full amount of the Secured Obligations on all Property remaining
subject hereto, and without the necessity that any sum representing the value of
any portion of the Property affected by the Beneficiary's action be credited on
the Secured Obligations:
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(i) Release any person liable for payment of any Secured
Obligation;
(ii) Extend the time for payment, or otherwise alter the terms of
payment, of any Secured Obligation;
(iii) Accept additional real or personal property of any kind as
security for any Secured Obligation, whether evidenced by deeds of trust,
mortgages, security agreements or any other instruments of security; or
(iv) Alter, substitute or release any property securing the Secured
Obligations.
(b) From time to time when requested to do so by Beneficiary in
writing, Trustee may perform any of the following acts without incurring any
liability or giving notice to any person:
(i) Consent in writing to the making of any plat or map of the
Property or any part of it;
(ii) Join in granting any easement or creating any restriction
affecting the Property;
(iii) Join in any subordination or other agreement affecting this
Deed of Trust or the lien of it or other agreement or instrument relating
hereto or to the Property or any portion thereof; or
(iv) Reconvey the Property or any part of it without any warranty.
42. Exculpation and Indemnification.
(a) Beneficiary shall not be directly or indirectly liable to Trustor
or any other person as a consequence of any of the following:
(i) Beneficiary's exercise of or failure to exercise any rights,
remedies or powers granted to Beneficiary in this Deed of Trust;
(ii) Beneficiary's failure or refusal to perform or discharge any
obligation or liability of Trustor under any agreement related to the
Property or under this Deed of Trust; or
(iii) Any loss sustained by Trustor or any third party resulting from
Beneficiary's failure to lease the Property, or from any other act or
omission of Beneficiary in managing the Property, after an Event of
Default, unless the loss is caused by the willful misconduct or bad faith
of Beneficiary.
To the extent permitted by applicable law, Trustor hereby expressly waives and
releases all liability of the types described above, and agrees that no such
liability shall be asserted against or imposed upon Beneficiary.
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(b) Except for losses caused by the willful misconduct or bad faith of
Trustee or Beneficiary, Trustor agrees to indemnify Trustee and Beneficiary
against and hold them harmless from all losses, damages, liabilities, claims,
causes of action, judgments, court costs, attorneys' fees and other reasonable
legal expenses, cost of evidence of title, cost of evidence of value, and other
reasonable costs and expenses which either may suffer or incur:
(i) In performing any act required or permitted by this Deed of
Trust or any of the other Loan Documents or by law;
(ii) Because of any failure of Trustor to perform any of Trustor's
obligations; or
(iii) Because of any alleged obligation of or undertaking by
Beneficiary to perform or discharge any of the representations, warranties,
conditions, covenants or other obligations in any document relating to the
Property other than the Loan Documents.
This agreement by Trustor to indemnify Trustee and Beneficiary shall survive the
release and cancellation of any or all of the Secured Obligations and the full
or partial release and/or reconveyance of this Deed of Trust.
(c) Trustor shall pay all amounts arising under the indemnity
obligations of this Deed of Trust immediately upon demand by Trustee or
Beneficiary.
43. Relationship to Guaranty. This Deed of Trust has been executed
pursuant to and is subject to the terms of the Guaranty executed concurrently
herewith and Trustor agrees to observe and perform all provisions contained
therein. If and to the extent of any conflict between the provisions of the
Guaranty and the provisions of this Deed of Trust, the provisions of this Deed
of Trust shall control.
44. Relationship to Security Agreement. Concurrently herewith, Trustor
is entering into the Security Agreement with Beneficiary with respect to the
Personal Property. As provided above, the terms of said Security Agreement
shall, with respect to the Personal Property and the security interest therein
granted hereby, supplement the terms of this Deed of Trust and, if and to the
extent of any conflict with the terms hereof applicable to said security
interest and Personal Property, shall, to the extent enforceable, control.
Nothing in this Section 44 shall be deemed or construed, however, to impair the
rights of Beneficiary to conduct one or more Trustee's Sales at which real and
personal property are sold together pursuant to the laws applicable to the sale
of real property.
45. Intentionally Omitted.
46. Severability. If any provision in or obligation under this Deed of
Trust shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
39
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47. Loan Statement Fees. Trustor shall pay the amount demanded by
Beneficiary or its authorized loan servicing agent for any statement regarding
the obligations secured hereby; provided, however, that such amount may not
exceed the maximum amount allowed by law at the time request for the statement
is made.
48. Notices.
(a) Methods; Addresses. All notices, requests and demands to be made
hereunder to the parties hereto shall be in writing and shall be given by any of
the following means: (i) personal service; (ii) electronic communication,
whether by telex, telegram or telecopying (if confirmed in writing sent by
registered or certified, first class mail, return receipt requested); or (iii)
registered or certified, first class mail, return receipt requested. Such
addresses may be changed by notice to the other parties given in the same manner
as provided above. Any notice, demand or request sent pursuant to either (i) or
(ii) of this Section shall be deemed received upon such personal service or upon
dispatch by electronic means, and, if sent pursuant to (iii) shall be deemed
received three (3) days following deposit in the mail.
To Beneficiary: First Interstate Bank of Nevada, N.A.
Gaming Industry Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attn: Steve Byrne, V.P.
To Trustor: ________________________________
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: President and Chief Operating Officer
With a copy to:________________________________
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: Chief Financial Officer
And a copy to: ________________________________
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: General Counsel
To Trustee: ________________________________
--------------------------------
--------------------------------
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(b) Reliance on Faxes. Each party hereto (a "Recipient") who
receives from another party hereto (a "Sender") by electronic facsimile
transmission (telecopier or fax) any writing which appears to be signed by an
authorized signatory of that Sender is authorized to rely and act upon that
writing in the same manner as if the original signed writing was in the
possession of the Recipient upon oral confirmation of that Sender to the
Recipient that the writing was signed by an authorized signatory of that Sender
and is intended by that Sender to be relied upon by the Recipient. Each party
transmitting any writing to any other party by electronic facsimile transmission
agrees to forward immediately to that Recipient, by expedited means (for next
day delivery, if possible), or by first class mail if the Recipient so agrees,
the signed hard copy of that writing, unless the Recipient expressly agrees to
some other disposition of the original by the Sender.
49. Governing Law. THIS DEED OF TRUST SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT APPLICABLE LAW PROVIDES THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEVADA.
50. Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST TRUSTOR ARISING OUT OF OR RELATING TO THIS DEED OF
TRUST MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN
THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS DEED OF TRUST TRUSTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS DEED OF TRUST. Trustor
hereby agrees that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return receipt requested, to
Trustor at its address provided in this Deed of Trust, such service being hereby
acknowledged by Trustor to be sufficient for personal jurisdiction in any action
against Trustor in any such court and to be otherwise effective and binding
service in every respect. Nothing herein shall affect the right to serve process
in any other manner permitted by law or shall limit the right of Beneficiary to
bring proceedings against Trustor in the courts of any other jurisdiction.
51. Waiver of Jury Trial. TRUSTOR AND BENEFICIARY HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS DEED OF TRUST. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Trustor and Beneficiary each acknowledge
that this waiver is a material inducement for Trustor and Beneficiary to enter
into a business relationship, that Trustor and Beneficiary have already relied
on this waiver in entering into this Deed of Trust and that each will continue
to rely on this waiver in their related future dealings. Trustor and Beneficiary
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal
41
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counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS DEED OF TRUST. In the event of
litigation, this Deed of Trust may be filed as a written consent to a trial by
the court.
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IN WITNESS WHEREOF, Trustor has executed this instrument as of the
day and year first above written.
TRUSTOR:
---------------------------------,
a _______________________________
By:__________________________________
Its:___________________________
STATE OF ____________________ )
) ss
COUNTY OF ___________________ )
This instrument was acknowledged before me on _________________,
1995, by ____________________________________ as ______________________________
of/for_____________________________.
WITNESS my hand and official seal.
----------------------------------
[SEAL]
<PAGE>
EXHIBIT A
Legal Description
Exhibit A-1 -- Legal Description of Leased Land
Exhibit A-2 -- Legal Description of Fee Land
1
<PAGE>
EXHIBIT B
Schedule of Ground Leases
1
<PAGE>
EXHIBIT C
Schedule of Development Contracts
1. Agreement Concerning Development of Golf Course and Residential
Housing, dated February 3, 1995, by and between Players Mesquite Golf
Club, Inc. and River View Limited Liability Company.
2. Agreement, dated April 18, 1995, by and among Players Nevada, Inc.,
Players Mesquite Land, Inc., Bryan K Hafen, Dawn N. Hafen, and Hafen
Dairy, Inc.
3. Amendment Agreement, dated June 2, 1995, by and among Players Mesquite
Golf Club, Inc., River View Limited Liability Company, Players Nevada,
Inc., Players Mesquite Land, Inc., Hafen Dairy, Inc., Bryan K Hafen,
Dawn N. Hafen, and Mesquite Mart, Inc.
4. Memorandum of Agreement, dated June 2, 1995, between Players Mesquite
Golf Club, Inc. and River View Limited Liability Company.
5. Joint Declaration of Covenants and Restrictions, dated June 2, 1995,
by Bryan K Hafen, Dawn N. Hafen, Players Nevada, Inc., and Players
Mesquite Land, Inc.
6. Easement Agreement, (Flood Control) dated June 2, 1995, by and between
Bryan K Hafen, Dawn N. Hafen, and Players Mesquite Golf Club, Inc.
7. Easement Agreement, (Water Storage Pond) dated June 2, 1995, by and
between River View Limited Liability Company and Players Mesquite Gold
Club, Inc.
8. Easement Agreement, (Golf Course Cart Paths) dated June 2, 1995, by
and between River View Limited Liability Company and Players Mesquite
Gold Club, Inc.
9. Grant of Temporary Access Easement, dated June 2, 1995, by River View
Limited Liability Company, Bryan K Hafen, Dawn N. Hafen, Players
Mesquite Golf Club, Inc.
10. Outdoor Advertising Agreement between Mesquite Mart, Inc. and Players
Nevada, Inc.
11. Amendment to Outdoor Advertising Agreement, dated June 2, 1995,
between Mesquite Mart, Inc. and Players Nevada, Inc.
2
<PAGE>
TABLE OF CONTENTS
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DESCRIPTION OF REAL PROPERTY COLLATERAL. . . . . . . . . . . . . . . . . 1
DESCRIPTION OF PERSONAL PROPERTY COLLATERAL. . . . . . . . . . . . . . . 3
1. Certain Representations and Warranties of Trustor . . . . . . . 8
2. Payment of Obligations. . . . . . . . . . . . . . . . . . . . . 8
3. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 8
4. Maintenance of Property . . . . . . . . . . . . . . . . . . . . 8
5. Environmental Obligations.. . . . . . . . . . . . . . . . . . . 9
6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Types and Amounts Required . . . . . . . . . . . . . . . . 10
(b) Uniform Policy Requirements. . . . . . . . . . . . . . . . 13
(c) Blanket and Umbrella Policies. . . . . . . . . . . . . . . 14
(d) Evidence of Insurance. . . . . . . . . . . . . . . . . . . 14
(e) Procurement by Beneficiary . . . . . . . . . . . . . . . . 14
(f) Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . 15
(g) Replacement Cost . . . . . . . . . . . . . . . . . . . . . 15
(h) Separate Insurance . . . . . . . . . . . . . . . . . . . . 15
(i) Compliance with Insurance Requirements . . . . . . . . . . 16
(j) Assignment of Policies upon Foreclosure. . . . . . . . . . 16
(k) Waiver of Subrogation. . . . . . . . . . . . . . . . . . . 16
(l) Requirements Supplemental. . . . . . . . . . . . . . . . . 16
7. Casualties; Insurance Proceeds. . . . . . . . . . . . . . . . . 16
(a) Notice of Casualties . . . . . . . . . . . . . . . . . . . 16
(b) Payment of Proceeds. . . . . . . . . . . . . . . . . . . . 16
(c) Use in Restoration . . . . . . . . . . . . . . . . . . . . 17
(d) Application by Beneficiary . . . . . . . . . . . . . . . . 17
(e) Duty to Restore. . . . . . . . . . . . . . . . . . . . . . 17
8. Taxes and Impositions . . . . . . . . . . . . . . . . . . . . . 18
(a) Payment by Trustor . . . . . . . . . . . . . . . . . . . . 18
(b) New Impositions. . . . . . . . . . . . . . . . . . . . . . 18
(c) Proof of Payment . . . . . . . . . . . . . . . . . . . . . 18
(d) Contest of Assessments . . . . . . . . . . . . . . . . . . 18
(e) Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . 19
i
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(f) Joint Assessment . . . . . . . . . . . . . . . . . . . . . 19
(g) Tax Service. . . . . . . . . . . . . . . . . . . . . . . . 20
9. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10. Leaseholds, Leases, Easements, and Servitudes . . . . . . . . . 20
(a) Leaseholds and Leases. . . . . . . . . . . . . . . . . . . 20
(b) Easement . . . . . . . . . . . . . . . . . . . . . . . . . 25
11. Further Acts. . . . . . . . . . . . . . . . . . . . . . . . . . 25
12. Assignment of Rents . . . . . . . . . . . . . . . . . . . . . . 25
(a) Assignment to Beneficiary; Trustor's Limited License to
Collect Prior to Default . . . . . . . . . . . . . . . . . 25
(b) No Other Assignments . . . . . . . . . . . . . . . . . . . 26
13. Actions Affecting Property. . . . . . . . . . . . . . . . . . . 26
14. Eminent Domain. . . . . . . . . . . . . . . . . . . . . . . . . 26
15. Due on Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 27
16. Partial or Late Payments. . . . . . . . . . . . . . . . . . . . 27
17. Reconveyance By Trustee . . . . . . . . . . . . . . . . . . . . 28
18. Right of Beneficiary and Trustee to Appear. . . . . . . . . . . 28
19. Performance by Trustee or Beneficiary . . . . . . . . . . . . . 28
20. Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21. Invalidity of Lien. . . . . . . . . . . . . . . . . . . . . . . 29
22. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 29
24. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Acceleration . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Receiver . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Cure; Protection of Security . . . . . . . . . . . . . . . 30
(e) Uniform Commercial Code Remedies . . . . . . . . . . . . . 31
(f) Judicial Action. . . . . . . . . . . . . . . . . . . . . . 31
(g) Power of Sale. . . . . . . . . . . . . . . . . . . . . . . 31
(h) Single or Multiple Foreclosure Sales . . . . . . . . . . . 32
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25. Costs of Enforcement. . . . . . . . . . . . . . . . . . . . . . 32
26. Remedies Cumulative and Not Exclusive . . . . . . . . . . . . . 33
27. Credit Bids . . . . . . . . . . . . . . . . . . . . . . . . . . 33
28. Application of Foreclosure Sale Proceeds. . . . . . . . . . . . 33
29. Application of Rents and Other Sums . . . . . . . . . . . . . . 34
30. Incorporation of Certain Nevada Covenants . . . . . . . . . . . 34
31. Substitution of Trustee . . . . . . . . . . . . . . . . . . . . 34
32. Binding Nature. . . . . . . . . . . . . . . . . . . . . . . . . 35
33. Acceptance of Trust; Resignation by Trustee . . . . . . . . . . 35
34. Full Performance Required; Survival of Warranties . . . . . . . 35
35. Waiver of Certain Rights By Trustor . . . . . . . . . . . . . . 35
36. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 35
37. Priority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
38. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
39. Financing Statement . . . . . . . . . . . . . . . . . . . . . . 36
40. Attorney-in-Fact. . . . . . . . . . . . . . . . . . . . . . . . 37
41. Releases, Extensions, Modifications and Additional Security . . 37
42. Exculpation and Indemnification . . . . . . . . . . . . . . . . 38
43. Relationship to Guaranty. . . . . . . . . . . . . . . . . . . . 38
44. Relationship to Security Agreement. . . . . . . . . . . . . . . 39
45. Relationship to Environmental Indemnity . . . . . . . . . . . . 39
46. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 39
47. Loan Statement Fees . . . . . . . . . . . . . . . . . . . . . . 39
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48. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Methods; Addresses . . . . . . . . . . . . . . . . . . . . 39
(b) Reliance on Faxes. . . . . . . . . . . . . . . . . . . . . 40
49. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 40
50. Consent to Jurisdiction and Service of Process. . . . . . . . . 40
51. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . 41
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
EXHIBIT A - Legal Description . . . . . . . . . . . . . . . . . . . . . .44
EXHIBIT B - Schedule of Ground Leases . . . . . . . . . . . . . . . . . .45
EXHIBIT C - Schedule of Development Contracts . . . . . . . . . . . . . .46
iv
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EXHIBIT 10.54
EXHIBIT XIII-B
FORM OF LOUISIANA MORTGAGE
Recording requested by:
This Instrument prepared by, and when recorded mail to:
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071-2899
Attention: Dean Adam Willis, Esq.
(267,718-007)
(Space above line is for Recorder's use)
ACT OF MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT
WITH PLEDGE AND ASSIGNMENT OF LEASES AND RENTS
NOTICE: THE OBLIGATIONS SECURED HEREBY INCLUDE REVOLVING CREDIT OBLIGATIONS
WHICH PERMIT BORROWING, REPAYMENT AND REBORROWING. INTEREST ON OBLIGATIONS
SECURED HEREBY ACCRUES AT RATES WHICH MAY FLUCTUATE FROM TIME TO TIME. THIS
INSTRUMENT SECURES FUTURE ADVANCES.
State of New Jersey
County of ______________
BE IT KNOWN, that on this ___ day of ____________, 1995,
BEFORE ME, the undersigned Notary Public, duly commissioned and qualified
in and for the State and county aforesaid, and in the presence of the
undersigned competent witnesses,
PERSONALLY CAME AND APPEARED:
PLAYERS LAKE CHARLES, INC., a Louisiana corporation, represented
herein by _________________, its __________________, duly authorized
to appear to herein by resolution of its Board of Directors, a
certified copy of which is annexed hereto as Exhibit C and made a part
hereof for all purposes (herein called the "Mortgagor"), which
declared that its mailing address is c/o Players International, Inc.,
3900 Paradise Road, Suite 135, Las Vegas, Nevada 89109, and its
employer identification number is ___________________,
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who, being duly sworn, did declare and say as follows:
W I T N E S S E T H:
THAT MORTGAGOR HEREBY:
Mortgages, pledges, hypothecates, grants a security interest in, and
pledges and assigns the following described immovable and movable property and
related collateral to FIRST INTERSTATE BANK OF NEVADA, N.A., as Administrative
Agent on behalf of itself and each of the Lenders (as defined and described
hereinbelow) ("Mortgagee") as security for the Secured Obligations (defined
below), whether now existing or arising hereafter, for the ratable benefit of
the Lenders upon the covenants and agreements herein expressed:
DESCRIPTION OF IMMOVABLE PROPERTY COLLATERAL
All the following immovable property, and the interests of Mortgagor
therein, situate in the Parish of Calcasieu, State of Louisiana: (i) those
certain parcels of immovable property leased by Mortgagor pursuant to, and all
of Mortgagor's rights under the leasehold estates and other interest arising out
of, those certain lease agreements set forth on Exhibit B attached hereto and
incorporated herein by reference (the "Ground Leases"), as the same may
hereafter be amended, supplemented, extended, renewed or otherwise modified or
assigned, which parcels are more particularly described on Exhibit A-1 attached
hereto and incorporated herein by reference (the "Leased Land"), and (ii) those
certain parcels of immovable property owned by Mortgagor and more particularly
described on Exhibit A-2 attached hereto and incorporated herein by reference
(the "Fee Land"; the Leased Land and the Fee Land being hereinafter referred to
collectively as the "Land");
Together with all right, title and interest of Mortgagor, now owned or
hereafter acquired, in and to any land lying within the right-of-way of any
street, open or proposed, adjoining any of the Land and any and all sidewalks,
bridges, elevated walkways, tunnels, alleys, strips and gores of land adjacent
to, connecting or used in connection with any of the Land, with appurtenances
("Adjacent Interests");
Together with the Barges (as defined in subsection (a) of the
Description of Personal Property Collateral hereinbelow but only to the extent
the same is deemed to constitute immovable Property or an interest therein under
applicable law);
Together with all buildings, structures and all other improvements and
fixtures that are or may hereafter be erected or placed on or in the Land or the
Barges and all rights and interests of Mortgagor in and to all buildings,
structures and other improvements and fixtures that are or may hereafter be
erected or placed on or in Adjacent Interests (collectively, the
"Improvements");
Together with all and singular the easements, tenements, hereditaments
and appurtenances belonging or in anywise appertaining to any of the Land,
Adjacent Interests or Improvements (collectively, the "Appurtenances");
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Together with all rents, issues, profits, royalties and other income
of or from any of the foregoing or of or from any of the Leases, as hereinafter
defined (collectively, the "Rents"), subject, however, in the case of Rents, to
the absolute assignment given to Mortgagee in Section 12 hereof, to which
Section 12 this grant to the Mortgagee is subject and subordinate;
Together with any right of Mortgagor under any Ground Lease to
purchase the fee interest of the lessor thereunder (collectively, the
"Options");
Together with all leasehold estate, right, title and interest of
Mortgagor in and to all leases, subleases, licenses, concessions, franchises and
other use or occupancy agreements (excepting, however, agreements made by
Mortgagor in the ordinary course of business for short-term use by members of
the public of guest rooms and public rooms, including banquet and meeting
facilities, located in the Improvements), and any amendments, modifications,
extensions or renewals thereof (collectively, "Leases") covering any of the
Land, Adjacent Interests, Improvements or Appurtenances, now or hereafter
existing or entered into, and all right, title and interest of Mortgagor
thereunder, including, without limitation, the right to all security deposits,
advance rentals, other deposits, and all payments of similar nature, relating
thereto;
Together with all water rights and rights to the use of water now or
hereafter appurtenant to or used in connection with any of the Land, Adjacent
Interests, Improvements or Appurtenances and all right, title and interest in
and to all of the accretions, alluvions, avulsions, batture and other riparian
rights in and to said Lake Charles, Louisiana thereof ("Water Rights");
Together with any and all other estate, right, title, interest,
property, possession, claim or demand, in law or in equity, which Mortgagor now
has or may hereafter acquire in or to any of the Land, Adjacent Interests,
Improvements, Appurtenances, Rents, Options, Leases, the Ground Leases, the
Barges (to the extent deemed immovable property or an interest therein under
applicable law) and Water Rights, or pertaining or appurtenant thereto
(including, without limitation, any fee interest of a lessor under a Ground
Lease that may hereafter be acquired upon Mortgagor exercising an Option or
otherwise acquiring any fee interest of a lessor under a Ground Lease), and all
reversions and remainders thereof, and all tenements, hereditaments and
appurtenances thereunto belonging or in any wise appertaining thereto ("Other
Interests") (said Land, Adjacent Interests, Improvements, Appurtenances, Rents,
Options, Leases, Water Rights, the Ground Leases, the Barges (to the extent
deemed immovable property or any interest therein under applicable law) and
Other Interests may be referred to herein as the "Real Property"); and
THAT MORTGAGOR HEREBY:
Grants a security interest, pursuant to the Louisiana Commercial Laws
- Secured Transactions (La.R.S. Title 10, Chapter 9), to Mortgagee for the
ratable benefit of Lenders on the terms and provisions (by this reference
incorporated herein with respect to the security interest herein granted and the
rights and obligations of the parties with respect to the Personal Property, as
hereinafter defined, but for no other purpose) set forth in that certain
Subsidiary Security Agreement dated as of even date herewith by and between
Mortgagor, as Grantor and Debtor, and Mortgagee, as Secured Party (the "Security
Agreement"), in all of the following described personal property, and the
interests of Mortgagor therein, whether now owned or hereafter acquired
(collectively, the "Personal Property"):
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DESCRIPTION OF PERSONAL PROPERTY COLLATERAL
(a) All present and future interest in and to those certain barges and
vessels presently moored, anchored or otherwise located on or around the Land or
otherwise used in connection with the Project (defined below), whether such
barges or vessels are deemed real, personal or mixed property, which barges and
vessels are described as follows: (i) that certain vessel _____ having Official
No. ______, built in ____ in _________, ________, formerly having its home port
at _________, ________, its present home port being ___________, _________, and
having its hailing port at _________, ___________, and (ii) that certain vessel
_____ having Official No. ______, built in ____ in _________, ________, formerly
having its home port at _________, ________, its present home port being
___________, _________, and having its hailing port at _________, ___________,
together with (iii) all equipment, earnings, proceeds arising from operation of
any business upon such barges and vessels, parts, attachments and all other
property, whether real, personal or mixed, now or hereafter located thereon,
derived therefrom or used in connection therewith, including, but not limited
to, all moorings, cells, cofferdam enclosures and related ancillary improvements
(collectively, the "Barges");
(b) All present and future chattels, furniture, furnishings, goods,
equipment, fixtures and all other tangible personal property, of whatever kind
and nature, now or hereafter used in connection with or placed or located in or
on any part of the Real Property or the Barges (including, without limitation,
any building or structure that is now or that may hereafter be erected on the
Real Property or the Barges), including, but not limited to, machinery,
materials, goods and equipment now or hereafter used in the construction or
operation of the hotel, casino, restaurant, entertainment and shopping complex
constructed and to be constructed on the Real Property or the Barges or portions
thereof (the "Project") (including, without limitation, air conditioning,
heating, electrical, lighting, fire fighting and fire prevention, food and
beverage service, laundry, plumbing, refrigeration, security, sound, signaling,
telephone, television, window washing and other equipment and fixtures, of
whatever kind or nature, including generators, transformers, switching gear,
boilers, burners, furnaces, piping, sprinklers, sinks, tubs, valves,
compressors, motors, carts, dumb waiters, elevators and other lifts, floor
coverings, hardware, keys, locks, organs, pianos, planters, railings, scales,
shelving, signs, tools, machinery, molds, dies, drills, presses, planers, saws,
furniture, business fixtures, trade fixtures, electric, gas and other motor
vehicles, uniforms, vacuum cleaners, hotel furniture, furnishings and equipment,
bathroom furniture and furnishings (including towels, bathmats, hamperettes,
shower curtains and other bath linens), beds and bedding (including mattresses,
springs, pillows, bed pads, sheets, blankets, comforters, spreads and other bed
linens and furnishings), bric-a-brac, chairs, chests, vanities, secretaries,
bureaus, chiffonniers, love seats, benches, costumers, smoking stands, sand
jars, desks, dressers, hangings, paintings, pictures, frames, sculptures, lamps,
light bulbs, mirrors, night stands, ornaments, radios, stereo equipment, sofas,
statuary, tables, telephones, televisions, vases, window coverings, foodstuffs,
beverages (including beer, wine, liquor and other alcoholic beverages), and
other consumables (including soap, shampoo, cleaning supplies and paper goods),
cutlery, cooking, baking and other kitchen utensils and apparatus (including
crockery, fryers, grills, kettles, mixers, pots, pans, pails, racks, steamers
and toasters), china and other dishes, flatware, glassware, hollowware, serving
pieces, trays, table linens, washers, dryers, irons, ironing boards and other
ironing equipment, cables, outlets, plugs, wiring and related apparatus and
fixtures, card readers, cash registers, adding machines, calculators, computers,
keyboards, monitors, printers, printing equipment, envelopes, stationary,
posting machines, blank forms, typewriters, typewriter stands, other office and
accounting equipment and supplies, time stamps, time recorders, bookkeeping
machines, checking machines, payroll machines, computer reservations systems,
equipment used in the operation of casinos on the Real Property or the
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<PAGE>
Barges (including but not limited to, gaming devices and associated equipment
(as defined in La.R.S. 4:504), including but not limited to, slot machines,
cards, poker chips and gaming tables) and all other goods, equipment,
furnishings, apparatus and fixtures that are now or may hereafter be located at
or used at or in connection with the Real Property or the Barges) and all other
tangible personal property used or to be used at or in connection with, or
placed or to be placed in, rooms, halls, lounges, offices, lobbies, lavatories,
basements, cellars, vaults or other portions of the Project or of any other
building or buildings hereafter constructed or erected thereon, whether herein
enumerated or not, and whether or not contained in any such building, and which
are used or to be used or useful in the operation and maintenance thereof, or in
any bar, casino, hotel, restaurant, store, health spa, salon or other business
conducted thereon, together with all replacements and substitutions for any and
all personal property in which Mortgagor has an interest, including without
limitation such goods and equipment as shall from time to time be located,
placed, installed or used in or upon, or procured for use, or to be used or
useful in connection with the operation of the whole, or any part of, the
Project and all parts thereof and all accessions thereto;
(c) All present and future goods, including, without limitation, all
consumer goods, inventory, equipment, and other supplies, of whatever kind or
nature, and any and all other goods, wherever located, used or to be used in
connection with or in the conduct of Mortgagor's business;
(d) All present and future inventory and merchandise in all of its
forms (including, but not limited to, (i) all goods held by Mortgagor for sale
or lease or to be furnished under contracts of service or so leased or
furnished, (ii) all raw materials, work in process, finished goods, and
materials used or consumed in the manufacture, packing, shipping, advertising,
selling, leasing, furnishing or production of such inventory or otherwise used
or consumed in Mortgagor's business, (iii) all goods in which Mortgagor has an
interest in mass or a joint or other interest or right of any kind, (iv) all
goods that are returned to or repossessed by Mortgagor, and (v) all packing
materials, supplies and containers relating to or used in connection with any of
the foregoing, and all accessions thereto and products thereof and all
negotiable documents of title (including without limitation warehouse receipts,
dock receipts and bills of lading) issued by any person covering any of the
foregoing;
(e) All present and future accounts, accounts receivable, rentals,
revenues, receipts and income of any other nature derived from or received with
respect to rooms, banquet facilities, convention facilities, retail premises,
bars, restaurants, casinos, parking lots and garages and any other facilities on
the Real Property or the Barges and services and amenities provided in
connection therewith, agreements, contracts, leases, contract rights, rights to
payment, instruments, documents, chattel paper, security agreements, guaranties,
undertakings, surety bonds, insurance policies, condemnation deposits and
awards, notes and drafts, securities, certificates of deposit and the right to
receive all payments thereon or in respect thereof (whether principal, interest,
fees or otherwise), contract rights (other than rights under contracts or
governmental permits that may not be transferred by law), including, without
limitation, rights to all deposits from tenants and other users of the Project,
rights under all contracts relating to the construction, renovation or
restoration of any of the improvements now or hereafter located on the Real
Property or the Barges or the financing thereof and all rights under payment or
performance bonds, warranties, guaranties, and the Options and all rights to
payment from any credit/charge card organization or entity such as or similar
to, and including, without limitation, the organizations or entities that
sponsor and administer, respectively, the American Express Card, the Carte
Blanche Card, the Diners Club Card, the Discover Card, the MasterCard and the
Visa Card, books of account, and principal, interest and payments due on account
of goods sold, services rendered, loans
5
<PAGE>
made or credit extended, on or in connection with the Project and all forms of
obligations owing to and rights of Mortgagor or in which Mortgagor may have any
interest, however created or arising;
(f) All present and future general intangibles (including but not
limited to all governmental permits relating to construction or other activities
on the premises), the Options, all tax refunds of every kind and nature to which
Mortgagor now or hereafter may become entitled, however arising, all other
refunds, and all deposits, goodwill, choses in action, rights to payment or
performance, gambling debts or gaming debts owed to Mortgagor by Mortgagor's
patrons (whether or not evidenced by a note), judgments taken on any rights or
claims included in the Property (as hereinafter defined), trade secrets,
computer programs, software, customer lists, business names, trademarks, trade
names and service marks (including, but not limited to:
"____________________________" and any derivation thereof, including any and all
state and federal applications and registrations thereof), patents, patent
applications, licenses, copyrights, technology, processes, proprietary
information and insurance proceeds;
(g) All present and future deposit accounts of Mortgagor, including,
without limitation, [the _______________________________ Account maintained at
the office of Mortgagee,] any demand, time, savings, passbook or like account
maintained by Mortgagor with any bank, savings and loan association, credit
union or like organization, and all money, cash and cash equivalents of
Mortgagor, whether or not deposited in any such deposit account;
(h) All present and future books and records, including, without
limitation, books of account and ledgers of every kind and nature, ledger cards,
computer programs, tapes, disks and other information storage devices, all
related data processing software, and all electronically recorded data relating
to Mortgagor or its business or the Project, all receptacles and containers for
such records, and all files and correspondence;
(i) All present and future stocks, bonds, debentures, securities,
subscription rights, options, warrants, puts, calls, certificates, partnership
interests, joint venture interests, investments, brokerage accounts and all
rights, preferences, privileges, dividends, distributions, redemption payments
and liquidation payments received or receivable with respect thereto;
(j) All present and future right, title and interest of Mortgagor in
and to all Leases, whether or not specifically herein described, that now or may
hereafter pertain to or affect the Real Property or the Barges or any portion
thereof, and all amendments to the same, including, but not limited to, the
following: (aa) all payments due and to become due under such Leases and Ground
Leases, whether as rent, damages, insurance payments, condemnation awards, or
otherwise; (bb) all claims, rights, powers, privileges and remedies under such
Leases and Ground Leases; and (cc) all rights of the Mortgagor under such Leases
and Ground Leases to exercise any election or option (including, without
limitation, the Options), or to give or receive any notice, consent, waiver or
approval, or to accept any surrender of the premises or any part thereof,
together with full power and authority in the name of the Mortgagor, or
otherwise, to demand and receive, enforce, collect, and receipt for any or all
of the foregoing, to endorse or execute any checks or any instruments or orders,
to file any claims, and to take any other action that Mortgagee may deem
necessary or advisable in connection therewith;
(k) All present and future maps, plans, specifications, surveys,
studies, reports, data and drawings (including, without limitation,
architectural, structural, mechanical and engineering plans
6
<PAGE>
and specifications, studies, data and drawings) prepared for or relating to the
development of the Project or the construction, renovation or restoration of any
improvements on the Real Property or the extraction of minerals, sand, gravel or
other valuable substances from the Real Property, together with all amendments
and modifications thereto;
(l) All present and future licenses, permits, variances, special
permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including options, option rights and
contract rights), other than those (including non-transferable gaming permits)
that may not be transferred by law, now or hereafter obtained by Mortgagor from
any governmental authority having or claiming jurisdiction over the Project, the
Real Property, or the Barges or any other element of the Property or providing
access thereto, or the operation of any business on, at, or from the Project;
(m) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and improvements to or of or with respect to any of the foregoing;
(n) All other fixtures and storage and office facilities, and all
accessions thereto and products thereof and all water stock relating to the Real
Property or the Barges;
(o) All other tangible and intangible personal property of Mortgagor;
(p) All rights, remedies, powers and privileges of Mortgagor with
respect to any of the foregoing; and
(q) Any and all proceeds, products, rents, income and profits of any
of the foregoing, including, without limitation, all money, accounts, general
intangibles, deposit accounts, documents, instruments, chattel paper, goods,
insurance proceeds (whether or not the Mortgagee is the loss payee), and any
other tangible or intangible property received upon the sale or disposition of
any of the foregoing (it being agreed, for purposes hereof, that the term
"proceeds" includes whatever is receivable or received when any of the Property
is sold, collected, exchanged or otherwise disposed of, whether such disposition
is voluntary or involuntary)
(The Real Property, the Personal Property and all of the other
collateral described above may hereinafter be collectively referred to as the
"Property".)
FOR THE PURPOSE OF SECURING:
First: Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. 362(a)), of all obligations and
liabilities of every nature of Mortgagor now or hereafter existing under or
arising out of or in connection with that certain Guaranty of even date herewith
executed by Mortgagor (and others) in favor of Mortgagee (as the same may be
amended, modified or supplemented from time to time, the "Guaranty"). The
Guaranty guaranties the obligations of Players International, Inc., a Nevada
corporation ("Borrower") under that certain Credit Agreement executed
concurrently herewith by Borrower, First Interstate Bank of Nevada, N.A., and
Bankers Trust Company, as Managing Agents, BT
7
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Securities Corporation, as a Co-Arranger, and the Lenders listed therein as
lenders (the "Lenders") and First Interstate Bank of Nevada, N.A., as a
Co-Arranger and Administrative Agent, together with any and all renewals,
extensions, amendments, modifications, rearrangements, replacements,
restatements, substitutions and addendums thereof or thereto (herein referred to
as the "Credit Agreement"), and the promissory notes issued to the Lenders to
evidence such obligations and liabilities, together with any and all renewals,
extensions, amendments, modifications, rearrangements, replacements,
restatements, substitutions and addendums thereof or thereto (herein referred to
as the "Notes"), whether for principal in the amount of One Hundred Twenty
Million Dollars ($120,000,000) or such principal amount as may be advanced and
remain unpaid or for interest (including, without limitation, interest that, but
for the filing of a petition in bankruptcy with respect to Mortgagor, would
accrue on such obligations), reimbursement of amounts drawn under letters of
credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Mortgagee or any such Lender as a preference, fraudulent
transfer or otherwise.
Second: Payment and performance of every obligation, covenant, promise
and agreement of Mortgagor herein contained (excepting, however, the obligations
of Mortgagor under Section 5(c) hereof), or incorporated herein by reference,
including any sums paid or advanced by Mortgagee pursuant to the terms hereof.
Third: Payment of the expenses and costs incurred or paid by Mortgagee
in the preservation and enforcement of the rights and remedies of Mortgagee and
the duties and liabilities of Mortgagor hereunder, including, but not by way of
limitation, attorneys' fees, court costs, witness fees, expert witness fees,
collection costs, Mortgagee's fees, and costs and expenses paid by Mortgagee in
performing for Mortgagor's account any obligation of Mortgagor.
Fourth: Payment of additional sums and interest thereon which may
hereafter be loaned to Mortgagor by the Lenders when evidenced by a promissory
note or notes or other agreement between Mortgagor and the Lenders that recites
that this Mortgage is security therefor.
Fifth: Performance of every obligation, warranty, representation,
covenant, agreement and promise of Mortgagor contained in the Guaranty.
The foregoing are described herein as the "Secured Obligations". All
persons who may have or acquire an interest in all or any part of the Property
will be considered to have notice of, and will be bound by, the terms of the
Secured Obligations and each other agreement or instrument made or entered into
in connection with each of the Secured Obligations. Such terms include any
provisions in the Notes or the Credit Agreement which permit borrowing,
repayment and reborrowing, or the making of future advances, or which provide
that the interest rate on one or more of the Secured Obligations may vary from
time to time. The maximum amount of the Secured Obligations outstanding at any
time or from time to time that are secured by this Mortgage is $120,000,000.
THIS MORTGAGE FURTHER WITNESSETH THAT, IN CONNECTION WITH
AND IN FURTHERANCE OF THE FOREGOING GRANTS, AND THE ENCUMBRANCES,
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LIENS AND SECURITY INTERESTS CREATED THEREBY, MORTGAGOR COVENANTS
AND AGREES AS FOLLOWS:
1. Certain Representations and Warranties of Mortgagor. Mortgagor
represents, warrants and covenants that, except as previously disclosed to
Mortgagee in a writing making reference to this Section 1:
(a) Mortgagor lawfully possesses and holds merchantable leasehold
title as lessee under the Ground Leases to all of the Leased Land and
Improvements thereon;
(b) Mortgagor lawfully possesses and holds merchantable title in
full ownership to all of the Fee Land and Improvements thereon;
(c) Mortgagor has or will have good title to all Property other
than the Land and Improvements;
(d) Mortgagor has the full and unlimited power, right and
authority to encumber the Property and pledge and assign the Leases and
Rents;
(e) This Mortgage creates a first priority mortgage lien on, and
land security interest in, the Property;
(f) The Property includes all property and rights which may be
reasonably necessary to promote the present and any reasonable future
beneficial use and enjoyment of the Land, the Improvements and the Project;
(g) Mortgagor owns the Personal Property free and clear of any
security agreements, reservations of title or conditional sales contracts
and there is no financing statement affecting the Personal Property on file
in any public office other than one filed to perfect the Security Interest
herein granted;
(h) Mortgagor's place of business, or its chief executive office
if it has more than one place of business, is located at the address of
Mortgagor specified in the Guaranty; and
(i) Mortgagor's employer identification number is __________.
2. Payment of Obligations. Mortgagor shall pay when due the Secured
Obligations under the Guaranty and hereunder; the principal of and interest on
any future advances secured by this Mortgage; and the principal of and interest
on any other indebtedness guaranteed by the Guaranty or otherwise secured by
this Mortgage.
3. Compliance with Laws. Mortgagor shall not commit, suffer or permit
any act to be done, or condition to exist, on, or with respect to, the Property
which violates or is prohibited by any law, statute, code, act, ordinance,
order, judgment, decree, injunction, rule, regulation, permit, license,
authorization or direction of any government or subdivision thereof, whether it
be federal, state, county or municipal (collectively, the "Legal Requirements"),
which is applicable to the Property, or any part thereof, now or at any time
hereafter.
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4. Maintenance of Property. Mortgagor agrees: (a) properly to care for
and keep the Property in good condition and repair; (b) not to remove, demolish
or substantially alter any building on the Real Property except upon the prior
written consent of Mortgagee; (c) to complete promptly and in a good and
workmanlike manner any building or other improvement which may be constructed
thereon, to restore promptly in like manner any portion of the Improvements
which may be damaged or destroyed from any cause whatsoever, and to pay when due
all claims for labor performed and materials furnished therefor; (d) to comply
with all Legal Requirements and covenants, conditions and restrictions now or
hereafter affecting the Property or any part thereof, including any which
require alteration or improvement thereof, and with all requirements of
insurance companies insuring the Property or any portion thereof and of any
bureau or agency which establishes standards of insurability; (e) not to commit
or permit any waste or deterioration of the Property; (f) to keep and maintain
abutting grounds, sidewalks, roads, parking and landscaped areas in good and
neat order and repair; (g) not to apply for, willingly suffer or permit any
change in zoning, subdivision, or land use regulations affecting the Property
without the prior written consent of Mortgagee; (h) not to drill or extract or
enter into any lease for the drilling for or extraction of oil, gas or other
hydrocarbon substances or any mineral of any kind or character on or from the
Property or any part thereof without the prior written consent of Mortgagee; and
(i) to do all other acts, in a timely and proper manner, which, from the
character or use of the Property, may be reasonably necessary to maintain and
preserve its value, the specific enumerations herein not excluding the general.
5. Environmental Obligations.
(a) Mortgagor shall comply with any and all Environmental Laws (as
hereinafter defined) regarding the presence or removal of Hazardous Material on
or in the Property, shall pay immediately, when due, the costs of removal from
the Property and disposal of any Hazardous Material which is required to be
removed pursuant to any Environmental Laws and shall keep the Property free of
any lien which may arise pursuant to any such Environmental Laws. Mortgagor
shall not, and shall not permit any person or entity to release, discharge, or
dispose of any Hazardous Material on the Real Property except in compliance with
all Environmental Laws and, if the same shall exist, Mortgagor shall immediately
remove or cause to be removed from the Real Property such Hazardous Material to
the extent required to be removed pursuant to any Environmental Laws.
(b) As used herein, the term "Hazardous Material" shall means: (i) any
chemical, material or substance at any time defined as or included in the
definition of "hazardous substances", "hazardous materials", hazardous wastes",
"extremely hazardous waste", "restricted hazardous waste", "infectious waste",
"toxic substances" or any other formulations intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Law or publication promulgated pursuant thereto; (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters or other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
asbestos in any form; (vii) urea formaldehyde foam insulation; (viii) electrical
equipment which contains any oil or dielectric fluid containing poly-chlorinated
biphenyls in excess of fifty parts per million; (ix) pesticides; (x) all
hazardous wastes or hazardous substances as defined by the Louisiana
Environmental Quality Act (La. R.S. 30:2001, et seq.) as amended from time to
time, and regulations promulgated thereunder, any naturally occurring
radioactive materials, the possession, use, transfer, processing, distribution
or
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disposal of which is subject to regulation by the Louisiana Department of
Environmental Quality pursuant to the provisions of La. Adm. Code 33:XV, Chapter
14, as amended from time to time, any non-hazardous wastes defined and regulated
by the Commissioner of Conservation under La. R.S. 30:1, et seq. or the
Louisiana Abandoned Oilfield Waste Site Law, La. R.S. 30:71, et seq., or the
Louisiana Oilfield Site Restoration Law, La. R.S. 30:80, et seq., each as
promulgated from time and regulations promulgated thereunder; and (xi) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
human health or safety or the environment if released into the workplace or the
environment; the term "Environmental Law" means all statutes, ordinances,
orders, rules, regulations, plans, policies or decrees and the like relating to:
(aa) environmental matters, including, without limitation, those relating to
fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Material, (bb) the generation, use, storage, transportation
or disposal of Hazardous Materials, or (cc) occupational safety and health,
industrial hygiene, land use or the protection of human, plant or animal health
or welfare, in any manner applicable to any of the Property, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136 et seq.), the Occupational Safety and Health Act
(29 U.S.C. 651 et seq.) and the Emergency Planning and Community Right-to-Know
Act (42 U.S.C. 11001 et seq.), each as amended and supplemented, and any
analogous future or present local, state and federal statutes, ordinances and
other laws, and rules and regulations promulgated pursuant thereto, each as in
effect as of the date of determination; and the term "Release" means any
release, spill, emission, leaking, pumping, pouring, injection, escaping,
deposit, disposal, dispersal, discharge, dumping, leaching or migration of
Hazardous Materials into the indoor or outdoor environment (including, without
limitation, the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), or into or out of any of
the Property, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.
(c) Mortgagor hereby agrees to indemnify, hold harmless and defend
Mortgagee, its directors, officers, employees, agents, successors and assigns
from and against any and all claims, losses, damages, demands, liabilities,
fines, penalties, assessments, charges, administrative and judicial proceedings
and orders, judgments, remedial action requirements, enforcement actions of any
kind, and all costs and expenses incurred in connection therewith (including but
not limited to attorneys' and consultants' fees and expenses), arising directly
or indirectly, in whole or in part, out of (i) the presence on or under the
Property of any Hazardous Material, or any Release of any Hazardous Material on,
under or from the Property, or (b) any activity carried on or undertaken on or
off the Property until the Secured Obligations have been fully and finally
satisfied, and whether by Mortgagor or any employees, agents, contractors or
subcontractors of Mortgagor or any third persons occupying or present on the
Property, in connection with the use, holding, handling, treatment, removal,
storage, decontamination, cleanup, transport, Release, processing or abatement
of any Hazardous Material located or present in, on or under the Property. The
foregoing indemnity shall further apply to any residual contamination in, on or
under the Property, or affecting any natural resources, and to any contamination
of any property or natural resources arising in connection with the generation,
use, handling, storage, transport or disposal of any such Hazardous Material,
and irrespective of whether any of such activities are undertaken in accordance
with applicable Environmental Laws. Mortgagor hereby acknowledges and agrees
that,
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notwithstanding any other provision of this Mortgage to the contrary, the
obligations of Mortgagor under this Section 5(c) shall be unlimited personal
obligations of Mortgagor, shall not be secured by this Mortgage and shall
survive any foreclosure under this Mortgage, any transfer in lieu thereof, and
any satisfaction of the Secured Obligations. The defense to be provided under
this Section 5(c) shall be conducted by counsel reasonably satisfactory to
Mortgagee; provided however, that Mortgagee shall have the right to be
represented by advisory counsel of its own selection and at its own expense; and
provided further, that Mortgagee may appoint its own counsel, at Mortgagor's
sole cost and expense, if Mortgagor fails to assume promptly any obligations
under this Section 5(c) (and in any event within ten (10) days of being notified
of the existence of a claim) or if different, additional, or inconsistent
defenses exist from those available to Mortgagor with respect to any claim for
which the indemnity in this Section 5(a) is implicated.
