<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1996
REGISTRATION NO. 333-05555
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
THE SECURITIES ACT OF 1933
------------------
BOYD GAMING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0242733
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
CALIFORNIA HOTEL AND CASINO
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0121743
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
BOYD TUNICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MISSISSIPPI 64-0829658
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
BOYD MISSISSIPPI, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MISSISSIPPI 93-1104426
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
BOYD KANSAS CITY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MISSOURI 43-1649728
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
BOYD KENNER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
LOUISIANA 88-0319489
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
MARE-BEAR, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0203692
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
SAM-WILL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0203673
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
<PAGE> 2
ELDORADO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0093922
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
MSW, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0310765
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS NEVADA 89109
(702) 792-7200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------
ELLIS LANDAU
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
BOYD GAMING CORPORATION
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA 89109
(702) 792-7200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANTS' AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
ROBERT M. MATTSON, JR., ESQ. MARC S. ROSENBERG, ESQ.
MORRISON & FOERSTER LLP CRAVATH, SWAINE & MOORE
19900 MACARTHUR BOULEVARD WORLDWIDE PLAZA
12TH FLOOR 825 EIGHTH AVENUE
IRVINE, CALIFORNIA 92715 NEW YORK, NEW YORK 10019-7475
</TABLE>
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _______
If delivery of this prospectus is expected to be made pursuant to Rule 434,
please 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities
and Exchange Commission. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any
State in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION
SEPTEMBER 4, 1996
PROSPECTUS
$200,000,000
BOYD GAMING CORPORATION
% SENIOR NOTES DUE 2003
[BOYD GAMING LOGO]
The % Senior Notes Due 2003 (the "Notes") are being offered (the "Offering")
by Boyd Gaming Corporation (the "Company") and will mature on , 2003.
Interest on the Notes will be payable semi-annually on and
of each year commencing , 1997. The Notes will be
redeemable at the option of the Company, in whole or in part, on or after
, 2000, at the redemption prices set forth herein plus accrued and
unpaid interest, if any, to the date of redemption. See "Description of
Notes -- Optional Redemption." Upon a Change of Control (as defined herein),
and, when the Company has reached Investment Grade Status (as defined herein),
upon a Change of Control and a Ratings Decline (as defined herein), holders of
the Notes may require the Company to purchase all or a portion of the Notes at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, through the date of repurchase. See "Description of
Notes -- Repurchase at the Option of Holders Upon a Change of Control."
Concurrent with the Offering, the Company is offering 4,000,000 shares and
certain stockholders of the Company are offering 1,337,786 shares of Common
Stock of the Company, $.01 par value per share (the "Common Stock"), to the
public (the "Common Stock Offering" and, collectively with the Offering, the
"Offerings"). See "Prospectus Summary -- The Offering -- Concurrent Offering of
Common Stock." Consummation of the Offering is not contingent upon consummation
of the Common Stock Offering, and there can be no assurance that the Common
Stock Offering will be consummated.
The Notes will be senior unsecured obligations of the Company and will rank pari
passu in right of payment to all existing and future unsecured senior
Indebtedness (as defined herein) of the Company and senior to all current and
future subordinated Indebtedness of the Company. The payment of principal and
interest on the Notes will be unconditionally guaranteed on a senior unsecured
basis by certain existing and future Restricted Subsidiaries (as defined herein)
of the Company (the "Guarantors"). See "Prospectus Summary -- The
Offering -- Guaranties," "-- Potential Par-A-Dice Guaranties" and "Description
of Notes." On a pro forma basis, after giving effect to the Offerings, the
Par-A-Dice Acquisition, the redemption of the 10.75% Notes and the Mary's Prize
Sale (each as defined herein), the total consolidated Indebtedness of the
Company at June 30, 1996 would have been approximately $719 million, with $185
million of Indebtedness subordinated to the Notes. See "Use of Proceeds,"
"Business -- Development Projects -- Par-A-Dice Acquisition," "-- Mary's Prize
Sale" and "Description of Other Indebtedness." Under certain circumstances, the
Notes could be structurally subordinated to the obligations of Subsidiaries (as
defined herein). See "Risk Factors -- Holding Company Structure and Ability to
Service Debt."
The Notes will be represented by one or more Global Securities registered in the
name of the nominee of The Depository Trust Company, which will act as the
depositary (the "Depositary"). Beneficial interests in the Global Security will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Except as described herein,
Notes in definitive form will not be issued. See "Description of
Notes -- Book-Entry System."
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES.
THESE 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.
NONE OF THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD, THE
MISSISSIPPI GAMING COMMISSION, THE MISSOURI GAMING COMMISSION, THE LOUISIANA
GAMING CONTROL BOARD OR ANY OTHER GAMING AUTHORITY HAS PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS OF THE NOTES OFFERED
HEREBY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC (1) DISCOUNT COMPANY (1)(2)
<S> <C> <C> <C>
Per Note......................... % % %
Total............................ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from , 1996 to the date of
delivery.
(2) Before deducting expenses payable by the Company, estimated to be $500,000.
The Notes are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Notes will be made through the facilities of The Depository
Trust Company, on or about , 1996.
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
BT SECURITIES CORPORATION
The date of this Prospectus is , 1996.
<PAGE> 4
[BOYD GAMING LOGO]
<TABLE>
<S> <C> <C>
STARDUST
LAS VEGAS
CALIFORNIA HOTEL & CASINO FREMONT
LAS VEGAS LAS VEGAS
SAM'S TOWN
KANSAS CITY
SAM'S TOWN SAM'S TOWN
LAS VEGAS TUNICA
TREASURE CHEST
KENNER
SILVERSTAR ELDORADO
PHILADELPHIA HENDERSON
JOKERS WILD
HENDERSON
STARDUST
ATLANTIC CITY
Under Development
SAM'S TOWN PAR-A-DICE
RENO EAST PEORIA
Under Development Subject to Acquisition
MAIN STREET STATION
LAS VEGAS
Under Construction
</TABLE>
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE> 5
[PHOTOS & MAPS]
LAS VEGAS LAS VEGAS MAP
DEPICTING SEVEN PROPERTY
LOCATIONS
[caption]
The Company's properties are located in
diverse
markets throughout greater Las Vegas.
STARDUST
HOTEL
[caption]The Stardust Resort and Casino is
located on the Las Vegas Strip.
ATRIUM AT
SAM'S TOWN
LAS VEGAS
[caption]
New hotel rooms overlook the indoor park
at Sam's Town Las Vegas.
<PAGE> 6
[PHOTOS AND MAPS]
THE FREMONT
AND FREMONT STREET
EXPERIENCE
The Fremont Street Experience
frames the Fremont Hotel and Casino
in downtown Las Vegas.
[caption]
CALIFORNIA HOTEL
& CASINO
The California Hotel and Casino is
located in downtown Las Vegas.
[caption]
RENO
RENO MAP
DEPICTING
LOCATION OF
SAM'S TOWN
RENO
[caption] The Company has acquired a site
in Reno, Nevada for development of
Sam's Town Hotel and Gambling Hall.
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements included or incorporated in this
Prospectus. Unless otherwise indicated, or the context otherwise requires, the
term "Company" refers to Boyd Gaming Corporation, a Nevada corporation, and its
subsidiaries. See "Risk Factors" for certain factors a prospective investor
should consider in evaluating the Company before purchasing the Notes offered
hereby.
THE COMPANY
Boyd Gaming Corporation is one of the leading casino entertainment
companies in the United States. The Company is a multi-jurisdictional gaming
company which currently owns or operates ten casino entertainment facilities, is
constructing its eleventh property and acquiring its twelfth property and
recently acquired the land upon which it intends to construct its thirteenth
property. The Company has operated successfully for more than two decades in the
highly competitive Las Vegas market and has entered four new gaming
jurisdictions in the past two years. The Company owns and operates six
facilities in three distinct markets in Las Vegas, Nevada: the Stardust Resort
and Casino (the "Stardust") on the Las Vegas Strip; Sam's Town Hotel and
Gambling Hall ("Sam's Town Las Vegas"), the Eldorado Casino (the "Eldorado") and
the Jokers Wild Casino ("Jokers Wild") on the Boulder Strip; and the California
Hotel and Casino (the "California") and the Fremont Hotel and Casino (the
"Fremont") in downtown Las Vegas. The Company also owns or manages four
facilities in new gaming jurisdictions, all opened during 1994 and 1995. The
Company owns and operates Sam's Town Hotel and Gambling Hall, a dockside gaming
and entertainment complex in Tunica County, Mississippi that is currently
undergoing a hotel and parking garage addition ("Sam's Town Tunica") and Sam's
Town Kansas City, a riverboat gaming and entertainment complex in Kansas City,
Missouri. The Company manages and owns a minority interest in the Treasure Chest
Casino (the "Treasure Chest"), a riverboat casino in Kenner, Louisiana, and
manages for the Mississippi Band of Choctaw Indians the Silver Star Resort and
Casino (the "Silver Star"), a land-based casino in the midst of a major
expansion project, located near Philadelphia, Mississippi. The Company plans to
open Main Street Station Hotel and Casino ("Main Street Station") in downtown
Las Vegas and in April 1996 entered into a definitive purchase agreement to
acquire a riverboat casino in East Peoria, Illinois (the "Par-A-Dice
Acquisition"). The Company recently acquired land on which it plans to develop a
casino, hotel and entertainment complex in Reno, Nevada ("Sam's Town Reno"). In
addition, the Company and Mirage Resorts, Inc. ("Mirage") recently announced the
signing of a joint venture agreement (the "Mirage Joint Venture") to jointly
develop and own a casino hotel entertainment facility in Atlantic City, New
Jersey (the "Atlantic City Project"). The Company currently owns or operates an
aggregate of 504,500 square feet of casino space containing 14,313 slot machines
and 510 table games. Assuming the completion of Main Street Station, completion
of the Par-A-Dice Acquisition, development of Sam's Town Reno and completion of
the expansion projects currently underway at certain of its existing facilities,
the Company will own or operate an aggregate of approximately 618,000 square
feet of casino space containing approximately 17,849 slot machines and
approximately 615 table games. See " -- Property Data."
The Company's operating strategy stresses delivering to its primarily
middle-income patrons a value-oriented, friendly casino entertainment
experience. To execute this strategy, the Company, on an ongoing basis,
reinvests in its properties in order to keep them modern, appealing and
competitive, especially with respect to its slot products, and strives to
achieve the highest level of customer satisfaction in order to build customer
loyalty. The Company also draws upon its long-standing experience in the gaming
industry to design each of its facilities to appeal to a broad range of
customers within its respective markets and employs marketing programs and
techniques, including database marketing and consumer research, tailored to
accomplish property-specific and company-wide objectives. The Company has
successfully developed its Sam's Town western theme into a recognized brand name
and has similar plans for the Stardust name. The Company integrates the
operations of its facilities to benefit from economies of scale and to foster
collaborative generation of new ideas, products and strategies among its
properties.
3
<PAGE> 8
The Company's development and expansion strategy is to grow and further
diversify its business through expansion and improvement of its existing
properties and development and acquisition of new facilities. The Company
master-plans its facilities to accommodate additional development and monitors
its operations on an ongoing basis to expand and modify its existing properties
as needed to address changing market dynamics, as demonstrated at Sam's Town
Tunica and as intended at the Stardust and Sam's Town Las Vegas. The Company
seeks acquisition and development opportunities which complement its existing
business, such as the acquisition and redevelopment of Main Street Station,
acquisition of the Par-A-Dice and development of Sam's Town Reno and the
Atlantic City Project. To accomplish this, the Company identifies strategic
opportunities in established and new gaming jurisdictions that include one or
more of the following characteristics: (i) close proximity to large population
centers or high-volume regional tourist areas, (ii) limited competition, and
(iii) no significant overlap with the Company's existing properties.
DEVELOPMENT PROJECTS
On April 26, 1996, the Company entered into a definitive purchase agreement
to acquire 100% of the capital stock of Par-A-Dice Gaming Corporation
("Par-A-Dice Gaming") and 100% of the capital stock of East Peoria Hotel, Inc.
("EPH"), each an Illinois corporation, for an aggregate consideration of
approximately $175 million. Par-A-Dice Gaming is the owner and operator of the
Par-A-Dice Riverboat Casino, a state-of-the-art riverboat casino with gaming on
four levels as well as non-gaming amenities, including three restaurants,
located in East Peoria, Illinois, approximately 170 miles from Chicago. EPH is
the general partner of a limited partnership which is developing a 204-room
full-service hotel (the "Par-A-Dice Hotel") located immediately adjacent to the
Par-A-Dice Riverboat Casino (the Par-A-Dice Riverboat Casino and the Par-A-Dice
Hotel are together referred to herein as the "Par-A-Dice"). The Company expects
to use borrowings under a $500 million reducing revolving bank credit facility
(the "New Bank Credit Facility") to fund the Par-A-Dice Acquisition. See "Use of
Proceeds" and "Description of Other Indebtedness -- New Bank Credit Facility."
The Company currently anticipates the consummation of the Par-A-Dice Acquisition
and completion of the Par-A-Dice Hotel prior to year end, subject to receipt of
regulatory approvals. See "Risk Factors -- Uncertainties of Consummation of the
Par-A-Dice Acquisition and Development of Sam's Town Reno and the Atlantic City
Project."
The Company recently acquired land in Reno, Nevada upon which it plans to
develop Sam's Town Reno, a $92 million casino, hotel and entertainment complex,
featuring the Sam's Town brand name and western theme. Sam's Town Reno is
planned to include a 33,000 square foot casino, a hotel with 211 guest rooms and
suites, five restaurants, an outdoor arena, an events center and various other
amenities. The Company currently plans to commence construction of Sam's Town
Reno in the first quarter of calendar 1997 and complete construction as early as
spring of 1998, subject to receipt of regulatory approvals, permits and
licenses. See "Risk Factors -- Uncertainties of Consummation of the Par-A-Dice
Acquisition and Development of Sam's Town Reno and the Atlantic City Project."
On May 29, 1996, the Company, through a wholly-owned subsidiary, entered
into the Mirage Joint Venture to jointly develop and own the Atlantic City
Project. The Atlantic City Project, which is expected to cost approximately $500
million, is planned to be one component of a multi-facility casino entertainment
development, master-planned by Mirage for the Marina District of Atlantic City.
Pursuant to the joint venture agreement, the Company will control the
development and operation of the Atlantic City Project. The Atlantic City
Project is expected to be adjacent and connected to Mirage's planned
wholly-owned resort. The Mirage Joint Venture will give the Company a presence
in Atlantic City, the primary casino gaming market serving the eastern United
States. Environmental remediation and construction of the Atlantic City Project
will not begin until after the necessary highway improvements are approved and
funded and necessary approvals, permits and licenses are received. See "Risk
Factors -- Uncertainties of Consummation of the Par-A-Dice Acquisition and
Development of Sam's Town Reno and the Atlantic City Project."
4
<PAGE> 9
In addition to the Par-A-Dice Acquisition and the above-mentioned expansion
projects, the Company is currently exploring expansion opportunities at certain
of its Las Vegas properties. No assurance can be given that any acquisition,
expansion or development projects will be completed as described herein.
RECENT DEVELOPMENTS
In the fourth quarter of fiscal 1996, the Company reported net income
(before the write-off of a $1.4 million extraordinary item) of $3.5 million, as
compared to approximately $12 million in the comparable period in fiscal 1995.
Fourth quarter results were adversely effected by competitive pressures at Sam's
Town Tunica and Sam's Town Kansas City, as well as by construction disruption at
Sam's Town Tunica related to the addition of 350 hotel rooms and a 1,000-car
parking garage. The Company continues to be adversely affected by these factors
at the Tunica and Kansas City properties in the first quarter of fiscal 1997. In
addition, the Stardust has experienced a decline in revenues and an increase in
general marketing costs during the first quarter of fiscal 1997 as compared to
the comparable prior year period, principally as a result of increased
competition in Las Vegas. As a result of these factors, the Company currently
anticipates that it will report minimal net income or possibly a net loss for
the first quarter of fiscal 1997. See "Risk Factors -- Competition," " -- Recent
Earnings Decline" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Developments."
------------------------
The Company was incorporated in Nevada in 1988 to serve as a holding
company for California Hotel and Casino ("CH&C") which was incorporated in 1973.
The executive offices of the Company are located at 2950 South Industrial Road,
Las Vegas, Nevada 89109, and its telephone number is (702) 792-7200.
5
<PAGE> 10
PROPERTY DATA
The following table sets forth certain information regarding the Company's
existing properties as of June 30, 1996, and certain information regarding the
estimated results of the Company's current expansion and development projects
and the Par-A-Dice Acquisition. There can be no assurance that such properties
will contain the casino square footage, gaming units, hotel rooms or restaurants
as set forth below when and if such expansion, development or acquisition is
completed. Each of these projects will be subject to the many risks inherent in
construction projects and the establishment of a new business enterprise. In
addition, many permits, licenses and approvals necessary for the projects have
not yet been obtained. See "Risk Factors -- Uncertainties of Consummation of the
Par-A-Dice Acquisition and Development of Sam's Town Reno and the Atlantic City
Project," "-- Expansion to Other Locations," "-- Additional Financing
Requirements," "-- Governmental Gaming Regulation" and "Business -- Development
Projects."
.
<TABLE>
<CAPTION>
CASINO SPACE SLOT TABLE HOTEL LAND
EXISTING (SQ. FT.) MACHINES GAMES ROOMS RESTAURANTS (ACRES)
- ------------------------------------------------ ------------ -------- ----- ----- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
LAS VEGAS STRIP
Stardust Resort and Casino...................... 87,000 1,958 78 2,320 7 61
DOWNTOWN LAS VEGAS
California Hotel and Casino..................... 36,000 1,130 38 781 5 16
Fremont Hotel and Casino........................ 32,000 1,106 31 452 5 2
BOULDER STRIP
Sam's Town Las Vegas............................ 118,000 2,774 55 650 12 63
Eldorado Casino................................. 16,000 558 11 -- 3 4
Jokers Wild Casino.............................. 22,500 647 11 -- 2 13
CENTRAL REGION
Sam's Town Tunica............................... 75,000 1,806 78 508 5 150
Sam's Town Kansas City.......................... 28,000 1,018 65 -- 5 34
Silver Star Resort and Casino................... 66,000 2,461 87 100 4 20
Treasure Chest Casino........................... 24,000 855 56 -- 4 --
--
------- ------ --- ----- ---
Total Existing.......................... 504,500 14,313 510 4,811 52 363
======= ====== === ===== == ===
</TABLE>
<TABLE>
<CAPTION>
PROJECTED ADDITIONS
- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DOWNTOWN LAS VEGAS
Main Street Station Hotel and Casino(a)......... 28,500 900 25 404 3 15
NORTHERN NEVADA
Sam's Town Reno(b).............................. 33,000 1,200 36 211 5 100
CENTRAL REGION
Sam's Town Tunica(c)............................ -- -- -- 350 -- --
Silver Star Resort and Casino(d)................ 19,000 439 2 403 1 --
Par-A-Dice(e)................................... 33,000 997 42 204 3 19
--
------- ------ --- ----- ---
Total Projected Additions............... 113,500 3,536 105 1,572 12 134
======= ====== === ===== == ===
Total Existing and Projected............ 618,000 17,849 615 6,383 64 497
======= ====== === ===== == ===
</TABLE>
- ---------------
(a) The information presented reflects Main Street Station after its completion,
which is expected by the end of calendar year 1996.
(b) The information presented reflects Sam's Town Reno after completion of the
project. Construction of the project is expected to commence in the first
quarter of calendar year 1997 and may be completed as early as spring of
1998.
(c) The information presented reflects the Sam's Town Tunica expansion project,
which is expected by the end of calendar year 1996.
(d) The information presented reflects the Silver Star expansion project, which
is currently scheduled by the owners of the Silver Star for early calendar
year 1997.
(e) Pending acquisition. Reflects the Par-A-Dice Hotel after its construction.
The acquisition of the Par-A-Dice, which is subject to obtaining regulatory
approval, and the completion of the Par-A-Dice Hotel are expected by the end
of calendar year 1996.
6
<PAGE> 11
THE OFFERING
Issuer..................... Boyd Gaming Corporation (the "Company").
Securities Offered......... $200 million principal amount of % Senior
Notes (the "Notes") Due 2003 (the "Offering").
Maturity Date.............. 2003.
Interest................... Interest on the Notes will be payable semi-annually
on each and
commencing 1997.
Guaranties................. The Notes will be guaranteed unconditionally as to
principal, premium, if any, and interest on a
senior unsecured basis (the "Guaranties") by all
material existing, and certain future, subsidiaries
of the Company (the "Guarantors").
Potential Par-A-Dice
Guaranties............... Par-A-Dice Gaming and EPH will not be Guarantors on
the date the Notes are issued, but in connection
with the Company's pending application before the
Illinois Gaming Board seeking approval for the
Par-A-Dice Acquisition, approval for Par-A-Dice
Gaming and EPH to be Guarantors has also been
requested. Until such time as approval is so
obtained, if at all, all liabilities of Par-A-Dice
Gaming and EPH (including indebtedness and trade
payables, which as of June 30, 1996 aggregated
$21.5 million) will effectively be senior to the
Notes. While no assurance can be given that such
approval will be obtained, in the event approval is
obtained, Par-A-Dice Gaming and EPH would become
Guarantors and guarantee the Notes unconditionally
as to principal, premium, if any, and interest on a
senior unsecured basis (the "Par-A-Dice
Guaranties").
Ranking.................... The Notes will rank pari passu (at an equal rate)
in right of payment with all existing and future
unsecured senior indebtedness of the Company and
senior to all future subordinated indebtedness of
the Company. At June 30, 1996, after giving effect
to the Offerings, the Par-A-Dice Acquisition,
redemption of the 10.75% Senior Subordinated Notes
due 2003 (the "10.75% Notes") and the August 23,
1996 sale of the Mary's Prize riverboat (the
"Mary's Prize Sale"), the Company had total
consolidated long-term debt of approximately $719
million. Giving effect to the same transactions, at
June 30, 1996 the Company had approximately $333
million of indebtedness that, in light of its
secured nature, will effectively rank senior to the
Notes. The Guaranties 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 New Bank Credit Facility, the holders of such
indebtedness will have prior claim to such assets
and will effectively be senior to the Notes.
Optional Redemption........ The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or
after , 2000 at the redemption prices
set forth herein plus accrued and unpaid interest,
if any, to the
7
<PAGE> 12
date of redemption. See "Description of
Notes -- Optional Redemption."
Special Redemption......... If any holder of Notes is found unsuitable under
applicable gaming laws, the Company may, at its
option, redeem such holder's Notes at the lesser of
(i) the current market price of the Notes, (ii) the
price at which the Notes were acquired by such
holder, excluding premium, if any, and without
accrued interest, or (iii) the principal amount of
such Notes without accrued interest, if any.
Change of Control.......... Under the Indenture for the Notes, a "Change of
Control" generally means (i) the acquisition of
more than 50% of the total voting power of all
classes of the Company's voting stock by any person
or group (other than the Boyd family), (ii) the
sale, lease, conveyance or other transfer of
substantially all of the Company's assets, (iii)
the approval by the stockholders of the Company of
any plan of liquidation or dissolution, (iv)
certain consolidations or mergers involving the
Company, or (v) certain changes in the composition
of the Company's board of directors. See
"Description of Notes -- Certain
Definitions -- Change of Control." Upon the
occurrence of a Change of Control, the Company will
be required to offer to repurchase (the "Change of
Control Offer") each holder's Notes at a repurchase
price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any,
through the date of repurchase. In the event that
at least two of three designated ratings agencies
have rated the Notes "investment grade" prior to
such Change of Control, the Company will only be
required to make a Change of Control Offer if,
within 90 days of the announcement of such Change
of Control, at least two of such designated ratings
agencies have rated the Notes "non-investment
grade" and the Company does not elect to defease
the Notes prior to the announcement of such
"non-investment grade" ratings. The Change of
Control Offer may be waived or modified with the
approval of the holders of a majority in principal
amount of the Notes outstanding.
There can be no assurance that the Company will
have adequate financial resources to consummate a
Change of Control Offer. See "Risk Factors -- Lack
of Sufficient Funds to Effect Repurchase." The
inability of the Company to repurchase the Notes
upon a Change of Control would constitute an event
of default under the Indenture for the Notes.
Events constituting a Change of Control also would
generally constitute an "event of default" under
the New Bank Credit Facility and certain existing
debt agreements, causing the possible acceleration
of the obligation to repay such indebtedness, which
as of June 30, 1996 and after giving effect to the
Offerings, the Par-A-Dice Acquisition, redemption
of the 10.75% Notes and the Mary's Prize Sale
aggregated approximately $332 million. In addition,
events constituting a Change of Control would
generally require the Company to offer to
repurchase the 11% Senior Subordinated Notes due
2002 (the "11% Notes"), of which an aggregate
principal amount of $185 million is outstanding.
See "Description of Other Indebtedness." The
Company's failure to repay or repurchase such
indebtedness would constitute an event of default
under the Indenture for the Notes. See "Description
of Notes -- Repurchase at the Option of Holders
Upon a Change of Control."
8
<PAGE> 13
Certain Covenants.......... The Indenture for the Notes contains limitations
on, among other things, (a) the ability of the
Company to incur additional indebtedness, (b) the
payment of dividends and other distributions with
respect to the capital stock of the Company and the
purchase, redemption or retirement of capital stock
of the Company, (c) the making of certain
investments, (d) the incurrence of certain liens,
(e) asset sales, (f) the issuance and sale of
capital stock of restricted subsidiaries, (g)
transactions with affiliates, (h) payment
restrictions affecting restricted subsidiaries, and
(i) certain consolidations, mergers and transfers
of assets. All of these limitations will be subject
to a number of important qualifications. See
"Description of Notes."
Use of Proceeds............ The net proceeds of the Offering (estimated to be
approximately $195 million) will be used to reduce
indebtedness outstanding under the New Bank Credit
Facility without reducing the commitment
thereunder. Amounts available under the New Bank
Credit Facility are expected to be used to effect
the redemption of the 10.75% Notes, to fund the
Par-A-Dice Acquisition and for general corporate
purposes. See "Use of Proceeds," "Capitalization"
and "Description of Other Indebtedness."
Concurrent Offering of
Common Stock............. Concurrently with the Offering, the Company is
offering 4,000,000 shares, and certain stockholders
of the Company are offering 1,337,786 shares, of
Common Stock of the Company (without giving effect
to the underwriters' over-allotment options) (the
"Common Stock Offering" and, together with this
Offering, the "Offerings"). In addition, the
Company and certain Selling Stockholders have
granted the underwriters options to purchase up to
730,000 additional shares of Common Stock to cover
over-allotments, if any. Neither the Offering nor
the Common Stock Offering is conditioned on
consummation of the other. The net proceeds to the
Company from the Common Stock Offering are expected
to be used to reduce outstanding indebtedness under
the New Bank Credit Facility without reducing the
commitment thereunder. Amounts available under the
New Bank Credit Facility will be used to effect the
redemption of the 10.75% Notes, to fund the
Par-A-Dice Acquisition and for general corporate
purposes.
9
<PAGE> 14
SUMMARY CONSOLIDATED FINANCIAL DATA
The consolidated financial data set forth below has been derived from the
audited consolidated financial statements of the Company for the respective
periods presented and is qualified in its entirety by, and should be read in
conjunction with, the consolidated financial statements and notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the other financial and statistical data included elsewhere or
incorporated in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
----------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues...................................... $775,857 $660,340 $468,219 $431,174 $406,804
Operating income.................................. 100,786 110,570 54,248 62,919 47,395
Interest expense, net(a).......................... 51,186 46,371 36,093 32,378 37,762
Income before cumulative effect of a change in
accounting principle and extraordinary item..... 29,579 36,249 10,650 20,134 6,114
Income before extraordinary item.................. 29,579 36,249 12,685 20,134 6,114
Net income........................................ 28,144 36,249 12,685 12,737 6,114
Ratio of earnings to fixed charges(b)............. 1.76 1.98 1.24 1.87 1.24
OTHER OPERATING DATA
Depreciation and amortization..................... $ 60,626 $ 54,518 $ 42,136 $ 39,450 $ 38,853
Preopening expense................................ 10,004 -- 4,605 -- --
Capital expenditures.............................. 90,977 183,299 326,829 24,485 18,702
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
1996
--------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA
Total assets.......................................................................... $953,425
Long-term debt (excluding current portion)............................................ 590,808
Stockholders' equity.................................................................. 233,257
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
(b) For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of income before fixed charges and income taxes, adjusted
to exclude interest capitalized, and "fixed charges" consist of interest
cost and a portion of rental expense deemed to be interest.
10
<PAGE> 15
PRO FORMA SUMMARY CONSOLIDATED FINANCIAL DATA
The following pro forma summary consolidated financial data for the Company
reflects the Par-A-Dice Acquisition. The pro forma consolidated income statement
data for the year ended June 30, 1996 has been presented as if the Par-A-Dice
Acquisition occurred on July 1, 1995. The pro forma consolidated balance sheet
data as of June 30, 1996 has been presented as if the Par-A-Dice Acquisition
occurred on June 30, 1996. These pro forma summary consolidated financial data
do not purport to represent what the Company's results of operations or
financial position would actually have been if the Par-A-Dice Acquisition had in
fact occurred at July 1, 1995 or June 30, 1996. The pro forma information set
forth below should be read in conjunction with the consolidated financial
statements of the Company, the consolidated financial statements of Par-A-Dice
Gaming and the pro forma consolidated financial statements (including the notes
to such financial statements) included elsewhere or incorporated in this
Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1996
---------------------------------------
COMPANY PAR-A-DICE COMPANY
HISTORICAL HISTORICAL PRO FORMA
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues..................................................... $ 775,857 $105,864 $881,721
Operating income................................................. 100,786 28,840 126,563
Interest expense, net (a)........................................ 51,186 842 63,974
Income from continuing operations................................ 29,579 27,605 37,892
OTHER OPERATING DATA
Depreciation and amortization.................................... $ 60,626 $ 4,454 $ 68,143
Preopening expense............................................... 10,004 -- 10,004
Capital expenditures............................................. 90,977 16,273 107,250
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------
ACTUAL PRO FORMA
-------- ----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA
Total assets................................................................... $953,425 $1,136,008
Long-term debt (excluding current portion)..................................... 590,808 767,366
Stockholders' equity........................................................... 233,257 233,257
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
11
<PAGE> 16
RISK FACTORS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended. Discussions containing
such forward-looking statements may be found in the material set forth under
"Prospectus Summary," "Use of Proceeds," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business," as well as
within the Prospectus generally (including the documents incorporated by
reference). Also, documents subsequently filed by the Company with the
Commission may contain forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements as a result of
the risk factors set forth below and the matters set forth or incorporated by
reference in the Prospectus generally. The Company cautions the reader, however,
that this list of factors may not be exhaustive, particularly with respect to
future filings. Before making a decision to purchase any of the Notes,
prospective investors should carefully consider the following factors.
HOLDING COMPANY STRUCTURE AND ABILITY TO SERVICE DEBT
The Company is a holding company whose operations are conducted through
subsidiaries. The Company, therefore, is 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
"-- Governmental Gaming Regulation" and "-- Environmental Risks." 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. In the
event such amounts are not paid to the Company, the Company may be unable to
make required principal and interest payments on the Notes.
PRIORITY OF NEW BANK CREDIT FACILITY
Obligations under the New Bank Credit Facility are secured by liens on
certain assets of the Company. 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 New Bank Credit
Facility above the initial availability of $500 million up to the aggregate
amount that is so permitted, from time to time, under such tests. In such event,
such additional indebtedness could 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, the New Bank Credit Facility creditors would be
entitled to payment in full out of the assets securing the New Bank Credit
Facility prior to payment to the holders of the Notes, and the rights of the
holders of the Notes are therefore effectively subordinated to the rights of
such creditors. If the New Bank Credit Facility creditors were to foreclose on
the collateral securing the New Bank Credit Facility, it is possible that
insufficient assets would remain after satisfaction of such indebtedness to
satisfy fully the claim of the holders of the Notes. In the event insufficient
assets remain to satisfy fully the claims of the holders of the Notes, the
Company may be unable to make required principal and interest payments on the
Notes.
LEVERAGE AND DEBT SERVICE
At June 30, 1996, after giving effect to the Offerings, the Par-A-Dice
Acquisition, redemption of the 10.75% Notes and the Mary's Prize Sale, the
Company had total consolidated long-term debt of approximately $719 million. The
New Bank Credit Facility is a five-year, $500 million reducing revolving credit
facility. Debt service requirements on the New Bank Credit Facility consist of
interest expense on outstanding indebtedness. Beginning in December 1998, the
total principal amount available under the New Bank Credit Facility will be
reduced by $25 million and reduced by an additional $50 million at the end of
each six-month period thereafter until maturity in June 2001. Debt service
requirements on the 11% Notes (as defined herein) issued by a financing
subsidiary of CH&C consist of semi-annual interest
12
<PAGE> 17
payments and repayment of the $185 million principal amount on December 1, 2002,
and debt service requirements under the Company's 10.75% Notes (as defined
herein) consist of semi-annual interest payments and repayment of the $150
million principal amount on September 1, 2003. The Company expects to fund the
Par-A-Dice Acquisition, as well as redemption of the 10.75% Notes, from
borrowings under the New Bank Credit Facility. The Company also expects to fund
its existing $40 million expansion project for Sam's Town Tunica, the $45
million renovation, expansion and re-equipping of Main Street Station, the $92
million Sam's Town Reno project and its subsidiary's required capital
contributions to the Mirage Joint Venture, currently expected to be $100
million, with borrowings under the New Bank Credit Facility to the extent not
funded from cash flow from operations. The Company's ability to service its debt
will be dependent on its future performance, which will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond the Company's control. Accordingly, no assurance can
be given that the Company will maintain a level of operating cash flow that will
permit it to service its obligations. If the Company is unable to generate
sufficient cash flow or is unable to refinance or extend outstanding borrowings,
it will have to adopt one or more alternatives, such as reducing or delaying
planned expansion and capital expenditures, selling assets, restructuring debt
or obtaining additional equity or debt financing. There can be no assurance that
any of these financing strategies could be effected on satisfactory terms, if at
all. In addition, certain states' laws contain restrictions on the ability of
companies engaged in the gaming business to undertake certain financing
transactions. Such restrictions may prevent the Company from obtaining necessary
capital. See "-- Additional Financing Requirements," "-- Governmental Gaming
Regulation," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
UNCERTAINTIES OF CONSUMMATION OF THE PAR-A-DICE ACQUISITION AND DEVELOPMENT OF
SAM'S TOWN RENO AND THE ATLANTIC CITY PROJECT
On April 26, 1996, the Company entered into a definitive stock purchase
agreement for the Par-A-Dice Acquisition. The Par-A-Dice Acquisition is subject
to regulatory approvals, including the approval of the Illinois Gaming Board and
the Mississippi Gaming Commission. No assurance can be given that the necessary
approvals will be received. The stock purchase agreement for the Par-A-Dice
Acquisition provides that if the Par-A-Dice Acquisition is not completed by
December 31, 1996, such agreement terminates. The Company has no prior
experience in Illinois, and no assurance can be given that the Company will be
able to compete successfully in this market. Furthermore, the Par-A-Dice
Acquisition is subject to certain closing conditions, and there can be no
assurance that the acquisition will be completed according to the terms
currently contemplated, if at all.
The Company recently acquired a 100-acre parcel of land upon which it plans
to build a casino hotel and entertainment complex in Reno, Nevada. Sam's Town
Reno is subject to a number of contingencies, including, but not limited to,
approval and licensing by the Nevada gaming authorities and the receipt of
land-use permits, building and zoning permits and liquor licenses. Accordingly,
there can be no assurance that Sam's Town Reno will be completed according to
the terms currently contemplated, if at all.
On May 29, 1996, the Company entered into a joint venture agreement with
Mirage to jointly develop and own a casino hotel entertainment facility in the
Marina District of Atlantic City, New Jersey. The casino hotel project
contemplated by the Mirage Joint Venture is subject to a number of
contingencies, including, but not limited to, approval and funding of highway
improvements necessary to accommodate the additional traffic that is expected to
be generated to and from the Marina District, approval and licensing by the New
Jersey gaming authorities, environmental remediation, the receipt of state and
local land-use permits, building and zoning permits and liquor licenses.
Accordingly, there can be no assurance that the Atlantic City Project will be
completed according to the terms currently contemplated, if at all. In addition,
the Company has no prior experience in New Jersey, and no assurance can be given
that, if the project is completed, the Company will be able to successfully
compete in this market. See "Business -- Development Projects."
13
<PAGE> 18
RECENT EARNINGS DECLINE
The competitive pressures on the Company's properties continue to increase
as new or expanded gaming facilities are opened. As a result of such competitive
pressures, particularly at Sam's Town Tunica and Sam's Town Kansas City, the
Company has experienced a recent earnings decline and may continue to report
reduced earnings in the future. In the fourth quarter of fiscal 1996, the
Company reported net income (before the write-off of a $1.4 million
extraordinary item) of $3.5 million, as compared to approximately $12 million in
the same period in 1995.
Results at Sam's Town Tunica have been hurt by increased competition as a
result of the opening of new gaming facilities in April and June of 1996. In
addition, operations at the property have been disrupted by the ongoing
construction of 350 additional hotel rooms and a 1,000-car parking garage,
projects which are not expected to be completed prior to mid-December 1996.
Sam's Town Kansas City reported an operating loss of $5 million (before the
write-off of preopening expenses) in fiscal 1996 as a result of high fixed costs
and substantial advertising and promotional expenses incurred in response to the
highly competitive operating environment. Competition in the Kansas City market
is expected to increase with the anticipated opening of two new gaming
facilities in the near future.
As a result of the factors described above, as well as a decline in revenue
and an increase in general marketing costs at the Stardust during the current
quarter, management expects that the Company's operating results for the first
quarter of fiscal 1997 will likely be well below those of the comparable prior
fiscal year period, and the Company anticipates that it will report minimal net
income or possibly a net loss for the quarter. There can be no assurance that
increased competition or other industry factors will not materially adversely
affect the Company's business, financial condition and results of operations in
the future. See "-- Competition" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Recent Developments."
COMPETITION
The gaming industry is highly competitive. Gaming activities include:
traditional land-based casinos; riverboat and dockside gaming; casino gaming on
Indian land; state-sponsored lotteries; video poker in restaurants, bars and
hotels; pari-mutuel betting on horse racing, dog racing and jai-alai; sports
bookmaking; and card rooms. The casinos owned, managed and being developed by
the Company compete and will in the future compete with all these forms of
gaming and with any new forms of gaming that may be legalized in existing and
additional jurisdictions, as well as with other types of entertainment. The
Company also competes with other gaming companies for opportunities to acquire
legal gaming sites in emerging and established gaming jurisdictions and for the
opportunity to manage casinos on Indian land. Such competition in the gaming
industry could adversely affect the Company's ability to compete for new gaming
opportunities as well as its existing operations. In addition, further expansion
of gaming into other jurisdictions could also adversely affect the Company's
business by diverting its customers to competitors in such jurisdictions. In
particular, the expansion of casino gaming in or near any geographic area from
which the Company attracts or expects to attract a significant number of its
customers could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Development
Projects." The Company believes that successful gaming facilities compete based
on the following factors: location; attractions; quality of gaming facilities,
gaming experience and entertainment; quality of food, beverage and atmosphere;
and price. Although the Company believes it competes favorably with respect to
these factors in most of its markets, some of its competitors have significantly
greater financial and other resources than the Company.
The Company's Las Vegas properties compete primarily with other casino
hotels on the Las Vegas Strip, on the Boulder Strip and in downtown Las Vegas.
Currently, there are approximately 25 major gaming properties located on or near
the Las Vegas Strip, 11 located in the downtown area and several located in
other areas of Las Vegas. Las Vegas gaming square footage and room capacity are
continuing to increase. A number of marquee properties have opened in the last
several years, and several others
14
<PAGE> 19
are currently under construction or planned for the Las Vegas Strip, including
the 1,500-room Stratosphere Tower, Casino and Hotel, the 3,000-room Paris
Casino-Resort, the 3,000-room Monte Carlo Resort and Casino, the 2,035-room New
York - New York Hotel/Casino, and the 3,000-room Bellagio. Additionally, several
properties have recently announced or begun significant expansion and renovation
projects, including Circus Circus - Las Vegas, MGM Grand Hotel/Casino,
Harrah's - Las Vegas, Rio Suite Hotel and Casino, Luxor Hotel and Casino, and
the Sahara Hotel and Casino. Each of the foregoing facilities has or may have a
theme and attractions which have drawn or may draw significant numbers of
visitors. Moreover, most of these facilities attract or may attract primarily
middle-income patrons, who are the focus of the Company's marketing strategy.
Although the Company believes that these additional facilities will draw more
visitors to Las Vegas, these properties also may divert potential gaming
activity from the Company. Future additions, expansions and enhancements to
existing properties and construction of new properties by the Company's
competitors could divert additional gaming activity from the Company's
facilities. There can be no assurance that the Company will compete successfully
in the Las Vegas market in the future.
Sam's Town Tunica competes primarily with other dockside gaming operations
in Tunica County and, to a lesser extent, with dockside casinos in Vicksburg,
Greenville, Natchez and Coahoma County, Mississippi, with dockside casinos on
the Mississippi Gulf Coast and with gaming operations in Louisiana. Gaming has
grown rapidly in Tunica County with ten dockside casinos now in operation.
Several casinos located in Tunica County have closed during the last 12 months.
One such closed facility was purchased by a competitor and reopened in April
1996. In addition, several Tunica-area casinos have recently added or are in the
process of adding hotel rooms, including 500 rooms at Fitzgeralds, 350 rooms at
the Hollywood Hotel and Casino, and 200 rooms at Harrah's Mardi Gras. Some of
these facilities are operated by certain of the Company's principal Nevada
competitors and may be operated or financed by companies with significantly
greater financial resources than the Company. Sam's Town Tunica reported an 80%
decline in operating income in the fourth quarter of fiscal 1996, which
management attributes principally to increased competition and also to the
disruption associated with ongoing construction at the facility. See "-- Recent
Earnings Decline" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Events."
Sam's Town Kansas City competes primarily with other riverboat gaming
operations in the Kansas City area. Two riverboat gaming operations, one in
Riverside, Missouri and one in North Kansas City, Missouri are currently
operating. In addition, two other operations in the Kansas City area are
currently under construction and awaiting licensing. Several other companies,
including some of the Company's principal Nevada competitors, have announced
plans to participate in riverboat gaming in the Kansas City area. Some of these
gaming facilities are being developed by companies that have significantly
greater financial resources than the Company, some have been operating for a
longer time than the Company's facility and some may possess more desirable
locations. Sam's Town Kansas City reported an operating loss of $5 million
(before the write-off of preopening expenses) in fiscal 1996 as a result of high
fixed costs and substantial advertising and promotional expenses incurred in
response to the highly competitive operating environment. Competition in the
Kansas City market is expected to increase with the expected opening of two new
gaming facilities in the near future. No assurance can be given that the Company
will compete successfully in this new market.
The Treasure Chest competes primarily with other riverboat gaming
operations in the New Orleans metropolitan area. A large land-based casino is
planned for downtown New Orleans but the project is presently in bankruptcy
reorganization. If the land-based project opens, it will compete directly with
the Treasure Chest. There are presently 14 licensed riverboats in the State of
Louisiana with four of these projects (including the Treasure Chest) operating
in the New Orleans metropolitan area. Some of these riverboats are operated by
companies with significantly greater financial resources and some may possess
more desirable locations. No assurance can be given that the Treasure Chest will
compete successfully in the future.
The Par-A-Dice competes primarily with other gaming operations in Illinois
and, to a lesser extent, with riverboats in Indiana and dockside gaming
facilities in Indiana, Iowa and Missouri. The Illinois
15
<PAGE> 20
Riverboat Gambling Act authorizes ten owner's licenses for riverboat gaming
operations. All ten licenses have been granted and ten riverboat gaming
facilities are currently in operation in Illinois. Some of these riverboats are
being operated by companies with greater experience in the Illinois market and
significantly greater financial resources than the Company. If the Par-A-Dice
Acquisition is consummated, there can be no assurance that the Par-A-Dice will
compete successfully in the future.
EXPANSION TO OTHER LOCATIONS
The Company is engaged in several projects to expand its operations, and
regularly evaluates development and expansion opportunities. See
"Business -- Properties." Each of these projects will be subject to the many
risks inherent in the establishment of a new business enterprise, including
unanticipated design, construction, regulatory, environmental and operating
problems, and the significant risks commonly associated with implementing a
marketing strategy in new markets. There can be no assurance that any of these
projects will become operational within the time frames and budgets currently
contemplated or at all. If these projects do not become operational within the
time frames and budgets currently contemplated, it could have a material adverse
effect on the Company's business, financial condition and results of operations.
Moreover, the Company will incur significant costs and expenses in connection
with its current expansion projects. There can be no assurance that these
expenditures will ultimately result in the establishment of profitable
operations.
Many permits, licenses and approvals necessary for the Company's expansion
projects have not yet been obtained. The scope of the approvals required for
projects of this nature is extensive, including, without limitation, gaming
approvals, state and local land-use permits, building and zoning permits and
liquor licenses. Unexpected changes or concessions required by local, state or
federal regulatory authorities could involve significant additional costs and
delay the scheduled openings of the facilities. There can be no assurance that
the Company will receive the necessary permits, licenses and approvals or that
such permits, licenses and approvals will be obtained within the anticipated
time frame. In addition, although the Company designs its expansion projects for
existing facilities to minimize disruption of business operations, major
expansion projects, such as those currently underway at Sam's Town Tunica and
the Silver Star and those being considered for the Stardust and Sam's Town Las
Vegas, require, from time to time, portions of the casino and parking areas to
be closed and disrupt portions of existing casino or hotel operations to some
extent. Any significant disruption in casino or hotel operations could have a
material adverse effect on the Company's business, financial condition and
results of operations.
ADDITIONAL FINANCING REQUIREMENTS
The Company intends to finance its current and future expansion projects
primarily with cash flow from operations and borrowings under its New Bank
Credit Facility. If the Company is unable to finance such projects through cash
flow from operations and borrowings under its New Bank Credit Facility, it will
have to adopt one or more alternatives, such as reducing or delaying planned
expansion and capital expenditures, selling assets, restructuring debt or
obtaining additional equity or debt financing. No assurance can be given that
the aforementioned sources of funds will be sufficient to finance the Company's
expansion, or that other financing will be available on acceptable terms, in a
timely manner or at all. In addition, the 11% Notes, the 10.75% Notes, the New
Bank Credit Facility and the Notes contain certain restrictions on the ability
of the Company to incur additional indebtedness. Following the Offering,
availability under the New Bank Credit Facility will effectively be reduced by
the cost to redeem all of the 10.75% Notes and will be subsequently increased if
and to the extent the Company funds a redemption of the 10.75% Notes. If the
Company is unable to secure additional financing, it could be forced to limit or
suspend expansion, development and acquisition projects, which may adversely
affect the Company's business, financial condition and results of operations.
See "-- Holding Company Structure and Ability to Service Debt," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Description of Notes" and
"Description of Other Indebtedness."
16
<PAGE> 21
GOVERNMENTAL GAMING REGULATION
The ownership and operation of the Company's gaming facilities and the
Par-A-Dice are subject, and the Atlantic City Project will be subject, to
extensive regulation by state and local regulatory authorities. Nevada,
Mississippi, Missouri, Louisiana, Illinois and New Jersey have each promulgated
detailed regulations governing gaming operations. Regulatory authorities in
these states have broad powers with respect to the licensing of casino
operations and may revoke, suspend, condition or limit the Company's gaming
licenses, impose substantial fines and take other actions, any one of which
could have a material adverse effect on the Company's business, financial
condition and results of operations. Directors, officers and certain key
employees of the Company must also be approved by certain state regulatory
authorities. If state regulatory authorities were to find a person occupying any
such position unsuitable, the Company would be required to sever its
relationship with that person. Charles L. Ruthe, President and a director of the
Company, has been on a leave of absence as President and a director of the
Company since September 1995 pending investigation by the Missouri Gaming
Commission of certain matters relating to Mr. Ruthe's suitability to hold a
Missouri gaming license. There can be no assurance that Mr. Ruthe's application
for a Missouri gaming license will be granted. Certain public issuances of
securities and certain other transactions by the Company also require the
approval of certain state regulatory authorities. In addition, Mississippi
gaming authorities must approve any future expansion of the Company's gaming
operations outside of Mississippi.
The Company operates the Silver Star pursuant to a management agreement
with the Mississippi Band of Choctaw Indians. The operation and management of
the Silver Star is subject to the regulatory authority of the National Indian
Gaming Commission ("NIGC") and the Choctaw Gaming Commission. Under the Indian
Gaming Regulatory Act of 1988 ("IGRA"), management contracts for Indian gaming
facilities must be approved by the NIGC. In addition, the Company, its
directors, persons with management responsibility, certain owners of the Company
and certain persons with a financial interest in the management agreement (as
determined by the NIGC and the Choctaw Gaming Commission) must provide
background information and be investigated by the NIGC and the Choctaw Gaming
Commission in connection with the approval of the management agreement by the
NIGC and issuance of a license to the Company to operate a gaming facility by
the Choctaw Gaming Commission. Persons who acquire beneficial ownership of the
Company's securities may be subject to certain reporting and qualification
procedures established by the NIGC and the Choctaw Gaming Commission. Such
limitations could adversely affect the marketability of the Notes or could
affect or prevent certain corporate transactions, including mergers or other
business combinations.
The Company is subject to a variety of regulations in the jurisdictions in
which it operates. If additional gaming regulations are adopted in a
jurisdiction in which the Company operates, such regulations could impose
restrictions or costs that could have a material adverse effect on the Company.
From time to time, various proposals are introduced in the legislatures of some
of the jurisdictions in which the Company has existing or planned operations
that, if enacted, could adversely affect the tax, regulatory, operational or
other aspects of the gaming industry and the Company. No assurance can be given
that such legislation will not be enacted. The federal government has also
previously considered a federal tax on casino revenues and may consider such a
tax in the future. In addition, gaming companies are currently subject to
significant state and local taxes and fees in addition to normal federal and
state corporate income taxes, and such taxes and fees are subject to increase at
any time. Any material increase in these taxes or fees could adversely affect
the Company.
ENVIRONMENTAL RISKS
The Company is subject to certain federal, state and local environmental,
safety and health laws, regulations and ordinances that apply to non-gaming
businesses generally, such as the Clean Air Act, Clean Water Act, Occupational
Safety and Health Act, Resource Conservation and Recovery Act and the
Comprehensive Environmental Response, Compensation, and Liability Act. The
Company has not made, and does not anticipate making, material expenditures with
respect to such environmental, safety and health laws, regulations and
ordinances. However, the coverage and attendant compliance costs
17
<PAGE> 22
associated with such laws, regulations and ordinances may result in future
additional costs to the Company's operations. For example, in 1990 the U.S.
Congress enacted the Oil Pollution Act to establish a comprehensive federal oil
spill response and liability framework. Pursuant to the Oil Pollution Act, the
Department of Transportation implemented regulations requiring owners and
operators of certain vessels, including the Company, to establish and maintain
through the U.S. Coast Guard evidence of financial responsibility sufficient to
meet their potential liability under both the Oil Pollution Act and the
Comprehensive Environmental Response, Compensation, and Liability Act for
discharges or threatened discharges of oil or hazardous substances. This
requirement may be satisfied by either proof of adequate insurance (including
self-insurance) or the posting of a surety bond or guaranty. Any significant
environmental liability or compliance costs could have a material adverse effect
on the Company's business, financial condition and results of operations.
REGULATION OF RIVERBOATS
The riverboats operated by the Company must comply with U.S. Coast Guard
requirements as to boat design, on-board facilities, equipment, personnel and
safety. Each of them must hold a Certificate of Seaworthiness or must be
approved by the American Bureau of Shipping ("ABS") for stabilization and
flotation, and may also be subject to local zoning and building codes. The U.S.
Coast Guard requirements establish design standards, set limits on the operation
of the vessels and require individual licensing of all personnel involved with
the operation of the vessels. Loss of a vessel's Certificate of Seaworthiness or
ABS approval would preclude its use as a floating casino. In addition, U.S.
Coast Guard regulations require a hull inspection at a U.S. Coast Guard-approved
dry docking facility for all cruising riverboats at five-year intervals.
Currently, the closest such facility to Sam's Town Kansas City is located in St.
Louis, Missouri. The travel to and from such docking facility, as well as the
time required for inspections of the Sam's Town Kansas City and Treasure Chest
riverboats, and, if the Par-A-Dice Acquisition is consummated, the Par-A-Dice
riverboat, could be significant. The loss of a dockside casino or riverboat
casino from service for any period of time could adversely affect the Company's
business, financial condition and results of operations.
MANAGEMENT AGREEMENTS OF LIMITED DURATION
The management agreement for the Silver Star, which is owned by the
Mississippi Band of Choctaw Indians, expires in July 2001. The Company must
submit any renewal of the management agreement to the NIGC, which has the right
to review management agreements. There can be no assurance that the current
management agreement will be renewed upon expiration or approved by the NIGC
upon any such review. The failure to renew the Company's management agreement
would result in the loss of revenues to the Company derived from the Silver Star
management agreement, which could have a material adverse effect on the Company.
The NIGC also has the authority to reduce the term of a management agreement or
the management fee or otherwise require modification of the agreement, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company manages the Treasure Chest pursuant to a management agreement
with Treasure Chest L.L.C., owner of the Treasure Chest. The management
agreement's initial five-year term expires in June 1999, subject to extension at
the Company's option if certain operating results are achieved. The Company is
reevaluating its interests in the Treasure Chest, which include its management
agreement with, and ownership interest in, Treasure Chest L.L.C. Among the
alternatives under consideration is the sale of the Company's ownership
interest. In the event of such a sale or other substantial alteration of the
Company's interest in Treasure Chest L.L.C., which the Company currently
anticipates, the management agreement between the Company and Treasure Chest
L.L.C. would likely be terminated. See "Business -- Properties -- Central Region
Properties."
RELIANCE ON CERTAIN MARKETS
The California and the Fremont derive a substantial portion of their
customers from the Hawaiian market. In fiscal 1996, patrons from Hawaii made up
over 80% of the room nights at the California and
18
<PAGE> 23
over 65% at the Fremont. An increase in fuel costs or transportation prices, a
decrease in airplane seat availability or a deterioration of relations with tour
and travel agents, as they affect travel between the Hawaiian market and the
Company's facilities, could adversely affect the Company's business, financial
condition and results of operations. The Company's Las Vegas properties also
draw a substantial number of customers from certain other specific geographic
areas, including Southern California, Arizona, Las Vegas and the Midwest. Sam's
Town Tunica draws patrons from northern Mississippi, western Tennessee
(principally Memphis) and Arkansas. The Treasure Chest appeals primarily to
local market patrons and attracts patrons from the western suburbs of New
Orleans. The Silver Star draws customers from central Mississippi, including the
greater Jackson area, and central Alabama, including Birmingham, Montgomery and
Tuscaloosa. Sam's Town Kansas City draws customers from the greater Kansas City
metropolitan area, as well as from other parts of Missouri and Kansas. The
Par-A-Dice draws customers not only from the greater Peoria area but also from
Chicago, Indiana, Iowa and Missouri. Adverse economic conditions in any of these
markets, or the failure of the Company's facilities to continue to attract
customers from these geographic markets as a result of increased competition in
those markets, could have a material adverse effect on the Company's business,
financial condition and results of operations.
FRAUDULENT TRANSFER CONSIDERATIONS
The Guaranties of the Notes provide a basis for a direct claim against the
Guarantors; however, it is possible that the Guaranties may not be enforceable.
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 Guaranty 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 sum of its debts is greater than all of its
property at a fair valuation or if the present fair salable 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.
If the Guaranties are not enforceable, the Notes will effectively be
subordinated to all indebtedness and liabilities including trade payables and
accrued liabilities of the Guarantors. On June 30, 1996, after giving effect to
the Offerings, the Par-A-Dice Acquisition, redemption of the 10.75% Notes and
Mary's Prize Sale, the Guarantors had aggregate trade payables, including
accrued liabilities of approximately $75 million and total consolidated
long-term debt of approximately $518 million, of which $185 million represents
the 11% Notes and $326 million represents borrowings under the New Bank Credit
Facility, for which CH&C (one of the Guarantors) serves as a co-obligor with the
Company. Additionally, the Guarantors have other liabilities, including
contingent liabilities, which may be substantial.
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
19
<PAGE> 24
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 Notes -- Mandatory Disposition
or Redemption Pursuant to Gaming Laws."
LACK OF SUFFICIENT FUNDS TO EFFECT REPURCHASE
Under certain circumstances, including the occurrence of a Change of
Control (or, if the Notes have been rated "investment grade" upon a Change of
Control and a ratings decline), the Company may be required to effect the
repurchase of all or a portion of the Notes. The inability of the Company to
repurchase the Notes upon a Change of Control would constitute an event of
default under the Indenture for the Notes. Events constituting a Change of
Control also would generally constitute an "event of default" under the New Bank
Credit Facility and certain existing debt agreements, causing the possible
acceleration of the obligation to repay such indebtedness, which as of June 30,
1996 and after giving effect to the Par-A-Dice Acquisition, redemption of the
10.75% Notes and the Mary's Prize Sale aggregated approximately $332 million. In
addition, events constituting a Change of Control would generally require the
Company to offer to repurchase the 11% Notes, of which an aggregate principal
amount of $185 million is outstanding. See "Description of Other Indebtedness."
The Company's failure to repay or repurchase such indebtedness would constitute
an event of default under the Indenture for the Notes. There can be no assurance
that at the time of any required repurchase the Company will have sufficient
funds to effect all or any portion of such repurchase.
CONTROL BY BOYD FAMILY
William S. Boyd, Chairman and Chief Executive Officer of the Company,
together with his immediate family, beneficially own 55.7% of the outstanding
shares of Common Stock of the Company as of June 30, 1996, (51.0% after giving
effect to the Common Stock Offering, assuming no exercise of the underwriters'
over-allotment options). As a result, the Boyd family has the ability to
significantly influence the affairs of the Company, including the election of
all of the directors of the Company and, except as otherwise provided by law,
approving or disapproving other matters submitted to a vote of the Company's
stockholders, including a merger, consolidation or sale of assets. In addition,
if the Boyd family were to sell its shares to a single investor or limited group
of investors, resulting in those investors' beneficial ownership of 50% or more
of the Company's voting stock, a Change in Control could be deemed to have
occurred in connection with the Notes.
LACK OF PUBLIC MARKET
The Notes are a new issue of securities, have no established trading market
and may not be widely distributed. The Underwriters have informed the Company
that they intend to make a market in the Notes as permitted by applicable laws
and regulations; however, the Underwriters are not obligated to do so and may
discontinue such market-making activities at any time without notice to the
holders of the Notes. Accordingly, there can be no assurance that a trading
market for the Notes will develop or be maintained. Moreover, if a market for
the Notes does not develop, holders may not be able to resell the Notes for an
extended period of time, if at all. If a trading market develops for the 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.
20
<PAGE> 25
USE OF PROCEEDS
The net proceeds to the Company from the Offering, after deduction of
selling and offering expenses, are estimated to be approximately $195 million.
The Company intends to use the net proceeds of the Offering to reduce
outstanding indebtedness under its New Bank Credit Facility without reducing the
commitment thereunder. Amounts available under the New Bank Credit Facility are
expected to be used to effect the redemption of the 10.75% Notes, to fund the
Par-A-Dice Acquisition and for general corporate purposes. If the concurrent
Common Stock Offering is consummated, the net proceeds to the Company from that
offering are estimated to be $44.9 million ($51.7 million if the underwriters'
over-allotment option is exercised in full). The Company intends to use those
net proceeds to reduce outstanding indebtedness under its New Bank Credit
Facility without reducing the commitment thereunder. The redemption of the
10.75% Notes is only expected to be effected in the event the Offering is
consummated.
Borrowings under the New Bank Credit Facility mature in June 2001 and bear
interest based on the agent bank's reference rate or the London Interbank
Offered Rate, at the Company's discretion. As of July 1, 1996, the interest rate
for the New Bank Credit Facility was 7.2% per annum. The indebtedness under the
New Bank Credit Facility was used to pay outstanding amounts under the Company's
and certain of its subsidiaries' former bank credit facilities ("Former Bank
Credit Facilities") and for general corporate purposes. The Company expects to
incur substantial additional borrowings under the New Bank Credit Facility to
effect the redemption of the 10.75% Notes, to fund the Par-A-Dice Acquisition
and for general corporate purposes. For a description of the New Bank Credit
Facility, see "Description of Other Indebtedness -- New Bank Credit Facility."
The 10.75% Notes mature in September 2003 and bear interest at a rate of 10.75%
per annum, payable semi-annually. The aggregate principal amount of the 10.75%
Notes is $150 million. For a description of the 10.75% Notes, see "Description
of Other Indebtedness -- 10.75% Notes."
21
<PAGE> 26
CAPITALIZATION
The following sets forth (i) the consolidated capitalization of the Company
as of June 30, 1996, (ii) such capitalization as adjusted to give effect to the
Offerings (without giving effect to the exercise of the underwriters'
over-allotment option from the Company in connection with the Common Stock
Offering), and (iii) the capitalization as adjusted and pro forma to reflect the
Par-A-Dice Acquisition, redemption of the 10.75% Notes and Mary's Prize Sale.
This table should be read in conjunction with the pro forma consolidated
financial statements of the Company and the consolidated financial statements of
the Company and of Par-A-Dice Gaming, which are included elsewhere or
incorporated in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------------------------
AS ADJUSTED AS ADJUSTED
FOR THE AND PRO
ACTUAL OFFERINGS FORMA
-------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents.............................. $ 48,980 $ 54,330 $ 51,701
======== ======== ==========
Long-term debt, including current portion
New Bank Credit Facility(a)(b)....................... $235,000 $ -- $ 326,283
Notes offered hereby(c).............................. -- 200,000 200,000
11% Senior Subordinated Notes due 2002(d)............ 185,000 185,000 185,000
10.75% Senior Subordinated Notes due 2003(e)......... 150,000 150,000 --
Other(b)............................................. 24,839 24,839 7,265
-------- -------- ----------
Total long-term debt......................... 594,839 559,839 718,548
Stockholders' equity................................... 233,257 278,107 273,457
-------- -------- ----------
Total capitalization......................... $828,096 $ 837,946 $ 992,005
======== ======== ==========
</TABLE>
- ---------------
(a) Represents borrowings under the New Bank Credit Facility to effect the
redemption of the 10.75% Notes to fund the Par-A-Dice Acquisition and for
general corporate purposes. Such borrowings are guaranteed by certain
existing and future subsidiaries of the Company and are secured.
(b) In connection with the Mary's Prize Sale for $20 million, approximately
$17.6 million of associated debt was retired and the balance of the proceeds
was applied to reduce amounts outstanding under the New Bank Credit
Facility.
(c) The Notes offered hereby are obligations of the Company and are guaranteed
by certain existing and future subsidiaries of the Company.
(d) The 11% Notes are obligations of California Hotel Finance Corporation, a
wholly-owned special purpose subsidiary of CH&C and are guaranteed on a
senior subordinated basis by CH&C.
(e) The 10.75% Notes are obligations of the Company.
22
<PAGE> 27
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of and for the
fiscal years ended June 30, 1996, 1995 and for the fiscal year ended June 30,
1994 have been derived from the audited consolidated financial statements of the
Company contained elsewhere in this Prospectus. The selected consolidated
financial data presented below as of June 30, 1994 and as of and for the fiscal
years ended June 30, 1993 and 1992, have been derived from audited consolidated
financial statements of the Company not contained herein. Operating results for
the fiscal years shown below are not necessarily indicative of the results that
may be expected for future fiscal years.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues.............................................. $775,857 $660,340 $468,219 $431,174 $406,804
Operating expense......................................... 675,071 549,770 413,971 368,255 359,409
-------- -------- -------- -------- --------
Operating income.......................................... 100,786 110,570 54,248 62,919 47,395
Interest expense, net(a).................................. 51,186 46,371 36,093 32,378 37,762
Gain on investment........................................ -- -- -- 1,062 --
-------- -------- -------- -------- --------
Income before provision for income taxes, cumulative
effect of
a change in accounting principle and extraordinary
item.................................................... 49,600 64,199 18,155 31,603 9,633
Provision for income taxes................................ 20,021 27,950 7,505 11,469 3,519
-------- -------- -------- -------- --------
Income before cumulative effect of a change in accounting
principle and extraordinary item........................ 29,579 36,249 10,650 20,134 6,114
Cumulative effect of a change in accounting for income
taxes................................................... -- -- 2,035 -- --
-------- -------- -------- -------- --------
Income before extraordinary item.......................... 29,579 36,249 12,685 20,134 6,114
Extraordinary item, net of tax............................ (1,435) -- -- (7,397) --
-------- -------- -------- -------- --------
Net income................................................ 28,144 36,249 12,685 12,737 6,114
Dividends on preferred stock.............................. -- -- 467 1,881 1,920
-------- -------- -------- -------- --------
Net income applicable to common stock..................... $ 28,144 $ 36,249 $ 12,218 $ 10,856 $ 4,194
======== ======== ======== ======== ========
Ratio of earnings to fixed charges(b)..................... 1.76 1.98 1.24 1.87 1.24
OTHER OPERATING DATA
Depreciation and amortization............................. $ 60,626 $ 54,518 $ 42,136 $ 39,450 $ 38,853
Preopening expense........................................ 10,004 -- 4,605 -- --
Capital expenditures...................................... 90,977 183,299 326,829 24,485 18,702
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets.............................................. $953,425 $949,513 $836,297 $500,123 $467,133
Long-term debt (excluding current portion)................ 590,808 587,957 525,637 364,927 317,106
Stockholders' equity...................................... 233,257 202,613 164,405 72,686 62,668
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
(b) For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of income before fixed charges and income taxes, adjusted
to exclude interest capitalized, and "fixed charges" consist of interest
cost and a portion of rental cost deemed to be interest.
23
<PAGE> 28
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying pro forma consolidated financial statements present pro
forma information for the Company and Par-A-Dice Gaming giving effect to the
Par-A-Dice Acquisition using the purchase method of accounting. The pro forma
consolidated financial statements of the Company are based on the historical
consolidated financial statements of the Company and Par-A-Dice Gaming as of and
for the year ended June 30, 1996.
The accompanying pro forma consolidated income statements for the year
ended June 30, 1996 have been presented as if the Par-A-Dice Acquisition
occurred on July 1, 1995. The accompanying pro forma consolidated balance sheet
as of June 30, 1996 has been presented as if the Par-A-Dice Acquisition occurred
on June 30, 1996.
The pro forma adjustments are based on currently available information and
upon certain assumptions that management of the Company believes are reasonable
under the circumstances.
The accompanying pro forma consolidated financial statements are provided
for informational purposes only and are not necessarily indicative of the
results that will be achieved for future periods. The accompanying pro forma
consolidated financial statements do not purport to represent what the Company's
results of operations or financial position would actually have been if the
Par-A-Dice Acquisition in fact had occurred at July 1, 1995 or June 30, 1996.
The accompanying pro forma consolidated financial statements and the related
notes thereto should be read in conjunction with the Company's consolidated
financial statements and the consolidated financial statements of Par-A-Dice
Gaming included elsewhere or incorporated in this Prospectus.
24
<PAGE> 29
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.............. $ 48,980 $ 2,721 $ 176,558(a)
(3,000)(b)
(16,500)(c)
(157,058)(d) $ 51,701
Accounts receivable, net............... 16,040 339 16,379
Inventories............................ 6,531 272 6,803
Prepaid expenses....................... 15,265 654 15,919
-------- ------- ----------
Total current assets................ 86,816 3,986 90,802
Property, equipment and leasehold
interests, net......................... 797,593 53,760 7,164(d) 858,517
Other assets and deferred charges........ 58,489 1,254 3,000(b)
(1,117)(d) 61,626
Goodwill and intangibles, net............ 10,527 -- 114,536(d) 125,063
-------- ------- -------- ----------
Total assets........................ $ 953,425 $ 59,000 $ 123,583 $1,136,008
======== ======= ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt...... $ 4,031 $ 2,400 $ (2,400)(c) $ 4,031
Accounts payable....................... 47,193 983 48,176
Accrued liabilities
Payroll and related................. 22,956 -- 22,956
Interest and other.................. 20,956 4,042 24,998
Income taxes payable................... 678 -- 678
-------- ------- -------- ----------
Total current liabilities........... 95,814 7,425 (2,400) 100,839
Long-term debt, net of current
maturities............................. 590,808 14,100 176,558(a)
(14,100)(c) 767,366
Deferred income taxes.................... 33,546 -- 33,546
Minority interest........................ -- 1,000 1,000
Commitments..............................
Stockholders' equity
Preferred stock........................ -- -- --
Common stock........................... 572 -- 572
Additional paid-in capital............. 102,583 8,788 (8,788)(d) 102,583
Retained earnings...................... 130,102 27,687 (27,687)(d) 130,102
-------- ------- -------- ----------
Total stockholders' equity.......... 233,257 36,475 (36,475) 233,257
-------- ------- -------- ----------
Total liabilities and stockholders'
equity............................ $ 953,425 $ 59,000 $ 123,583 $1,136,008
======== ======= ======== ==========
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
25
<PAGE> 30
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- --------------- ---------
<S> <C> <C> <C> <C>
Revenues
Casino............................... $ 548,167 $ 97,829 $ $ 645,996
Food and beverage.................... 142,420 7,742 150,162
Rooms................................ 69,645 0 69,645
Other................................ 49,895 2,296 52,191
Management fees and joint venture.... 41,576 0 41,576
-------- ------- -------- --------
Gross revenues......................... 851,703 107,867 959,570
Less promotional allowances............ 75,846 2,003 77,849
-------- ------- -------- --------
Net revenues...................... 775,857 105,864 881,721
-------- ------- -------- --------
Costs and expenses
Casino............................... 273,545 32,508 306,053
Food and beverage.................... 99,213 7,633 106,846
Rooms................................ 25,842 0 25,842
Other................................ 36,830 2,886 39,716
Selling, general and
administrative.................... 114,497 26,691 141,188
Maintenance and utilities............ 30,171 2,852 33,023
Depreciation and amortization........ 60,626 4,454 3,063(e)(f) 68,143
Corporate expense.................... 24,343 -- 24,343
Preopening expense................... 10,004 -- 10,004
-------- ------- -------- --------
Total............................. 675,071 77,024 3,063 755,158
-------- ------- -------- --------
Operating income....................... 100,786 28,840 (3,063) 126,563
-------- ------- -------- --------
Other income (expense)
Interest income...................... 1,174 537 (84)(g) 1,627
Interest expense, net of amounts
capitalized....................... (52,360) (1,379) (11,862)(h)(i) (65,601)
-------- ------- -------- --------
Total............................. (51,186) (842) (11,946) (63,974)
-------- ------- -------- --------
Income before provision for income
taxes and extraordinary item......... 49,600 27,998 (15,009) 62,589
Provision for income taxes............. 20,021 393 4,283(j) 24,697
-------- ------- -------- --------
Income from continuing operations...... $ 29,579 $ 27,605 $ (19,292) $ 37,892
======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
26
<PAGE> 31
BOYD GAMING CORPORATION
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
The pro forma adjustments contained in the accompanying pro forma
consolidated financial statements reflect:
(a) The proceeds from borrowings under the New Bank Credit Facility to fund the
Par-A-Dice Acquisition.
(b) The payment of fees related to the Par-A-Dice Acquisition.
(c) The retirement of assumed indebtedness of Par-A-Dice Gaming.
(d) The payment of approximately $157,058 to the Par-A-Dice Gaming shareholders,
the transfer of certain assets of $1,117 not associated with the Par-A-Dice
to the Par-A-Dice Gaming shareholders (the "Transferred Assets"), the
elimination of Par-A-Dice Gaming's equity ($8,788 in common stock and
$27,687 in retained earnings) and the allocation of the excess purchase
price over historical value of acquired assets ($7,164 additional amounts
allocated to property, equipment and leasehold interest related to
construction in process of the hotel facility, $114,536 allocated to
intangibles-license rights) based on the Company's estimates of the fair
market values of the assets being acquired.
(e) The elimination of Par-A-Dice Gaming's historical depreciation and
amortization expense for the year ended June 30, 1996.
(f) Depreciation and amortization expense as follows:
<TABLE>
<CAPTION>
AMOUNT LIFE DEPRECIATION
-------- ---- ------------
<S> <C> <C> <C>
Land............................................. $ 1,453 -- --
Buildings, equipment and leasehold interest...... 38,373 8 $4,454
Construction in process -- Hotel................. 21,098 -- --
-------- ------------
Total property, equipment and leasehold
interest.................................... 60,924 4,454
Other assets..................................... 3,000 15 200
Intangibles-license rights....................... 114,536 40 2,863
------------
Total....................................... $7,517
==========
</TABLE>
(g) The elimination of interest income of $84 for the year ended June 30, 1996
related to the Transferred Assets.
(h) The elimination of Par-A-Dice Gaming's historical interest expense for the
year ended June 30, 1996.
(i) Interest expense on $176,558 in debt at an assumed interest rate of 7.5%.
(j) An adjustment to the provision for income taxes of $4,283, for the year
ended June 30, 1996 in order to result in a 36% combined state and federal
corporate tax rate due to the conversion of Par-A-Dice Gaming from
Subchapter S status to C corporate status under the Internal Revenue Code.
27
<PAGE> 32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain Income
Statement Data for the Company's properties. As used herein, "Boulder Strip
Properties" consists of Sam's Town Las Vegas, the Eldorado and the Jokers Wild;
"Downtown Properties" consists of the California and the Fremont; and "Central
Region Properties" consists of Sam's Town Tunica, Sam's Town Kansas City (opened
September 1995), management fee income from the Silver Star, and management fee
and joint venture income from the Treasure Chest (opened September 1994).
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
----------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues
Stardust........................................... $194,513 $193,563 $195,899
Boulder Strip Properties........................... 189,315 168,036 125,087
Downtown Properties................................ 139,602 135,232 137,726
Central Region Properties.......................... 245,204 163,509 9,507
-------- -------- --------
Total Properties.............................. $768,634 $660,340 $468,219
========= ========= =========
Operating income
Stardust........................................... $ 30,748 $ 30,688 $ 26,713
Boulder Strip Properties........................... 23,904 15,551 20,686
Downtown Properties................................ 18,444 22,561 23,583
Central Region Properties.......................... 66,681 68,486 2,439
Preopening expense................................. (10,004) -- (4,605)
-------- -------- --------
Total Properties.............................. $129,773 $137,286 $ 68,816
========= ========= =========
</TABLE>
RECENT DEVELOPMENTS
In the fourth quarter of fiscal 1996, the Company reported net income
(before the write-off of a $1.4 million extraordinary item) of $3.5 million, as
compared to approximately $12 million in the same period in fiscal 1995. For the
first quarter of fiscal 1997, management expects that the Company's operating
results will continue to be adversely affected by certain competitive trends
which affected the Company's results during the fourth fiscal quarter of 1996,
and at Sam's Town Tunica, by the effect of construction disruption related to
ongoing construction projects, as well as trends specific to the first quarter
of fiscal 1997.
Sam's Town Tunica experienced an 80% decline in operating income in the
fourth quarter of fiscal 1996 and continues to experience operating results well
below those historically achieved. Management believes that the property has
been adversely affected by the opening of new gaming facilities in April and
June of 1996 and disruption from the ongoing construction of an additional 350
hotel rooms and a 1,000-car parking garage. The construction is not anticipated
to be completed prior to the middle of December 1996. As a result of the ongoing
impact of these factors, Sam's Town Tunica is expected to post fiscal 1997 first
quarter results that are higher than those in the fourth quarter of fiscal 1996,
though well below those experienced in the comparable prior year period.
Sam's Town Kansas City reported an operating loss of $5 million (before the
write-off of preopening expenses) in 1996. The property is expected to continue
to report poor results during the first quarter of fiscal 1997. Management
attributes the poor performance to high fixed costs and substantial advertising
and promotional expenses incurred in response to the highly competitive
operating environment. The
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<PAGE> 33
Company is in the process of developing and implementing new marketing programs
and making certain physical and equipment changes in an effort to improve
revenues. While management expects results to slightly improve in the first
quarter of fiscal 1997 as compared to the fourth quarter of fiscal 1996, Sam's
Town Kansas City is expected to face increased competition following the
anticipated opening of two new gaming facilities in the near future. Further,
there can be no assurance when, or if, Sam's Town Kansas City will achieve
profitability.
In addition, management expects that the first quarter of fiscal 1997 may
be adversely affected by competitive pressures specific to the quarter. In
particular, the Stardust has experienced a decline in revenue and an increase in
general marketing costs during the first quarter of fiscal 1997 as compared to
the comparable prior year period. These results are, in part, attributable to
historical seasonal patterns experienced by the Stardust as well as to increased
competition in Las Vegas, as evidenced by the opening of new gaming facilities
in April and June of 1996.
As a result of the factors described above, management expects that the
Company's operating results for the first quarter of fiscal 1997 will likely be
well below those of the comparable prior fiscal year period. The Company
anticipates that it will report minimal net income or possibly a net loss for
the quarter. See "Risk Factors -- Recent Earnings Decline" and "-- Competition."
FISCAL 1996 COMPARED TO FISCAL 1995
Consolidated net revenues increased 17.5% for fiscal 1996 compared to
fiscal 1995. The increase in net revenues for fiscal 1996 resulted primarily
from the opening of Sam's Town Kansas City in September 1995, increased revenues
at Sam's Town Las Vegas of 14.9% and increased revenues at Sam's Town Tunica of
8.2%. In the Company's Central Region, which consists of Sam's Town Tunica,
Sam's Town Kansas City, the Silver Star and the Treasure Chest, revenue
increased 50% for fiscal 1996 compared to fiscal 1995 while in the Company's
Nevada Region, which consists of the Stardust, Sam's Town Las Vegas, the
Eldorado, Jokers Wild, the California and the Fremont, revenue increased 5.4%
for fiscal 1996 compared to fiscal 1995. Revenue growth on a consolidated basis
in fiscal 1996 was achieved in all major revenue categories, with casino revenue
increasing 18.3%, room revenue increasing 5.7%, food and beverage revenue
increasing 12.7% and management fee and joint venture income increasing 16.3%
compared to fiscal 1995. Slot revenue, which continued to account for more than
70% of casino revenue, increased 22% in fiscal 1996 compared to fiscal 1995.