6. Insurance.
(a) Types and Amounts Required. During the continuance of this
Mortgage, Mortgagor shall at all times provide, maintain and keep in force, at
no expense to Mortgagee, for the benefit of Mortgagor and Mortgagee, as their
respective interests may appear, the following policies of insurance:
i) During the course of any construction or repair of
Improvements on the Property, (x) builder's completed value risk insurance
against "all risks of physical loss" (including fire and extended coverage,
and endorsements extending coverage for vandalism and malicious mischief,
collapse and property in transit, offsite storage, delay of opening
(business interruption), demolition and debris removal, flood, and, if
reasonably available, earthquake), in non-reporting form, covering 100% of
the anticipated construction cost, including "soft costs," with not more
than $100,000 deductible from the loss payable for any casualty and no more
than thirty (30) days for delay of opening; said policy to contain a
"permission to occupy upon completion of work or occupancy" endorsement and
waiver of subrogation endorsement acceptable to Mortgagee, and replacement
cost coverage in an agreed amount, and (y) an "owner/contractor protective
liability" policy, providing separate liability coverage for Mortgagor and
Mortgagee, with a limit of not less than $5,000,000;
ii) Insurance against loss or damage to the Improvements and
Personal Property by fire and any of the other risks covered by insurance
of the type now known as "all risks of physical loss" (including flood,
and, if reasonably available, earthquake coverage (the sublimit for flood
and earthquake insurance shall be no less than $10,000,000)) in an amount
not less than 100% of the then replacement cost of the Improvements and
Personal Property (exclusive of the cost of excavations, pilings,
foundations, footings and other underground improvements lying below the
lowest basement level) without deduction for physical depreciation; with an
Agreed Amount endorsement (waiving co-insurance), a Replacement Cost
Valuation endorsement, a waiver of subrogation endorsement, coverage for
the cost of removing damaged property, and, if Mortgagee shall so require,
coverage for demolition and increased cost of construction occasioned by
operation of any law or ordinance regulating the construction, use or
repair of the Improvements; and with not more than $350,000 deductible per
occurrence and $500,000 for the perils of flood and earthquake, if a
sub-deductible applies;
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iii) Mechanical breakdown insurance (also known as "boiler and
machinery" insurance) covering pressure vessels, air tanks, boilers,
machinery, pressure piping, heating, air conditioning and elevator
equipment and escalator equipment, if the Improvements contain equipment of
such nature, and insurance against loss of occupancy or use arising from
any such breakdown, written on a comprehensive form with a combined direct
and indirect limit of $25,000,000; the policy shall include an Agreed
Amount endorsement (waiving co-insurance), a Replacement Cost Valuation
endorsement, and coverage for increased cost of construction occasioned by
operation of any law or ordinance regulating the construction, use or
repair of the Improvements; the policy may contain deductibles of no
greater than $100,000 for direct damage and seventy-two (72) hours or the
average value of receipts for three (3) days, whichever if less, for
indirect loss;
iv) Commercial general liability insurance (1988 Form or
subsequent revisions of the same), written on an "occurrence basis,"
against claims for death, bodily injury, personal injury and property
damage occurring in, on or about the Real Property or the adjoining
streets, sidewalks and passageways, or arising from or connected with the
use, conduct or operation of Mortgagor's business or interest (including,
without limitation, products liability coverage; blanket contractual
liability coverage, including both oral and written contracts; broad form
property damage coverage; coverage against liability for injury or property
damage arising out of the use, by or on behalf of the Mortgagor or any
other person or organization, of any owned, non-owned, leased or hired
automotive equipment in the conduct of any and all operations of Mortgagor;
coverage for "liquor legal liability," and "employee benefits legal
liability;" policy will be extended to provide watercraft liability for
permanently moored barges (including, the Barges) while stationary;
coverage for all professional liability exposures associated with the
operation of the health spa; coverage for those hazards commonly known in
the insurance industry as explosion, collapse and underground property
damage; owners' and contractors' protective coverage; coverage for
elevators, escalators and garage/parking operations, if any, on the Real
Property; if such policy contains a self-insured retention, (A) such
self-insured retention shall be no greater than $250,000 per occurrence,
and (B) Mortgagor shall be solely responsible for the payment of all
amounts due within said self-insured retention, and the indemnification
provisions contained in this Mortgage shall include all liability
associated with said self-insured retention;
v) Comprehensive business automobile liability insurance, written
under Coverage Symbol "1," covering all owned, non-owned and hired or
borrowed vehicles of Mortgagor used in connection with any of the
construction, maintenance and operation of the Improvements, naming
Mortgagor as the named insured and covering Mortgagee as additional
insured, insuring against liability for bodily injury and death and/or for
property damage in an amount not less than $1,000,000 combined single limit
per accident; (if the policy contains a self-insured retention, (A) such
self-insured retention shall be no greater than $250,000 per occurrence,
and (B) Mortgagor shall be solely responsible for the payment of all
amounts due within said self-insured retention, and the indemnification
provisions contained in this Mortgage shall include all liability
associated with said self-insured retention); in addition to said
automobile liability insurance, Mortgagor must provide, maintain and keep
in effect (x) garage liability insurance, providing $1,000,000 combined
single limit for bodily injury and property damage for the parking garage
operation, and (y) garagekeepers legal liability insurance, providing
$500,000 limit for comprehensive and collision coverages for physical
damage to
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vehicles in Mortgagor's care, custody and control, with a deductible no
greater than $25,000 for each loss;
vi) A standard Worker's Compensation policy covering the State of
Louisiana and Employer's Liability coverage subject to a limit of no less
than $100,000 for each employee, $100,000 for each accident, and a $500,000
policy limit, which policy shall include endorsements for Voluntary
Compensation and Employer's Liability Coverage and Stop Gap Liability; if
Mortgagor elects to self-insure Worker's Compensation coverage in the State
of Louisiana, Mortgagee must be furnished with a copy of the certificate
from the state permitting self insurance and evidence of a stop
loss/aggregate Excess Worker's Compensation policy with a specific
retention of no greater than $300,000 per occurrence;
vii) An Umbrella/Bumbershoot Liability policy with a limit of no
less than $100,000,000 providing excess coverage over all limits and
coverages set forth in paragraphs (iv), (v) and (vi) above, which limits
can be obtained by a combination of Primary and Excess Umbrella/Bumbershoot
policies, provided that all layers follow form with the underlying policies
set forth in paragraphs (iv), (v) and (vi) and are written on an
"occurrence form;"
viii) Business interruption insurance/extra expense and loss of
"rental value" insurance, including coverage for off-premises power losses
and an extended period of indemnity endorsement for at least 180 days, in
an amount representing not less than 100% percent of the annual net profit
plus continuing expenses (including debt service) for the Project, as such
net profit and continuing expenses are reasonably projected by Mortgagor
and consented to by Mortgagee (or, in the absence of such a projection, as
reasonably projected by Mortgagee), with a deductible of no greater than
seventy-two (72) hours or the average value of receipts for three (3) days,
whichever is less.
ix) If the Property is located in an area identified by the
Secretary of Housing and Urban Development as a flood hazard area and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968, flood insurance covering the Improvements, in an
amount, available under the Act, satisfactory to Mortgagee;
x) A comprehensive crime policy, including the following
coverages: (A) Employee Dishonesty: $2,500,000; (B) Money & Securities
(inside): $500,000; (C) Money & Securities (outside): $500,000; (D)
Depositors Forgery: $1,000,000; and (E) Computer Fraud: $1,000,000; such
policy shall be amended so that the term "money" is defined therein to
include "chips," the policy may contain deductibles of no more than
$250,000 for all other agreements listed above; and
xi) Such other insurance and in such amounts, and such additional
amounts of the foregoing insurance, as may reasonably be required by
Mortgagee, in its sole discretion, from time to time, due consideration
being given to standard practices in the industry and to the risks involved
in Mortgagor's business, operations or interest.
(b) Uniform Policy Requirements. All policies of insurance required
by the terms of this Mortgage:
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i) shall be issued by insurance companies licensed and admitted
to do business in the State of Louisiana, and rated no lower than A-XII in
the most recent edition of A.M. Best's and AA in the most recent edition of
Standard & Poor's, and in such form and amounts as are satisfactory to
Mortgagee from time to time;
ii) shall contain an endorsement or agreement by the insurer that
any loss shall be payable in accordance with the terms of such policy
notwithstanding any act, failure to act, negligence or breach of
representation or warranty of Mortgagor, or of any party holding under
Mortgagor, which might otherwise result in forfeiture of said insurance;
iii) shall contain a waiver by the insurer of all rights of
setoff, counterclaim and deduction against Mortgagor;
iv) shall contain a waiver of subrogation by the insurer in favor
of Mortgagee and a clause providing that the policy is primary and that any
other insurance of Mortgagee with respect to the matters covered by such
policy shall be excess and non- contributing;
v) shall, in the case of policies affording liability insurance
coverage, name Mortgagee (and Mortgagee's officers, directors, employees,
agents and representatives) as additional insured by an endorsement
satisfactory to Mortgagee and contain cross-liability and severability of
interest clauses satisfactory to Mortgagee, and, in the case of other
policies, shall name Mortgagee as a loss payee and have attached thereto a
lender's loss payable endorsement, for the benefit of Mortgagee, in form
satisfactory to Mortgagee (Form 438 BFU, unless otherwise specified by
Mortgagee); and
vi) shall contain a provision that, notwithstanding any contrary
agreement between Mortgagor and insurance company, such policies will not
be canceled, fail to be renewed or materially amended (which term shall
include any reduction in the type, scope or limits of coverage) without at
least thirty (30) days prior written notice to Mortgagee.
(c) Blanket and Umbrella Policies. If Mortgagee consents, Mortgagor or
Borrower may provide any of the required insurance through an umbrella policy or
policies or through blanket policies carried by Mortgagor and covering more than
one location, or by policies procured by a tenant or other party holding under
Mortgagor; provided, however, that the amount of the total insurance allocated
to the Real Property and available with respect to occurrences required to be
insured against shall be such as to furnish protection the equivalent of
separate policies in the amounts herein required, and provided further, that, in
all other respects, any such policy or policies shall comply with all of the
other provisions of this Mortgage.
(d) Evidence of Insurance. At Mortgagee's option, Mortgagor shall
furnish Mortgagee with certified copies of all policies of insurance required
under this Section or with a certificate of insurance for each required policy
setting forth the coverage, the limits of liability, the deductibles, if any,
the name of the carrier, the policy number, and the period of coverage, which
certificates shall be executed by authorized officials of the companies issuing
such insurance, or by agents or attorneys-in-fact authorized to issue said
certificates (in which event each such certificate shall be accompanied by a
notarized affidavit, agency agreement or power of attorney evidencing the
authority
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of the signatory to issue such certificate on behalf of the insurer named
therein). Mortgagor shall furnish to Mortgagee annually, within ten days after
the date hereof, or more often if Mortgagee shall so request, a certificate of
Mortgagor specifying all insurance policies with respect to the Property and all
other policies required hereby then outstanding and in force, and stating
whether or not such insurance complies with the requirements of this Section
and, if it does not, the manner in which it does not comply. At least ten (10)
days prior to the expiration of each required policy, Mortgagor shall deliver to
Mortgagee evidence satisfactory to Mortgagee of the payment of premium and the
renewal or replacement of such policy continuing insurance in force as required
by this Mortgage.
(e) Procurement by Mortgagee. If Mortgagor fails to provide, maintain,
keep in force or deliver to Mortgagee the policies of insurance required by this
Mortgage, Mortgagee may (but shall have no obligation to) procure such
insurance, or single interest insurance for such risks covering Mortgagee's
interests, and Mortgagor will pay all premiums therefor promptly upon demand by
Mortgagee; and until such payment is made by Mortgagor, the amount of all such
premiums, together with interest thereon at an annual rate equal to the rate
specified in Section 2.2E. (Post-Default Interest) of the Credit Agreement (or
if such provision is hereafter replaced or renumbered, the equivalent section)
(the "Agreed Rate"), shall be secured by this Mortgage.
(f) Reserve Fund. Upon request by Mortgagee following an Event of
Default (as defined in Section 23 hereof), Mortgagor shall pay to Mortgagee an
initial cash reserve in an amount adequate to pay all insurance premiums due
within the next succeeding twelve calendar months on all policies of insurance
required by this Mortgage (or such lesser amount as may then be specified by
Mortgagee), and shall thereafter deposit with Mortgagee each month, commencing
with the first month after such request by Mortgagee and continuing until all
sums secured hereby are paid in full or Mortgagee notifies Mortgagor to cease
making such deposits, an amount equal to one-twelfth of the aggregate annual
insurance premiums on all policies of insurance required by this Mortgage, as
reasonably estimated by Mortgagee. In such event Mortgagor further agrees to
cause all bills, statements or other documents relating to the foregoing
insurance premiums to be sent or mailed directly to Mortgagee. Upon receipt of
such bills, statements or other documents evidencing that a premium for a
required policy is then payable, and providing Mortgagor has deposited
sufficient funds with Mortgagee pursuant to this Section, Mortgagee shall pay
such amounts as may be due thereunder out of the funds so deposited with
Mortgagee. If at any time and for any reason the funds deposited with Mortgagee
are or will be insufficient to pay such amounts as may be then or subsequently
due, Mortgagee may notify Mortgagor and Mortgagor shall immediately deposit an
amount equal to such deficiency with Mortgagee. Notwithstanding the foregoing,
nothing contained herein shall cause Mortgagee to be deemed a trustee of said
funds or to be obligated to pay any amounts in excess of the amount of funds
deposited with Mortgagee pursuant to this Section, nor shall anything contained
herein modify the obligation of Mortgagor to maintain and keep in force at all
times such insurance as is required by this Mortgage. Mortgagee may commingle
said reserve with its own funds and Mortgagor shall be entitled to no interest
thereon.
(g) Replacement Cost. Whenever Mortgagee requires insurance with full
replacement cost protection, such full replacement cost shall be determined
annually (except in the event of substantial changes, alterations or additions
to the Improvements or in the event of new construction undertaken by the
Mortgagor, in which event such full replacement cost shall be determined from
time to time as required to assure full replacement cost coverage). Such
determination of full replacement cost shall be made by written agreement of the
insurance carrier and Mortgagor, subject to the approval of
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Mortgagee. If they cannot agree or the value shall not be approved by Mortgagee
within thirty (30) days after such request, such full replacement cost shall be
determined by an appraiser, architect or contractor who shall be acceptable to
Mortgagee. No omission on the part of Mortgagee to request any such
determination shall relieve Mortgagor of its obligations hereunder, and any such
determination to the contrary notwithstanding, Mortgagee may require Mortgagor
to obtain additional insurance as provided in this Section.
(h) Separate Insurance. Mortgagor shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required by this Section to be furnished by Mortgagor unless Mortgagee is a
named insured therein, with loss payable as provided herein. Mortgagor shall
immediately notify Mortgagee of the taking out of any such separate insurance
and shall cause the original policies in respect thereof or certificates
therefor to be delivered to Mortgagee.
(i) Compliance with Insurance Requirements. Mortgagor shall observe
and comply with the requirements of all policies of insurance required to be
maintained in accordance with this Mortgage and shall cause the requirements of
the companies writing such policies to be so performed and satisfied that at all
times companies of good standing satisfactory to Mortgagee shall be willing to
write and to continue such insurance. Notwithstanding any approval, disapproval,
acceptance or acquiescence by Mortgagee with respect to such insurance, or
Mortgagee's obtaining or failure to obtain any insurance, Mortgagee shall incur
no liability as to the form or legal sufficiency of insurance contracts, the
solvency of any insurer or the payment of any loss, and Mortgagor hereby
expressly assumes full responsibility therefor.
(j) Assignment of Policies upon Foreclosure. In the event of
foreclosure of this Mortgage or other transfer of title or assignment of any of
the Property in extinguishment, in whole or in part, of the debt guaranteed by
the Guaranty and secured hereby, all right, title and interest of Mortgagor in
and to all policies of insurance required by this Section with respect to such
Property and any unearned premiums paid thereon shall, without further act, be
assigned to and shall inure to the benefit of and pass to the successor in
interest to Mortgagor or the purchaser or grantee of the Property, and Mortgagor
hereby appoints Mortgagee its lawful attorney-in-fact to execute an assignment
thereof and any other document necessary to effect such transfer.
(k) Waiver of Subrogation. Mortgagor waives any and all right to claim
or recover against Mortgagee, its directors, officers, employees, agents and
representatives, for loss of or damage to Mortgagor, the Property, any other
property of Mortgagor, or any property of others under Mortgagor's control, from
any cause insured against or required to be insured against by the provisions of
this Mortgage.
(l) Requirements Supplemental. The requirements of this Mortgage with
respect to insurance and maintenance of the Property shall be supplemental to
and not exclusive of the requirements of the Credit Agreement and the Security
Agreement relating thereto.
7. Casualties; Insurance Proceeds.
(a) Notice of Casualties. Mortgagor shall give prompt written notice
thereof to Mortgagee after the happening of any material casualty to or in
connection with the Property or any part thereof, whether or not such casualty
is covered by insurance.
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(b) Payment of Proceeds. Prior to any Event of Default, proceeds of
insurance in an amount not greater than $2,500,000 payable in connection with
any casualty affecting all or any portion of the Property shall be payable to
Mortgagor. Proceeds in any greater amount and, after an Event of Default, all
proceeds, payable in connection with any casualty affecting all or any portion
of the Property shall be payable to Mortgagee. Mortgagor hereby authorizes and
directs any affected insurance company to make payment of such proceeds directly
to Mortgagee. If Mortgagor receives any proceeds of insurance resulting from a
casualty which, pursuant to this Mortgage, are to be paid to Mortgagee,
Mortgagor shall promptly pay over such proceeds to Mortgagee. Mortgagor shall
not settle, adjust or compromise any claims for loss, damage or destruction of
the Property or any part thereof under any policy or policies of insurance in
connection with a loss in an amount greater than $1,000,000 without the prior
written consent of Mortgagee to such settlement, adjustment or compromise; and,
if Mortgagor is then in default hereunder, Mortgagee shall have the sole and
exclusive right, and Mortgagor hereby authorizes and empowers Mortgagee, to
settle, adjust or compromise any such claims.
(c) Use in Restoration. In the event of any damage to or destruction
of the Property, and provided that (i) at the time of such damage or destruction
or thereafter, an Event of Default does not exist hereunder, and (ii)
application of insurance proceeds to restoration of the Property will not, in
Mortgagee's reasonable judgment, impair Mortgagee's security for the obligations
secured hereby, insurance proceeds payable in connection with such damage or
destruction shall be applied, first, toward reimbursement of all of Mortgagee's
reasonable costs and expenses of recovering the proceeds, including reasonable
attorneys' fees; then, to payment of all sums advanced by Mortgagee to protect
the Property or the security for the Secured Obligations; then, to payment of
obligations then due under the Guaranty; then, to restoration of the Property,
upon such reasonable conditions as Mortgagee shall determine (it being expressly
understood and agreed that Mortgagee may condition disbursement of such proceeds
for restoration upon, among other things: delivery to Mortgagee by Mortgagor of
detailed plans and specifications providing for restoration in accordance with
all applicable Legal Requirements of all governmental authorities having
jurisdiction over the Project, together with a detailed estimate of the cost of
the work and schedule therefor and a construction contract satisfactory to
Mortgagee, with a contractor satisfactory to Mortgagee, for performance of the
work within the budgeted amount, and within the scheduled time for completion;
proof that the insurance required hereby is in force; proof that an amount equal
to the sum which Mortgagee is requested to disburse has theretofore been paid by
Mortgagor, or is then due and payable, for materials theretofore installed or
work theretofore performed upon the Property and properly includable in the cost
of repair, reconstruction or restoration thereof; proof that, after repair or
reconstruction, the Property will be at least as valuable as it was immediately
before the damage or condemnation occurred; and proof that the insurance
proceeds available for repair or restoration are sufficient, in Mortgagee's
determination, to pay for the total cost of repair or reconstruction, including
all associated development costs and interest projected to be payable on the
Secured Obligations until the repair or reconstruction is complete, or Mortgagor
must provide its own funds in an amount equal to the difference between the
proceeds available for repair or restoration and a reasonable estimate, made by
Mortgagor and found acceptable by Mortgagee, of the total cost of repair or
reconstruction); and, upon completion of the work of restoration and payment of
the cost thereof, any balance of such proceeds shall be applied to the
indebtedness guaranteed by the Guaranty, in such order as Mortgagee, in its sole
discretion, shall determine; and, if any then remains, it shall be paid over to
Mortgagor.
(d) Application by Mortgagee. If (i) at the time of such damage or
destruction or thereafter, an Event of Default exists hereunder, or (ii)
application of insurance proceeds to restoration
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will, in Mortgagee's reasonable judgment, impair Mortgagee's security for the
obligations secured hereby, Mortgagee shall have the option, in its sole and
absolute discretion, (1) to apply all or any portion of such proceeds to any
indebtedness guaranteed by the Guaranty and in such order as Mortgagee may
determine, notwithstanding that said indebtedness or the performance of said
obligation may not be due according to the terms thereof, or (2) to apply all or
any portion of such proceeds to the restoration of the Property, subject to such
conditions as Mortgagee shall determine, or (3) to deliver all or any portion
such proceeds to Mortgagor, subject to such conditions as Mortgagee may
determine.
(e) Duty to Restore. Nothing in this Mortgage shall be deemed to
excuse Mortgagor from restoring, repairing and maintaining the Property, as
herein provided, regardless of whether or not insurance proceeds are available
for restoration, whether or not any such proceeds are sufficient in amount, or
whether or not the Property can be restored to the same condition and character
as existed prior to such damage or destruction.
8. Taxes and Impositions.
(a) Payment by Mortgagor. Mortgagor shall pay, or cause to be paid, at
least ten (10) days prior to delinquency, all real property taxes and
assessments, general and special, and all other taxes and assessments of any
kind or nature whatsoever, including, without limitation, non-governmental
levies or assessments such as maintenance charges, owner association dues or
charges or fees, levies or charges resulting from covenants, conditions or
restrictions affecting the Property, which are assessed or imposed upon the
Property, or become due and payable, and which create, may create or appear to
create a lien upon the Property, or any part thereof, or upon any personal
property, equipment or other facility used in the operation or maintenance
thereof (all of which taxes, assessments and charges, together with any and all
other taxes, and charges of a similar kind or nature are collectively referred
to hereinafter as "Impositions"); provided, however, that if, by law, any such
Imposition is payable, or may at the option of the taxpayer be paid, in
installments, Mortgagor may pay the same or cause it to be paid, together with
any accrued interest on the unpaid balance of such Imposition, in installments
as the same become due and before any fine, penalty, interest or cost may be
added thereto for the nonpayment of any such installment and interest.
(b) New Impositions. If at any time after the date hereof there shall
be assessed or imposed (i) a tax or assessment on the Property in lieu of or in
addition to the Impositions payable by Mortgagor pursuant to Subsection (a) of
this Section, or (ii) a license fee, tax or assessment imposed on Mortgagee and
measured by or based in whole or in part upon the amount of the Notes or other
obligations secured hereby, then all such taxes, assessments or fees shall be
deemed to be included within the term "Impositions" as defined in Subsection (a)
of this Section, and Mortgagor shall pay and discharge the same as herein
provided with respect to the payment of Impositions, if Mortgagor is permitted
by law to pay the same. If Mortgagor is prohibited by law from paying such
Impositions, then, at the option of Mortgagee, the indebtedness guaranteed by
the Guaranty and all other obligations secured hereby, together with all accrued
interest thereon, shall immediately become due and payable. Anything to the
contrary herein notwithstanding, Mortgagor shall have no obligation to pay any
franchise, estate, inheritance, income, excess profits or similar tax levied on
Mortgagee or on the obligations secured hereby.
(c) Proof of Payment. Subject to the provisions of Subsection (d) of
this Section, Mortgagor shall deliver to Mortgagee, within seven (7) days after
the date upon which any Imposition is
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due and payable by Mortgagor in accordance with this Mortgage, official receipts
of the appropriate taxing authority, or other proof satisfactory to Mortgagee,
evidencing the payment thereof.
(d) Contest of Assessments. Mortgagor shall have the right before any
delinquency occurs to contest or object to the amount or validity of any such
Imposition by appropriate legal proceedings, but this shall not be deemed or
construed in any way as relieving, modifying or extending Mortgagor's covenant
to pay any such Imposition at the time and in the manner provided in this
Section unless Mortgagor has given prior written notice to Mortgagee of
Mortgagor's intent so to contest or object to an Imposition, and unless, at
Mortgagee's sole option, (i) Mortgagor shall demonstrate to Mortgagee's
satisfaction that the legal proceedings shall conclusively operate to prevent
the sale of the Property, or any part thereof, to satisfy such Imposition prior
to final determination of such proceedings; or (ii) Mortgagor shall furnish a
good and sufficient bond or surety as requested by and satisfactory to
Mortgagee; or (iii) Mortgagor shall demonstrate to Mortgagee's satisfaction that
Mortgagor has provided a good and sufficient undertaking as required or
permitted by law to accomplish a stay of any such sale.
(e) Reserve Fund. Upon request by Mortgagee following an Event of
Default, Mortgagor shall pay to Mortgagee an initial cash reserve in an amount
adequate to pay all Impositions for the ensuing tax fiscal year (or such lesser
amount as may then be specified by Mortgagee), and shall thereafter deposit with
Mortgagee each month, commencing with the first month after such request by
Mortgagee and continuing until all sums guaranteed by the Guaranty or otherwise
secured hereby are paid in full or Mortgagee gives notice to Mortgagor to cease
making such deposits, an amount equal to one-twelfth of the sum of the annual
Impositions, as reasonably estimated by Mortgagee. In such event, Mortgagor
further agrees to cause all bills, statements or other documents relating to
Impositions to be sent or mailed directly to Mortgagee. Upon receipt of such
bills, statements or other documents evidencing that Impositions are then
payable, and providing Mortgagor has deposited sufficient funds with Mortgagee
pursuant to this Section, Mortgagee shall pay such amounts as may be due
thereunder out of the funds so deposited with Mortgagee. If at any time and for
any reason the funds deposited with Mortgagee are or will be insufficient to pay
such amounts as may then or subsequently be due, Mortgagee may notify Mortgagor
and upon such notice Mortgagor shall immediately deposit an amount equal to such
deficiency with Mortgagee. Notwithstanding the foregoing, nothing contained
herein shall cause Mortgagee to be deemed a trustee of said funds or to be
obligated to pay any amounts in excess of the amount of funds deposited with
Mortgagee pursuant to this Section, nor shall anything contained herein modify
the obligation of Mortgagor to pay, or cause to be paid, all Impositions.
Mortgagee may commingle said reserve with its own funds and Mortgagor shall be
entitled to no interest thereon. Mortgagee may impound or reserve for future
payment of Impositions such portion of such payments as Mortgagee may in its
absolute discretion deem proper, applying the balance upon any indebtedness
guaranteed by the Guaranty or other obligation secured hereby in such order as
Mortgagee may determine, notwithstanding that said indebtedness or the
performance of said obligation may not yet be due according to the terms
thereof. Should Mortgagor fail to deposit with Mortgagee (exclusive of that
portion of said payments which has been applied by Mortgagee upon any
indebtedness guaranteed by the Guaranty or other obligation secured hereby) sums
sufficient to fully pay such Impositions at least thirty (30) days before
delinquency thereof, Mortgagee may, at Mortgagee's election, but without any
obligation so to do, advance any amounts required to make up the deficiency,
which advances, if any, together with interest thereon at an annual rate equal
to the Agreed Rate, shall be secured hereby and shall be repayable to Mortgagee
upon demand; or, at the option of Mortgagee, Mortgagee may, without making any
advance whatever, apply any sums held by it upon any indebtedness guaranteed by
the Guaranty or other obligation secured hereby, in such order as Mortgagee may
determine, notwithstanding
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that said indebtedness or the performance of said obligation may not yet be due
according to the terms thereof.
(f) Joint Assessment. Mortgagor shall not initiate, and, to the
maximum extent permitted by law, shall not suffer or permit the joint assessment
of any real and personal property which may constitute all or a portion of the
Property or any other procedure whereby the lien of real property taxes and the
lien of personal property taxes shall be assessed, levied or charged to the
Property as a single lien.
(g) Tax Service. Mortgagor shall cause to be furnished to Mortgagee
a tax reporting service, covering the Property, of the type and duration, and
with a company, satisfactory to Mortgagee.
9. Liens. Mortgagor shall pay and promptly discharge, at Mortgagor's
cost and expense, all liens, encumbrances and charges upon the Property, or any
part thereof or interest therein. If Mortgagor shall fail to remove and
discharge any such lien, encumbrance or charge, then, in addition to any other
right or remedy of Mortgagee, Mortgagee may, but shall not be obligated to,
discharge the same, either by paying the amount claimed to be due, or by
procuring the discharge of such lien, encumbrance or charge by depositing in a
court a bond or the amount claimed or otherwise giving security for such claim,
or by procuring such discharge in such manner as is or may be prescribed by law.
Mortgagor shall, immediately upon demand therefor by Mortgagee, pay to Mortgagee
an amount equal to all costs and expenses incurred by Mortgagee in connection
with the exercise by Mortgagee of the foregoing right to discharge any such
lien, encumbrance or charge, together with interest thereon from the date of
such expenditure at an annual rate equal to the Agreed Rate.
10. Leaseholds, Leases, Easements, and Servitudes.
(a) Leaseholds and Leases.
i) Mortgagor agrees to duly and punctually pay when due all rents
and other payments due under each of the Ground Leases; to at all times
perform all covenants, agreements, terms and conditions imposed on or
assumed by Mortgagor as lessee under each of the Ground Leases; to cause
each of the Ground Leases to remain in effect so long as any portion of any
indebtedness guaranteed by the Guaranty or otherwise secured hereby shall
be unpaid; to pay or cause the lessor under each such Ground Lease (the
"Ground Lessor") or any prior lessees of the Property to pay any portion of
the impositions, including taxes, assessments, rates and charges to be
borne by such Ground Lessor or such other lessees that have or might become
a lien on the Property or the leasehold estate; to do all things necessary
to keep unimpaired Mortgagor's right in and to the estate created by each
of the Ground Leases; to refrain from doing anything which would impair
Mortgagor's right in and to the estate of each of the Ground Leases or
which would be grounds for declaring a forfeiture or causing a termination
or cancellation of any of the Ground Leases. To prevent any default
thereunder or forfeiture or impairment thereof, Mortgagor shall not, except
with the prior written consent of the Mortgagee:
1) Cancel, terminate, abandon, or surrender any of the
Ground Leases, or consent to or accept any cancellation or termination
thereof, or permit any
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condition or event to exist which would terminate or cancel the same,
or permit such termination or cancellation;
2) Amend, modify, change, supplement or alter ("Amendments")
any of the Ground Leases, whether orally or in writing if the effect
of such Amendment, together with all other Amendments, is to increase
materially the obligations of Mortgagor thereunder or to confer any
additional rights on the Ground Lessor of such Ground Lease that could
reasonably be expected to be materially adverse to Mortgagor or
Mortgagee, but Mortgagor shall not make any Amendments to the rent,
term, or use or development provisions of any Ground Lease without the
prior written consent of Mortgagee; or
3) Take any action in connection with any of the Ground
Leases which would presently or hereafter have the effect of impairing
the value of Mortgagor's interest thereunder, or of the Property, or
of impairing the interest of Mortgagee in any of the Ground Leases or
in the Property.
ii) Mortgagor further agrees that it will promptly deliver to
Mortgagee an exact copy of any notice, communication, plan, specification
or other instrument or document received or given by Mortgagor in any way
relating to or affecting any of the Ground Leases or the Property which may
concern or affect the estate of the lessor in or under any of the Ground
Leases or in the Property; and upon the failure of Mortgagor with respect
to any of the covenants and agreements in this Section 10, Mortgagee may,
at its option, declare all sums guaranteed by the Guaranty or otherwise
secured by this Mortgage or by any other Loan Document (as defined in the
Credit Agreement) to be immediately due and payable, and avail itself of
any remedies provided for herein; and neither the exercise nor the failure
to exercise the foregoing option by Mortgagee shall be deemed a waiver or
release of its right thereafter to declare an Event of Default under this
Mortgage or any other Loan Document by reason of said failure of Mortgagor
to keep, observe and perform its obligations under such Loan Document, or
be deemed an election of remedies by Mortgagee.
iii) As further security for all indebtedness guaranteed by the
Guaranty or otherwise secured hereby, and for the performance of covenants
herein contained and in each of the Ground Leases contained, Mortgagor
hereby assigns to Mortgagee all of Mortgagor's rights, privileges and
prerogatives as lessee under each of the Ground Leases, whether now
existing or hereafter acquired, to terminate, cancel, modify, change,
supplement, alter, amend or extend any of the Ground Leases or to purchase
the demised premises of any of the Ground Leases. Any such termination,
cancellation, modification, change, supplement, alteration, amendment, or
extension of any of the Ground Leases without the prior written consent
thereto by Mortgagee shall be void and of no force and effect.
iv) Any waiver or forbearance of enforcement by Mortgagee with
respect to any default in any of Mortgagor's obligations under any of the
Ground Leases, whether pursuant to the Ground Lease, or otherwise, shall
not release Mortgagor of any of its obligations under this Mortgage,
including its obligations with respect to payment of rentals as provided in
each of the Ground Leases and the performance of all of the terms,
provisions, covenants, conditions and agreements contained in each of the
Ground Leases to be performed by Mortgagor.
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v) Upon Mortgagor's failure to perform any of its covenants,
agreements, terms or conditions imposed on or assumed by Mortgagor as
lessee under any of the Ground Leases, Mortgagee may, at its option, but
shall not be obligated to, take any action Mortgagee deems necessary or
desirable to cure any default by Mortgagor in the performance of or
compliance with any of Mortgagor's covenants or obligations under any of
the Ground Leases. Upon receipt by Mortgagee of any written notice from any
Ground Lessor of any default by the Mortgagor as lessee thereunder,
Mortgagee may rely thereon and take any action as aforesaid to cure any
such alleged default if, in Mortgagee's sole judgment, such alleged default
could result in immediate termination of such Ground Lease even though the
existence of such default or the nature thereof is questioned or denied by
Mortgagor or by any party acting on behalf of Mortgagor. Mortgagor hereby
grants to Mortgagee and agrees that Mortgagee, its officers, employees,
agents, and workmen shall have the absolute and immediate right to enter in
and on the Property to the extent and as often as Mortgagee, in its sole
discretion, deems necessary for the purpose of taking such action as
provided in the preceding sentences. Any expenditure or payments made or
incurred by Mortgagee in curing or commencing to cure any such alleged
default or potential default shall be an advance secured by the lien of
this Mortgage, and shall bear interest at the Agreed Rate from the date of
such advance, and shall, at the option of Mortgagee, be immediately
repayable upon demand. Should Mortgagor fail to repay Mortgagee any such
advance with interest as herein provided within ten (10) days after demand
of the same, Mortgagee may, at its option, declare all sums guaranteed by
the Guaranty or otherwise secured by this Mortgage or by any other Loan
Document to be immediately due and payable, and avail itself of any
remedies provided for herein; and neither the exercise nor the failure to
exercise the foregoing option by Mortgagee shall be deemed a waiver or
release of its right thereafter to declare an Event of Default under this
Mortgage by reason of said failure of Mortgagor to keep, observe and
perform its obligations under each of the Ground Leases or hereunder, or be
deemed an election of remedies by Mortgagee. Any such action of Mortgagee
to cure a default of Mortgagor under a Ground Lease shall not without
Mortgagee's consent, remove or waive the corresponding Event of Default
under the terms hereof.
vi) If both the lessor's and lessee's estates under the Ground
Lease shall at any time become vested in one owner, this Mortgage and the
lien created hereby shall not be destroyed or terminated by application of
the doctrine of merger; and in such event, Mortgagee shall continue to have
and to enjoy all of the rights, title interest and privileges of Mortgagee
as to the separate estates. In the event that Mortgagor shall acquire fee
simple title to the Property at any time prior to the payment in full of
all indebtedness guaranteed by the Guaranty or otherwise secured by this
Mortgage, such fee simple title shall not merge with the leasehold estate
encumbered by this Mortgage, but such fee simple title shall, without
further action on the part of Mortgagor, continue to be subject to the lien
and security interest hereof. In the event of such acquisition by
Mortgagor, Mortgagor agrees to execute and deliver to Mortgagee such
further instruments, covenants, and assurances as Mortgagee may reasonably
require in order to further confirm and assure that the fee simple title so
acquired by Mortgagor is and continues to be subject to the covenants,
terms, agreements, conditions, lien and security interest of this Mortgage.
In addition, if both the lessor's and lessee's estates under any of the
Ground Leases shall at any time become vested in one owner, any Leases then
existing shall not be destroyed or terminated by application of the law of
merger or as a matter of law unless Mortgagee shall so elect in writing.
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vii) Notwithstanding anything to the contrary herein contained
with respect to any Ground Lease:
1) The lien of this Mortgage attaches to all of Mortgagor's
rights and remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11 U.S.C. Sections 101 et
seq. (the "Bankruptcy Code"), including, without limitation, all of
Mortgagor's rights to remain in possession of the Property.
2) Mortgagor shall not, without Mortgagee's written consent,
elect to treat any of the Ground Leases as terminated under subsection
365(h)(1) of the Bankruptcy Code. Any such election made without
Mortgagee's prior written consent shall be void.
3) As security for the Secured Obligations, Mortgagor hereby
unconditionally assigns, transfers and sets over to Mortgagee all of
Mortgagor's claims and rights to the payment of damages arising from
any rejection by any lessor of any of the Ground Leases under the
Bankruptcy Code. Mortgagee and Mortgagor shall proceed jointly or in
the name of Mortgagor in respect of any claim, suit, action or
proceeding relating to the rejection of any Ground Lease, including,
without limitation, the right to file and prosecute any proofs of
claim, complaints, motions, applications, notices and other documents
in any case in respect of such lessor under the Bankruptcy Code. This
assignment constitutes a present, irrevocable and unconditional
assignment of the foregoing claims, rights and remedies, and shall
continue in effect until all of the Secured Obligations shall have
been satisfied and discharged in full. Any amounts received by
Mortgagee or Mortgagor as damages arising out of the rejection of any
Ground Lease as aforesaid shall be applied first to all costs and
expenses of Mortgagee (including, without limitation, attorneys' fees
and costs) incurred in connection with the exercise of its rights or
remedies under this Section 10(a) and then in accordance with the
other applicable provisions of this Mortgage.
4) If, pursuant to subsection 365(h)(1) of the Bankruptcy
Code, Mortgagor seeks to offset against the rent reserved in any
Ground Lease the amount of any damages caused by the nonperformance by
the lessor thereunder of such lessor's obligations under such Ground
Lease after the rejection by lessor of such Ground Lease under the
Bankruptcy Code, Mortgagor shall, prior to effecting such offset,
notify Mortgagee in writing of its intent so to do, setting forth the
amounts proposed to be so offset, and, in the event Mortgagee objects,
Mortgagor shall not effect offset of the amounts so objected to by
Mortgagee. If Mortgagee has failed to object as aforesaid within ten
days after notice from Mortgagor in accordance with the first sentence
of this Section 10(a)(vii)(4), Mortgagor may proceed to offset the
amounts set forth in Mortgagor's notice.
5) If any action, proceeding, motion or notice shall be
commenced or filed in respect of any lessor or the Property or any
portion thereof in connection with any case under this Bankruptcy
Code, Mortgagee and Mortgagor shall cooperatively conduct and control
any such litigation with counsel agreed upon between Mortgagor and
Mortgagee in connection therewith. Mortgagor shall, upon demand, pay
to Mortgagee
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all costs and expenses (including reasonable attorneys' fees and
costs) paid or incurred by Mortgagee in connection with the
cooperative prosecution or conduct of any such proceedings. All such
costs and expenses shall be secured by the lien of this Mortgage.
6) Mortgagor shall promptly, after obtaining knowledge
thereof, notify Mortgagee orally of any filing by or against any
lessor of a petition under the Bankruptcy Code. Mortgagor shall
thereafter promptly give written notice of such filing to Mortgagee,
setting forth any information available to Mortgagor as to the data of
such filing, the court in which such petition was filed, and the
relief sought therein. Mortgagor shall promptly deliver to Mortgagee,
following its receipt thereof, any and all notices, summonses,
pleadings, applications and other documents received by Mortgagor in
connection with any such petition and any proceedings relating
thereto.
viii) To the extent permitted by law, the price payable by
Mortgagor or any other party in the exercise of the right of redemption, if
any, from any sale under or decree of foreclosure of this Mortgage shall
include all rents and other amounts paid and other sums advanced by
Mortgagee on behalf of Mortgagor as the lessee under the Ground Leases.
ix) Mortgagor hereby grants and assigns to Mortgagee a security
interest in all prepaid rent and security deposits and all other security
which the lessors under the Ground Leases may hold now or later for the
performance of Mortgagor's obligations as the lessee under the Ground
Leases.
x) Mortgagor shall not, without Mortgagee's written consent, fail
to exercise any option or right to renew or extend the term of any Ground
Lease at least six months prior to the date of termination of any such
option or right, shall give immediate written notice thereof to Mortgagee,
and shall execute, acknowledge, deliver and record any document reasonably
requested by Mortgagee to evidence the lien of this Mortgage on such
extended or renewed lease term. If Mortgagor shall fail to exercise any
such option or right as aforesaid, Mortgagee may exercise the option or
right as Mortgagors' agent and attorney-in-fact pursuant to Section
10(a)(xiii) below of this Mortgage, or in Mortgagee's own name or in the
name of and on behalf of a nominee of Mortgagee, as Mortgagee may determine
in the exercise of its sole and absolute discretion.
xi) All subleases entered into by Mortgagor (and all existing
subleases modified or amended by Mortgagor) shall provide that such
subleases are subordinate to the lien of this Mortgage and any extensions,
replacements and modifications of this Mortgage and the obligations secured
hereby and that if Mortgagee forecloses under this Mortgage or enters into
a new lease with any lessor under a Ground Lease pursuant to the provisions
for a new lease, if any, contained in the applicable Ground Lease or any
document supplementing the Ground Lease, then the sublessee shall attorn to
Mortgagee or its assignee and the sublease will remain in full force and
effect in accordance with its terms and notwithstanding the termination of
the applicable Ground Lease.
xii) Mortgagor shall not waive, excuse, condone or in any way
release or discharge the lessor under any Ground Lease of or from such
lessor's material obligations,
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covenants and/or conditions under the Ground Lease without the prior
written consent of Mortgagee.
xiii) If any default under any Ground Lease shall have occurred
and be continuing, Mortgagor shall promptly execute, acknowledge and
deliver to Mortgagee such instruments as may reasonably be required to
permit Mortgagee to cure such default under such Ground Lease or permit
Mortgagee to take such other action required to enable Mortgagee to cure or
remedy the matter in default and preserve the security interest of
Mortgagee under this Mortgage with respect to such Ground Lease. Mortgagor
hereby irrevocably appoints Mortgagee as its true and lawful
attorney-in-fact to do, in its name or otherwise, any and all acts and to
execute any and all documents which are necessary to preserve any rights of
Mortgagor under or with respect to any of the Ground Leases, including,
without limitation, the right to effectuate any extension or renewal of any
of the Ground Leases, or to preserve any rights of Mortgagor whatsoever in
respect of any part of any of the Ground Leases (and the above powers
granted to Mortgagor are coupled with an interest and shall be
irrevocable).
The generality of the provisions of this Section 10(a) relating to the Ground
Leases shall not be limited by other provisions of this Mortgage setting forth
particular obligations of Mortgagor which are also required of Mortgagor with
respect to the Ground Leases or the Property.
(b) Easement. If an easement or other incorporeal right constitutes a
portion of the Real Property, Mortgagor agrees not to terminate or materially
amend, change, or modify such easement or other right or interest, or any right
thereto or interest therein, without the prior written consent of Mortgagee.
Consent to one amendment, change, agreement or modification shall not be deemed
to be a waiver of the right to require consent to other, future or successive
amendments, changes, agreements or modifications. Mortgagor agrees to perform
all obligations and agreements with respect to said easement or other right or
interest and shall not take any action or omit to take any action which would
effect or permit the termination thereof. Mortgagor agrees to promptly notify
Mortgagee in writing with respect to any default or alleged default by any party
thereto and to deliver to Mortgagee copies of all notices, demands, complaints
or other communications received or given by Mortgagor with respect to any such
default or alleged default. Mortgagee shall have the option to cure any such
default and to perform any or all of Mortgagor's obligations thereunder or with
respect thereto. All sums expended by Mortgagee in curing any such default shall
be secured hereby and shall be immediately due and payable without demand or
notice and shall bear interest from date of expenditure at an annual rate equal
to the Agreed Rate.
11. Further Acts. Mortgagor shall do and perform all acts necessary to
keep valid and effective the charges and lien hereof, to carry into effect its
object and purposes, to protect the lawful owners of the Guaranty and other
obligations secured hereby; shall execute and deliver to Mortgagee at any time,
upon request of Mortgagee, all other and further instruments in writing
necessary to vest in and secure to Mortgagee each and every part of the Real
Property and to Mortgagee the Rents therefrom and rights and interest of
Mortgagee therein or with respect thereto; and, upon request by the Mortgagee,
shall supply evidence of fulfillment of each of the covenants herein contained
concerning which a request for such evidence has been made.
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12. Pledge and Assignment of Leases and Rents and Incorporeals.
(a) Pledge and Assignment to Mortgagee; Mortgagor's Limited License to
Collect Prior to Default. Notwithstanding any language contained herein, or in
any other document, to the contrary, Mortgagor hereby irrevocably and absolutely
pledges and assigns and transfers to Mortgagee as security for the Secured
Obligations, whether now existing or arising hereafter, up to a maximum amount
outstanding of $120,000,000 at any time or from time to time and pursuant to the
provisions of La. R.S. 9:4401 et seq., without having to first take possession
of the Property, all Rents, and all present and future Leases and other rental
agreements, reserving unto Mortgagor a license to collect such Rents prior to
written notice to Mortgagor of the occurrence of any Event of Default.
Subsequent to the occurrence of an Event of Default, and written notice to
Mortgagor thereof, any Rents, including those past due, unpaid or undetermined,
may be collected by Mortgagee or its agent, and any amount so collected shall be
applied, less costs and expenses of operation and collection, including
reasonable attorneys' fees, to any indebtedness guaranteed by the Guaranty
and/or other obligations secured hereby, and in such order as Mortgagee shall
determine. The collection of such Rents, and the application thereof as
aforesaid, shall not cure or constitute a waiver of any default or notice of
default hereunder or invalidate any act done pursuant to such notice. Mortgagor
and Mortgagee intend that this pledge assignment shall be a present, absolute
and unconditional assignment, and shall, immediately upon the execution hereof,
subject to the license granted above, give Mortgagee, and its agent, the right
to collect the Rents and to apply them as aforesaid. Nothing contained herein,
nor any collection of Rents by Mortgagee, or its agent or a keeper, shall be
construed to make Mortgagee (i) a "Mortgagee-in-Possession" of the Property so
long as Mortgagee has not itself entered into actual possession of the Property;
(ii) responsible for performing any of the obligations of the lessor under any
Lease; (iii) responsible for any waste committed by lessees or any other
parties, any dangerous or defective condition of the Property, or any negligence
in the management, upkeep, repair or control of the Property; or (iv) liable in
any manner for the Property or the use, occupancy, enjoyment or operation of all
or any part of it.