This increase in slot revenue was primarily attributable to the opening of Sam's
Town Kansas City in September 1995 and to a 24% increase in slot revenue at
Sam's Town Las Vegas. Table games revenue, the only other significant component
of casino revenue, increased 10.6% in fiscal 1996 compared to fiscal 1995
primarily as a result of the opening of Sam's Town Kansas City. Company-wide
room revenue increased 5.7% in fiscal 1996 compared to fiscal 1995 as a result
of a 5.9% increase in occupied rooms and a 6.3% increase in the average daily
room rate. The Company's hotel rooms posted an overall occupancy percentage of
96% in fiscal 1996 compared to 95% in fiscal 1995 with occupancy at Sam's Town
Tunica increasing to 95% in fiscal 1996 from 87% in fiscal 1995 and occupancy at
Sam's Town Las Vegas increasing to 96% in fiscal 1996 compared to 92% in fiscal
1995. The increase in occupied rooms was attributable to the openings of the
Sam's Town Tunica rooms expansion (300 rooms opened in December 1994) and the
California rooms expansion (146 rooms opened in December 1994). Both of these
rooms expansion projects were open for the entire fiscal 1996 but were only open
for the last six months of fiscal 1995. Occupancy statistics do not include
rooms at Main Street Station which the Company uses to augment the rooms base at
the California and the Fremont. The Main Street Station property was purchased
in December 1993 as a closed casino hotel facility and is currently undergoing
an extensive renovation and expansion project. The Company expects to open this
renovated and expanded property in fiscal 1997 as a complete casino hotel
facility.
Consolidated operating income declined 8.8% for fiscal 1996 as compared to
fiscal 1995 while consolidated operating income margins declined to 13.0% from
16.7%. This decline in consolidated operating income and consolidated operating
income margins was primarily attributable to the write-off of preopening
expenses related to the opening of Sam's Town Kansas City on September 13, 1995.
This
29
<PAGE> 34
preopening charge, which amounted to $10 million, was taken in the first quarter
of fiscal 1996. Consolidated operating income for fiscal 1996 before the
write-off of preopening expenses increased slightly compared to fiscal 1995
while consolidated operating income margins was 14.3% in fiscal 1996 compared to
16.7% in fiscal 1995. In the Company's Nevada Region, operating income increased
6.2% for fiscal 1996 compared to fiscal 1995 while consolidated operating income
margins increased to 14.0% for fiscal 1996 from 13.8% in fiscal 1995. This
increase in operating income and operating income margins was primarily
attributable to increases at Sam's Town Las Vegas of 83% and 4.3 percentage
points, respectively, offset by declines at the Downtown Properties of 18.2% and
3.5 percentage points, respectively. In the Company's Central Region, operating
income before the write-off of preopening expenses related to Sam's Town Kansas
City decreased 2.6% in fiscal 1996 compared to fiscal 1995 while operating
income margins declined to 27% primarily as a result of an operating loss at
Sam's Town Kansas City and a decline in operating income margin at Sam's Town
Tunica to 21.8% in fiscal 1996. Operating income in the Central Region includes
management fee and joint venture income related to the Company's Silver Star and
Treasure Chest operations.
Net revenues at the Stardust increased 0.5% for fiscal 1996 as compared to
the prior fiscal year. Casino and food and beverage revenues declined 0.5% and
1.6%, respectively, while rooms revenue increased 3.4% and showroom revenue
increased 9.3% for fiscal 1996 as compared to fiscal 1995. Slot revenue declined
1.3% in fiscal 1996 with a 2.3% increase in wagering offset by lower net
winnings. Table games revenue declined 4.1% for fiscal 1996 as compared to
fiscal 1995 as a result of an increase of 4.3% in wagering offset by lower net
winnings. Other casino revenues increased 11.9% for fiscal 1996 primarily as a
result of a 28% increase in revenue in the sports book. Rooms revenue at the
Stardust increased 3.4% for fiscal 1996 compared to fiscal 1995 with a 1.3%
decline in occupied rooms offset by a 7.9% increase in average daily room rate.
The Stardust posted an occupancy rate of 96% in fiscal 1996 versus 97% in the
prior fiscal year. Operating income increased slightly in fiscal 1996 compared
to fiscal 1995 and operating income margin was 15.8% compared to 15.9%,
respectively for fiscal 1996 versus fiscal 1995. The slight decline in operating
income margin was primarily the result of higher advertising and promotional
expenses not fully offset by increased operating income and operating income
margin in the rooms department.
Net revenues for the Boulder Strip Properties increased 12.7% for fiscal
1996 versus fiscal 1995 primarily as a result of increased revenues at Sam's
Town Las Vegas. Sam's Town Las Vegas revenue increased 14.9% for fiscal 1996
while revenues increased 6.8% at Jokers Wild and declined slightly at the
Eldorado. Casino revenues at the Boulder Strip Properties increased 16.7% for
fiscal 1996 versus fiscal 1995, while rooms revenue increased 4.7% and food and
beverage revenue increased 4.8%. Operating income at the Boulder Strip
Properties increased 54% for fiscal 1996 compared to fiscal 1995 while operating
income margin increased 3.3 percentage points to 12.6% for fiscal 1996. Sam's
Town Las Vegas posted increases in operating income and operating income margin
of 83% and 4.3 percentage points, respectively for the 1996 fiscal year.
Operating income margins increased 2.5 percentage points at the Eldorado and
declined 2.3 percentage points at Jokers Wild for fiscal 1996 versus fiscal
1995. The increase in operating income margin at the Eldorado was a result of
increased casino revenue while the decline in operating income margin at Jokers
Wild was primarily a result of increased expenses in the food and beverage
department for fiscal 1996 versus fiscal 1995. Management believes that the
significant increases in revenues, operating income and operating income margin
at Sam's Town Las Vegas for fiscal 1996 versus fiscal 1995 were primarily
attributable to the implementation of successful marketing programs creating
increased customer awareness and visitation.
Net revenues at the Downtown Properties increased 3.2% for fiscal 1996
compared to fiscal 1995. Net revenues at the California increased 1.4% while net
revenues at the Fremont increased 5.2%. Casino revenues at the Downtown
Properties were up slightly while food and beverage revenue increased 20% and
rooms revenue declined slightly. Operating income and operating income margins
at the Downtown Properties declined 18.2% and 3.5 percentage points,
respectively in fiscal 1996 as compared to fiscal 1995. Operating income at the
California declined 20% while operating income margin at the California declined
3.7 percentage points for fiscal 1996. The decline in operating income and
operating income
30
<PAGE> 35
margin at the California was primarily the result of increased operating costs
in the rooms and food and beverage departments and increased advertising and
promotional costs. Operating income and operating income margin at the Fremont
declined 15.6% and 3.1 percentage points, respectively for fiscal 1996 compared
to fiscal 1995 primarily as a result of increased advertising and promotional
costs. Construction of the Fremont Street Experience project, which was
completed and opened to the public in December 1995, negatively impacted the
Downtown Properties for the majority of the first and second fiscal quarters.
Net revenues at the Central Region Properties increased 50% for fiscal 1996
versus 1995. The opening of Sam's Town Kansas City on September 13, 1995
accounted for the majority of the increase in fiscal 1996. Sam's Town Tunica
revenues increased 8.2% for the 1996 fiscal year versus fiscal 1995 while
management fees and joint venture income related to the Silver Star and the
Treasure Chest operations increased 16.3%. Operating income in the Central
Region (before the write-off of preopening expenses related to Sam's Town Kansas
City) declined 2.6% to $66.7 million for fiscal 1996. The decline in operating
income was primarily a result of a $5 million operating loss at Sam's Town
Kansas City and an 8.0% decline in operating income at Sam's Town Tunica,
partially offset by a 16.3% increase in operating income from management fees
and joint venture income. The operating loss at Sam's Town Kansas City was
primarily attributable to revenues not sufficient to cover the high level of
fixed costs associated with the operation of the facility and higher levels of
advertising and promotional expenses aimed at increasing customer awareness and
revenues. Results from Sam's Town Tunica were weakened due to severe weather
during the third quarter of fiscal 1996, the effects of a new competitor opening
at the beginning of the fourth fiscal quarter and the impact of construction
disruption related to the 350-room hotel expansion project and construction of a
1,000-car parking garage which commenced in the second half of fiscal 1996.
Interest expense, net of amounts capitalized, increased $3.9 million or
8.1% for fiscal 1996 compared to fiscal 1995 primarily as a result of less
capitalized interest related to projects under development. Depreciation and
amortization expense for fiscal 1996 increased $6.1 million or 11.2% compared to
fiscal 1995 primarily as a result of the opening of Sam's Town Kansas City in
September 1995 and a full year of depreciation of the Sam's Town Las Vegas
expansion and the California rooms expansion projects which opened in December
1994.
The Company's tax rate for fiscal 1996 was 40% compared to 44% in fiscal
1995. The Company's 1995 tax rate was affected by the increase in certain
non-deductible expenses related to the Company's development efforts during that
year.
The Company recorded an extraordinary loss, net of tax, of $1.4 million in
fiscal 1996. This extraordinary loss resulted from the write-off of unamortized
bank loan fees in connection with its recent bank refinancing which was
completed on June 19, 1996.
As a result of these factors, net income before extraordinary item declined
$6.7 million and net income declined $8.1 million for fiscal 1996 compared to
fiscal 1995. Net income per common share declined to $0.49 for fiscal 1996 from
$0.64 in fiscal 1995 primarily as a result of lower net income and slightly more
additional shares outstanding.
FISCAL 1995 COMPARED TO FISCAL 1994
Consolidated net revenues increased 41% for fiscal 1995 compared to fiscal
1994. This increase in net revenues in fiscal 1995 resulted from the Company's
current expansion program which included the opening of Sam's Town Tunica in May
1994 and a subsequent rooms expansion project in December 1994, the opening of
the Silver Star in July 1994 and a subsequent casino expansion in December 1994,
the opening of the Treasure Chest in September 1994, the opening of Sam's Town
Las Vegas expansion in July 1994 and the opening of the California rooms
expansion in December 1994. The Company's Central Region, which consists of
Sam's Town Tunica, the Silver Star and the Treasure Chest, accounted for more
than 80% of the increase in net revenues. Only one of these properties was open
prior to the start of the fiscal year, as Sam's Town Tunica was open for
approximately one month in fiscal 1994. In the
31
<PAGE> 36
Company's Nevada Region, net revenues increased 8.3% with net revenues at the
Boulder Strip Properties increasing 34% and net revenues at the Stardust and
Downtown Properties declining 1.2% and 1.8%, respectively. Net revenues at the
Boulder Strip Properties were enhanced by the opening in July 1994 of the Sam's
Town Las Vegas expansion and by the acquisition of the Eldorado and Jokers Wild
in October 1993. The Company's revenue growth was achieved in all major revenue
categories with casino revenue increasing 36%, room revenue increasing 45%, food
and beverage revenue increasing 18.6% and other revenue increasing 28%.
Management fee and joint venture revenue relating to the operation of the Silver
Star, which opened in July 1994 and the Treasure Chest, which opened in
September 1994, totaled $35.8 million for fiscal 1995. Slot revenue, which
accounted for more than two-thirds of total casino revenue, increased 38% in
fiscal 1995 compared to fiscal 1994. The increase in slot revenue was primarily
attributable to the opening of Sam's Town Tunica in May 1994 and the opening of
the Sam's Town Las Vegas expansion in July 1994. Table games revenue, the only
other significant component of casino revenue, increased 39% also as a result of
the opening of Sam's Town Tunica and the Sam's Town Las Vegas expansion.
Company-wide room revenue increased 45% for fiscal 1995 compared to fiscal 1994
primarily as a result of a 25% increase in occupied rooms and a 12.7% increase
in average daily room rate. The increase in occupied rooms was attributable to
the opening of the Sam's Town Las Vegas expansion in July 1994 (650 rooms), the
opening and subsequent expansion of Sam's Town Tunica (200 rooms opened May 1994
and an additional 308 rooms opened December 1994) and the opening of the
California rooms expansion (146 rooms opened December 1994). The Company's hotel
rooms posted an overall occupancy percentage of 95% in fiscal 1995 compared to
98% in fiscal 1994. Occupancy statistics do not include Main Street Station
rooms which the Company uses to augment the rooms base at the California and the
Fremont. Occupancy rates at the Stardust declined to 97% while Sam's Town Tunica
posted an occupancy rate of 87% for fiscal 1995.
Consolidated operating income increased 104% for fiscal 1995 compared to
fiscal 1994 while consolidated operating income margins increased 5.1 percentage
points to 16.7% for fiscal 1995 compared to 11.6% in fiscal 1994. The increase
in operating income and operating income margins for fiscal 1995 was generated
primarily by the Company's Central Region properties which produced $68.5
million in operating income and posted a 42% operating income margin. In the
Nevada Region, the Stardust operating income margin increased to 15.9% in fiscal
1995 from 13.6% in fiscal 1994 and operating income margins at the Boulder Strip
and Downtown Properties declined to 9.3% and 16.7%, respectively, in fiscal
1995. Higher corporate expense related to the Company's development activities
also impacted consolidated operating income margins. Operating income in the
Central Region includes management fees and joint venture income related to the
Silver Star and the Treasure Chest. Neither of these properties were open in
fiscal 1994.
Net revenues at the Stardust declined 1.2% for fiscal 1995 as compared to
the prior fiscal year. Casino and food and beverage revenues declined 3.8% and
5.1% respectively, while rooms revenue increased 14.4% and showroom revenue
increased 19.9%. Slot revenue declined 1.8% with a 3.5% increase in wagering
offset by lower net winnings. Table games revenue declined 3.8% as a result of a
decline of 2.2% in wagering combined with slightly lower net winnings. Other
casino revenues declined 15.9% for fiscal 1995 with both the sports book and
keno posting declines in wagering of 17.3% and 17.8% respectively, offset by
slightly higher net winnings. The decline in wagering in the sports book was
primarily attributable to the decline in baseball wagering due to the Major
League Baseball strike. Rooms revenue at the Stardust increased 14.4% for fiscal
1995 compared to fiscal 1994 with a 2.6% decline in occupied rooms offset by a
15.7% increase in average daily room rate. The Stardust posted an occupancy rate
of 97% in fiscal 1995 versus 99% in the prior fiscal year. Operating income
margins increased 2.3 percentage points to 15.9% for fiscal 1995 versus 13.6% in
fiscal 1994. The increase in the operating income margin was the result of
increased operating income in the rooms department and showroom department
combined with slight decreases in payroll and overhead expenses.
Net revenues for the Boulder Strip Properties increased 34% for fiscal 1995
versus fiscal 1994 primarily as a result of the opening of the Sam's Town Las
Vegas expansion in July 1994 and also as a result of the acquisition of the
Eldorado and Jokers Wild in October 1993. Sam's Town Las Vegas
32
<PAGE> 37
revenue increased 31% as a result of the expansion with casino revenue
increasing 22%, food and beverage revenue increasing 54% and increased rooms
revenue as a result of having a full year of rooms revenue in fiscal 1995. For
most of fiscal 1994 all 200 hotel rooms at Sam's Town Las Vegas were unavailable
as a result of the expansion project. Net revenues at the Eldorado and Jokers
Wild increased 40% and 56%, respectively, primarily as a result of their
acquisition in October 1993. The operating income margin for the Boulder Strip
Properties was 9.3% in fiscal 1995 versus 16.5% in fiscal 1994. The decline in
the operating income margin was attributable to a decline in Sam's Town Las
Vegas operating income margin to 7.3% from 15.6% and a decline in operating
income margins at the Eldorado and Jokers Wild to 14.8% and 19.8%, respectively,
from 18.3% and 23.7%, respectively. The decline in operating income margins at
Sam's Town Las Vegas was primarily attributable to the growth in revenues which
did not match the growth in expenses associated with the expanded property and
increased competition, primarily the opening of a new property on the Boulder
Strip. The decline in operating income margins at the Eldorado and Jokers Wild
resulted from increased competition on the Boulder Strip.
Net revenues at the Downtown Properties decreased 1.8% for fiscal 1995 as
compared to fiscal 1994. Net revenues at the California increased 2.5% in fiscal
1995 with casino revenue increasing 1.5%, rooms revenue increasing 15.9% and
food and beverage revenue declining 4.2%. Net revenues at the California were
enhanced by the opening in December 1994 of a 146-room expansion project. At the
Fremont, net revenues declined 6.1% with casino revenue declining 4.5% and rooms
and food and beverage revenue declining 3.8% and 14.3%, respectively. During the
third and fourth fiscal quarters, the Fremont and to a lesser extent the
California were negatively impacted by the construction of the Fremont Street
Experience. The construction of the Fremont Street Experience, as well as work
on several adjacent streets, impeded the free flow of both vehicular and
pedestrian traffic through downtown Las Vegas. The Company was negatively
impacted by this construction until the Fremont Street Experience opened in
December 1995. Operating income margins at the Downtown Properties were 16.7% in
fiscal 1995 versus 17.1% in fiscal 1994 with operating income margins at the
California of 17.5% in fiscal 1995 versus 18.7% in fiscal 1994 and operating
income margins at the Fremont of 15.7% in fiscal 1995 versus 15.5% in fiscal
1994. The decline in operating income margin at the California was attributable
to increased revenues in lower margin departments and certain inefficiencies
associated with the opening of the new hotel rooms.
The Central Region Properties produced net revenues of $163.5 million for
fiscal 1995 versus $9.5 million in fiscal 1994. Sam's Town Tunica, in its first
full year of operation, produced net revenues of $127.7 million while management
fee and joint venture income from the Silver Star and the Treasure Chest totaled
$35.8 million. Operating income and the operating income margin for fiscal 1995
was $68.5 million or 42%. Operating income was $32.7 million at Sam's Town
Tunica while operating income from the Silver Star and the Treasure Chest
totaled $35.8 million. The Central Region Properties results include the full
revenues and income from Sam's Town Tunica which opened in May 1994, management
fee income from the Silver Star which opened in July 1994 and management fee and
joint venture income from the Treasure Chest which opened in September 1994. Net
revenues, operating income and operating income margin were enhanced by the
opening of a 308-room expansion at Sam's Town Tunica in December 1994 and a
casino expansion at the Silver Star which opened in December 1994.
Interest income for fiscal 1995 was $2.1 million compared to $3.4 million
in fiscal 1994. Interest expense, net of amounts capitalized, increased $9.0
million or 22.7% for fiscal 1995 versus the prior year as a result of increased
borrowings and higher interest rates. Depreciation expense for fiscal 1995
increased 29% primarily as a result of the openings of Sam's Town Tunica and the
Sam's Town Las Vegas expansion.
The Company's tax rate for fiscal 1995 was 44% as compared to 41% for
fiscal 1994. The increase in the Company's tax rate was primarily a result of
the increase in certain non-deductible expenses related to the Company's
development efforts.
33
<PAGE> 38
As a result of these factors, net income before the cumulative effect of a
change in accounting principle increased $25.6 million or 240% for fiscal 1995
as compared to fiscal 1994. Net income increased $24.0 million or 197% during
fiscal 1995 compared to the prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow and Working Capital
The Company's policy is to use operating cash flow and debt and equity
financing to fund renovation of its properties and expansion of its business.
With the opening of Sam's Town Kansas City in September 1995, the Company
completed a significant expansion program and is in the process of another
expansion program which includes the $40 million expansion of its Sam's Town
Tunica facility, the $45 million expansion and renovation of Main Street
Station, the $175 million Par-A-Dice Acquisition, the proposed $92 million
development of a casino, hotel and entertainment facility in Reno, Nevada and
the Company's anticipated $100 million investment in the Mirage Joint Venture.
In addition, the Company continues to explore new opportunities for growth.
For the year ended June 30, 1996, the Company's net cash provided by
operating activities was $103.9 million compared to $83.1 million in the prior
fiscal year. Net cash provided by operating activities in the prior fiscal year
was negatively impacted by significant reductions in accounts payable and
increases in other assets related to the opening of new properties and the
timing of payments related to the opening of those projects. As of June 30,
1996, the Company had balances of cash and cash equivalents of approximately $49
million and had approximately $265 million of credit available under its New
Bank Credit Facility.
The Company's principal sources of funds for the year ending June 30, 1995
consisted of cash flows from operating activities of $83.1 million and
borrowings under the Former Bank Credit Facilities. As of June 30, 1995, the
Company had $12 million available under the Former Bank Credit Facilities. For
the fiscal year ended June 30, 1994, the Company's principal sources of funds
consisted of proceeds from the issuance of long-term debt of $148.5 million,
proceeds from the issuance of Common Stock of $72.4 million and cash flows from
operating activities of $75.8 million.
Long-Term Debt
In June 1996, the Company and its wholly-owned subsidiary, CH&C, entered
into the New Bank Credit Facility, a $500 million five-year reducing revolving
credit facility (under which $235 million in borrowings was outstanding at June
30, 1996) which replaced the Company's and certain of its subsidiaries' Former
Bank Credit Facilities. See "Description of Other Indebtedness." Availability
under the New Bank Credit Facility will be reduced by $25 million at the end of
two and one-half years and reduced by an additional $50 million at the end of
each six-month period thereafter until maturity in June 2001. Interest on the
New Bank Credit Facility is based upon the agent bank's quoted reference rate or
the London Interbank Offered Rate, at the discretion of the Company. The
interest rate under the New Bank Credit Facility at July 1, 1996 was
approximately 7.2%. The Company intends to use the proceeds of the Offerings to
reduce outstanding indebtedness under the New Bank Credit Facility without
reducing the commitment thereunder. The Company recently effected the Mary's
Prize Sale for $20 million and retired $17.6 million of debt in connection
therewith.
Capital Expenditures
The Company is committed to continually maintaining and enhancing its
existing facilities, most notably by upgrading and remodeling its casinos, hotel
rooms and restaurants and by providing the latest slot machines for its
customers. The Company's capital expenditures for these purposes were $30.1
million, $23.5 million and $16.2 million in the years ended June 30, 1996, 1995
and 1994, respectively.
For the year ended June 30, 1996, cash used in investing activities was
$106 million, primarily related to the completion of Sam's Town Kansas City
(approximately $36 million) and the acquisition of
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property and equipment (approximately $70 million). The Company's principal uses
of funds for the two years ended June 30, 1995 consisted of cash used in
investing activities, primarily for the acquisition of property and equipment,
and cash used in financing activities, primarily cash paid to reduce long-term
debt. For the year ended June 30, 1995, cash used in investing activities was
$145.5 million, primarily related to the completion of the Sam's Town Las Vegas
expansion and the construction of Sam's Town Kansas City. For the year ended
June 30, 1994, cash used in investing activities was $310.4 million and was
primarily related to the $105 million expansion project at Sam's Town Las Vegas
and the construction of Sam's Town Tunica.
Stockholders' Equity
The Company's stockholders' equity increased from $202.6 million on June
30, 1995 to $233.3 million on June 30, 1996. The primary increase resulted from
the Company's earnings during fiscal 1996. In addition, during fiscal 1996,
212,368 and 2,334 additional shares of Common Stock were issued pursuant to the
Company's Employee Stock Purchase Plan and the Flexible Stock Incentive Plan,
respectively.
New Expansion Projects
The Company is currently involved in several projects to expand its
operations. On April 26, 1996 the Company entered into a definitive stock
purchase agreement for the Par-A-Dice Acquisition for an aggregate consideration
of approximately $175 million. Closing of the transaction is conditioned upon,
among other things, approval by the Illinois Gaming Board. The Company plans to
fund the Par-A-Dice Acquisition from borrowings under the New Bank Credit
Facility. The Company began construction of a $40 million expansion at Sam's
Town Tunica in April 1996. This project consists of a 350-room hotel tower and a
1,000-space parking garage. The Company recently began the renovation and
expansion of Main Street Station. This project, which is expected to cost
approximately $45 million, will include a redesign of the property's public
space, expanded restaurant facilities, a refurbishment of the property's 400
hotel rooms, acquisition of new gaming equipment and increased parking. The
Company plans to fund the Sam's Town Tunica expansion and Main Street Station
renovation primarily from cash flow from operations and availability under the
New Bank Credit Facility. The Company recently acquired a casino hotel site in
Reno, Nevada and plans to develop Sam's Town Reno on the site at a total
estimated cost of approximately $92 million. The Company plans to fund the Sam's
Town Reno development primarily from cash flow from operations and availability
under the New Bank Credit Facility. On May 29, 1996 the Company, through a
wholly-owned subsidiary, executed a joint venture agreement with Mirage for the
Atlantic City Project. The Mirage Joint Venture Agreement provides for $100
million in capital contributions by the Company during the course of the
construction of the Atlantic City Project. The Company plans to fund its Mirage
Joint Venture capital contributions primarily from cash flow from operations and
availability under the New Bank Credit Facility. In addition, the Company is
exploring the possible expansion of its Stardust and Sam's Town Las Vegas
properties; substantial funds would be required for any such expansion of those
properties. The Company has been selected by the City of Cape Girardeau,
Missouri to be the developer and operator of a riverboat casino facility in
downtown Cape Girardeau. There can be no assurance that any of the above
mentioned projects will go forward or ultimately become operational. The source
of funds required to meet the Company's working capital needs (including
maintenance capital expenditures) and those required to complete the
above-mentioned projects is expected to be cash flow from operations and
availability under the New Bank Credit Facility. The Company does not currently
anticipate issuing additional equity or obtaining new borrowings in excess of
amounts available under the New Bank Credit Facility in the next 12 months based
on current plans. Thereafter, the Company may require additional funds to
support its working capital requirements or for other purposes and may seek to
raise such additional funds through public or private equity and/or debt
financings or from other sources. No assurance can be given that additional
financing will be available or that, if available, such financing will be
obtainable on terms favorable to the Company or its stockholders. See "Risk
Factors -- Leverage and Debt Service" and " -- Additional Financing
Requirements."
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The Company continues to pursue and investigate additional expansion
opportunities both in Nevada and in other markets where casino gaming is
currently permitted. The Company is also pursuing expansion opportunities in
jurisdictions were casino gaming is not currently permitted in order for the
Company to be prepared to develop projects upon approval of casino gaming. Such
expansion will be affected and determined by several key factors, including
license selection processes, approval of gaming in jurisdictions where the
Company has been active but where casino gaming is not currently permitted,
identification of additional suitable investment opportunities in current gaming
jurisdictions, and availability of acceptable financing. Additional projects
will require the Company to make substantial investments, which the Company
intends to fund through cash flow from operations and availability under the New
Bank Credit Facility. To the extent such sources of funds are not sufficient,
the Company may also seek to raise such additional funds through public or
private equity and/or debt financings or from other sources. No assurance can be
given that additional financing will be available or that, if available, such
financing will be obtainable on terms favorable to the Company and its
stockholders. See "Risk Factors -- Leverage and Debt Service" and
" -- Additional Financing Requirements."
Certain indebtedness of the Company contains restrictive covenants which,
among other things, impose significant restrictions on the Company's operations
and its ability to seek alternative financing means. For a summary of such
restrictive covenants (which does not purport to be complete and is qualified in
its entirety by reference to the various governing instruments, copies of which
have been filed, or incorporated by reference, as exhibits to the registration
statement of which this Prospectus is a part), see "Description of Other
Indebtedness."
The Company's ability to service its debt will be dependent on its future
performance, which will be affected by, among other things, prevailing economic
conditions and financial, business and other factors, certain of which are
beyond the Company's control.
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BUSINESS
GENERAL
Boyd Gaming Corporation is one of the leading casino entertainment
companies in the United States. The Company is a multi-jurisdictional gaming
company which currently owns or operates ten casino entertainment facilities, is
in the process of constructing its eleventh property, acquiring its twelfth
property and recently acquired the land upon which it intends to construct its
thirteenth property. The Company owns and operates six facilities in three
distinct markets in Las Vegas, Nevada: the Stardust on the Las Vegas Strip;
Sam's Town Las Vegas, the Eldorado and Jokers Wild on the Boulder Strip; and the
California and the Fremont in downtown Las Vegas. The Company also owns or
manages four facilities in new gaming jurisdictions, all opened during 1994 and
1995. The Company owns and operates Sam's Town Tunica, a dockside gaming and
entertainment complex in Tunica County, Mississippi that is currently undergoing
a hotel and parking garage addition and Sam's Town Kansas City, a riverboat
gaming and entertainment complex in Kansas City, Missouri. The Company manages
and owns a minority interest in the Treasure Chest, a riverboat casino in
Kenner, Louisiana, and manages for the Mississippi Band of Choctaw Indians the
Silver Star, a land-based casino in the midst of a major expansion project,
located near Philadelphia, Mississippi. The Company plans to open Main Street
Station in downtown Las Vegas and in April 1996 entered into a definitive
purchase agreement to acquire the Par-A-Dice in East Peoria, Illinois. The
Company recently acquired land on which it plans to develop Sam's Town Reno, a
casino, hotel and entertainment complex in Reno, Nevada. In addition, the
Company recently announced the signing of a joint venture agreement with Mirage
to jointly develop and own a casino hotel entertainment facility in Atlantic
City, New Jersey. The Company currently owns or operates an aggregate of 504,500
square feet of casino space, containing 14,313 slot machines and 510 table
games. See "Prospectus Summary -- Property Data." Assuming completion of Main
Street Station, completion of the Par-A-Dice Acquisition, development of Sam's
Town Reno and completion of the expansion projects currently underway at certain
of its existing facilities, the Company will own or operate an aggregate of
approximately 618,000 square feet of casino space containing approximately
17,849 slot machines and approximately 615 table games. See "Prospectus
Summary -- Property Data." Due to the many risks and uncertainties inherent in
construction projects and the establishment of a new business, there can be no
assurance as to when, if at all, the development and expansion projects will be
completed or acquired. See "Risk Factors -- Uncertainties of Consummation of the
Par-A-Dice Acquisition and Development of Sam's Town Reno and the Atlantic City
Project," "-- Expansion to Other Locations," "-- Competition" and
"-- Governmental Gaming Regulation."
The Company currently conducts substantially all of its business through
five wholly-owned subsidiaries: California Hotel and Casino ("CH&C"); Boyd
Tunica, Inc. ("Boyd Tunica"); Boyd Kenner, Inc. ("Boyd Kenner"); Boyd
Mississippi, Inc. ("Boyd Mississippi"); and Boyd Kansas City, Inc. ("Boyd Kansas
City"). CH&C directly owns and operates Sam's Town Las Vegas and the California
and owns and operates the Stardust, the Fremont and the Eldorado and Jokers
Wild, and owns and will operate Main Street Station, through wholly-owned
subsidiaries. Boyd Tunica owns and operates Sam's Town Tunica; Boyd Kenner
operates the Treasure Chest and owns a 15% equity interest in the Treasure
Chest, L.L.C. ("Treasure Chest L.L.C."), the owner of the Treasure Chest; Boyd
Mississippi operates Silver Star; and Boyd Kansas City owns and operates Sam's
Town Kansas City. See "-- Properties -- Central Region Properties." Par-A-Dice
Gaming is expected to become a wholly-owned subsidiary of the Company, and Sam's
Town Reno will be owned and operated by a wholly-owned subsidiary of the Company
or CH&C.
OPERATING STRATEGY
The Company believes that the following key elements have contributed to
the success of the Company in the past and are central to its future success.
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Value-Oriented Casino Entertainment Experience
The Company is committed to providing a high-quality casino entertainment
experience to its primarily middle-income customers at an affordable price in
order to develop customer loyalty. The Company delivers value to its customers
through providing service in an inviting and entertaining environment. The
Company delivers additional value to its customers through moderately-priced
casino entertainment, hotel, restaurant and live entertainment offerings and
regularly reinvests in its existing facilities in an effort to maintain the
quality and competitiveness of its properties.
Lively, Friendly Atmosphere
Each of the Company's facilities is clean and modern and offers friendly
service in an informal and lively atmosphere. The Company's employee training
programs are designed to motivate employees to provide the type of friendly and
attentive service which the Company seeks to provide at its facilities. The
Company has an extensive customer feedback system, ranging from guest comment
cards in its restaurants and hotel rooms, to other consumer surveys and
research. In addition to providing a measure of customer service, comment cards
and consumer research allow the Company to obtain valuable customer feedback and
marketing information for its database.
Emphasis on Slot Play
The Company emphasizes slot machine wagering, the most consistently
profitable segment of the casino entertainment business. Technological advances
in slot product have resulted in sophisticated interactive games which offer
customers greater variety, more generous payoffs and increased periods of play
for their casino entertainment dollar. The Company continually invests in
upgrading its machines to reflect advances in technology and the development of
proprietary slot games and related equipment at all of its facilities in order
to further enhance the slot customer's experience.
Comprehensive Marketing and Promotion
The Company actively promotes its casino entertainment offerings, its
hotels, destination restaurants and live entertainment using a variety of
promotional advertising media including outdoor advertising and print and
broadcast media. The Company develops and maintains an extensive customer
database. The database is expanded daily, adding new casino customers by
obtaining their mailing addresses and other marketing information. To encourage
repeat visitation, the Company employs a direct mail program targeting its
database customers with a variety of product offerings, including incentives to
visit the Company's facilities frequently. During fiscal 1996, the Company
distributed approximately 14 million pieces of mail to its database customers.
The Company also provides complimentary rooms, food and other services to valued
customers, but maintains limits on such items consistent with its focus on
middle-income patrons.
PROPERTIES
The Company currently owns and operates six properties in Las Vegas: the
Stardust; Sam's Town Las Vegas; the Eldorado; Jokers Wild; the California; and
the Fremont. The Company also owns and/or operates four properties outside the
State of Nevada: Sam's Town Tunica, in Tunica County, Mississippi; Sam's Town
Kansas City, in Kansas City, Missouri; Treasure Chest, in the western suburbs of
New Orleans; and Silver Star, in central Mississippi.
The Stardust
The Stardust, situated on 52 acres of land owned and nine acres of land
leased by the Company on the Las Vegas Strip, is a casino hotel complex with
approximately 87,000 square feet of casino space, a conference center containing
approximately 35,000 square feet of meeting space and a 900-seat showroom. The
casino offers nearly 2,000 slot machines and 78 table games, including tables
featuring "21," craps, roulette, baccarat, mini-baccarat, pai gow, Caribbean
stud and poker, as well as keno. The
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Stardust features "Enter the Night," a production show that includes
computerized lighting, lasers and digital surround sound. The Stardust also has
one of the largest and best known race and sports books in the United States and
is the home of the Stardust line, a racing and sports line service that is
quoted throughout the United States and abroad. The Stardust features more than
2,300 guest rooms, 1,500 in its 32-story hotel tower. Notwithstanding the
increased number of rooms available in Las Vegas, the Stardust achieved a 97%
occupancy rate in fiscal 1995 and a 96% occupancy rate for fiscal 1996. The
Stardust complex, which is distinguished by dramatic building lighting, has
seven restaurants, a shopping arcade, two swimming pools and parking spaces for
approximately 2,900 cars.
The Stardust caters primarily to adult Las Vegas visitors seeking the
classic Las Vegas gaming experience. Using its extensive database, the property
promotes customer loyalty and generates repeat customer business by
communicating with its customers regarding special events, new product offerings
and special incentive promotions at the property. The Company uses a network of
tour operators and wholesalers to reach customers who prefer packaged trips and
print and broadcast media to attract the independent traveler. The Company
attracts proven slot and table game players through direct mail promotions for
tournaments, events and a variety of special offers. With its conference center,
the Stardust also attracts meeting and banquet business. In addition, the
Stardust draws a significant number of walk-in customers. Patrons of the
Stardust come primarily from the western United States, including Southern
California and Arizona, and the Midwest.
The Company has developed a master plan for the Stardust, calling for,
among other things, as many as two additional hotel towers, and has taken steps
for a future expansion, including incorporating footings for one of the two
proposed additional towers in the existing facility. In addition, the Company
has determined that the 61-acre Stardust site is capable of accommodating the
development of an entirely new casino entertainment facility adjacent to the
existing Stardust and is exploring the feasibility of such a project.
Boulder Strip Properties
Sam's Town Las Vegas is situated on 56 acres of land owned and seven acres
of land leased by the Company on the Boulder Strip, approximately six miles east
of the Las Vegas Strip. Following a $105 million expansion completed in July
1994, Sam's Town features an approximately 118,000 square foot casino, a 56-lane
bowling center and the 25,000 square foot Western Emporium retail store. The
gaming facilities now include nearly 2,800 slot machines and 55 table games,
including tables featuring "21," craps, roulette, pai gow, poker and Caribbean
stud, as well as keno, an expanded race and sports book and a large bingo
parlor. The expanded property has 650 guest rooms, 12 restaurants, approximately
3,200 parking spaces, including two parking garages which together can
accommodate up to 2,000 cars and approximately 500 recreational vehicles. The
expanded Sam's Town facility features a 25,000 square foot atrium enclosing a
Sierra Nevada-style park with extensive foliage and trees, streams, bridges and
water features. Fronting the park are an Italian restaurant, a western
steakhouse and a food court, as well as new retail outlets. Also located at the
property is a 5,400 square foot sports bar featuring interactive activities, an
outdoor recreation complex with a swimming pool and volleyball court and a
conference facility. Sam's Town Las Vegas achieved a 92% occupancy rate in
fiscal 1995 and a 96% occupancy rate in fiscal 1996.
Sam's Town Las Vegas has a western theme and features an informal, friendly
atmosphere that appeals to both local residents and visitors. Gaming and bowling
tournaments, paycheck sweepstakes, costume contests and holiday parties create a
social center that attracts many Las Vegas residents. The property hosts two of
the largest events on the Ladies Professional Bowling Tour, including the Sam's
Town Ladies Professional Bowling Tournament, which events have been televised on
ESPN, and a premier amateur bowling tournament which attracts participants from
throughout the world. Additionally, the Company attracts local market patrons,
many of whom are repeat customers, by offering excellent price/value
relationships in its food and beverage operations, and by slot marketing
programs that include generous slot payouts. The popularity of Sam's Town Las
Vegas among local residents allows it to benefit from the rapid development of
the Las Vegas metropolitan area, which has been one of the
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fastest growing communities in the United States over the last decade.
Management believes that the addition of 650 new guest rooms, as well as
destination restaurants and other amenities, as part of the expansion has
increased the appeal of Sam's Town Las Vegas to visitors. Since completion of
the expansion, overnight visitation to the property has substantially increased.
The Company has developed a master plan for Sam's Town Las Vegas calling for,
among other things, a second hotel tower. Although the Company has not yet made
any decision regarding a future Sam's Town Las Vegas expansion, it is currently
exploring the feasibility of such a project.
The Eldorado is situated on four acres of land owned by the Company in
downtown Henderson, Nevada, which is southeast of Las Vegas. The casino has over
16,000 square feet of gaming space featuring approximately 560 slot machines and
11 table games, including tables featuring "21," craps, roulette and pai gow, as
well as keno, bingo and a sports book. The facility also offers three
restaurants, a live entertainment lounge and a parking garage for up to 500
cars. The principal customers at the Eldorado are Henderson residents.
Jokers Wild is situated on 13 acres of land owned by the Company on the
Boulder Strip. Following a $5.6 million expansion completed in April 1994, the
property offers over 22,500 square feet of casino space with approximately 650
slot machines and 11 table games, including tables featuring "21," craps,
roulette, pai gow, Caribbean stud and poker, as well as keno and a sports book.