(b) No Other Assignments. Mortgagor hereby represents to Mortgagee
that there is no assignment or pledge of any Leases of, or Rentals from, the
Property now in effect, and covenants that, until the Notes are fully paid and
the other Secured Obligations are fully satisfied, Mortgagor will not make any
such assignment or pledge to anyone other than Mortgagee nor will it accept any
periodic payments which are to be made pursuant to such Leases or Rents more
than ten (10) days in advance of the date on which such payments are due.
(c) Incorporeal rights. Mortgagor further hereby irrevocably and
absolutely pledges and assigns and transfers to Mortgagee as security for the
Secured Obligations, whether now existing or arising hereafter, up to a maximum
amount outstanding at any time or for an outstanding amount of $120,000,000 at
any time or from time to time, and pursuant to the provision of La. R.S. 9:5386
all rights to receive proceeds attributable to the insurance loss of all or any
part of the Property, which pledge and assignment shall be effective on the date
hereof and shall have effect, other than between Mortgagor and Mortgagee, and
shall be perfected, upon recordation of this Mortgage in the mortgage records of
the Parish of Calcasieu, Louisiana. Mortgagor further grants Mortgagee a mandate
and power of attorney, coupled with an interest, to carry out the grants and
pledges provided hereby.
13. Actions Affecting Property. Mortgagor shall give Mortgagee prompt
written notice of the assertion of any claim with respect to, or the filing of
any action or proceeding affecting or
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purporting to affect, the Property, or title thereto or any right of possession
thereof, or this Mortgage or the security hereof or the rights or powers of
Mortgagee hereunder. Mortgagor shall appear in and contest any such action or
proceeding at Mortgagor's sole expense; and shall pay all costs and expenses,
including cost of evidence of title and attorneys' fees, in any such action or
proceeding in which Mortgagee may appear.
14. Eminent Domain. If any proceeding or action be commenced for the
taking of the Property, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, condemnation or otherwise,
or if the same be taken or damaged by reason of any public improvement or
condemnation proceeding, or in any other manner, or should Mortgagor receive any
notice or other information regarding such proceeding, action, taking or damage
(including, without limitation, a proposal to purchase the Property or some
portion thereof in lieu of condemnation), Mortgagor shall give prompt written
notice thereof to Mortgagee. Mortgagee shall be entitled, at its option, without
regard to the adequacy of its security, to investigate and negotiate with the
condemnor concerning the proposed taking, to commence, appear in and prosecute
in its own name any such action or proceeding, and, if an Event of Default then
exists hereunder, to make any compromise or settlement in connection with such
taking or damage. Mortgagor shall not compromise or settle any such action or
proceeding or agree to any sale in lieu of condemnation without the prior
written consent of Mortgagee. All compensation, awards, damages, rights of
action and proceeds awarded to Mortgagor by reason of any such taking, transfer
or damage (the "Award") are hereby pledged and assigned to Mortgagee as security
for the Secured Obligations, whether now existing or arising hereinafter, up to
a maximum outstanding of $120,000,000 at any time or from time to time, and
Mortgagor agrees to execute such further assignments of the Award as Mortgagee
may require. After deducting therefrom all costs and expenses (regardless of the
particular nature thereof and whether incurred with or without suit), including
attorneys' fees, incurred by it in connection with any such negotiations, action
or proceeding (whether or not prosecuted to judgment), Mortgagee shall, if (i)
an Event of Default does not then exist hereunder, and (ii) if application of
the Award to restoration of the Property will not, in Mortgagee's reasonable
judgment, impair Mortgagee's security for the Secured Obligations, apply the
Award to the restoration of the Property, subject to such conditions as
Mortgagee shall determine (it being expressly understood and agreed that
Mortgagee may condition disbursement of such proceeds for restoration upon proof
that an amount equal to the sum which Mortgagee is requested to disburse has
theretofore been paid by Mortgagor without reimbursement therefor, or is then
due and payable, for materials theretofore installed or work theretofore
performed upon the Property and properly includable in the cost of repair,
reconstruction or restoration thereof). If, at the time of receipt by Mortgagee
of such proceeds, (i) an Event of Default then exists hereunder, or (ii)
application of the Award to restoration will, in Mortgagee's reasonable
judgment, impair Mortgagee's security for the Secured Obligations, Mortgagee
shall have the option, in its sole and absolute discretion, (1) to apply all or
any portion of the Award upon any indebtedness guaranteed by the Guaranty and in
such order as Mortgagee may determine, notwithstanding that said indebtedness or
the performance of said obligation may not be due according to the terms
thereof, or (2) to apply all or any portion of the Award to the restoration of
the Property, subject to such conditions as Mortgagee may determine, or (3) to
deliver all or any portion of the Award, after such deductions, to Mortgagor,
subject to such conditions as Mortgagee may determine (and, if the Award is not
sufficient to satisfy the Secured Obligations in full, Mortgagor shall
immediately pay any remaining balance, together with all accrued interest
thereon). Nothing herein contained shall be deemed to excuse Mortgagor from
restoring, repairing and maintaining the Property, as herein provided,
regardless of whether or not the Award is available for restoration, whether or
not any such Award is sufficient in amount, or whether or not the Property can
be restored to the same condition and character as existed
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prior to such damage or partial taking. Mortgagor hereby specifically,
unconditionally and irrevocably waives all rights of a property owner under all
laws which provide for allocation of condemnation proceeds between a property
owner and a lienholder.
15. Due on Sale. Except as otherwise permitted by the Credit
Agreement, if Mortgagor shall sell or convey, or create or permit to exist any
mortgage, pledge, security interest or other encumbrance on, or in any other
manner alienate or otherwise "transfer" the Real Property hereby encumbered or
any part thereof or any interest therein, or shall enter into any agreement for
the same, or shall be divested of its title in any manner or way, whether
voluntary or involuntary or by merger, without the written consent of Mortgagee
being first had and obtained, any indebtedness guaranteed by the Guaranty or
other obligation secured hereby, irrespective of the maturity dates expressed in
the Notes or any other notes evidencing the same, at the option of Mortgagee,
and without demand or notice, shall immediately become due and payable. Consent
to one such transaction shall not be deemed to be a waiver of the right to
require consent to future or successive transactions. Mortgagee may grant or
deny such consent in its sole discretion and, if consent should be given, any
such transfer shall be subject to this Mortgage, and any such transferee shall
assume all obligations hereunder and agree to be bound by all provisions
contained herein. Such assumption shall not, however, release Mortgagor or any
maker or guarantor of any Secured Obligation from any liability with respect
thereto without the prior written consent of Mortgagee. As used herein,
"transfer" includes the direct or indirect sale, agreement to sell, transfer,
conveyance, pledge, collateral assignment or hypothecation of the Real Property,
or any portion thereof or interest therein, whether voluntary, involuntary, by
operation of law or otherwise, the execution of any installment land sale
contract or similar instrument affecting all or a portion of the Real Property,
or the lease of all or substantially all of the Real Property. The term
"transfer" shall also include the direct or indirect transfer, assignment,
hypothecation or conveyance of legal or beneficial ownership of any stock in
Mortgagor.
16. Partial or Late Payments. By accepting payment of any indebtedness
guaranteed by the Guaranty after its due date, Mortgagee does not waive its
right either to require prompt payment, when due, of all other indebtedness so
secured or to declare default, as herein provided, for failure to so pay.
17. Release By Mortgagee. Upon payment in full of all Secured
Obligations and upon cancellation of the Guaranty by Mortgagee, the Mortgagee
shall execute, without warranty or recourse, a release of this Mortgage all at
the expense of Mortgagor.
18. Right of Mortgagee to Appear. If, during the existence of the
trust created hereby, there be commenced or pending any suit or action
materially and adversely affecting the Property, or any part thereof, or the
title thereto, or if any adverse claim for or against the Property, or any part
thereof, be made or asserted, the Mortgagee may appear or intervene in the suit
or action and retain counsel therein and, unless such suit or action is being
diligently contested in good faith by Mortgagor and Mortgagor shall have
established and maintained adequate reserves with Mortgagee for the full payment
and satisfaction of such suit or action if determined adversely to Mortgagor,
may defend same, or otherwise take such action therein as the Mortgagee may be
advised and may pay and expend such sums of money as the Mortgagee may deem to
be necessary and Mortgagor shall pay all reasonable costs and expenses of
Mortgagee incurred in connection therewith.
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19. Performance by Mortgagee. If Mortgagor fails to make any payment
or perform any act as and in the manner provided in any of the Loan Documents,
then the Mortgagee, at its election and without any obligation to do so, after
the giving of reasonable notice to the Mortgagor, or any successor in interest
of the Mortgagor, or any of them and without releasing Mortgagor from any
obligation hereunder, may make such payment or perform such act and incur any
liability, or expend whatever amounts, in its absolute discretion, it may deem
necessary therefor. In connection therewith (without limiting their general and
other powers, whether conferred herein, in another Loan Document or by law),
Mortgagee shall have and is hereby given the right, but not the obligation, (i)
to enter upon and take possession of the Property; (ii) to make additions,
alterations, repairs and improvements to the Property which it may consider
necessary or proper to keep the Property in good condition and repair; (iii) to
appear and participate in any action or proceeding affecting or which may affect
the security hereof or the rights or powers of Mortgagee; (iv) to pay, purchase,
contest or compromise any encumbrance, claim, charge, lien or debt which in the
judgment of either may affect or appears to affect the security of this Mortgage
or to be prior or superior hereto; and (v) in exercising such powers, to pay
necessary expenses, including employment of counsel and other necessary or
desirable consultants. All sums incurred or expended by the Mortgagee, under the
terms hereof (including, without limiting the generality of the foregoing, costs
of evidence of title, court costs, appraisals, surveys, and keeper's,
Mortgagee's and attorneys' fees, costs and expenses (including, without
limitation, the fees and expenses of attorneys for Mortgagee), whether or not an
action is actually commenced in connection therewith), shall be a part of the
Secured Obligations and shall become due and payable by Mortgagor to Mortgagee
within ten (10) days and shall bear interest until paid at an annual percentage
rate equal to the Agreed Rate. In no event shall payment by Mortgagee be
construed as a waiver of the default occasioned by Mortgagor's failure to make
such payment or payments.
20. Inspections. Mortgagee, or its agents, representatives or workers,
are authorized to enter at any reasonable time upon or in any part of the
Property for the purpose of inspecting the same and for the purpose of
performing any of the acts it is authorized to perform hereunder or under the
terms of any of the Loan Documents.
21. Invalidity of Lien. If the lien of this Mortgage is invalid or
unenforceable as to any part of the debt, or if the lien is invalid or
unenforceable as to any part of the Property, the unsecured or partially secured
portion of the debt shall be completely paid prior to the payment of the
remaining and secured or partially secured portion of the debt, and all payments
made on the debt, whether voluntary or under foreclosure or other enforcement
action or procedure, shall be considered to have been first paid on and applied
to the full payment of that portion of the debt which is not secured or is not
fully secured by the lien of this Mortgage.
22. Subrogation. To the extent that any sums advanced by Mortgagee are
used to pay any outstanding lien, charge or prior encumbrance against the
Property, such sums shall be deemed to have been advanced by Mortgagee at
Mortgagor's request and Mortgagee shall be subrogated to any and all rights and
liens held by any owner or holder of such outstanding liens, charges and prior
encumbrances, regardless of whether said liens, charges or encumbrances are
released.
23. Events of Default. Mortgagor will be in default under this
Mortgage upon the occurrence of any one or more of the following events (some or
all collectively, "Events of Default"; any one singly, an "Event of Default"):
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(a) Failure to Pay. Any amount due under any of the Notes, the
Guaranty, the Credit Agreement, this Mortgage or any other Loan Document, or any
other amount the payment of which is secured hereby, is not paid when due; or
(b) Other Breaches Hereof. A breach by Mortgagor of any
representation, warranty or covenant in this Mortgage which is not cured within
any applicable notice and cure period provided in the Credit Agreement with
respect to such breach; or
(c) Defaults Under Other Loan Documents. The occurrence under any of
the Loan Documents of an "Event of Default" (as defined therein).
24. Remedies. At any time after an Event of Default, Mortgagee and
Mortgagee will be entitled to invoke any and all of the following rights and
remedies, all of which will be cumulative, and the exercise of any one or more
of which shall not constitute an election of remedies:
(a) Acceleration. Mortgagee may declare any or all of the Secured
Obligations to be due and payable immediately, without presentment, demand,
protest or notice of any kind.
(b) Keeper. Mortgagee may apply to any court of competent jurisdiction
for, and obtain appointment of, a keeper for the Property or any part thereof,
without notice to Mortgagor or anyone claiming under Mortgagor, and without
regard to the then value of the Property or the adequacy of any security for the
Secured Obligations, and Mortgagor hereby irrevocably consents to such
appointment and waives notice of any application therefor. Any such keeper or
keepers shall have all the usual powers and duties of keepers in like or similar
cases and all the powers and duties of Mortgagee in case of entry as provided
herein and in the Credit Agreement and shall continue as such and exercise all
such powers until the later of (i) the date of confirmation of sale of all of
the Property; (ii) the disbursement of all proceeds of the Property collected by
such keeper and the payment of all expenses incurred in connection therewith; or
(iii) the termination of such receivership with the consent of Mortgagee or
pursuant to an order of a court of competent jurisdiction. Mortgagee may also
request, in connection with any foreclosure proceeding hereunder, that the
Louisiana Gaming Commission petition a District Court of the State of Louisiana
for the appointment of a supervisor to conduct the normal gaming activities on
the Property following such foreclosure proceeding. The compensation of the
keeper is hereby fixed at 1% of the amount due or sued for or claimed or sought
to be protected, preserved, or enforced, and shall constitute a part of the
Secured Obligations.
(c) Foreclosure. The Mortgagor hereby acknowledges the Secured
Obligations, whether now existing or to arise hereafter, and confesses judgment
thereon if the Secured Obligations are not paid at maturity, and does by these
presents consent, agree and stipulate that if any portion of the Secured
Obligations is not promptly and fully paid upon demand when due, or if there
should occur an Event of Default as defined above, the Secured Obligations
shall, at the option of the Mortgagee, become immediately due and payable and it
shall be lawful for the Mortgagee, without making a demand and without notice or
putting in default, the same being hereby expressly waived, to cause all and
singular the Property to be seized and sold by executory process, without
appraisement (appraisement being hereby expressly waived), either in its
entirety or in lots or parcels, as the Mortgagee may determine, to the highest
bidder for cash, or on such terms as plaintiff in such proceedings may direct.
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The Mortgagor hereby expressly waives: (a) the benefit of
appraisement, as provided in Articles 2332, 2336, 2723 and 2724, Louisiana Code
of Civil Procedure, and all other laws conferring the same; (b) the demand and
three (3) days delay accorded by Articles 2639 and 2721, Louisiana Code of Civil
Procedure; (c) the notice of seizure required by Articles 2293 and 2721,
Louisiana Code of Civil Procedure; (d) the three (3) days delay provided by
Articles 2331 and 2722, Louisiana Code of Civil Procedure; and (e) the benefit
of the other provisions of Articles 2331, 2722 and 2723, Louisiana Code of Civil
Procedure, and the benefit of any other Articles or laws relating to rights of
appraisement, notice, or delay not specifically mentioned above; and the
Mortgagor expressly agrees to the immediate seizure of the Property in the event
of suit hereon.
(d) Entry. Mortgagee, in person, by agent or by court-appointed
keeper, may enter, take possession of, manage and operate all or any part of the
Property, subject to applicable Gaming Laws (as defined in the Credit
Agreement), and may also do any and all other things in connection with those
actions that Mortgagee may, in its sole discretion, consider necessary and
appropriate to protect the security of this Mortgage. Such other things may
include, among other things, any of the following: taking and possessing all of
Mortgagor's or the then owner's books and records; entering into, enforcing,
modifying, or canceling Leases on such terms and conditions as Mortgagee may
consider proper; obtaining and evicting tenants; fixing or modifying Rents;
collecting and receiving any payment of money owing to Mortgagor; completing
construction; and contracting for and making repairs and alterations. If
Mortgagee so requests, Mortgagor shall assemble all of the Property that has
been removed from the Real Property and make all of it available to Mortgagee at
the site of the Real Property. Mortgagor hereby irrevocably constitutes and
appoints Mortgagee as Mortgagor's attorney-in-fact, such power being coupled
with an interest, to perform such acts and execute such documents as Mortgagee
in its sole discretion may consider to be appropriate in connection with taking
these measures, including endorsement of Mortgagor's name on any instruments.
Regardless of any provision of this Mortgage or the Credit Agreement, Mortgagee
shall not be considered to have accepted any property other than cash or
immediately available funds in satisfaction of any obligation of Mortgagor to
Mortgagee, unless Mortgagee has given express written notice of Mortgagee's
election of that remedy in accordance with the Louisiana Commercial Laws -
Secured Transactions (La.R.S. Title 10, Chapter 9) as it may be amended or
recodified from time to time.
(e) Cure; Protection of Security. Mortgagee may cure any breach or
default of Mortgagor, and if it chooses to do so in connection with any such
cure, Mortgagee may also, enter the Property and, whether or not Mortgagee
enters the Property, do any and all other things which Mortgagee, in its sole
discretion, may consider necessary and appropriate to protect the security of
this Mortgage, including, without limitation, the right to complete the
Improvements. Such other things may include: appearing in and/or defending any
action or proceeding which purports to affect the security of, or the rights or
powers of Mortgagee under, this Mortgage; paying, purchasing, contesting or
compromising any encumbrance, charge, lien or claim of lien which in Mortgagee's
sole judgment is or may be senior in priority to this Mortgage, such judgment of
Mortgagee to be conclusive as among the parties to this Mortgage; obtaining
insurance and/or paying any premiums or charges for insurance required to be
carried under this Mortgage; otherwise caring for and protecting any and all of
the Property; and employing counsel, accountants, contractors and other
appropriate persons to assist Mortgagee. Mortgagee may take any of the actions
permitted under this Subsection either with or without giving notice to any
person.
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(f) Uniform Commercial Code Remedies. With respect to Personal
Property, Mortgagee may exercise any or all of the remedies granted to a secured
party under the Louisiana Commercial Laws - Secured Transactions (La. R.S. Title
10, Chapter 9), and all rights under the Louisiana Code of Civil Procedure,
together with any and all other rights and remedies provided in the Security
Agreement. Further, Mortgagor acknowledges that Mortgagee shall have all rights
to foreclosure by executory process and appointment of the keeper, as set forth
in paragraph (c) above with regard to the Personal Property, as fully and
completely as with regard to the other Property.
(g) Judicial Action. Mortgagee may bring an action in any court of
competent jurisdiction to foreclose this Mortgage or to obtain specific
enforcement of any of the covenants or agreements of this Mortgage or for any
other remedy provided herein, in the Guaranty, in the Credit Agreement, in any
Loan Document or otherwise provided by law or in equity.
(h) Power of Sale. Under the power of sale herein granted, Mortgagee
shall have the discretionary right to cause some or all of the Property,
including any Property which constitutes personal property, to be sold or
otherwise disposed of in any combination and in any manner permitted by
applicable law.
(i) Sales of Personal Property.
(A) For purposes of the power of sale herein granted,
Mortgagee may elect to treat as personal property any Property which
is intangible or which can be severed from the Land or Improvements
without causing structural damage. If Mortgagee chooses to do so,
Mortgagee may dispose of any personal property separately from the
sale of real property, in any manner permitted by or under the laws of
the state of Louisiana, including any public or private sale, or in
any manner permitted by any other applicable law.
(B) The following provision shall apply in the absence of
any specific statutory requirement which permits or requires a
different notice period: In connection with any sale or other
disposition of such Property, Mortgagor agrees that the following
procedures constitute a commercially reasonable sale: Mortgagee shall
mail written notice of the sale to Mortgagor not later than fifteen
(15) days prior to such sale. Not less than once per week during the
two weeks (fourteen (14) days) immediately preceding such sale,
Mortgagee will publish notice of the sale in a local daily newspaper
of general circulation. Upon receipt of any written request, Mortgagee
will, to the extent reasonably practicable, make the Property
available to any bona fide prospective purchaser for inspection during
reasonable business hours prior to the sale. Notwithstanding any
provision to the contrary, Mortgagee shall be under no obligation to
consummate a sale if, in its judgment, none of the offers received by
it equals the fair value of the Property offered for sale. The
foregoing procedures do not constitute the only procedures that may be
commercially reasonable.
(ii) Mortgagee's Sales of Real Property or Mixed Collateral.
(A) Mortgagee may choose to dispose of some or all of the
Property which consists solely of real property in any manner then
permitted by applicable law.
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In its discretion, Mortgagee may also or alternatively choose to
dispose of some or all of the Property, in any combination consisting
of both real and personal property, together in one sale to be held in
accordance with the law and procedures applicable to real property.
Mortgagor agrees that any sale of personal property together with real
property constitutes a commercially reasonable sale of the personal
property. For purposes of this power of sale, either a sale of real
property alone, or a sale of both real and personal property together
in accordance with law, will sometimes be referred to as a
"Mortgagee's Sale."
(B) Before any Mortgagee's Sale, Mortgagee shall give and
record such notice of default and election to sell as may then be
required by law. When all time periods then legally mandated have
expired, and after such notice of sale as may then be legally required
has been given, Mortgagee shall sell the property being sold at a
public auction to be held at the time and place specified in the
notice of sale. Mortgagee shall have no obligation to make demand on
Mortgagor before any Mortgagee's Sale. From time to time, in
accordance with then applicable law, Mortgagee may, and in any event
at Mortgagee's request shall, postpone any Mortgagee's sale by public
announcement at the time and place noticed for that sale, or may, in
its discretion, give a new notice of sale.
(C) At any Mortgagee's Sale, Mortgagee shall sell to the
highest bidder at public auction for cash in lawful money of the
United States. Mortgagee shall execute and deliver to the purchaser(s)
a deed or deeds conveying the property being sold without any covenant
or warranty whatsoever, express or implied. The recitals in any such
deed of any matters or facts, including any facts bearing upon the
regularity or validity of any Mortgagee's Sale, shall be conclusive
proof of their truthfulness. Any such deed shall be conclusive against
all persons as to the facts recited in it.
(i) Single or Multiple Foreclosure Sales. If the Property at the
time of sale or other disposition consists of more than one lot, parcel or item
of property, Mortgagee may:
(i) Designate the order in which the lots, parcels or items
shall be sold or disposed of or offered for sale or disposition; and
(ii) Elect to dispose of the lots, parcels or items through a
single consolidated sale or disposition to be held or made under the
power of sale herein granted, or in connection with judicial
proceedings, or by virtue of a judgment and decree of foreclosure and
sale; or through two or more such sales or dispositions; or in any
other manner that Mortgagee may deem to be in its best interests (any
such sale or disposition, a "Foreclosure Sale;" any two or more,
"Foreclosure Sales").
If Mortgagee chooses to have more than one Foreclosure Sale, Mortgagee at its
option may cause the Foreclosure Sales to be held simultaneously or
successively, on the same day, or on such different days and at such different
times and in such order as Mortgagee may deem to be in its best interests. No
Foreclosure Sale shall terminate or affect the liens of this Mortgage on any
part of the Property which has not been sold, until all of the Secured
Obligations have been paid in full.
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25. Costs of Enforcement. If any Event of Default occurs, Mortgagee
may employ an attorney or attorneys to protect its rights hereunder. Mortgagor
promises to pay to Mortgagee, on demand, the fees and expenses of such attorneys
and all other costs of enforcing the obligations secured hereby, including but
not limited to, recording fees, Mortgagee's fees and expenses, keepers' fees and
expenses, and all other expenses, of whatever kind or nature, incurred by
Mortgagee in connection with the enforcement of the obligations secured hereby,
whether or not such enforcement includes the filing of a lawsuit. Until paid,
such sums shall be secured hereby and shall bear interest, from date of
expenditure, at an annual rate equal to the Agreed Rate.
26. Remedies Cumulative and Not Exclusive. Mortgagee shall be entitled
to enforce payment and performance of any indebtedness guaranteed by the
Guaranty or other obligations secured hereby and to exercise all rights and
powers under this Mortgage, any agreement secured hereby or any other agreement,
or under any laws now or hereafter in force, notwithstanding some or all of the
said indebtedness guaranteed by the Guaranty and other obligations secured
hereby may now or hereafter be otherwise secured, whether by mortgage, deed of
trust, pledge, lien, assignment or otherwise. Neither the acceptance of this
Mortgage nor its enforcement whether by court action or pursuant to the power of
sale or other powers herein contained, shall prejudice or in any manner affect
Mortgagee's right to realize upon or enforce any other security now or hereafter
held by Mortgagee, it being agreed that Mortgagee shall be entitled to enforce
this Mortgage and any other security now or hereafter held by Mortgagee in such
order and manner as Mortgagee may in its absolute discretion determine. No
remedy herein conferred upon or reserved to Mortgagee is intended to be
exclusive of any other remedy herein or by law provided or permitted, but each
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any other instrument or agreement to Mortgagee or to
which Mortgagee may be otherwise entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by
Mortgagee and Mortgagee may pursue inconsistent remedies.
27. Credit Bids. At any Foreclosure Sale, any person, including
Mortgagor, or Mortgagee, may bid for and acquire the Property or any part
thereof to the extent permitted by then applicable law. Instead of paying cash
for such property, Mortgagee may settle therefor by crediting such portion of
the following obligations against the sales price of the property as is
necessary to equal such price:
(a) First, the portion of the Secured Obligations attributable to the
expenses of sale, costs of any action and any other sums for which Mortgagor is
obligated to pay or reimburse Mortgagee hereunder or under any other Loan
Document; and
(b) Second, any of the other Secured Obligations, in any order and
proportion as Mortgagee, in its sole discretion, may elect.
28. Application of Foreclosure Sale Proceeds. Mortgagee shall apply
the proceeds of any Foreclosure Sale in the following manner:
(a) First, to pay the portion of the Secured Obligations attributable
to the expenses of sale, costs of any action and any other sums for which
Mortgagor is obligated to reimburse Mortgagee hereunder or under any other Loan
Document;
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(b) Second, to pay the portion of the Secured Obligations attributable
to any sums expended or advanced by Mortgagee under the terms of this Mortgage
which then remain unpaid;
(c) Third, to pay any and all other Secured Obligations, in any order
and proportion as Mortgagee, in its sole discretion, may elect; and
(d) Fourth, the remainder, if any, shall be remitted to the person
or persons entitled to it.
29. Application of Rents and Other Sums. Mortgagee shall apply any and
all Rents collected by it, and any and all sums, other than proceeds of a
Foreclosure Sale, which Mortgagee may receive or collect, in the following
manner:
(a) First, to pay the portion of the Secured Obligations attributable
to the costs and expenses of operation and collection that may be incurred by
Mortgagee or any keeper;
(b) Second, to pay any and all other Secured Obligations in any order
and proportion as Mortgagee, in its sole discretion, may elect; and
(c) Third, the remainder, if any, shall be remitted to the person or
persons entitled to it.
Mortgagee shall have no liability for any funds which it does not actually
receive.
30. Binding Nature. This Mortgage applies to, inures to the benefit of
and binds Mortgagor and the heirs, legatees, devisees, administrators, personal
representatives, executors and the successors and assigns thereof, and
Mortgagee. As used herein, the term "Mortgagee" shall include the owners and
holders of the Notes and other Secured Obligations from time to time, whether or
not named as Mortgagee herein (it being expressly agreed, however, that
Mortgagee may act through an agent; that only the signature of such agent is
required on any amendment hereof or any consent, approval or other action
hereunder; and that First Interstate Bank of Nevada, N.A., is the initial agent
hereunder); and the term "Mortgagor" shall mean the Mortgagor named herein and
the successors-in-interest, if any, of said named Mortgagor, in and to the
Property or any part thereof. If there be more than one Mortgagor hereunder,
their obligations hereunder shall be joint and several.
31. Full Performance Required; Survival of Warranties. All
representations, warranties and covenants of Mortgagor contained in any loan
application or made to Mortgagee in or in connection with the Guaranty or any of
the Loan Documents or incorporated by reference in any of them, shall survive
the execution and delivery of this Mortgage and shall remain continuing
obligations, warranties and representations of Mortgagor so long as any portion
of the obligations secured by this Mortgage remains outstanding.
32. Waiver of Certain Rights By Mortgagor. Mortgagor waives, to the
extent permitted by law, (i) the benefit of all laws now existing or that may
hereafter be enacted providing for any appraisement before sale of any portion
of the Property, (ii) all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the secured
indebtedness and marshalling in the event of foreclosure of the liens hereby
created, (iii) all rights and
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remedies which Mortgagor may have or be able to assert by reason of the laws of
the State of Louisiana pertaining to the rights and remedies of sureties and
(iv) the provisions of Louisiana Civil Code Title XVI, including, but not
limited to all rights of division and discussion and any right of any guarantor
to terminate the Guaranty under Louisiana Civil Code article 3061, it being
understood that Mortgagee and each Lender have irrevocably changed their
positions by advancing or agreeing to advance funds to the Company under the
Loan Agreement based upon the continued existence of the Guaranty and the grant
of collateral by Mortgagor to secure its obligations under its Guaranty. Without
limiting the generality of the foregoing, Mortgagor waives, to the extent
permitted by law, all rights to direct the order in which any of the Property
shall be sold in the event of any sale or sales pursuant hereto and to have any
of the Property or any other property now or hereafter constituting security for
the indebtedness guaranteed by the Guaranty marshalled upon any foreclosure of
this Mortgage or of any other security for any of such indebtedness.
33. Construction. The language in all parts of this Mortgage shall be
in all cases construed simply according to its fair meaning and not strictly for
or against any of the parties hereto. Headings at the beginning of Sections,
Subsections, paragraphs and subparagraphs of this Mortgage are solely for the
convenience of the parties, are not a part hereof and shall not be used in
construing this Mortgage. The preamble, any recitals and all exhibits and
schedules to this Mortgage are part of this Mortgage and are incorporated herein
by this reference. When required by the context: whenever the singular number is
used in this Mortgage, the same shall include the plural, and the plural shall
include the singular; and the masculine gender shall include the feminine and
neuter genders and vice versa. Unless otherwise required by the context (or
otherwise provided herein): the words "herein", "hereof" and "hereunder" and
similar words shall refer to this Mortgage generally and not merely to the
provision in which such term is used; the word "person" shall include
individual, partnership, corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority and other entity of whatever nature; the words
"including", "include" or "includes" shall be interpreted in a non-exclusive
manner as though the words "but [is] not limited to" or "but without limiting
the generality of the foregoing" or "without limitation" immediately followed
the same; the word "month" shall mean calendar month; and the term "business
day" shall mean any day other than a Saturday, Sunday or legal holiday under the
laws of the State of Nevada. If the day on which performance of any act or the
occurrence of any event hereunder is due is not a business day, the time when
such performance or occurrence shall be due shall be the first business day
occurring after the day on which performance or occurrence would otherwise be
due hereunder. All times provided in this Mortgage for the performance of any
act will be strictly construed, time being of the essence hereof.
34. Priority. This Mortgage is intended to have, and retain, priority
over all other liens and encumbrances upon the Real Property, excepting only:
(i) such Impositions as, at the date hereof, have, or, by law, gain, priority
over the lien created hereby; (ii) covenants, conditions, restrictions,
easements, rights of way and Leases which are of record or are disclosed of
record and which, on the date hereof, affect the Real Property and are superior
in right to or have priority over this Mortgage and (iii) Leases, liens,
encumbrances and other matters as to which Mortgagee hereafter expressly
subordinates the lien of this Mortgage by written instrument in recordable form.
Under no circumstances shall Mortgagee be obligated or required to subordinate
the lien hereof to any lien, encumbrance, covenant or other matter affecting the
Real Property or any portion thereof. Mortgagee may, however, at Mortgagee's
option, exercisable in its sole and absolute discretion, subordinate the lien of
this Mortgage, in whole or in part, to any or all Leases, liens, encumbrances or
other matters affecting all or any portion of the Real Property, by executing
and recording, in the Office of the County Recorder
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of the county or counties in which the Real Property is located, a unilateral
declaration of such subordination specifying the Lease, lien, encumbrance or
other matter or matters to which this Mortgage shall thereafter be subordinate.
35. Amendments. This Mortgage cannot be waived, changed, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, discharge or termination is
sought.
36. Financing Statement. Portions of the Personal Property (and
portions of the Real Property) are goods which are or are to become fixtures on
or relating to the Real Property. This Mortgage constitutes a financing
statement filed as a fixture filing in the Official Records of the County
Recorder of the County in which the Property is located with respect to any and
all fixtures included within the term "Property" as used herein and with respect
to any goods or other Personal Property that may now be or hereafter become such
fixtures. The address of Mortgagee, from which information concerning the
security interest granted hereunder may be obtained, is:
First Interstate Bank of Nevada, N.A.
Gaming Industry Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attn: Steve Byrne, V.P.
The address of Trustor, from which information concerning the security interest
granted hereunder may be obtained, is:
-------------------------------
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: President and Chief Operating Officer
38
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With respect to the Leased Land, the address of the record owner(s), from which
information concerning the security interest granted hereunder may be obtained,
is:
===============================
===============================
Attn: ________________________
37. Attorney-in-Fact. Mortgagor hereby appoints Mortgagee the
attorney-in-fact of Mortgagor, such agency being coupled with an interest, to
prepare, sign, file and record one or more financing statements; any documents
of title or registration, or like papers, and to take any other action deemed
necessary, useful or desirable by Mortgagee to perfect and preserve Mortgagee's
security interest against the rights or interests of third persons.
38. Releases, Extensions, Modifications and Additional Security.
(a) From time to time, Mortgagee may perform any of the following acts
without incurring any liability or giving notice to any person, and without
affecting the personal liability of any person for the payment of the Secured
Obligations (except as provided below), and without affecting the security
hereof for the full amount of the Secured Obligations on all Property remaining
subject hereto, and without the necessity that any sum representing the value of
any portion of the Property affected by the Mortgagee's action be credited on
the Secured Obligations:
(i) Release any person liable for payment of any Secured Obligation;
(ii) Extend the time for payment, or otherwise alter the terms of
payment, of any Secured Obligation;
(iii) Accept additional real or personal property of any kind as
security for any Secured Obligation, whether evidenced by deeds of trust,
mortgages, security agreements or any other instruments of security; or
(iv) Alter, substitute or release any property securing the Secured
Obligations.
(b) From time to time when requested to do so by Mortgagee in writing,
Mortgagee may perform any of the following acts without incurring any liability
or giving notice to any person:
(i) Consent in writing to the making of any plat or map of the
Property or any part of it;
(ii) Join in granting any easement or creating any restriction
affecting the Property;
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(iii) Join in any subordination or other agreement affecting this
Mortgage or the lien of it or other agreement or instrument relating hereto
or to the Property or any portion thereof; or
(iv) Reconvey the Property or any part of it without any warranty.
39. Exculpation and Indemnification.
(a) Mortgagee shall not be directly or indirectly liable to Mortgagor
or any other person as a consequence of any of the following:
(i) Mortgagee's exercise of or failure to exercise any rights,
remedies or powers granted to Mortgagee in this Mortgage;
(ii) Mortgagee's failure or refusal to perform or discharge any
obligation or liability of Mortgagor under any agreement related to the
Property or under this Mortgage; or
(iii) Any loss sustained by Mortgagor or any third party resulting
from Mortgagee's failure to lease the Property, or from any other act or
omission of Mortgagee in managing the Property, after an Event of Default,
unless the loss is caused by the willful misconduct or bad faith of
Mortgagee.
To the extent permitted by applicable law, Mortgagor hereby expressly waives and
releases all liability of the types described above, and agrees that no such
liability shall be asserted against or imposed upon Mortgagee.
(b) Except for losses caused by the willful misconduct or bad faith of
Mortgagee, Mortgagor agrees to indemnify Mortgagee against and hold them
harmless from all losses, damages, liabilities, claims, causes of action,
judgments, court costs, attorneys' fees and other reasonable legal expenses,
cost of evidence of title, cost of evidence of value, and other reasonable costs
and expenses which either may suffer or incur:
(i) In performing any act required or permitted by this Mortgage or
any of the other Loan Documents or by law;
(ii) Because of any failure of Mortgagor to perform any of
Mortgagor's obligations; or
(iii) Because of any alleged obligation of or undertaking by
Mortgagee to perform or discharge any of the representations, warranties,
conditions, covenants or other obligations in any document relating to the
Property other than the Loan Documents.
This agreement by Mortgagor to indemnify Mortgagee shall survive the release and
cancellation of any or all of the Secured Obligations and the full or partial
release and/or reconveyance of this Mortgage.
(c) Mortgagor shall pay all amounts arising under the indemnity
obligations of this Mortgage immediately upon demand by Mortgagee.
40
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40. Relationship to Guaranty. This Mortgage has been executed pursuant
to and is subject to the terms of the Guaranty executed concurrently herewith
and Mortgagor agrees to observe and perform all provisions contained therein. If
and to the extent of any conflict between the provisions of the Guaranty and the
provisions of this Mortgage, the provisions of this Mortgage shall control.
41. Relationship to Security Agreement. Concurrently herewith,
Mortgagor is entering into the Security Agreement with Mortgagee with respect to
the Personal Property. As provided above, the terms of said Security Agreement
shall, with respect to the Personal Property and the security interest therein
granted hereby, supplement the terms of this Mortgage and, if and to the extent
of any conflict with the terms hereof applicable to said security interest and
Personal Property, shall, to the extent enforceable, control. Nothing in this
Section 41 shall be deemed or construed, however, to impair the rights of
Mortgagee to conduct one or more Mortgagee's Sales at which real and personal
property are sold together pursuant to the laws applicable to the sale of real
property.
42. Intentionally Omitted.
43. Severability. If any provision in or obligation under this
Mortgage shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
44. Loan Statement Fees. Mortgagor shall pay the amount demanded by
Mortgagee or its authorized loan servicing agent for any statement regarding the
obligations secured hereby; provided, however, that such amount may not exceed
the maximum amount allowed by law at the time request for the statement is made.
45. Notices.
(a) Methods; Addresses. All notices, requests and demands to be made
hereunder to the parties hereto shall be in writing and shall be given by any of
the following means: (i) personal service; (ii) electronic communication,
whether by telex, telegram or telecopying (if confirmed in writing sent by
registered or certified, first class mail, return receipt requested); or (iii)
registered or certified, first class mail, return receipt requested. Such
addresses may be changed by notice to the other parties given in the same manner
as provided above. Any notice, demand or request sent pursuant to either (i) or
(ii) of this Section shall be deemed received upon such personal service or upon
dispatch by electronic means, and, if sent pursuant to (iii) shall be deemed
received three (3) days following deposit in the mail.
To Mortgagee: First Interstate Bank of Nevada, N.A.
Gaming Industry Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attn: Steve Byrne, V.P.
41
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To Mortgagor: Players Lake Charles, Inc.
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: President and Chief Operating Officer
With a copy to:Players Lake Charles, Inc.
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: Chief Financial Officer
and a copy to: Players Lake Charles, Inc.
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: General Counsel
(b) Reliance on Faxes. Each party hereto (a "Recipient") who
receives from another party hereto (a "Sender") by electronic facsimile
transmission (telecopier or fax) any writing which appears to be signed by an
authorized signatory of that Sender is authorized to rely and act upon that
writing in the same manner as if the original signed writing was in the
possession of the Recipient upon oral confirmation of that Sender to the
Recipient that the writing was signed by an authorized signatory of that Sender
and is intended by that Sender to be relied upon by the Recipient. Each party
transmitting any writing to any other party by electronic facsimile transmission
agrees to forward immediately to that Recipient, by expedited means (for next
day delivery, if possible), or by first class mail if the Recipient so agrees,
the signed hard copy of that writing, unless the Recipient expressly agrees to
some other disposition of the original by the Sender.
46. Governing Law. THIS MORTGAGE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT THAT THE LAWS OF
THE STATE OF LOUISIANA SHALL GOVERN AS TO THE VALIDITY AND PERFECTION OF THE
MORTGAGE LIEN ON THE REAL PROPERTY AND PLEDGE AND ASSIGNMENT OF THE LEASES AND
RENTS PRODUCED THEREFROM AND EXCEPT FURTHER TO THE EXTENT THAT APPLICABLE LAW
PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEVADA.
47. Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST MORTGAGOR ARISING OUT OF OR RELATING TO THIS
MORTGAGE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS MORTGAGE MORTGAGOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY
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DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS MORTGAGE. Mortgagor hereby
agrees that service of all process in any such proceeding in any such court may
be made by registered or certified mail, return receipt requested, to Mortgagor
at its address provided in this Mortgage, such service being hereby acknowledged
by Mortgagor to be sufficient for personal jurisdiction in any action against
Mortgagor in any such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Mortgagee to bring
proceedings against Mortgagor in the courts of any other jurisdiction.
48. Waiver of Jury Trial. MORTGAGOR AND MORTGAGEE HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS MORTGAGE. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Mortgagor and Mortgagee
each acknowledge that this waiver is a material inducement for Mortgagor and
Mortgagee to enter into a business relationship, that Mortgagor and Mortgagee
have already relied on this waiver in entering into this Mortgage and that each
will continue to rely on this waiver in their related future dealings. Mortgagor
and Mortgagee further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS MORTGAGE. In the event of litigation, this Mortgage may
be filed as a written consent to a trial by the court.
49. No paraph. Mortgagor declares that no note or guaranty has
been presented to the undersigned Notary Public to be paraphed with this
instrument.
50. Conflict. Notwithstanding any reference in this Mortgage to
the Credit Agreement, the Guaranty or any other document whatsoever, any third
party dealing with the Property shall be entitled to rely solely upon a
certificate of the Mortgagee as to the existence of any event, including but not
limited to the occurrence of an Event of Default or the right of the Mortgagee
to exercise any right hereunder, and no such party shall be charged with the
obligation to determine the correctness or validity of any such statement.
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THUS DONE AND PASSED on the date first above mentioned in the presence
of the undersigned competent witnesses who hereunto sign their names with the
said Mortgagor and me, Notary, after due reading of the whole.
WITNESSES: MORTGAGOR:
------------------------------ PLAYERS LAKE CHARLES, INC.,
a Louisiana corporation
By: _______________________
------------------------------ Its: ______________________
----------------------------------
Notary Public
<PAGE>
EXHIBIT A
Legal Description
Exhibit A-1 -- Legal Description of Leased Land
Exhibit A-2 -- Legal Description of Fee Land
A-1
<PAGE>
EXHIBIT B
Schedule of Ground Leases
(i) That certain Lease, dated by lessor May 19, 1993 (the "Beeber Lease"),
between The Beeber Corporation, as lessor, and Mortgagor, as lessee, an
extract of which was filed on May 20, 1993, as Instrument No. 2169407
and recorded on May 24, 1993 in Book 2358 of Conveyances, at page 357
of the records of the Parish of Calcasieu, Louisiana,
(A) the Beeber Lease was amended pursuant to that letter agreement,
dated as of April 19, 1993, between the Beeber Corporation, as
lessor, and Mortgagor, as lessee;
(B) the Beeber Lease was amended pursuant to that letter agreement,
dated as of August 24, 1993, between the Beeber Corporation, as
lessor, and Mortgagor, as lessee;
(C) the Beeber Lease was amended pursuant to that letter agreement,
dated as of September 12, 1993, between the Beeber Corporation, as
lessor, and Mortgagor, as lessee.
(ii) That certain Lease, dated _______________, 1993 (the "Bel Heirs
Lease"), between J.A. Bel Heirs, et. al., as lessors, and Mortgagor, as
lessee, a memorandum of which has been recorded concurrently herewith,
in Book ____, at page ____ of the records of the Parish of Calcasieu,
Louisiana,
(A) the Bel Heirs Lease was amended pursuant to that First Amendment
to Lease dated as of September __, 1993, between J.A. Bel Heirs,
et. al., as lessor, and Mortgagor, as lessee.
(iii) That certain Lease, dated _______________, 1993 (the "Opal Gray
Lease"), between the Opal Gray Trust (and certain other trusts listed
therein), as lessors, and Mortgagor, as lessee, a memorandum of which
has been recorded concurrently herewith, in Book ____, at page ____ of
the records of the Parish of Calcasieu, Louisiana.
(iv) That certain Lease, dated July 12, 1995 (the "Waterfront Lease"),
between the State of Louisiana, acting by and through the State Land
Office, as lessor, and Mortgagor, as lessee, a memorandum of which has
been recorded concurrently herewith, in Book ____, at page ____ of the
records of the Parish of Calcasieu, Louisiana.
(v) That certain Lease, dated _______________, 1995 (the "Waterbottom
Lease"), between the State of Louisiana, acting by and through [the
State Land Office,] as lessor, and Mortgagor, as lessee, a memorandum
of which has been recorded concurrently herewith, in Book ____, at page
____ of the records of the Parish of Calcasieu, Louisiana.
B-1
<PAGE>
EXHIBIT C
Board of Director's Resolution
1
<PAGE>
TABLE OF CONTENTS
DESCRIPTION OF IMMOVABLE PROPERTY COLLATERAL . . . . . . . . . . . . . . 2
DESCRIPTION OF PERSONAL PROPERTY COLLATERAL. . . . . . . . . . . . . . . 3
1. Certain Representations and Warranties of Mortgagor . . . . . . 9
2. Payment of Obligations. . . . . . . . . . . . . . . . . . . . . 9
3. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 9
4. Maintenance of Property . . . . . . . . . . . . . . . . . . . . 9
5. Environmental Obligations.. . . . . . . . . . . . . . . . . . . 10
6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Types and Amounts Required . . . . . . . . . . . . . . . . 12
(b) Uniform Policy Requirements. . . . . . . . . . . . . . . . 14
(c) Blanket and Umbrella Policies. . . . . . . . . . . . . . . 15
(d) Evidence of Insurance. . . . . . . . . . . . . . . . . . . 15
(e) Procurement by Mortgagee . . . . . . . . . . . . . . . . . 16
(f) Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . 16
(g) Replacement Cost . . . . . . . . . . . . . . . . . . . . . 16
(h) Separate Insurance . . . . . . . . . . . . . . . . . . . . 16
(i) Compliance with Insurance Requirements . . . . . . . . . . 17
(j) Assignment of Policies upon Foreclosure. . . . . . . . . . 17
(k) Waiver of Subrogation. . . . . . . . . . . . . . . . . . . 17
(l) Requirements Supplemental. . . . . . . . . . . . . . . . . 17
7. Casualties; Insurance Proceeds. . . . . . . . . . . . . . . . . 17
(a) Notice of Casualties . . . . . . . . . . . . . . . . . . . 17
(b) Payment of Proceeds. . . . . . . . . . . . . . . . . . . . 17
(c) Use in Restoration . . . . . . . . . . . . . . . . . . . . 18
(d) Application by Mortgagee . . . . . . . . . . . . . . . . . 18
(e) Duty to Restore. . . . . . . . . . . . . . . . . . . . . . 18
8. Taxes and Impositions . . . . . . . . . . . . . . . . . . . . . 19
(a) Payment by Mortgagor . . . . . . . . . . . . . . . . . . . 19
(b) New Impositions. . . . . . . . . . . . . . . . . . . . . . 19
(c) Proof of Payment . . . . . . . . . . . . . . . . . . . . . 19
(d) Contest of Assessments . . . . . . . . . . . . . . . . . . 19
(e) Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . 20
(f) Joint Assessment . . . . . . . . . . . . . . . . . . . . . 20
(g) Tax Service. . . . . . . . . . . . . . . . . . . . . . . . 20
i
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9. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10. Leaseholds, Leases, Easements, and Servitudes . . . . . . . . . 21
(a) Leaseholds and Leases. . . . . . . . . . . . . . . . . . . 21
(b) Easement . . . . . . . . . . . . . . . . . . . . . . . . . 25
11. Further Acts. . . . . . . . . . . . . . . . . . . . . . . . . . 26
12. Pledge and Assignment of Leases and Rents and Incorporeals. . . 26
(a) Pledge and Assignment to Mortgagee; Mortgagor's Limited
License to Collect Prior to Default . . . . . . . . . . . 26
(b) No Other Assignments . . . . . . . . . . . . . . . . . . . 27
(c) Incorporeal rights . . . . . . . . . . . . . . . . . . . . 27
13. Actions Affecting Property. . . . . . . . . . . . . . . . . . . 27
14. Eminent Domain. . . . . . . . . . . . . . . . . . . . . . . . . 27
15. Due on Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16. Partial or Late Payments. . . . . . . . . . . . . . . . . . . . 29
17. Release By Mortgagee. . . . . . . . . . . . . . . . . . . . . . 29
18. Right of Mortgagee to Appear. . . . . . . . . . . . . . . . . . 29
19. Performance by Mortgagee. . . . . . . . . . . . . . . . . . . . 29
20. Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21. Invalidity of Lien. . . . . . . . . . . . . . . . . . . . . . . 30
22. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 30
24. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Acceleration . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Keeper . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Foreclosure. . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(e) Cure; Protection of Security . . . . . . . . . . . . . . . 32
(f) Uniform Commercial Code Remedies . . . . . . . . . . . . . 32
(g) Judicial Action. . . . . . . . . . . . . . . . . . . . . . 32
(h) Power of Sale. . . . . . . . . . . . . . . . . . . . . . . 32
(i) Single or Multiple Foreclosure Sales . . . . . . . . . . . 33
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25. Costs of Enforcement. . . . . . . . . . . . . . . . . . . . . . 34
26. Remedies Cumulative and Not Exclusive . . . . . . . . . . . . . 34
27. Credit Bids . . . . . . . . . . . . . . . . . . . . . . . . . . 34
28. Application of Foreclosure Sale Proceeds. . . . . . . . . . . . 35
29. Application of Rents and Other Sums . . . . . . . . . . . . . . 35
30. Binding Nature. . . . . . . . . . . . . . . . . . . . . . . . . 35
31. Full Performance Required; Survival of Warranties . . . . . . . 36
32. Waiver of Certain Rights By Mortgagor . . . . . . . . . . . . . 36
33. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 36
34. Priority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
35. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
36. Financing Statement . . . . . . . . . . . . . . . . . . . . . . 37
37. Attorney-in-Fact. . . . . . . . . . . . . . . . . . . . . . . . 37
38. Releases, Extensions, Modifications and Additional Security . . 37
39. Exculpation and Indemnification . . . . . . . . . . . . . . . . 38
40. Relationship to Guaranty. . . . . . . . . . . . . . . . . . . . 39
41. Relationship to Security Agreement. . . . . . . . . . . . . . . 39
43. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 40
44. Loan Statement Fees . . . . . . . . . . . . . . . . . . . . . . 40
45. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Methods; Addresses . . . . . . . . . . . . . . . . . . . . 40
(b) Reliance on Faxes. . . . . . . . . . . . . . . . . . . . . 41
46. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 41
47. Consent to Jurisdiction and Service of Process. . . . . . . . . 41
48. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . 41
iii
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49. No paraph . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
50. Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
EXHIBIT A - Legal Description. . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - Board of Director's Resolution . . . . . . . . . . . . . . B-1
iv
<PAGE>
EXHIBIT 10.55
EXHIBIT XIII-A
FORM OF ILLINOIS MORTGAGE
Recording requested by:
This Instrument prepared by, and when recorded mail to:
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071-2899
Attention: Dean Adam Willis, Esq.
(267,718-007)
(Space above line is for Recorder's use)
MORTGAGE, FIXTURE FILING
AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
NOTICE: THE OBLIGATIONS SECURED HEREBY INCLUDE REVOLVING CREDIT OBLIGATIONS
WHICH PERMIT BORROWING, REPAYMENT AND REBORROWING. INTEREST ON OBLIGATIONS
SECURED HEREBY ACCRUES AT RATES WHICH MAY FLUCTUATE FROM TIME TO TIME. THIS
INSTRUMENT SECURES FUTURE ADVANCES.
THIS MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT WITH
ASSIGNMENT OF RENTS (this "Mortgage"), made as of the _____ day of
_______________, 1995, by and among ________________________
______________________________, a ________________________, as debtor and
mortgagor ("Mortgagor"), and FIRST INTERSTATE BANK OF NEVADA, N.A., as
Administrative Agent on behalf of itself and each of the Lenders (as defined and
described hereinbelow), as secured party and mortgagee ("Mortgagee"),
W I T N E S S E T H:
THAT MORTGAGOR HEREBY:
Grants, bargains, sells, transfers, mortgages and warrants, conveys
and assigns the following described real property and related collateral to
Mortgagee and its successors and assigns, to have and to hold, upon the trusts,
covenants and agreements herein expressed:
DESCRIPTION OF REAL PROPERTY COLLATERAL
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All of the following real property, and the interests of Mortgagor
therein, situate in the County of Massac, State of Illinois: (i) those certain
parcels of real property leased by Mortgagor pursuant to, and all of Mortgagor's
rights under the leasehold estates and other interests arising out of, those
certain lease agreements set forth on Exhibit B attached hereto and incorporated
herein by reference (the "Ground Leases"), as the same may hereafter be amended,
supplemented, extended, renamed or otherwise modified or assigned, which parcels
are more particularly described in Exhibit A-1 attached hereto and incorporated
herein by reference (the "Leased Land"), and (ii) those certain parcels of real
property owned by Mortgagor and more particularly described on Exhibit A-2
attached hereto and incorporated herein by reference (the "Fee Land"; the Leased
Land and the Fee Land being hereinafter referred to collectively as the "Land");
Together with all right, title and interest of Mortgagor, now owned or
hereafter acquired, in and to any land lying within the right-of-way of any
street, open or proposed, adjoining any of the Land and any and all sidewalks,
bridges, elevated walkways, tunnels, alleys, strips and gores of land adjacent
to, connecting or used in connection with any of the Land, with appurtenances
("Adjacent Interests");
Together with the Barges (as defined in subsection (a) of the
Description of Personal Property Collateral hereinbelow but only to the extent
the same is deemed to constitute real property or an interest therein under
applicable law);
Together with all buildings, structures and all other improvements and
fixtures that are or may hereafter be erected or placed on or in the Land or the
Barges and all rights and interests of Mortgagor in and to all buildings,
structures and other improvements and fixtures that are or may hereafter be
erected or placed on or in Adjacent Interests (collectively, the
"Improvements");
Together with all and singular the easements, tenements, hereditaments
and appurtenances belonging or in anywise appertaining to any of the Land,
Adjacent Interests or Improvements (collectively, the "Appurtenances");
Together with all rents, issues, profits, royalties and other income
of or from any of the foregoing or of or from any of the Leases, as hereinafter
defined (collectively, the "Rents"), subject, however, in the case of Rents, to
the absolute assignment given to Mortgagee in Section 12 hereof, to which
Section 12 this grant to the Trustee is subject and subordinate;
Together with any right of Mortgagor under any Ground Lease to
purchase the fee interest of the lessor thereunder (the "Options");
Together with all leasehold estate, right, title and interest of
Mortgagor in and to all leases, subleases, licenses, concessions, franchises and
other use or occupancy agreements (excepting, however, agreements made by
Mortgagor in the ordinary course of business for short-term use by members of
the public of guest rooms and public rooms, including banquet and meeting
facilities, located in the Improvements), and any amendments, modifications,
extensions or renewals thereof (collectively, "Leases") covering any of the
Land, Adjacent Interests, Improvements or Appurtenances, now or hereafter
existing or entered into, and all right, title and interest of Mortgagor
thereunder, including, without limitation, the right to all security deposits,
advance rentals, other deposits, and all payments of similar nature, relating
thereto;
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Together with all riparian rights, water rights and rights to the use
of water now or hereafter appurtenant to or used in connection with any of the
Land, Adjacent Interests, Improvements or Appurtenances ("Water Rights");
Together with any and all other estate, right, title, interest,
property, possession, claim or demand, in law or in equity, which Mortgagor now
has or may hereafter acquire in or to any of the Land, Adjacent Interests,
Improvements, Appurtenances, Rents, Options, Leases, Ground Leases, and Water
Rights, or pertaining or appurtenant thereto (including, without limitation, any
fee interest of a lessor under a Ground Lease that may hereafter be acquired
upon Mortgagor exercising an Option or otherwise acquiring any fee interest of a
lessor under a Ground Lease) and all reversions and remainders thereof, and all
tenements, hereditaments and appurtenances thereunto belonging or in any wise
appertaining thereto ("Other Interests") (said Land, Adjacent Interests,
Improvements, Appurtenances, Rents, Options, Leases, Ground Leases, Water
Rights, the Barges (to the extent deemed real property or any interest therein
under applicable law) and Other Interests may be referred to herein as the "Real
Property"); and
THAT MORTGAGOR HEREBY:
Grants a security interest, pursuant to the Illinois Uniform
Commercial Code -- Secured Transactions (810 ILCS 5/9-101 et. seq.), to
Mortgagee, on the terms and provisions (by this reference incorporated herein
with respect to the security interest herein granted and the rights and
obligations of the parties with respect to the Personal Property, as hereinafter
defined, but for no other purpose) set forth in that certain Subsidiary Security
Agreement dated as of even date herewith by and between Mortgagor, as Grantor
and Debtor, and Mortgagee, as Secured Party (the "Security Agreement"), in all
of the following described personal property, and the interests of Mortgagor
therein, whether now owned or hereafter acquired (collectively, the "Personal
Property"):
DESCRIPTION OF PERSONAL PROPERTY COLLATERAL
(a) All present and future interest in and to those certain barges and
vessels presently moored, anchored or otherwise located on or around the Land or
otherwise used in connection with the Project (defined below), whether such
barges or vessels are deemed real, personal or mixed property, which barges and
vessels are described as follows: (i) that certain vessel ______ having Official
No. ______, built in ____ in _________, _________, formerly having its home port
at ________, ________________, its present home port being ____________,
____________ and having its hailing port at __________, ____________, and (ii)
that certain vessel __________ having Official No. ___________, built in
_________ in ______________, ______________, formerly having its home port at
__________________, __________________, ______________, together with (iii) all
equipment, earnings proceeds arising from operation of any business upon such
barges and vessels, parts, attachments and all other property, whether real,
personal or mixed, now or hereafter located thereon, derived therefrom or used
in connection therewith, including, but not limited to, all moorings, cells,
cofferdam enclosures and related ancillary improvements (collectively, the
"Barges");
(b) All present and future chattels, furniture, furnishings, goods,
equipment, fixtures and all other tangible personal property, of whatever kind
and nature, now or hereafter used in connection with or placed or located in or
on any part of the Real Property or the Barges (including, without limitation,
any building or structure that is now or that may hereafter be erected on the
Real
3
<PAGE>
Property) or the Barges, including, but not limited to, machinery, materials,
goods and equipment now or hereafter used in the construction or operation of
the hotel, casino, restaurant, entertainment and shopping complex constructed
and to be constructed on the Real Property or the Barges or portions thereof
(the "Project") (including, without limitation, air conditioning, heating,
electrical, lighting, fire fighting and fire prevention, food and beverage
service, laundry, plumbing, refrigeration, security, sound, signaling,
telephone, television, window washing and other equipment and fixtures, of
whatever kind or nature, including generators, transformers, switching gear,
boilers, burners, furnaces, piping, sprinklers, sinks, tubs, valves,
compressors, motors, carts, dumb waiters, elevators and other lifts, floor
coverings, hardware, keys, locks, organs, pianos, planters, railings, scales,
shelving, signs, tools, machinery, molds, dies, drills, presses, planers, saws,
furniture, business fixtures, trade fixtures, electric, gas and other motor
vehicles, uniforms, vacuum cleaners, hotel furniture, furnishings and equipment,
bathroom furniture and furnishings (including towels, bathmats, hamperettes,
shower curtains and other bath linens), beds and bedding (including mattresses,
springs, pillows, bed pads, sheets, blankets, comforters, spreads and other bed
linens and furnishings), bric-a-brac, chairs, chests, vanities, secretaries,
bureaus, chiffonniers, love seats, benches, costumers, smoking stands, sand
jars, desks, dressers, hangings, paintings, pictures, frames, sculptures, lamps,
light bulbs, mirrors, night stands, ornaments, radios, stereo equipment, sofas,
statuary, tables, telephones, televisions, vases, window coverings, foodstuffs,
beverages (including beer, wine, liquor and other alcoholic beverages), and
other consumables (including soap, shampoo, cleaning supplies and paper goods),
cutlery, cooking, baking and other kitchen utensils and apparatus (including
crockery, fryers, grills, kettles, mixers, pots, pans, pails, racks, steamers
and toasters), china and other dishes, flatware, glassware, hollowware, serving
pieces, trays, table linens, washers, dryers, irons, ironing boards and other
ironing equipment, cables, outlets, plugs, wiring and related apparatus and
fixtures, card readers, cash registers, adding machines, calculators, computers,
keyboards, monitors, printers, printing equipment, envelopes, stationary,
posting machines, blank forms, typewriters, typewriter stands, other office and
accounting equipment and supplies, time stamps, time recorders, bookkeeping
machines, checking machines, payroll machines, computer reservations systems,
equipment used in the operation of casinos on the Real Property or the Barges
(including but not limited to, gambling equipment/supplies (as defined in
Section 3000.100 of the Rules of the Illinois Gaming Board), including but not
limited to, slot machines, cards, poker chips and gaming tables) and all other
goods, equipment, furnishings, apparatus and fixtures that are now or may
hereafter be located at or used at or in connection with the Real Property) or
the Barges and all other tangible personal property used or to be used at or in
connection with, or placed or to be placed in, rooms, halls, lounges, offices,
lobbies, lavatories, basements, cellars, vaults or other portions of the Project
or of any other building or buildings hereafter constructed or erected thereon,
whether herein enumerated or not, and whether or not contained in any such
building, and which are used or to be used or useful in the operation and
maintenance thereof, or in any bar, casino, hotel, restaurant, store, health
spa, salon or other business conducted thereon, together with all replacements
and substitutions for any and all personal property in which Mortgagor has an
interest, including without limitation such goods and equipment as shall from
time to time be located, placed, installed or used in or upon, or procured for
use, or to be used or useful in connection with the operation of the whole, or
any part of, the Project and all parts thereof and all accessions thereto;
(c) All present and future goods, including, without limitation, all
consumer goods, inventory, equipment, and other supplies, of whatever kind or
nature, and any and all other goods, wherever located, used or to be used in
connection with or in the conduct of Mortgagor's business;
4
<PAGE>
(d) All present and future inventory and merchandise in all of its
forms (including, but not limited to, (i) all goods held by Mortgagor for sale
or lease or to be furnished under contracts of service or so leased or
furnished, (ii) all raw materials, work in process, finished goods, and
materials used or consumed in the manufacture, packing, shipping, advertising,
selling, leasing, furnishing or production of such inventory or otherwise used
or consumed in Mortgagor's business, (iii) all goods in which Mortgagor has an
interest in mass or a joint or other interest or right of any kind, (iv) all
goods that are returned to or repossessed by Mortgagor, and (v) all packing
materials, supplies and containers relating to or used in connection with any of
the foregoing, and all accessions thereto and products thereof and all
negotiable documents of title (including without limitation warehouse receipts,
dock receipts and bills of lading) issued by any person covering any of the
foregoing;
(e) All present and future accounts, accounts receivable, rentals,
revenues, receipts and income of any other nature derived from or received with
respect to rooms, banquet facilities, convention facilities, retail premises,
bars, restaurants, casinos, parking lots and garages and any other facilities on
the Real Property or the Barges and services and amenities provided in
connection therewith, agreements, contracts, leases, contract rights, rights to
payment, instruments, documents, chattel paper, security agreements, guaranties,
undertakings, surety bonds, insurance policies, condemnation deposits and
awards, notes and drafts, securities, certificates of deposit and the right to
receive all payments thereon or in respect thereof (whether principal, interest,
fees or otherwise), contract rights (other than rights under contracts or
governmental permits that may not be transferred by law), including, without
limitation, rights to all deposits from tenants and other users of the Project,
rights under all contracts relating to the construction, renovation or
restoration of any of the improvements now or hereafter located on the Real
Property or the Barges or the financing thereof and all rights under payment or
performance bonds, warranties, guaranties and the Options, and all rights to
payment from any credit/charge card organization or entity such as or similar
to, and including, without limitation, the organizations or entities that
sponsor and administer, respectively, the American Express Card, the Carte
Blanche Card, the Diners Club Card, the Discover Card, the MasterCard and the
Visa Card, books of account, and principal, interest and payments due on account
of goods sold, services rendered, loans made or credit extended, on or in
connection with the Project and all forms of obligations owing to and rights of
Mortgagor or in which Mortgagor may have any interest, however created or
arising;
(f) All present and future general intangibles (including but not
limited to all governmental permits relating to construction or other activities
on the premises), the Options, all tax refunds of every kind and nature to which
Mortgagor now or hereafter may become entitled, however arising, all other
refunds, and all deposits, goodwill, choses in action, rights to payment or
performance, gambling debts or gaming debts owed to Mortgagor by Mortgagor's
patrons (whether or not evidenced by a note), judgments taken on any rights or
claims included in the Property (as hereinafter defined), trade secrets,
computer programs, software, customer lists, business names, trademarks, trade
names and service marks (including, but not limited to:
"____________________________" and any derivation thereof, including any and all
state and federal applications and registrations thereof), patents, patent
applications, licenses, copyrights, technology, processes, proprietary
information and insurance proceeds;
(g) All present and future deposit accounts of Mortgagor, including,
without limitation, [the _______________________________ Account maintained at
the office of Mortgagee,] any demand, time, savings, passbook or like account
maintained by Mortgagor with any bank, savings
5
<PAGE>
and loan association, credit union or like organization, and all money, cash and
cash equivalents of Mortgagor, whether or not deposited in any such deposit
account;
(h) All present and future books and records, including, without
limitation, books of account and ledgers of every kind and nature, ledger cards,
computer programs, tapes, disks and other information storage devices, all
related data processing software, and all electronically recorded data relating
to Mortgagor or its business or the Project, all receptacles and containers for
such records, and all files and correspondence;
(i) All present and future stocks, bonds, debentures, securities,
subscription rights, options, warrants, puts, calls, certificates, partnership
interests, joint venture interests, investments, brokerage accounts and all
rights, preferences, privileges, dividends, distributions, redemption payments
and liquidation payments received or receivable with respect thereto;
(j) All present and future right, title and interest of Mortgagor in
and to all Leases, whether or not specifically herein described, that now or may
hereafter pertain to or affect the Real Property or the Barges or any portion
thereof, and all amendments to the same, including, but not limited to, the
following: (aa) all payments due and to become due under such Leases and Ground
Leases, whether as rent, damages, insurance payments, condemnation awards, or
otherwise; (bb) all claims, rights, powers, privileges and remedies under such
Leases and Ground Leases; and (cc) all rights of the Mortgagor under such Leases
and Ground Leases to exercise any election or option (including, without
limitation, the Options), or to give or receive any notice, consent, waiver or
approval, or to accept any surrender of the premises or any part thereof,
together with full power and authority in the name of the Mortgagor, or
otherwise, to demand and receive, enforce, collect, and receipt for any or all
of the foregoing, to endorse or execute any checks or any instruments or orders,
to file any claims, and to take any other action that Mortgagee may deem
necessary or advisable in connection therewith;
(k) All present and future maps, plans, specifications, surveys,
studies, reports, data and drawings (including, without limitation,
architectural, structural, mechanical and engineering plans and specifications,
studies, data and drawings) prepared for or relating to the development of the
Project or the construction, renovation or restoration of any improvements on
the Real Property or the extraction of minerals, sand, gravel or other valuable
substances from the Real Property, together with all amendments and
modifications thereto;
(l) All present and future licenses, permits, variances, special
permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including options, option rights and
contract rights), other than those (including non-transferable gaming permits)
that may not be transferred by law, now or hereafter obtained by Mortgagor from
any governmental authority having or claiming jurisdiction over the Project, the
Real Property, or the Barges or any other element of the Property or providing
access thereto, or the operation of any business on, at, or from the Project;
(m) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and improvements to or of or with respect to any of the foregoing;
6
<PAGE>
(n) All other fixtures and storage and office facilities, and all
accessions thereto and products thereof and all water stock relating to the Real
Property or the Barges;
(o) All other tangible and intangible personal property of Mortgagor;
(p) All rights, remedies, powers and privileges of Mortgagor with
respect to any of the foregoing; and
(q) Any and all proceeds, products, rents, income and profits of any
of the foregoing, including, without limitation, all money, accounts, general
intangibles, deposit accounts, documents, instruments, chattel paper, goods,
insurance proceeds (whether or not the Mortgagee is the loss payee), and any
other tangible or intangible property received upon the sale or disposition of
any of the foregoing (it being agreed, for purposes hereof, that the term
"proceeds" includes whatever is receivable or received when any of the Property
is sold, collected, exchanged or otherwise disposed of, whether such disposition
is voluntary or involuntary)
(The Real Property, the Personal Property and all of the other
collateral described above may hereinafter be collectively referred to as the
"Property".)
FOR THE PURPOSE OF SECURING:
First: Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. 362(a)), of all obligations and
liabilities of every nature of Mortgagor now or hereafter existing under or
arising out of or in connection with that certain Guaranty of even date herewith
executed by Mortgagor (and others) in favor of Mortgagee (as the same may be
amended, modified or supplemented from time to time, the "Guaranty"). The
Guaranty guaranties the obligations of Players International, Inc., a Nevada
corporation ("Borrower") under that certain Credit Agreement executed
concurrently herewith by Borrower, First Interstate Bank of Nevada, N.A., and
Bankers Trust Company, as Managing Agents, BT Securities Corporation, as a
Co-Arranger, and the Lenders listed therein as lenders (the "Lenders") and First
Interstate Bank of Nevada, N.A., as a Co-Arranger and Administrative Agent,
together with any and all renewals, extensions, amendments, modifications,
rearrangements, replacements, restatements, substitutions and addendums thereof
or thereto (herein referred to as the "Credit Agreement"), and the promissory
notes issued to the Lenders to evidence such obligations and liabilities, which
notes shall mature as provided in the Credit Agreement, together with any and
all renewals, extensions, amendments, modifications, rearrangements,
replacements, restatements, substitutions and addendums thereof or thereto
(herein referred to as the "Notes"), whether for principal in the amount of One
Hundred Twenty Million Dollars ($120,000,000) or such principal amount as may be
advanced and remain unpaid or for interest (including, without limitation,
interest that, but for the filing of a petition in bankruptcy with respect to
Mortgagor, would accrue on such obligations), reimbursement of amounts drawn
under letters of credit, fees, expenses, indemnities or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Mortgagee or any such Lender as a preference,
fraudulent transfer or otherwise. In no event shall the indebtedness,
obligations, and
7
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liabilities of the Mortgagor under the Guaranty with respect to the Credit
Agreement and the Notes exceed two hundred (200%) percent of the face amount of
the Notes. The Notes and Credit Agreement evidence a "revolving credit" as
defined in 815 ILCS 205/4.1. The lien of this Mortgage secures a guaranty of the
payment, among other things, of any indebtedness and future advances made
pursuant to the Notes and Credit Agreement to the same extent as if such future
advances were made on the date of execution of this Mortgage without regard to
whether or not there is any advance made at the time this Mortgage is executed
and without regard to whether or not there is any indebtedness outstanding at
the time any advance is made.
Second: Payment and performance of every obligation, covenant, promise
and agreement of Mortgagor herein contained (excepting, however, the obligations
of Mortgagor under Section 5(c) hereof), or incorporated herein by reference,
including any sums paid or advanced by Mortgagee pursuant to the terms hereof.
Third: Payment of the expenses and costs incurred or paid by Mortgagee
in the preservation and enforcement of the rights and remedies of Mortgagee and
the duties and liabilities of Mortgagor hereunder, including, but not by way of
limitation, attorneys' fees, court costs, witness fees, expert witness fees,
collection costs, costs of a foreclosure, and costs and expenses paid by
Mortgagee in performing for Mortgagor's account any obligation of Mortgagor.
Fourth: Payment of additional sums and interest thereon which may
hereafter be loaned to Mortgagor by the Lenders when evidenced by a promissory
note or notes or other agreement between Mortgagor and the Lenders that recites
that this Mortgage is security therefor.
Fifth: Performance of every obligation, warranty, representation,
covenant, agreement and promise of Mortgagor contained in the Guaranty.
The foregoing are described herein as the "Secured Obligations". All
persons who may have or acquire an interest in all or any part of the Property
will be considered to have notice of, and will be bound by, the terms of the
Secured Obligations and each other agreement or instrument made or entered into
in connection with each of the Secured Obligations. Such terms include any
provisions in the Notes or the Credit Agreement which permit borrowing,
repayment and reborrowing, or the making of future advances, or which provide
that the interest rate on one or more of the Secured Obligations may vary from
time to time.
THIS MORTGAGE FURTHER WITNESSETH THAT, IN CONNECTION WITH
AND IN FURTHERANCE OF THE FOREGOING GRANTS, AND THE ENCUMBRANCES,
LIENS AND SECURITY INTERESTS CREATED THEREBY, MORTGAGOR COVENANTS
AND AGREES AS FOLLOWS:
1. Certain Representations and Warranties of Mortgagor. Mortgagor
represents, warrants and covenants that, except as previously disclosed to
Mortgagee in a writing making reference to this Section 1:
(a) Mortgagor lawfully possesses and holds fee simple absolute
title to all of the Fee Land and Improvements;
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(b) Mortgagor lawfully possesses and holds leasehold title as
lessee under the Ground Leases to all of the Leased Land and Improvements;
(c) Mortgagor has or will have good title to all Property other
than the Land and Improvements;
(d) Mortgagor has the full and unlimited power, right and
authority to encumber the Property and assign the Rents;
(e) This Mortgage creates a first priority lien on the Property;
(f) The Property includes all property and rights which may be
reasonably necessary to promote the present and any reasonable future
beneficial use and enjoyment of the Land, the Improvements and the Project;
(g) Mortgagor owns the Personal Property free and clear of any
security agreements, reservations of title or conditional sales contracts
and there is no financing statement affecting the Personal Property on file
in any public office other than one filed to perfect the Security Interest
herein granted; and
(h) Mortgagor's place of business, or its chief executive office
if it has more than one place of business, is located at the address of
Mortgagor specified in the Guaranty.
2. Payment of Obligations. Mortgagor shall pay when due the Secured
Obligations under the Guaranty and hereunder; the principal of and interest on
any future advances secured by this Mortgage; and the principal of and interest
on any other indebtedness guaranteed by the Guaranty or otherwise secured by
this Mortgage.
3. Compliance with Laws. Mortgagor shall not commit, suffer or permit
any act to be done, or condition to exist, on, or with respect to, the Property
which violates or is prohibited by any law, statute, code, act, ordinance,
order, judgment, decree, injunction, rule, regulation, permit, license,
authorization or direction of any government or subdivision thereof, whether it
be federal, state, county or municipal (collectively, the "Legal Requirements"),
which is applicable to the Property, or any part thereof, now or at any time
hereafter.
4. Maintenance of Property. Mortgagor agrees: (a) properly to care for
and keep the Property in good condition and repair; (b) not to remove, demolish
or substantially alter any building on the Real Property except upon the prior
written consent of Mortgagee; (c) to complete promptly and in a good and
workmanlike manner any building or other improvement which may be constructed
thereon, to restore promptly in like manner any portion of the Improvements
which may be damaged or destroyed from any cause whatsoever, and to pay when due
all claims for labor performed and materials furnished therefor; (d) to comply
with all Legal Requirements and covenants, conditions and restrictions now or
hereafter affecting the Property or any part thereof, including any which
require alteration or improvement thereof, and with all requirements of
insurance companies insuring the Property or any portion thereof and of any
bureau or agency which establishes standards of insurability; (e) not to commit
or permit any waste or deterioration of the Property; (f) to keep and maintain
abutting grounds, sidewalks, roads, parking and landscaped areas in good and
neat order and repair; (g) not to apply for,
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willingly suffer or permit any change in zoning, subdivision, or land use
regulations affecting the Property without the prior written consent of
Mortgagee; (h) not to drill or extract or enter into any lease for the drilling
for or extraction of oil, gas or other hydrocarbon substances or any mineral of
any kind or character on or from the Property or any part thereof without the
prior written consent of Mortgagee; and (i) to do all other acts, in a timely
and proper manner, which, from the character or use of the Property, may be
reasonably necessary to maintain and preserve its value, the specific
enumerations herein not excluding the general.
5. Environmental Obligations.
(a) Mortgagor shall comply with any and all Environmental Laws (as
hereinafter defined) regarding the presence or removal of Hazardous Material on
or in the Property, shall pay immediately, when due, the costs of removal from
the Property and disposal of any Hazardous Material which is required to be
removed pursuant to any Environmental Laws and shall keep the Property free of
any lien which may arise pursuant to any such Environmental Laws. Mortgagor
shall not, and shall not permit any person or entity to release, discharge, or
dispose of any Hazardous Material on the Real Property except in compliance with
all Environmental Laws and, if the same shall exist, Mortgagor shall immediately
remove or cause to be removed from the Real Property such Hazardous Material to
the extent required to be removed pursuant to any Environmental Laws.
(b) As used herein, the term "Hazardous Material" shall means: (i) any
chemical, material or substance at any time defined as or included in the
definition of "hazardous substances", "hazardous materials", hazardous wastes",
"extremely hazardous waste", "restricted hazardous waste", "infectious waste",
"toxic substances" or any other formulations intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Law or publication promulgated pursuant thereto; (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters or other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
asbestos in any form; (vii) urea formaldehyde foam insulation; (viii) electrical
equipment which contains any oil or dielectric fluid containing poly-chlorinated
biphenyls in excess of fifty parts per million; (ix) pesticides; (x) all
hazardous substances and wastes defined in 415 ILCS 5/3.14 and 415 ILCS 5/3.15
("ILCS" means Illinois Compiled Statutes), and (xi) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
governmental authority or which may or could pose a hazard to human health or
safety or the environment if released into the workplace or the environment; the
term "Environmental Law" means all statutes, ordinances, orders, rules,
regulations, plans, policies or decrees and the like relating to: (aa)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened Release of Hazardous
Material, (bb) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (cc) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or welfare, in any
manner applicable to any of the Property, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act
(42 U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et
seq.), the Federal
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Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 136 et seq.), the
Occupational Safety and Health Act (29 U.S.C. 651 et seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), each as
amended and supplemented, and any analogous future or present local, state and
federal statutes, ordinances and other laws, and rules and regulations
promulgated pursuant thereto, each as in effect as of the date of determination;
and the term "Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, dispersal, discharge, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any of the Property, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
(c) Mortgagor hereby agrees to indemnify, hold harmless and defend
Mortgagee, its directors, officers, employees, agents, successors and assigns
from and against any and all claims, losses, damages, demands, liabilities,
fines, penalties, assessments, charges, administrative and judicial proceedings
and orders, judgments, remedial action requirements, enforcement actions of any
kind, and all costs and expenses incurred in connection therewith (including but
not limited to attorneys' and consultants' fees and expenses), arising directly
or indirectly, in whole or in part, out of (i) the presence on or under the
Property of any Hazardous Material, or any Release of any Hazardous Material on,
under or from the Property, or (b) any activity carried on or undertaken on or
off the Property until the Secured Obligations have been fully and finally
satisfied, and whether by Mortgagor or any employees, agents, contractors or
subcontractors of Mortgagor or any third persons occupying or present on the
Property, in connection with the use, holding, handling, treatment, removal,
storage, decontamination, cleanup, transport, Release, processing or abatement
of any Hazardous Material located or present in, on or under the Property. The
foregoing indemnity shall further apply to any residual contamination in, on or
under the Property, or affecting any natural resources, and to any contamination
of any property or natural resources arising in connection with the generation,
use, handling, storage, transport or disposal of any such Hazardous Material,
and irrespective of whether any of such activities are undertaken in accordance
with applicable Environmental Laws. Mortgagor hereby acknowledges and agrees
that, notwithstanding any other provision of this Mortgage to the contrary, the
obligations of Mortgagor under this Section 5(c) shall be unlimited personal
obligations of Mortgagor, shall not be secured by this Mortgage and shall
survive any foreclosure under this Mortgage, any transfer in lieu thereof, and
any satisfaction of the Secured Obligations. The defense to be provided under
this Section 5(c) shall be conducted by counsel reasonably satisfactory to
Mortgagee; provided however, that Mortgagee shall have the right to be
represented by advisory counsel of its own selection and at its own expense; and
provided further, that Mortgagee may appoint its own counsel, at Mortgagor's
sole cost and expense, if Mortgagor fails to assume promptly any obligations
under this Section 5(c) (and in any event within ten (10) days of being notified
of the existence of a claim) or if different, additional, or inconsistent
defenses exist from those available to Mortgagor with respect to any claim for
which the indemnity in this Section 5(c) is implicated.
6. Insurance.
(a) Types and Amounts Required. During the continuance of this
Mortgage, Mortgagor shall at all times provide, maintain and keep in force, at
no expense to Mortgagee, for the benefit of Mortgagor and Mortgagee, as their
respective interests may appear, the following policies of insurance:
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(i) During the course of any construction or repair of Improvements
on the Property, (x) builder's completed value risk insurance against "all
risks of physical loss" (including fire and extended coverage, and
endorsements extending coverage for vandalism and malicious mischief,
collapse and property in transit, offsite storage, delay of opening
(business interruption), demolition and debris removal, flood, and, if
reasonably available, earthquake), in non-reporting form, covering 100% of
the anticipated construction cost, including "soft costs," with not more
than $100,000 deductible from the loss payable for any casualty and no more
than thirty (30) days for delay of opening; said policy to contain a
"permission to occupy upon completion of work or occupancy" endorsement and
waiver of subrogation endorsement acceptable to Mortgagee, and replacement
cost coverage in an agreed amount, and (y) an "owner/contractor protective
liability" policy, providing separate liability coverage for Mortgagor and
Mortgagee, with a limit of not less than $5,000,000;
(ii) Insurance against loss or damage to the Improvements and
Personal Property by fire and any of the other risks covered by insurance
of the type now known as "all risks of physical loss" (including flood,
and, if reasonably available, earthquake coverage (the sublimit for flood
and earthquake insurance shall be no less than $10,000,000)) in an amount
not less than 100% of the then replacement cost of the Improvements and
Personal Property (exclusive of the cost of excavations, pilings,
foundations, footings and other underground improvements lying below the
lowest basement level) without deduction for physical depreciation; with an
Agreed Amount endorsement (waiving co-insurance), a Replacement Cost
Valuation endorsement, a waiver of subrogation endorsement, coverage for
the cost of removing damaged property, and, if Mortgagee shall so require,
coverage for demolition and increased cost of construction occasioned by
operation of any law or ordinance regulating the construction, use or
repair of the Improvements; and with not more than $350,000 deductible per
occurrence and $500,000 for the perils of flood and earthquake, if a
sub-deductible applies;
(iii) Mechanical breakdown insurance (also known as "boiler and
machinery" insurance) covering pressure vessels, air tanks, boilers,
machinery, pressure piping, heating, air conditioning and elevator
equipment and escalator equipment, if the Improvements contain equipment of
such nature, and insurance against loss of occupancy or use arising from
any such breakdown, written on a comprehensive form with a combined direct
and indirect limit of $25,000,000; the policy shall include an Agreed
Amount endorsement (waiving co-insurance), a Replacement Cost Valuation
endorsement, and coverage for increased cost of construction occasioned by
operation of any law or ordinance regulating the construction, use or
repair of the Improvements; the policy may contain deductibles of no
greater than $100,000 for direct damage and seventy-two (72) hours or the
average value of receipts for three (3) days, whichever if less, for
indirect loss;
(iv) Commercial general liability insurance (1988 Form or subsequent
revisions of the same), written on an "occurrence basis," against claims
for death, bodily injury, personal injury and property damage occurring in,
on or about the Real Property or the adjoining streets, sidewalks and
passageways, or arising from or connected with the use, conduct or
operation of Mortgagor's business or interest (including, without
limitation, products liability coverage; blanket contractual liability
coverage, including both oral and written contracts; broad form property
damage coverage; coverage against liability for injury or property damage
arising out of the use, by or on behalf of the Mortgagor or any other
person or organization, of any owned,
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non-owned, leased or hired automotive equipment in the conduct of any and
all operations of Mortgagor; coverage for "liquor legal liability," and
"employee benefits legal liability;" policy will be extended to provide
watercraft liability for permanently moored barges (including, the Barges)
while stationary; coverage for all professional liability exposures
associated with the operation of the health spa; coverage for those hazards
commonly known in the insurance industry as explosion, collapse and
underground property damage; owners' and contractors' protective coverage;
coverage for elevators, escalators and garage/parking operations, if any,
on the Real Property; if such policy contains a self-insured retention, (A)
such self-insured retention shall be no greater than $250,000 per
occurrence, and (B) Mortgagor shall be solely responsible for the payment
of all amounts due within said self-insured retention, and the
indemnification provisions contained in this Mortgage shall include all
liability associated with said self-insured retention;
(v) Comprehensive business automobile liability insurance, written
under Coverage Symbol "1," covering all owned, non-owned and hired or
borrowed vehicles of Mortgagor used in connection with any of the
construction, maintenance and operation of the Improvements, naming
Mortgagor as the named insured and covering Mortgagee as additional
insured, insuring against liability for bodily injury and death and/or for
property damage in an amount not less than $1,000,000 combined single limit
per accident; (if the policy contains a self-insured retention, (A) such
self-insured retention shall be no greater than $250,000 per occurrence,
and (B) Mortgagor shall be solely responsible for the payment of all
amounts due within said self-insured retention, and the indemnification
provisions contained in this Mortgage shall include all liability
associated with said self-insured retention); in addition to said
automobile liability insurance, Mortgagor must provide, maintain and keep
in effect (x) garage liability insurance, providing $1,000,000 combined
single limit for bodily injury and property damage for the parking garage
operation, and (y) garagekeepers legal liability insurance, providing
$500,000 limit for comprehensive and collision coverages for physical
damage to vehicles in Mortgagor's care, custody and control, with a
deductible no greater than $25,000 for each loss;
(vi) A standard Worker's Compensation policy covering the State of
Illinois and Employer's Liability coverage subject to a limit of no less
than $1,000,000 for each employee, $1,000,000 for each accident, and a
$1,000,000 policy limit, which policy shall include endorsements for
Voluntary Compensation and Employer's Liability Coverage and Stop Gap
Liability; if Mortgagor elects to self-insure Worker's Compensation
coverage in the State of Illinois, Mortgagee must be furnished with a copy
of the certificate from the state permitting self insurance and evidence of
a stop loss/aggregate Excess Worker's Compensation policy with a specific
retention of no greater than $300,000 per occurrence;
(vii) An Umbrella Liability policy with a limit of no less than
$100,000,000 providing excess coverage over all limits and coverages set
forth in paragraphs (iv), (v) and (vi) above, which limits can be obtained
by a combination of Primary and Excess Umbrella policies, provided that all
layers follow form with the underlying policies set forth in paragraphs
(iv), (v) and (vi) and are written on an "occurrence form;"
(viii) Business interruption insurance/extra expense and loss of
"rental value" insurance, including coverage for off-premises power losses
and an extended period of indemnity
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endorsement for at least 180 days, in an amount representing not less than
100% percent of the annual net profit plus continuing expenses (including
debt service) for the Project, as such net profit and continuing expenses
are reasonably projected by Mortgagor and consented to by Mortgagee (or, in
the absence of such a projection, as reasonably projected by Mortgagee),
with a deductible of no greater than seventy-two (72) hours or the average
value of receipts for three (3) days, whichever is less.
(ix) If the Property is located in an area identified by the
Secretary of Housing and Urban Development as a flood hazard area and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968, flood insurance covering the Improvements, in an
amount, available under the Act, satisfactory to Mortgagee;
(x) A comprehensive crime policy, including the following
coverages: (A) Employee Dishonesty: $2,500,000; (B) Money & Securities
(inside): $500,000; (C) Money & Securities (outside): $500,000; (D)
Depositors Forgery: $1,000,000; and (E) Computer Fraud: $1,000,000; such
policy shall be amended so that the term "money" is defined therein to
include "chips," the policy may contain deductibles of no more than
$250,000 for all other agreements listed above; and
(xi) Such other insurance and in such amounts, and such additional
amounts of the foregoing insurance, as may reasonably be required by
Mortgagee, in its sole discretion, from time to time, due consideration
being given to standard practices in the industry and to the risks involved
in Mortgagor's business, operations or interest.
(b) Uniform Policy Requirements. All policies of insurance required
by the terms of this Mortgage:
(i) shall be issued by insurance companies licensed and admitted to
do business in the State of Illinois, and rated no lower than A-XII in the
most recent edition of A.M. Best's and AA in the most recent edition of
Standard & Poor's, and in such form and amounts as are satisfactory to
Mortgagee from time to time;
(ii) shall contain an endorsement or agreement by the insurer that
any loss shall be payable in accordance with the terms of such policy
notwithstanding any act, failure to act, negligence or breach of
representation or warranty of Mortgagor, or of any party holding under
Mortgagor, which might otherwise result in forfeiture of said insurance;
(iii) shall contain a waiver by the insurer of all rights of setoff,
counterclaim and deduction against Mortgagor;
(iv) shall contain a waiver of subrogation by the insurer in favor
of Mortgagee and a clause providing that the policy is primary and that any
other insurance of Mortgagee with respect to the matters covered by such
policy shall be excess and non-contributing;
(v) shall, in the case of policies affording liability insurance
coverage, name Mortgagee (and Mortgagee's officers, directors, employees,
agents and representatives) as additional insured by an endorsement
satisfactory to Mortgagee and contain cross-liability and
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severability of interest clauses satisfactory to Mortgagee, and, in the
case of other policies, shall name Mortgagee as a loss payee and have
attached thereto a lender's loss payable endorsement, for the benefit of
Mortgagee, in form satisfactory to Mortgagee (Form 438 BFU, unless
otherwise specified by Mortgagee); and
(vi) shall contain a provision that, notwithstanding any contrary
agreement between Mortgagor and insurance company, such policies will not
be canceled, fail to be renewed or materially amended (which term shall
include any reduction in the type, scope or limits of coverage) without at
least thirty (30) days prior written notice to Mortgagee.
(c) Blanket and Umbrella Policies. If Mortgagee consents, Mortgagor or
Borrower may provide any of the required insurance through an umbrella policy or
policies or through blanket policies carried by Mortgagor and covering more than
one location, or by policies procured by a tenant or other party holding under
Mortgagor; provided, however, that the amount of the total insurance allocated
to the Real Property and available with respect to occurrences required to be
insured against shall be such as to furnish protection the equivalent of
separate policies in the amounts herein required, and provided further, that, in
all other respects, any such policy or policies shall comply with all of the
other provisions of this Mortgage.
(d) Evidence of Insurance. At Mortgagee's option, Mortgagor shall
furnish Mortgagee with certified copies of all policies of insurance required
under this Section or with a certificate of insurance for each required policy
setting forth the coverage, the limits of liability, the deductibles, if any,
the name of the carrier, the policy number, and the period of coverage, which
certificates shall be executed by authorized officials of the companies issuing
such insurance, or by agents or attorneys-in-fact authorized to issue said
certificates (in which event each such certificate shall be accompanied by a
notarized affidavit, agency agreement or power of attorney evidencing the
authority of the signatory to issue such certificate on behalf of the insurer
named therein). Mortgagor shall furnish to Mortgagee annually, within ten days
after the date hereof, or more often if Mortgagee shall so request, a
certificate of Mortgagor specifying all insurance policies with respect to the
Property and all other policies required hereby then outstanding and in force,
and stating whether or not such insurance complies with the requirements of this
Section and, if it does not, the manner in which it does not comply. At least
ten (10) days prior to the expiration of each required policy, Mortgagor shall
deliver to Mortgagee evidence satisfactory to Mortgagee of the payment of
premium and the renewal or replacement of such policy continuing insurance in
force as required by this Mortgage.
(e) Procurement by Mortgagee. If Mortgagor fails to provide, maintain,
keep in force or deliver to Mortgagee the policies of insurance required by this
Mortgage, Mortgagee may (but shall have no obligation to) procure such
insurance, or single interest insurance for such risks covering Mortgagee's
interests, and Mortgagor will pay all premiums therefor promptly upon demand by
Mortgagee; and until such payment is made by Mortgagor, the amount of all such
premiums, together with interest thereon at an annual rate equal to the rate
specified in Section 2.2E. (Post-Default Interest) of the Credit Agreement (or
if such provision is hereafter replaced or renumbered, the equivalent section)
(the "Agreed Rate"), shall be secured by this Mortgage.
(f) Reserve Fund. Upon request by Mortgagee following an Event of
Default (as defined in Section 23 hereof), Mortgagor shall pay to Mortgagee an
initial cash reserve in an amount adequate to pay all insurance premiums due
within the next succeeding twelve calendar months on all
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policies of insurance required by this Mortgage (or such lesser amount as may
then be specified by Mortgagee), and shall thereafter deposit with Mortgagee
each month, commencing with the first month after such request by Mortgagee and
continuing until all sums secured hereby are paid in full or Mortgagee notifies
Mortgagor to cease making such deposits, an amount equal to one-twelfth of the
aggregate annual insurance premiums on all policies of insurance required by
this Mortgage, as reasonably estimated by Mortgagee. In such event Mortgagor
further agrees to cause all bills, statements or other documents relating to the
foregoing insurance premiums to be sent or mailed directly to Mortgagee. Upon
receipt of such bills, statements or other documents evidencing that a premium
for a required policy is then payable, and providing Mortgagor has deposited
sufficient funds with Mortgagee pursuant to this Section, Mortgagee shall pay
such amounts as may be due thereunder out of the funds so deposited with
Mortgagee. If at any time and for any reason the funds deposited with Mortgagee
are or will be insufficient to pay such amounts as may be then or subsequently
due, Mortgagee may notify Mortgagor and Mortgagor shall immediately deposit an
amount equal to such deficiency with Mortgagee. Notwithstanding the foregoing,
nothing contained herein shall cause Mortgagee to be deemed a trustee of said
funds or to be obligated to pay any amounts in excess of the amount of funds
deposited with Mortgagee pursuant to this Section, nor shall anything contained
herein modify the obligation of Mortgagor to maintain and keep in force at all
times such insurance as is required by this Mortgage. Mortgagee may commingle
said reserve with its own funds and Mortgagor shall be entitled to no interest
thereon.