The facility also offers a buffet restaurant, a coffee shop, an entertainment
lounge, a video arcade and approximately 800 parking spaces. Jokers Wild serves
both local residents and visitors to the Las Vegas area traveling on the Boulder
Highway.
Downtown Properties
The California is situated on 13.9 acres of land owned and 1.6 acres of
land leased by the Company in downtown Las Vegas. The California was the
Company's first property and has over 36,000 square feet of gaming space, 781
guest rooms, five restaurants, approximately 5,000 square feet of meeting space,
more than 800 parking spaces, including a parking garage for up to 425 cars, and
an approximately 220-space recreational vehicle park, the only such facility in
the downtown area. The casino offers over 1,100 slot machines and 38 table
games, including tables featuring "21," craps, roulette, mini-baccarat, pai gow
and Caribbean stud, as well as keno and a sports book. In December 1994, the
Company completed a $15 million expansion of the California that added 140 new
guest rooms and six suites, as well as other amenities. The California achieved
a 95% occupancy rate in both fiscal 1995 and 1996.
The Fremont is situated on 1.4 acres of land owned and 0.9 acres of land
leased by the Company on the principal thoroughfare in downtown Las Vegas. The
property offers nearly 32,000 square feet of casino space including
approximately 1,100 slot machines, and 31 table games, including tables
featuring "21," craps, roulette, pai gow, poker and Caribbean stud, as well as
keno and a race and sports book. The hotel has 452 guest rooms and five
restaurants including the Second Street Grill, an upscale contemporary
restaurant, and the Paradise Buffet, which features tropical-themed
surroundings. The property also has approximately 8,200 square feet of meeting
space and a parking garage for up to 350 cars. The Fremont achieved a 96%
occupancy rate in both fiscal 1995 and 1996.
While many casinos in downtown Las Vegas compete with other downtown
properties and properties on the Las Vegas Strip for the same customers, the
Company has developed a distinctive niche for its Downtown Properties by
focusing primarily on customers from Hawaii. The Company's marketing strategy
for the Downtown Properties focuses on gaming enthusiasts from Hawaii and tour
and travel agents from Hawaii with whom the Company has cultivated relationships
since it opened the California in 1975. Through the Company's recently acquired
Hawaiian travel agency, the Company operates two DC-10 charter flights from
Honolulu to Las Vegas each week, helping to ensure stable, reasonably priced air
seats. This, as well as the Company's strong, informal relationships with other
Hawaiian travel agencies, its affordably priced, all-inclusive packages and its
Hawaiian promotions have allowed the California and the Fremont to capture a
significant share of the Hawaiian tourist trade in Las
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Vegas. For more than a decade the Downtown Properties have been the leading Las
Vegas destination for visitors from Hawaii. The Company attributes this success
to the amenities and atmosphere at the Downtown Properties, which are designed
to appeal specifically to visitors from Hawaii, and to its marketing strategy
featuring significant promotions in Hawaii and a monthly newsletter circulated
to over 68,000 households, primarily in Hawaii. In fiscal 1996, patrons from
Hawaii comprised over 80% of the room nights at the California and over 65% of
the room nights at the Fremont.
In December 1993, the Company acquired for $16.5 million Main Street
Station, a casino hotel that is not currently in operation located across the
street from the California. The Company has used the facility, where it
previously leased rooms, to provide lodging for additional customers at the
Downtown Properties. The renovation and expansion of Main Street Station is
currently underway. The project includes a 28,500 square foot, newly-equipped
casino with 25 table games and over 900 slot machines. The project also includes
a complete renovation of the property's hotel rooms and an expansion and
renovation of the property's food facilities to include a 500-seat buffet, a
130-seat specialty restaurant, a 100-seat cafe, a 200-seat brew pub and oyster
bar and expanded parking to include 2,000 spaces. The renovation and expansion
of Main Street Station is expected to be completed by the end of calendar year
1996. There can be no assurance that the project will be completed on schedule
due to the many risks and uncertainties inherent in such renovation and
expansion. See "Risk Factors -- Expansion to Other Locations."
In anticipation of the opening of Main Street Station, the Company's third
property in downtown Las Vegas, the Company has begun coordinating marketing
efforts, consolidating support functions and standardizing operating procedures
and systems with the goal of enhancing revenues and reducing expenses. This
effort will include a consolidated database and marketing program for all
Downtown Properties. The Company believes these efforts will provide it with a
competitive advantage.
The Company, together with other downtown casino operators and the City of
Las Vegas, retained a well-known urban design firm to develop a major new
attraction known as the Fremont Street Experience. The attraction was designed
to capitalize on Fremont Street's famous lights and features a semi-circular
space frame nine stories above the street, stretching along four city blocks
against which a sound and light spectacle is displayed. As part of the project,
vehicular traffic on portions of Fremont Street has been eliminated, asphalt
replaced by a patterned streetscape and special events brought to the downtown
area to entertain visitors. The Fremont Street Experience cost approximately $70
million. Of this amount, $22 million was provided by eight downtown casino
operators (including the Company), and the remainder was provided by local bond
issuances. The Company invested approximately $5 million in the project. The
Company believes that, since its opening in December 1995, the Fremont Street
Experience has significantly enhanced the experience of visiting downtown Las
Vegas and has attracted additional customers to the downtown area. However, no
assurance can be given that the Fremont Street Experience will materially
benefit the operating results of the Company's Downtown Properties.
Central Region Properties
The Company has exported its popular Sam's Town western theme and
atmosphere to the growing Mississippi dockside gaming market by developing Sam's
Town Tunica, which opened on May 25, 1994. Sam's Town Tunica is located in
Tunica County near State Highway 61 approximately 25 miles south of Memphis,
Tennessee. The adult population within a 200-mile radius is over 3 million and
includes the cities of Nashville, Tennessee; Jackson, Mississippi; and Little
Rock, Arkansas. The Company has distinguished itself from other operators in the
area by developing a major casino entertainment complex with extensive amenities
including a 508-room hotel, an entertainment lounge featuring country-western
music, five destination restaurants including Corky's B-B-Q, featuring the food
of that popular Memphis eatery, bars, specialty shops and River Palace Arena, a
1,650-seat entertainment facility featuring country-western entertainers. In
December 1994, an $18 million expansion was completed which included the
addition of 308 guest rooms surrounding a swimming pool and recreational area.
The complex offers a two-story casino of approximately 75,000 square feet
featuring over 1,800 slot machines and 78 table games, including tables
featuring "21," craps, roulette, poker, Caribbean stud and pai gow,
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as well as keno. The design of the facility integrates the water-based and
land-based components of the facility. The Company, seeking to further its
position in both the overnight and drive-in markets in Tunica, is currently
expanding Sam's Town Tunica. The $40 million expansion project, which is
currently under construction, includes a 350-room hotel tower and a 1,000-car
parking garage. The new hotel tower will bring the total room count to 858, and
the garage will be the first enclosed parking structure at a Tunica County
casino. The expansion of Sam's Town Tunica is scheduled to be completed by the
end of calendar year 1996, although there can be no assurance that the project
will be completed on schedule due to the many risks and uncertainties inherent
in such expansion. See "Risk Factors -- Expansion to Other Locations." Sam's
Town Tunica achieved an 87% occupancy rate in fiscal 1995 and a 95% occupancy
rate in fiscal 1996.
The Company has extended its popular Sam's Town theme to the Kansas City,
Kansas market with the opening of Sam's Town Kansas City on September 13, 1995.
Sam's Town Kansas City was completed at a cost of approximately $145 million,
including land, capitalized interest and preopening costs. The facility, which
is situated on 34 acres located on the Missouri River and Interstate 435,
features a continuously docked riverboat housing a 28,000 square foot casino on
three decks with over 1,000 slot machines and 65 table games. The 80,000 square
foot land-based facility contains five food facilities, including a 7,000 square
foot sports bar, and ticketing services, all surrounding a turn-of-the-century
Kansas City streetscape. The facility also features a 1,350-space garage,
connected to the main facilities by an enclosed moving walkway. Including
surface parking, the property offers a total of 2,000 parking spaces. The Kansas
City metropolitan area has an adult population of over one million. The
Company's facility is located near the Interstate 435 entertainment corridor in
Kansas City which provides access to the Worlds of Fun and Oceans of Fun theme
parks, the Kansas City Zoo, and the Kansas City Chiefs' and Kansas City Royals'
Stadiums. In connection with the operation of Sam's Town Kansas City, the
Company will pay the City of Kansas City approximately $250,000 per year for a
period of ten years ending in September 2004. The Company intends to offer 10%
of the capital stock of Boyd Kansas City, the entity that owns and operates
Sam's Town Kansas City, to certain persons or entities located in the Kansas
City area. The price to be paid by such persons or entities will be based on the
total cost of the project.
The Company manages and partly owns the Treasure Chest, a riverboat casino
operation located on Lake Pontchartrain in Kenner, Louisiana, which opened in
September 1994. Located near the New Orleans International Airport, the Treasure
Chest primarily serves patrons from Jefferson Parish, including suburbs on the
west side of New Orleans. The gaming operation features a classic paddle-wheel
riverboat with a total capacity of 2,000 persons, approximately 24,000 square
feet of casino space, over 850 slot machines and 56 table games, including
tables for "21," craps, roulette and poker. Each of the riverboat's three decks
has a different theme, with one featuring contemporary Las Vegas-style decor,
one offering a nautical environment and one providing a festive Mardi Gras
setting.
The management agreement between the Company and Treasure Chest L.L.C.,
owner of the Treasure Chest, provides for an initial five-year term expiring
June 1999, extendible at the Company's option for three additional five-year
periods if certain operating results are achieved. The agreement also provides
for a management fee of 10% of the enterprise's net operating profit before
interest, depreciation, income taxes, amortization, extraordinary items and the
management fee. The Company owns a 15% equity interest in Treasure Chest L.L.C.
The Company is reevaluating its interests in the Treasure Chest, which
include its management agreement with, and ownership interest in, Treasure Chest
L.L.C. Among the alternatives under consideration is the sale of the Company's
ownership interest. In the event of such a sale or other substantial alteration
of the Company's interest in Treasure Chest L.L.C., which the Company currently
anticipates, the management agreement between the Company and Treasure Chest
L.L.C. would likely be terminated.
Pursuant to an agreement with the Mississippi Band of Choctaw Indians, the
Company operates the Silver Star, the only land-based casino in the State of
Mississippi. The facility, which opened in July 1994,
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is located on tribal lands in central Mississippi. The principal markets served
by the facility are central Mississippi and Alabama, with the Birmingham,
Montgomery and Tuscaloosa metropolitan areas located within approximately 200
miles of the site. The property, a contemporary Las Vegas-style facility
emphasizing light, color and geometric design, includes a 100-room hotel and a
casino with approximately 66,000 square feet of gaming space with over 2,490
slot machines and 87 table games, including tables for "21," craps, roulette,
mini-baccarat and Caribbean stud, as well as a lounge suitable for entertainment
and dancing, a swimming pool, four restaurants and more than 1,300 parking
spaces. A $10 million casino expansion project was completed in December 1994,
and a 55,000 square foot conference center was completed in June 1995. In
addition, an expansion project, including 400 additional rooms and suites, a
casino expansion, a new restaurant, an 18-hole golf course and a full-service
spa, is currently under construction. Although the Mississippi Band of Choctaw
Indians, the owner of Silver Star, has advised the Company that construction is
currently scheduled to be completed by early calendar year 1997, there can be no
assurance that the project will be completed on schedule due to the many risks
and uncertainties inherent in such expansion. See "Risk Factors -- Expansion to
Other Locations." The Silver Star achieved a 95% occupancy rate in fiscal 1995
and a 98% occupancy rate in fiscal 1996.
The management agreement for Silver Star provides for a seven-year term
expiring in July 2001 and a management fee of 30% of the enterprise's operating
income before debt service for the first five years and 40% of its operating
income before debt service for the final two years. Under the agreement, the
Company provided $30.5 million in debt financing for the construction and
start-up of the facility, which amount was repaid during fiscal 1995 from the
enterprise's cash flow. The Company has loaned to the tribe an additional $10
million for the casino expansion project which was completed in December 1994.
This loan is scheduled to be repaid over five years.
DEVELOPMENT PROJECTS
Par-A-Dice Acquisition
On April 26, 1996, the Company entered into a definitive purchase agreement
for the Par-A-Dice Acquisition. The Par-A-Dice is a riverboat facility located
along the Illinois River in East Peoria, Illinois, approximately 170 miles from
Chicago. The Par-A-Dice Riverboat Casino initially commenced operations in
November 1991, operating from a temporary facility in downtown Peoria. In May
1993, the facility was relocated across the Illinois River to a newly
constructed land-based pavilion, containing two restaurants, a bar, gift shop,
ticketing area and surface parking for 750 cars, located on 19 acres in East
Peoria. In May 1994, the original Par-A-Dice Riverboat Casino replica
paddle-wheel riverboat was replaced with a new, state-of-the-art, twin hull
cruise ship. The new boat measures 238 feet long and 66 feet wide and since the
recent completion of an expansion in March 1996, features 33,000 square feet of
gaming space on four levels with approximately 1,000 slot machines and 42 table
games, as well as limited food and beverage services. The Par-A-Dice Hotel,
which is currently under construction, is a 204-room full-service hotel with
food and beverage and banquet and meeting facilities. The Company believes the
hotel will enable the Par-A-Dice to develop an overnight customer base for the
facility and provides much needed banquet and meeting capabilities. The Company
currently anticipates the consummation of the Par-A-Dice Acquisition and
completion of the Par-A-Dice Hotel prior to year end, subject to receipt of
regulatory approvals. There can be no assurance, however, as to when, or if, the
Par-A-Dice Acquisition will be consummated or the Par-A-Dice Hotel will be
completed. See "Risk Factors -- Uncertainties of Consummation of the Par-A-Dice
Acquisition and Development of Sam's Town Reno and the Atlantic City Project."
The Par-A-Dice is the primary casino entertainment facility serving central
Illinois, and is strategically located within 1/8 of a mile from an exit off of
Interstate 74, a major regional east-west interstate highway. The Par-A-Dice is
the only casino entertainment facility within approximately 100 miles of Peoria.
There are more than 350,000 people living within the Peoria metropolitan area
and over 1.7 million people over the age of 21 living within 100 miles of
Peoria. The Par-A-Dice Acquisition is subject to certain closing conditions,
including the obtaining of regulatory approvals from the Illinois Gaming Board
and the
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Mississippi Gaming Commission. See "Risk Factors -- Uncertainties of
Consummation of the Par-A-Dice Acquisition and Development of Sam's Town Reno
and the Atlantic City Project."
Pursuant to the Illinois Riverboat Gambling Act and Illinois Gaming Board
Rules, the Illinois Gaming Board (the "IGB") must approve the purchase agreement
for the Par-A-Dice Acquisition as it represents a transfer of 100% of the
ownership interest in Par-A-Dice. In order to facilitate the IGB's investigation
and review of the proposed acquisition, the Company was required to file with
the IGB certain information about the Company. In particular, the Company
informed the IGB about the acquisition financing and the Offerings. In addition
to information about the Company and its operations, the Company's "Key Persons"
were required to provide certain personal information. A "Key Person" under
Illinois rules is defined as an officer, director, trustee, partner, proprietor,
or managing agent of, or a holder of any direct or indirect legal or beneficial
interest whose combined direct, indirect or attributed interest is 5% or more in
a business entity.
No assurance can be given that the Company will receive IGB approval for
the Par-A-Dice Acquisition. Review of the Par-A-Dice Acquisition by the IGB will
occur only after IGB staff has concluded its investigation of the Company and
its Key Persons. The Company cannot with any certainty predict when this
transaction will be considered by the IGB, although an IGB determination could
be made as early as the fall of 1996.
In addition, pursuant to provisions of the Mississippi Gaming Control Act,
no Mississippi gaming licensee or any company that controls, is controlled by or
is under common control with a Mississippi gaming licensee may be involved in
gaming operations outside the State of Mississippi without the prior approval of
the Mississippi Gaming Commission, acting upon a recommendation of its Executive
Director. The Company has received such approvals from the Mississippi Gaming
Commission with respect to its subsidiaries' operations in Nevada, Missouri and
Louisiana and is required to obtain such approvals from the Mississippi Gaming
Commission prior to engaging in gaming operations in Illinois through Par-A-Dice
or another subsidiary. The Company intends to request that the Mississippi
Gaming Commission consider such approval at its meeting to be held on September
17, 1996, although there can be no assurance the Commission will give the
requisite approval at that meeting. See "Risk Factors -- Governmental Gaming
Regulation."
In addition to approvals under applicable state gaming laws, the purchase
agreement for the Par-A-Dice Acquisition requires that certain other conditions
to closing be satisfied or waived by the Company. These conditions include the
receipt by the Company of consents under or the termination of certain
contractual arrangements of the Par-A-Dice, its shareholders, and its
subsidiaries, including consents under certain employment agreements and
agreements between the Par-A-Dice and its institutional lenders.
Sam's Town Reno
The Company recently announced its plans for a $92 million casino hotel and
entertainment complex in Reno, Nevada and acquired a 100-acre parcel of land
south of Reno and adjacent to a newly opened freeway interchange to be used as
the site of this project. Plans for the Sam's Town Reno project include a 33,000
square foot casino, featuring over 1,200 slot machines and 36 table games and a
hotel with 211 guest rooms and suites. The project is also expected to include
five destination restaurants, two entertainment lounges, a 5,000-seat outdoor
arena, an approximately 15,000 square foot events arena, retail shops and two
old-time movie theaters. The Company plans to commence construction of Sam's
Town Reno in the first quarter of 1997 and to complete construction as early as
Spring 1998, subject to receipt of appropriate regulatory approvals, permits and
licenses. There can be no assurance, however, as to when, or if, such
construction will be commenced or completed due to the many risks and
uncertainties inherent in the project. See "Risk Factors -- Uncertainties of
Consummation of the Par-A-Dice Acquisition and Development of Sam's Town Reno
and the Atlantic City Project."
William S. Boyd, Chairman and Chief Executive Officer of the Company, and
Warren L. Nelson, a Director of the Company, each owns a 17.5% partnership
interest in the partnership which owned the
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acquired land. The $6 million purchase price for the land was based upon an
independent third-party appraisal and the purchase of the land from the
partnership has been approved by an independent committee of the Company's Board
of Directors.
Mirage Joint Venture
On May 29, 1996, the Company, through a wholly-owned subsidiary, entered
into a joint venture agreement with a subsidiary of Mirage to jointly develop
and own a casino hotel entertainment facility in Atlantic City, New Jersey. The
Atlantic City Project is planned to be one component of a multi-facility casino
entertainment development, master-planned by Mirage for the Marina District of
Atlantic City. The Atlantic City Project is expected to cost approximately $500
million. The agreement contemplates that the joint venture would fund $300
million of the project cost with non-recourse third-party financing. The
remaining $200 million is expected to be funded equally by capital contributions
from the partners, including, in the case of Mirage, contribution of the land.
Pursuant to the joint venture agreement, the Company will control the
development and operation of the Atlantic City Project. The Atlantic City
Project is expected to include a hotel of at least 1,000 rooms and is expected
to be adjacent and connected to Mirage's planned wholly-owned resort. The
Company believes that certain highway improvements to permit greater access to
the Marina District of Atlantic City will be necessary to support the
multi-facility casino entertainment development master-planned by Mirage. The
State of New Jersey Department of Transportation and Mirage are currently
considering the development of a mutually satisfactory plan for those
improvements. If such a plan is developed, the Company will submit its petition
for a statement of compliance to the New Jersey Casino Control Commission
("NJCCC"). Once filed, this petition is then forwarded to the New Jersey
Division of Gaming Enforcement ("NJDGE") for investigation. Historically, such
investigations have taken a minimum of twelve months to be completed. Once
construction has commenced, the Company, through a wholly-owned subsidiary, can
submit its application for casino licensure to the NJCCC. With a statement of
compliance for the Company in place, the investigation by the NJCCC and NJDGE in
connection with the casino license application will focus on issues concerning
operations, the facility and equal employment and business opportunity.
Environmental remediation and construction of the Atlantic City Project are not
expected to begin until after the necessary highway improvements are assured.
Once such improvements are assured and other requisite approvals are received,
the Company estimates that environmental remediation will take at least six
months and construction of the Atlantic City Project will thereafter take at
least two years. Accordingly, the Company is unable to estimate, when, if at
all, the Atlantic City Project will be completed. See "Risk Factors --
Uncertainties of Consummation of the Par-A-Dice Acquisition and Development of
Sam's Town Reno and the Atlantic City Project." The Mirage Joint Venture will
give the Company a presence in Atlantic City, the primary casino gaming market
serving the eastern United States.
Mary's Prize Sale
On August 23, 1996, the Company sold its riverboat Mary's Prize, which has
been completed since 1995 but has never been in operation, to Casino Magic of
Louisiana, Corp. for $20 million, and retired $17.6 million of debt in
connection therewith. Projects for which Mary's Prize was constructed have
either been delayed or did not materialize.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the current directors and executive officers
of Boyd Gaming Corporation:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- ----------------------------------------------------------
<S> <C> <C>
William S. Boyd............ 64 Chairman of the Board of Directors and Chief Executive
Officer
Charles L. Ruthe........... 62 President and Director
Robert L. Boughner......... 43 Executive Vice President, Chief Operating Officer and
Director
Donald Snyder.............. 49 Executive Vice President-Administration and Director
Ellis Landau............... 52 Senior Vice President, Chief Financial Officer and
Treasurer
Ralph Purnell.............. 61 Senior Vice President-Director of Operations, Nevada
Region
Maunty C. Collins.......... 53 Senior Vice President-Director of Operations, Central
Region
James Hippler.............. 49 Senior Vice President-Administration
Charles E. Huff............ 51 Vice President, Secretary and General Counsel
Keith E. Smith............. 36 Vice President and Controller
Brian Larson............... 40 Vice President-Development and Assistant Secretary
William R. Boyd............ 36 Vice President and Director
Marianne Boyd Johnson...... 37 Assistant Secretary and Director
Perry B. Whitt............. 73 Vice Chairman of the Board of Directors and Director
Kenny C. Guinn............. 59 Director
Warren L. Nelson........... 83 Director
</TABLE>
William S. Boyd is the father of William R. Boyd and Marianne Boyd Johnson.
William S. Boyd has served as a director of the Company since its inception
in June 1988 and as Chairman of the Board of Directors and Chief Executive
Officer since August 1988. A co-founder of CH&C, he has served as a director and
President of CH&C since its inception in 1973, and has also held several other
offices with CH&C. Mr. Boyd has also served as President and a Director of
Eldorado, Inc., which operates the Eldorado and Jokers Wild. Prior to joining
the Company, Mr. Boyd practiced law in Las Vegas for 15 years. Between 1970 and
1974 he also was Secretary and Treasurer and a member of the Board of Directors
of the Union Plaza Hotel and Casino. Mr. Boyd has been active in numerous
business and civic organizations in Las Vegas.
Charles L. Ruthe has served as a director of the Company since its
inception, President since August 1988 and Chief Operating Officer from August
1988 to April 1990. Mr. Ruthe is currently on a leave of absence from his
positions as President of the Company and as a director pending approval by the
Missouri Gaming Commission of Mr. Ruthe's gaming license application. He has
served as a director of CH&C since its inception and has also held several
offices with CH&C. Mr. Ruthe is active in many Las Vegas business and civic
organizations. Mr. Ruthe is a director of Sierra Health Services, Inc., a
healthcare company. In 1995, Mr. Ruthe was appointed President of Boyd
Development Corporation, a wholly-owned subsidiary of the Company.
Robert L. Boughner has been Executive Vice President and Chief Operating
Officer of the Company since April 1990 and has served as a director since April
1996. From 1985 until April 1990, he served as Senior Vice President of
Administration of CH&C and prior to that time he held various management
positions in the Company. Mr. Boughner is active in civic and industry affairs,
and serves on the Board of Directors of the Las Vegas Convention and Visitors
Authority, the Nevada Hotel and Motel Association and the Nevada Restaurant
Association.
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<PAGE> 51
Donald Snyder has been Executive Vice President-Administration since July
1996 and has served as a director of the Company since April 1996. From 1993 to
the present, Mr. Snyder has served as Chairman, President and Chief Executive
Officer of the Fremont Street Experience Company, the developer and operator of
the Fremont Street Experience in Downtown Las Vegas. From 1992 to 1993, he was
President of Strategic Associates, Inc., a consulting firm. From 1987 through
1991, he served as Chairman of the Board and Chief Executive Officer of First
Interstate Bank of Nevada.
Ellis Landau has been Senior Vice President, Chief Financial Officer and
Treasurer of the Company since August 1990. From April 1990 through July 1990,
he served as a consultant to the Company. Prior to joining the Company, Mr.
Landau held various management positions with Ramada, Inc., a gaming and
hospitality company whose gaming operations were transferred to Aztar
Corporation, including Vice President and Treasurer of that company from 1978 to
February 1990.
Ralph Purnell has been Senior Vice President-Director of Operations, Nevada
Region of the Company since its inception. From the inception of the Company
until April 1994, Mr. Purnell served as Senior Vice President-Gaming of the
Company. From 1975 to 1988, Mr. Purnell held various positions with CH&C,
including General Manager of the Stardust and the California. Mr. Purnell serves
on the Board of Directors of the Nevada Resort Association.
Maunty C. Collins has been Senior Vice President-Director of Operations,
Central Region of the Company since June 1993. From December 1991 through June
1993, he served as Assistant General Manager at the Stardust. From 1985 until
December 1991, he was General Manager at Sam's Town Gold River in Laughlin,
Nevada. From 1978 to 1985, Mr. Collins held various positions at properties
owned by the Company.
James W. Hippler has been Senior Vice President-Administration of the
Company since April 1990. From 1980 to 1990, Mr. Hippler held various positions
with CH&C, including Director of Risk Management, Director of Internal Audit and
Director of Human Resources.
Charles E. Huff has been Vice President, Secretary and General Counsel of
the Company since its inception. He has served as Vice President and General
Counsel of CH&C since July 1986 and Secretary since January 1988. Prior to
joining CH&C, Mr. Huff practiced law in Las Vegas for 13 years.
Keith E. Smith became Vice President and Controller of the Company in June
1993. From September 1990 to June 1993 he served as Corporate Controller of the
Company. From May 1989 to September 1990, Mr. Smith was Vice President-Finance
of the Dunes Hotel, Casino and Country Club in Las Vegas. From 1982 to May 1989,
he was employed by Ramada, Inc. in a variety of positions, including Controller
of the Tropicana Resort and Casino in Las Vegas.
Brian A. Larson became Vice President-Development of the Company in June
1993 and Assistant Secretary in August 1993. He has also served as Associate
General Counsel of the Company since March 1993. From 1987 through February
1993, Mr. Larson was associated with the law firm of Snell & Wilmer in Phoenix,
Arizona, in which he became a partner on January 1, 1992.
William R. Boyd has been a Vice President of the Company since December
1990 and a director since September 1992. From June 1987 until December 1990, he
was director of operations at the Fremont. From 1978 until 1987, he held various
positions at the California and at Sam's Town Las Vegas.
Marianne Boyd Johnson has been Assistant Secretary of the Company since
September 1989 and a director since September 1990. From 1976 until September
1990, she held a variety of full and part-time sales and marketing positions
with the Company and CH&C.
Perry B. Whitt has served as a director of the Company since its inception
and Vice Chairman of the Board of Directors since August 1988. He has served as
a director of CH&C since its inception, and has also held several offices with
CH&C. Mr. Whitt has over 40 years experience in the gaming industry, much of it
with the Boyd family. He is also President of Utility Shareholders Association
of Nevada and serves on the Board of Directors of BankWest of Nevada.
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<PAGE> 52
Kenny C. Guinn has served as a director of the Company since January 1994.
He has served as Chairman of the Board of Southwest Gas Corporation
("Southwest") since May 1993 and Chairman of the Board of PriMerit Bank, a
subsidiary of Southwest ("PriMerit"), since 1987. From 1978 to May 1993, Mr.
Guinn served in various other executive positions for Southwest and PriMerit,
including Chief Executive Officer of Southwest from 1988 to 1993 and Chief
Executive Officer of PriMerit until 1992. He served as Interim President of the
University of Nevada, Las Vegas from May 1994 until May 1995. Mr. Guinn is also
a director of Oasis Residential, Inc. and Del Webb, Inc.
Warren L. Nelson has served as a director of the Company since its
inception and as a director of CH&C since its inception. For the last 28 years,
he has been a co-owner and director of the Club Cal Neva, a gaming facility in
Reno, Nevada. Mr. Nelson has over 55 years experience in the gaming industry. He
is a Director of International Game Technology, a slot machine manufacturer.
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<PAGE> 53
DESCRIPTION OF OTHER INDEBTEDNESS
The following summary of the terms of certain outstanding indebtedness of
the Company, certain of its wholly-owned subsidiaries, CH&C and California Hotel
Finance Corporation, a wholly-owned finance subsidiary of CH&C ("CHFC"), does
not purport to be complete and is qualified in its entirety by reference to the
various governing instruments, copies of which have been filed, or incorporated
by reference, as exhibits to the Registration Statement of which this Prospectus
is a part.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the various governing instruments.
10.75% SENIOR SUBORDINATED NOTES
The 10.75% Notes were issued under an indenture dated September 3, 1993
(the "10.75% Indenture"), between the Company and State Street Bank and Trust
Company, as Trustee. The aggregate principal amount of the 10.75% Notes is $150
million. The 10.75% Notes mature on September 1, 2003 and bear interest at a
rate of 10.75% per annum, payable semi-annually on September 1 and March 1. The
10.75% Notes, which are subordinate to the Notes, are subject to redemption at
the Company's option after September 1, 1996 at redemption prices ranging from
105.00% in 1996 to 100.00% in 1999 and thereafter of their principal amount,
plus accrued interest to the redemption date. In addition, upon a Change of
Control, as defined in the 10.75% Indenture, each holder of 10.75% Notes has the
right to require the Company to repurchase each holder's 10.75% Notes at a
purchase price in cash equal to 101% of the principal amount thereof. The
Company currently anticipates redeeming the 10.75% Notes during the second
quarter of fiscal 1997. See "Use of Proceeds."
The 10.75% Indenture contains restrictive covenants which, among other
things, impose significant restrictions on the Company's operations, including
restrictions on the Company's ability to incur any debt unless the Consolidated
Fixed Charge Coverage Ratio (as defined below) exceeds 3.0 to 1.0, or to create
or permit liens on assets, in each case other than debt or liens in certain
limited amounts. "Consolidated Fixed Charge Coverage Ratio" is defined in the
10.75% Indenture as the total interest expense of the Company and its Restricted
Subsidiaries (as defined below) including (i) the interest component of capital
lease obligations, (ii) one-third of the rental expense attributable to
operating leases, (iii) amortization of debt discount and commissions, discounts
and other similar fees and charges owed with respect to debt, (iv) non-cash
interest payments, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi) net
costs under interest rate swap obligations designed to provide interest rate
protection (including amortization of fees), and (vii) dividends on all
preferred stock of Restricted Subsidiaries owned by persons other than the
Company or a wholly-owned subsidiary of the Company, directly or indirectly.
"Restricted Subsidiaries" include all consolidated subsidiaries of the Company
except those specifically designated by the Company as an "Unrestricted
Subsidiary." In addition to debt incurred within the permitted Consolidated
Fixed Charge Coverage Ratio, the Company or any of its Restricted Subsidiaries
may have or incur debt (i) which was outstanding at the time of the issuance of
the 10.75% Notes or incurred in connection with the refinancing thereof, (ii) to
a Restricted Subsidiary (and, similarly, a Restricted Subsidiary may incur debt
to the Company), (iii) up to $40 million for the acquisition, construction or
expansion by the Company or a Restricted Subsidiary of any new or existing
facility or facilities relating to the gaming business and the related
businesses of the Company or such Restricted Subsidiary, (iv) for the
maintenance, refurbishment or replacement of assets relating to the gaming
business and the related businesses of the Company, (v) solely in respect of
performance bonds and completion guarantees, and (vi) with respect to interest
rate swap obligations. With respect to the creation of any liens on assets, the
Company or any of its Restricted Subsidiaries may create liens with respect to
(i) debt existing as of the date of the 10.75% Indenture, (ii) debt senior to
the 10.75% Notes, (iii) the property of any subsidiary securing debt of such
subsidiary, (iv) debt in favor of the Company or a wholly-owned subsidiary, (v)
debt of the Company that is pari passu with the 10.75% Notes, so long as such
liens are equal and ratable to liens with respect to the 10.75% Notes, and debt
that is subordinate or junior in right of payment to the 10.75% Notes so long as
such liens are junior to liens with respect to the 10.75% Notes,
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<PAGE> 54
and (vi) certain other permitted liens. In addition, the 10.75% Indenture
contains covenants that restrict the Company's ability to make investments in or
loans to affiliates, to sell or dispose of its assets or to merge or consolidate
with other entities.
The Company expects to redeem the 10.75% Notes with borrowings under the
New Bank Credit Facility once the 10.75% Notes become redeemable in September
1996.
11% SENIOR SUBORDINATED NOTES
The 11% Notes were issued under an indenture dated November 15, 1992 (the
"11% Indenture"), among CHFC, CH&C, as Guarantor, and State Street Bank and
Trust Company, as Trustee. The aggregate outstanding principal amount of the 11%
Notes is $185 million. CH&C has guaranteed the payment of the 11% Notes (the
"CH&C Guaranty"). The CH&C Guaranty ranks junior in right to payment to all
Senior Debt (as defined in the 11% Indenture) of CH&C, including the Notes, and
pari passu with all other subordinated debt of CH&C.
The 11% Notes mature on December 1, 2002 and bear interest at a rate of 11%
per annum, payable semiannually on June 1 and December 1. The 11% Notes are
subject to redemption at the option of CHFC after December 1, 1997, at
redemption prices ranging from 104.125% in 1997 to 100% in 1999 and thereafter
of the principal amount outstanding plus accrued interest to the redemption
date. In addition, upon a Change of Control (as defined in the 11% Indenture),
each holder of 11% Notes has the right to require CHFC to repurchase the
holder's 11% Notes at a purchase price in cash equal to 101% of the principal
amount thereof.
The 11% Indenture contains restrictive covenants which, among other things,
impose significant restrictions on CH&C's operations, including restrictions on
CH&C's ability to incur debt, unless the Consolidated Fixed Charge Coverage
Ratio (as defined below) exceeds 2.0 to 1.0, or to create or permit liens on
assets, in each case, other than debt or liens in certain limited amounts or to
sell or dispose of its assets or to merge or consolidate with other entities.
"Consolidated Fixed Charge Coverage Ratio" is defined in the 11% Indenture as
the total interest expense of CH&C and its Restricted Subsidiaries (as defined
below) including (i) the interest component of capital lease obligations, (ii)
one-third of the rental expense attributable to operating leases, (iii)
amortization of debt discount and commissions, discounts and other similar fees
and charges owed with respect to debt, (iv) non-cash interest payments, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) net costs under interest rate
swap obligations designed to provide interest rate protection (including
amortization of fees), and (vii) dividends on all preferred stock of Restricted
Subsidiaries owned by persons other than CH&C or a wholly-owned subsidiary of
CH&C, directly or indirectly. "Restricted Subsidiaries" include all consolidated
subsidiaries of CH&C except those specifically designated by CH&C as an
"Unrestricted Subsidiary." In addition to the debt incurred within the permitted
Consolidated Fixed Charge Coverage Ratio, CH&C or any of its Restricted
Subsidiaries may have or incur debt (i) which was outstanding at the time of the
issuance of the 11% Notes, and incurred in connection with the refinancing
thereof, (ii) to a Restricted Subsidiary (and, similarly, a Restricted
Subsidiary may incur debt to CH&C), (iii) up to $40 million for the acquisition,
construction or expansion by CH&C or a Restricted Subsidiary of any new or
existing facility or facilities relating to the gaming business and the related
businesses of CH&C or such Restricted Subsidiary, (iv) for the maintenance,
refurbishment or replacement of assets relating to the gaming business and the
related businesses of CH&C, (v) solely in respect of performance bonds and
completion guarantees, and (vi) with respect to interest rate swap obligations.
With respect to the existence and creation of any liens on assets, CH&C or any
of its Restricted Subsidiaries may suffer to exist or create liens with respect
to (i) debt existing as of the date of the 11% Indenture, (ii) debt senior to
the 11% Notes, (iii) the property of any subsidiary securing debt of such
subsidiary, (iv) debt in favor CH&C or a wholly-owned subsidiary, (v) debt of
CH&C that is pari passu with the 11% Notes, so long as such liens are equal and
ratable to liens with respect to the 11% Notes, and debt that is subordinate or
junior in right of payment to the 11% Notes so long as such liens are junior to
liens with respect to the 11% Notes and (vi) certain other permitted liens. In
addition, the 11% Indenture contains covenants that restrict CH&C's ability to
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make investments in or loans to affiliates, to sell or dispose of its assets, or
to merge or consolidate with other entities.
Each of CHFC and CH&C will be a "Restricted Subsidiary" under the Indenture
for the Notes. See "Description of Notes."
NEW BANK CREDIT FACILITY
On June 19, 1996, the Company and CH&C (collectively referred to herein as
the "Borrowers") entered into the New Bank Credit Facility pursuant to which
Canadian Imperial Bank of Commerce ("CIBC") and certain other financial
institutions (collectively, the "Banks") have provided a five-year reducing
revolving credit facility under which the Borrowers are able to borrow, on a
revolving basis, up to $500 million and under which CIBC serves as the agent
(the "Agent"). The available commitment under the New Bank Credit Facility,
which will expire June 18, 2001, began at $500 million and will be reduced over
the course of the five-year period according to a predetermined schedule
pursuant to which the commitment will be reduced to $475 million on December
1998 and will be further reduced by an additional $50 million at the end of each
six-month period thereafter until maturity. Any outstanding borrowings at
maturity must be repaid at such date. Following the Offering, the availability
will be reduced by approximately $158 million, which amount represents the
expected cost to redeem the 10.75% Notes from September 1, 1996 to September 1,
1997 based on the terms of the 10.75% Indenture. The availability will be
increased if and to the extent that the Company redeems the 10.75% Notes. The
New Bank Credit Facility includes a sublimit for standby letters of credit in an
amount up to $15 million to support various obligations of the Borrowers and
their subsidiaries.
Borrowings under the New Bank Credit Facility bear interest, at the option
of the Borrowers, at a margin above (a) the Eurodollar Rate or (b) the highest
of the following: (i) the Agent's reference rate, (ii) the Federal Funds Rate
plus 1/2 of 1%, and (iii) the CD Published Moving Rate plus 1% (each as defined
in the New Bank Credit Facility). The margin above such rates, and the fee on
the unfunded portions of the New Bank Credit Facility, vary based on the
Company's ratio of Funded Debt (as defined below) to EBITDA (as defined below)
pursuant to the following price matrix:
<TABLE>
<CAPTION>
RATIO OF
FUNDED DEBT
TO ALTERNATE BASE EURODOLLAR
EBITDA RATE MARGIN RATE MARGIN COMMITMENT FEE
- ------------ -------------- ----------- --------------
<S> <C> <C> <C>
(x)<2.00 0.000% 1.000% 0.3750%
2.00x<2.50 0.000% 1.250% 0.3750%
2.50x<3.00 0.250% 1.500% 0.3750%
3.00x<3.50 0.500% 1.750% 0.4375%
3.50x 0.750% 2.000% 0.5000%
</TABLE>
The applicable margin at July 1, 1996 was 1.75% above the Eurodollar Rate
Margin, resulting in an interest rate of approximately 7.2% as of such date.