(g) Replacement Cost. Whenever Mortgagee requires insurance with full
replacement cost protection, such full replacement cost shall be determined
annually (except in the event of substantial changes, alterations or additions
to the Improvements or in the event of new construction undertaken by the
Mortgagor, in which event such full replacement cost shall be determined from
time to time as required to assure full replacement cost coverage). Such
determination of full replacement cost shall be made by written agreement of the
insurance carrier and Mortgagor, subject to the approval of Mortgagee. If they
cannot agree or the value shall not be approved by Mortgagee within thirty (30)
days after such request, such full replacement cost shall be determined by an
appraiser, architect or contractor who shall be acceptable to Mortgagee. No
omission on the part of Mortgagee to request any such determination shall
relieve Mortgagor of its obligations hereunder, and any such determination to
the contrary notwithstanding, Mortgagee may require Mortgagor to obtain
additional insurance as provided in this Section.
(h) Separate Insurance. Mortgagor shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required by this Section to be furnished by Mortgagor unless Mortgagee is a
named insured therein, with loss payable as provided herein. Mortgagor shall
immediately notify Mortgagee of the taking out of any such separate insurance
and shall cause the original policies in respect thereof or certificates
therefor to be delivered to Mortgagee.
(i) Compliance with Insurance Requirements. Mortgagor shall observe
and comply with the requirements of all policies of insurance required to be
maintained in accordance with this Mortgage and shall cause the requirements of
the companies writing such policies to be so performed and satisfied that at all
times companies of good standing satisfactory to Mortgagee shall be willing to
write and to continue such insurance. Notwithstanding any approval, disapproval,
acceptance or acquiescence by Mortgagee with respect to such insurance, or
Mortgagee's obtaining or failure to obtain any insurance, Mortgagee shall incur
no liability as to the form or legal sufficiency of insurance
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contracts, the solvency of any insurer or the payment of any loss, and Mortgagor
hereby expressly assumes full responsibility therefor.
(j) Assignment of Policies upon Foreclosure. In the event of
foreclosure of this Mortgage or other transfer of title or assignment of any of
the Property in extinguishment, in whole or in part, of the debt guaranteed by
the Guaranty and secured hereby, all right, title and interest of Mortgagor in
and to all policies of insurance required by this Section with respect to such
Property and any unearned premiums paid thereon shall, without further act, be
assigned to and shall inure to the benefit of and pass to the successor in
interest to Mortgagor or the purchaser or grantee of the Property, and Mortgagor
hereby appoints Mortgagee its lawful attorney-in-fact to execute an assignment
thereof and any other document necessary to effect such transfer.
(k) Waiver of Subrogation. Mortgagor waives any and all right to claim
or recover against Mortgagee, its directors, officers, employees, agents and
representatives, for loss of or damage to Mortgagor, the Property, any other
property of Mortgagor, or any property of others under Mortgagor's control, from
any cause insured against or required to be insured against by the provisions of
this Mortgage.
(l) Requirements Supplemental. The requirements of this Mortgage with
respect to insurance and maintenance of the Property shall be supplemental to
and not exclusive of the requirements of the Credit Agreement and the Security
Agreement relating thereto.
7. Casualties; Insurance Proceeds.
(a) Notice of Casualties. Mortgagor shall give prompt written notice
thereof to Mortgagee after the happening of any material casualty to or in
connection with the Property or any part thereof, whether or not such casualty
is covered by insurance.
(b) Payment of Proceeds. Prior to any Event of Default, proceeds of
insurance in an amount not greater than $2,500,000 payable in connection with
any casualty affecting all or any portion of the Property shall be payable to
Mortgagor. Proceeds in any greater amount and, after an Event of Default, all
proceeds, payable in connection with any casualty affecting all or any portion
of the Property shall be payable to Mortgagee. Mortgagor hereby authorizes and
directs any affected insurance company to make payment of such proceeds directly
to Mortgagee. If Mortgagor receives any proceeds of insurance resulting from a
casualty which, pursuant to this Mortgage, are to be paid to Mortgagee,
Mortgagor shall promptly pay over such proceeds to Mortgagee. Mortgagor shall
not settle, adjust or compromise any claims for loss, damage or destruction of
the Property or any part thereof under any policy or policies of insurance in
connection with a loss in an amount greater than $500,000 without the prior
written consent of Mortgagee to such settlement, adjustment or compromise; and,
if Mortgagor is then in default hereunder, Mortgagee shall have the sole and
exclusive right, and Mortgagor hereby authorizes and empowers Mortgagee, to
settle, adjust or compromise any such claims.
(c) Use in Restoration. In the event of any damage to or destruction
of the Property, and provided that (i) at the time of such damage or destruction
or thereafter, an Event of Default does not exist hereunder, and (ii)
application of insurance proceeds to restoration of the Property will not, in
Mortgagee's reasonable judgment, impair Mortgagee's security for the obligations
secured hereby, insurance proceeds payable in connection with such damage or
destruction shall be applied, first,
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toward reimbursement of all of Mortgagee's reasonable costs and expenses of
recovering the proceeds, including reasonable attorneys' fees; then, to payment
of all sums advanced by Mortgagee to protect the Property or the security for
the Secured Obligations; then, to payment of obligations then due under the
Guaranty; then, to restoration of the Property, upon such reasonable conditions
as Mortgagee shall determine (it being expressly understood and agreed that
Mortgagee may condition disbursement of such proceeds for restoration upon,
among other things: delivery to Mortgagee by Mortgagor of detailed plans and
specifications providing for restoration in accordance with all applicable Legal
Requirements of all governmental authorities having jurisdiction over the
Project, together with a detailed estimate of the cost of the work and schedule
therefor and a construction contract satisfactory to Mortgagee, with a
contractor satisfactory to Mortgagee, for performance of the work within the
budgeted amount, and within the scheduled time for completion; proof that the
insurance required hereby is in force; proof that an amount equal to the sum
which Mortgagee is requested to disburse has theretofore been paid by Mortgagor,
or is then due and payable, for materials theretofore installed or work
theretofore performed upon the Property and properly includable in the cost of
repair, reconstruction or restoration thereof; proof that, after repair or
reconstruction, the Property will be at least as valuable as it was immediately
before the damage or condemnation occurred; and proof that the insurance
proceeds available for repair or restoration are sufficient, in Mortgagee's
determination, to pay for the total cost of repair or reconstruction, including
all associated development costs and interest projected to be payable on the
Secured Obligations until the repair or reconstruction is complete, or Mortgagor
must provide its own funds in an amount equal to the difference between the
proceeds available for repair or restoration and a reasonable estimate, made by
Mortgagor and found acceptable by Mortgagee, of the total cost of repair or
reconstruction); and, upon completion of the work of restoration and payment of
the cost thereof, any balance of such proceeds shall be applied to the
indebtedness guaranteed by the Guaranty, in such order as Mortgagee, in its sole
discretion, shall determine; and, if any then remains, it shall be paid over to
Mortgagor.
(d) Application by Mortgagee. If (i) at the time of such damage or
destruction or thereafter, an Event of Default exists hereunder, or (ii)
application of insurance proceeds to restoration will, in Mortgagee's reasonable
judgment, impair Mortgagee's security for the obligations secured hereby,
Mortgagee shall have the option, in its sole and absolute discretion, (1) to
apply all or any portion of such proceeds to any indebtedness guaranteed by the
Guaranty and in such order as Mortgagee may determine, notwithstanding that said
indebtedness or the performance of said obligation may not be due according to
the terms thereof, or (2) to apply all or any portion of such proceeds to the
restoration of the Property, subject to such conditions as Mortgagee shall
determine, or (3) to deliver all or any portion such proceeds to Mortgagor,
subject to such conditions as Mortgagee may determine.
(e) Duty to Restore. Nothing in this Mortgage shall be deemed to
excuse Mortgagor from restoring, repairing and maintaining the Property, as
herein provided, regardless of whether or not insurance proceeds are available
for restoration, whether or not any such proceeds are sufficient in amount, or
whether or not the Property can be restored to the same condition and character
as existed prior to such damage or destruction.
8. Taxes and Impositions.
(a) Payment by Mortgagor. Mortgagor shall pay, or cause to be paid, at
least ten (10) days prior to delinquency, all real property taxes and
assessments, general and special, and all other taxes and assessments of any
kind or nature whatsoever, including, without limitation, non-governmental
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levies or assessments such as maintenance charges, owner association dues or
charges or fees, levies or charges resulting from covenants, conditions or
restrictions affecting the Property, which are assessed or imposed upon the
Property, or become due and payable, and which create, may create or appear to
create a lien upon the Property, or any part thereof, or upon any personal
property, equipment or other facility used in the operation or maintenance
thereof (all of which taxes, assessments and charges, together with any and all
other taxes, and charges of a similar kind or nature are collectively referred
to hereinafter as "Impositions"); provided, however, that if, by law, any such
Imposition is payable, or may at the option of the taxpayer be paid, in
installments, Mortgagor may pay the same or cause it to be paid, together with
any accrued interest on the unpaid balance of such Imposition, in installments
as the same become due and before any fine, penalty, interest or cost may be
added thereto for the nonpayment of any such installment and interest.
(b) New Impositions. If at any time after the date hereof there shall
be assessed or imposed (i) a tax or assessment on the Property in lieu of or in
addition to the Impositions payable by Mortgagor pursuant to Subsection (a) of
this Section, or (ii) a license fee, tax or assessment imposed on Mortgagee and
measured by or based in whole or in part upon the amount of the Notes or other
obligations secured hereby, then all such taxes, assessments or fees shall be
deemed to be included within the term "Impositions" as defined in Subsection (a)
of this Section, and Mortgagor shall pay and discharge the same as herein
provided with respect to the payment of Impositions, if Mortgagor is permitted
by law to pay the same. If Mortgagor is prohibited by law from paying such
Impositions, then, at the option of Mortgagee, the indebtedness guaranteed by
the Guaranty and all other obligations secured hereby, together with all accrued
interest thereon, shall immediately become due and payable. Anything to the
contrary herein notwithstanding, Mortgagor shall have no obligation to pay any
franchise, estate, inheritance, income, excess profits or similar tax levied on
Mortgagee or on the obligations secured hereby.
(c) Proof of Payment. Subject to the provisions of Subsection (d) of
this Section, Mortgagor shall deliver to Mortgagee, within seven (7) days after
the date upon which any Imposition is due and payable by Mortgagor in accordance
with this Mortgage, official receipts of the appropriate taxing authority, or
other proof satisfactory to Mortgagee, evidencing the payment thereof.
(d) Contest of Assessments. Mortgagor shall have the right before any
delinquency occurs to contest or object to the amount or validity of any such
Imposition by appropriate legal proceedings, but this shall not be deemed or
construed in any way as relieving, modifying or extending Mortgagor's covenant
to pay any such Imposition at the time and in the manner provided in this
Section unless Mortgagor has given prior written notice to Mortgagee of
Mortgagor's intent so to contest or object to an Imposition, and unless, at
Mortgagee's sole option, (i) Mortgagor shall demonstrate to Mortgagee's
satisfaction that the legal proceedings shall conclusively operate to prevent
the sale of the Property, or any part thereof, to satisfy such Imposition prior
to final determination of such proceedings; or (ii) Mortgagor shall furnish a
good and sufficient bond or surety as requested by and satisfactory to
Mortgagee; or (iii) Mortgagor shall demonstrate to Mortgagee's satisfaction that
Mortgagor has provided a good and sufficient undertaking as required or
permitted by law to accomplish a stay of any such sale.
(e) Reserve Fund. Upon request by Mortgagee following an Event of
Default, Mortgagor shall pay to Mortgagee an initial cash reserve in an amount
adequate to pay all Impositions for the ensuing tax fiscal year (or such lesser
amount as may then be specified by Mortgagee), and shall thereafter deposit with
Mortgagee each month, commencing with the first month after such request by
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Mortgagee and continuing until all sums guaranteed by the Guaranty or otherwise
secured hereby are paid in full or Mortgagee gives notice to Mortgagor to cease
making such deposits, an amount equal to one-twelfth of the sum of the annual
Impositions, as reasonably estimated by Mortgagee. In such event, Mortgagor
further agrees to cause all bills, statements or other documents relating to
Impositions to be sent or mailed directly to Mortgagee. Upon receipt of such
bills, statements or other documents evidencing that Impositions are then
payable, and providing Mortgagor has deposited sufficient funds with Mortgagee
pursuant to this Section, Mortgagee shall pay such amounts as may be due
thereunder out of the funds so deposited with Mortgagee. If at any time and for
any reason the funds deposited with Mortgagee are or will be insufficient to pay
such amounts as may then or subsequently be due, Mortgagee may notify Mortgagor
and upon such notice Mortgagor shall immediately deposit an amount equal to such
deficiency with Mortgagee. Notwithstanding the foregoing, nothing contained
herein shall cause Mortgagee to be deemed a trustee of said funds or to be
obligated to pay any amounts in excess of the amount of funds deposited with
Mortgagee pursuant to this Section, nor shall anything contained herein modify
the obligation of Mortgagor to pay, or cause to be paid, all Impositions.
Mortgagee may commingle said reserve with its own funds and Mortgagor shall be
entitled to no interest thereon. Mortgagee may impound or reserve for future
payment of Impositions such portion of such payments as Mortgagee may in its
absolute discretion deem proper, applying the balance upon any indebtedness
guaranteed by the Guaranty or other obligation secured hereby in such order as
Mortgagee may determine, notwithstanding that said indebtedness or the
performance of said obligation may not yet be due according to the terms
thereof. Should Mortgagor fail to deposit with Mortgagee (exclusive of that
portion of said payments which has been applied by Mortgagee upon any
indebtedness guaranteed by the Guaranty or other obligation secured hereby) sums
sufficient to fully pay such Impositions at least thirty (30) days before
delinquency thereof, Mortgagee may, at Mortgagee's election, but without any
obligation so to do, advance any amounts required to make up the deficiency,
which advances, if any, together with interest thereon at an annual rate equal
to the Agreed Rate, shall be secured hereby and shall be repayable to Mortgagee
upon demand; or, at the option of Mortgagee, Mortgagee may, without making any
advance whatever, apply any sums held by it upon any indebtedness guaranteed by
the Guaranty or other obligation secured hereby, in such order as Mortgagee may
determine, notwithstanding that said indebtedness or the performance of said
obligation may not yet be due according to the terms thereof.
(f) Joint Assessment. Mortgagor shall not initiate, and, to the
maximum extent permitted by law, shall not suffer or permit the joint assessment
of any real and personal property which may constitute all or a portion of the
Property or any other procedure whereby the lien of real property taxes and the
lien of personal property taxes shall be assessed, levied or charged to the
Property as a single lien.
(g) Tax Service. Mortgagor shall cause to be furnished to Mortgagee
a tax reporting service, covering the Property, of the type and duration, and
with a company, satisfactory to Mortgagee.
9. Liens. Mortgagor shall pay and promptly discharge, at Mortgagor's
cost and expense, all liens, encumbrances and charges upon the Property, or any
part thereof or interest therein. If Mortgagor shall fail to remove and
discharge any such lien, encumbrance or charge, then, in addition to any other
right or remedy of Mortgagee, Mortgagee may, but shall not be obligated to,
discharge the same, either by paying the amount claimed to be due, or by
procuring the discharge of such lien, encumbrance or charge by depositing in a
court a bond or the amount claimed or otherwise giving
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security for such claim, or by procuring such discharge in such manner as is or
may be prescribed by law. Mortgagor shall, immediately upon demand therefor by
Mortgagee, pay to Mortgagee an amount equal to all costs and expenses incurred
by Mortgagee in connection with the exercise by Mortgagee of the foregoing right
to discharge any such lien, encumbrance or charge, together with interest
thereon from the date of such expenditure at an annual rate equal to the Agreed
Rate.
10. Leaseholds, Leases, Easements, and Servitudes.
(a) Leaseholds and Leases.
i) Mortgagor agrees to duly and punctually pay when due all rents
and other payments due under each of the Ground Leases; to at all times
perform all covenants, agreements, terms and conditions imposed on or
assumed by Mortgagor as lessee under each of the Ground Leases; to cause
each of the Ground Leases to remain in effect so long as any portion of any
indebtedness guaranteed by the Guaranty or otherwise secured hereby shall
be unpaid; to pay or cause the lessor under each such Ground Lease (the
"Ground Lessor") or any prior lessees of the Property to pay any portion of
the impositions, including taxes, assessments, rates and charges to be
borne by such Ground Lessor or such other lessees that have or might become
a lien on the Property or the leasehold estate; to do all things necessary
to keep unimpaired Mortgagor's right in and to the estate created by each
of the Ground Leases; to refrain from doing anything which would impair
Mortgagor's right in and to the estate of each of the Ground Leases or
which would be grounds for declaring a forfeiture or causing a termination
or cancellation of any of the Ground Leases. To prevent any default
thereunder or forfeiture or impairment thereof, Mortgagor shall not, except
with the prior written consent of the Mortgagee:
a) Cancel, terminate, abandon, or surrender any of the
Ground Leases, or consent to or accept any cancellation or termination
thereof, or permit any condition or event to exist which would
terminate or cancel the same, or permit such termination or
cancellation;
b) Amend, modify, change, supplement or alter ("Amendments")
any of the Ground Leases, whether orally or in writing if the effect
of such Amendment, together with all other Amendments, is to increase
materially the obligations of Mortgagor thereunder or to confer any
additional rights on the Ground Lessor of such Ground Lease that could
reasonably be expected to be materially adverse to Mortgagor or
Mortgagee, but Mortgagor shall not make any Amendments to the rent,
term, or use or development provisions of any Ground Lease without the
prior written consent of Mortgagee; or
c) Take any action in connection with any of the Ground
Leases which would presently or hereafter have the effect of impairing
the value of Mortgagor's interest thereunder, or of the Property, or
of impairing the interest of Mortgagee in any of the Ground Leases or
in the Property.
ii) Mortgagor further agrees that it will promptly deliver to
Mortgagee an exact copy of any notice, communication, plan, specification
or other instrument or document
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received or given by Mortgagor in any way relating to or affecting any of
the Ground Leases or the Property which may concern or affect the estate of
the lessor in or under any of the Ground Leases or in the Property; and
upon the failure of Mortgagor with respect to any of the covenants and
agreements in this Section 10, Mortgagee may, at its option, declare all
sums guaranteed by the Guaranty or otherwise secured by this Mortgage or by
any other Loan Document (as defined in the Credit Agreement) to be
immediately due and payable, and avail itself of any remedies provided for
herein; and neither the exercise nor the failure to exercise the foregoing
option by Mortgagee shall be deemed a waiver or release of its right
thereafter to declare an Event of Default under this Mortgage or any other
Loan Document by reason of said failure of Mortgagor to keep, observe and
perform its obligations under such Loan Document, or be deemed an election
of remedies by Mortgagee.
iii) As further security for all indebtedness guaranteed by the
Guaranty or otherwise secured hereby, and for the performance of covenants
herein contained and in each of the Ground Leases contained, Mortgagor
hereby assigns to Mortgagee all of Mortgagor's rights, privileges and
prerogatives as lessee under each of the Ground Leases, whether now
existing or hereafter acquired, to terminate, cancel, modify, change,
supplement, alter, amend or extend any of the Ground Leases or to purchase
the demised premises of any of the Ground Leases. Any such termination,
cancellation, modification, change, supplement, alteration, amendment, or
extension of any of the Ground Leases without the prior written consent
thereto by Mortgagee shall be void and of no force and effect.
iv) Any waiver or forbearance of enforcement by Mortgagee with
respect to any default in any of Mortgagor's obligations under any of the
Ground Leases, whether pursuant to the Ground Lease, or otherwise, shall
not release Mortgagor of any of its obligations under this Mortgage,
including its obligations with respect to payment of rentals as provided in
each of the Ground Leases and the performance of all of the terms,
provisions, covenants, conditions and agreements contained in each of the
Ground Leases to be performed by Mortgagor.
v) Upon Mortgagor's failure to perform any of its covenants,
agreements, terms or conditions imposed on or assumed by Mortgagor as
lessee under any of the Ground Leases, Mortgagee may, at its option, but
shall not be obligated to, take any action Mortgagee deems necessary or
desirable to cure any default by Mortgagor in the performance of or
compliance with any of Mortgagor's covenants or obligations under any of
the Ground Leases. Upon receipt by Mortgagee of any written notice from any
Ground Lessor of any default by the Mortgagor as lessee thereunder,
Mortgagee may rely thereon and take any action as aforesaid to cure any
such alleged default if, in Mortgagee's sole judgment, such alleged default
could result in immediate termination of such Ground Lease even though the
existence of such default or the nature thereof is questioned or denied by
Mortgagor or by any party acting on behalf of Mortgagor. Mortgagor hereby
grants to Mortgagee and agrees that Mortgagee, its officers, employees,
agents, and workmen shall have the absolute and immediate right to enter in
and on the Property to the extent and as often as Mortgagee, in its sole
discretion, deems necessary for the purpose of taking such action as
provided in the preceding sentence. Any expenditure or payments made or
incurred by Mortgagee in curing or commencing to cure any such alleged
default or potential default shall be an advance secured by the lien of
this Mortgage, and shall bear interest at the Agreed Rate from the date of
such advance, and shall, at the option of Mortgagee, be immediately
repayable upon demand. Should Mortgagor fail to repay Mortgagee
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any such advance with interest as herein provided within ten (10) days
after demand of the same, Mortgagee may, at its option, declare all sums
guaranteed by the Guaranty or otherwise secured by this Mortgage or by any
other Loan Document to be immediately due and payable, and avail itself of
any remedies provided for herein; and neither the exercise nor the failure
to exercise the foregoing option by Mortgagee shall be deemed a waiver or
release of its right thereafter to declare an Event of Default under this
Mortgage by reason of said failure of Mortgagor to keep, observe and
perform its obligations under each of the Ground Leases or hereunder, or be
deemed an election of remedies by Mortgagee. Any such action of Mortgagee
to cure a default of Mortgagor under a Ground Lease shall not without
Mortgagee's consent, remove or waive the corresponding Event of Default
under the terms hereof.
vi) If both the lessor's and lessee's estates under the Ground
Lease shall at any time become vested in one owner, this Mortgage and the
lien created hereby shall not be destroyed or terminated by application of
the doctrine of merger; and in such event, Mortgagee shall continue to have
and to enjoy all of the rights, title interest and privileges of Mortgagee
as to the separate estates. In the event that Mortgagor shall acquire fee
simple title to the Property at any time prior to the payment in full of
all indebtedness guaranteed by the Guaranty or otherwise secured by this
Mortgage, such fee simple title shall not merge with the leasehold estate
encumbered by this Mortgage, but such fee simple title shall, without
further action on the part of Mortgagor, continue to be subject to the lien
and security interest hereof. In the event of such acquisition by
Mortgagor, Mortgagor agrees to execute and deliver to Mortgagee such
further instruments, covenants, and assurances as Mortgagee may reasonably
require in order to further confirm and assure that the fee simple title so
acquired by Mortgagor is and continues to be subject to the covenants,
terms, agreements, conditions, lien and security interest of this Mortgage.
In addition, if both the lessor's and lessee's estates under any of the
Ground Leases shall at any time become vested in one owner, any Leases then
existing shall not be destroyed or terminated by application of the law of
merger or as a matter of law unless Mortgagee shall so elect in writing.
vii) Notwithstanding anything to the contrary herein contained
with respect to any Ground Lease:
a) The lien of this Mortgage attaches to all of Mortgagor's
rights and remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11 U.S.C. Sections 101 et
seq. (the "Bankruptcy Code"), including, without limitation, all of
Mortgagor's rights to remain in possession of the Property.
b) Mortgagor shall not, without Mortgagee's written consent,
elect to treat any of the Ground Leases as terminated under subsection
365(h)(1) of the Bankruptcy Code. Any such election made without
Mortgagee's prior written consent shall be void.
c) As security for the Secured Obligations, Mortgagor hereby
unconditionally assigns, transfers and sets over to Mortgagee all of
Mortgagor's claims and rights to the payment of damages arising from
any rejection by any lessor of any of the Ground Leases under the
Bankruptcy Code. Mortgagee and Mortgagor shall proceed jointly or in
the name of Mortgagor in respect of any claim, suit, action or
proceeding
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relating to the rejection of any Ground Lease, including, without
limitation, the right to file and prosecute any proofs of claim,
complaints, motions, applications, notices and other documents in any
case in respect of such lessor under the Bankruptcy Code. This
assignment constitutes a present, irrevocable and unconditional
assignment of the foregoing claims, rights and remedies, and shall
continue in effect until all of the Secured Obligations shall have
been satisfied and discharged in full. Any amounts received by
Mortgagee or Mortgagor as damages arising out of the rejection of any
Ground Lease as aforesaid shall be applied first to all costs and
expenses of Mortgagee (including, without limitation, attorneys' fees
and costs) incurred in connection with the exercise of its rights or
remedies under this Section 10.(a) and then in accordance with the
other applicable provisions of this Mortgage.
d) If, pursuant to subsection 365(h)(1) of the Bankruptcy
Code, Mortgagor seeks to offset against the rent reserved in any
Ground Lease the amount of any damages caused by the nonperformance by
the lessor thereunder of such lessor's obligations under such Ground
Lease after the rejection by lessor of such Ground Lease under the
Bankruptcy Code, Mortgagor shall, prior to effecting such offset,
notify Mortgagee in writing of its intent so to do, setting forth the
amounts proposed to be so offset, and, in the event Mortgagee objects,
Mortgagor shall not effect offset of the amounts so objected to by
Mortgagee. If Mortgagee has failed to object as aforesaid within ten
days after notice from Mortgagor in accordance with the first sentence
of this Section 10(a)(vii)(d), Mortgagor may proceed to offset the
amounts set forth in Mortgagor's notice.
e) If any action, proceeding, motion or notice shall be
commenced or filed in respect of any lessor or the Property or any
portion thereof in connection with any case under this Bankruptcy
Code, Mortgagee and Mortgagor shall cooperatively conduct and control
any such litigation with counsel agreed upon between Mortgagor and
Mortgagee in connection therewith. Mortgagor shall, upon demand, pay
to Mortgagee all costs and expenses (including reasonable attorneys'
fees and costs) paid or incurred by Mortgagee in connection with the
cooperative prosecution or conduct of any such proceedings. All such
costs and expenses shall be secured by the lien of this Mortgage.
f) Mortgagor shall promptly, after obtaining knowledge
thereof, notify Mortgagee orally of any filing by or against any
lessor of a petition under the Bankruptcy Code. Mortgagor shall
thereafter promptly give written notice of such filing to Mortgagee,
setting forth any information available to Mortgagor as to the data of
such filing, the court in which such petition was filed, and the
relief sought therein. Mortgagor shall promptly deliver to Mortgagee,
following its receipt thereof, any and all notices, summonses,
pleadings, applications and other documents received by Mortgagor in
connection with any such petition and any proceedings relating
thereto.
viii) To the extent permitted by law, the price payable by
Mortgagor or any other party in the exercise of the right of redemption, if
any, from any sale under or decree of foreclosure of this Mortgage shall
include all rents and other amounts paid and other sums advanced by
Mortgagee on behalf of Mortgagor as the lessee under the Ground Leases.
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ix) Mortgagor hereby grants and assigns to Mortgagee a security
interest in all prepaid rent and security deposits and all other security
which the lessors under the Ground Leases may hold now or later for the
performance of Mortgagor's obligations as the lessee under the Ground
Leases.
x) Mortgagor shall not, without Mortgagee's written consent, fail
to exercise any option or right to renew or extend the term of any Ground
Lease at least six months prior to the date of termination of any such
option or right, shall give immediate written notice thereof to Mortgagee,
and shall execute, acknowledge, deliver and record any document reasonably
requested by Mortgagee to evidence the lien of this Mortgage on such
extended or renewed lease term. If Mortgagor shall fail to exercise any
such option or right as aforesaid, Mortgagee may exercise the option or
right as Mortgagors' agent and attorney-in-fact pursuant to Section
10(a)(xiii) below of this Mortgage, or in Mortgagee's own name or in the
name of and on behalf of a nominee of Mortgagee, as Mortgagee may determine
in the exercise of its sole and absolute discretion.
xi) All subleases entered into by Mortgagor (and all existing
subleases modified or amended by Mortgagor) shall provide that such
subleases are subordinate to the lien of this Mortgage and any extensions,
replacements and modifications of this Mortgage and the obligations secured
hereby and that if Mortgagee forecloses under this Mortgage or enters into
a new lease with any lessor under a Ground Lease pursuant to the provisions
for a new lease, if any, contained in the applicable Ground Lease or any
document supplementing the Ground Lease, then the sublessee shall attorn to
Mortgagee or its assignee and the sublease will remain in full force and
effect in accordance with its terms and notwithstanding the termination of
the applicable Ground Lease.
xii) Mortgagor shall not waive, excuse, condone or in any way
release or discharge the lessor under any Ground Lease of or from such
lessor's material obligations, covenants and/or conditions under the Ground
Lease without the prior written consent of Mortgagee.
xiii) If any default under any Ground Lease shall have occurred
and be continuing, Mortgagor shall promptly execute, acknowledge and
deliver to Mortgagee such instruments as may reasonably be required to
permit Mortgagee to cure such default under such Ground Lease or permit
Mortgagee to take such other action required to enable Mortgagee to cure or
remedy the matter in default and preserve the security interest of
Mortgagee under this Mortgage with respect to such Ground Lease. Mortgagor
hereby irrevocably appoints Mortgagee as its true and lawful
attorney-in-fact to do, in its name or otherwise, any and all acts and to
execute any and all documents which are necessary to preserve any rights of
Mortgagor under or with respect to any of the Ground Leases, including,
without limitation, the right to effectuate any extension or renewal of any
of the Ground Leases, or to preserve any rights of Mortgagor whatsoever in
respect of any part of any of the Ground Leases (and the above powers
granted to Mortgagor are coupled with an interest and shall be
irrevocable).
The generality of the provisions of this Section 10(a) relating to the Ground
Leases shall not be limited by other provisions of this Mortgage setting forth
particular obligations of Mortgagor which are also required of Mortgagor with
respect to the Ground Leases or the Property.
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(b) Easement. If an easement or other incorporeal right constitutes a
portion of the Real Property, Mortgagor agrees not to terminate or materially
amend, change, or modify such easement or other right or interest, or any right
thereto or interest therein, without the prior written consent of Mortgagee.
Consent to one amendment, change, agreement or modification shall not be deemed
to be a waiver of the right to require consent to other, future or successive
amendments, changes, agreements or modifications. Mortgagor agrees to perform
all obligations and agreements with respect to said easement or other right or
interest and shall not take any action or omit to take any action which would
effect or permit the termination thereof. Mortgagor agrees to promptly notify
Mortgagee in writing with respect to any default or alleged default by any party
thereto and to deliver to Mortgagee copies of all notices, demands, complaints
or other communications received or given by Mortgagor with respect to any such
default or alleged default. Mortgagee shall have the option to cure any such
default and to perform any or all of Mortgagor's obligations thereunder or with
respect thereto. All sums expended by Mortgagee in curing any such default shall
be secured hereby and shall be immediately due and payable without demand or
notice and shall bear interest from date of expenditure at an annual rate equal
to the Agreed Rate.
11. Further Acts. Mortgagor shall do and perform all acts necessary to
keep valid and effective the charges and lien hereof, to carry into effect its
object and purposes, to protect the lawful owners of the Guaranty and other
obligations secured hereby; shall execute and deliver to Mortgagee at any time,
upon request of Mortgagee, all other and further instruments in writing
necessary to vest in and secure to Mortgagee each and every part of the Real
Property and the Rents therefrom and rights and interest of Mortgagee therein or
with respect thereto; and, upon request by the Mortgagee, shall supply evidence
of fulfillment of each of the covenants herein contained concerning which a
request for such evidence has been made.
12. Assignment of Rents.
(a) Assignment to Mortgagee; Mortgagor's Limited License to Collect
Prior to Default. Notwithstanding any language contained herein, or in any other
document, to the contrary, Mortgagor hereby irrevocably and absolutely assigns
and transfers to Mortgagee, without having to first take possession of the
Property, all Rents, including all present and future Leases and other rental
agreements, reserving unto Mortgagor a license to collect such Rents prior to
written notice to Mortgagor of the occurrence of any Event of Default.
Subsequent to the occurrence of an Event of Default, and written notice to
Mortgagor thereof, any Rents, including those past due, unpaid or undetermined,
may be collected by Mortgagee or its agent, and any amount so collected shall be
applied, less costs and expenses of operation and collection, including
reasonable attorneys' fees, to any indebtedness guaranteed by the Guaranty
and/or other obligations secured hereby, and in such order as Mortgagee shall
determine. The collection of such Rents, and the application thereof as
aforesaid, shall not cure or constitute a waiver of any default or notice of
default hereunder or invalidate any act done pursuant to such notice. Mortgagor
and Mortgagee intend that this assignment shall be a present, absolute and
unconditional assignment, not an assignment for additional security only, and
shall, immediately upon the execution hereof, subject to the license granted
above, give Mortgagee, and its agent, the right to collect the Rents and to
apply them as aforesaid. Nothing contained herein, nor any collection of Rents
by Mortgagee, or its agent or a receiver, shall be construed to make Mortgagee
(i) a "Mortgagee-in-Possession" of the Property so long as Mortgagee has not
itself entered into actual possession of the Property; (ii) responsible for
performing any of the obligations of the lessor under any Lease; (iii)
responsible for any waste committed by lessees or any other parties, any
dangerous or defective condition
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of the Property, or any negligence in the management, upkeep, repair or control
of the Property; or (iv) liable in any manner for the Property or the use,
occupancy, enjoyment or operation of all or any part of it.
(b) No Other Assignments. Mortgagor hereby represents to Mortgagee
that there is no assignment or pledge of any Leases of, or Rentals from, the
Property now in effect, and covenants that, until the Notes are fully paid and
the other Secured Obligations are fully satisfied, Mortgagor will not make any
such assignment or pledge to anyone other than Mortgagee nor will it accept any
periodic payments which are to be made pursuant to such Leases or Rents more
than ten (10) days in advance of the date on which such payments are due.
13. Actions Affecting Property. Mortgagor shall give Mortgagee prompt
written notice of the assertion of any claim with respect to, or the filing of
any action or proceeding affecting or purporting to affect, the Property, or
title thereto or any right of possession thereof, or this Mortgage or the
security hereof or the rights or powers of Mortgagee hereunder. Mortgagor shall
appear in and contest any such action or proceeding at Mortgagor's sole expense;
and shall pay all costs and expenses, including cost of evidence of title and
attorneys' fees, in any such action or proceeding in which Mortgagee may appear.
14. Eminent Domain. If any proceeding or action be commenced for the
taking of the Property, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, condemnation or otherwise,
or if the same be taken or damaged by reason of any public improvement or
condemnation proceeding, or in any other manner, or should Mortgagor receive any
notice or other information regarding such proceeding, action, taking or damage
(including, without limitation, a proposal to purchase the Property or some
portion thereof in lieu of condemnation), Mortgagor shall give prompt written
notice thereof to Mortgagee. Mortgagee shall be entitled, at its option, without
regard to the adequacy of its security, to investigate and negotiate with the
condemnor concerning the proposed taking, to commence, appear in and prosecute
in its own name any such action or proceeding, and, if an Event of Default then
exists hereunder, to make any compromise or settlement in connection with such
taking or damage. Mortgagor shall not compromise or settle any such action or
proceeding or agree to any sale in lieu of condemnation without the prior
written consent of Mortgagee. All compensation, awards, damages, rights of
action and proceeds awarded to Mortgagor by reason of any such taking, transfer
or damage (the "Award") are hereby assigned to Mortgagee and Mortgagor agrees to
execute such further assignments of the Award as Mortgagee may require. After
deducting therefrom all costs and expenses (regardless of the particular nature
thereof and whether incurred with or without suit), including attorneys' fees,
incurred by it in connection with any such negotiations, action or proceeding
(whether or not prosecuted to judgment), Mortgagee shall, if (i) an Event of
Default does not then exist hereunder, and (ii) if application of the Award to
restoration of the Property will not, in Mortgagee's reasonable judgment, impair
Mortgagee's security for the Secured Obligations, apply the Award to the
restoration of the Property, subject to such conditions as Mortgagee shall
determine (it being expressly understood and agreed that Mortgagee may condition
disbursement of such proceeds for restoration upon proof that an amount equal to
the sum which Mortgagee is requested to disburse has theretofore been paid by
Mortgagor without reimbursement therefor, or is then due and payable, for
materials theretofore installed or work theretofore performed upon the Property
and properly includable in the cost of repair, reconstruction or restoration
thereof). If, at the time of receipt by Mortgagee of such proceeds, (i) an Event
of Default then exists hereunder, or (ii) application of the Award to
restoration will, in Mortgagee's reasonable judgment, impair Mortgagee's
security for the Secured
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Obligations, Mortgagee shall have the option, in its sole and absolute
discretion, (1) to apply all or any portion of the Award upon any indebtedness
guaranteed by the Guaranty and in such order as Mortgagee may determine,
notwithstanding that said indebtedness or the performance of said obligation may
not be due according to the terms thereof, or (2) to apply all or any portion of
the Award to the restoration of the Property, subject to such conditions as
Mortgagee may determine, or (3) to deliver all or any portion of the Award,
after such deductions, to Mortgagor, subject to such conditions as Mortgagee may
determine (and, if the Award is not sufficient to satisfy the Secured
Obligations in full, Mortgagor shall immediately pay any remaining balance,
together with all accrued interest thereon). Nothing herein contained shall be
deemed to excuse Mortgagor from restoring, repairing and maintaining the
Property, as herein provided, regardless of whether or not the Award is
available for restoration, whether or not any such Award is sufficient in
amount, or whether or not the Property can be restored to the same condition and
character as existed prior to such damage or partial taking. Mortgagor hereby
specifically, unconditionally and irrevocably waives all rights of a property
owner under all laws, which provide for allocation of condemnation proceeds
between a property owner and a lienholder.
15. Due on Sale. Except as otherwise permitted by the Credit
Agreement, if Mortgagor shall sell or convey, or create or permit to exist any
mortgage, pledge, security interest or other encumbrance on, or in any other
manner alienate or otherwise "transfer" the Real Property hereby encumbered or
any part thereof or any interest therein, or shall enter into any agreement for
the same, or shall be divested of its title in any manner or way, whether
voluntary or involuntary or by merger, without the written consent of Mortgagee
being first had and obtained, any indebtedness guaranteed by the Guaranty or
other obligation secured hereby, irrespective of the maturity dates expressed in
the Notes or any other notes evidencing the same, at the option of Mortgagee,
and without demand or notice, shall immediately become due and payable. Consent
to one such transaction shall not be deemed to be a waiver of the right to
require consent to future or successive transactions. Mortgagee may grant or
deny such consent in its sole discretion and, if consent should be given, any
such transfer shall be subject to this Mortgage, and any such transferee shall
assume all obligations hereunder and agree to be bound by all provisions
contained herein. Such assumption shall not, however, release Mortgagor or any
maker or guarantor of any Secured Obligation from any liability with respect
thereto without the prior written consent of Mortgagee. As used herein,
"transfer" includes the direct or indirect sale, agreement to sell, transfer,
conveyance, pledge, collateral assignment or hypothecation of the Real Property,
or any portion thereof or interest therein, whether voluntary, involuntary, by
operation of law or otherwise, the execution of any installment land sale
contract or similar instrument affecting all or a portion of the Real Property,
or the lease of all or substantially all of the Real Property. The term
"transfer" shall also include the direct or indirect transfer, assignment,
hypothecation or conveyance of legal or beneficial ownership of any stock in
Mortgagor.
16. Partial or Late Payments. By accepting payment of any
indebtedness guaranteed by the Guaranty after its due date, Mortgagee does not
waive its right either to require prompt payment, when due, of all other
indebtedness so secured or to declare default, as herein provided, for failure
to so pay.
17. Release By Mortgagee. When all sums guaranteed by the Guaranty or
otherwise secured hereby have been paid and upon surrender of this Mortgage and
the Guaranty secured hereby for cancellation and retention, or such other
disposition as Mortgagor, in its sole discretion, may choose, and upon payment
of its fees, Mortgagee shall release, without warranty or recourse, the Property
then held hereunder. The recitals in such release of any matters of fact shall
be conclusive
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proof of the truth thereof. If applicable, the grantee in such release may be
described in general terms as "the person or persons legally entitled thereto".
18. Right of Mortgagee to Appear. If, during the existence of the
mortgage created hereby, there be commenced or pending any suit or action
materially and adversely affecting the Property, or any part thereof, or the
title thereto, or if any adverse claim for or against the Property, or any part
thereof, be made or asserted, Mortgagee may appear or intervene in the suit or
action and retain counsel therein and, unless such suit or action is being
diligently contested in good faith by Mortgagor and Mortgagor shall have
established and maintained adequate reserves with Mortgagee for the full payment
and satisfaction of such suit or action if determined adversely to Mortgagor,
may defend same, or otherwise take such action therein as the Mortgagee may be
advised and may pay and expend such sums of money as the Mortgagee may deem to
be necessary and Mortgagor shall pay all reasonable costs and expenses of
Mortgagee incurred in connection therewith.
19. Performance by Mortgagee. If Mortgagor fails to make any payment
or perform any act as and in the manner provided in any of the Loan Documents,
then the Mortgagee, at its election and without any obligation to do so, after
the giving of reasonable notice to Mortgagor, or any successor in interest of
Mortgagor, or any of them and without releasing Mortgagor from any obligation
hereunder, may make such payment or perform such act and incur any liability, or
expend whatever amounts, in its absolute discretion, it may deem necessary
therefor. In connection therewith (without limiting their general and other
powers, whether conferred herein, in another Loan Document or by law),
Mortgagee, shall have and is hereby given the right, but not the obligation, (i)
to enter upon and take possession of the Property; (ii) to make additions,
alterations, repairs and improvements to the Property which they or either of
them may consider necessary or proper to keep the Property in good condition and
repair; (iii) to appear and participate in any action or proceeding affecting or
which may affect the security hereof or the rights or powers of Mortgagee; (iv)
to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or
debt which in the judgment of either may affect or appears to affect the
security of this Mortgage or to be prior or superior hereto; and (v) in
exercising such powers, to pay necessary expenses, including employment of
counsel and other necessary or desirable consultants. All sums incurred or
expended by the Mortgagee, under the terms hereof (including, without limiting
the generality of the foregoing, costs of evidence of title, court costs,
appraisals, surveys, and receiver's and Mortgagee's attorneys' fees, costs and
expenses, whether or not an action is actually commenced in connection
therewith), shall become due and payable by Mortgagor to Mortgagee within ten
(10) days and shall bear interest until paid at an annual percentage rate equal
to the Agreed Rate. In no event shall payment by Mortgagee be construed as a
waiver of the default occasioned by Mortgagor's failure to make such payment or
payments.
20. Inspections. Mortgagee, or its agents, representatives or
workers, are authorized to enter at any reasonable time upon or in any part of
the Property for the purpose of inspecting the same and for the purpose of
performing any of the acts it is authorized to perform hereunder or under the
terms of any of the Loan Documents.
21. Invalidity of Lien. If the lien of this Mortgage is invalid or
unenforceable as to any part of the debt, or if the lien is invalid or
unenforceable as to any part of the Property, the unsecured or partially secured
portion of the debt shall be completely paid prior to the payment of the
remaining and secured or partially secured portion of the debt, and all payments
made on the debt, whether voluntary or under foreclosure or other enforcement
action or procedure, shall be considered to have been first paid on
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and applied to the full payment of that portion of the debt which is not secured
or is not fully secured by the lien of this Mortgage.
22. Subrogation. To the extent that any sums advanced by Mortgagee are
used to pay any outstanding lien, charge or prior encumbrance against the
Property, such sums shall be deemed to have been advanced by Mortgagee at
Mortgagor's request and Mortgagee shall be subrogated to any and all rights and
liens held by any owner or holder of such outstanding liens, charges and prior
encumbrances, regardless of whether said liens, charges or encumbrances are
released.
23. Events of Default. Mortgagor will be in default under this
Mortgage upon the occurrence of any one or more of the following events (some or
all collectively, "Events of Default"; any one singly, an "Event of Default"):
(a) Failure to Pay. Any amount due under any of the Notes, the
Guaranty, the Credit Agreement, this Mortgage or any other Loan Document, or any
other amount the payment of which is secured hereby, is not paid when due; or
(b) Other Breaches Hereof. A breach by Mortgagor of any
representation, warranty or covenant in this Mortgage which is not cured within
any applicable notice and cure period provided in the Credit Agreement with
respect to such breach; or
(c) Defaults Under Other Loan Documents. The occurrence under any
of the Loan Documents of an "Event of Default" (as defined therein).
24. Remedies. At any time after an Event of Default, Mortgagee will
be entitled to invoke any and all of the following rights and remedies, all of
which will be cumulative, and the exercise of any one or more of which shall not
constitute an election of remedies:
(a) Acceleration. Mortgagee may declare any or all of the Secured
Obligations to be due and payable immediately, without presentment, demand,
protest or notice of any kind.
(b) Receiver. Mortgagee may apply to any court of competent
jurisdiction for, and obtain appointment of, a receiver for the Property or any
part thereof, without notice to Mortgagor or anyone claiming under Mortgagor,
and without regard to the then value of the Property or the adequacy of any
security for the Secured Obligations, and Mortgagor hereby irrevocably consents
to such appointment and waives notice of any application therefor. Any such
receiver or receivers shall have all the usual powers and duties of receivers in
like or similar cases and all the powers and duties of Mortgagee in case of
entry as provided herein and in the Credit Agreement and shall continue as such
and exercise all such powers until the later of (i) the date of confirmation of
sale of all of the Property; (ii) the disbursement of all proceeds of the
Property collected by such receiver and the payment of all expenses incurred in
connection therewith; or (iii) the termination of such receivership with the
consent of Mortgagee or pursuant to an order of a court of competent
jurisdiction. Mortgagee may also request, in connection with any foreclosure
proceeding hereunder, that the Illinois Gaming Board petition a First Circuit
Court in Southern Illinois or a Federal District Court with the Southern
District of the State of Illinois for the appointment of a supervisor to conduct
the normal gaming activities on the Property following such foreclosure
proceeding.
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(c) Entry. Mortgagee, in person, by agent or by court-appointed
receiver, may and shall be entitled to enter, take possession of, manage and
operate all or any part of the Property, subject to applicable Gaming Laws (as
defined in the Credit Agreement), and may also do any and all other things in
connection with those actions that Mortgagee may, in its sole discretion,
consider necessary and appropriate to protect the security of this Mortgage.
Such other things may include, among other things, any of the following: taking
and possessing all of Mortgagor's or the then owner's books and records;
entering into, enforcing, modifying, or canceling Leases on such terms and
conditions as Mortgagee may consider proper; obtaining and evicting tenants;
fixing or modifying Rents; collecting and receiving any payment of money owing
to Mortgagor; completing construction; and contracting for and making repairs
and alterations. If Mortgagee so requests, Mortgagor shall assemble all of the
Property that has been removed from the Real Property and make all of it
available to Mortgagee at the site of the Real Property. Mortgagor hereby
irrevocably constitutes and appoints Mortgagee as Mortgagor's attorney-in-fact
to perform such acts and execute such documents as Mortgagee in its sole
discretion may consider to be appropriate in connection with taking these
measures, including endorsement of Mortgagor's name on any instruments.
Regardless of any provision of this Mortgage or the Credit Agreement, Mortgagee
shall not be considered to have accepted any property other than cash or
immediately available funds in satisfaction of any obligation of Mortgagor to
Mortgagee, unless Mortgagee has given express written notice of Mortgagee's
election of that remedy in accordance with the Illinois Uniform Commercial Code
(810 ILCS 5/9-101 et. seq.), as it may be amended or recodified from time to
time.
(d) Cure; Protection of Security. Mortgagee may cure any breach or
default of Mortgagor, and if it chooses to do so in connection with any such
cure, Mortgagee may also, enter the Property and, whether or not Mortgagee enter
the Property, do any and all other things which it, in its sole discretion, may
consider necessary and appropriate to protect the security of this Mortgage,
including, without limitation, the right to complete the Improvements. Such
other things may include: appearing in and/or defending any action or proceeding
which purports to affect the security of, or the rights or powers of Mortgagee
under, this Mortgage; paying, purchasing, contesting or compromising any
encumbrance, charge, lien or claim of lien which in Mortgagee's sole judgment is
or may be senior in priority to this Mortgage, such judgment of Mortgagee to be
conclusive as among the parties to this Mortgage; obtaining insurance and/or
paying any premiums or charges for insurance required to be carried under this
Mortgage; otherwise caring for and protecting any and all of the Property; and
employing counsel, accountants, contractors and other appropriate persons to
assist Mortgagee. Mortgagee may take any of the actions permitted under this
Subsection either with or without giving notice to any person.
(e) Uniform Commercial Code Remedies. With respect to Personal
Property, Mortgagee may exercise any or all of the remedies granted to a secured
party under 810 ILCS 5/9-101 et seq. (the Illinois enactment of the Uniform
Commercial Code), together with any and all other rights and remedies provided
in the Security Agreement.
(f) Judicial Action. Mortgagee may bring an action in any court of
competent jurisdiction to foreclose this Mortgage or to obtain specific
enforcement of any of the covenants or agreements of this Mortgage or for any
other remedy provided herein, in the Guaranty, in the Credit Agreement, in any
Loan Document or otherwise provided by law (including, without limitations, all
rights and remedies under the Illinois Mortgage Foreclosure Act, 735 ILCS
5/15-1101 et. seq. or any successor or replacement law) or in equity.
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(g) Sale of Property. Mortgagee shall have the discretionary right to
cause some or all of the Property, including any Property which constitutes
personal property, to be sold or otherwise disposed of in any combination and in
any manner permitted by applicable law.
(i) Sales of Personal Property.
(A) Mortgagee may elect to treat as personal property any
Property which is intangible or which can be severed from the Land or
Improvements without causing structural damage. If Mortgagee chooses
to do so, Mortgagee may dispose of any personal property separately
from the sale of real property, in any manner permitted by or under
the laws of the State of Illinois, including any public or private
sale, or in any manner permitted by any other applicable law.
(B) The following provision shall apply in the absence of
any specific statutory requirement which permits or requires a
different notice period: In connection with any sale or other
disposition of such Property, Mortgagor agrees that the following
procedures constitute a commercially reasonable sale: Mortgagee shall
mail written notice of the sale to Mortgagor not later than fifteen
(15) days prior to such sale. Not less than once per week during the
two weeks (fourteen (14) days) immediately preceding such sale,
Mortgagee will publish notice of the sale in a local daily newspaper
of general circulation. Upon receipt of any written request, Mortgagee
will, to the extent reasonably practicable, make the Property
available to any bona fide prospective purchaser for inspection during
reasonable business hours prior to the sale. Notwithstanding any
provision to the contrary, Mortgagee shall be under no obligation to
consummate a sale if, in its judgment, none of the offers received by
it equals the fair value of the Property offered for sale. The
foregoing procedures do not constitute the only procedures that may be
commercially reasonable.
(ii) Mortgagee's Sales of Real Property or Mixed Collateral.
(A) Mortgagee may choose to dispose of some or all of the
Property which consists solely of real property in any manner then
permitted by applicable law. In its discretion, Mortgagee may also or
alternatively choose to dispose of some or all of the Property, in any
combination consisting of both real and personal property, together in
one sale to be held in accordance with the law and procedures
applicable to real property. Mortgagor agrees that any sale of
personal property together with real property constitutes a
commercially reasonable sale of the personal property.
(B) Intentionally Omitted.
(C) Intentionally Omitted.
(h) Single or Multiple Foreclosure Sales. If the Property at the
time of sale or other disposition consists of more than one lot, parcel or item
of property, Mortgagee may:
(i) Designate the order in which the lots, parcels or items
shall be sold or disposed of or offered for sale or disposition; and
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(ii) Elect to dispose of the lots, parcels or items through a
single consolidated sale or disposition to be held or made under the
remedies herein granted, or in connection with judicial proceedings,
or by virtue of a judgment and decree of foreclosure and sale; or
through two or more such sales or dispositions; or in any other manner
that Mortgagee may deem to be in its best interests (any such sale or
disposition, a "Foreclosure Sale;" any two or more, "Foreclosure
Sales").
If Mortgagee chooses to have more than one Foreclosure Sale, Mortgagee at its
option may cause the Foreclosure Sales to be held simultaneously or
successively, on the same day, or on such different days and at such different
times and in such order as Mortgagee may deem to be in its best interests. No
Foreclosure Sale shall terminate or affect the liens of this Mortgage on any
part of the Property which has not been sold, until all of the Secured
Obligations have been paid in full.
25. Costs of Enforcement. If any Event of Default occurs, Mortgagee
may employ an attorney or attorneys to protect its rights hereunder. Mortgagor
promises to pay to Mortgagee, on demand, the fees and expenses of such attorneys
and all other costs of enforcing the obligations secured hereby, including but
not limited to, recording fees, the expense of foreclosure, receivers' fees and
expenses, and all other expenses, of whatever kind or nature, incurred by
Mortgagee in connection with the enforcement of the obligations secured hereby,
whether or not such enforcement includes the filing of a lawsuit. Until paid,
such sums shall be secured hereby and shall bear interest, from date of
expenditure, at an annual rate equal to the Agreed Rate.
26. Remedies Cumulative and Not Exclusive. Mortgagee shall be entitled
to enforce payment and performance of any indebtedness guaranteed by the
Guaranty or other obligations secured hereby and to exercise all rights and
powers under this Mortgage, any agreement secured hereby or any other agreement,
or under any laws now or hereafter in force, notwithstanding some or all of the
said indebtedness guaranteed by the Guaranty and other obligations secured
hereby may now or hereafter be otherwise secured, whether by mortgage, deed of
trust, pledge, lien, assignment or otherwise. Neither the acceptance of this
Mortgage nor its enforcement whether by court action or pursuant to the remedies
or other powers herein contained, shall prejudice or in any manner affect
Mortgagee's right to realize upon or enforce any other security now or hereafter
held by Mortgagee, it being agreed that Mortgagee shall be entitled to enforce
this Mortgage and any other security now or hereafter held by Mortgagee in such
order and manner as Mortgagee may in its absolute discretion determine. No
remedy herein conferred upon or reserved to Mortgagee is intended to be
exclusive of any other remedy herein or by law provided or permitted, but each
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any other instrument or agreement to Mortgagee or to
which Mortgagee may be otherwise entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by
Mortgagee and Mortgagee may pursue inconsistent remedies.
27. Credit Bids. At any Foreclosure Sale, any person, including
Mortgagor or Mortgagee, may bid for and acquire the Property or any part thereof
to the extent permitted by then applicable law. Instead of paying cash for such
property, Mortgagee may settle therefor by crediting such portion of the
following obligations against the sales price of the property as is necessary to
equal such price:
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(a) First, the portion of the Secured Obligations attributable to the
expenses of sale, costs of any action and any other sums for which Mortgagor is
obligated to pay or reimburse Mortgagee hereunder or under any other Loan
Document; and
(b) Second, any of the other Secured Obligations, in any order and
proportion as Mortgagee, in its sole discretion, may elect.
28. Application of Foreclosure Sale Proceeds. Mortgagee shall apply
the proceeds of any Foreclosure Sale in the following manner:
(a) First, to pay the portion of the Secured Obligations attributable
to the expenses of sale, costs of any action and any other sums for which
Mortgagor is obligated to reimburse Mortgagee hereunder or under any other Loan
Document;
(b) Second, to pay the portion of the Secured Obligations attributable
to any sums expended or advanced by Mortgagee under the terms of this Mortgage
which then remain unpaid;
(c) Third, to pay any and all other Secured Obligations, in any order
and proportion as Mortgagee, in its sole discretion, may elect; and
(d) Fourth, the remainder, if any, shall be remitted to the person
or persons entitled to it.
29. Application of Rents and Other Sums. Mortgagee shall apply any
and all Rents collected by it, and any and all sums, other than proceeds of a
Foreclosure Sale, which Mortgagee may receive or collect, in the following
manner:
(a) First, to pay the portion of the Secured Obligations attributable
to the costs and expenses of operation and collection that may be incurred by
Mortgagee or any receiver;
(b) Second, to pay any and all other Secured Obligations in any order
and proportion as Mortgagee, in its sole discretion, may elect; and
(c) Third, the remainder, if any, shall be remitted to the person or
persons entitled to it.
Mortgagee shall have no liability for any funds which it does not actually
receive.
30. Intentionally Omitted.
31. Intentionally Omitted.
32. Binding Nature. This Mortgage applies to, inures to the benefit of
and binds Mortgagor and the heirs, legatees, devisees, administrators, personal
representatives, executors and the successors and assigns thereof, and
Mortgagee. As used herein, the term "Mortgagee" shall include the owners and
holders of the Notes and other Secured Obligations from time to time, whether or
not named as Mortgagee herein (it being expressly agreed, however, that
Mortgagee may act through an agent; that
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only the signature of such agent is required on any amendment hereof or any
consent, approval or other action hereunder; and that First Interstate Bank of
Nevada, N.A., is the initial agent hereunder); and the term "Mortgagor" shall
mean the Mortgagor named herein and the successors-in-interest, if any, of said
named Mortgagor, in and to the Property or any part thereof. If there be more
than one Mortgagor hereunder, their obligations hereunder shall be joint and
several.
33. Intentionally Omitted.
34. Full Performance Required; Survival of Warranties. All
representations, warranties and covenants of Mortgagor contained in any loan
application or made to Mortgagee in or in connection with the Guaranty or any of
the Loan Documents or incorporated by reference in any of them, shall survive
the execution and delivery of this Mortgage and shall remain continuing
obligations, warranties and representations of Mortgagor so long as any portion
of the obligations secured by this Mortgage remains outstanding.
35. Waiver of Certain Rights By Mortgagor.
(a) Mortgagor waives and releases, to the extent permitted by law, (i)
the benefit of all laws now existing or that may hereafter be enacted providing
for any appraisement before sale of any portion of the Property, (ii) all rights
of redemption, valuation, appraisement, stay of execution, notice of election to
mature or declare due the whole of the secured indebtedness and marshalling in
the event of foreclosure of the liens hereby created, (iii) all rights and
remedies which Mortgagor may have or be able to assert by reason of the laws of
the State of Illinois pertaining to the rights and remedies of sureties and (iv)
all rights under and by virtue of the homestead exception laws of the State of
Illinois. Without limiting the generality of the foregoing, Mortgagor waives, to
the extent permitted by law, all rights to direct the order in which any of the
Property shall be sold in the event of any sale or sales pursuant hereto and to
have any of the Property or any other property now or hereafter constituting
security for the indebtedness guaranteed by the Guaranty marshalled upon any
foreclosure of this Mortgage or of any other security for any of such
indebtedness.
(b) MORTGAGOR HEREBY WAIVES ANY AND ALL RIGHTS OF REDEMPTION FROM SALE
UNDER ANY ORDER OR JUDGMENT OF FORECLOSURE OF THIS MORTGAGE AND ANY RIGHTS OF
REINSTATEMENT PURSUANT TO THE LAWS OF THE STATE OF ILLINOIS REGARDING
FORECLOSURE OF MORTGAGES, ON MORTGAGOR'S OWN BEHALF AND ON BEHALF OF EACH AND
EVERY PERSON, EXCEPT JUDGMENT CREDITORS OF THE MORTGAGOR, ACQUIRING ANY INTEREST
IN OR TITLE TO THE PREMISES AS OF OR SUBSEQUENT TO THE DATE OF THIS MORTGAGE.
36. Construction. The language in all parts of this Mortgage shall be
in all cases construed simply according to its fair meaning and not strictly for
or against any of the parties hereto. Headings at the beginning of Sections,
Subsections, paragraphs and subparagraphs of this Mortgage are solely for the
convenience of the parties, are not a part hereof and shall not be used in
construing this Mortgage. The preamble, any recitals and all exhibits and
schedules to this Mortgage are part of this Mortgage and are incorporated herein
by this reference. When required by the context: whenever the singular number is
used in this Mortgage, the same shall include the plural, and the plural shall
include the singular; and the masculine gender shall include the feminine and
neuter genders and vice versa. Unless otherwise required by the context (or
otherwise provided herein): the words "herein", "hereof"
35
<PAGE>
and "hereunder" and similar words shall refer to this Mortgage generally and not
merely to the provision in which such term is used; the word "person" shall
include individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority and other entity of whatever nature; the words
"including", "include" or "includes" shall be interpreted in a non-exclusive
manner as though the words "but [is] not limited to" or "but without limiting
the generality of the foregoing" or "without limitation" immediately followed
the same; the word "month" shall mean calendar month; and the term "business
day" shall mean any day other than a Saturday, Sunday or legal holiday under the
laws of the State of Nevada. If the day on which performance of any act or the
occurrence of any event hereunder is due is not a business day, the time when
such performance or occurrence shall be due shall be the first business day
occurring after the day on which performance or occurrence would otherwise be
due hereunder. All times provided in this Mortgage for the performance of any
act will be strictly construed, time being of the essence hereof.
37. Priority. This Mortgage is intended to have, and retain, priority
over all other liens and encumbrances upon the Real Property, excepting only:
(i) such Impositions as, at the date hereof, have, or, by law, gain, priority
over the lien created hereby; (ii) covenants, conditions, restrictions,
easements, rights of way and Leases which are of record or are disclosed of
record and which, on the date hereof, affect the Real Property and are superior
in right to or have priority over this Mortgage and (iii) Leases, liens,
encumbrances and other matters as to which Mortgagee hereafter expressly
subordinates the lien of this Mortgage by written instrument in recordable form.
Under no circumstances shall Mortgagee be obligated or required to subordinate
the lien hereof to any lien, encumbrance, covenant or other matter affecting the
Real Property or any portion thereof. Mortgagee may, however, at Mortgagee's
option, exercisable in its sole and absolute discretion, subordinate the lien of
this Mortgage, in whole or in part, to any or all Leases, liens, encumbrances or
other matters affecting all or any portion of the Real Property, by executing
and recording, in the Office of the County Recorder of the county or counties in
which the Real Property is located, a unilateral declaration of such
subordination specifying the Lease, lien, encumbrance or other matter or matters
to which this Mortgage shall thereafter be subordinate.
38. Amendments. This Mortgage cannot be waived, changed, discharged
or terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, discharge or termination is
sought.
39. Financing Statement. Portions of the Personal Property (and
portions of the Real Property) are goods which are or are to become fixtures on
or relating to the Real Property. This Mortgage constitutes a financing
statement filed as a fixture filing in the Official Records of the County
Recorder of the County in which the Property is located with respect to any and
all fixtures included within the term "Property" as used herein and with respect
to any goods or other Personal Property that may now be or hereafter become such
fixtures. The address of Mortgagee, from which information concerning the
security interest granted hereunder may be obtained, is:
First Interstate Bank of Nevada, N.A.
Gaming Industry Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attn: Steve Byrne, V.P.
36
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The address of Mortgagor, from which information concerning the security
interest granted hereunder may be obtained, is:
-------------------------------
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: President and Chief Operating Officer
With respect to the Leased Land, the address of the record owner(s), from which
information concerning the security interest granted hereunder may be obtained,
is:
===============================
===============================
Attn: ________________________
40. Attorney-in-Fact. Mortgagor hereby appoints Mortgagee the
attorney-in-fact of Mortgagor to prepare, sign, file and record one or more
financing statements; any documents of title or registration, or like papers,
and to take any other action deemed necessary, useful or desirable by Mortgagee
to perfect and preserve Mortgagee's security interest against the rights or
interests of third persons.
41. Releases, Extensions, Modifications and Additional Security.
(a) From time to time, Mortgagee may perform any of the following acts
without incurring any liability or giving notice to any person, and without
affecting the personal liability of any person for the payment of the Secured
Obligations (except as provided below), and without affecting the security
hereof for the full amount of the Secured Obligations on all Property remaining
subject hereto, and without the necessity that any sum representing the value of
any portion of the Property affected by the Mortgagee's action be credited on
the Secured Obligations:
(i) Release any person liable for payment of any Secured
Obligation;
(ii) Extend the time for payment, or otherwise alter the terms of
payment, of any Secured Obligation;
(iii) Accept additional real or personal property of any kind as
security for any Secured Obligation, whether evidenced by deeds of trust,
mortgages, security agreements or any other instruments of security; or
(iv) Alter, substitute or release any property securing the Secured
Obligations.
(b) Intentionally Omitted.
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42. Exculpation and Indemnification.
(a) Mortgagee shall not be directly or indirectly liable to Mortgagor
or any other person as a consequence of any of the following:
(i) Mortgagee's exercise of or failure to exercise any rights,
remedies or powers granted to Mortgagee in this Mortgage;
(ii) Mortgagee's failure or refusal to perform or discharge any
obligation or liability of Mortgagor under any agreement related to the
Property or under this Mortgage; or
(iii) Any loss sustained by Mortgagor or any third party resulting
from Mortgagee's failure to lease the Property, or from any other act or
omission of Mortgagee in managing the Property, after an Event of Default,
unless the loss is caused by the willful misconduct or bad faith of
Mortgagee.
To the extent permitted by applicable law, Mortgagor hereby expressly waives and
releases all liability of the types described above, and agrees that no such
liability shall be asserted against or imposed upon Mortgagee.
(b) Except for losses caused by the willful misconduct or bad faith of
Mortgagee, Mortgagor agrees to indemnify Mortgagee against and hold Mortgagee
harmless from all losses, damages, liabilities, claims, causes of action,
judgments, court costs, attorneys' fees and other reasonable legal expenses,
cost of evidence of title, cost of evidence of value, and other reasonable costs
and expenses which Mortgagee may suffer or incur:
(i) In performing any act required or permitted by this Mortgage
or any of the other Loan Documents or by law;
(ii) Because of any failure of Mortgagor to perform any of
Mortgagor's obligations; or
(iii) Because of any alleged obligation of or undertaking by
Mortgagee to perform or discharge any of the representations, warranties,
conditions, covenants or other obligations in any document relating to the
Property other than the Loan Documents.
This agreement by Mortgagor to indemnify Mortgagee shall survive the release and
cancellation of any or all of the Secured Obligations and the full or partial
release and/or reconveyance of this Mortgage.
(c) Mortgagor shall pay all amounts arising under the indemnity
obligations of this Mortgage immediately upon demand by Mortgagee.
43. Relationship to Guaranty. This Mortgage has been executed pursuant
to and is subject to the terms of the Guaranty executed concurrently herewith
and Mortgagor agrees to observe and perform all provisions contained therein. If
and to the extent of any conflict between the provisions of the Guaranty and the
provisions of this Mortgage, the provisions of this Mortgage shall control.
38
<PAGE>
44. Relationship to Security Agreement. Concurrently herewith,
Mortgagor is entering into the Security Agreement with Mortgagee with respect to
the Personal Property. As provided above, the terms of said Security Agreement
shall, with respect to the Personal Property and the security interest therein
granted hereby, supplement the terms of this Mortgage and, if and to the extent
of any conflict with the terms hereof applicable to said security interest and
Personal Property, shall, to the extent enforceable, control. Nothing in this
Section 44 shall be deemed or construed, however, to impair the rights of
Mortgagee to conduct one or more foreclosure sales at which real and personal
property are sold together pursuant to the laws applicable to the sale of real
property.
45. Intentionally Omitted.
46. Severability. If any provision in or obligation under this
Mortgage shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
47. Loan Statement Fees. Mortgagor shall pay the amount demanded by
Mortgagee or its authorized loan servicing agent for any statement regarding the
obligations secured hereby; provided, however, that such amount may not exceed
the maximum amount allowed by law at the time request for the statement is made.
48. Notices.
(a) Methods; Addresses. All notices, requests and demands to be made
hereunder to the parties hereto shall be in writing and shall be given by any of
the following means: (i) personal service; (ii) electronic communication,
whether by telex, telegram or telecopying (if confirmed in writing sent by
registered or certified, first class mail, return receipt requested); or (iii)
registered or certified, first class mail, return receipt requested. Such
addresses may be changed by notice to the other parties given in the same manner
as provided above. Any notice, demand or request sent pursuant to either (i) or
(ii) of this Section shall be deemed received upon such personal service or upon
dispatch by electronic means, and, if sent pursuant to (iii) shall be deemed
received three (3) days following deposit in the mail.
To Mortgagee: First Interstate Bank of Nevada, N.A.
Gaming Industry Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attn: Steve Byrne, V.P.
To Mortgagor: ________________________________
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: President and Chief Operating Officer
With a copy to: ________________________________
39
<PAGE>
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: Chief Financial Officer
And a copy to: ________________________________
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attn: General Counsel
(b) Reliance on Faxes. Each party hereto (a "Recipient") who
receives from another party hereto (a "Sender") by electronic facsimile
transmission (telecopier or fax) any writing which appears to be signed by an
authorized signatory of that Sender is authorized to rely and act upon that
writing in the same manner as if the original signed writing was in the
possession of the Recipient upon oral confirmation of that Sender to the
Recipient that the writing was signed by an authorized signatory of that Sender
and is intended by that Sender to be relied upon by the Recipient. Each party
transmitting any writing to any other party by electronic facsimile transmission
agrees to forward immediately to that Recipient, by expedited means (for next
day delivery, if possible), or by first class mail if the Recipient so agrees,
the signed hard copy of that writing, unless the Recipient expressly agrees to
some other disposition of the original by the Sender.
49. Governing Law. THIS MORTGAGE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT APPLICABLE LAW PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEVADA.
50. Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST MORTGAGOR ARISING OUT OF OR RELATING TO THIS
MORTGAGE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS MORTGAGE MORTGAGOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS MORTGAGE. Mortgagor hereby
agrees that service of all process in any such proceeding in any such court may
be made by registered or certified mail, return receipt requested, to Mortgagor
at its address provided in this Mortgage, such service being hereby acknowledged
by Mortgagor to be sufficient for personal jurisdiction in any action against
Mortgagor in any such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Mortgagee to bring
proceedings against Mortgagor in the courts of any other jurisdiction.
40
<PAGE>
51. Waiver of Jury Trial. MORTGAGOR AND MORTGAGEE HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS MORTGAGE. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Mortgagor and Mortgagee
each acknowledge that this waiver is a material inducement for Mortgagor and
Mortgagee to enter into a business relationship, that Mortgagor and Mortgagee
have already relied on this waiver in entering into this Mortgage and that each
will continue to rely on this waiver in their related future dealings. Mortgagor
and Mortgagee further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS MORTGAGE. In the event of litigation, this Mortgage may
be filed as a written consent to a trial by the court.
41
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IN WITNESS WHEREOF, Mortgagor has executed this instrument as of
the day and year first above written.
MORTGAGOR:
---------------------------------,
a _______________________________
By:__________________________________
Its:___________________________
STATE OF _____________)
COUNTY OF ____________)
This instrument was acknowledged before me on _______________ by
____________________ as______________________ of ____________________________
________________________, a ______________, on behalf of the ________________.
-----------------------------
Notary Public
Notarial Seal
<PAGE>
EXHIBIT A
Legal Description
43
<PAGE>
EXHIBIT A-1
Legal Description of Leased Land
1
<PAGE>
EXHIBIT A-2
Legal Description of Fee Land
1
<PAGE>
EXHIBIT B
Schedule of Ground Leases
(i) That certain Lease, dated December 10, 1990 (the "Landing Lease"),
between the City of Metropolis, a municipal corporation (the "City")
and P.C.I., Inc., a Nevada corporation ("PCI"), as lessee.
(A) the Landing Lease was amended pursuant to that Amendment of Lease,
dated May 26, 1992, between the City, as lessor, and PCI, as
lessee,
(B) PCI's interest in the Landing Lease has been assigned, and the
Landing Lease has been amended pursuant to that Amendment and
Assignment Agreement of even date herewith among PCI, Mortgagor,
and the City, recorded concurrently herewith, in Book_____,
Page_____ of the land records of Massac County, Illinois.
(ii) That certain Lease, dated April 18, 1994, between (the "Theater
Lease"), between Metropolis, IL 1292 Limited Partnership, an Illinois
limited partnership, as lessor and Southern Illinois
Riverboat Casino Cruises, Inc., an Illinois corporation, as lessee,
1
<PAGE>
TABLE OF CONTENTS
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DESCRIPTION OF REAL PROPERTY COLLATERAL. . . . . . . . 2
DESCRIPTION OF PERSONAL PROPERTY COLLATERAL. . . . . . . 4
1. Certain Representations and Warranties of Mortgagor . . . . . . 10
2. Payment of Obligations. . . . . . . . . . . . . . . . . . . . . 11
3. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 11
4. Maintenance of Property . . . . . . . . . . . . . . . . . . . . 11
5. Environmental Obligations.. . . . . . . . . . . . . . . . . . . 12
6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Types and Amounts Required . . . . . . . . . . . . . . . . 14
(b) Uniform Policy Requirements. . . . . . . . . . . . . . . . 17
(c) Blanket and Umbrella Policies. . . . . . . . . . . . . . . 18
(d) Evidence of Insurance. . . . . . . . . . . . . . . . . . . 18
(e) Procurement by Mortgagee . . . . . . . . . . . . . . . . . 19
(f) Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Replacement Cost . . . . . . . . . . . . . . . . . . . . . 20
(h) Separate Insurance . . . . . . . . . . . . . . . . . . . . 20
(i) Compliance with Insurance Requirements . . . . . . . . . . 20
(j) Assignment of Policies upon Foreclosure. . . . . . . . . . 20
(k) Waiver of Subrogation. . . . . . . . . . . . . . . . . . . 21
(l) Requirements Supplemental. . . . . . . . . . . . . . . . . 21
7. Casualties; Insurance Proceeds. . . . . . . . . . . . . . . . . 21
(a) Notice of Casualties . . . . . . . . . . . . . . . . . . . 21
(b) Payment of Proceeds. . . . . . . . . . . . . . . . . . . . 21
(c) Use in Restoration . . . . . . . . . . . . . . . . . . . . 21
(d) Application by Mortgagee . . . . . . . . . . . . . . . . . 22
(e) Duty to Restore. . . . . . . . . . . . . . . . . . . . . . 22
8. Taxes and Impositions . . . . . . . . . . . . . . . . . . . . . 23
(a) Payment by Mortgagor . . . . . . . . . . . . . . . . . . . 23
(b) New Impositions. . . . . . . . . . . . . . . . . . . . . . 23
(c) Proof of Payment . . . . . . . . . . . . . . . . . . . . . 23
(d) Contest of Assessments . . . . . . . . . . . . . . . . . . 24
(e) Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . 24
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(f) Joint Assessment . . . . . . . . . . . . . . . . . . . . . 25
(g) Tax Service. . . . . . . . . . . . . . . . . . . . . . . . 25
9. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10. Leaseholds, Leases, Easements, and Servitudes . . . . . . . . . 25
(a) Leaseholds and Leases . . . . . . . . . . . . . . . . . . 25
(b) Easement . . . . . . . . . . . . . . . . . . . . . . . . . 32
11. Further Acts. . . . . . . . . . . . . . . . . . . . . . . . . . 32
12. Assignment of Rents . . . . . . . . . . . . . . . . . . . . . . 32
(a) Assignment to Mortgagee; Mortgagor's Limited License to
Collect Prior to Default . . . . . . . . . . . . . . . . . 32
(b) No Other Assignments . . . . . . . . . . . . . . . . . . . 33
13. Actions Affecting Property. . . . . . . . . . . . . . . . . . . 33
14. Eminent Domain. . . . . . . . . . . . . . . . . . . . . . . . . 33
15. Due on Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16. Partial or Late Payments. . . . . . . . . . . . . . . . . . . . 35
17. Release By Mortgagee. . . . . . . . . . . . . . . . . . . . . . 35
18. Right of Mortgagee to Appear. . . . . . . . . . . . . . . . . . 35
19. Performance by Mortgagee. . . . . . . . . . . . . . . . . . . . 36
20. Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . 36
21. Invalidity of Lien. . . . . . . . . . . . . . . . . . . . . . . 36
22. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 37
23. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 37
24. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Acceleration . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Receiver . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(d) Cure; Protection of Security . . . . . . . . . . . . . . . 38
(e) Uniform Commercial Code Remedies . . . . . . . . . . . . . 39
(f) Judicial Action. . . . . . . . . . . . . . . . . . . . . . 39
(g) Sale of Property . . . . . . . . . . . . . . . . . . . . . 39
(h) Single or Multiple Foreclosure Sales . . . . . . . . . . . 40
ii
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25. Costs of Enforcement. . . . . . . . . . . . . . . . . . . . . . 41
26. Remedies Cumulative and Not Exclusive . . . . . . . . . . . . . 41
27. Credit Bids . . . . . . . . . . . . . . . . . . . . . . . . . . 42
28. Application of Foreclosure Sale Proceeds. . . . . . . . . . . . 42
29. Application of Rents and Other Sums . . . . . . . . . . . . . . 42
30. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . 43
31. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . 43
32. Binding Nature. . . . . . . . . . . . . . . . . . . . . . . . . 43
33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
34. Full Performance Required; Survival of Warranties . . . . . . . 43
35. Waiver of Certain Rights By Mortgagor . . . . . . . . . . . . . 43
36. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 44
37. Priority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
38. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
39. Financing Statement . . . . . . . . . . . . . . . . . . . . . . 45
40. Attorney-in-Fact. . . . . . . . . . . . . . . . . . . . . . . . 46
41. Releases, Extensions, Modifications and Additional Security . . 46
42. Exculpation and Indemnification . . . . . . . . . . . . . . . . 47
43. Relationship to Guaranty. . . . . . . . . . . . . . . . . . . . 48
44. Relationship to Security Agreement. . . . . . . . . . . . . . . 48
45. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . 48
46. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 48
47. Loan Statement Fees . . . . . . . . . . . . . . . . . . . . . . 48
48. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
iii
<PAGE>
(a) Methods; Addresses . . . . . . . . . . . . . . . . . . . . 48
(b) Reliance on Faxes. . . . . . . . . . . . . . . . . . . . . 49
49. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 50
50. Consent to Jurisdiction and Service of Process. . . . . . . . . 50
51. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . 50
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
EXHIBIT A - Legal Description . . . . . . . . . . . . . . . . . . . . . .44
EXHIBIT B - Schedule of Ground Leases . . . . . . . . . . . . . . . . .. 45
iv
<PAGE>
EXHIBIT 10.56
EXHIBIT XIV
[FORM OF SHIP MORTGAGE]
FIRST PREFERRED SHIP MORTGAGE
This First Preferred Ship Mortgage (this "Ship Mortgage"), dated August 25,
1995, made by ______________________, a ____________ corporation ("Mortgagor")
to First Interstate Bank of Nevada, N.A., a national banking association, in its
capacity as trustee (in such capacity, "Trustee") under the Trust Agreement
hereinafter defined.
W I T N E S S E T H:
TERMS AND CONDITIONS
DEFINITIONS: The following words shall have the following meanings when used in
this Ship Mortgage. All references to dollar amounts shall mean amounts in
lawful money of the United States of America. In this Ship Mortgage, whenever
the context so requires, the singular includes the plural and the plural also
includes the singular.
"Additional Advances" means any and all sums that Mortgagee may advance on
Mortgagor's behalf as provided under this Ship Mortgage, and for which
Mortgagor is responsible to repay.
"Administrative Agent" means the administrative agent under the Credit
Agreement and its succesors and assigns.
"Closing Date" means August 30, 1995.
"Collateral" means the Vessel and Mortgagor's Rights.
"Credit Agreement" means that certain Credit Agreement dated as of August
25, 1995 by and among Players International, Inc., a Nevada corporation,
First Interstate Bank of Nevada, N.A. ("FIB"), as Administrative Agent, the
Lenders listed on the signature pages thereto, FIB and Bankers Trust
Company, as Managing Agents, and FIB and BT Securities Corporation, as
Co-Arrangers, as the same may be modified or amended from time to time and
in effect.
"Encumbrances" means individually, collectively, and interchangeably any
and all presently existing and/or future mortgages, liens, privileges, and
other contractual and/or
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statutory security interests and rights, of every nature and kind, whether
in admiralty, at law, or in equity, that now and/or in the future may
affect the Collateral or any part or parts thereof.
"Event of Default" means individually, collectively, and interchangeably
any of the Events of Default set forth below in the section titled "Events
of Default".
"Event of Loss" means, with respect to any property or asset, (i) any 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.
"Guarantied Obligations" means the obligations, liabilities and
indebtedness of Mortgagor now or hereafter arising under or pursuant to the
Guaranty.
"Guaranty" means the Guaranty dated the Closing Date executed by Mortgagor
in favor of Mortgagee, as the same may be modified or amended from time to
time and in effect.
"Indebtedness" means the obligations, liabilities and indebtedness of
Players International now or hereafter arising under or pursuant to the
Credit Agreement, the Notes or any of the Related Documents.
"Lenders" means the lenders under the Credit Agreement and their respective
successors and assigns, and any subsequent holder or holders of the Notes,
or any interest therein.
"Mortgagee" means First Interstate Bank of Nevada, N.A. in its capacity as
Trustee under the Trust Agreement.
"Mortgagor" means individually, collectively, and interchangeably
_______________________ and its successors, administrators, and assigns.
"Notes" means the promissory notes issued by Players International to
Lenders pursuant to the Credit Agreement, and any and all renewals,
extensions, and refinancings thereof.
"Obligations" means all liabilities, obligations and indebtedness of
Mortgagor to Mortgagee or any of Lenders now or hereafter arising under or
pursuant to the Guaranty or any of the Related Documents, together with all
obligations, liabilities and indebtedness of Mortgagor to Mortgagee or any
of Lenders for which Mortgagor is responsible under this Ship Mortgage,
including but not limited to the repayment of any Additional Advances.
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"Players International" means Players International, Inc. a Nevada
corporation.
"Related Documents" means and includes individually, collectively,
interchangeably, and without limitation all promissory notes, credit
agreements, loan agreements, guaranties, security agreements, mortgage,
deeds of trust, and all other instruments, agreements, and documents,
whether now or hereafter existing, and executed in connection with the
Credit Agreement, the Notes or the Guaranty.
"Rights" means individually, collectively, and interchangeably any and all
of the property, rights or interests in which Mortgagee is granted a
security interest as provided under this Ship Mortgage.
"Ship Mortgage" means this First Preferred Ship Mortgage, as the same may
be amended or modified from time to time and in effect.
"Ship Mortgage Laws" means the Ship Mortgage Laws as codified in Chapter
313 of Title 46 of the United States Code, and as amended from time to time
and in effect.
"Trust Agreement" means that certain Trust Agreement, dated as of August
25, 1995, by and among Trustee and Administrative Agent for itself and on
behalf of Lenders, as the same may be modified or amended from time to time
and in effect.
"Vessel" means the whole of the vessel named below and described as
follows:
Vessel Name Official
Number
together with any and all present and future engines, boilers, machinery,
components, masts, boats, anchors, cables, chains, rigging, tackle,
apparel, furniture, capstans, outfit, tools, pumps, gear, furnishings,
appliances, fittings, spare and replacement parts, equipment and any and
all other appurtenances thereto, appertaining or belonging to the Vessel,
whether now or hereafter acquired, and whether on board or not on board,
together with any and all present and future additions, improvements, and
replacements therefor, made in or to the Vessel, or any part or parts
thereof; and all accounts, earned hire, charter payments, freight,
earnings, revenues, income and profit therefrom and additionally, all log
books, manuals, trip records, maintenance records, inspection reports,
seaworthiness certificates, and other historical records or information
relating to the
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Vessel, all of which shall be deemed to be included in any reference herein
to the term "Vessel"; provided, however, nothing herein contained shall be
deemed or construed to subject to the preferred lien of this Ship Mortgage
any property other than a "vessel" as defined in the Ship Mortgage Laws.
GRANTING OF MORTGAGE. And now, in order to secure the prompt and punctual
payment and performance of all Obligations, Mortgagor does by these presents
specifically mortgage, affect, and hypothecate unto and in favor of Mortgagee on
behalf of Lenders, the whole of the Vessel.
MORTGAGE SECURING FUTURE INDEBTEDNESS. This Ship Mortgage has been executed by
Mortgagor for the purpose of securing the Obligations that may now be existing
and that may arise in the future as provided herein, with the preferences and
priorities provided under applicable law.
DURATION OF MORTGAGE. The Ship Mortgage shall remain in full force and effect
until such time as all Obligations shall have been fully paid and performed and
the Guaranty terminated.
REPRESENTATIONS, WARRANTIES, AND OBLIGATIONS CONCERNING THE VESSEL. Mortgagor
represents, warrants, and covenants to Mortgagee as follows with respect
to the Vessel:
Port of Documentation. The port of documentation of the Vessel is and shall
at all times be _____________, State of __________. As long as this Ship
Mortgage remains in effect, Mortgagor will not change the port of
documentation of the Vessel without the prior written consent of Mortgagee.
Location of Vessel. When not in use elsewhere, the Vessel shall be berthed
at: ________________, ______________.
Notice of Mortgage. Mortgagor shall exhibit and/or cause a certified copy
of this Ship Mortgage and any and all amendments or supplements hereto or
assignments hereof, to be exhibited, on demand, to any person having
business with the Vessel or with Mortgagor or with any of Mortgagor's
representatives. Mortgagor shall further cause the following notice,
printed in plain type of such size that each paragraph of reading matter
shall cover a space not less than six (6) inches wide by nine (9) inches
high, and framed under glass, to be placed and kept prominently displayed
on the Vessel:
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"NOTICE OF MORTGAGE"
This Vessel is owned by ________________________, and is covered by a
First Preferred Ship Mortgage in favor of First Interstate Bank of
Nevada, N.A., as Trustee. Under the terms of said Ship Mortgage, no
owner, operator, charterer, cargo owner, subcharterer of this Vessel,
or any person, has the right, power or authority to create, incur, or
permit to exist on this Vessel any lien whatsoever other than liens
for crews' wages or salvage. A copy of the First Preferred Ship
Mortgage is carried on this vessel and must be exhibited on demand to
any person having business with this vessel.
Mortgagor agrees that such notice shall be changed whenever necessary to
reflect the identity of any successor to Mortgagor or Mortgagee.
Use of Vessel. Mortgagor shall use, and/or shall cause others to use, the
Vessel at all times in accordance with the laws, treaties, conventions,
rules, regulations, and ordinances of the United States of America, the
several states and municipalities thereof, and any other sovereign
jurisdiction in which the Vessel may be located. The Vessel shall further
be used only for any purpose and in the manner set forth in the application
of insurance executed in connection herewith, as from time to time in
effect, and furthermore, may not be used for any illegal purpose. Mortgagor
shall not, without the prior written consent of Mortgagee, do any act, or
voluntarily suffer or permit any act to be done, whereby any insurance
required under this Ship Mortgage shall or may be cancelled, suspended,
impaired or defeated, or suffer or permit the Vessel to engage in any
voyage or to carry any cargo not permitted under the policies of insurance
then in effect without procuring insurance satisfactory to Mortgagee
covering the Vessel in all respects for such voyage.
Alterations. Mortgagor shall not, without the prior written consent of
Mortgagee, make or permit others to make, any alterations to the Vessel or
any part or component of the Vessel, that may reduce or impair the Vessel's
value or utility; provided that Mortgagor and Mortgagee hereby acknowledge
that the intended use of the Vessel by Mortgagor is as the base for a
riverboat casino facility to be located near _________________,
_______________.
Abandonment of Vessel. Mortgagor shall not, nor shall Mortgagor permit
others to, abandon, commit waste, or destroy the Vessel, or any part or
component of the Vessel.
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Repair and Maintenance. Mortgagor shall, at its own expense, keep and
maintain and/or cause others to keep and maintain, the Vessel in good
order, repair and seaworthy condition to Mortgagee's satisfaction and to
the satisfaction of the Vessel's salvage association, classification
society, and/or the United States Coast Guard, as applicable. Mortgagor
shall further make and/or cause all necessary repairs to be made to the
Vessel, including the repair and restoration of any portion of the Vessel,
or its parts or components, that may have been lost, damaged, or impaired.
Inspections; Audits. Mortgagor shall give Mortgagee notice of each proposed
survey of the Vessel twenty (20) days in advance if practicable, but
otherwise as long in advance as may be practicable under the circumstances
and shall permit representatives of Mortgagee to be present during such
survey. Notwithstanding the previous sentence, Mortgagee and its agents may
periodically inspect or survey the Vessel to ascertain its condition and to
satisfy Mortgagee that the Vessel is being properly repaired and
maintained. Mortgagee and its agents may further periodically enter upon
Mortgagor's premises at reasonable hours and conduct audits of Mortgagor's
books and records that in any way pertain to the Vessel, any part or parts
thereof, or Mortgagor's Rights. Mortgagee shall have the further right to
periodically inspect the log of the Vessel.
Prohibitions Regarding the Vessel. So long as this Ship Mortgage remains in
effect, Mortgagor shall not, without Mortgagee's prior written consent, (a)
sell, assign, transfer, convey, option, mortgage, lease, or charter the
Vessel; (b) permit any Encumbrances to be placed on or attached to the
Vessel; (c) change the port of documentation of the Vessel; or (d) change
the registration or flag of the Vessel.
Preferred Ship Mortgage. Mortgagor shall comply with and satisfy all of the
provisions of applicable law and regulations of the United States of
America, as the same may at any time be amended, including without
limitation all laws and regulations relating to citizenship of Mortgagor,
in order to establish and maintain this Ship Mortgage as a first priority
"preferred mortgage" upon the Vessel for the full amount secured hereby.
Mortgagor shall also execute and record from time to time, at its expense
and at reasonable advance intervals, such additional instruments as may be
necessary or appropriate within Mortgagee's sole discretion, so that this
Ship Mortgage may be established and preserved as a valid preferred lien on
the Vessel until this Ship Mortgage shall be cancelled in the manner
provided herein.
VESSEL OWNERSHIP AND TITLE. Mortgagor represents, warrants, and covenants to
Mortgagee, on behalf of Lenders, as follows:
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General Representations and Warranties. Except as previously disclosed to
and accepted by Mortgagee, on behalf of Lenders in writing: (a) Mortgagor
is and will continue at all times to be the sole lawful owner of the
Vessel; (b) Mortgagor has the right to mortgage the Vessel to Mortgagee;
(c) as of the time this Ship Mortgage is recorded, there are no prior
Encumbrances affecting the Vessel, or any part or parts thereof; (d) the
security interests granted under this Ship Mortgage shall at no time become
subordinate or junior to any security interest, lien, or claim of any
person, firm, corporation or other entity (other than possibly for crew's
wages or salvage); (e) this Ship Mortgage is binding upon Mortgagor as well
as Mortgagor's successors, representatives, and assigns, and is legally
enforceable in accordance with its terms; (f) the Vessel is and will
continue to be properly registered under the laws of the United States of
America; and (g) so long as part of any Obligations remain unpaid or
unperformed and the Guaranty remains in effect, there shall be no change in
the ownership of the Vessel or any of the shares of Mortgagor without the
prior written consent of Mortgagee. The foregoing representations and
warranties, and all other representations and warranties contained in this
Ship Mortgage, shall be continuing in nature and shall remain in full force
and effect until such time as the Ship Mortgage is cancelled in the manner
provided herein.
Prior Encumbrances. To the extent applicable, Mortgagor shall fully and
timely perform any and all of Mortgagor's obligations under any
Encumbrances affecting the Collateral. Without limiting the foregoing,
Mortgagor shall not commit, or permit to exist, any breach of or default
under any Encumbrances. Mortgagor shall further promptly notify Mortgagee
in writing upon the occurrence of any event or circumstances that would, or
that might, result in a breach of or default under any Encumbrance.
Mortgagor shall further not modify or extend any of the terms of any
Encumbrance or any indebtedness secured thereby, or request or obtain any
additional loans or other extensions of credit from any third party
creditor or creditors whenever such additional loan advances or other
extensions of credit may be directly or indirectly secured, whether by
cross-collateralization or otherwise, by the Collateral, or any part or
parts thereof, with possible preference and priority over the lien and
security interest created by this Ship Mortgage.
Future Encumbrances. Neither Mortgagor, nor any charterer, master or
operator of the Vessel, shall, without the prior written consent of
Mortgagee, grant, or create any Encumbrance, or incur any obligation that
may give rise to an Encumbrance (other than for crew's wages or salvage),
that may affect the Collateral, or any part or parts thereof, nor shall
Mortgagor, or any charterer, master or operator of the Vessel, permit or
consent to any encumbrance attaching to or being filed against the
Collateral, or any part or parts thereof, in favor of anyone other than
Mortgagee. Mortgagor shall further promptly pay
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when due, or cause to be paid when due, all statements and charges of the
master, crew, seamen, mechanics, materialman, laborers and others incurred
in connection with the alteration, improvement, operation, repair,
maintenance and salvage of the Vessel, or any and all part or parts
thereof, or otherwise furnish appropriate security or bond so that no
Encumbrance may ever attach to or be filed against the Vessel, or any of
Mortgagor's Rights.
Notice of Encumbrances. Mortgagor shall immediately notify Mortgagee in
writing upon the filing of any attachment, lien, judicial process, claim or
other Encumbrance affecting the Collateral, or any part or parts thereof.
Mortgagor additionally agrees to notify Mortgagee immediately in writing,
upon the occurrence of any default, or event that, with the passage of
time, failure to cure, or giving of notice, might result in a default,
under any of Mortgagor's obligations that may be secured by any presently
existing or future Encumbrance, or that may result in an Encumbrance
affecting the Collateral, or any part or parts thereof, or should the
Collateral be seized or attached or levied upon, or threatened by seizure
or attachment or levy, by any person other than Mortgagee, on behalf of
Lenders.
VESSEL INSURANCE REQUIREMENTS AND PROVISIONS. Mortgagor represents, warrants,
and covenants to Mortgagee as follows with respect to insurance and the Vessel:
Required Insurance. So long as this Ship Mortgage remains in effect,
Mortgagor shall keep, at Mortgagor's sole cost, and/or cause others at
their expense to keep the Vessel constantly insured as specified below, as
well as to keep the Vessel insured against such additional risks as may be
commercially reasonable or reasonably specified by Mortgagee from time to
time:
Hull and Machinery Coverage. Mortgagor shall secure an insurance policy
that will provide "All Risk" (including SR&CC) property coverage covering
the Vessel for physical damage at a value that represents 100% of the
Vessel's replacement cost. The policy will include Agreed Amount (waiving
co-insurance) replacement cost valuation, and Liner negligence clause
endorsements. The policy may not have a deductible in excess of 1% of the
replacement cost.