The New Bank Credit Facility initially is guaranteed by Mare-Bear, Inc.,
Sam-Will, Inc., Eldorado Inc., Boyd Tunica, Boyd Mississippi, Boyd Kansas City,
Boyd Kenner, and MSW, Inc. and thereafter must be guaranteed by any other
Significant Subsidiaries (as defined below) created after June 19, 1996
(collectively, the "Credit Facility Guarantors").
The obligations under the New Bank Credit Facility are secured by: (a)
first deeds of trust on (i) the Stardust, (ii) Sam's Town Las Vegas, (iii) the
California, (iv) the Fremont, (v) Sam's Town Tunica, and (vi) Sam's Town Kansas
City; (b) a first security interest in all furniture, fixtures, accounts,
inventory, equipment (other than leased or financed items) of the Borrowers and
Credit Facility Guarantors; (c) a negative pledge on (i) the real and personal
property of any other Significant Subsidiaries excepting permitted liens, and
(ii) the Silver Star and Treasure Chest management contracts; and (d) first
preferred ship mortgages on the whole of the Patco 400 Riverboat, moored at
Sam's Town Tunica, and the Judy's Prize riverboat, moored at Sam's Town Kansas
City. In addition, Par-A-Dice Gaming and EPH are expected to guaranty the
obligations under the New Bank Credit Facility following the Par-A-Dice
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<PAGE> 56
Acquisition, subject to the approval of the IGB. The deeds of trust and security
interest also secure the Borrower's obligations under any hedging arrangements
with any of the Banks.
The New Bank Credit Facility contains certain financial and other
covenants, including, without limitation, various covenants (i) requiring the
maintenance of a minimum Tangible Net Worth (as defined below) of not less than
the sum of (a) $210,000,000, plus (b) 50% of the Company's consolidated net
income (without giving effect to any losses) for each fiscal quarter ending on
or after September 30, 1996 plus (c) an amount equal to the increase in the
Company's stockholders' equity after June 19, 1996 by reasons of sales and
issuances of the Company's capital stock, and minus (d) the amount of goodwill,
not to exceed $130,000,000, associated with Par-A-Dice in the event the
Par-A-Dice Acquisition is consummated (ii) requiring the maintenance of a
minimum Fixed Charge Coverage Ratio (as defined below) of 2.0 to 1.0 from June
19, 1996 to March 31, 1998 and 2.25 to 1.0 at any time thereafter, (iii)
establishing a maximum permitted Funded Debt (as defined below) to EBITDA (as
defined below) ratio of 4.0 to 1.0 from June 19, 1996 to March 31, 1997, 3.75 to
1.0 from April 1, 1997 to March 31, 1998, 3.5 to 1.0 from April 1, 1998 and
March 31, 1999 and 3.0 to 1.0 from April 1, 1999, (iv) imposing limitations on
the incurrence of additional indebtedness and the creation of liens, (v)
imposing limits on the maximum permitted Maintenance Capital Expenditures (as
defined below) for each fiscal year during the term of the New Bank Credit
Facility ($50,000,000 for fiscal years 1996, 1997 and 1998, $55,000,000 for
fiscal year 1999, and $60,00,000 for fiscal years 2000 and 2001), and (vi)
imposing restrictions on Investments (as defined below), the purchase or
redemption of subordinated debt prior to its stated maturity, dividends and
other distributions, and the redemption or purchase of capital stock of the
Company.
The following terms when used in this "New Bank Credit Facility" section of
this Prospectus have the following meanings (such meanings to be applicable to
the singular and plural forms thereof):
"EBITDA" means, for any period, the Company and certain of its
subsidiaries' consolidated earnings before depreciation, amortization, interest
expense, preopening expenses, extraordinary items and taxes, all as determined
in accordance with generally accepted accounting principles ("GAAP"), plus the
earnings, before depreciation, amortization, interest expense, preopening
expenses, extraordinary items and taxes, all as determined in accordance with
GAAP, during such period for any new venture acquired by the Company or its
subsidiaries during such period, in either case, plus (or minus) any non-cash
loss (or gain) arising from a change in GAAP.
"Eurodollar Rate" means the rate of interest equal to (a) the interest rate
per annum for deposits in U.S. dollars in an amount approximately equal to the
amount of CIBC's Eurodollar Rate Loan and for a period approximately equal to
such interest period which appears on page 3750 of the Dow Jones Industrial
Screen as of 10:00 a.m. London time two business days prior to the beginning of
the period for which the interest rate is being calculated for delivery on the
first day of such interest period, or (b) if such a rate does not appear on page
3750 of the Dow Jones Telerate Screen, the average (rounded upwards, if
necessary, to the nearest 1/100 of 1%) of the rates per annum at which dollar
deposits in immediately available funds are offered to certain lenders in the
interbank market as at or about 11:00 a.m. New York time two business days prior
to the beginning of such interest period, and in an amount approximately equal
to the amount of CIBC's Eurodollar Rate Loan comprising part of such borrowing
and for a period equal to such interest period.
"Fixed Charge Coverage Ratio" means the ratio of (a) twelve-month trailing
EBITDA plus rental payments during such period to (b) the sum of (i) the Company
and certain of its subsidiaries' consolidated interest expense, provision for
taxes and rental payments (each as defined under GAAP) for such twelve-month
period, plus (ii) all dividends and distributions paid on any shares of capital
stock of the Company during such twelve month period, plus (iii) all mandatory
principal payments required to be made by the Company or certain of its
subsidiaries (whether or not such payments are actually made) for such
twelve-month period (exclusive of (a) the repayment of certain indebtedness and
(b) the payment of the loans in connection with mandatory reductions of the
commitment).
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<PAGE> 57
"Funded Debt" means the Company's outstanding total consolidated debt
(including letters of credits, synthetic leases and capital leases, but
excluding trade payables and other current accrued liabilities) calculated as
the average of the amounts outstanding as of the last day of each calendar month
in a fiscal quarter.
"Investment" means, relative to any person, (a) any loan or advance made by
such person to any other person (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business); (b)
any contingent liability of such person; and (c) any ownership or similar
interest held by such person in any other person.
"Maintenance Capital Expenditures" means any capital expenditures which are
made to maintain or restore the condition or usefulness of property, but which
are not properly chargeable to repairs and maintenance in accordance with GAAP;
provided, however, that such term will not include any capital expenditures to
restore the condition or usefulness of property to the extent funded from
insurance; proceeds delivered to the Company or its subsidiaries in accordance
with the terms of the New Bank Credit Facility.
"Tangible Net Worth" means the consolidated net worth of the Company and
certain of its subsidiaries after subtracting therefrom the aggregate amount of
any intangible assets of the Company and such subsidiaries, including goodwill,
franchises, licenses, patents, trademarks and trade names.
53
<PAGE> 58
DESCRIPTION OF NOTES
The Notes will be issued under an indenture to be dated as of ,
1996 (the "Indenture") among the Company, the Guarantors and The Bank of New
York, as trustee (the "Trustee"). A copy of the Indenture may be obtained by
contacting the Office of the Secretary at the principal executive offices of the
Company, 2950 South Industrial Road, Las Vegas, Nevada 89109, telephone: (702)
792-7200.
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"), as in effect on the date of the Indenture.
The Notes are subject to all such terms, and holders of the Notes (the
"Holders") are referred to the Indenture and the Trust Indenture Act for a
statement of those terms. The statements under this caption relating to the
Notes and the Indenture are summaries and do not purport to be complete. Such
summaries may make use of certain terms defined in the Indenture and are
qualified in their entirety by express reference to the Indenture. For the
purposes of this section "Description of Notes," the term "Company" shall mean
Boyd Gaming Corporation only, and shall not include any of its subsidiaries.
GENERAL
The Notes will mature on , 2003 and will be limited to an
aggregate principal amount of $200 million. The Notes will be issued in fully
registered form only and will be issued in denominations of $1,000 and integral
multiples thereof. The Notes may be presented for registration of transfer and
exchange at the offices of the Registrar, which initially will be the offices of
the Trustee.
PAYMENT TERMS
The Notes will bear interest at a rate of % per annum until maturity,
payable semi-annually on and of each year, commencing
1997, to the persons who are registered Holders thereof at the close of
business on the or immediately preceding such interest
payment date.
The Indenture provides that interest on the Notes will be computed on the
basis of a 360-day year of twelve 30-day months. Initially, the Trustee will act
as Paying Agent and Registrar. Principal and interest will be payable initially
at the offices of the Trustee but, at the option of the Company, interest may be
paid by check mailed to Holders at their registered addresses. The Company or
any domestically incorporated Restricted Subsidiary may act as Paying Agent and
Registrar, and the Company may change the Paying Agent or Registrar without
prior notice to Holders.
RANKING
The Indebtedness evidenced by the Notes will be senior unsecured
obligations of the Company, will rank pari passu in right of payment with all
existing and future senior Indebtedness of the Company, will be senior in right
of payment to all future subordinated Indebtedness of the Company and will be
Guaranteed(collectively, the "Guaranties") by certain existing Restricted
Subsidiaries of the Company, which contain substantially all of the
income-producing properties of the Company, and any future Subsidiaries to which
any Guarantor transfers assets unless: (x) with respect to each such transfer
the transfer is at least as favorable to such Guarantor as could be obtained in
a similar transaction in arm's-length dealings with a Person who is not an
Affiliate of such Guarantor, and with respect to each transfer (i) involving
aggregate payments in excess of $5 million, the Company delivers to the Trustee
an Officers' Certificate certifying that such transfer was approved by a
majority of the disinterested members of the Board of Directors of the Company
as complying with the foregoing standard and (ii) involving aggregate payments
in excess of $10 million, the Company delivers to the Trustee an opinion letter
from an Independent Advisor to the effect that such transfer is fair, from a
financial point of view, to the Guarantor; and (y) each such transfer is for
Property other than securities of the transferee and its Affiliates. Any Person
required by the preceding sentence to become a Guarantor because of a transfer
of assets must be or become a Restricted Subsidiary at the time of such
transfer. As of June 30, 1996 and
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<PAGE> 59
giving effect to the Offerings, the Par-A-Dice Acquisition, redemption of the
10.75% Notes and the Mary's Prize Sale, the Company had approximately $333
million of indebtedness that, in light of its secured nature, will effectively
rank senior to the Notes. The Company will use all reasonable efforts to cause
Par-A-Dice and EPH to become Guarantors as described below under "-- Guaranty by
Par-A-Dice and EPH." All Subsidiaries required to Guarantee the Notes in
accordance with the foregoing are referred to as the "Guarantors." Except in the
case of Par-A-Dice and EPH, and as a result of asset transfers referred to
above, the Indenture does not require future Restricted Subsidiaries to become
Guarantors.
The Notes will be structurally subordinated to all present and future
obligations of the Company's Subsidiaries that are not Guarantors and could be
effectively subordinated to obligations of the Guarantors. See "-- Guaranties"
and "Risk Factors -- Holding Company Structure and Ability to Service Debt." As
of June 30, 1996, after giving effect to the Offering and the application of the
net proceeds thereof, the total Indebtedness and liabilities (including trade
payables and accrued liabilities) of Subsidiaries reflected on the Company's
balance sheet would have been approximately $258 million. Although the Indenture
contains limitations on the amount of additional Indebtedness which the Company
and its Restricted Subsidiaries may Incur, the amounts of such Indebtedness
could be substantial and, in any case, all of such Indebtedness may be
Indebtedness of Subsidiaries (which could be effectively senior in right of
payment to the Notes).
GUARANTIES
The obligations of the Company pursuant to the Indenture, including the
repurchase obligation resulting from a Change of Control, will be
unconditionally Guaranteed, jointly and severally, on a senior unsecured basis,
by each of the Guarantors under such Guarantor's Guaranty. Each Guarantor will
also agree to contribute to any Guarantor or Guarantors which make payments
pursuant to a Guaranty or Guaranties an amount equal to such Guarantor's
proportionate share of such Guaranty payment, based on the net worth of such
Guarantor relative to the aggregate net worth of the Guarantors.
GUARANTY BY PAR-A-DICE AND EPH
The Indenture provides that the Company shall use all reasonable efforts,
and shall cause Par-A-Dice and EPH to use all reasonable efforts, to obtain all
necessary approvals of Gaming Authorities in the State of Illinois for
Par-A-Dice and EPH to execute a supplemental indenture, in the form prescribed
by the Indenture and containing their Guaranty, in favor of the Holders at the
consummation of the Par-A-Dice Acquisition or as soon thereafter as possible.
Regardless of whether such approval is obtained, at all times following
consummation of the Par-A-Dice Acquisition, Par-A-Dice and EPH will be subject
to all of the covenants applicable to a Guarantor under the Indenture.
MANDATORY DISPOSITION OR REDEMPTION PURSUANT TO GAMING LAWS
If a Holder or beneficial owner of a Note is required to be licensed,
qualified or found suitable under applicable Gaming Laws and is not so licensed,
qualified or found suitable, the Holder shall be obliged, at the request of the
Company, to dispose of such Holder's Notes within 30 days after receipt of
notice of failure to be found suitable or such earlier date prescribed by any
Gaming Authority (in which event the Company's obligation to pay any interest
after the receipt of such notice shall be limited as provided in such Gaming
Laws), and thereafter, the Company shall have the right to redeem, on the date
fixed by the Company for the redemption of such Notes, such Holder's Notes at a
redemption price equal to the lowest of (i) the price at which such Holder or
beneficial owner acquired the Notes without accrued interest, if any (unless the
payment of such interest is permitted by the applicable Gaming Authority), (ii)
the Current Market Price of the Notes on such redemption date and (iii) the
principal amount of such notes without accrued interest, if any (unless the
payment of such interest is permitted by the applicable Gaming Authority). The
Company is not required to pay or reimburse any Holder or beneficial owner of a
Note for the costs of licensure or investigation for such licensure,
qualification or finding of suitability. Any Holder or beneficial owner of a
Note required to be licensed, qualified or found suitable under applicable
55
<PAGE> 60
Gaming Laws must pay all investigative fees and costs of the Gaming Authorities
in connection with such qualification or application therefor.
OPTIONAL REDEMPTION
The Notes will not be redeemable at the option of the Company prior to
, 2000. On or after that date, the Notes will be redeemable at the
option of the Company, in whole at any time or in part from time to time, on at
least 30 but not more than 60 days' prior notice, mailed by first-class mail to
the Holders' registered addresses, at the redemption prices (expressed in
percentages of principal amount) specified below plus accrued interest to the
redemption date, if redeemed during the 12-month period beginning of
the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000 %
2001 %
2002 %
</TABLE>
If fewer than all the Notes are to be redeemed, selection of Notes for
redemption will be made by the Trustee, pro rata or by lot or by any other means
the Trustee determines to be fair and appropriate and which complies with
applicable legal requirements.
MANDATORY SINKING FUND
There are no mandatory sinking fund payments for the Notes.
BOOK-ENTRY SYSTEM
The Notes will initially be issued in the form of Global Securities (as
defined in the Indenture) held in book-entry form. Accordingly, The Depository
Trust Company ("DTC") or its nominee will initially be the sole registered
holder of the Notes for all purposes under the Indenture.
Upon the issuance of a Global Security, DTC or its nominee will credit the
accounts of persons holding through it with the respective principal amounts of
the Notes represented by such Global Security purchased by such persons in the
Offering. Such accounts shall be designated by the Underwriters with respect to
Notes placed by the Underwriters for the Company. Ownership of beneficial
interests in a Global Security will be limited to persons that have accounts
with DTC ("participants") or persons that may hold interests through
participants. Ownership of beneficial interests by participants in a Global
Security will be shown on, and the transfer of that ownership interest will be
effected only through, records maintained by DTC for such Global Security.
Ownership of beneficial interest in such Global Security by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interest in a Global Security.
Payment of principal and interest on Notes represented by any such Global
Security will be made to DTC or its nominee, as the case may be, as the sole
registered owner and the sole holder of the Notes represented thereby for all
purposes under the Indenture. None of the Company, the Trustee, any agent of the
Company, or the Underwriters will have any responsibility or liability for any
aspect of DTC's records relating to or payments made on account of beneficial
ownership interests in a Global Security representing any Notes or for
maintaining, supervising, or reviewing any of DTC's records relating to such
beneficial ownership interests.
The Company has been advised by DTC that upon receipt of any payment of
principal of, or interest on, any Global Security, DTC will immediately credit,
on its book-entry registration and transfer system, the accounts of participants
with payments in amounts proportionate to their respective beneficial interests
in the principal or face amount of such Global Security as shown on the records
of DTC.
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<PAGE> 61
Payments by participants to owners of beneficial interests in a Global Security
held through such participants will be governed by standing instructions and
customary practices as is now the case with securities held for customer
accounts registered in "street name" and will be the sole responsibility of such
participants.
A Global Security may not be transferred except as a whole by DTC or a
nominee of DTC to a nominee of DTC. A Global Security is exchangeable for
certificated Notes only if (i) DTC notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security or if at any time
DTC ceases to be a clearing agency registered under the Exchange Act, (ii) the
Company executes and delivers to the Trustee a notice that such Global Security
shall be so transferable, registerable, and exchangeable, and such transfers
shall be registerable or (iii) there shall have occurred and be continuing an
Event of Default or an event which, with the giving of notice or lapse of time
or both, would constitute an Event of Default with respect to the Notes
represented by such Global Security. Any Global Security that is exchangeable
for certificated Notes pursuant to the preceding sentence will be transferred
to, and registered and exchanged for, certificated Notes in authorized
denominations and registered in such names as DTC or any successor depositary
holding such Global Security may direct. Subject to the foregoing, a Global
Security is not exchangeable, except for a Global Security of like denomination
to be registered in the name of the Depositary or its nominee. In the event that
a Global Security becomes exchangeable for certificated Notes, (i) certificated
Notes will be issued only in fully registered form in denominations of $1,000 or
integral multiples thereof, (ii) payment of principal, any repurchase price, and
interest on the certificated Notes will be payable, and the transfer of the
certificated Notes will be registerable, at the office or agency of the Company
maintained for such purposes and (iii) no service charge will be made for any
registration of transfer or exchange of the certificated Notes, although the
Company may require payment of a sum sufficient to cover any tax or governmental
charge imposed in connection therewith.
So long as DTC or any successor depositary for a Global Security, or its
nominee, is the registered owner of such Global Security, DTC or such successor
depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Security for the
purposes of receiving payment on the Notes, receiving notices, and for all other
purposes under the Indenture and the Notes. Beneficial interests in Notes will
be evidenced only by, and transfers thereof will be effected only through,
records maintained by DTC or any successor depositary and its participants. Cede
& Co. has been appointed as the nominee of DTC. Except as provided above, owners
of beneficial interests in a Global Security will not be entitled to and will
not be considered the Holders thereof for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of DTC or any successor depositary, and, if such person
is not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a Holder under the
Indenture, including suing for nonpayment of principal or interest. The Company
understands that under existing industry practices, in the event that the
Company requests any action of Holders or that an owner of a beneficial interest
in a Global Security desires to give or take any which a Holder is entitled to
give or take under the Indenture, the Depositary would authorize the
participants holding the relevant beneficial interest to give or take such
action and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
DTC has advised the Company that DTC is a limited-purpose trust company
organized under the Banking Law of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered under the
Exchange Act. DTC was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations, and certain other organizations some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also
57
<PAGE> 62
available to others, such as banks, brokers, dealers, and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly.
REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder shall have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the purchase date (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder stating, among other things: (1) that a Change of Control
has occurred and a Change of Control Offer is being made pursuant to the
covenant entitled "Repurchase at the Option of Holders Upon a Change of Control"
and that all Notes (or portions thereof) timely tendered will be accepted for
payment; (2) the purchase price and the purchase date, which shall be, subject
to any contrary requirements of applicable law, no earlier than 30 days nor
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"); (3) that any Note (or portion thereof) accepted for payment (and
for which payment has been duly provided on the Change of Control Payment Date)
pursuant to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date; (4) that any Notes (or portions thereof) not
tendered will continue to accrue interest; (5) a description of the transaction
or transactions constituting the Change of Control; and (6) the procedures that
Holders must follow in order to tender their Notes (or portions thereof) for
payment and the procedures that Holders must follow in order to withdraw an
election to tender Notes (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of
Rule 14e-1 under the Exchange Act, and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the purchase of Notes in connection with a Change of Control. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions relating to the Change of Control Offer, the Company will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations described above by virtue thereof.
Except as described above with respect to a Change of Control, the
Indenture does not contain any other provisions that permit the Holders to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar restructuring.
In the event the Notes have Investment Grade Status at the earlier of the
public announcement of (x) the occurrence of a Change of Control or (y) (if
applicable) the intention of the Company to effect a Change of Control, the
foregoing Change of Control provisions shall not apply unless both a Change of
Control with respect to the Company and a Rating Decline shall occur. If the
Notes have Investment Grade Status at the earlier of the public announcement of
(x) the occurrence of a Change of Control or (y) (if applicable) the intention
of the Company to effect a Change of Control, and the Company effects defeasance
of the Notes under the Indenture prior to the date of a Rating Decline, the
Company will not be obligated to make a repurchase offer as a result of such
Change of Control and Rating Decline. While the Company has no present intention
to defease the Notes, the Company could elect to defease the Notes in the event
that a proposed corporate action could not be undertaken in compliance with the
restrictive covenants in the Notes and the terms of the Notes did not then
permit the Company to effect a redemption. The effect of the preceding provision
is that in the event that at least two of three designated ratings agencies
rated the Notes "investment grade" prior to such Change of Control, the Company
would only be required to make a Change of Control Offer if, within 90 days of
the announcement of such Change of Control, at least two of the three designated
ratings agencies have rated the Notes "non-investment grade" and the Company
does not elect to defease the Notes prior to the announcement of such
"non-investment grade" ratings.
There can be no assurance that the Company will be able to fund any such
repurchase of the Notes. Certain existing credit agreements contain and any
future credit agreements or other agreements relating
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<PAGE> 63
to indebtedness of the Company may contain prohibitions or restrictions on the
Company's ability to effect a Change of Control Payment. In the event a Change
of Control occurs at a time when such prohibitions or restrictions are in
effect, the Company could seek the consent of its lenders to the purchase of
Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will be effectively prohibited from purchasing Notes. In
such case, the Company's failure to purchase tendered Notes would constitute an
Event of Default under the Indenture. See "Risk Factors -- Lack of Sufficient
Funds to Effect Repurchase."
The definition of Change of Control includes a phrase relating to the sale,
lease, conveyance or transfer of "all or substantially all" of the Company's
assets. Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder to require the
Company to repurchase such Notes as a result of a sale, lease, conveyance or
transfer of less than all of the assets of the Company to another person may be
uncertain.
CERTAIN COVENANTS
Set forth below are certain covenants contained in the Indenture. During
any period of time that (i) the Notes have Investment Grade Status and (ii) no
Default or Event of Default has occurred and is continuing under the Indenture
with respect to the Notes, the Company and its Restricted Subsidiaries will not
be subject to the provisions of the Indenture with respect to the Notes
described below under "-- Limitation on Indebtedness," "-- Limitation on
Restricted Payments" and "-- Limitation on Asset Sales" (collectively, the
"Suspended Covenants"). In the event that the Company and its Restricted
Subsidiaries are not subject to the Suspended Covenants with respect to the
Notes for any period of time as a result of the preceding sentence and,
subsequently, at least two of the three Rating Agencies withdraw their ratings
or assign the Notes a rating below the required Investment Grade Ratings, then
the Company and its Restricted Subsidiaries will thereafter again be subject to
the Suspended Covenants for the benefit of the Notes and compliance with the
Suspended Covenant with respect to Restricted Payments made after the time of
such withdrawal or assignment will be calculated in accordance with the terms of
the covenant described below under "-- Limitation on Restricted Payments" as if
such covenant had been in effect during the entire period of time from the Issue
Date with respect to the Notes.
Limitation on Indebtedness. The Company shall not, and shall not permit
any Restricted Subsidiary to, Incur any Indebtedness unless no Event of Default
has occurred and is continuing and unless (after giving effect to (i) the
Incurrence of such Indebtedness as if such Indebtedness was Incurred at the
beginning of the Reference Period and (if applicable) the application of the net
proceeds thereof to repay other Indebtedness as if the application of such
proceeds occurred at the beginning of the Reference Period, (ii) the Incurrence
and retirement of any other Indebtedness since the first day of the Reference
Period as if such Indebtedness was Incurred or retired at the beginning of the
Reference Period and (iii) the acquisition or disposition of any company or
business by the Company or any Restricted Subsidiary since the first day of the
Reference Period including any acquisition or disposition which will be
consummated contemporaneously with the Incurrence of such Indebtedness, as if
such acquisition or disposition occurred at the beginning of the Reference
Period), the Company's Consolidated Fixed Charge Coverage Ratio would exceed 2.0
to 1.0.
Notwithstanding the foregoing limitation, the Company may Incur the
following Indebtedness: (i) Indebtedness evidenced by the Notes; (ii)
Indebtedness outstanding on the Issue Date; (iii) so long as no Event of Default
has occurred and is continuing, Indebtedness under the Credit Facility in an
aggregate amount outstanding at any time not to exceed $500 million, as such
amount may be reduced as a result of repayments pursuant to the covenant
"Limitation on Asset Sales; Events of Loss" of Indebtedness outstanding under
the Credit Facility; (iv) Indebtedness of the Company or a Restricted Subsidiary
owing to and held by a Restricted Subsidiary or the Company; provided, however,
that any subsequent issuance or transfer of any Capital Stock or other event
that results in any such Restricted
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Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of
any such Indebtedness except to the Company or a Restricted Subsidiary shall be
deemed in each case to constitute the Incurrence of such Indebtedness by the
issuer thereof; (v) Indebtedness under Interest Rate Agreements entered into for
the purpose of limiting interest rate risks, provided that the obligations under
such agreements are related to payment obligations on Indebtedness otherwise
permitted by the terms of this covenant; (vi) Indebtedness under Currency
Exchange Protection Agreements, provided that such Currency Exchange Protection
Agreements were entered into for the purpose of limiting exchange rate risks in
connection with transactions entered into in the ordinary course of business;
(vii) Indebtedness in connection with one or more standby letters of credit,
performance bonds or completion guarantees issued in the ordinary course of
business or pursuant to self-insurance obligations and not in connection with
the borrowing of money or the obtaining of advances or credit; (viii)
Indebtedness outstanding under Permitted FF&E Financings which are either (x)
Non-Recourse Indebtedness of the Company and its Restricted Subsidiaries or (y)
limited in amount for each Gaming Facility owned or leased by the Company or any
of its Restricted Subsidiaries to the lesser of (1) the amount of FF&E used in
such Gaming Facility and financed by such Permitted FF&E Financing or (2) $10
million; (ix) so long as no Event of Default has occurred and is continuing,
Indebtedness of the Company not otherwise permitted to be Incurred pursuant to
the provisions of the immediately preceding paragraph or this paragraph in an
aggregate amount Incurred not to exceed $25 million; or (x) Permitted
Refinancing Indebtedness Incurred in respect of Indebtedness outstanding
pursuant to the provisions of the immediately preceding paragraph or clauses
(i), (ii), (iii), (viii) and this clause (x) of this paragraph.
Limitation on Restricted Payments. The Company shall not make, and shall
not permit any Restricted Subsidiary to make, any Restricted Payment if at the
time of, and after giving effect to, such proposed Restricted Payment, (a) a
Default or an Event of Default shall have occurred and be continuing, (b) the
Company could not Incur at least $1.00 of additional Indebtedness pursuant to
the first paragraph of "-- Limitation on Indebtedness" or (c) the aggregate
amount of such Restricted Payment and all other Restricted Payments made from
and after the date of the Indenture (the amount of any Restricted Payment, if
made other than in cash, to be based upon Fair Market Value) would exceed an
amount equal to the sum of (i) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the end of the most recent
fiscal quarter ended immediately prior to the date of the Indenture to the end
of the most recent fiscal quarter ended immediately prior to the date of such
Restricted Payment (or, in the case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); (ii) the aggregate Net Cash Proceeds
received by the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the end of the most recent fiscal quarter
ended immediately prior to the date of the Indenture (other than an issuance or
sale to a Subsidiary of the Company or an employee stock ownership plan or other
trust established by the Company or any of its Subsidiaries or pursuant to
clauses (iii) or (iv) in the following paragraph); (iii) the amount by which
Indebtedness of the Company or any Guarantor is reduced on the Company's balance
sheet upon the conversion or exchange (other than an issuance or sale to a
Subsidiary of the Company or an employee stock ownership plan or other trust
established by the Company or any of its Subsidiaries) subsequent to the end of
the most recent fiscal quarter ended immediately prior to the date of the
Indenture, of any Indebtedness of the Company or any Guarantor convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash or other property distributed by the Company or any
Restricted Subsidiary upon such conversion or exchange); (iv) the amount equal
to the net reduction in Investments resulting from (A) payments of dividends,
repayments of loans or advances or other transfers of assets to the Company or
any Guarantor or the satisfaction or reduction (other than by means of payments
by the Company or any Restricted Subsidiary) of obligations of other Persons
which have been Guaranteed by the Company or any Guarantor or (B) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries which
execute Guaranties, in each case such net reduction in Investments being (x)
valued as provided in the definition of "Investment," (y) in an amount not to
exceed the aggregate amount of Investments previously made by the Company or any
Guarantor which were treated as a Restricted Payment, and (z) included in this
clause (iv) only to the extent not included in Consolidated Net Income; (v)
payments of dividends,
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repayments of loans or advances or other transfers of assets to the Company or
any Guarantor from the Mirage Joint Venture to the extent such dividends,
repayments, advances or other transfers exceed $100 million; and (vi) $75
million.
The provisions of the preceding paragraph shall not prohibit: (i) the
payment of any dividend within 60 days after the date of its declaration if such
dividend could have been paid on the date of its declaration in compliance with
such provisions; provided that at the time of payment of such dividend no
Default under any provision of the Indenture other than this covenant shall have
occurred and be continuing (or would result therefrom); (ii) the redemption or
repurchase of any Capital Stock or Indebtedness of the Company (other than any
Capital Stock or Indebtedness which is held or beneficially owned by, or issued
by, any member of the Boyd Family, the Company or any Affiliate of the Company),
(A) if the holder or beneficial owner of such Capital Stock or Indebtedness is
required to qualify under the Gaming Laws and does not so qualify or (B) if
necessary in the reasonable, good faith judgment of the Board of Directors, as
evidenced by a Board Resolution, to prevent the loss or secure the reinstatement
of any Gaming License which if lost or not reinstated, as the case may be, would
have a material adverse effect on the business of the Company and its
Subsidiaries, taken as a whole, or would restrict the ability of the Company or
any of its Subsidiaries to conduct business in any gaming jurisdiction; (iii)
any purchase, redemption or other acquisition or retirement of Capital Stock of
the Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock (other than Disqualified Stock) of the
Company; (iv) any purchase, redemption or other acquisition or retirement of the
Indebtedness of any Person made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock (other than Disqualified Stock)
of the Company; (v) any purchase, redemption, defeasance or other acquisition or
retirement for value of Indebtedness from the proceeds of Permitted Refinancing
Indebtedness; (vi) any purchase, redemption or other retirement of the 11% Notes
and the 10.75% Notes; (vii) Investments not to exceed $100 million in the Mirage
Joint Venture; (viii) Investment Guarantees to the extent permitted by the
provisions described under the caption, "-- Limitation on Indebtedness" above
that constitute Permitted Joint Venture Investments and Guarantee (with full
rights of subrogation) Indebtedness Incurred by a Permitted Joint Venture to
acquire or construct Gaming Facilities provided that such Indebtedness (A) is
not expressly subordinated in right of payment or otherwise to any other
Indebtedness of such Permitted Joint Venture and (B) is secured by first
priority security interests in such Gaming Facilities, and (ix) payments
pursuant to Investment Guarantees which were entered into in compliance with
clause (viii) of this paragraph.
The full amount of any Restricted Payments pursuant to clauses (i) and (ii)
of the preceding paragraph (but not pursuant to clauses (iii), (iv), (v), (vi)
and (vii) of the preceding paragraph) shall be included in the calculation of
the aggregate amount of the Restricted Payments referred to in the next
preceding paragraph. With respect to any Investment Guarantee, (x) if at any
time the Company or any Restricted Subsidiary ceases to control the day-to-day
operations of the Permitted Joint Venture the Indebtedness of which is
Guaranteed by the Investment Guarantee, the full amount of such Investment
Guarantee shall thereafter be included in the calculation of the aggregate
amount of Restricted Payments referred to in the next preceding paragraph and
(y) if the Company or a Restricted Subsidiary retains such control, any amount
actually paid pursuant to such Investment Guarantee shall be included in the
calculation of the aggregate amount of Restricted Payments referred to in the
next preceding paragraph.
Limitation on Liens. The Company shall not, and shall not permit any
Guarantor or Par-A-Dice and EPH to, directly or indirectly, Incur or suffer to
exist, any Lien upon any of its Property, whether now owned or hereafter
acquired, or any interest therein or any income or profits therefrom, unless it
has made or will make effective provision whereby the Notes will be secured by
such Lien equally and ratably with (or prior to) all other Indebtedness of the
Company or any Guarantor, Par-A-Dice or EPH secured by such Lien except for: (i)
Permitted Liens; (ii) Liens on assets financed through Permitted FF&E Financings
securing Indebtedness permitted under clause (viii) of "-- Limitation on
Indebtedness"; (iii) Liens on the Property of the Company or any Guarantor,
Par-A-Dice or EPH existing on the date of the Indenture; (iv) Liens securing
Indebtedness Incurred pursuant to the Credit Facility; (v) Liens in
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favor of the Company or a Guarantor; (vi) Liens on the Property of a Person at
the time such Person becomes a Guarantor; provided, however, that any such Lien
may not extend to any other Property of the Company or any Guarantor; provided
further, however, that any such Lien was not Incurred in anticipation of or in
connection with the transaction or series of related transactions pursuant to
which such Person became a Guarantor; or (vii) Liens to secure any refinancing,
refunding, extension, renewal or replacement (or successive refinancings,
refundings, extensions, renewals or replacements) as a whole or in part of any
Indebtedness secured by any Lien referred to in the foregoing clauses (ii),
(iii), (vi) and (vii); provided, however, that (x) such new Lien shall be
limited to all or part of the same Property subject to the original Lien (plus
improvements on such Property) and (y) the Indebtedness secured by such Lien at
such time is not increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of the
Indebtedness described under clauses (ii), (iii), (vi) or (vii) and (B) an
amount necessary to pay any fees and expenses, including premiums, related to
such refinancing, refunding, extension, renewal or replacement.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other distributions to
the Company or any other Restricted Subsidiary (A) on its Capital Stock or (B)
with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any indebtedness owed to the Company or any other
Restricted Subsidiary or (b) make loans or advances to the Company or any other
Restricted Subsidiary or (c) transfer any of its Property to the Company or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) agreements in effect on the Issue Date; (ii)
applicable law; (iii) customary nonassignment provisions in leases entered into
in the ordinary course of business and consistent with past practices; (iv)
Permitted Refinancing Indebtedness; provided, however, that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced; or (v) agreements in existence with respect to a
Restricted Subsidiary at the time it is so designated; provided, however, that
such agreements are not entered into in anticipation or contemplation of such
designation. Nothing contained in this covenant shall prevent the Company or any
Restricted Subsidiary from granting any Lien permitted by the "-- Limitation on
Liens" covenant.
Limitation on Asset Sales; Event of Loss. Other than upon an Event of Loss,
the Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Sale after the Issue Date, where
the Property subject to such Asset Sale has an aggregate Fair Market Value equal
to or in excess of $10 million, unless: (i) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value of the Property subject to such
Asset Sale; (ii) at least 75% of such consideration consists of cash or
Temporary Cash Investments; provided, however, that for purposes of this clause
(ii), (x) the assumption of Indebtedness of the Company or a Restricted
Subsidiary which is not subordinated to the Notes or any Guarantee shall be
deemed to be Temporary Cash Investments if the Company, such Restricted
Subsidiary, and all other Restricted 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, (y) any securities or notes received by the
Company or such Restricted Subsidiary from such transferee that are converted by
the Company or such Restricted Subsidiary into cash or Temporary Cash
Investments within 10 business days of the date of such Asset Sale shall be
deemed to be Temporary Cash Investments and (z) the Company and its Restricted
Subsidiaries may receive consideration in the form of securities exceeding 25%
of the consideration for one or more Asset Sales so long as the Company and its
Restricted Subsidiaries do not hold such securities having an aggregate Fair
Market Value in excess of $50 million at any time outstanding; (iii) 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
(iv) the Board of Directors of the Company determines in good faith that such
Asset Sale complies with clauses (i) and (ii).
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Upon an Event of Loss incurred by the Company or any of its Restricted
Subsidiaries, the Net Proceeds received from such Event of Loss shall be applied
in the same manner as proceeds from Asset Sales described above and pursuant to
the procedures set forth below.
Within 270 days after the receipt of the Net Proceeds of an Asset Sale or
Event of Loss, an amount equal to 100% of the Net Proceeds from such Asset Sale
or Event of Loss may be applied by the Company or a Restricted Subsidiary (A) to
permanently repay, redeem or repurchase Indebtedness of the Company or
Indebtedness of any Restricted Subsidiary or (B) to reinvest in Additional
Assets (including by means of an Investment in Additional Assets by a Restricted
Subsidiary with Net Proceeds received by the Company or another Restricted
Subsidiary); provided, however, that if the Company or any Restricted Subsidiary
contractually commits within such 270-day period to apply such Net Proceeds
within 180 days of such contractual commitment in accordance with the above
clauses (A) or (B), and such Net Proceeds are subsequently applied as
contemplated in such contractual commitment, then the requirement for
application of Net Proceeds set forth in this paragraph shall be considered
satisfied.
Any Net Proceeds from an Asset Sale or Event of Loss that are not used in
accordance with the preceding paragraph shall constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $20 million (taking into account
income earned on such Excess Proceeds), the Company shall make an offer to
purchase (the "Prepayment Offer"), on a pro rata basis, from all Holders of the
Notes, an aggregate principal amount of Notes equal to the Excess Proceeds, at a
price in cash at least equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, in accordance with the procedures summarized herein
and set forth in the Indenture. To the extent that any portion of the Excess
Proceeds remains after compliance with the preceding sentence and provided that
all Holders have been given the opportunity to tender the Notes for repurchase
in accordance with the Indenture, the Company or such Restricted Subsidiary may
use such remaining amount for general corporate purposes and the amount of
Excess Proceeds shall be reset to zero. Pending application of Net Proceeds
pursuant to clause (A) and (B) above, such Net Proceeds will be invested in
Temporary Cash Investments.
Within ten Business Days after the amount of Excess Proceeds exceeds $20
million, the Company shall send a written notice, by first-class mail, to the
Holders (the "Prepayment Offer Notice"), accompanied by such information
regarding the Company and its Subsidiaries as the Company in good faith believes
will enable such Holders to make an informed decision with respect to the
Prepayment Offer. The Prepayment Offer Notice will state, among other things,
(a) that the Company is offering to purchase Notes pursuant to the provisions of
the Indenture described herein under "-- Limitation on Asset Sales," (b) that
any Note (or any portion thereof) accepted for payment (and for which payment
has been duly provided on the Purchase Date) pursuant to the Prepayment Offer
shall cease to accrue interest after the Purchase Date, (c) the purchase price
and purchase date, which shall be, subject to any contrary requirements of
applicable law, no less than 30 days nor more than 60 days from the date the
Prepayment Offer Notice is mailed (the "Purchase Date"), (d) the aggregate
principal amount of Notes (or portions thereof) to be purchased and (e) a
description of the procedure which Holders must follow in order to tender their
Notes (or portions thereof) and the procedures that Holders must follow in order
to withdraw an election to tender their Notes (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of
Rule 14e-1 under the Exchange Act, and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the purchase of Notes as described above. To the extent that the provisions
of any securities laws or regulations conflict with the provisions relating to
the Prepayment Offer, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
described above by virtue thereof.
Limitation on Transactions with Affiliates. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, conduct
any business or enter into or suffer to exist any transaction or series of
transactions (including the purchase, sale, transfer, lease or exchange of any
Property, the making of any Investment, the giving of any Guarantee or the
rendering or receiving of any service) with, from or for the benefit of, (1) any
Affiliate, (2) any Related Person or (3) any officer or
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director of any Affiliate or a Related Person (an "Affiliate Transaction")
unless (i) the terms of such Affiliate Transaction are (a) in writing, (b) in
the best interest of the Company or such Restricted Subsidiary, as the case may
be, and (c) at least as favorable to the Company or such Restricted Subsidiary,
as the case may be, as those that could be obtained at the time of such
Affiliate Transaction in a similar transaction in arm's-length dealings with a
Person who is not such an Affiliate, Related Person or officer or director of an
Affiliate or Related Person, (ii) with respect to each Affiliate Transaction
involving aggregate payments to either party in excess of $5 million, the
Company delivers to the Trustee an Officers' Certificate certifying that such
Affiliate Transaction was approved by a majority of the disinterested members of
the Board of Directors and that such Affiliate Transaction complies with clause
(i), and (iii) with respect to each Affiliate Transaction involving aggregate
payments in excess of $10 million, the Company delivers to the Trustee an
opinion letter from an Independent Advisor to the effect that such Affiliate
Transaction is fair, from a financial point of view.
Notwithstanding the foregoing limitation, the Company may enter into or
suffer to exist the following: (i) any transaction pursuant to any contract in
existence on the Issue Date; (ii) any Restricted Payment permitted to be made
pursuant to "-- Limitation on Restricted Payments"; (iii) any transaction or
series of transactions between the Company and one or more of its Restricted
Subsidiaries or between two or more of its Restricted Subsidiaries; and (iv) the
payment of compensation (including amounts paid pursuant to employee benefit
plans) for the personal services of officers, directors and employees of the
Company or any of its Restricted Subsidiaries, so long as the Board of Directors
in good faith shall have approved the terms thereof and deemed the services
theretofore or thereafter to be performed for such compensation or fees to be
fair consideration therefor.
Maintenance of Properties and Other Matters. The Company shall, and shall
cause each of its Subsidiaries to, maintain its Properties in good working order
and condition and make all necessary repairs, renewals and replacements;
provided, however, that nothing in this provision shall prevent the Company or
any of its Subsidiaries from discontinuing the operation and maintenance of any
of its Properties, if such discontinuance is, in the judgment of the Company,
both desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and not disadvantageous in any material respect
to the Holders.
The Company shall, and shall cause each of its Subsidiaries to, insure and
keep insured, with financially sound and reputable insurers, so much of their
respective Properties and in such amounts as is usually and customarily insured
by Persons engaged in a similar business with respect to Properties of a similar
character against loss by fire and the extended coverage perils. None of the
Company or any of its Subsidiaries shall maintain a system of self-insurance in
lieu of or in combination with the foregoing insurance with respect to its
Properties; provided that deductibles under the insurance policy or policies of
the Company and its Subsidiaries shall not be considered to be self-insurance as
long as such deductibles accord with financially sound and approved practices of
Persons owning or operating Properties of a similar character and maintaining
similar insurance coverage.
The Company shall, and shall cause each of its Subsidiaries to, keep proper
books and records of accounts in which full and correct entries will be made of
all its business transactions in accordance with GAAP. The Company shall cause
the books and records of accounts of the Company and its Subsidiaries to be
examined, either on a consolidated or on an individual basis, by one or more
firms of independent public accountants not less frequently than annually. The
Company shall, and shall cause each of its Subsidiaries to, prepare its
financial statements in accordance with GAAP.
The Company shall, and shall cause each of its Subsidiaries to, comply with
all Legal Requirements and to obtain any licenses, permits, franchises or other
authorizations, including Gaming Licenses, from Governmental Authorities
necessary to the ownership or operation of its Properties or to the conduct of
its business.
Notwithstanding the foregoing provisions in this covenant, failure by the
Company or any of its Subsidiaries to comply with such provisions shall not be
deemed to be a breach of such provisions to the
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extent that such failure would not have a material adverse effect on the Company
and its Subsidiaries, taken as a whole.
Limitation on Activities of the Company. The Company shall not, and shall
not permit any of its Restricted Subsidiaries to, engage in (through acquisition
or otherwise) any business other than a Related Business.
Limitation on Status as an Investment Company. The Company shall not, and
shall not permit any of its Subsidiaries to, become an "investment company" (as
that term is defined in the Investment Company Act of 1940), to the extent such
status would subject the Company or any such Subsidiary to regulation under the
Investment Company Act, except for Subsidiaries established for the purpose of
financing the operating businesses of the Company and its Subsidiaries.
RELEASE OF GUARANTORS
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 where the surviving entity
to such consolidation or merger is not a Subsidiary of the Company, in
circumstances where such sale, consolidation or merger is not prohibited under
the covenant "-- Limitation on Asset Sales", such Guarantor shall be deemed
automatically and unconditionally released and discharged from all obligations
under its Guaranty and the Indenture without any further action required on the
part of the Trustee or any Holder.
MERGER, CONSOLIDATION AND SALE OF ASSETS
Neither the Company nor any Guarantor shall merge or consolidate with or
into any other entity (other than a merger or consolidation of a Guarantor with
or into the Company or another Guarantor, and other than a merger or
consolidation of a Guarantor where the surviving entity is not the Company or a
Subsidiary of the Company) or in one transaction or a series of related
transactions sell, convey, assign, transfer, lease or otherwise dispose of all
or substantially all of its Property unless: (i) the entity formed by or
surviving any such consolidation or merger (if the Company or such Guarantor is
not the surviving entity) or the Person to which such sale, assignment,
transfer, lease or conveyance is made (the "Successor") (a) shall be a
corporation organized and existing under the laws of the United States of
America or a State thereof or the District of Columbia and such corporation
expressly assumes, by supplemental indenture satisfactory to the Trustee,
executed and delivered to the Trustee by such corporation, the due and punctual
payment of the principal, premium, if any, and interest on all the Notes,
according to their tenor, and the due and punctual performance and observance of
all the covenants and conditions of the Indenture to be performed by the Company
or such Guarantor, as the case may be, and (b) the Successor shall have all
Gaming Licenses required to operate all Gaming Facilities to be owned by such
Successor; (ii) in the case of a sale, transfer, assignment, lease, conveyance
or other disposition of all or substantially all of the Company's Property or of
such Guarantor's Property, such Property shall have been transferred as an
entirety or virtually as an entirety to one Person; (iii) immediately before and
after giving effect to such transaction or series of transactions on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing;
(iv) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness Incurred or anticipated to be Incurred in connection with such
transaction or series of transactions), the Company or the Successor, as the
case may be, would be able to Incur at least $1.00 of additional Indebtedness
pursuant to the first paragraph of "-- Limitation of Indebtedness"; and (v)
immediately after giving effect to such transaction or series of transactions on
a pro forma basis including, without limitation, any Indebtedness Incurred or
anticipated to be Incurred in connection with such transaction or series of
transactions), the Company or the Successor shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to the transaction or series of transactions.
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SEC REPORTS
The Indenture provides that whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will file with the Commission and furnish to the Trustee and Holders such annual
reports and such information, documents and other reports as are specified in
Sections 13 or 15(d) of the Exchange Act and the rules and regulations
thereunder and applicable to a U.S. corporation subject to such Sections and the
rules and regulations thereunder, such information, documents and other reports
to be so filed and provided at the times specified for the filing of such
information, documents and reports under such Sections and the rules and
regulations thereunder.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) default with respect to payment of interest on any of the Notes when it
becomes due and payable, and the continuance of such default for a period of 30
days; (ii) default with respect to payment of principal or premium, if any, on
any of the Notes when due at maturity, upon acceleration, required purchase or
otherwise; (iii) failure by the Company or any Guarantor to observe, perform or
comply with the covenants and agreements described in "-- Merger, Consolidation
and Sale of Assets" herein; (iv) failure by the Company or the Guarantors to
observe, perform or comply with any of the other covenants and agreements in the
Indenture and such failure to observe, perform or comply continues for a period
of 30 days after receipt by the Company of a written notice from the Trustee or
Holders of not less than 25% in aggregate principal amount of the Notes then
outstanding; (v) Indebtedness of the Company or any Restricted Subsidiary is not
paid when due within any applicable grace period or is accelerated by the
holders thereof and, in either case, the total amount of such unpaid or
accelerated Indebtedness exceeds $10 million; (vi) the entry by a court of
competent jurisdiction of one or more judgments or orders against the Company or
any Restricted Subsidiary in an uninsured aggregate amount in excess of $10
million and such judgment or order is not discharged, waived, stayed or
satisfied for a period of 60 consecutive days; (vii) certain events of
bankruptcy, insolvency or reorganization affecting the Company or any Restricted
Subsidiary; (viii) any revocation, suspension or loss of any Gaming License
which results in the cessation of business for a period of more than 90
consecutive days of the business of any Gaming Facility owned, leased or
operated directly or indirectly by the Company or any of its Subsidiaries (other
than any voluntary relinquishment of a Gaming License if such relinquishment is,
in the reasonable, good faith judgment of the Board of Directors, evidenced by a
Board Resolution, both desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole, and not disadvantageous in any material
respect to the Holders); and (ix) any Guaranty ceases to be in full force and
effect (other than pursuant to the terms of the Indenture) or is declared null
and void or any Guarantor denies that it has any further liability under its
Guaranty or gives notice to such effect.
The Indenture provides that the Trustee, within 90 days after the
occurrence of any continuing Default or Event of Default that is known to the
Trustee, will give notice to the Holders; provided, however, that, except in the
case of a default in payment of principal of or interest on the Notes, the
Trustee may withhold such notice as long as it in good faith determines that
such withholding is in the interest of the Holders.
The Indenture provides that if an Event of Default with respect to the
Notes (other than an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization with respect to the Company or a
Guarantor) shall have occurred and be continuing, the Trustee or the registered
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may accelerate the maturity of all the Notes in which event the
Notes shall become immediately due and payable; provided, however, that after
such acceleration but before a judgment or decree based on acceleration is
obtained by the Trustee, the registered holders of a majority in aggregate
principal amount of the Notes then outstanding, may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal, have been cured or waived as
provided in the Indenture. In case an Event of Default resulting from certain
events of bankruptcy, insolvency or
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reorganization with respect to the Company or a Guarantor shall occur, the Notes
shall be due and payable immediately without any declaration or other act on the
part of the Trustee or the Holders.
The Holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing Default with respect to the Notes or
compliance with any provision of the Indenture or the Notes and to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, subject to certain limitations specified in the Indenture.
No Holder will have any right to institute any proceeding with respect to
the Indenture or for any remedy thereunder, unless: (i) such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default;
(ii) Holders of at least 25% in aggregate principal amount of the Notes then
outstanding shall have made written request and offered reasonable indemnity to
the Trustee to institute such proceeding as a trustee; and (iii) the Trustee
shall not have received from the Holders of a majority in aggregate principal
amount of the Notes then outstanding a direction inconsistent with such request
and shall have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a Holder for enforcement of
payment of the principal of and premium, if any, or interest on such Holder's
Note on or after the respective due dates expressed in such Note.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture, the Notes and the Guaranties
may be amended with the consent of the Holders of a majority in principal amount
of the Notes then outstanding (including consents obtained in connection with a
tender offer or exchange for the Notes) and any past default or compliance with
any provisions may also be waived with the consent of the Holders of a majority
in principal amount of the Notes then outstanding. However, without the consent
of each Holder of an outstanding Note, no amendment may, among other things, (i)
reduce the amount of Notes whose Holders must consent to an amendment or waiver,
(ii) reduce the rate of or extend the time for payment of interest on any Note,
(iii) reduce the principal of or extend the Stated Maturity of any Note, (iv)
make any Note payable in money other than that stated in the Note, (v) impair
the right of any Holder to receive payment of principal of and interest on such
Holder's Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Notes, (vi)
subordinate in right of payment, or otherwise subordinate, the Notes to any
other obligation of the Company or any Guarantor, or (vii) release any security
interest in favor of the Notes or Guaranties.
Without the consent of any Holder of the Notes, the Company, the Guarantors
and the Trustee may amend the Indenture to cure any ambiguity, omission, defect
or inconsistency, to provide for the assumption by a successor corporation of
the obligations of the Company or any Guarantor under the Indenture, to release
a Guarantor from its Guaranty if such Guarantor is sold in compliance with the
provisions set forth in "-- Release of Guarantors" above, to provide for
uncertificated Notes in addition to or in place of certificated Notes (provided
that the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code, or in a manner such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the Internal
Revenue Code), to secure the Notes, to add to the covenants of the Company or
any Guarantor for the benefit of the Holders or to surrender any right or power
conferred upon the Company or any Guarantor, to make any change that does not
adversely affect the rights of any Holder or to comply with any requirement of
the Commission in connection with the qualification of the Indenture under the
Trust Indenture Act.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
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After an amendment under the Indenture becomes effective, the Company is
required to mail to Holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all Holders, or any
defect therein, will not impair or affect the validity of the amendment.
DISCHARGE OF INDENTURE AND DEFEASANCE
When (i) the Company delivers to the Trustee all outstanding Notes (other
than Notes replaced because of mutilation, loss, destruction or wrongful taking)
for cancellation or (ii) all outstanding Notes have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption as
described above, and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Notes,
including interest thereon, and if in either case the Company pays all other
sums payable hereunder by the Company, then the Indenture shall, subject to
certain surviving provisions, cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of the Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
Subject to the conditions to defeasance described below and the survival of
certain provisions, the Company at any time may terminate (i) all its
obligations under the Notes and the Indenture ("legal defeasance option") or
(ii) its obligations under certain restrictive covenants and the related Events
of Default ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment of the Notes
may not be accelerated because of an Event of Default. If the Company exercises
its covenant defeasance option, payment of the Notes may not be accelerated
because of an Event of Default referred to in clause (ii) of the immediately
preceding paragraph.
The legal defeasance option or the covenant defeasance option may be
exercised only if: (i) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment of principal of and
interest on the Notes to maturity or redemption, as the case may be; (ii) the
Company delivers to the Trustee a certificate from a nationally recognized firm
of independent certified public accountants expressing their opinion that the
payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the Notes to maturity
or redemption, as the case may be; (iii) 123 days pass after the deposit is made
and during the 123-day period no Default described in clause (vii) under
"-- Events of Default" occurs which is continuing at the end of the period; (iv)
no Default or Event of Default has occurred and is continuing on the date of
such deposit and after giving effect thereto; (v) the deposit does not
constitute a default under any other agreement or instrument binding on the
Company; (vi) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940; (vii) in the case of the legal defeasance option, the Company delivers to
the Trustee an Opinion of Counsel stating that (a) the Company has received from
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, to the effect,
in either case, that, and based thereon such Opinion of Counsel shall confirm
that, the holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred; (viii) in
the case of the covenant defeasance option, the Company delivers to the Trustee
an Opinion of Counsel to the effect that the holders of the 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; and (ix) the Company delivers to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent to the defeasance and discharge of the Notes have been
complied with as required by the Indenture.
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THE TRUSTEE
The Bank of New York is to be the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
TRANSFER AND EXCHANGE
Holders may transfer or exchange their Notes in accordance with the
Indenture. The Registrar under the Indenture may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
is not required to transfer or exchange any Note selected for redemption. Also,
the Registrar is not required to transfer or exchange any Note for a period of
15 days before selection of Notes to be redeemed.
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
"Additional Assets" means (i) any Property (other than cash, cash
equivalents or securities) to be owned by the Company or a Restricted Subsidiary
and used in a Related Business, (ii) the costs of improving, restoring,
replacing or developing any Property owned by the Company or a Restricted
Subsidiary which is used in a Related Business or (iii) Investments in any other
Person engaged primarily in a Related Business (including the acquisition from
third parties of Capital Stock of such Person) as a result of which such other
Person becomes a Restricted Subsidiary in compliance with the procedure for
designation of Restricted Subsidiaries set forth below in the definition of
"Restricted Subsidiary."
"Affiliate" means, with respect to any Person, a Person (i) which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such Person, (ii) which directly or indirectly
through one or more intermediaries beneficially owns or holds 10% or more of any
class of the Voting Stock of such Person (or a 10% or greater equity interest in
a Person which is not a corporation) or (iii) of which 10% or more of any class
of the Voting Stock (or, in the case of a Person which is not a corporation, 10%
or more of the equity interest) is beneficially owned or held directly or
indirectly through one or more intermediaries by such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Sale" means the sale, conveyance, transfer, lease or other
disposition, whether in a single transaction or a series of related transactions
(including, without limitation, dispositions pursuant to Sale/Leaseback
Transactions or pursuant to the merger of the Company or any of its Restricted
Subsidiaries with or into any person other than the Company or one of its
Restricted Subsidiaries, but not including any dispositions to the Company or
any of its Restricted Subsidiaries), by the Company or one of its Restricted
Subsidiaries to any Person other than the Company or one of its Restricted
Subsidiaries of (i) any of the Capital Stock or other ownership interests of any
Subsidiary of the Company or (ii) any
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other Property of the Company or any Property of its Restricted Subsidiaries, in
each case not in the ordinary course of business of the Company or such
Restricted Subsidiary.
"Attributable Indebtedness" means Indebtedness deemed to be Incurred in
respect of a Sale/ Leaseback Transaction and shall be, at the date of
determination, the present value (discounted at the actual rate of interest
implicit in such transaction, compounded annually), of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, to be in full force and effect on the date of such certification
and delivered to the Trustee.
"Boyd Family" means William S. Boyd, any direct descendant or spouse of
such person, or any direct descendant of such spouse, and any trust or other
estate in which each person who has a beneficial interest, directly or
indirectly through one or more intermediaries, in Capital Stock of the Company
is one of the foregoing persons.
"Capital Lease Obligations" means Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP and the amount of such Indebtedness shall be
the capitalized amount of such obligations determined in accordance with GAAP.
For purposes of "-- Certain Covenants -- Limitation on Liens," Capital Lease
Obligations shall be deemed secured by a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of corporate stock, partnership interests
or any other participation, right, warrants, options or other interest in the
nature of an equity interest in such Person, but excluding any debt security
convertible or exchangeable into such equity interest.
A "Change of Control" shall be deemed to occur if:
(i) any "person" or "group" (within the meaning of Sections 13(d)(3)
and 14(d)(2) of the Exchange Act or any successor provision to either of
the foregoing, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act), other than the Permitted Holders and other than a
Restricted Subsidiary, becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time) of 50% or more of the total voting power of all classes of
the Voting Stock of the Company and/or warrants or options to acquire such
Voting Stock, calculated on a fully diluted basis; provided that for
purposes of this clause (i), the members of the Boyd Family shall be deemed
to beneficially own any Voting Stock of a corporation held by any other
corporation (the "parent corporation") so long as the members of the Boyd
Family beneficially own (as so defined), directly or indirectly through one
or more intermediaries, in the aggregate 50% or more of the total voting
power of the Voting Stock of the parent corporation;
(ii) the sale, lease, conveyance or other transfer of all or
substantially all of the Property of the Company (other than to any
Restricted Subsidiary) shall have occurred;
(iii) the stockholders of the Company shall have approved any plan of
liquidation or dissolution of the Company;
(iv) the Company consolidates with or merges into another Person or
any Person consolidates with or merges into the Company in any such event
pursuant to a transaction in which the outstanding Voting Stock of the
Company is reclassified into or exchanged for cash, securities or
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other property, other than any such transaction where (a) the outstanding
Voting Stock of the Company is reclassified into or exchanged for Voting
Stock of the surviving corporation that is Capital Stock and (b) the
holders of the Voting Stock of the Company immediately prior to such
transaction own, directly or indirectly, not less than a majority of the
Voting Stock of the surviving corporation immediately after such
transaction in substantially the same proportion as before the transaction;
or
(v) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election or appointment by such board or whose
nomination for election by the stockholders of the Company was approved by
a vote of either (A) 66 2/3% 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 or (B) members of the
Boyd Family who beneficially own (as defined for purposes of clause (i)
above), directly or indirectly through one or more intermediaries, in the
aggregate 50% or more of the total voting power of the Voting Stock of the
Company) cease for any reason to constitute a majority of the Board of
Directors then in office.
"Consolidated EBITDA" means, for any period, without duplication,
Consolidated Net Income, plus (i) Consolidated Fixed Charges, (ii) provisions
for taxes based on income to the extent such taxes were deducted in determining
Consolidated Net Income, (iii) consolidated depreciation expense, (iv)
consolidated amortization expense, and (v) other noncash items reducing
Consolidated Net Income, minus (vi) other noncash items increasing Consolidated
Net Income, all as determined on a consolidated basis for the Company and its
Restricted Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of (i)
Consolidated EBITDA during the Reference Period to (ii) the aggregate amount of
Consolidated Fixed Charges during the Reference Period.
"Consolidated Fixed Charges" means, for any period, the total interest
expense of the Company and its consolidated Subsidiaries (other than
Unrestricted Subsidiaries), including (i) the interest component of Capital
Lease Obligations, (ii) one-third of the rental expense attributable to
operating leases, (iii) amortization of Indebtedness discount and commissions,
discounts and other similar fees and charges owed with respect to Indebtedness,
(iv) noncash interest payments, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs pursuant to Interest Rate Agreements, (vii) dividends
on all Preferred Stock of Restricted Subsidiaries held by Persons other than the
Company or a Restricted Subsidiary, (viii) interest attributable to the
Indebtedness of any other Person for which the Company or any Restricted
Subsidiary is responsible or liable as obligor, guarantor or otherwise
(including Indebtedness Guaranteed pursuant to Investment Guarantees) and (viii)
any dividend or distribution, whether in cash, property or securities, on
Disqualified Stock of the Company.
"Consolidated Net Income" means for any period, the net income (loss) of
the Company and its Subsidiaries; provided, however, that there shall not be
included in such Consolidated Net Income (i) any net income (loss) of any Person
if such Person is not a Restricted Subsidiary, except that subject to the
limitations contained in (iv) below, (a) the Company's equity in the net income
of any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to the Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (iii) below) and
(b) the Company's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in determining such
Consolidated Net Income, (ii) any net income (loss) of any Person acquired by
the Company or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition, (iii) any net income (loss) of any
Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company, except that (a)
subject to the limitations
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contained in (iv) below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been distributed by
such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend to
another Restricted Subsidiary, to the limitation contained in this clause) and
(b) the Company's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net Income, (iv)
any gain or loss realized upon the sale or other disposition of any Property of
the Company or its consolidated Subsidiaries (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the
ordinary course of business and any gain or loss realized upon the sale or other
disposition of any Capital Stock of any Person, (v) any extraordinary gain or
loss and (vi) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of any
action for the purpose of which the determination is being made, as (i) the par
or stated value of all outstanding Capital Stock of the Company plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Stock.
"Credit Facility" means the revolving credit facility, as amended from time
to time, among the Company, certain Subsidiaries and a syndicate of banks, and
any extensions, revisions, refinancings or replacements thereof by an
institutional lender or syndicate of institutional lenders.
"Currency Exchange Protection Agreement" means, in respect of a Person, any
foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency exchange rates.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" of a Person means any Capital Stock of such Person:
(i) that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or otherwise (a) matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b)
is or may become redeemable or repurchaseable at the option of the holder
thereof, in whole or in part, or (c) is convertible or exchangeable or
exercisable for Indebtedness; and (ii) as to which the maturity, mandatory
redemption, conversion or exchange or redemption at the option of the holder
thereof occurs, or may occur, in the case of each of clauses (i) or (ii) on or
prior to the first anniversary of the Stated Maturity of the Notes; provided,
however, that such Capital Stock of the Company or any of its Subsidiaries shall
not constitute Disqualified Stock if it is redeemable prior to the first
anniversary of the Stated Maturity of the Notes only if: (A) the holder or a
beneficial owner of such Capital Stock is required to qualify under the Gaming
Laws and does not so qualify, or (B) the Board of Directors determines in its
reasonable, good faith judgment, as evidenced by a Board Resolution, that as a
result of a holder or beneficial owner owning such Capital Stock, the Company or
any of its Subsidiaries has lost or may lose any Gaming License, which if lost
or not reinstated, as the case may be, would have a material adverse effect on
the business of the Company and its Subsidiaries, taken as a whole, or would
restrict the ability of the Company or any of its Subsidiaries to conduct
business in any gaming jurisdiction.
"EPH" means East Peoria Hotel, Inc., an Illinois corporation.
"Event of Loss" means, with respect to any Property, any (i) loss,
destruction or damage of such Property; or (ii) any condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of such
Property, or confiscation or requisition of the use of such Property.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Fair Market Value" means with respect to any Property, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. Fair Market Value will be
determined, except as otherwise provided, (i) if such Property has a Fair Market
Value of less than $5 million, by any Officer of the Company or (ii) if such
Property has a Fair Market Value in excess of $5 million, by a majority of the
Board of Directors and evidenced by a Board Resolution, dated within 30 days of
the relevant transaction, delivered to the Trustee.
"GAAP" means generally accepted accounting principles in effect on the date
of the Indenture.
"Gaming Authority" means any of the Nevada Gaming Commission, the Nevada
Gaming Control Board, the Mississippi Gaming Commission, the Mississippi State
Tax Commission, the Missouri Gaming Commission, the National Indian Gaming
Commission, the Bureau of Indian Affairs, the Illinois Gaming Board and any
other agency (including, without limitation, any agency established by a
federally-recognized Indian tribe to regulate gaming on such tribe's
reservation) which has, or may at any time after the date of the Indenture have,
jurisdiction over the gaming activities of the Company or any of its
Subsidiaries or any successor to such authority.
"Gaming Facility" 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 or 100% of the equity interest of a Person the primary
business of which is ownership and operation of any of the foregoing.
"Gaming Laws" means the gaming laws of a jurisdiction or jurisdictions to
which the Company or any of its Subsidiaries is, or may at any time after the
date of the Indenture be, subject.
"Gaming License" means any license, permit, franchise or other
authorization from any governmental authority required on the date of the
Indenture or at any time thereafter to own, lease, operate or otherwise conduct
the gaming business of the Company and its Subsidiaries, including all licenses
granted under Gaming Laws and other Legal Requirements.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such first Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), extend,
assume, Guarantee or become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or obligation on the consolidated balance sheet of such Person
including by merger or operation of law (and "Incurrence," "Incurred,"
"Incurrable" and "Incurring" shall have meanings correlative to the foregoing).
The accretion of principal of a noninterest bearing or other discount security
shall be deemed the Incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness, secured or unsecured, contingent or otherwise, which is for
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), or the principal amount of
such indebtedness evidenced by bonds, notes, debentures or similar instruments
or representing the balance deferred and unpaid of the purchase price of any
property (excluding any balances that constitute customer advance payments and
deposits, accounts payable or trade payables,
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and other accrued liabilities arising in the ordinary course of business) if and
to the extent any of the foregoing indebtedness would appear as a liability upon
a balance sheet of such Person prepared in accordance with GAAP, and shall also
include, to the extent not otherwise included (i) any Capital Lease Obligations,
(ii) Indebtedness of other Persons secured by a Lien to which the property or
assets owned or held by such Person is subject, whether or not the obligation or
obligations secured thereby shall have been assumed (the amount of such
Indebtedness being deemed to be the lesser of the value of such property or
assets or the amount of the Indebtedness so secured), (iii) Guarantees of
Indebtedness of other Persons, (iv) any Disqualified Stock, (v) any Attributable
Indebtedness, (vi) all obligations of such Person in respect of letters of
credit, bankers' acceptances or other similar instruments or credit transactions
issued for the account of such Person (including reimbursement obligations with
respect thereto), other than obligations with respect to letters of credit
securing obligations (other than obligations described in this definition)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit, (vii) in the case of the Company, Preferred Stock of its
Restricted Subsidiaries and (viii) obligations pursuant to any Interest Rate
Agreement or Currency Rate Protection Agreement. Notwithstanding the foregoing,
Indebtedness shall not include any interest or accrued interest until due and
payable. For purposes of this definition, the maximum fixed repurchase price of
any Disqualified Stock or Preferred Stock that does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Disqualified
Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were
repurchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indenture; provided, however, that if such Disqualified Stock or
Preferred Stock is not then permitted to be repurchased, the repurchase price
shall be the book value of such Disqualified Stock or Preferred Stock. The
amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability of any other obligations described in clauses (i) through
(viii) above in respect thereof at such date.
"Independent Advisor" means, an investment banking firm of national
standing with non-investment grade debt underwriting experience or any third
party appraiser of national standing; provided, however, that such firm or
appraiser is not an Affiliate of the Company.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of cash
or other Property to others or payments for Property or services for the account
or use of others, or otherwise) to, or Incurrence of an Investment Guarantee or
a Guarantee of any obligation of, or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Indebtedness issued
by, any other Person, including the redesignation by the Board of Directors of a
Person to be an Unrestricted Subsidiary. In determining the amount of any
Investment in respect of any Property other than cash, such Property shall be
valued at its Fair Market Value at the time of such Investment.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's (or any successor to the rating agency business
thereof), BBB- (or the equivalent) by S&P (or any successor to the rating agency
business thereof) and BBB- (or the equivalent) by Duff & Phelps Credit Rating
Co. (or any successor to the rating agency business thereof).
"Investment Grade Status" means any time at which the ratings of the Notes
by two of three of Moody's (or any successor to the rating agency business
thereof), S&P (or any successor to the rating agency business thereof) and Duff
& Phelps Credit Rating Co. (or any successor to the rating agency business
thereof) are Investment Grade Ratings; provided, however, that one of such two
must be Moody's or S&P.
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"Investment Guarantee" means any Guarantee by the Company or a Restricted
Subsidiary of Indebtedness of a Permitted Joint Venture; provided, such
Guarantee complies with the requirements of clause (viii) of the second
paragraph of "-- Limitation on Restricted Payments"; provided, further, that
only such Indebtedness of such Permitted Joint Venture Guaranteed by the Company
or a Restricted Subsidiary that matures by its terms prior to the time (if any)
that the ability of the Company or a Restricted Subsidiary to control the
day-to-day operations of such Permitted Joint Venture (pursuant to a management
contract or otherwise) is scheduled to expire may constitute Indebtedness
subject to an Investment Guarantee.
"Issue Date" means the date on which the Notes are initially issued.
"Legal Requirements" means all laws, statutes and ordinances and all rules,
orders, rulings, regulations, directives, decrees, injunctions and requirements
of all governmental authorities, that are now or may hereafter be in existence,
and that may be applicable to the Company or any Subsidiary or Affiliate thereof
or the Trustee (including building codes, zoning and environmental laws,
regulations and ordinances and Gaming Laws), as modified by any variances,
special use permits, waivers, exceptions or other exemptions which may from time
to time be applicable.
"Lien" means with respect to any Property of any Person, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority, or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such Property (including any Capital Lease
Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing). Any
Sale/Leaseback Transaction shall be deemed to constitute a Lien on the Property
which is the subject of such Sale/Leaseback Transaction securing the
Attributable Indebtedness represented thereby.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale, net of attorney's fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually Incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Net Proceeds" from any Asset Sale or Event of Loss by any Person or its
Restricted Subsidiaries means cash and cash equivalents received in respect of
the Property sold or with respect to which an Event of Loss occurred net of (i)
all reasonable out-of-pocket expenses of such Person or such Restricted
Subsidiary Incurred in connection with an Asset Sale of such type, including,
without limitation, all legal, title and recording tax expenses, commissions and
fees and expenses incurred (but excluding any finder's fee or broker's fee
payable to any Affiliate of such Person) and all Federal, state, provincial,
foreign and local taxes arising in connection with such Asset Sale or Event of
Loss that are paid or required to be accrued as a liability under GAAP by such
Person or its Restricted Subsidiaries, (ii) all payments made by such Person or
its Restricted Subsidiaries on any Indebtedness which is secured by such
Property in accordance with the terms of any Lien upon or with respect to such
Property or which must, by the terms of such Lien, or in order to obtain a
necessary consent to such Asset Sale or by applicable law, be repaid out of the
proceeds from such Asset Sale or Event of Loss, and (iii) all contractually
required distributions and other payments made to minority interest holders (but
excluding distributions and payments to Affiliates of such Person) in Restricted
Subsidiaries of such Person as a result of such Asset Sale or Event of Loss;
provided, however, that, in the event that any consideration for an Asset Sale
(which would otherwise constitute Net Proceeds) is required to be held in escrow
pending determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Proceeds only at such
time as it is released to such Person or its Restricted Subsidiaries from
escrow; and provided further, however, that any noncash consideration received
in connection with an Asset Sale or Event of Loss which is subsequently
converted to cash shall be deemed to be Net Proceeds at and from the time of
such conversion.
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"Non-Recourse Indebtedness" means Indebtedness of a Person to the extent
that under the terms thereof or pursuant to applicable law (i) no personal
recourse shall be had against such Person for the payment of the principal of or
interest or premium, if any, on such Indebtedness, and (ii) enforcement of
obligations on such Indebtedness is limited only to recourse against interests
in Property purchased with the proceeds of the Incurrence of such Indebtedness
and as to which neither the Company nor any of its Restricted Subsidiaries
provides any credit support or is liable.
"Officer" means the Chief Executive Officer, President, Treasurer, any
Executive Vice President or any Vice President of the Company.
"Officers' Certificate" means a certificate signed by two Officers at least
one of whom shall be the principal executive officer, principal accounting
officer or principal financial officer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Par-A-Dice" means Par-A-Dice Gaming Corporation.
"Permitted FF&E Financing" means Indebtedness of the Company or any of its
Restricted Subsidiaries that is Incurred to finance the acquisition or lease
after the date of the Indenture of newly acquired or leased furniture, fixtures
or equipment ("FF&E") used directly in the operation of a Gaming Facility owned
or leased by the Company or its Restricted Subsidiaries and secured by a Lien on
such FF&E in an amount not to exceed 100% of the cost of the FF&E so purchased
or leased.
"Permitted Holders" means the Boyd Family and any group (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) comprised solely of
members of the Boyd Family.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person which will, upon the
making of such Investment, become a Restricted Subsidiary; provided, however,
that the primary business of such Restricted Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary, as
the case may be; (vii) stock, obligations or securities received in settlement
of debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments; and (viii) securities
received pursuant to clause (ii) of the covenant "-- Limitation on Asset Sales;
Events of Loss."
"Permitted Joint Venture" means a Person in which a Permitted Joint Venture
Investment has been made by the Company or any Restricted Subsidiary.
"Permitted Joint Venture Investment" means any Investment in a Person
primarily engaged or preparing to engage in a Related Business if, immediately
after giving effect to such Investment, the Company or a Restricted Subsidiary
will own at least 50.0% of the shares of Capital Stock (including at least 50.0%
of the total voting power thereof) of such Person, and will control the
day-to-day operations of such Person pursuant to a management contract or
otherwise.
"Permitted Liens" means (i) Liens for taxes, assessments or governmental
charges or levies on the Property of the Company or any Restricted Subsidiary if
the same shall not at the time be delinquent or thereafter can be paid without
penalty, or are being contested in good faith and by appropriate proceedings;
(ii) Liens imposed by law, such as carriers', warehousemen's and mechanics'
Liens and
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other similar Liens on the Property of the Company or any Restricted Subsidiary
which secure payment of obligations arising in the ordinary course of business;
(iii) Liens on the Property of the Company or any Restricted Subsidiary in favor
of issuers of performance bonds and surety bonds obtained in the ordinary course
of business; (iv) other Liens on the Property of the Company or any Restricted
Subsidiary incidental to the conduct of their respective businesses or the
ownership of their respective Properties which were not created in connection
with the Incurrence of Indebtedness or the obtaining of advances or credit and
which do not in the aggregate materially detract from the value of their
respective Properties or materially impair the use thereof in the operation of
their respective businesses; (v) pledges or deposits by the Company or any
Restricted Subsidiary under workmen's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which the Company or any Restricted Subsidiary is a party, or deposits to secure
public or statutory obligations of the Company or any Restricted Subsidiary, or
deposits for the payment of rent, in each case Incurred in the ordinary course
of business; (vi) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and do not materially
detract from the value of such Property; and (vii) Liens securing obligations to
the Trustee pursuant to the compensation and indemnity provisions of the
Indenture.
"Permitted Refinancing Indebtedness" means any renewals, extensions,
substitutions, refinancings or replacements of any Indebtedness, including any
successive extensions, renewals, substitutions, refinancings or replacements
(and including refinancings by the Company of Indebtedness of a Restricted
Subsidiary) so long as (i) the aggregate amount of Indebtedness represented
thereby is not increased by such renewal, extension, substitution, refinancing
or replacement, (ii) the average life and Stated Maturity is not shortened and
(iii) the new Indebtedness shall not be senior in right of payment to the
Indebtedness that is being extended, renewed, substituted, refinanced or
replaced; provided, however, that Permitted Refinancing Indebtedness shall not
include (a) Indebtedness of a Subsidiary that refinances Indebtedness of the
Company or another Subsidiary or (b) Indebtedness of the Company that refinances
the Indebtedness of an Unrestricted Subsidiary.
"Person" means any individual, corporation, company (including limited
liability company), partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock in any other Person
(but excluding Capital Stock or other securities issued by such first Person).
"Rating Agencies" means S&P, Duff & Phelps Credit Rating Co. and Moody's or
any successor to the respective rating agency businesses thereof.
"Rating Decline" shall have occurred if at any date within 90 calendar days
after the date of public disclosure of the occurrence of a Change of Control
(which period will be extended for so long as the Company's debt ratings are
under publicly announced review for possible downgrading (or without an
indication of the direction of a possible ratings change) by either Moody's or
S&P or their respective successors) the Notes no longer have Investment Grade
Status.
"Reference Period" means the period of four consecutive fiscal quarters
ending with the last full fiscal quarter immediately preceding the date of a
proposed Incurrence, Restricted Payment or other transaction.
"Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries in connection with any Gaming
Facility and any and all reasonably related businesses necessary for, in
support, furtherance or anticipation of and/or ancillary to or in preparation
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for, such business including, without limitation, the development, expansion or
operation of any Gaming Facility (including any land-based, dockside, riverboat
or other type of casino), owned, or to be owned, leased or managed by the
Company or one of its Subsidiaries.
"Related Person" means any legal or beneficial owner of 5% or more of any
class of Capital Stock of the Company or any of its Subsidiaries.