Casino Boat Business Interruption. Mortgagor shall purchase Business
Interruption coverage under a "comprehensive facility" form indemnifying
Mortgagor for loss of net profits and continuing expenses (including debt
service) for loss arising from casualty to the Vessel. The limit purchased
must represent no less than twenty-five million dollars ($25,000,000) in
the aggregate. The policy may not have a deductible in excess of thirty
(30) days.
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Protection and Indemnity. Mortgagor shall secure a Protection and Indemnity
policy that is written with a one million dollars ($1,000,000) combined
single limit for bodily injury and property damage, including all standard
policy form extensions. The policy will include a comprehensive Pollution
Liability endorsement covering any loss or damage resulting from any
discharge, emission, spillage or leakage on or into any water, including
governmental mandated clean up. The policy shall be written on an
"occurrence form". This policy shall be endorsed to include Mortgagee and
Lenders as additional insureds.
Umbrella/Bumbershoot Liability. Mortgagor shall secure an
Umbrella/Bumbershoot Liability policy with a limit of not less than one
hundred million dollars ($100,000,000) providing excess coverage over all
limits and coverages indicated in the preceding paragraph. The limits can
be obtained by a combination of Primary and Excess Umbrella/Bumbershoot
Liability policies, provided that all layers follow form with the
Protection and Indemnity policy, and are written on an "occurrence" form.
This policy shall be endorsed to include Mortgagee and Lenders as
additional insureds.
Insurance Companies. Mortgagor may purchase such insurance through one or
more marine insurance brokers of its choice, with such insurance being
placed and kept with such American, British, or other insurance companies,
underwriters' associations, clubs, or underwriting funds reasonably
acceptable to Mortgagee. All such insurance policies, including renewals
and replacements, must also be in form, amount, and substance acceptable to
Mortgagee and must additionally contain a noncontributory Mortgagee's loss
payable clause in favor of Mortgagee, providing in part that: (a) all
proceeds and returned premiums under such policies of Insurance will be
paid directly to Mortgagee, on behalf of Lenders; (b) no act or omission on
the part of Mortgagor or any of its officers, agents, employees or
representatives, or the master or crew of the Vessel, or any charterer or
subcharterer thereof, or breach of any warranties contained in such
policies, shall affect the obligations of the Insurer to pay the full
amount of any loss to Mortgagee; (c) such policies may not be cancelled or
altered without thirty (30) days' prior written notice to Mortgagee of such
intended cancellation or alteration, (d) there shall be no recourse against
Mortgagee for the payment of premiums or commissions; and (e) if such
policies provide for the payment of club calls, assessments or advances,
there shall be no recourse against Mortgagee for the payment thereof.
Insurance Policies. Mortgagor agrees to provide Mortgagee with originals or
certified copies of such policies of insurance. Mortgagor further agrees to
promptly furnish Mortgagee with copies of all renewal notices and, if
requested by Mortgagee, with copies of receipts for paid premiums.
Mortgagor shall provide Mortgagee with originals or
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certified copies of all renewals or replacement policies of insurance no
later than ten (10) days before any such existing policy or policies should
expire.
Casualties and Accidents. Mortgagor agrees to immediately notify Mortgagee
in writing of any material casualty to or accident involving the Vessel,
whether or not such casualty or loss is covered by insurance. Mortgagor
further agrees promptly to notify Mortgagor's insurers and to submit an
appropriate claim and proof of claim to such insurers in the event that the
Vessel, or any part or parts thereof, is lost, damaged, or impaired as a
result of an insured hazard. Mortgagee may submit such a claim and proof of
claim to the insurer on Mortgagor's behalf, should Mortgagor fail to do so
promptly for any reason. Mortgagor hereby irrevocably appoints Mortgagee as
its agent and attorney-in-fact, such agency being coupled with an interest,
to make, settle, and adjust any and all claims under such policy or
policies of insurance and to endorse the name of Mortgagor on any check or
other item of payment for the proceeds thereof; it being understood,
however, that unless one or more Events of Default exist under this Ship
Mortgage, Mortgagee will not settle or adjust any such claims without the
prior approval of Mortgagor (which approval shall not be unreasonably
withheld).
Insurance Certificates or Opinions. Mortgagor will further furnish to
Mortgagee, and Mortgagee may rely upon, a certificate or opinion of a firm
or marine insurance brokers acting for Mortgagor with respect to the
Vessel, as of the date of this Ship Mortgage, stating in effect, that such
insurance complies in all respects to the applicable requirements of this
Ship Mortgage. Annually hereafter, Mortgagor shall further furnish to
Mortgagee a detailed certificate or opinion signed by a qualified firm of
marine insurance brokers as provided above, as to the insurance maintained
by Mortgagor pursuant to this Ship Mortgage, specifying the respective
policies of insurance covering the same, and stating, in effect, that such
insurance complies in all respects with the applicable requirements of this
Ship Mortgage.
Insurance Proceeds. To the extent permitted by applicable law, Mortgagor
agrees to distribute to Players International (by way of dividend, loan or
otherwise) any cash proceeds received by it as a result of the occurrence
of an Event of Loss to which subsection 2.4A(ii)(b) of the Credit Agreement
requires that Players International prepay such proceeds to reduce the then
outstanding Obligations. Mortgagee, on behalf of Lenders, shall have the
right to receive directly any such proceeds. In the event that Mortgagor
should receive any such insurance proceeds, Mortgagor agrees immediately to
turn over such proceeds and to pay the same directly to Mortgagee, on
behalf of Lenders. Notwithstanding the foregoing, if an Event of Default
exists under this Ship Mortgage or the Credit Agreement, Mortgagor agrees
to distribute all proceeds from any Event of Loss to Players International
for immediate distribution to Mortgagee.
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Mortgagee may apply such proceeds at Mortgagee's sole option and
discretion, in such a manner as Mortgagee may determine (after payment of
all reasonable costs, expenses and attorneys' fees paid or incurred by
Mortgagee in this connection), for the purpose of (a) repairing or
replacing any lost, damaged or impaired portions, parts or components of
the Vessel, as well as payment of any liabilities, salvage or other charges
and expenses (including labor charge due or paid by Mortgagor), that may be
covered by such policies of insurance; or (b) reducing the then outstanding
balance of the Obligations, with such payments to be applied in the manner
provided in this Ship Mortgage. Mortgagee's receipt of such insurance
proceeds and application of such proceeds as provided herein shall not,
however, affect the lien under this Ship Mortgage.
Nothing under this Section shall be deemed to excuse Mortgagor from
Mortgagor's obligations promptly to repair, replace, or restore any lost,
damaged, or destroyed portion, part or component of the Vessel, whether or
not the same may be covered by insurance, and whether or not such proceeds
of insurance are available, and whether such proceeds are sufficient in
amount to complete such repair, replacement, or restoration to the
satisfaction of Mortgagee. Furthermore, unless otherwise confirmed by
Mortgagee in writing, the application or release of any insurance proceeds
by Mortgagee shall not be deemed to cure or waive any Event of Default
under this Ship Mortgage. In the event of an accident or event resulting in
a constructive total loss of the Vessel, Mortgagee shall have the right to
assert a claim on behalf of Mortgagor, and if (a) such claim is accepted by
all underwriters under the policies then in force, and (b) payment in full
thereof is made in cash, then Mortgagee shall have the right to abandon the
Vessel to the underwriters, free from the lien of this Ship Mortgage.
Mortgagee shall also have the right, in its sole discretion, to enter into
any agreement or compromise with regard to the total loss or the
constructive total loss of the Vessel.
TAX REQUIREMENTS AND PROVISIONS. Mortgagor represents, warrants, and covenants
to Mortgagee as follows with respect to taxes relating to the Vessel and this
Ship Mortgage:
Taxes. Mortgagor shall promptly pay, or cause to be paid when due, all
taxes, local and special assessments, and governmental and other charges,
fines, and penalties, of every nature and description, that may from time
to time be imposed, assessed, and levied against the Vessel or against
Mortgagor. Mortgagor further agrees to furnish Mortgagee with evidence that
such taxes, assessments, and governmental and other charges, fines, and
penalties have been paid in full and in a timely manner.
Tax Law Changes. In the event that there should be any change in applicable
law with regard to taxation of ship mortgages or the debts they secure,
Mortgagor agrees to pay
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any taxes, assessments, or charges that may be imposed upon Mortgagee as a
result of this Ship Mortgage.
ADDITIONAL ADVANCES FOR SPECIFIC PURPOSES. Mortgagee shall have the right,
within Mortgagee's sole option and discretion, to make Additional Advances on
Mortgagor's behalf for any of the following purposes:
Insurance. If Mortgagor should for any reason fail to maintain insurance on
the Vessel as required under this Ship Mortgage, Mortgagee may make
Additional Advances on Mortgagor's behalf for the purpose of purchasing and
maintaining, and Mortgagee may purchase and maintain, such insurance
coverage (including insurance protecting only Mortgagee's interest in the
Vessel).
Taxes. If Mortgagor should for any reason fail to pay promptly when due
taxes, assessments, and governmental charges as required under this Ship
Mortgage, Mortgagee may make Additional Advances on Mortgagor's behalf for
the purpose of paying such taxes, assessments, and governmental and other
charges.
Repairs. If Mortgagor should for an reason fail to make all necessary
repairs to the Vessel and to keep the Vessel in good working order and
seaworthy condition as required under this Ship Mortgage, Mortgagor agrees
that Mortgagee may make Additional Advances on Mortgagor's behalf for the
purpose of making, and Mortgagee may make, such repairs and maintenance to
the Vessel as Mortgagee may deem to be necessary and proper within its sole
discretion. Mortgagee and its agents may board the Vessel at any time, and
from time to time, for the purpose of accomplishing such repairs and
maintenance.
Encumbrances. If Mortgagor should permit or allow any Encumbrance to attach
to or be recorded or filed against the Collateral, without having first
obtained Mortgagee's prior written consent, or if Mortgagor should for any
reason default under any obligation secured by any presently existing or
future Encumbrance, Mortgagee may make Additional Advances on Mortgagor's
behalf and take such other action or actions, as Mortgagee may deem to be
necessary and proper within its sole discretion, to pay and fully satisfy
such obligation and/or Encumbrance, to cure or rectify any such default or
defaults and to prevent future defaults on Mortgagor's part.
Arrest and Seizure of Vessel. Should the Vessel be arrested or detained by
a marshal or other officer of any court of law, equity, or admiralty
jurisdiction or by any government or other authority, and the Vessel not be
released within fifteen (15) days from the date of arrest or detention,
Mortgagee is hereby authorized and empowered to apply for and
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receive and take possession of the Vessel in the name of Mortgagor.
Mortgagee is further authorized and empowered to appear in any court where
a suit is pending against the Vessel and to take such action as Mortgagee
may deem, within its sole discretion, to be necessary and/or proper to
defend any such suit and/or to obtain the release or discharge of any lien
against the Vessel. All funds and expenses expended or incurred by
Mortgagee for such purposes shall be considered an Additional Advance as
provided under this Ship Mortgage.
Other Purposes. Mortgagee may further make Additional Advances on
Mortgagor's behalf and take such other action or actions as Mortgagee may
deem to be necessary and proper within Mortgagee's sole discretion, to cure
and rectify any actions or inactions on Mortgagor's part, as are required
under this Ship Mortgage, that are not listed immediately above.
No Obligations. Nothing under this Ship Mortgage shall obligate Mortgagee
to make any such Additional Advances or to take any of the above actions on
Mortgagor's behalf, or make Mortgagee in any way responsible or liable for
any loss, damage, or injury to Mortgagor, or to any other person or
persons, resulting from Mortgagee's election not to advance such additional
sums or to take such action or actions. In addition, Mortgagee's election
to make Additional Advances and/or to take the above actions on Mortgagor's
behalf shall not constitute a waiver or forbearance by Mortgagee of any
Event of Default under this Ship Mortgage.
OBLIGATION TO REPAY ADDITIONAL ADVANCES; INTEREST. Mortgagor
unconditionally agrees to repay any and all Additional Advances that Mortgagee
may elect to make on Mortgagor's behalf, together with interest as provided
herein, immediately upon demand by Mortgagee. Mortgagor agrees to pay Mortgagee
interest on Additional Advances at the rate specified in subsection 2.2E of the
Credit Agreement from the date of each such Additional Advance until all such
Additional Advances are repaid in full. Mortgagor's obligations to repay
Additional Advances to Mortgagee, together with interest thereon, shall be
secured by this Ship Mortgage.
ADDITIONAL SECURITY IN RIGHTS. Mortgagor further grants a continuing security
interest in the following property, rights and interests (collectively,
"Rights") in favor of Mortgagee as additional collateral security for the prompt
and punctual payment and performance of the Obligations:
Proceeds. Any and all proceeds of or with regard to the Vessel and
Mortgagor's Rights, including without limitation all proceeds derived or to
be derived from the sale, transfer, conveyance, exchange, insurance loss,
damage, destruction, condemnation, expropriation,
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or other taking of the Vessel and any unearned insurance premiums relating
thereto, as well as any salvage awards and/or recoveries in general
average, and all other sums due or to become due with respect to the
Vessel, and further including the rights of Mortgagor to receive such
proceeds directly from the obligor or obligors therefor, and to further
enforce any rights that Mortgagor may have to collect such proceeds,
including without limitation Mortgagor's rights to commence an appropriate
collection or enforcement action or actions incident thereto.
Equipment. Any and all of Mortgagor's present and future machinery,
equipment (including gaming equipment), furniture, furnishings and
fixtures, of every type and description, now or hereafter located on the
Vessel or used in connection therewith, together with all accessories,
attachments, accessions, substitutions, replacements and additions thereto,
and all proceeds derived or to be derived therefrom, including without
limitation, any equipment purchased with proceeds, and all insurance
proceeds and refunds of insurance proceeds, if any, and any sums that may
be due from third parties who may cause damage of any of the foregoing, or
from any insurer, whether due to judgment, settlement or other process, and
any and all present and future accounts, chattel paper, instruments, notes
and monies that may be derived from the sale, lease or other disposition of
any of the foregoing and any rights of Mortgagor to collect or enforce
payment thereof, and all present and future general intangibles of
Mortgagor in any way related or pertaining to the ownership, operation or
use of the foregoing.
Leases, Charters, Rents, and Profits. Any and all present and future leases
or charters affecting the Vessel, including without limitation any and all
rents, income, profits, bonuses, revenues, royalties, cash or security
deposit, advance rentals, and other payments, and further including
Mortgagor's rights to enforce such leases or charters and to receive and
endorse any rights that Mortgagor might have to collect such payments.
Earnings and Other Revenues. Any and all present and future freight, hire,
earnings, issues, revenues, accounts, assets, payments, income, and profits
derived or to be derived from the use or operation of the Vessel, or any
part or parts thereof, including the rights of Mortgagor to receive such
payment directly from the obligor or obligors thereof, and to further
enforce any rights that Mortgagor collect such payments, including, but not
limited to, Mortgagor's rights to commence an appropriate collection or
enforcement action or actions incident thereto.
Deposits. Any and all present and future deposits or other security or
advance payments, including rental payments made by or on behalf of
Mortgagor to others, with respect to (a) moorage or dockage of the Vessel,
(b) cleaning, maintenance, repair or similar
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services regarding the Vessel, and (c) rentals of equipment, if any, used
in the operation by or on behalf of Mortgagor regarding the Vessel.
Option. Any and all present and future options to sell, lease, or charter
the Vessel or any interest in the Vessel.
Other Rights. Any and all of Mortgagor's present and future contract
rights, general intangibles, instruments, and documents necessary for use
or useful in connection with the ownership and operation of the Vessel,
whether now existing or hereafter created or otherwise acquired by
Mortgagor, and all liens, security interests, guaranties, remedies,
privileges, and other rights pertaining thereto, and all rights and
remedies of any kind forming the subject matter thereof, as well as all
records and data relating to any of the foregoing or to the Vessel, whether
in the form of a writing, photograph, microfilm, microfiche, or electronic
media, together with all of Mortgagor's right, title, and interest in and
to all programming and software required to utilize, create, maintain, and
process any such records or data on electronic media.
REPRESENTATIONS AND WARRANTIES CONCERNING RIGHTS. Mortgagor represents,
warrants, and covenants to Mortgagee as follows with respect to the aforesaid
Rights:
Specific Representations and Warranties. (a) Mortgagor is (or with respect
to future Rights, will be at the time of acquisition of the future
Right(s)) the sole lawful owner of all the aforesaid Rights; (b) Mortgagor
has the right to grant a security interest in such Rights in favor of
Mortgagee, on behalf of Lenders; (c) Mortgagor has not made any previous
assignments or pledges or otherwise encumbered any of Mortgagor's Rights;
(d) to the extent applicable, all of Mortgagor's Rights that consist of or
give rise to obligations of third parties, represent and/or will at all
times continue to represent bona fide obligations of the obligor
thereunder, free of any offset, compensation, deduction, or counterclaim;
and (e) the security interest granted hereunder as affecting Mortgagor's
Rights is binding upon Mortgagor, as well as Mortgagor's successors,
representatives, and assigns, and is legally enforceable in accordance with
the terms and conditions of this Ship Mortgage.
Additional Obligations of Mortgagor with Regard to the Rights. Mortgagor
additionally agrees (a) so long as this Ship Mortgage remains in effect,
Mortgagor will not, without the prior written consent of Mortgagee, sell,
transfer, assign, pledge, or grant, or create or permit to exist any lien
or security interest in or against any of Mortgagor's Rights, in favor of
any person other than Mortgagee; (b) Mortgagor shall not, without the prior
written consent of Mortgagee, compromise, settle, adjust, or extend payment
under or with regard to any of Mortgagor's Rights; and (c) Mortgagor will
keep proper books
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and records with regard to Mortgagor's business activities and Rights, in
accordance with generally accepted accounting principles, applied on a
consistent basis throughout, which books and records shall at all
reasonable times be open to inspection and copying by Mortgagee or its
designated agents. Mortgagee also shall have the right to inspect
Mortgagor's books and records and to discuss Mortgagor's affairs and
finances with Mortgagor's officers and representatives, at such reasonable
times as Mortgagee may designate.
Notice to Obligors. Upon request by Mortgagee, Mortgagor immediately will
notify individual obligors under Mortgagor's Rights, advising such obligors
of the fact that their respective agreements and/or obligations have been
assigned and pledged to Mortgagee. In the event that Mortgagor should fail
to provide such notices for any reason upon request by Mortgagee, Mortgagor
agrees that Mortgagee may forward appropriate notices to such obligors,
either in Mortgagee's name or the name of Mortgagor. Mortgagee or its
agents also may periodically contact individual obligors to verify the
amounts then owing under such obligation, to determine whether such
obligors have any offsets or counterclaims against Mortgagor, and to
inquire about such other matters as Mortgagee may deem necessary or
desirable.
Protection of Rights. Mortgagor will at all times protect and preserve all
of Mortgagor's Rights.
Mortgagee's Right to Collect Directly and Receive Proceeds and Payments
After Event of Default. If an Event of Default shall exist under this Ship
Mortgage or under the Credit Agreement, Mortgagee shall have the right, at
its sole option and election, at any time, to collect directly and receive
all proceeds and payments arising under or in any way accruing from
Mortgagor's Rights, as such amounts become due and payable. In order to
permit the foregoing, Mortgagor unconditionally agrees to deliver to
Mortgagee, immediately following demand, any and all of Mortgagor's
records, ledger sheets and all other documents in the form requested by
Mortgagee, with regard to Mortgagor's Rights and any and all proceeds and
payments applicable thereto. Mortgagee shall have the further right, where
appropriate and within Mortgagee's sole discretion, to file suit, either in
Mortgagee's own name or in the name of Mortgagor, to collect any and all
proceeds and payments that may now and/or in the future be due and owing
under and/or as a result of such Rights. Where it is necessary for
Mortgagee to attempt to collect any such proceeds or payments from the
obligors or debtors therefor, Mortgagee may compromise, settle, extend, or
renew for any period (whether or not longer than the original period) any
indebtedness thereunder or evidenced thereby, or surrender release, or
exchange all or any part of said indebtedness, without affecting the
liability of Mortgagor under this Ship Mortgage or the Guarantied
Obligations. To that end, Mortgagor hereby irrevocably
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constitutes and appoints Mortgagee as Mortgagor's attorney-in-fact, coupled
with an interest and with full power of substitution, to take any and all
such actions and any and all other actions permitted hereby, either in the
name of Mortgagor or Mortgagee.
EVENTS OF DEFAULT. Each of the following actions and/or inactions shall
constitute an Event of Default under this Ship Mortgage.
Event of Default under the Credit Agreement. The occurrence of an "Event of
Default" as defined in the Credit Agreement.
Default under the Guaranty. Mortgagor's failure to perform its obligations
under the Guaranty.
Default under this Ship Mortgage. Mortgagor's violation or failure to
comply fully with any of the terms and conditions of, or default under this
Ship Mortgage and/or any of the additional obligations incurred or assumed
by Mortgagor hereunder.
Failure to Pay Additional Advances. Mortgagor's failure to pay any
Additional Advance, together with interest thereon, as provided in this
Ship Mortgage, upon demand by Mortgagee.
False Statements. If any representation or warranty of Mortgagor made in
this Ship Mortgage or otherwise in connection with any indebtedness secured
by this Ship Mortgage proves to be incorrect or misleading in any material
respect.
MORTGAGEE'S RIGHTS UPON DEFAULT. Should one or more Events of Default occur or
exist under this Ship Mortgage, as provided above, Mortgagee shall have the
right, at its sole option, to accelerate payment in full of any and all of the
Obligations and to declare the same to be immediately due and payable, without
further notice to, or demand of Mortgagor, and without formally placing
Mortgagor in default hereof or hereunder. Mortgagee shall then have the right to
commence appropriate foreclosure proceedings against the Vessel and against the
Rights without further notice to and/or demand of Mortgagor, and without placing
Mortgagor in default hereof or hereunder. In addition, Mortgagee shall have the
right, at its sole and exclusive option and discretion, to take any one or more
of the following actions to the full extent permitted by applicable law:
(a) Exercise all the rights and remedies in foreclosure and/or as
otherwise given to mortgagees generally by laws of the United States
of America or other applicable provisions of law, including without
limitation the laws of any jurisdiction in which the Vessel and other
Collateral may then be found;
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(b) Take and enter into possession of the Vessel at any time wherever
the same may be located, without legal process and without being
responsible for any loss or damage to Mortgagor or any other third
party. Mortgagor and all other persons then in possession of the
Vessel, shall forthwith, upon demand by Mortgagee, surrender
possession of the Vessel and Mortgagee may, without being responsible
for any loss or damage to Mortgagor or any other third party, hold,
lay up, lease, charter, operate, or otherwise use the Vessel for such
time and under such terms as Mortgagee may deem to be in its best
interest and advantage. Mortgagee may further demand, collect, and
retain all proceeds, payments, and other Rights and any and all other
sums due or to become due with respect to the Vessel or with respect
to any insurance thereon, from any person whatsoever, provided that
the gross amount of all such proceeds or other amounts and sums
referred to above (after deducting any costs or expenses of Mortgagee
therefrom), received by Mortgagee, shall, promptly upon receipt, be
applied in accordance with the provisions of this Ship Mortgage;
(c) Take and enter into possession of the Vessel at any time, wherever
the same may be located, with or without legal process, and if it
seems desirable to Mortgagee and without being responsible for any
loss or damage to Mortgagor or any other third party, sell the Vessel,
whether in whole or in component parts, at public or private sale,
without survey or appraisal, at any place and at any such time as
Mortgagee may specify, and in such manner as Mortgagee may deem
advisable, free from any claim by Mortgagor in admiralty, in equity,
at law, or by statute, after first giving public notice of the time
and place of sale with a general description of the mortgaged Vessel.
(d) Exercise any rights, privileges, and remedies in foreclosure
otherwise given to Mortgagee by any other instrument securing the
Guarantied Obligations; and
(e) Any sale of the Vessel and/or its component parts made pursuant to
this Ship Mortgage, whether under the power of sale hereby granted or
in any judicial proceeding, shall operate to divest Mortgagor of all
rights, title and interest of any nature whatsoever, and shall bar
Mortgagor and Mortgagor's successors and assigns, and all other
persons claiming by, through or under them, from any and all further
rights, claims or interest in or to the Vessel and its components. The
purchaser of the Vessel shall not be bound to inquire whether notice
has been given, or whether any Event of Default has occurred, or as to
the propriety of the sale, or as to the application of the proceeds of
the sale. In any such sale, Mortgagee may bid for and may purchase the
Vessel in the form of compensation
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against Mortgagor's then outstanding indebtedness. Upon compliance
with the terms of sale, Mortgagee may hold, retain, and dispose of the
Vessel without further accountability therefor.
Attorney-In-Fact. Mortgagee is hereby irrevocably appointed Mortgagor's
attorney-in-fact, coupled with an interest and with full powers of
substitution, to execute and deliver to any purchaser of the Vessel as
provided above, and is hereby vested with full power and authority to make,
in the name and on behalf of Mortgagee, a good conveyance to the title to
the Vessel and/or its component parts sold. In the event that the sale of
the Vessel and/or component parts under any power of sale herein contained,
Mortgagor will, if and when required by Mortgagee, execute such form of
conveyance of the Vessel and its component parts as Mortgagee may direct or
approve.
Appointment of Receiver. If any legal proceeding shall be taken to enforce
any rights under the Ship Mortgage, Mortgagee shall be entitled as a matter
of right to the appointment of a receiver of the Vessel and of Mortgagor's
proceeds, payment, and other Rights. Such a receiver shall be entitled to
reasonable compensation, which additional compensation shall be secured by
this Ship Mortgage in the form of an Additional Advance as provided herein.
Additional Expenses. In the event that it should become necessary for
Mortgagee to conduct a search for the Vessel and/or to store such Vessel,
Mortgagor agrees to reimburse Mortgagee for the cost of conducting such a
search and/or storing the Vessel, which additional expenses shall also be
secured by the lien of this Ship Mortgage in the form of an Additional
Advance as provided herein.
Separate Sale of Mortgagor's Rights Following Default. Mortgagee shall have
the additional right, at its sole option, separately to sell Mortgagor's
aforesaid Rights or any part or parts thereof, at private or public sale,
at such price or prices as Mortgagee may deem best, either for cash or for
any other compensation, or on credit, or for future delivery, without the
assumption of any credit risk. The sale of Mortgagor's aforesaid Rights may
be without appraisement, the benefit of which is also expressly waived by
Mortgagor. Mortgagor expressly grants to Mortgagee the full and irrevocable
power, coupled with an interest, to sell Mortgagor's aforesaid Rights, or
any part or parts thereof, in the manner herein specified without the
intervention of any court and without any formalities other than those
provided herein. For purposes of selling Mortgagor's aforesaid Rights,
Mortgagee is hereby made and constituted the agent of Mortgagor, such
agency being coupled with an interest. [Insofar as the validity or
perfection of the security interests hereunder or the remedies hereunder
with respect to the Rights are governed by the laws of the State of
Louisiana, Mortgagor agrees as follows:
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(a) For purposes of executory process, Mortgagor acknowledges the
Obligations secured hereby, whether now existing or to arise
hereafter, and confesses judgment thereon if not paid when due. Upon
the occurrence of an Event of Default and at any time thereafter so
long as the same shall be continuing, and in addition to all other
rights and remedies granted Mortgagee hereunder, it shall be lawful
for and Mortgagor hereby authorizes Mortgagee, without making a demand
or putting Mortgagor in default, a putting in default being expressly
waived, to cause all and singular the Rights to be seized and sold
after due process of law, Mortgagor waiving the benefit of any and all
laws or parts of laws relative to the appraisement of property seized
and sold under executory process or other legal process, and
consenting that the Rights be sold without appraisement, either in its
entirety, or in lots or parcels, as Mortgagee may determine, to the
highest bidder for cash or on such other terms as Mortgagee and such
proceedings may direct. Mortgagee shall be granted all the rights and
remedies granted it hereunder as well as all of the rights and
remedies granted a secured party under Louisiana law including under
the Uniform Commercial Code then in effect in Louisiana.
(b) Mortgagor hereby waives:
(i) the benefit of appraisement provided for in Articles 2332,
2336, 2723 and 2724 of the Louisiana Code of Civil Procedure and
all other laws conferring the same;
(ii) the demand and three days notice of demand as provided in
Articles 2639 and 2721 of the Louisiana Code of Civil Procedure;
(iii) the notice of seizure provided by Articles 2293 and
2721 of the Louisiana Code of Civil Procedure; and
(iv) the three days delay provided in Articles 2331 and 2722 of
the Louisiana Code of Civil Procedure.
(c) In the event the Rights or any part thereof is seized as an
incident to an action for the recognition or enforcement of this Ship
Mortgage by executory process, ordinary process, sequestration, writ
of fieri facias, or otherwise, Mortgagor agrees that the court issuing
such order shall, if petitioned for by Mortgagee, direct the
applicable sheriff to appoint as a keeper of the Rights, Mortgagee or
any agent or representative designated by Mortgagee or any person
named by Mortgagee at the time such seizure is effected. This
designation is
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made pursuant to La. R.S. 9:5136 et seq., as the same may be amended,
and Mortgagee shall be entitled to all of the rights and benefits
accorded thereunder. The keeper shall be entitled to receive
reasonable compensation for its services which shall be paid by
Mortgagor and, upon Mortgagor's failure to pay, Mortgagee may make
Additional Advances on Mortgagor's behalf, the repayment of which
shall be secured by this Ship Mortgage. The designation of keeper made
herein shall not be deemed to require Mortgagee to provoke the
appointment of such a keeper.] [Insert bracketed language in Louisiana
Mortgage only.]
Automatic Transfer of Rights. In the event of foreclosure under this Ship
Mortgage or other transfer of title or assignment of the Vessel, or any
part or parts thereof, in lieu of payment of the Indebtedness or amounts
payable under the Guaranty, whether in whole or in part, all policies of
insurance and other Rights applicable to the foreclosed upon or transferred
Vessel shall automatically inure to the benefit of and shall pass to the
purchasers or transferees thereof, subject to the rights of the purchasers
or transferees to reject such insurance coverage or Rights at its or their
sole option and election.
Specific Performance. Mortgagee may, in addition to the foregoing remedies,
or in lieu thereof, in Mortgagee's sole discretion, commence an appropriate
action against Mortgagor seeking specific performance of any covenant
contained herein or in aid of the execution or enforcement of any power
herein granted.
Cumulative Remedies. Mortgagee's remedies as provided herein shall be
cumulative in nature, and nothing under this Ship Mortgage shall be
construed as to limit or restrict the options and remedies available to
Mortgagee following Mortgagor's default, or to in any way limit or restrict
the rights and ability of Mortgagee to proceed directly against Mortgagor
or against any guarantor, surety or endorser of the Indebtedness or to
proceed against other collateral directly or indirectly securing the
Indebtedness.
PROTECTION OF MORTGAGEE'S SECURITY RIGHTS. Mortgagor will be fully responsible
for any losses that Mortgagee may suffer as a result of anyone other than
Mortgagee asserting any rights or interest in or to the Vessel and/or
Mortgagor's Rights. Mortgagor agrees to appear in and to defend all actions or
proceedings purporting to affect Mortgagee's security interest in the Vessel
and/or Rights subject to this Ship Mortgage and any of the rights and powers
granted Mortgagee hereunder. In the event that Mortgagor fails to do what is
required of Mortgagor under this Ship Mortgage, or if any action or proceeding
is commenced naming Mortgagee as a party or affecting Mortgagee's security
interests or the rights and powers granted to Mortgagee under this Ship
Mortgage, then Mortgagee may, without releasing Mortgagor from any of
Mortgagor's obligations under this Ship Mortgage, do whatever Mortgagee believes
to be
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necessary and appropriate within its sole discretion, including making
Additional Advances on Mortgagor's behalf as provided herein, to protect the
security of this Ship Mortgage.
INDEMNIFICATION BY MORTGAGOR. Mortgagor agrees to indemnify, to defend, and to
save Mortgagee, each Lender and the officers, directors, employees, agents and
affiliates of Mortgagee and each Lender harmless from any and all claims, suits,
obligations, damages, losses, costs, expenses (including without limitation
Mortgagee's attorneys' fees), demands, liabilities, penalties, fines, and
forfeitures of any nature whatsoever that may be asserted against or incurred by
Mortgagee arising out of or in any manner occasioned by this Ship Mortgage and
the exercise of the rights and remedies granted Mortgagee hereunder, and
Mortgagor's obligations to so indemnify, defend, and hold Mortgagee harmless
shall be secured by this Ship Mortgage. The foregoing indemnity provision shall
survive the cancellation of this Ship Mortgage as to all matters arising or
accruing prior to such cancellation, and the foregoing indemnity provisions
shall survive in the event that Mortgagee elects to exercise any of its remedies
as provided under this Ship Mortgage following any Event of Default hereunder.
EXECUTION OF ADDITIONAL DOCUMENTS. Mortgagor agrees to execute all additional
documents, instruments, UCC Financing Statements, and other agreements that
Mortgagee may deem to be necessary and appropriate, within its sole discretion,
in form and substance satisfactory to Mortgagee, to keep this Ship Mortgage in
effect, to better reflect the true intent of this Ship Mortgage, and to
consummate fully all of the transactions contemplated hereby and by any other
Related Documents heretofore, now or at any time or times hereafter executed by
Mortgagor and delivered to Mortgagee.
APPLICATION OF PAYMENTS. Unless specified otherwise herein or in the Credit
Agreement, Mortgagor agrees that all payments and other sums and amounts
received by Mortgagee in respect of this Ship Mortgage, shall be applied: first,
to reimburse Mortgagee for its costs of collecting the same (including but not
limited to, reimbursement of Mortgagee's reasonable attorneys' fees); second, to
the repayment of interest on all Additional Advances that Mortgagee may have
made on Mortgagor's behalf pursuant to this Ship Mortgage; third, to the payment
of principal of all such Additional Advances; and finally, to the payment of
principal and interest on the Indebtedness then outstanding or any amount
payable under any other Obligations, which may be applied in such order and
priority as Mortgagee may determine within its sole discretion.
ADDITIONAL REPRESENTATIONS AND WARRANTIES. Mortgagor further represents,
warrants, and covenants that:
Existence and Good Standing. Mortgagor is and shall at all times hereafter
be duly organized and existing in good standing under the laws of the State
of ___________, and
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shall at all times be properly qualified to do business and in good
standing in each jurisdiction in which the nature of its business requires
such qualification. Mortgagor is a "Citizen of the United States" within
the meaning of the Ship Mortgage Laws entitled to own and operate the
Vessel under its marine document, which Mortgagor shall maintain in full
force and effect. Mortgagor shall do all things necessary to preserve and
to keep in full force and effect its existence, rights, and privileges, and
shall comply with all regulations, rules, ordinances, statutes (including
without limitation the Ship Mortgage Laws), orders, and decrees of any
governmental or quasi-governmental authority or court applicable to
Mortgagor and Mortgagor's business activities.
Requisite Authority. The execution, delivery, and performance of this Ship
Mortgage and all other agreements, instruments, and documents contemplated
hereby or relating to or the granting of the security interests provided
hereunder will not breach or constitute a default by Mortgagor under any
other agreement or document to which Mortgagor is a party or by which
Mortgagor or its property is bound.
Consents and Approvals. If notice to or the consent of approval of any
governmental body or authority or any third party, including without
limitation any other creditor of Mortgagor, is now or any time hereafter
required in connection with the execution, delivery, and performance by
Mortgagor of this Ship Mortgage, then (a) with respect to all currently
applicable requirements, such notice has been given and such consent or
approval obtained by Mortgagor prior to the execution hereof and written
evidence thereof has been concurrently herewith delivered to Mortgagee, and
(b) with respect to such requirements which shall at any time hereafter be
imposed or become applicable, such notice will be given and such consent or
approval will be obtained by Mortgagor prior to the time such failure to do
so will constitute a violation of law or result in any breach, default, or
forfeiture by Mortgagor under any contract or instrument, and written
evidence thereof will at such time be delivered to Mortgagee.
Perfection of Security Interests. Except for the recordation of this Ship
Mortgage and the filing of UCC-1 Financing Statements with regard to
perfection of the security interest in Mortgagor's Rights, no other filing
or recording is necessary or advisable in any jurisdiction or before or
with any governmental or private regulatory body in order to establish and
perfect Mortgagee's preferred lien and security interest in the Vessel or
Mortgagor's Rights with respect to Mortgagor or any of Mortgagor's present
or future creditors or any other third party whatsoever. Mortgagee may at
any time, and without further authorization from Mortgagor, file a carbon,
photographic, facsimile, or other reproduction of a UCC-1 Financing
Statement or of this Ship Mortgage for use as a financing statement.
Mortgagor will reimburse Mortgagee for all expenses for the
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perfection, termination, and the continuation of the perfection of
Mortgagee's preferred lien and security interest in the Collateral.
Financial Statements. All financial statements and information relating to
Mortgagor, which have been or may hereafter be submitted to Mortgagee, are
and will continue to be complete, true, and correct.
No Change in Financial Condition. There has been no material adverse change
in the financial condition of Mortgagor since the latest submission of any
such financial information to Mortgagee. Mortgagor shall notify Mortgagee
in writing immediately upon the occurrence of any such material adverse
change.
Additional Documents. Mortgagor agrees to deliver to Mortgagee such other
documents, including without limitation such legal opinions as Mortgagee
may reasonably request, to show Mortgagor's compliance with the foregoing
and with the other warranties and covenants of Mortgagor contained in this
Ship Mortgage and the Related Documents.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Ship Mortgage:
Amendments. This Ship Mortgage, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Ship Mortgage. No alteration of or amendment to
this Ship Mortgage shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Ship Mortgage shall be governed and construed in
accordance with the laws of the United States of America and, to the extent
applicable, of the State of ------------------.
Attorneys' Fees; Expenses. Mortgagor agrees to pay upon demand all of
Mortgagee's costs and expenses, including attorneys' fees and legal
expenses, incurred in connection with the enforcement of this Ship
Mortgage. Mortgagee may pay someone else to help enforce this Ship
Mortgage, and Mortgagor shall pay the costs and expenses of such
enforcement. Costs and expenses include Mortgagee's attorneys fees and
legal expenses whether or not there is a lawsuit, including attorneys' fees
and legal expenses for bankruptcy proceedings and including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Mortgagor also shall pay all
court costs and such additional fees as may be directed by the court.
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Caption Headings. Captioned headings of the sections of this Ship Mortgage
are for convenience purposes only and are not to be used to interpret or to
define their provisions.
Effect of Waivers. Any failure or delay on the part of Mortgagee to
exercise any of the rights and remedies granted under this Ship Mortgage or
under any other agreement or agreements by and between Mortgagor and
Mortgagee, shall not have the effect of waiving any of Mortgagee's rights
and remedies. Any partial exercise of any rights and remedies granted to
Mortgagee shall furthermore not constitute a waiver of any of Mortgagee's
other rights and remedies, it being Mortgagor's intent and agreement that
Mortgagee's rights and remedies shall be cumulative in nature. Furthermore,
any failure or delay on the part of Mortgagee at any time or times
hereafter to require strict performance by Mortgagor of any of the
provisions, warranties, terms, and conditions contained herein or in any
other agreement, document, or instrument now or hereafter executed by
Mortgagor and delivered to Mortgagee, shall not waive, affect, or diminish
the rights of Mortgagee thereafter to demand strict compliance and
performance therewith and with respect to all other provisions, warranties,
terms, and conditions contained herein or therein. None of the warranties,
conditions, provisions, and terms contained in this Ship Mortgage or any
other agreement, document, or instrument now or hereafter executed by
Mortgagor and delivered to Mortgagee, shall be deemed to have been waived
by any act or knowledge of Mortgagee, its agents, officers, or employees,
but only by an instrument in writing specifying such waiver, signed by a
duly authorized officer of Mortgagee, and delivered to Mortgagor. A waiver
or forbearance on the part of Mortgagee as to one Event of Default shall
not constitute a waiver or forbearance as to any other or subsequent
default.
Multiple Counterparts. This Ship Mortgage may be executed in any number or
counterparts, each of which shall be an original; but such counterparts
shall together constitute one and the same instrument.
Notice. Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing
and may be personally served, or sent by certified or registered United
States mail or courier service or by telex or telefacsimile and confirmed
by courier and shall be deemed to have been given when delivered in person
or by courier service, or five days after depositing it in the United
States mail with postage prepaid and properly addressed; provided that
notices to Mortgagee shall not be effective until received.
25
<PAGE>
For the purposes of this Ship Mortgage, the notice address of Mortgagor and
Mortgagee are as follows:
Mortgagor:
______________________________
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
Mortgagee:
3800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
Any party by proper written notice hereunder to the other party may change
the address to which notices shall thereafter be sent.
Severability. If any provision of this Ship Mortgage is held to be invalid,
illegal, or unenforceable by any court or constitute a waiver of the
preferred status of any rights or remedies of Mortgagee under this Ship
Mortgage, this Ship Mortgage shall be interpreted as if the invalid
provision had never been a part of this Ship Mortgage.
Sole Discretion of Mortgagee. Whenever Mortgagee's consent or approval is
required under this Ship Mortgage, the decision as to whether or not to
grant or approve shall be in
26
<PAGE>
the sole and exclusive discretion of Mortgagee, and Mortgagee's decision
shall be final and conclusive.
Successors and Assigns Bound; Joint and Several Liability. Mortgagor's
obligations and agreements under this Ship Mortgage shall be binding upon
Mortgagor's successors, administrators, and assigns. In the event that
there is more than one Mortgagor under this Ship Mortgage, all of the
agreements and obligations made and/or incurred by any Mortgagor under this
Ship Mortgage shall be on a "joint and several" basis.
Ship Mortgage Laws. For purposes of this Ship Mortgage and in order to
comply with the Ship Mortgage Laws, Mortgagor does hereby declare as
follows: (a) the total amount of the Obligations that is or may become
secured by this Ship Mortgage (excluding interest, expenses, Additional
Advances and fees) is $______________; (b) the address of Mortgagor and the
address of Mortgagee are set forth in the Notice section of this Ship
Mortgage; and (c) the interest of Mortgagor in the Vessel is the entire
100% interest, and the interest mortgaged herein covers the entire 100%
interest in the Vessel.
27
<PAGE>
IN WITNESS WHEREOF, this Ship Mortgage has been executed and delivered by
Mortgagor as of the day, month, and year first above written.
WITNESSES: Mortgagor:
SOUTHERN ILLINOIS RIVERBOAT/
CASINO CRUISES, INC.
___________________________ By: ________________________________
Name: ______________________________
___________________________ Title: _____________________________
Notice Address:
3800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-1
<PAGE>
WITNESSES: Mortgagor:
PLAYERS LAKE CHARLES, INC.
___________________________ By: _____________________________
Name: ___________________________
___________________________ Title: __________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-1
<PAGE>
WITNESSES: Mortgagor:
SHOWBOAT STAR PARTNERSHIP
___________________________ By: _____________________________
Name: ___________________________
___________________________ Title: __________________________
Notice Address:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
c/o Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
S-1
<PAGE>
WITNESSES: Mortgagee:
FIRST INTERSTATE BANK OF NEVADA,
N.A.
___________________________ By: _____________________________
Name: ___________________________
___________________________ Title: __________________________
Notice Address:
3800 Howard Hughes Parkway, Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
S-1
<PAGE>
ACKNOWLEDGMENT
STATE OF
COUNTY OF
On this _______ day of __________________, 1995, before me personally
appeared ______________________________________, to me known, being by me duly
sworn, did depose and say that he is the _________________ of
____________________, Mortgagor described in and which executed the foregoing
Ship Mortgage; that said Ship Mortgage was signed on behalf of said corporation
by authority of the Board of Directors of said corporation, that he signed his
name thereto by like authority and acknowledged the foregoing Ship Mortgage as
the free act and deed of said corporation.
____________________________________________
Notary Public
My Commission Expires: ____________________
S-2
<PAGE>
EXHIBIT 10.57
EXHIBIT XII
[FORM OF ENVIRONMENTAL INDEMNITY]
ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (this "Indemnity") is entered into as
of August 25, 1995, by PLAYERS INTERNATIONAL, INC., a Nevada corporation
("Indemnitor"), to and for the benefit of FIRST INTERSTATE BANK OF NEVADA,
N.A. ("FIB"), as administrative agent for and representative of (in such
capacity herein called "Administrative Agent"), the lenders ("Lenders") under
the Credit Agreement (defined below) and each of its successors, assigns and
participants, and its and their respective parent, subsidiary and affiliated
corporations, and the respective directors, officers, agents, attorneys, and
employees of each of the foregoing (each of which shall be referred to
hereinafter individually as an "Indemnitee" and collectively as the
"Indemnitees").
W I T N E S S E T H:
A. Lenders have agreed to make a general corporate revolving loan in
the maximum principal amount of One Hundred Twenty Million Dollars
($120,000,000) (the "Loan") to Indemnitor, pursuant to that certain Credit
Agreement (as it may be amended, supplemented or otherwise modified from time
to time, "Credit Agreement"; capitalized terms used herein without definition
shall have the meanings assigned to those terms in the Credit Agreement) of
even date herewith by and among Indemnitor, Lenders, Administrative Agent,
FIB and Bankers Trust Company, as Managing Agents, and FIB and BT Securities
Corporation, as Co-Arrangers, which Loan is to be secured by, among other
things, (i) that certain Mortgage, Fixture Filing and Security Agreement with
Assignment of Rents of even date herewith executed by SIRCC (a wholly-owned
subsidiary of Indemnitor), as mortgagor, in favor of Administrative Agent, as
mortgagee, (ii) those certain Deeds of Trust, Fixture Filings and Security
Agreements with Assignment of Rents of even date herewith executed by each of
PNEV, PMGC and PML (each a wholly-owned subsidiary of Indemnitor), as trustor
and owner, in favor of Chicago Title Insurance Company, as trustee, for the
benefit of Administrative Agent, as beneficiary and (iii) that certain Act of
Mortgage, Fixture Filing and Security Agreement with Pledge and Assignment of
Leases and Rents of even date herewith executed by PLC (a wholly-owned
subsidiary of Indemnitor), as mortgagor, in favor of Administrative Agent, as
mortgagee (each of (i), (ii) and (iii) collectively referred to as the "Real
Property Security Documents"), which Real Property Security Documents
encumber those certain parcels of real
<PAGE>
property described on Exhibits A through C attached hereto (individually, a
"Premises" and collectively, the "Premises"), and the Improvements
constructed or to be constructed thereon (which Improvements, together with
the Premises, shall hereinafter be referred to as the "Facilities").
B. It is a condition of Lenders making the Loan that this Indemnity
be executed and delivered by Indemnitor. Lenders are making the Loan in
reliance upon this Indemnity.
NOW, THEREFORE, in consideration of the foregoing and of Lenders
making the Loan, and other valuable consideration, the receipt of which is
hereby acknowledged, Indemnitor agrees as follows:
1. As used in this Indemnity, the following terms shall have the
following meanings:
"Agreed Rate" means the rate specified in subsection 2.2E of the
Credit Agreement.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et seq.), as
heretofore or hereafter amended from time to time.