"Restricted Payment" means (i) any dividend or distribution (whether made
in cash, property or securities) declared or paid on or with respect to any
shares of Capital Stock of the Company or to the Company's stockholders except
for such dividends or distributions payable solely in Capital Stock of the
Company (other than Disqualified Stock of the Company); (ii) a payment made by
the Company or any Restricted Subsidiary (other than to the Company or a
Restricted Subsidiary) to purchase, redeem, acquire or retire any Capital Stock
of the Company or Capital Stock of any Affiliate of the Company or any warrants,
rights or options, to directly or indirectly purchase or acquire any such
Capital Stock or any securities exchangeable for or convertible into any such
Capital Stock; (iii) a payment made by the Company or any Restricted Subsidiary
to redeem, repurchase, defease or otherwise acquire or retire for value, prior
to any scheduled maturity, scheduled sinking fund or mandatory redemption
payment (other than the purchase, repurchase, or other acquisition of any
Indebtedness subordinate in right of payment to the Notes purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition),
Indebtedness of the Company or any Guarantor which is subordinate (whether
pursuant to its terms or by operation of law) in right of payment to the Notes
or the Guaranties; or (iv) any Investment (other than a Permitted Investment) in
any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that (A) has
not been designated by the Board of Directors of the Company as an Unrestricted
Subsidiary or (B) was an Unrestricted Subsidiary but has been redesignated by
the Board of Directors of the Company as a Restricted Subsidiary, in each case
as provided under the definition of Unrestricted Subsidiary; provided, however,
that no Subsidiary shall become a Restricted Subsidiary unless, immediately
after giving pro forma effect to such designation, the Company would be able to
incur at least $1.00 of additional Indebtedness pursuant to the first paragraph
of "Certain Covenants -- Limitation on Indebtedness."
"Sale/Leaseback Transaction" means, with respect to any Person, any direct
or indirect arrangement pursuant to which Property is sold or transferred by
such Person or a Restricted Subsidiary of such Person and is thereafter leased
back from the purchaser or transferee thereof by such Person or one of its
Restricted Subsidiaries.
"S&P" means Standard & Poor's Ratings Group, a division of the McGraw-Hill
Companies, Inc.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which a payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person.
"Temporary Cash Investments" means any of the following: (i) Investments in
U.S. Government Obligations maturing within 90 days of the date of acquisition
thereof, (ii) Investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 90 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America or any state thereof having capital, surplus and
undivided profits aggregating in excess
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of $500,000,000 and whose long-term debt is rated "A-3" or higher, "A-" or
higher or "A-" or higher according to Moody's, S&P or Duff & Phelps Credit
Rating Co. (or such similar equivalent rating by at least one "nationally
recognized statistical rating organization" (as defined in Rule 436 under the
Securities Act)), respectively, (iii) repurchase obligations with a term of not
more than 7 days for underlying securities of the types described in clause (i)
entered into with a bank meeting the qualifications described in clause (ii)
above, and (iv) Investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than the Company
or an Affiliate of the Company) organized and in existence under the laws of the
United States of America with a rating at the time as of which any Investment
therein is made of "P-1" (or higher) according to Moody's "A-1" (or higher)
according to S&P or "A-1" (or higher) according to Duff & Phelps Credit Rating
Co. (or such similar equivalent rating by at least one "nationally recognized
statistical rating organization" (as defined in Rule 436 under the Securities
Act)).
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company which at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors) and (ii) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
(unless such Subsidiary owns any Capital Stock of or owns or holds any Lien on
any Property of the Company or any other Subsidiary of the Company which is not
a Subsidiary of the Subsidiary to be so designated); provided that either (A)
the Subsidiary to be so designated has total assets of $1,000 or less or (B)
such designation is effective immediately upon such entity becoming a Subsidiary
of the Company. Subject to clause (ii) above, the Board of Directors may
redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that immediately after giving pro forma effect to such redesignation, the
Company would be able to incur at least $1.00 of additional Indebtedness
pursuant to the first paragraph of "Certain Covenants -- Limitation on
Indebtedness of the Company."
Any such designation by the Board of Directors will be evidenced to the
Trustee by filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying (i) that such
designation complies with the foregoing provisions and (ii) giving the effective
date of such designation, such filing with the Trustee to occur within 75 days
after the end of the fiscal quarter of the Company in which such designation is
made (or, in the case of a designation made during the last fiscal quarter of
the Company's fiscal year, within 120 days after the end of such fiscal year).
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" means securities of any class or classes of a Person, the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for corporate directors (or Persons performing equivalent functions).
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal U.S. Federal income tax
consequences resulting from the beneficial ownership of Notes by certain
persons. This summary does not purport to consider all the possible U.S. Federal
tax consequences of the purchase, ownership or disposition of the Notes and is
not intended to reflect the particular tax position of any beneficial owner. It
deals only with Notes held as capital assets. Moreover, except as expressly
indicated, it addresses initial purchasers and does not address beneficial
owners that may be subject to special tax rules, such as banks, insurance
companies, dealers in securities or currencies, purchasers that hold Notes as a
hedge against currency risks or as part of a straddle with other investments or
as part of a "synthetic security" or other integrated investment (including a
"conversion transaction") comprised of a Note and one or more other investments,
or purchasers that have a "functional currency" other than the U.S. Dollar.
Except to the extent discussed below under "Non-U.S. Holders," this summary is
not applicable to non-United States persons not subject to U.S. Federal income
tax on their worldwide income. This summary is based upon the U.S. Federal tax
laws and regulations as now in effect and as currently interpreted and does not
take into account possible changes in such tax laws or such interpretations, any
of which may be applied retroactively. It does not include any description of
the tax laws of any state, local or foreign government that may be applicable to
the Notes or holders thereof. PERSONS CONSIDERING THE PURCHASE OF NOTES SHOULD
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF THE U.S. FEDERAL
TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES TO THEM
UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
U.S. HOLDERS
In general, interest on a Note will be taxable to a beneficial owner that
is (i) a citizen or resident of the United States, (ii) a corporation created or
organized under the laws of the United States or any State thereof (including
the District of Columbia), or (iii) a person otherwise subject to United States
Federal income taxation on its worldwide income (a "U.S. Holder") as ordinary
income at the time it is received or accrued, depending on the holder's method
of accounting for tax purposes. A U.S. Holder will recognize a gain or loss upon
the sale or other disposition of a Note in an amount equal to the difference
between the amount realized from such disposition and the U.S. Holder's adjusted
tax basis in the Note. Such gain or loss will be a capital gain or loss,
assuming that the holder has held the Note as a capital asset, and will be long
term if the holder has held the Note for more than one year at the time of
disposition.
NON-U.S. HOLDERS
Under present U.S. Federal income and estate tax law and subject to the
discussion of backup withholding below:
(a) payments of principal and interest on the Notes by the Company or
any agent of the Company to any holder of a Note that is not a U.S. Holder
(a "Non-U.S. Holder") will not be subject to U.S. Federal withholding tax,
provided in the case of interest that (i) the Non-U.S. Holder does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote, (ii) the
Non-U.S. Holder is not a controlled foreign corporation that is related to
the Company (directly or indirectly) through stock ownership, and (iii)
either (A) the beneficial owner of the Notes certifies to the Company or
its agent, under penalties of perjury, that it is not a "United States
person" (as defined in the Code) and provides its name and address, or (B)
a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "financial institution") and holds the Notes on behalf of the
beneficial owner certifies to the Company or its agent, under penalties of
perjury, that such statement has been received from the beneficial owner by
it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof;
(b) any gain realized on the sale, exchange, retirement, redemption or
other disposition of a Note by a Non-U.S. Holder will not be subject to
U.S. Federal income or withholding taxes unless
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(i) such gain is effectively connected with a U.S. trade or business of the
Non-U.S. Holder or (ii) in the case of an individual, such Non-U.S. Holder
is present in the United States for 183 days or more in the taxable year of
the sale, exchange, retirement, redemption or other disposition and either
(A) such individual's "tax home" for United States Federal income tax
purposes is in the United States or (B) the gain is attributable to an
office or other fixed place of business maintained in the United States by
such individual; and
(c) a Note held by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to U.S.
Federal estate tax as a result of such individual's death if, at the time
of such death, the individual did not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Company entitled to vote and the income on the Notes would not have been
effectively connected with the conduct of a trade or business by the
individual in the United States.
If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest on the Note is effectively connected with the conduct of such trade
or business, the Non-U.S. Holder, although exempt from the withholding tax
discussed in the preceding paragraph (provided that such holder properly claims
such exemption by furnishing a properly executed IRS Form 4224 on or before any
payment is due), may be subject to U.S. Federal income tax on such interest in
the same manner as if it were a U.S. Holder.
Recently proposed Treasury regulations (the "Proposed Regulations") would
provide alternative methods for satisfying the certification requirements
described above. The Proposed Regulations also would require, in the case of
Notes held by a foreign partnership, that (x) the certification described in
clause (a)(iii) above be provided by the partners rather than by the foreign
partnership and (y) the partnership provide certain information, including a
United States taxpayer identification number. A look-through rule would apply in
the case of tiered partnerships. The Proposed Regulations are proposed to be
effective for payments made after December 31, 1997. There can be no assurance
that the Proposed Regulations will be adopted or as to the provisions that they
will include if and when adopted in temporary or final form.
INFORMATION REPORTING AND BACKUP WITHHOLDING
For each calendar year in which the Notes are outstanding, the Company is
required to provide the IRS with certain information, including the holder's
name, address and taxpayer identification number, the aggregate amount of
principal and interest paid to that holder during the calendar year and the
amount of tax withheld, if any. This obligation, however, does not apply with
respect to certain U.S. Holders, including corporations, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts.
In the event that a U.S. Holder subject to the reporting requirements
described above fails to supply its correct taxpayer identification number in
the manner required by applicable law or underreports its tax liability, the
Company, its agents or paying agents or a broker may be required to "backup"
withhold a tax equal to 31% of each payment of interest and principal (and
premium, if any) on the Notes. This backup withholding is not an additional tax
and may be credited against the U.S. Holder's U.S. Federal income tax liability,
provided that the required information is furnished to the IRS.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a Non-U.S. Holder of a Note if such holder has
provided the required certification that it is not a United States person as set
forth in clause (iii) in the first paragraph under "-- Non-U.S. Holders," or has
otherwise established an exemption (provided that neither the Company nor its
agent has actual knowledge that the holder is a United States person or that the
conditions of any exemption are not in fact satisfied).
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that information reporting may apply to
81
<PAGE> 86
such payments if the broker is a United States person, a controlled foreign
corporation for United States tax purposes or a foreign person 50% or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment was effectively connected with a
U.S. trade or business. Payment of the proceeds from a sale of a Note to or
through the U.S. office of a broker is subject to information reporting and
backup withholding unless the holder or beneficial owner certifies as to its
taxpayer identification number or otherwise establishes an exemption from
information reporting and backup withholding.
82
<PAGE> 87
UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms
and conditions of the Underwriting Agreement with the Company, to purchase from
the Company the aggregate principal amount of Notes set forth opposite their
respective names.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES
--------------------------------------------------------------------- ------------
<S> <C>
Salomon Brothers Inc ................................................ $
Goldman, Sachs & Co..................................................
CIBC Wood Gundy Securities Corporation...............................
BT Securities Corporation............................................
------------
Total...................................................... $200,000,000
============
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Notes offered hereby if any such Notes are purchased. In the event of a default
by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances the purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
The Underwriters have advised the Company that the Underwriters propose
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such
offering price less a concession not in excess of % of the principal amount
of the Notes. The Underwriters may allow and such dealers may reallow a
concession not in excess of % of such principal amount to certain other
dealers. After the initial public offering, the public offering price and such
concessions may be changed.
The Company does not intend to apply for listing of the Notes on any
securities exchange or for quotation of the Notes through the National
Association of Securities Dealers Automated Quotation System. The Underwriters
have indicated that they intend to make a market in the Notes, subject to
applicable laws and regulations. However, the Underwriters are not obligated to
do so and any such market-making may be discontinued at any time at the
Underwriters' sole discretion. No assurance can be given as to the development
of liquidity in any trading market for the Notes. See "Risk Factors -- Lack of
Public Market."
The Underwriting Agreement provides that the Company agrees to indemnify
the Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"), or contribute to
payments the Underwriters may be required to make in respect thereof.
The Notes are being offered in accordance with the provisions of the
Conduct Rules of the National Association of Securities Dealers, Inc., Rule
2710(c)(8). Certain proceeds of the Offering and the Common Stock Offering will
be used to repay amounts owing under the New Bank Credit Facility for which
Canadian Imperial Bank of Commerce ("CIBC") acts as agent and as a lender. CIBC,
which is an affiliate of CIBC Wood Gundy Securities Corporation, will receive
approximately $ million, or approximately % of the combined net
proceeds of the Offering and the Common Stock Offering (giving effect to the
Underwriters over-allotment option), and $ million, or approximately %
of the Offering, in its capacity as a lender under the New Bank Credit Facility.
Bankers Trust Company, an affiliate of BT Securities Corporation, is a lender
under the New Bank Credit Facility and will receive its proportionate share of
the repayment thereof with the proceeds of the Offering. Salomon Brothers Inc
has agreed to act as a qualified independent underwriter (as defined in the
Conduct Rules of the National Association of Securities Dealers, Inc., Rule
2720(b)(15)) for the Offering, and has agreed to assume
83
<PAGE> 88
the responsibilities of acting as a qualified independent underwriter in pricing
the Offering and in conducting due diligence.
LEGAL MATTERS
Certain matters with respect to the Notes and the Guaranties thereon will
be passed upon for the Company by Morrison & Foerster LLP, Irvine, California.
With respect to all matters of Nevada law, Morrison & Foerster will rely on the
opinion of McDonald Carano Wilson McCune Bergin Frankovich & Hicks LLP, Reno and
Las Vegas, Nevada. Cravath, Swaine & Moore, New York, New York, has acted as
counsel for the Underwriters in connection with the Offering.
EXPERTS
The consolidated financial statements of the Company as of June 30, 1996
and 1995 and for each of the three years in the period ended June 30, 1996
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is included herein, and
has been so included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of Par-A-Dice Gaming Corporation as
of December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995, included in Boyd Gaming Corporation's Form 8-K Current
Report dated June 7, 1996, have been incorporated herein by reference in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements, and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at Seven World Trade Center, New York, New York 10048 and at the
Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such information may be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, the Commission
maintains a Website (http://www.sec.gov) that also contains such reports, proxy
statements and other information filed by the Company. Such reports, proxy
statements and other information concerning the Company can also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005, on which the Company's Common Stock is listed.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act with respect to the Notes offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Notes, reference is made to the Registration
Statement and the exhibits filed as a part thereof. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete and, in
each instance, reference is made to the copy of said document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
84
<PAGE> 89
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated by reference in this prospectus: (i) the Company's Annual Report on
Form 10-K for the year ended June 30, 1995; (ii) the Company's amended Annual
Report on Form 10-K/A for the year ended June 30, 1995, (iii) the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995; (iv) the
Company's amended Quarterly Report on Form 10-Q/A for the quarter ended
September 30, 1995; (v) the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995; (vi) the Company's amended Quarterly Report on
Form 10-Q/A for the quarter ended December 31, 1995; (vii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; (viii) the
Company's Current Report on Form 8-K, dated May 13, 1996; (ix) the Company's
Current Report on Form 8-K, dated June 7, 1996; (x) the Company's Current Report
on Form 8-K dated June 19, 1996; (xi) the Company's Current Report on Form 8-K
dated August 16, 1996; (xii) the description of the Common Stock contained in
the Company's Registration Statement on Form 8-A declared effective by the
Commission on October 15, 1993; and (xiii) all other documents filed by the
Company 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
offering of the Notes. 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 shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of such person, a copy of any or
all of the documents which are incorporated by reference herein, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Written or telephone requests should be
directed to Boyd Gaming Corporation, 2950 South Industrial Road, Las Vegas,
Nevada 89109, Attention: Investor Relations; telephone (702) 792-7200.
85
<PAGE> 90
BOYD GAMING CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Financial Statements
Consolidated Balance Sheets......................................................... F-3
Consolidated Statements of Income................................................... F-4
Consolidated Statements of Changes in Stockholders' Equity.......................... F-5
Consolidated Statements of Cash Flows............................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 91
INDEPENDENT AUDITORS' REPORT
Boyd Gaming Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Boyd Gaming
Corporation and Subsidiaries (the "Company") as of June 30, 1996 and 1995, and
the related consolidated statements of income, changes in stockholders' equity,
and cash flows for each of the three years in the period ended June 30, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Boyd Gaming Corporation and
Subsidiaries at June 30, 1996 and 1995 and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 1996
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
August 23, 1996
F-2
<PAGE> 92
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30,
---------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.......................................... $ 48,980 $ 83,169
Accounts receivable, net........................................... 16,040 16,135
Inventories........................................................ 6,531 6,648
Prepaid expenses................................................... 15,265 13,465
------- -------
Total current assets............................................ 86,816 119,417
Property, equipment and leasehold interests, net..................... 797,593 765,799
Other assets and deferred charges.................................... 58,489 53,686
Goodwill, net........................................................ 10,527 10,611
------- -------
Total assets.................................................... $953,425 $949,513
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt............................... $ 4,031 $ 36,347
Accounts payable................................................... 47,193 50,432
Accrued liabilities
Payroll and related............................................. 22,956 21,133
Interest and other.............................................. 20,956 20,792
Income taxes payable............................................... 678 596
------- -------
Total current liabilities....................................... 95,814 129,300
Long-term debt, net of current maturities............................ 590,808 587,957
Deferred income taxes................................................ 33,546 29,643
Commitments
Stockholders' equity
Preferred stock, $.01 par value, 5,000,000 shares authorized....... -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
57,213,720 and 56,999,018 shares outstanding.................... 572 570
Additional paid-in capital......................................... 102,583 100,085
Retained earnings.................................................. 130,102 101,958
------- -------
Total stockholders' equity...................................... 233,257 202,613
------- -------
Total liabilities and stockholders' equity...................... $953,425 $949,513
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 93
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
---------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Revenues
Casino........................................................... $ 548,167 $ 463,179 $ 341,473
Food and beverage................................................ 142,420 123,527 99,082
Rooms............................................................ 69,645 62,300 44,934
Other............................................................ 49,895 37,563 28,695
Management fees and joint venture................................ 41,576 35,763 --
-------- -------- --------
Gross revenues..................................................... 851,703 722,332 514,184
Less promotional allowances........................................ 75,846 61,992 45,965
-------- -------- --------
Net revenues................................................... 775,857 660,340 468,219
-------- -------- --------
Costs and expenses
Casino........................................................... 273,545 221,844 164,798
Food and beverage................................................ 99,213 90,670 74,115
Rooms............................................................ 25,842 24,578 19,683
Other............................................................ 36,830 25,567 20,633
Selling, general and administrative.............................. 114,497 79,785 54,441
Maintenance and utilities........................................ 30,171 28,452 21,057
Depreciation and amortization.................................... 60,626 54,518 42,136
Corporate expense................................................ 24,343 24,356 12,503
Preopening expense............................................... 10,004 -- 4,605
-------- -------- --------
Total.......................................................... 675,071 549,770 413,971
-------- -------- --------
Operating income................................................... 100,786 110,570 54,248
-------- -------- --------
Other income (expense)
Interest income.................................................. 1,174 2,072 3,379
Interest expense, net of amounts capitalized..................... (52,360) (48,443) (39,472)
-------- -------- --------
Total.......................................................... (51,186) (46,371) (36,093)
-------- -------- --------
Income before provision for income taxes, cumulative effect of a
change in accounting principle and extraordinary item............ 49,600 64,199 18,155
Provision for income taxes......................................... 20,021 27,950 7,505
-------- -------- --------
Income before cumulative effect of a change in accounting principle
and extraordinary item........................................... 29,579 36,249 10,650
Cumulative effect of a change in accounting for income taxes....... -- -- 2,035
-------- -------- --------
Income before extraordinary item................................... 29,579 36,249 12,685
Extraordinary item, net of tax benefit of $889..................... 1,435 -- --
-------- -------- --------
Net income......................................................... 28,144 36,249 12,685
Dividends on preferred stock....................................... -- -- 467
-------- -------- --------
Net income applicable to common stock.............................. $ 28,144 $ 36,249 $ 12,218
======== ======== ========
Net income per common share
Income before cumulative effect of a change in accounting
principle and extraordinary item............................... $ 0.52 $ 0.64 $ 0.19
Cumulative effect of a change in accounting for income taxes..... -- -- 0.04
Extraordinary item............................................... (0.03) -- --
-------- -------- --------
Net income......................................................... $ 0.49 $ 0.64 $ 0.23
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 94
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
--------------------- --------------------- PAID-IN RETAINED TREASURY STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS STOCK EQUITY
-------- -------- ---------- ------ -------- -------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, JULY 1,
1993................. 177,881 $ 19,260 48,410,506 $513 $ 3,643 $ 53,491 $(4,221) $ 72,686
Net income............. 12,685 12,685
Cash dividends on
preferred stock...... (467) (467)
Conversion of preferred
stock................ (177,881) (19,260) 1,046,358 10 17,778 1,472 --
Purchase of fractional
shares............... (78) (1) (1)
Stock issued in
connection with
employee stock
purchase plan........ 36,944 463 463
Stock issued in
connection with
acquisition.......... 2,723,165 27 7,107 7,134
Issuance of stock, net
of expenses.......... 4,600,000 46 71,859 71,905
Cancellation of
treasury stock....... (28) (2,721) 2,749 --
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1994................. -- -- 56,816,895 568 98,128 65,709 -- 164,405
Net income............. 36,249 36,249
Stock issued in
connection with
employee stock
purchase plan........ 182,123 2 1,957 1,959
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1995................. -- -- 56,999,018 570 100,085 101,958 -- 202,613
Net income............. 28,144 28,144
Stock issued in
connection with
employee stock
purchase plan........ 212,368 2 2,466 2,468
Stock options
exercised............ 2,334 -- 32 32
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1996................. -- -- 57,213,720 $572 $102,583 $130,102 -- $ 233,257
======= ======== ========== ===== ======= ======= ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 95
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
---------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income...................................................................... $ 28,144 $ 36,249 $ 12,685
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............................................... 60,626 54,518 42,136
Cumulative effect of a change in accounting for income taxes................ -- -- (2,035)
Extraordinary item.......................................................... 1,435 -- --
Deferred income taxes....................................................... 3,903 14,148 877
Other....................................................................... 185 84 (142)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net........................... 95 (3,089) (4,383)
(Increase) decrease in inventories........................................ 117 (180) (1,891)
(Increase) decrease in prepaid expenses................................... (1,800) 1,940 (4,952)
Increase in other assets.................................................. (4,412) (2,032) (3,995)
Increase (decrease) in other current liabilities.......................... 15,504 (19,146) 39,766
Increase (decrease) in income taxes payable............................... 82 596 (2,291)
-------- ---------
Net cash provided by operating activities....................................... 103,879 83,088 75,775
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, equipment and other assets......................... (107,734) (181,212) (307,045)
Proceeds from loans receivable.............................................. 2,000 30,667 --
Cash acquired in Eldorado, Inc. acquisition................................. -- -- 1,622
Decrease (increase) in short-term investments............................... -- 5,000 (5,000)
-------- ---------
Net cash used in investing activities........................................... (105,734) (145,545) (310,423)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt.................................... 230,934 86,025 148,500
Payments on long-term debt.................................................. (265,149) (22,027) (13,862)
Net borrowings under credit agreements...................................... (250) 13,000 35,000
Dividends paid.............................................................. -- -- (467)
Proceeds from issuance of common stock...................................... 2,131 1,664 72,368
-------- ---------
Net cash provided by (used in) financing activities............................. (32,334) 78,662 241,539
-------- ---------
Net increase (decrease) in cash and cash equivalents............................ (34,189) 16,205 6,891
Cash and cash equivalents, beginning of year.................................... 83,169 66,964 60,073
-------- ---------
Cash and cash equivalents, end of year.......................................... $ 48,980 $ 83,169 $ 66,964
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized.......................... $ 54,064 $ 51,405 $ 33,541
Cash paid for income taxes.................................................. 15,266 12,607 10,050
======== =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Property additions acquired on contracts and trade
payables which were accrued, but not yet paid............................. $ 7,352 $ 24,109 $ 22,022
Unamortized financing costs written-off..................................... 2,324 -- --
Deferred bond financing costs incurred...................................... -- -- 1,500
======== =========
Conversion of preferred stock to common stock............................... -- -- 17,788
Acquisition of Eldorado, Inc.
Assets acquired........................................................... -- -- 21,796
Liabilities assumed....................................................... -- -- 14,662
-------- ---------
Net acquisition........................................................... $ -- $ -- $ 7,134
======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 96
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Boyd Gaming Corporation and its wholly-owned subsidiaries, collectively referred
to herein as the "Company." The Company owns and operates six casino
entertainment facilities in Las Vegas, Nevada, one in Tunica, Mississippi and
one in Kansas City, Missouri which opened in September 1995. The Company manages
a casino entertainment facility in Philadelphia, Mississippi, which opened July
1, 1994, for which it has a seven-year management contract. The Company is also
part owner of and manages a riverboat gaming operation in Kenner, Louisiana,
which opened September 1994, for which it has a five-year management contract
with certain renewal options. All material intercompany accounts and
transactions have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with an
original maturity of three months or less. These investments are stated at cost
which approximates fair value.
Inventories
Inventories are stated at lower of cost or market. Cost is determined using
the first-in, first-out and retail inventory methods.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization
are computed using the straight-line method over the estimated useful lives of
the assets. Costs of major improvements including interest incurred during
construction of new facilities and major additions are capitalized; costs of
normal repairs and maintenance are charged to expense as incurred. Gains or
losses on disposal of assets are recognized as incurred.
Fair Value of Financial Instruments
The carrying value of the Company's cash and cash equivalents, trade
receivables and trade payables approximates fair value because of the short
maturity of those instruments. The Company estimates fair value of its long-term
obligations based on quoted market prices or on the current rates offered to the
Company for debt of the same remaining maturities.
Goodwill
The excess of total acquisition costs over the fair value of assets
acquired is amortized using the straight-line method over forty years. As of
June 30, 1996 and 1995, accumulated amortization was $4.0 millon and $3.7
million, respectively.
Revenues
Casino revenues represent the net win from gaming wins and losses. Revenues
include the retail value of room, food, beverage and other goods and services
provided to customers without charge. Such
F-7
<PAGE> 97
amounts are then deducted as promotional allowances. The estimated cost of
providing these promotional allowances is charged to the casino department in
the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Rooms....................................... $10,660 $ 8,991 $ 8,308
Food and beverage........................... 59,254 49,674 35,507
Other....................................... 3,116 2,422 1,324
------- ------- -------
Total....................................... $73,030 $61,087 $45,139
======= ======= =======
</TABLE>
Income Taxes
The Company and its subsidiaries file a consolidated federal tax return.
The Company accounts for income taxes in accordance with the Statement of
Financial Accounting Standard (SFAS) No. 109, Accounting for Income Taxes. SFAS
No. 109 requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Deferred income taxes reflect the net tax
effects of (i) temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes, and (ii) operating loss and tax credit carryforwards.
Preopening Expenses
Expenses incurred prior to the opening of new facilities are capitalized as
incurred and charged to expense upon commencement of operations. Preopening
expenses associated with the development of Sam's Town Kansas City, which opened
September 1995, amounted to $10 million and were charged to expense during the
year ended June 30, 1996. Preopening expenses associated with the development of
Sam's Town Tunica, which opened May 1994, amounted to $4.6 million and were
charged to expense during the year ended June 30, 1994.
Net Income Per Common Share
Net Income per common share is based upon the weighted average number of
common stock and common stock equivalents outstanding during the period which
were 57,057,550, 56,870,104 and 54,297,226 for the years ended June 30, 1996,
1995 and 1994, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Recently Issued Accounting Standards
The FASB issued SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of, in March 1995. This statement, effective for the
Company's fiscal year beginning July 1, 1996, requires that long-lived assets
and certain identifiable intangibles to be held and used by an entity be
reviewed whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Management believes that adoption of
SFAS No. 121 will not have a significant effect on the financial position or
results of operations of the Company.
The FASB issued SFAS No. 123, Accounting for Stock-Based Compensation, in
October 1995. This statement, effective for the Company's fiscal year beginning
July 1, 1996, requires certain disclosures about the impact on results of
operations of the fair value of stock based employee compensation arrangements.
Management intends to continue to account for stock based employee compensation
F-8
<PAGE> 98
arrangements in accordance with Accounting Principles Board No. 25, Accounting
for Stock Issued to Employees, and accordingly believes that adoption of SFAS
No. 123 will not have a significant effect on the financial position or results
of operations of the Company. The Company will include the pro forma effects of
this statement in its notes to financial statements for the fiscal year ending
June 30, 1997.
NOTE 2: RELATED PARTIES
In connection with the closing of the Company's initial public offering in
October 1993, the Company purchased Eldorado, Inc., owner of Eldorado Casino and
Jokers Wild Casino. The acquisition was accounted for as a purchase at
historical cost. The Company issued 2,723,165 shares of common stock in exchange
for all of the outstanding stock of Eldorado, Inc. and the assumption of debt
and other liabilities. For the year ended June 30, 1994, revenue, net income and
net income per common share on a proforma basis as if Eldorado, Inc. were owned
by the Company for the entire fiscal year were $476,550,000, $12,794,000 and
$.23, respectively. Certain former stockholders of Eldorado, Inc. are also
directors, officers and significant shareholders of the Company.
NOTE 3: ACCOUNTS RECEIVABLE
Accounts receivable at June 30 are as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Casino................................................. $ 6,420 $ 5,661
Hotel.................................................. 3,622 2,415
Other.................................................. 8,110 9,854
------- -------
Total.................................................. 18,152 17,930
Less allowance for doubtful accounts................... 2,112 1,795
------- -------
Total.................................................. $16,040 $16,135
======= =======
</TABLE>
NOTE 4: PROPERTY, EQUIPMENT AND LEASEHOLD INTEREST
Property, equipment and leasehold interest consist of the following at June
30:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Land.............................................. $ 120,557 $ 115,803
Buildings and improvements........................ 605,332 482,443
Furniture and equipment........................... 312,937 281,791
Leasehold improvements............................ 42,270 42,878
Construction in progress.......................... 50,854 129,190
-------- --------
Total fixed assets................................ 1,131,950 1,052,105
Less accumulated depreciation and amortization.... 334,357 286,306
-------- --------
Net fixed assets.................................. $ 797,593 $ 765,799
======== ========
</TABLE>
Depreciation and amortization are computed using the straight-line method
over the following useful lives:
<TABLE>
<CAPTION>
USEFUL LIVES
-------------
<S> <C>
Buildings and improvements.................... 4 to 40 years
Furniture and equipment....................... 3 to 30 years
Leasehold improvements........................ 3 to 40 years
</TABLE>
Interest costs of $4.3, $7.1 and $6.6 million were capitalized in 1996,
1995 and 1994, respectively, during construction of new properties and major
additions.
F-9
<PAGE> 99
NOTE 5: LONG-TERM DEBT
Long-term debt at June 30 consists of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Notes payable under credit agreements................ $235,000 $281,500
11% senior subordinated notes........................ 185,000 185,000
10.75% senior subordinated notes..................... 150,000 150,000
Other................................................ 24,839 7,804
-------- --------
Total long-term debt................................. 594,839 624,304
Less current maturities.............................. 4,031 36,347
-------- --------
Total................................................ $590,808 $587,957
======== ========
</TABLE>
On June 19, 1996, the Company entered into a $500 million five-year
reducing, revolving bank credit facility which matures in June 2001 (the "New
Bank Credit Facility"). The New Bank Credit Facility replaced the Company's
amended senior credit agreement, Boyd Tunica loan and Boyd Kansas City loan.
Total availability under the New Bank Credit Facility will be reduced by $25
million at the end of the two and a one-half years and reduced by an additional
$50 million at the end of each six-month period thereafter until maturity. As of
June 30, 1996, the Company had unused availability of $265 million under the New
Bank Credit Facility. Interest on the New Bank Credit Facility is based upon the
agent bank's quoted reference rate or London Interbank Offered Rate, at the
discretion of the Company. The average interest rate under the New Bank Credit
Facility at June 30, 1996 was 7.2%.
The New Bank Credit Facility is collateralized by the real and personal
property comprising six casino hotel properties owned by the Company and by
related security agreements with assignment of rents.
The New Bank Credit Facility contains certain financial covenants,
limitations on the incurrence of debt and limitations on the incurrence of
capital expenditure and investments, all as defined in the New Bank Credit
Facility.
The Company has $150 million principal amount of 10.75% senior subordinated
notes due September 2003. The notes require semi-annual interest payments on
March 1 and September 1 of each year through September 1, 2003, at which time
the principal balance is due and payable. The notes may be redeemed at the
Company's option any time after September 1, 1996 at redemption prices ranging
from 105% in 1996 to 100% in 1999. The notes contain certain covenants regarding
incurrence of debt, sales and disposition of assets, mergers or consolidations
and limitations on restricted payments (as defined in the indenture relating to
the notes).
The Company, through its wholly-owned subsidiary California Hotel Finance
Company, has $185 million principal amount of 11% senior subordinated notes due
December 2002. The net proceeds were used to refinance certain indebtedness of
the Company and provide for working capital needs and expansion of the Company's
operations. The notes require semi-annual interest payments on June 1 and
December 1 of each year until December 1, 2002, at which time the principal
balance is due and payable. The notes may be redeemed at the Company's option
any time after December 1, 1997 at redemption prices ranging from 104.125% in
1997 to 100% in 1999. The notes contain certain covenants regarding incurrence
of debt, sales and disposition of assets, mergers or consolidations and
limitations on restricted payments (as defined in the indenture relating to the
notes). As a result of these restrictions, at June 30, 1996, California Hotel
and Casino (a wholly-owned subsidiary of the Company) had a portion of its
retained earnings and its net assets in the amounts of $51.5 million and $106.7
million, respectively, that were not available for distribution as dividends to
the Company.
On June 7, 1996 the Company filed a registration statement with the
Securities and Exchange Commission which will allow the issuance of up to $200
million of senior notes of the Company. The notes will be guaranteed by all
existing significant subsidiaries of the Company. The guaranties will be full,
unconditional, and joint and several. All of the Company's significant
subsidiaries are wholly-owned.
F-10
<PAGE> 100
Assets, equity income and cash flows of all other subsidiaries of the Company
that are not expected to guaranty the notes are less than 3% of the respective
consolidated amounts and are inconsequential, individually and in the aggregate,
to the Company. The Company has not included separate financial information of
the guarantors since such information is not material to investors. The net
proceeds to the Company from the notes offering will be used to reduce
outstanding indebtedness under its New Bank Credit Facility. Amounts available
under the New Bank Credit Facility are expected to be used to redeem the 10.75%
Notes.
The estimated fair value of the Company's long-term debt at June 30, 1996
was approximately $608 million, versus its book value of $595 million. At June
30, 1995 the estimated fair value of the Company's long-term debt was
approximately $636 million, versus its book value of $624 million.
In connection with the closing of the New Bank Credit Facility, the Company
recorded a $1.4 million extraordinary loss (net of income tax benefit of $.9
million) related to the write-off of unamortized bank fees.
Interest rates on the Company's other long-term debt range from 5.0% to
16.8%.
Management believes the Company and its subsidiaries are in compliance with
all covenants contained in its long-term debt agreements at June 30, 1996.
The scheduled maturities of long-term debt for the years ending June 30 are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997.......................................................... $ 4,031
1998.......................................................... 4,086
1999.......................................................... 4,091
2000.......................................................... 11,970
2001.......................................................... 235,411
Thereafter.................................................... 335,250
--------
Total......................................................... $594,839
========
</TABLE>
NOTE 6: LEASES
Future minimum lease payments required under noncancelable operating leases
(principally for land) as of June 30, 1996 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997.......................................................... $ 2,673
1998.......................................................... 2,298
1999.......................................................... 2,030
2000.......................................................... 1,975
2001.......................................................... 1,964
Thereafter.................................................... 76,156
-------
Total minimum payments required............................... $ 87,096
=======
</TABLE>
Rent expense for the years ended June 30, 1996, 1995 and 1994 was $2.9
million, $2.8 million and $2.3 million, respectively and is included in selling,
general and administrative expenses.
NOTE 7: EMPLOYEE BENEFIT PLANS
The Company contributes to multi-employer pension plans under various union
agreements. Contributions, based on wages paid to covered employees, totaled
approximately $2.2 million, $2.0 million and $2.2 million for the years ended in
1996, 1995 and 1994, respectively. The Company's share of the unfunded liability
related to multi-employer plans, if any, is not determinable.
F-11
<PAGE> 101
The Company has a retirement savings plan under Section 401(k) of the
Internal Revenue Code covering its non-union employees. The plan allows
employees to defer up to the lesser of the Internal Revenue Code-prescribed
maximum amount or 15% of their income on a pre-tax basis through contributions
to the plan. On January 1, 1996 the Company combined its profit sharing plan
into the 401(k) plan. The Company expensed voluntary contributions of $1.4
million, $1.8 million and $1.5 million in 1996, 1995 and 1994, respectively, to
the Company's 401(k) profit-sharing plan and trust.
NOTE 8: INCOME TAXES
A summary of the provision for income taxes for the years ended June 30 is
as follows:
Provision for Income Taxes:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal............................................ $15,301 $14,165 $6,277
State.............................................. 817 494 352
------- ------- ------
16,118 14,659 6,629
------- ------- ------
Deferred
Federal............................................ 4,119 12,786 876
State.............................................. (216) 505 --
------- ------- ------
3,903 13,291 876
------- ------- ------
$20,021 $27,950 $7,505
======= ======= ======
</TABLE>
The following table provides a reconciliation between the federal statutory
rate and the effective income tax rate from continuing operations at June 30
where both are expressed as a percentage of income.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Tax provision at statutory rate............................... 35.0% 35.0% 35.0%
Increase/(decrease) resulting from:
Licensing expenditures for new jurisdictions................ 0.5 3.1 --
Company provided benefits................................... 2.5 2.7 2.5
State income tax, net of federal benefit.................... 0.8 1.0 1.3
Tax preferred investments................................... -- (0.1) (2.5)
Statutory rate change....................................... -- -- 3.8
Other, net.................................................. 1.6 1.8 1.2
--- --- ---
40.4% 43.5% 41.3%
=== === ===
</TABLE>
F-12
<PAGE> 102
The tax items comprising the Company's net deferred tax liability as of
June 30 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax liabilities:
Difference between book and tax basis of property........... $38,187 $33,053 $22,615
Difference between book and tax basis of amortizable
assets.................................................... 2,185 1,513 --
Reserve differential for gaming activities.................. 2,027 894 1,116
Other....................................................... 3,520 1,192 89
------ ------ ------
45,919 36,652 23,820
------ ------ ------
Deferred tax assets:
Alternative minimum tax credit carryforward................. 5,146 3,944 5,351
Preopening expense amortized for tax purposes............... 952 1,126 1,612
Provision for doubtful accounts............................. 3,498 832 795
Other....................................................... 2,777 1,107 567
------ ------ ------
12,373 7,009 8,325
------ ------ ------
Net deferred tax liability.................................. $33,546 $29,643 $15,495
====== ====== ======
</TABLE>
The Internal Revenue Service has examined the Company's federal
consolidated income tax returns through the year ended June 30, 1989. The
Company is currently under examination for fiscal years 1990 through 1992.