"Environmental Losses" means Losses suffered or incurred by any
Indemnitee, arising out of or as a result of: (i) any Hazardous
Material Activity that occurs or is alleged to have occurred in whole
or in part on or prior to a Transfer Date (as defined below); (ii) any
violation on or prior to a Transfer Date of any Environmental Laws
relating to the Premises or to the ownership, use, occupancy or
operation thereof; (iii) any investigation, inquiry, order, hearing,
action, or other proceeding by or before any governmental agency in
connection with any Hazardous Material Activity that occurs or is
alleged to have occurred in whole or in part on or prior to a Transfer
Date; or (iv) any claim, demand or cause of action, or any action or
other proceeding, whether meritorious or not, brought or asserted
against any Indemnitee that directly or indirectly relates to, arises
from or is based on any of the matters described in clauses (i), (ii)
or (iii), or any allegation of any such matters. Environmental Losses
shall include Losses suffered or incurred by an Indemnitee after a
Transfer Date that would not have been incurred or suffered but for
any matter described in clause (i), (ii) or (iii) or any allegation of
any such matters, including, without limitation, Environmental Losses
incurred by any Indemnitee arising out of or as a result of (a) the
introduction or release of a Hazardous Material that is discovered or
released at a Premises or any portion thereof after
XII-2
<PAGE>
a Transfer Date, but that was introduced at such Premises prior to a
Transfer Date and (b) the continuing migration or release of any
Hazardous Material introduced in, on or under a Premises or
surrounding property prior to a Transfer Date.
"Hazardous Material Activity" means any actual, proposed or
threatened use, storage, holding, existence, release (including any
spilling, leaking, pumping, pouring, emitting, emptying, dumping,
disposing into the environment, and the continuing migration into or
through soil, surface water, or groundwater), emission, discharge,
generation, processing, abatement, removal, disposition, handling or
transportation to or from a Premises of any Hazardous Material from,
under, in, into or on any portion of any of the Facilities or
surrounding property, including, without limitation, the movement or
migration of any Hazardous Material from surrounding property or
groundwater in, into or onto the Facilities and any residual Hazardous
Material contamination on or under the Facilities.
"Losses" means any and all losses, liabilities, damages (whether
actual, consequential, punitive, or otherwise denominated), demands,
claims, actions, judgments, causes of action, assessments, penalties,
costs and expenses (including, without limitation, environmental
investigation, response, removal and remediation costs, reasonable
attorneys' fees and disbursements), of any and every kind or
character, foreseeable and unforeseeable, liquidated and contingent,
proximate and remote, including, without limitation, any of the
foregoing caused by the negligence of any Indemnitee.
"Transfer Date", with respect to a Premises, means the date on which
any of Lenders (or any of their affiliates) acquires fee title to such
Premises pursuant to a foreclosure of the lien of any Real Property
Security Document, or by receipt of a deed in lieu of such
foreclosure, and all redemption rights that the respective Subsidiary
of Indemnitor that owned such Premises (the "Relevant Subsidiary") may
have expired, so long as a period of ninety-one (91) days has elapsed
since the date on which fee title vests in Administrative Agent (or
its affiliate) and during such period no bankruptcy or other
insolvency proceeding is filed by or against Indemnitor or the
Relevant Subsidiary. If the Relevant Subsidiary should remain in
possession of such Premises after the Transfer Date, or if Indemnitor
or the Relevant Subsidiary should engage in any Hazardous Material
Activity on or at such Premises after the Transfer Date, the Transfer
Date shall be deemed to be the date after which Indemnitor or the
Relevant Subsidiary is no longer in possession of such Premises and
has ceased to engage in any Hazardous Material Activity on or at such
Premises.
XII-3
<PAGE>
2. Indemnitor hereby agrees to indemnify, defend, and hold harmless
Indemnitees, and each of them, from and against any and all Environmental
Losses.
3. (A) If any Indemnitee notifies Indemnitor of any claim or notice
of the commencement of any action, administrative or legal proceeding, or
investigation as to which the indemnity provided for in Paragraph 2 applies,
Indemnitor shall assume on behalf of such Indemnitee and conduct with due
diligence and in good faith the investigation and defense thereof and the
response thereto with counsel reasonably satisfactory to such Indemnitee;
provided, however, that such Indemnitee shall have the right to be
represented by advisory counsel of its own selection and at its own expense;
and provided, further, that if any such claim, action, proceeding, or
investigation involves both Indemnitor and an Indemnitee, and such Indemnitee
shall have reasonably concluded that there may be legal defenses available to
it that are different from, additional to, or inconsistent with those
available to Indemnitor ("Separate Defenses"), then the Indemnitee shall have
the right to select separate counsel to participate in the investigation and
defense of and response to such claim, action, proceeding or investigation on
its own behalf at Indemnitor's expense with respect to the Separate Defenses.
(B) If any claim, action, proceeding, or investigation arises as to
which the indemnity provided for in Paragraph 2 applies, and Indemnitor fails
to assume promptly (and in any event within ten (10) days after being
notified of the claim, action, proceeding, or investigation) the defense of
an Indemnitee, then such Indemnitee may contest and settle the claim, action,
proceeding, or investigation at Indemnitor's expense using counsel selected
by such Indemnitee; provided, however, that after any such failure by
Indemnitor no such contest need be made by such Indemnitee and settlement or
full payment of any claim may be made by such Indemnitee without Indemnitor's
consent and without releasing Indemnitor from any obligations to such
Indemnitee under Paragraph 2.
4. This Indemnity is given solely to protect Lenders and the other
Indemnitees against Environmental Losses, and not as additional security for,
or as a means of repayment of, the Loan. The obligations of Indemnitor under
this Indemnity are independent of, and shall not be measured or affected by
(i) any amounts at any time owing under the Loan or secured by the Real
Property Security Documents, (ii) the sufficiency or insufficiency of any
collateral (including, without limitation, the Facilities) given to Lenders
to secure repayment of the Loan, (iii) the consideration given by Lenders or
any other party in order to acquire the Premises or the Facilities, or any
portion thereof, (iv) the modification, expiration, termination or release of
any Real Property Security Document or any other document or instrument
relating to the Loan, or (v) the discharge or repayment in full of the Loan
(including, without
XII-4
<PAGE>
limitation, by amounts paid or credit bid at a foreclosure sale or by
discharge in connection with a deed in lieu of foreclosure).
5. Indemnitor's obligations hereunder shall survive the sale or
other transfer of a Premises prior to the Transfer Date related to such
Premises. The rights of each Indemnitee under this Indemnity shall be in
addition to any other rights and remedies of such Indemnitee against
Indemnitor under any other document or instrument now or hereafter executed
by Indemnitor or any Relevant Subsidiary, or at law or in equity (including,
without limitation, any right of reimbursement or contribution pursuant to
CERCLA), and shall not in any way be deemed a waiver of any of such rights.
Indemnitor agrees that it shall have no right of contribution (including,
without limitation, any right of contribution under CERCLA) or subro-
gation against any other person or entity, unless and until all obligations
of Indemnitor have been satisfied.
6. All obligations of Indemnitor hereunder shall be payable on
demand, and any amount due and payable hereunder to any Indemnitee by
Indemnitor that is not paid within thirty (30) days after written demand
therefor from an Indemnitee with an explanation of the amounts demanded shall
bear interest from the date of such demand at the Agreed Rate.
7. Indemnitor agrees to pay to each Indemnitee all reasonable costs
and expenses (including, without limitation, Indemnitee's reasonable
attorneys' fees) incurred by such Indemnitee in connection with Environmental
Losses covered by this Indemnity or the enforcement hereof.
8. If any of the provisions of the Illinois Responsible Property
Transfer Act, 765 ILCS 90/1 et seq. ("IRPTA") are now or hereafter become
applicable to the Illinois Premises, Indemnitor shall comply with such
provisions.
9. This Indemnity shall be binding upon Indemnitor, its heirs,
representatives, administrators, executors, successors and assigns and shall
inure to the benefit of and shall be enforceable by each Indemnitee, its
successors, endorsees and assigns (including, without limitation, any entity
to which Lenders assigns or sells all or any portion of its interest in the
Loan).
10. THIS INDEMNITY SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
11. Every provision of this Indemnity is intended to be severable.
If any provision of this Indemnity or the application of any provision hereof
to any party or circumstance is declared to be illegal, invalid or
unenforceable for any reason
XII-5
<PAGE>
whatsoever by a court of competent jurisdiction, such invalidity shall not
affect the balance of the terms and provisions hereof or the application of
the provision in question to any other party or circumstance, all of which
shall continue in full force and effect.
12. No failure or delay on the part of any Indemnitee to exercise
any power, right or privilege under this Indemnity shall impair any such
power, right or privilege, or be construed to be a waiver of any default or
an acquiescence therein, nor shall any single or partial exercise of such
power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. No provision of this Indemnity may be
changed, waived, discharged or terminated except by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge
or termination is sought.
13. All notices, requests and demands to be made hereunder to the
parties hereto shall be in writing (at the addresses set forth below) and
shall be given by any of the following means: (a) personal service; (b)
electronic communication, whether by telex, telegram or telecopying (if
confirmed in writing sent by registered or certified, first class mail,
return receipt requested); or (c) registered or certified, first class mail,
return receipt requested. Such addresses may be changed by notice to the
other parties given in the same manner as provided above. Any notice, demand
or request sent pursuant to either subsection (a) or (b) hereof shall be
deemed received upon such personal service or upon dispatch by electronic
means, and, if sent pursuant to subsection (c) shall be deemed received five
(5) days following deposit in the mail.
To Administrative Agent: First Interstate Bank of Nevada, N.A.
3800 Howard Hughes Parkway
Suite 400
Las Vegas, Nevada 89109
Attention: Steve Byrne
To Indemnitor: 3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: President and Chief Financial
Officer
With copies to:
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: Chief Financial Officer
XII-6
<PAGE>
Players International, Inc.
3900 Paradise Road, Suite 135
Las Vegas, Nevada 89109
Attention: General Counsel
14. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST INDEMNITOR ARISING OUT
OF OR RELATING TO THIS INDEMNITY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT
OF COMPETENT JURISDICTION IN THE STATE OF NEVADA, AND BY EXECUTION AND
DELIVERY OF THIS INDEMNITY, INDEMNITOR ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS
INDEMNITY. Indemnitor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail,
return receipt requested, to Indemnitor at its address as provided below,
such service being hereby acknowledged by Indemnitor to be sufficient for
personal jurisdiction in any action against Indemnitor in any such court and
to be otherwise effective and binding service in every respect. Nothing
herein shall affect the right to serve process in any other manner permitted
by law or shall limit the right of Administrative Agent or any Lender to
bring proceedings against Indemnitor in the courts of any other jurisdiction.
15. INDEMNITOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF,
ADMINISTRATIVE AGENT EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
INDEMNITY. The scope of this waiver is intended to be all encompassing of any
and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Indemnitor and, by its acceptance of the benefits hereof,
Administrative Agent, each (i) acknowledges that this waiver is a material
inducement for Indemnitor and Administrative Agent to enter into a business
relationship, that Indemnitor and Administrative Agent have already relied on
this waiver in entering into this Indemnity or accepting the benefits
thereof, as the case may be, and that each will continue to rely on this
waiver in their related future dealings and (ii) further warrants and
represents that each has reviewed this waiver with its legal counsel, and
that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY
TO ANY
XII-7
<PAGE>
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
INDEMNITY. In the event of litigation, this Indemnity may be filed as a
written consent to a trial by the court.
16. This Indemnity may be executed in counterparts each of which
shall be deemed an original and all of which shall constitute one and the
same Indemnity with the same effect as if all parties had signed the same
signature page. Any signature page of this Indemnity may be detached from any
other counterpart of this Indemnity and reattached to any other counterpart
of this Indemnity identical in form hereto but having attached to it one or
more additional signature pages.
XII-8
<PAGE>
IN WITNESS WHEREOF, Indemnitor has executed this Indemnity as of the day
and year first written above.
Indemnitor: PLAYERS INTERNATIONAL, INC.
By: ___________________________
Title: ___________________________
S-1
<PAGE>
EXHIBIT A
[Description of Illinois Premises]
A-1
<PAGE>
EXHIBIT B
[Description of Louisiana Premises]
A-2
<PAGE>
EXHIBIT C
[Description of Nevada Premises]
A-3
<PAGE>
EXHIBIT 10.58
MASTER VESSEL AND COLLATERAL TRUST AGREEMENT
Dated as of August __, 1995
Between
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Administrative Agent
and
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Trustee.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
GRANTING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II - DECLARATION OF TRUST. . . . . . . . . . . . . . . . . . . .3
ARTICLE III - TRANSFER OF PROPERTY TO TRUST . . . . . . . . . . . . . . .4
ARTICLE IV - DUTIES OF THE TRUSTEE . . . . . . . . . . . . . . . . . . .5
ARTICLE V - CONCERNING THE TRUSTEE. . . . . . . . . . . . . . . . . . .6
ARTICLE VI - INDEMNIFICATION OF THE TRUSTEE BY THE
BORROWER. . . . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE VII - TRANSFER OF THE ADMINISTRATIVE AGENT'S
INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE VIII - PROCEDURE FOR ENFORCEMENT . . . . . . . . . . . . . . . . .9
ARTICLE IX - PAYMENTS TO THE ADMINISTRATIVE AGENT AND
DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE X - COMPENSATION OF THE TRUSTEE . . . . . . . . . . . . . . . 11
ARTICLE XI - REMOVAL, DISQUALIFICATION OR RESIGNATION
OF THE TRUSTEE; SUCCESSOR TRUSTEES. . . . . . . . . . . . 12
ARTICLE XII - TERMINATION AND DISCHARGE OF TRUST. . . . . . . . . . . . 14
ARTICLE XIII - AMENDMENT OF TRUST AGREEMENT . . . . . . . . . . . . 14
ARTICLE XIV - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 15
-i-
<PAGE>
SCHEDULE A - DESCRIPTION OF SHIPS
EXHIBIT A - TRUST RECEIPT
-ii-
<PAGE>
MASTER VESSEL AND COLLATERAL TRUST AGREEMENT
THIS MASTER VESSEL AND COLLATERAL TRUST AGREEMENT (this "Trust
Agreement") is made and entered into as of August __, 1995 between (A) First
Interstate Bank of Nevada, N.A., as administrative agent (the "Administrative
Agent") on behalf of itself and the Lenders (as defined below), and (B) First
Interstate Bank of Nevada, N.A., as trustee (the "Trustee"). Capitalized terms
used herein and not otherwise defined herein shall have the same meanings
ascribed to them as set forth in the Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS,
(A) Players International, Inc. (the "Borrower"), the financial
institutions party thereto from time to time (the "Lenders") and First
Interstate Bank of Nevada, N.A., individually and as Administrative Agent, a
Managing Agent and a Co-Arranger, Bankers Trust Company, individually and as a
Managing Agent, and BT Securities Corporation, as a Co-Arranger, have entered
into a Credit Agreement, dated as of August , 1995 (as amended, modified or
supplemented from time to time, the "Credit Agreement"), providing for the
making of the Loans and the issuance of, and participation in, Letters of Credit
as contemplated therein (the Lenders and the Administrative Agent are herein
called the "Secured Creditors");
(B) It is a condition precedent to the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement that the Borrower
and its Subsidiaries have entered into certain Collateral Documents to secure
the obligations of the Borrower under the Loan Documents;
(C) Pursuant to the Credit Agreement the Borrower (i) shall cause to
be granted to the Trustee, solely for the benefit of the Administrative Agent,
as agent for itself and the Lenders, a mortgage on each Ship described in the
Credit Agreement pursuant to the Ship Mortgages; and
(D) The Administrative Agent and the other Secured Creditors desire
the Trustee to hold the Trust Estate pursuant to the provisions of this Trust
Agreement, and the Trustee is willing to hold the Trust Estate in accordance
with the provisions hereof, all as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises, and subject
to the terms and conditions provided herein, the parties hereto agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. For all purposes of this Trust Agreement, the following
terms shall have the meanings specified below and such meanings are equally
applicable both to the singular and plural forms of the terms defined where
appropriate:
(a) "Actual Knowledge" shall mean actual knowledge of of First
Interstate Bank of Nevada, N.A., as Trustee in who, in the normal performance of
his or her operational duties, would have knowledge of such matters and the
requirements with respect thereto.
(b) "Enforcement" shall mean the exercise of any remedy provided for
under a Ship Security Instrument or otherwise available by applicable law upon
the occurrence of an event of default under the Mortgages or the Credit
Agreement.
(c) "MARAD" shall mean the United States Maritime Administration, and
any predecessor or successor agency or the Secretary of Transportation of the
United States of America, acting by and through the Maritime Administrator, as
the context of the United States Maritime Laws may require.
(d) "Mortgages" shall mean each Ship Mortgage executed or to be
executed in favor of the Trustee pursuant to the Credit Agreement, as amended,
supplemented or modified from time to time.
(e) "Ship" shall mean any, and "Ships" shall mean all, of the ships on
which a Mortgage may be granted from time to time in favor of the Trustee
pursuant to the Credit Agreement, as more particularly described in Schedule A
attached hereto.
(f) "Ship Security Instrument" shall refer to any preferred ship
mortgage made pursuant to Chapter 313 of Title 46 of the United States Code, as
amended, the Mortgages, or other agreement or document creating any security
interest or any other interest in a United States Ship.
(g) "Trust Agreement" shall mean this Agreement as amended,
supplemented or otherwise modified from time to time, together with all Exhibits
hereto.
(h) "Trust Estate" shall mean, and consist of, (i) the Ship Security
Instruments and (ii) the Ships, charter earnings, insurance proceeds, funds and
other property which the
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Trustee acquires in its capacity as Trustee or Mortgagee in connection with the
Mortgages, either of the Ships, charter earnings or insurance proceeds.
(i) "Trust Receipt" shall mean a receipt, substantially in the form of
Exhibit A hereto, given by the Trustee to the Administrative Agent upon receipt
of any Ship Security Instrument.
(j) "Trustee" shall have the meaning given that term in the Preamble,
and any successor Trustee.
(k) "United States Maritime Laws" shall mean all provisions of United
States law restricting or pertaining to the operation of a Ship or to the
transfer to persons not citizens of the United States of any interest of
whatsoever nature in, or of beneficial control of, Ships, including, but not
limited to, the Shipping Act, 1916, as amended (46 U.S.C. 801 et seq.) and
particularly Sections 2, 9 and 37 thereof (46 U.S.C. 802, 808 and 835) and
Chapters 121, 301 and 313 of Title 46 of the United States Code, as amended and
pertinent regulations of the United States Coast Guard and MARAD.
(l) "United States Ship" shall mean any Ship, which without violating
the United States Maritime Laws, cannot be owned by, mortgaged to, or operated
by any person who is not a citizen of the United States within the meaning of
Section 2 of the Shipping Act, 1916 as amended, without the approval of MARAD.
ARTICLE II
DECLARATION OF TRUST
Section 2.01. The Trustee hereby declares that it will hold the Trust
Estate upon the trust hereinafter set forth, subject to, and upon the terms and
conditions of, this Trust Agreement, for the sole use and benefit of the
Administrative Agent and the Secured Creditors.
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ARTICLE III
TRANSFER OF PROPERTY TO TRUST
Section 3.01. The Administrative Agent hereby authorizes the Trustee
and the Trustee hereby agrees to accept as a part of the Trust Estate all of the
Ship Security Instruments. At any time hereafter and from time to time, the
Trustee shall execute or enter into, as the case may be, as Trustee, the Ship
Security Instruments upon written direction of the Administrative Agent. The
Trustee shall issue to the Administrative Agent a Trust Receipt for each of the
Ship Security Instruments upon the execution of such Ship Security Instrument.
Section 3.02. Upon satisfaction or discharge of the Obligations
secured in accordance with the Credit Agreement or by the security interest
provided for in any of the Ship Security Instruments, the Administrative Agent
shall so notify the Trustee. The Trustee shall advise the parties, upon request
of the Administrative Agent, whether or not there has been a satisfaction or
discharge of such Obligations, execute and deliver to the Administrative Agent,
such satisfaction or discharge of such Mortgages as the Administrative Agent may
request. Upon satisfaction or discharge of the lien provided for in any of the
Ship Security Instruments, the Administrative Agent shall return the respective
Trust Receipt to the Trustee for cancellation and thereafter the Trustee shall
return the respective Ship Security Instrument to the Administrative Agent, at
which time the Ship Security Instrument shall be deemed withdrawn from the Trust
Estate.
Section 3.03. The Administrative Agent shall deliver to the Trustee on
request, a certificate setting forth the principal amount then outstanding under
the Credit Agreement.
ARTICLE IV
DUTIES OF THE TRUSTEE
Section 4.01. The Trustee shall take such action with respect to any
event of default under the Mortgages as shall be specified in any notice of such
default or enforcement event and written instructions of the Administrative
Agent, but the Trustee shall not be required to take any action not expressly
set forth in such written instructions. If the approval of any governmental
agency or body is required in order to carry out the instructions of the
Administrative Agent, including, without limitation, the approval of MARAD under
applicable United States Maritime Laws, the Trustee shall not be required to
carry out such instructions unless such approval shall have been obtained.
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Section 4.02. The Trustee shall not have any duty or obligation to
manage, operate, control, use, sell, make investments in respect of, dispose of
or otherwise deal with the Ships, any Ship Security Instrument or any other part
of the Trust Estate or to otherwise take or refrain from taking any action
under, or in connection with the Ship Security Instruments, except as expressly
provided by the terms of this Trust Agreement or as expressly provided in
written instructions received from the Administrative Agent. Except for the
accounting for monies or things actually received by it as Trustee hereunder the
Trustee shall have no duties as to any monies, instruments or securities. The
Trustee shall not be obligated or required, and this Trust Agreement shall not
be construed so as to obligate or require the Trustee, to expend or risk its own
funds or incur any financial responsibility in the performance of any of its
duties under this Trust Agreement, to file any reports or other matters with any
governmental authority relating to the matters hereof other than those required
to be filed by the Trustee as a depository institution, or to follow any written
instructions received from any Lender or any Person other than the
Administrative Agent.
Section 4.03. (a) In the event the Trustee shall be unable to act as
trustee under any applicable governmental rule or regulation, the sole
obligation of the Trustee hereunder shall be to advise the Administrative Agent
promptly of any such fact of which it has Actual Knowledge and to resign under
this Trust Agreement, if requested by the Administrative Agent. The Trustee
shall have no liability to the Administrative Agent, the Secured Creditors, the
Borrower, or any other Person by reason of its failure to be or remain qualified
to act under applicable law as trustee, except that the Trustee agrees to pay
its own costs and expenses, including, without limitation, legal counsel fees
and expenses, in connection with any resignation under this Section 4.03.
(b) The Trustee shall use its best efforts to maintain itself as an
approved trustee by MARAD and properly comply with all regulations of MARAD in
connection therewith including, without limitation, making such reports, filings
and accountings as may be required. If the Trustee learns of the occurrence of
events which will or could, in its opinion, result or have resulted in its
disqualification, the Trustee shall promptly so advise the Administrative Agent.
Section 4.04. The Trustee shall furnish promptly to the Administrative
Agent each communication received by it or a copy thereof relating to any Ship
Security Instrument, but shall have no duty to act upon or reply to any such
communication in the absence of written instructions from the Administrative
Agent.
Section 4.05. The Trustee shall keep custody of any cover notes,
insurance policies, brokers' opinion letters, or other documents delivered to it
from time to time as may be required by any Ship Security Instrument and shall
promptly give copies thereof to the Administrative Agent. The Trustee shall have
no duty to advise the Administrative Agent of its failure to receive in timely
fashion any such insurance document and the
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responsibility of determining if any insurance document does not comply with the
requirements of the Ship Security Instruments shall be solely that of the
Administrative Agent.
ARTICLE V
CONCERNING THE TRUSTEE
Section 5.01. The Trustee accepts the trust hereby created and agrees
to perform such trust but only upon the terms of this Trust Agreement. The
Trustee shall not be answerable or accountable to the Administrative Agent, the
Secured Creditors, or any other Person under any circumstances, except for its
own willful misconduct or gross negligence. The Trustee agrees that it shall not
operate any Ship under a Ship Security Instrument without the prior consent of
MARAD in any case where such consent is required by law and that it shall not
sell any Ship under a Ship Security Instrument to a person who is not a citizen
of the United States within the meaning of Section 2 of the Shipping Act, 1916,
as amended, without the prior written consent of MARAD in any case where such
consent is required by law. The Administrative Agent shall be responsible for
furnishing the Trustee with satisfactory evidence of MARAD approval or of
citizenship in such cases.
Section 5.02. Except in accordance with written instructions furnished
pursuant to Section 4.01 hereof, and without limiting the generality of Section
4.02 hereof, the Trustee shall have no duty (a) to record, file or deposit any
Ship Security Instrument or any amendments thereto, (b) to effect or maintain
any insurance on any Ship, (c) to pay or discharge any tax, assessment or other
governmental charge or any lien or encumbrance of any kind owing with respect
to, assessed or levied against, any part of the Trust Estate, (d) to confirm or
verify any notices or reports of the Borrower or any other Person other than to
furnish the Administrative Agent with a copy of each notice or report furnished
the Trustee by the Borrower or any other Person pursuant to the Ship Security
Instrument or (e) to inspect any Ship at any time or ascertain or inquire as to
the performance or observance of the covenants under any Ship Security
Instrument or whether any default shall have occurred thereunder.
Section 5.03. THE TRUSTEE MAKES NO REPRESENTATION OR WARRANTY AS TO:
(a) THE VALIDITY, LEGALITY, ENFORCEABILITY OR PRIORITY OF ANY SHIP SECURITY
INSTRUMENT, THE INSURANCE ASSIGNMENTS OR AS TO THE CORRECTNESS OF ANY STATEMENT
CONTAINED IN ANY THEREOF, OR AS TO ITS TITLE THERETO; (b) THE TITLE,
DOCUMENTATION, SEAWORTHINESS, VALUE, CONDITION OR FITNESS FOR USE OF ANY OF THE
SHIPS, OR ANY OTHER REPRESENTATION OR WARRANTY
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WITH RESPECT THERETO; OR (c) THE VALIDITY, LEGALITY OR ENFORCEABILITY OF THIS
TRUST AGREEMENT OR ANY DOCUMENT HEREBY CONTEMPLATED, except that the Trustee
represents and warrants that (x) this Trust Agreement and any other instrument
executed by the Trustee have been or will be executed by an officer duly
authorized to execute them on its behalf, and (y) the Trustee is an approved
Trustee within the meaning of Chapter 313 of Title 46 of the United States Code,
as amended, qualified to hold preferred mortgages and other security interests
in vessels of the United States for the benefit of persons such as the
Administrative Agent and the Lenders.
.
Section 5.04. No monies received by the Trustee hereunder need be
segregated in any manner except to the extent required hereunder or by law and
the Trustee shall not be liable for any interest thereon.
Section 5.05. The Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it in
good faith to be genuine and believed by it in good faith to be signed by the
proper party or parties. The Trustee may accept a copy of a resolution of the
board of directors of any corporate party, certified by the secretary, an
assistant secretary or any other officer of said party, as duly adopted and in
full force and effect, as conclusive evidence that such resolution has been
adopted by said board and is in full force and effect. As to any fact or matter,
the manner of ascertainment of which is not specifically described herein, the
Trustee may for all purposes hereof rely in good faith on a certificate, signed
by or on behalf of the party executing such certificate, as to such fact or
matter, and such certificate shall constitute full protection to the Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
In the administration of the Trust Estate, the Trustee may perform its powers
and duties hereunder directly or through other agents or attorneys and may, at
the cost and expense of the Borrower, seek advice of counsel (including counsel
for the Administrative Agent or the Borrower), accountants and other skilled
persons to be selected and employed by it, and the Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the actions, advice or opinion of any such counsel, agents, accountants or other
skilled persons.
Section 5.06. In accepting the trust hereby created, the Trustee acts
solely as trustee hereunder and not in its individual capacity, and the Trustee
shall have no liability hereunder or under any Ship Security Instrument, except
as expressly set forth herein or therein.
Section 5.07. The Trustee shall be entitled to receive reasonable
compensation from the Borrower, on behalf of the Administrative Agent, for its
services hereunder, as provided in Section 10.01 below.
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ARTICLE VI
INDEMNIFICATION OF THE TRUSTEE BY THE BORROWER
Section 6.01. The Borrower shall, whether or not any of the
transactions contemplated hereby shall be consummated, assume liability for, and
indemnify, protect, save and keep harmless the Trustee and its respective
successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (such term "taxes"
or the term "tax" as used in this Section 6.01 shall include, without
limitation, all taxes specifically related to this Trust Agreement and the Trust
Estate created hereby excluding, however, any income, franchise or similar taxes
on fees or other compensation received by the Trustee in its capacity as
Trustee), claims, actions, suits, costs, expenses or disbursements (including,
without limitation, legal fees and expenses) of any kind and nature whatsoever
which may be imposed on or incurred by or asserted against the Trustee, its
respective successors, assigns, agents or servants, by whomsoever asserted, in
any way specifically relating to or arising out of this Trust Agreement or a
Ship Security Instrument, or the performance or enforcement of any of the terms
thereof, or in any way relating to or arising out of the financing, refinancing,
mortgaging, manufacture, purchase, acceptance, rejection, ownership, delivery,
lease, possession, use, operation, condition, sale, return or other disposition
of either of the Ships (including, without limitation, latent and other defects,
whether or not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Estate, or to the action or inaction of the Trustee hereunder, except
only in the case of willful misconduct or gross negligence by the Trustee. The
indemnities contained in this Section 6.01 shall survive the termination of this
Trust Agreement.
Section 6.02. The indemnity provided in Section 6.01 shall not apply
to any costs, expenses or other liabilities incurred by the Trustee in the
preservation of its status as an approved trustee by MARAD or any other status
which it holds at the date of entering into this Trust Agreement.
ARTICLE VII
TRANSFER OF THE ADMINISTRATIVE AGENT'S INTEREST
Section 7.01. None of the Administrative Agent or the Secured
Creditors shall assign, convey or otherwise transfer any of its right, title or
interest in and to this Trust Agreement, the Trust Estate or any part thereof
except (i) with respect to the Administrative Agent and the Secured Creditors in
compliance with the terms of the Credit Agreement; or
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(ii) with the prior written consent of the Trustee. In connection with any
conveyance or transfer described above, the Trustee shall execute and deliver
such instruments or do such acts as the Administrative Agent may require, at the
cost and expense of the Borrower, in order to consummate such assignment,
conveyance or transfer.
ARTICLE VIII
PROCEDURE FOR ENFORCEMENT
Section 8.01. Upon receipt of a notice and instructions provided for
in Section 4.01 hereof, the Trustee shall proceed to exercise such rights and
remedies available to it under the applicable Ship Security Instruments as the
Administrative Agent shall, from time to time, instruct it to exercise. The
Administrative Agent acknowledges that it cannot require the Trustee to operate
a Ship or to sell any Ship to a person who is not a citizen of the United States
within the meaning of Section 2 of the Shipping Act, 1916, as amended, without
the prior approval of MARAD in any case where such consent is required by law or
to do any other act which is not lawful for mortgagees of United States Ships.
Section 8.02. If so instructed by the Administrative Agent, the
Trustee shall, in connection with any Enforcement, employ attorneys, experts,
consultants, managers, security guards, surveyors, insurance brokers, inspectors
or any other persons or entities deemed desirable by the Administrative Agent.
Section 8.03. If so instructed by the Administrative Agent, the
Trustee shall file such suits or actions or bring such proceedings before any
court or agency in connection with the enforcement of any Ship Security
Instruments in its own name in its capacity as Trustee, or shall join in any
such suits, actions or proceedings as co-plaintiff with the Administrative Agent
as the Administrative Agent deems necessary or desirable. The conduct of such
suits, actions or proceedings shall be in accordance with instructions from the
Administrative Agent.
Section 8.04. If so instructed by the Administrative Agent, the
Trustee shall, in connection with any Enforcement, provided the same be lawful,
do any or all of the following:
(a) Operate any or all of the Ships under the applicable Ship
Security Instrument;
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(b) Conduct a private sale of any Ship or other collateral covered by
a Ship Security Instrument and execute and deliver an appropriate bill of
sale transferring title to any Ship or Ships to a purchaser thereof at such
a private sale;
(c) Bid upon or purchase any Ship or Ships at any judicial sale or
other auction, provided that the Administrative Agent shall have made funds
available in advance to the Trustee for this purpose; and
(d) Operate any or all of the Ships acquired by it as a result of an
Enforcement.
Section 8.05. Upon the acquisition of title to the Ship or Ships, as
contemplated by Section 8.04 above, the Trustee shall have no obligation to
protect, conserve or deal with any Ship, except as so specifically instructed by
the Administrative Agent in writing.
Section 8.06. The Borrower on behalf of the Administrative Agent shall
pay all costs and expenses incurred in connection with any Enforcement, and the
Trustee may, in its discretion, require that the Borrower make funds available
to the Trustee to satisfy any such cost or expense prior to the time of
incurring such cost or expense.
ARTICLE IX
PAYMENTS TO THE ADMINISTRATIVE AGENT AND DISTRIBUTIONS
Section 9.01. The Trustee shall pay, pursuant to Section 9.02 hereof,
to the Administrative Agent promptly upon receipt thereof, all sums collected
under any Ship Security Instrument. Such payments shall be made in immediately
available funds to such place as the Administrative Agent from time to time may
direct the Trustee.
Section 9.02. Save as expressly stated to the contrary in any of the
Loan Documents to which the Trustee is a party or in any written instructions to
the Trustee from the Administrative Agent, to the extent that the Trustee
receives or recovers monies pursuant to the Loan Documents to be applied in
discharge of the Obligations, such monies (after deduction of the costs,
expenses and fees of the Trustee or any receiver, attorney, agent, delegate or
other Person appointed by the Trustee) shall be paid by the Trustee to the
Administrative Agent for application by the Administrative Agent in accordance
with the provisions of the relevant Ship Security Instrument.
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Section 9.03. The Trustee shall not be required to segregate its
collections or sums received in payment from its other funds, except as
otherwise by law required or required hereunder, but shall, upon request of the
Administrative Agent furnish to the Administrative Agent, a statement and
accounting of any monies, or funds or other things of value (other than the Ship
Security Instruments) held by it as Trustee for the benefit of the
Administrative Agent. The form of such report shall be as mutually agreed by the
Trustee and the Administrative Agent.
Section 9.04. In the event the Administrative Agent is in default in
respect of any payment to the Trustee of fees or any other sums owed by the
Administrative Agent, the Trustee shall be allowed to deduct any such fees or
amounts from the Trust Estate before being required to make any payment thereof
to the Administrative Agent. In the event any such deduction is made, the
Trustee shall promptly furnish the Administrative Agent a statement giving
complete details of any such deduction and the basis upon which such deduction
is made.
ARTICLE X
COMPENSATION OF THE TRUSTEE
Section 10.01. The Trustee shall receive no compensation for its
services hereunder other than those costs, expenses and liabilities for which
the Trustee is entitled to be reimbursed or indemnified by the Borrower as set
forth in this Trust Agreement.
ARTICLE XI
REMOVAL, DISQUALIFICATION OR RESIGNATION OF
THE TRUSTEE; SUCCESSOR TRUSTEES
Section 11.01. (a) In its discretion, the Administrative Agent may
remove the Trustee at any time, without cause, by directing a written notice to
the Trustee of such removal. No removal shall be effective unless a qualified
successor trustee, described in Section 11.02(e) below, shall have been
appointed on or prior to the effective date of such removal in accordance with
the provisions of this Trust Agreement.
(b) The Trustee may resign at any time without cause by giving at
least thirty (30) days' prior written notice to the Administrative Agent, such
resignation to be effective,
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subject to the provisions of the last sentence of this paragraph, on the date
specified in such notice. If the Administrative Agent shall not have appointed a
successor trustee within thirty (30) days after such notice of resignation, the
Trustee may apply to any court of competent jurisdiction to appoint a qualified
successor trustee to act until such time, if any, as a successor trustee shall
have been appointed by the Administrative Agent. Any successor trustee so
appointed by such court shall immediately and without further act be superseded
by any successor trustee appointed by the Administrative Agent. In any event,
however, no resignation shall be effective until a qualified trustee shall have
been appointed by the Administrative Agent or a court.
(c) In the event that the Trustee becomes disqualified as an approved
trustee by MARAD, the Administrative Agent shall: (i) remove the Trustee and
appoint a qualified successor trustee or (ii) take the action provided for in
Section 11.03.
Section 11.02. (a) A successor trustee shall be appointed by an
instrument in writing which shall state the effective date said successor
trustee shall become the Trustee hereunder, which document shall contain the
executed acknowledgement of acceptance by the successor trustee of the trust,
the Trust Estate and the duties of the Trustee as herein provided. The Trustee,
the successor trustee and the Administrative Agent shall execute, acknowledge
and deliver such assignments as may be required, in recordable form, and a
sufficient number of counterparts, whereby the successor trustee becomes vested
with all of the estates, properties, rights, remedies and trusts of its
predecessor to the trust hereunder and such instruments shall be duly recorded
forthwith in accordance with Chapter 313 of Title 46 of the United States Code,
as amended, or other laws or statutes governing any Ship Security Instrument, as
the case may be. The Trustee shall duly assign, transfer, deliver and pay over
to any successor trustee any monies and other property or things of value
subject to the trust hereunder and held by the Trustee. Should any act or
further instrument from the Trustee or the Administrative Agent be required by
any successor trustee for more fully and certainly vesting in and confirming to
such successor trustee such estates, properties, rights, remedies and trusts,
then on request any and all such acts and instruments shall be done, made,
executed, acknowledged and delivered by the Administrative Agent and the
Trustee. If the Administrative Agent's removal of the Trustee is by reason of
the Trustee's failure to remain qualified as an approved trustee by MARAD, the
provisions of Section 4.03 shall govern.
(b) The Borrower on behalf of the Administrative Agent shall pay or
cause to be paid all recording fees, transfer taxes, court costs, if applicable,
and all other costs arising out of the transfer of the Trust Estate from the
Trustee to a successor trustee. If the Administrative Agent's removal of the
Trustee is by reason of the Trustee's failure to remain qualified as an approved
trustee by MARAD, the provisions of Section 4.03 shall govern.
(c) Upon the removal or resignation of the Trustee, the Trustee's
compensation shall cease as of the effective date thereof, but its rights of
indemnification shall survive such
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removal or resignation. Within thirty (30) days following the effective date of
such removal or resignation, the Trustee shall furnish to the Administrative
Agent a complete accounting of the Trust Estate and its compensation, costs and
expenses as of the date of removal or resignation.
(d) Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation to which substantially all the business of the Trustee may be
transferred, shall be the Trustee under this Trust Agreement without any further
act, provided the successor corporation remains qualified as an approved
trustee.
(e) Any successor to the Trustee, however appointed, shall be a bank
or trust company organized under the laws of the United States or any
jurisdiction thereof, authorized under such laws to exercise corporate trust
powers, and subject to supervision or examination by federal or state authority,
having a combined capital and surplus of at least Fifty Million Dollars
($50,000,000), and be qualified to act as mortgagee under the Mortgages to the
extent required by applicable law and shall be a trustee approved by MARAD in
accordance with the provisions of the Shipping Act, 1916, as amended, and
Chapter 313 of Title 46 of the United States Code, as amended, if there be such
an institution willing, able and legally qualified to perform the duties of the
Trustee hereunder upon reasonable or customary terms.
Section 11.03. If at any time: (a) events occur which will or could,
in the opinion of the Administrative Agent or the Trustee, result in the
disqualification of the Trustee; or (b) the Trustee becomes disqualified, the
Trustee or the Administrative Agent, or both of them, may petition the United
States District Court for the Southern District of New York for instructions to
the Trustee in order that the trust may be preserved to prevent the
Administrative Agent or the Trustee from falling into violation of law,
including without limitation, the United States Maritime Laws. To the extent
that such may be required or necessary, the parties hereto agree that said court
has jurisdiction for this purpose; however, if in the interest of justice, the
said court determines to transfer the matter to any other United States Court,
the parties hereby agree to the jurisdiction of such transferee court. Any such
petition shall be served upon the other party hereto. The Trustee, the
Administrative Agent and any successor trustee hereby agree to abide by the
instructions of the court and to do all acts, execute such agreements and
instruments as may be required in connection therewith and all other instruments
and/or documents necessary to preserve the Trust Estate for the benefit of the
Administrative Agent on behalf of the Secured Creditors under the terms
hereunder.
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ARTICLE XII
TERMINATION AND DISCHARGE OF TRUST
Section 12.01. This trust is hereby declared to be irrevocable except
that this trust may be terminated by notice given by the Administrative Agent to
the Trustee at any time that there is no Ship Security Instrument held or to be
held as a part of the Trust Estate and termination of the trust would not create
an interest in a United States Ship on the part of the Administrative Agent and
the Secured Creditors that would be contrary to applicable law, or otherwise
cause the Administrative Agent or the Secured Creditors to be in violation of
any applicable law and no Obligations to the Administrative Agent and the
Secured Creditors under the Loan Documents remain and no obligation of the
Administrative Agent or the Secured Creditors to make any Loan or issue any
Letter of Credit is still outstanding. Within thirty (30) days following the
date of such notice, the Trustee shall furnish to the Administrative Agent a
complete accounting of the Trust Estate and its compensation, costs and
expenses. This trust shall terminate, cease and determine upon: (i) the
assignment, conveyance and transfer by the Trustee to the Administrative Agent
of all property then comprising the Trust Estate and (ii) the acceptance of such
accounting of the Trustee by the Administrative Agent.
ARTICLE XIII
AMENDMENT OF TRUST AGREEMENT
Section 13.01. No term or provision of this Trust Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the Administrative Agent and the Trustee; and any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given; provided, however, because of the irrevocable nature of
this trust and the reasons for which it is created the trust may not be amended
in any way that may vest or revest in the Administrative Agent or the Secured
Creditors any interest in a United States Ship contrary to applicable law, and
without limitation, particularly the United States Maritime Laws.
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ARTICLE XIV
MISCELLANEOUS
Section 14.01. The headings of the various articles are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
Section 14.02. Any assignment, sale, transfer or other conveyance by
the Trustee of the interest of the Trustee in any Ship Security Instrument, or
any of the Ships, or insurance proceeds made pursuant to this Trust Agreement or
any Ship Security Instrument shall bind the Administrative Agent and the Secured
Creditors and shall be effective to transfer or convey all right, title and
interest of the Trustee and the Administrative Agent and the Secured Creditors
therein. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance or as to the application of any sale or other proceeds
with respect thereto by the Trustee.
Section 14.03. Unless otherwise expressly specified or permitted by
the terms hereof, all notices shall be in writing, delivered or mailed by first
class mail, postage prepaid, (i) if to the Trustee, addressed to the Trustee at
its offices at 3800 Howard Hughes Parkway, Suite 400, Las Vegas, Nevada 89109,
and (ii) if to the Administrative Agent, addressed to it as provided in Section
10.08 of the Credit Agreement, or such other address as the Trustee or the
Administrative Agent may designate by notice to the other parties. All notices
given pursuant to this Section 14.03 shall be effective upon receipt. All
notices required to be delivered by the Trustee under this Trust Agreement shall
be delivered promptly by the Trustee. Copies of all notices shall be delivered
to the Borrower addressed to its President and Chief Operating Officer as
provided in Section 10.08 of the Credit Agreement with copies addressed to its
Chief Financial Officer and its General Counsel as provided in Section 10.08 of
the Credit Agreement.
Section 14.04. Any provision of this Trust Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 14.05. This Trust Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
15
<PAGE>
Section 14.06. All covenants and agreements contained herein shall be
binding upon, and inure to the benefit of, the Trustee, and its successors and
assigns, the Administrative Agent, and its successors and assigns, and the
Lenders, and their respective successors and assigns. Any request, notice,
direction, consent, waiver or other instrument or action by the Administrative
Agent shall bind its successors and assigns, and the Lenders, and their
respective successors and assigns.
Section 14.07. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any Person, other than the parties
hereto, their successors or assigns, any right, remedy or claim under or by
reason of this Trust Agreement or of any term, covenant or condition hereof, and
all of the terms, covenants, conditions, promises and agreements contained
herein shall be for the sole and exclusive benefit of the parties hereto and
their successors and assigns.
Section 14.08. THIS TRUST AGREEMENT, AND ALL OF THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER, AND THEIR SUCCESSORS AND ASSIGNS, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
Section 14.09. No provision of this Trust Agreement or any action
taken pursuant hereto shall be considered to be a waiver of the preferred status
of any United States preferred mortgage transferred to the Trustee hereunder or
in derogation of any of the benefits, privileges, rights or remedies provided
for by Chapter 313 of Title 46 of the United States Code, as amended, or other
applicable law or any Ship Security Instrument.
Section 14.10. This Trust Agreement has been delivered in Las Vegas,
Nevada.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto, have caused this Trust
Agreement to be duly executed and delivered in Las Vegas, Nevada by their
respective officers thereunto duly authorized on the day and year first above
written.
FIRST INTERSTATE BANK OF NEVADA, N.A.,
as Administrative Agent
By ___________________________
Name:
Title:
FIRST INTERSTATE BANK OF NEVADA, N.A., as Trustee,
By __________________________
Name:
Title:
ACKNOWLEDGED AND ACCEPTED:
PLAYERS INTERNATIONAL, INC.
By: _____________________
Name:
Title:
17
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NAME OF OFFICIAL NAME OF
SHIP FLAG NUMBER SHIPOWNER
<S> <C> <C> <C>
STAR CASINO U.S. 997578 Showboat Star Partnership
PLAYERS RIVERBOAT U.S. 989886 Southern Illinois Riverboat/
CASINO Casino Cruises, Inc.
PLAYERS RIVERBOAT U.S. 997773 Players Lake Charles, Inc.
CASINO II
</TABLE>
<PAGE>
EXHIBIT A
TRUST RECEIPT
Date:_______________________ Number:_________________
To: First Interstate Bank of Nevada, N.A., Administrative Agent
From: First Interstate Bank of Nevada, N.A.,
not in its individual
capacity, but solely as
Trustee
The Trustee hereby acknowledges the delivery to the Trustee, as
trustee under the Master Vessel and Collateral Trust Agreement dated as of
August __, 1995 with you (the "Trust Agreement"), of the below listed Ship
Security Instruments covering the U.S. flag vessel ______ entered into by
__________________________ in favor of the Trustee for your benefit (the
"Mortgage").
------------------------------
------------------------------
------------------------------
Terms used herein are used as defined in the Trust Agreement.
------------------------------,
not in its individual
capacity, but solely as
Trustee,
By __________________________
Name:
Title:
<PAGE>
EXHIBIT 23.1
CONSENT
We consent to the reference to our firm under the caption 'Experts' and to the
use of our report dated May 19, 1995, in the Registration Statement (Form S-4
No. 33-60085) and related Prospectus of Players International, Inc. for the
registration of $150,000,000 10 7/8% Senior Notes Due 2005.
ERNST & YOUNG, LLP
Philadelphia, Pennsylvania
September 15, 1995
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report on the consolidated financial statements of Players International, Inc.
and subsidiaries (and to all references to our Firm) included in or made a part
of this registration statement on Form S-4.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
September 14, 1995