Management of the Company does not believe any significant adjustments will be
required.
NOTE 9: CAPITAL STOCK AND STOCK INCENTIVE PLANS
Capital Stock
Two hundred million shares of common stock with a par value of $.01 per
share are authorized, of which 57,213,720 and 56,999,018 shares were issued at
June 30, 1996 and June 30, 1995 respectively, including no treasury shares. The
Company has authorized 5,000,000 shares of $.01 par value preferred stock of
which no shares were issued at June 30, 1996 and June 30, 1995.
Stock Options
In June 1993, shareholders of the Company approved a Flexible Stock
Incentive Plan (the "Flexible Plan") which provides for the granting of
incentive stock options, as determined under the Internal Revenue Code, to
employees of the Company, the granting of non-qualified stock options, stock
bonuses and stock appreciation rights to employees, officers, directors and
consultants of the Company and for the sale of restricted common stock to such
persons. The maximum number of shares of common stock available for issuance
under this plan is 4,000,000 shares. As of June 30, 1996, 3,871,921
non-qualified stock options had been issued and 2,334 had been exercised.
Options granted under the plan generally become exercisable as to one-third
of the optioned shares each year after the date of grant. Options granted under
this plan expire no later than ten years after the grant date. Under the plan,
the exercise price of incentive options and non-qualified options granted to
certain executive officers may not be less than the fair market value of the
optioned stock at the date of grant.
In June 1993, shareholders of the Company approved a Director's
Non-qualified Stock Option Plan (the "Director Plan") which provides for the
granting of up to 50,000 common shares. Options granted under the plan become
exercisable as to one-fourth of the optioned shares each year after the date of
the grant. Options granted under the plan expire no later than ten years after
the grant. Under the plan, the exercise price of the options granted may not be
less than the fair market value of the optioned stock at the date of grant. At
June 30, 1996, a total of 20,000 stock options had been issued and none had been
exercised.
F-13
<PAGE> 103
<TABLE>
<CAPTION>
NUMBER OF SHARES OPTION PRICES
---------------------- -------------------------------------
FLEXIBLE DIRECTOR FLEXIBLE DIRECTOR
PLAN PLAN PLAN PLAN
--------- -------- ----------------- ---------------
<S> <C> <C> <C> <C>
Options outstanding at July 1,
1993......................... -- -- -- --
Options granted................ 2,688,000 15,000 $17.000 $17.00 - $18.50
Options canceled............... (36,800) -- 17.000 --
--------- ------
Options outstanding at June 30,
1994......................... 2,651,200 15,000 $17.000 $17.00 - $18.50
Options granted................ 1,287,100 2,000 13.625 14.00
Options canceled............... (38,682) -- 13.625 14.00
--------- ------
Options outstanding at June 30,
1995......................... 3,899,618 17,000 $13.625 - $17.000 $14.00 - $18.50
Options granted................ 45,000 3,000 13.250 14.375
Options canceled............... (72,697) -- $13.625 - $17.000 --
Options exercised.............. (2,334) -- $13.625
--------- ------
Options outstanding June 30,
1996......................... 3,869,587 20,000 $13.250 - $17.000 $14.00 - $18.50
========= ======
Exercisable options at June 30,
1996......................... 2,146,017 8,000
</TABLE>
At June 30, 1996, there were 128,079 and 30,000 options available for
future grant under the Flexible Plan and Director Plan, respectively.
Employee Stock Purchase Plan
In June 1993, shareholders of the Company approved an Employee Stock
Purchase Plan, which allows employees to purchase the Company's common stock,
through payroll deductions, at a price that shall not be less than 85% of fair
market value on the first or last date of the purchase period. The plan provides
for a maximum of 1,500,000 shares to be issued. During 1996, 212,368 shares were
issued at $9.88. In 1995, 182,123 shares were issued to employees at a price of
$9.14. In 1994, 36,944 shares were issued to employees at a price of $12.54. At
June 30, 1996, there were 1,068,565 shares available for issuance under the
plan.
NOTE 10: LEGAL PROCEEDINGS
The Company is a defendant in various pending litigation. In the opinion of
management, all pending claims in such litigation will not, in the aggregate,
have a material adverse effect on the Company.
NOTE 11: INITIAL PUBLIC OFFERING
In October 1993, the Company completed an initial public offering of 4.6
million shares of common stock at a price of $17 per share. In connection with
the closing of the offering, the Company effected a previously declared
11.322241 for 1 split of its common stock. The Company's $100 Preferred Stock
automatically converted into common stock of the Company upon the closing of the
initial public offering. Proceeds from the offering were approximately $73.1
million.
Upon the closing of the public offering, the Company acquired all of the
outstanding shares of Eldorado, Inc. in exchange for shares of common stock of
the Company and assumption of indebtedness. Holders of certain promissory notes
of Eldorado, Inc. also received shares of common stock of the Company in
exchange for such notes.
F-14
<PAGE> 104
NOTE 12: OTHER INFORMATION
Acquisition
On April 26, 1996, the Company entered into a definitive purchase agreement
to acquire 100% of the capital stock of Par-a-Dice Gaming Corporation and 100%
of the capital stock of East Peoria Hotel, Inc. Par-A-Dice Gaming Corporation is
the owner and operator of the Par-a-Dice Riverboat Casino in East Peoria,
Illinois and East Peoria Hotel, Inc., is the general partner of a partnership
constructing a 204-room hotel adjacent to the Par-a-Dice Riverboat Casino.
Closing of the transaction is conditioned upon, among other things, approval of
the Illinois Gaming Board. The total purchase price is $175 million and includes
the riverboat casino facility, the 204-room hotel and a vacant potential gaming
site in Missouri.
Joint Venture -- Mirage Resorts, Inc.
On May 29, 1996, the Company entered into a joint venture agreement with
Mirage Resorts, Inc. ("Mirage") to jointly develop and own a casino hotel
entertainment facility in the Marina District of Atlantic City, New Jersey (the
"Atlantic City Project"). The Atlantic City Project, which is expected to cost
approximately $500 million, is planned to be one component of a multi-facility
casino entertainment development master-planned by Mirage. Pursuant to the joint
venture agreement, the Company will control the development and operation of the
Atlantic City Project. Environmental remediation and construction of the
Atlantic City Project are not expected to begin until after the necessary
highway improvements are assured.
Sam's Town Reno
On August 16, 1996 the Company acquired land upon which it plans to develop
Sam's Town Reno, a $92 million casino hotel and entertainment complex in Reno,
Nevada. William S. Boyd, Chairman and Chief Executive Officer of the Company and
Warren L. Nelson, a Director of the Company, each own a 17.5% partnership
interest in the partnership from which the Company acquired the land. The
development of Sam's Town Reno is subject to receipt of regulatory approvals,
permits and licenses.
NOTE 13: SUBSEQUENT EVENT
Sale of Riverboat
On August 23, 1996, the Company sold its riverboat Mary's Prize for $20
million and retired debt of $17.6 million in connection therewith. Projects for
which Mary's Prize was constructed have either been delayed or did not
materialize.
F-15
<PAGE> 105
BOYD GAMING CORPORATION AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1996
Net revenues....................... $ 179,060 $ 200,289 $ 202,160 $ 194,348 $ 775,857
Operating income................... 18,729 31,280 31,743 19,034 100,786
Income before income tax and
extraordinary item............... 6,859 17,322 19,236 6,183 49,600
Extraordinary item, net of tax..... -- -- -- 1,435 1,435
Net income......................... 4,184 10,567 11,351 2,042 28,144
======== ======== ======== ======== ========
Net income per common share:
Income before extraordinary item... $ 0.07 $ 0.19 $ 0.20 $ 0.06 $ 0.52
Extraordinary item, net of tax..... -- -- -- (.02) (.03)
-------- -------- -------- -------- --------
Net income......................... $ 0.07 $ 0.19 $ 0.20 $ 0.04 $ 0.49
======== ======== ======== ======== ========
1995
Net revenues....................... $ 156,719 $ 168,909 $ 166,757 $ 167,955 $ 660,340
Operating income................... 20,854 27,755 32,209 29,752 110,570
Income before income tax........... 9,235 15,747 19,578 19,639 64,199
Net income......................... 5,477 7,336 11,482 11,954 36,249
======== ======== ======== ======== ========
Net income per common share:
Net income......................... $ 0.10 $ 0.13 $ 0.20 $ 0.21 $ 0.64
======== ======== ======== ======== ========
</TABLE>
F-16
<PAGE> 106
[PHOTOS AND MAPS]
<TABLE>
<C> <S>
ATLANTIC CITY
ATLANTIC CITY
MARINA MAP
</TABLE>
[caption]
The Marina District in Atlantic City is
the
planned site for the Company's Stardust
Resort and Casino, a joint venture
development
with Mirage Resorts, Incorporated.
<TABLE>
<C> <S>
ILLINOIS
CENTRAL ILLINOIS PAR-A-DICE
MAP BOAT
The Company has signed an agreement to acquire,
subject to various approvals, the Par-A-Dice Par-A-Dice Riverboat Casino cruises on the Illinois
Riverboat Casino in East Peoria, Illinois. River.
[caption] [caption]
</TABLE>
RENDERING
OF
PAR-A-DICE
HOTEL
Par-A-Dice's 204-room hotel is currently under construction.
[caption]
<PAGE> 107
[PHOTOS AND MAPS]
MISSISSIPPI
STATE MAP
DEPICTING TWO
PROPERTY LOCATIONS
The Company operates two
properties in Mississippi.
[caption]
SILVER STAR
Silver Star Resort and Casino, located
near Philadelphia, Mississippi and
operated by the Company under a management
agreement, brings a
touch of Las Vegas to residents of central
Mississippi and Alabama.
[caption]
<TABLE>
<S> <C>
SAM'S TOWN
TUNICA
Sam's Town's theme brings the Old West to the banks of the Mississippi River in
Tunica County, Mississippi.
[caption]
NEW ORLEANS
MAP OF
NEW ORLEANS
</TABLE>
[caption]
Treasure Chest Casino
offers
casino entertainment to
the
greater New Orleans
market.
<PAGE> 108
[PHOTOS AND MAPS]
<TABLE>
<S> <C>
KANSAS CITY
MAP
OF
KANSAS CITY
</TABLE>
Sam's Town Casino in Kansas City, Missouri is
located on the Missouri River and Interstate 435.
[caption]
<TABLE>
<S> <C>
SAM'S TOWN
KANSAS CITY
</TABLE>
Guests enter Sam's
Town Kansas City
from an elevated
moving walkway
and are welcomed
to Town Square.
[caption]
<TABLE>
<S> <C>
NEW ORLEANS
TREASURE CHEST
</TABLE>
Treasure Chest Casino, located on Lake
Ponchartrain in Kenner, Louisiana, is
operated by the Company under a
management agreement.
[caption]
<PAGE> 109
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................ 3
Risk Factors.............................. 12
Use of Proceeds........................... 21
Capitalization............................ 22
Selected Consolidated Financial Data...... 23
Pro Forma Consolidated Financial
Statements.............................. 24
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 28
Business.................................. 37
Management................................ 46
Description of Other Indebtedness......... 49
Description of Notes...................... 54
Certain United States Federal Income
Tax Considerations...................... 80
Underwriting.............................. 83
Legal Matters............................. 84
Experts................................... 84
Available Information..................... 84
Incorporation of Certain Documents by
Reference............................... 85
Index to Consolidated Financial
Statements.............................. F-1
</TABLE>
$200,000,000
BOYD GAMING
CORPORATION
% SENIOR NOTES DUE 2003
[BOYD GAMING LOGO]
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY
SECURITIES CORP.
BT SECURITIES CORPORATION
PROSPECTUS
DATED , 1996
<PAGE> 110
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1 Form of Underwriting Agreement (to be filed by amendment).
2.1(6) Stock Purchase Agreement, dated as of April 26, 1996, by and among Registrant,
Par-A-Dice Gaming Corporation, East Peoria Hotel, Inc., and the owners of all
the Capital Stock of Par-A-Dice Gaming Corporation and East Peoria Hotel.
3.1(1) Restated Articles of Incorporation.
3.2 Restated Bylaws (previously filed).
4 Form of Indenture.
5.1 Opinion of Morrison & Foerster LLP (to be filed by amendment).
10.1(1) First Amended and Restated Credit Agreement dated as of September 2, 1993, among
CH&C, Certain Commercial Lending Institutions, CIBC Inc., First Interstate Bank
of Nevada and Bank of America and related Exhibits.
10.2(2) Form of Indenture relating to $150,000,000 aggregate principal amount 11% Senior
Subordinated Notes due 2002 of California Hotel Finance Corporation, including
the Form of Note.
10.3(1) Indenture dated as of September 3, 1993 relating to 10.75% Senior Subordinated
Notes Due 2003 ("10.75% Notes"), including Form of Note.
10.4(1) Note Purchase Agreement dated September 3, 1993 relating to 10.75% Notes.
10.5(1) Registration Rights Agreement dated as of September 3, 1993 relating to 10.75%
Notes.
10.6(1) Loan Agreement dated March 2, 1989, by and between First Interstate Bank of
Nevada and Eldorado, Inc., including related Promissory Notes, and related
Revision Agreement dated October 31, 1989, by and between First Interstate Bank
of Nevada, N.A. and Eldorado, Inc.
10.7(3) Loan Agreement dated August 17, 1994, by and among Boyd Tunica, Inc., the
Registrant, First Interstate Bank of Nevada, Bankers Trust Company and Bank of
America Nevada.
10.8(2) Ninty-Nine Year Lease dated June 30, 1954, by and among Fremont Hotel, Inc., and
Charles L. Ronnow and J.L. Ronnow, and Alice Elizabeth Ronnow.
10.9(2) Lease Agreement dated October 31, 1963, by and between Fremont Hotel, Inc. and
Cora Edith Garehime.
10.10(2) Lease Agreement dated December 31, 1963, by and among Fremont Hotel, Inc., Bank
of Nevada and Leon H. Rockwell, Jr.
10.11(2) Lease Agreement dated June 7, 1971, by and among Anthony Antonacci, Margaret Fay
Simon and Bank of Nevada, as Co-Trustees under Peter Albert Simon's Last Will
and Testament, and related Assignment of Lease dated February 25, 1985 to
Sam-Will, Inc. and Fremont Hotel, Inc.
10.12(2) Lease Agreement dated July 25, 1973, by and between CH&C and William Peccole, as
Trustee of the Peter Peccole 1970 Trust.
10.13(2) Lease Agreement dated July 1, 1974, by and among Fremont Hotel, Inc., and Bank
of Nevada, Leon H. Rockwell, Jr. and Margorie Rockwell Riley.
10.14(2) Ground Lease Agreement dated July 5, 1978, by and between CH&C, and Irene
Elizabeth Carey, as Trustee of the Carey Survivor's Trust U/A October 18, 1972
and Irene Elizabeth Carey, as Trustee of the Carey Family Trust U/A October 18,
1972.
</TABLE>
II-1
<PAGE> 111
<TABLE>
<C> <S>
10.15(2) Ninety-Nine Year Lease dated December 1, 1978, by and between Matthew Paratore,
and George W. Morgan and LaRue Morgan, and related Lease Assignment dated
November 10, 1987 to Sam-Will, Inc., d/b/a Fremont Hotel and Casino.
10.16(3) Collective Bargaining Agreement effective as of January 17, 1994, by and between
Sam-Will, Inc. d/b/a Fremont Hotel and Casino and the International Union of
Operating Engineers, Local No. 501, AFL-CIO (slot technician unit).
10.17(1) Labor Agreement dated as of January 13, 1993, by and between Mare-Bear, Inc.
d/b/a Stardust Hotel & Casino, and the International Union of Operating
Engineers, Local No. 501, AFL-CIO.
10.18(1) Labor Agreement dates as of January 13, 1993, by and between Sam-Will, Inc.,
d/b/a Fremont Hotel and Casino, and the International Union of Operating
Engineers, Local No. 501, AFL-CIO.
10.19(1) Labor Agreement dated January 13, 1993, by and between CH&C and the
International Union of Operating Engineers, Local No. 501, AFL-CIO.
10.20(1) Agreement dated as of May 1, 1991, by and between Mare-Bear, Inc., d/b/a
Stardust Hotel & Casino, and the Local Joint Executive Board of Las Vegas for
and on behalf of the Culinary Workers' Union, Local No. 226 and Bartenders
Union, Local No. 165.
10.21(2) Agreement dated May 1, 1991 by and between Sam-Will, Inc., d/b/a Fremont Hotel
and Casino, and the Local Joint Executive Board of Las Vegas for and on behalf
of the Culinary Workers Union, Local No. 226 and Bartenders Union, Local No.
165.
10.22(1) Collective Bargaining Agreement dated September 12, 1991, by and between
Eldorado Casino and the Local Joint Executive Board of Las Vegas for and on
behalf of Culinary Workers Union, Local No. 226 and Bartenders Union, Local 165.
10.23(2) Collective Bargaining Agreement dated March 14, 1991, by and between Mare-Bear,
Inc. d/b/a Stardust Hotel & Casino, and the Musicians Union of Las Vegas, Local
No. 369, American Federation of Musicians, AFL-CIO.
10.24(2) Labor Agreement dated May 1, 1991, by and between Mare-Bear, Inc., d/b/a
Stardust Hotel & Casino, and the International Alliance of Theatrical Stage
Employees and Moving Picture Machine Operators of the United States and Canada,
Local 720, Las Vegas, Nevada.
10.25(2) Labor Agreement dated May 1, 1991, by and between Mare-Bear, Inc., d/b/a
Stardust Hotel & Casino, and the International Alliance of Theatrical State
Employees and Moving Picture Machine Operators of the Unites States and Canada,
Local 720, Las Vegas, Nevada (Theatrical Wardrobe Employees).
10.26(2) Labor Agreement dated June 14, 1983, by and between Stardust Hotel & Casino and
the International Brotherhood of Painters and Allied Trades Local Union No. 159,
AFL-CIO.
10.27(2) Labor Agreement dated June 1, 1983, by and between Stardust Hotel and Casino and
the United Brotherhood of Carpenters and Joiners of America, Local No. 1780, Las
Vegas, Nevada.
10.28(2) Labor Agreement dated August 1, 1983, by and between Stardust Hotel and Casino
and the International Brotherhood of Electrical Workers, Local Union No. 357,
AFL-CIO.
10.29(2) Implemented Proposal dated June 15, 1992, by and between Stardust Hotel and
Casino and the Back-End Teamsters Local No. 995.
10.30(2) Implemented Proposal dated June 15, 1992, by and between Fremont Hotel and
Casino and the Back-End Teamsters Local No. 995.
10.31(1) Agreement and Plan of Reorganization dated as of June 25, 1993, by and among
Eldorado, Inc., the Registrant, CH&C and certain stockholders and noteholders of
Eldorado, Inc.
</TABLE>
II-2
<PAGE> 112
<TABLE>
<C> <S>
10.32(1) Management Agreement dated March 11, 1993, by and between Mississippi Band of
Choctaw Indians and Boyd Mississippi, Inc.
10.33(3) Addendum to Management Agreement dated November 24, 1993, by and between
Mississippi Band of Choctaw Indians and Boyd Mississippi, Inc.
10.34(1) Casino Management Agreement dated August 30, 1993, by and between Treasure Chest
Casino, L.L.C. and Boyd Kenner, Inc.
10.35(1) Subscription Agreement dated as of August 30, 1993, by and among Boyd Kenner,
Inc., the Registrant and Treasure Chest Casino, L.L.C.
10.36(3) Amended and Restated Operating Agreement dated August 5, 1994 by and between
Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc.
10.37(1) Real Estate Contract of Sale dated April 29, 1993, by and among Boyd Tunica,
Inc. and Shea Leatherman, Irwin L. Zanone and William A. Leatherman, Jr.
10.38(1) Real Estate Contract of Sale dated April 29, 1993, by and between Eugene H.
Beck, Jr. and the Boyd Group.
10.39(1) Real Estate Contract of Sale dated April 30, 1993, by and between Mid-West
Terminal Warehouse Company and the Boyd Group.
10.40(1) Real Estate Contract of Sale dated April 30, 1993, by and between Hunt Midwest
Real Estate Development, Inc. and the Boyd Group.
10.41(1) Amendment to Real Estate Contracts of Sale date May 26, 1993, by and among the
Boyd Group, Hunt Midwest Real Estate Development, Inc., Mid-West Terminal
Warehouse Company and Eugene H. Beck, Jr.
10.42(1) Real Estate Contract of Sale dated as of April 30, 1993, by and between Vergie
G. Bevan, individually and as trustee of the Vergie G., Bevan Revocable Trust,
and the Boyd Group.
10.43(3) Development Agreement dated June 6, 1994 by and among the Registrant, Boyd
Kansas City, Inc. and Port Authority of Kansas City, Missouri.
10.44(3) Agreement dated January 10, 1994, by and between Boyd Tunica, Inc. and W.G.
Yates & Sons Construction Company.
10.45(3) Building Contract dated July 15, 1993, by and between Marnell Corrao Associates,
Inc. and Sam's Town Hotel and Gambling Hall for Sam's Town Addition Phase V.
10.46(1) Form of Indemnification Agreement.
10.47(1)(4) Flexible Stock Incentive Plan and related agreements.
10.48(1)(4) 1993 Directors Non-Qualified Stock Option Plan and related agreements.
10.49(1)(4) 1993 Employee Stock Purchase Plan and related agreement.
10.50(2) 401(k) Profit Sharing Plan and Trust.
10.51(2) Note dated July 1, 1992, from Samuel A. Boyd Family Trust to the Boyd Group on
the principal sum of $3,000,000.
10.52(5) Promissory Note dated December 30, 1991, from Eldorado, Inc. to Samuel A. Boyd
in the principal sum of $600,000.
10.53(7) Joint Venture Agreement of Stardust A.C., dated as of May 29, 1996, by and
between MAC, Corp., a New Jersey corporation, which is a wholly-owned subsidiary
of Mirage Resorts, Incorporated, a Nevada corporation, and Grand K, Inc., a
Nevada corporation, which is a wholly-owned subsidiary of Registrant. (Certain
portions of this exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment for this Agreement.)
</TABLE>
II-3
<PAGE> 113
<TABLE>
<C> <S>
10.54(8) Credit Agreement dated as of June 19, 1996, by and among the Registrant and
California Hotel and Casino as the Borrowers, certain commercial lending
institutions as the Lenders, Canadian Imperial Bank of Commerce as the Agent,
Bank of America National Trust Savings Association and Wells Fargo Bank N.A. as
Co-Managing Agents and Bankers Trust Company, Credit Lyonnais and Societe
Generale as Co-Agents.
10.55(9) Property Purchase Agreement dated as of August 9, 1996, by and between Steamboat
Station Company, a Nevada general partnership, and Boyd Reno, Inc., a Nevada
corporation and wholly-owned subsidiary of the Company.
10.56(9) Buy-Sell Agreement dated as of August 2, 1996, by and between the Registrant and
Casino Magic of Louisiana, Corp., a Louisiana corporation.
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Morrison & Foerster LLP (to be included in Exhibit 5.1 to this
Registration Statement) (to be filed by amendment).
23.3 Consent of Coopers & Lybrand L.L.P.
24 Powers of Attorney (previously filed).
25 Statement of Eligibility of Trustee on Form T-1 (to be filed by amendment).
</TABLE>
- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on Form
S-1, File No. 33-64006, which became effective on October 15, 1993.
(2) Incorporated by reference to the Registration Statement on Form S-1, File
No. 33-51672, of California Hotel and Casino and California Hotel Finance
Corporation, which became effective on November 18, 1992.
(3) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1995.
(4) Management contracts or compensatory plans or arrangements.
(5) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1994.
(6) Incorporated by reference to Registrant's Current Report on Form 8-K dated
April 26, 1996.
(7) Incorporated by reference to Registrant's Current Report on Form 8-K dated
June 7, 1996.
(8) Incorporated by reference to Registrant's Current Report on Form 8-K dated
June 19, 1996.
(9) Incorporated by reference to Registrant's Current Report on Form 8-K dated
August 16, 1996.
II-4
<PAGE> 114
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 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 3, 1996.
BOYD GAMING CORPORATION
By: /s/ WILLIAM S. BOYD
------------------------------------
Title Chief Executive Officer
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD Chairman of the Board of Directors, September 3, 1996
- --------------------------------- Chief Executive Officer and Director
William S. Boyd (Principal Executive Officer)
* Senior Vice President, Chief Financial September 3, 1996
- --------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ---------------------------------
Robert L. Boughner
* Director September 3, 1996
- ---------------------------------
William R. Boyd
* Director September 3, 1996
- ---------------------------------
Kenny C. Guinn
* Director September 3, 1996
- ---------------------------------
Marianne Boyd Johnson
* Director September 3, 1996
- ---------------------------------
Warren L. Nelson
Director , 1996
- ---------------------------------
Charles L. Ruthe
* Director September 3, 1996
- ---------------------------------
Donald D. Snyder
* Director September 3, 1996
- ---------------------------------
Perry B. Whitt
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-1
<PAGE> 115
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
California Hotel and Casino certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 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 3, 1996.
CALIFORNIA HOTEL AND CASINO
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- --------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief September 3, 1996
- --------------------------------- Financial Officer and Treasurer
Ellis Landau (Principal Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director , 1996
- ---------------------------------
Robert L. Boughner
Director September 3, 1996
- ---------------------------------
Charles L. Ruthe
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-2
<PAGE> 116
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Boyd Tunica, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 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 3, 1996.
BOYD TUNICA, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- --------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief September 3, 1996
- --------------------------------- Financial Officer and Treasurer
Ellis Landau (Principal Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ---------------------------------
Robert L. Boughner
Director , 1996
- ---------------------------------
Charles L. Ruthe
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-3
<PAGE> 117
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Boyd Mississippi, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 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 3, 1996.
BOYD MISSISSIPPI, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- --------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief September 3, 1996
- --------------------------------- Financial Officer and Treasurer
Ellis Landau (Principal Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ---------------------------------
Robert L. Boughner
Director , 1996
- ---------------------------------
Charles L. Ruthe
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-4
<PAGE> 118
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Boyd Kansas City, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 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 3, 1996.
BOYD KANSAS CITY, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- ---------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief September 3, 1996
- ---------------------------------- Financial Officer and Treasurer
Ellis Landau (Principal Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- ---------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ----------------------------------
Robert L. Boughner
Director , 1996
- ----------------------------------
Norman Powell
*By: /s/ KEITH SMITH
- ----------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-5
<PAGE> 119
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Boyd Kenner, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 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 3, 1996.
BOYD KENNER, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- --------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief Financial September 3, 1996
- --------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ---------------------------------
Robert L. Boughner
Director , 1996
- ---------------------------------
Charles L. Ruthe
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-6
<PAGE> 120
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Mare-Bear, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 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 3, 1996.
MARE-BEAR, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- --------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief Financial September 3, 1996
- --------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ---------------------------------
Robert L. Boughner
Director , 1996
- ---------------------------------
Charles L. Ruthe
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-7
<PAGE> 121
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Sam-Will, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 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 3, 1996.
SAM-WILL, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- --------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief September 3, 1996
- --------------------------------- Financial Officer and Treasurer
Ellis Landau (Principal Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ---------------------------------
Robert L. Boughner
Director , 1996
- ---------------------------------
Charles L. Ruthe
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-8
<PAGE> 122
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Eldorado, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 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 3, 1996.
ELDORADO, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- --------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief September 3, 1996
- --------------------------------- Financial Officer and Treasurer
Ellis Landau (Principal Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ---------------------------------
Robert L. Boughner
Director , 1996
- ---------------------------------
Charles L. Ruthe
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-9
<PAGE> 123
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
MSW, Inc. certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 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 3, 1996.
MSW, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM S. BOYD President and Director September 3, 1996
- --------------------------------- (Principal Executive Officer)
William S. Boyd
* Senior Vice President, Chief September 3, 1996
- --------------------------------- Financial Officer and Treasurer
Ellis Landau (Principal Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 3, 1996
- --------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 3, 1996
- ---------------------------------
Robert C. Boughner
Director , 1996
- ---------------------------------
Charles L. Ruthe
*By: /s/ KEITH SMITH
- ---------------------------------
Keith Smith,
Attorney-In-Fact
</TABLE>
S-10
<PAGE> 124
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- -------------------------------------------------------------------- ------------
<C> <S> <C>
1 Form of Underwriting Agreement (to be filed by amendment)...........
2.1(6) Stock Purchase Agreement, dated as of April 26, 1996, by and among
Registrant, Par-A-Dice Gaming Corporation, East Peoria Hotel, Inc.,
and the owners of all the Capital Stock of Par-A-Dice Gaming
Corporation and East Peoria Hotel...................................
3.1(1) Restated Articles of Incorporation..................................
3.2 Restated Bylaws (previously filed)..................................
4 Form of Indenture...................................................
5.1 Opinion of Morrison & Foerster LLP (to be filed by amendment).......
10.1(1) First Amended and Restated Credit Agreement dated as of September 2,
1993, by and among CH&C, Certain Commercial Lending Institutions,
CIBC Inc., First Interstate Bank of Nevada and Bank of America and
related Exhibits....................................................
10.2(2) Form of Indenture relating to $150,000,000 aggregate principal
amount 11% Senior Subordinated Notes due 2002 of California Hotel
Finance Corporation, including the Form of Note.....................
10.3(1) Indenture dated as of September 3, 1993 relating to 10.75% Senior
Subordinated Notes Due 2003 ("10.75% Notes"), including Form of
Note................................................................
10.4(1) Note Purchase Agreement dated September 3, 1993 relating to 10.75%
Notes...............................................................
10.5(1) Registration Rights Agreement dated as of September 3, 1993 relating
to 10.75% Notes.....................................................
10.6(1) Loan Agreement dated March 2, 1989, by and between First Interstate
Bank of Nevada and Eldorado, Inc., including related Promissory
Notes, and related Revision Agreement dated October 31, 1989, by and
between First Interstate Bank of Nevada, N.A. and Eldorado, Inc.....
10.7(3) Loan Agreement dated August 17, 1994 by and among Boyd Tunica, Inc.,
the Registrant, First Interstate Bank of Nevada, Bankers Trust
Company and Bank of America Nevada..................................
10.8(2) Ninty-Nine Year Lease dated June 30, 1954, by and among Fremont
Hotel, Inc., and Charles L. Ronnow and J.L. Ronnow, and Alice
Elizabeth Ronnow....................................................
10.9(2) Lease Agreement dated October 31, 1963, by and between Fremont
Hotel, Inc. and Cora Edith Garehime.................................
10.10(2) Lease Agreement dated December 31, 1963, by and among Fremont Hotel,
Inc., Bank of Nevada and Leon H. Rockwell, Jr.......................
10.11(2) Lease Agreement dated June 7, 1971, by and among Anthony Antonacci,
Margaret Fay Simon and Bank of Nevada, as Co-Trustees under Peter
Albert Simon's Last Will and Testament, and related Assignment of
Lease dated February 25, 1985 to Sam-Will, Inc. and Fremont Hotel,
Inc.................................................................
10.12(2) Lease Agreement dated July 25, 1973, by and between CH&C and William
Peccole, as Trustee of the Peter Peccole 1970 Trust.................
10.13(2) Lease Agreement dated July 1, 1974 by and among Fremont Hotel, Inc.,
and Bank of Nevada, Leon H. Rockwell, Jr. and Margorie Rockwell
Riley...............................................................
</TABLE>
<PAGE> 125
<TABLE>
<CAPTION>
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<C> <S> <C>
10.14(2) Ground Lease Agreement dated July 5, 1978 by and between CH&C, and
Irene Elizabeth Carey, as Trustee of the Carey Survivor's Trust U/A
October 18, 1972 and Irene Elizabeth Carey, as Trustee of the Carey
Family Trust U/A October 18, 1972...................................
10.15(2) Ninety-Nine Year Lease dated December 1, 1978, by and between
Matthew Paratore, and George W. Morgan and LaRue Morgan, and related
Lease Assignment dated November 10, 1987 to Sam-Will, Inc., d/b/a
Fremont Hotel and Casino............................................
10.16(3) Collective Bargaining Agreement effective as of January 17, 1994, by
and between Sam-Will, Inc. d/b/a Fremont Hotel and Casino and the
International Union of Operating Engineers, Local No. 501, AFL-CIO
(slot technician unit)..............................................
10.17(1) Labor Agreement dated as of January 13, 1993, by and between Mare-
Bear, Inc. d/b/a Stardust Hotel & Casino, and the International
Union of Operating Engineers, Local No. 501, AFL-CIO................
10.18(1) Labor Agreement dates as of January 13, 1993, by and between
Sam-Will, Inc., d/b/a Fremont Hotel and Casino, and the
International Union of Operating Engineers, Local No. 501,
AFL-CIO.............................................................
10.19(1) Labor Agreement dated January 13, 1993, by and between CH&C and the
International Union of Operating Engineers, Local No. 501,
AFL-CIO.............................................................
10.20(1) Agreement dated as of May 1, 1991, by and between Mare-Bear, Inc.,
d/b/a Stardust Hotel & Casino, and the Local Joint Executive Board
of Las Vegas for and on behalf of the Culinary Workers' Union, Local
No. 226 and Bartenders Union, Local No. 165.........................
10.21(2) Agreement dated May 1, 1991 by and between Sam-Will, Inc., d/b/a
Fremont Hotel and Casino, and the Local Joint Executive Board of Las
Vegas for and on behalf of the Culinary Workers Union, Local No. 226
and Bartenders Union, Local No. 165.................................
10.22(1) Collective Bargaining Agreement dated September 12, 1991, by and
between Eldorado Casino and the Local Joint Executive Board of Las
Vegas for and on behalf of Culinary Workers Union, Local No. 226 and
Bartenders Union, Local 165.........................................
10.23(2) Collective Bargaining Agreement dated March 14, 1991, by and between
Mare-Bear, Inc. d/b/a Stardust Hotel & Casino, and the Musicians
Union of Las Vegas, Local No. 369, American Federation of Musicians,
AFL-CIO.............................................................
10.24(2) Labor Agreement dated May 1, 1991, by and between Mare-Bear, Inc.,
d/b/a Stardust Hotel & Casino, and the International Alliance of
Theatrical Stage Employees and Moving Picture Machine Operators of
the United States and Canada, Local 720, Las Vegas, Nevada..........
10.25(2) Labor Agreement dated May 1, 1991, by and between Mare-Bear, Inc.,
d/b/a Stardust Hotel & Casino, and the International Alliance of
Theatrical State Employees and Moving Picture Machine Operators of
the Unites States and Canada, Local 720, Las Vegas, Nevada
(Theatrical Wardrobe Employees).....................................
10.26(2) Labor Agreement dated June 14, 1983, by and between Stardust Hotel &
Casino and the International Brotherhood of Painters and Allied
Trades Local Union No. 159, AFL-CIO.................................
</TABLE>
<PAGE> 126
<TABLE>
<CAPTION>
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NUMBER DESCRIPTION PAGES
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<C> <S> <C>
10.27(2) Labor Agreement dated June 1, 1983, by and between Stardust Hotel
and Casino and the United Brotherhood of Carpenters and Joiners of
America, Local No. 1780, Las Vegas, Nevada..........................
10.28(2) Labor Agreement dated August 1, 1983, by and between Stardust Hotel
and Casino and the International Brotherhood of Electrical Workers,
Local Union No. 357, AFL-CIO........................................
10.29(2) Implemented Proposal dated June 15, 1992, by and between Stardust
Hotel and Casino and the Back-End Teamsters Local No. 995...........
10.30(2) Implemented Proposal dated June 15, 1992, by and between Fremont
Hotel and Casino and the Back-End Teamsters Local No. 995...........
10.31(1) Agreement and Plan of Reorganization dated as of June 25, 1993, by
and among Eldorado, Inc., the Registrant, CH&C and certain
stockholders and noteholders of Eldorado, Inc.......................
10.32(1) Management Agreement dated March 11, 1993, by and between
Mississippi Band of Choctaw Indians and Boyd Mississippi, Inc.......
10.33(3) Addendum to Management Agreement dated November 24, 1993, by and
between Mississippi Band of Choctaw Indians and Boyd Mississippi,
Inc.................................................................
10.34(1) Casino Management Agreement dated August 30, 1993, by and between
Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc..................
10.35(1) Subscription Agreement dated as of August 30, 1993, by and among
Boyd Kenner, Inc., the Registrant and Treasure Chest Casino,
L.L.C...............................................................
10.36(3) Amended and Restated Operating Agreement dated August 5, 1994 by and
between Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc..........
10.37(1) Real Estate Contract of Sale dated April 29, 1993, by and among Boyd
Tunica, Inc. and Shea Leatherman, Irwin L. Zanone and William A.
Leatherman, Jr......................................................
10.38(1) Real Estate Contract of Sale dated April 29, 1993, by and between
Eugene H. Beck, Jr. and the Boyd Group..............................
10.39(1) Real Estate Contract of Sale dated April 30, 1993, by and between
Mid-West Terminal Warehouse Company and the Boyd Group..............
10.40(1) Real Estate Contract of Sale dated April 30, 1993, by and between
Hunt Midwest Real Estate Development, Inc. and the Boyd Group.......
10.41(1) Amendment to Real Estate Contracts of Sale date May 26, 1993, by and
among the Boyd Group, Hunt Midwest Real Estate Development, Inc.,
Mid-West Terminal Warehouse Company and Eugene H. Beck, Jr..........
10.42(1) Real Estate Contract of Sale dated as of April 30, 1993, by and
between Vergie G. Bevan, individually and as trustee of the Vergie
G., Bevan Revocable Trust, and the Boyd Group.......................
10.43(3) Development Agreement dated June 6, 1994 by and among the
Registrant, Boyd Kansas City, Inc. and Port Authority of Kansas
City, Missouri......................................................
10.44(3) Agreement dated January 10, 1994, by and between Boyd Tunica, Inc.
and W.G. Yates & Sons Construction Company..........................
</TABLE>
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<TABLE>
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10.45(3) Building Contract dated July 15, 1993, by and between Marnell Corrao
Associates, Inc. and Sam's Town Hotel and Gambling Hall for Sam's
Town Addition Phase V...............................................
10.46(1) Form of Indemnification Agreement...................................
10.47(1)(4) Flexible Stock Incentive Plan and related agreements................
10.48(1)(4) 1993 Directors Non-Qualified Stock Option Plan and related
agreements..........................................................
10.49(1)(4) 1993 Employee Stock Purchase Plan and related agreement.............
10.50(2) 401(k) Profit Sharing Plan and Trust................................
10.51(2) Note dated July 1, 1992, from Samuel A. Boyd Family Trust to the
Boyd Group on the principal sum of $3,000,000.......................
10.52(5) Promissory Note dated December 30, 1991, from Eldorado, Inc. to
Samuel A. Boyd in the principal sum of $600,000.....................
10.53(7) Joint Venture Agreement of Stardust A.C., dated as of May 29, 1996,
by and between MAC, Corp., a New Jersey corporation, which is a
wholly-owned subsidiary of Mirage Resorts, Incorporated, a Nevada
corporation, and Grand K, Inc., a Nevada corporation, which is a
wholly-owned subsidiary of Registrant. (Certain portions of this
exhibit have been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential
treatment for this Agreement.)......................................
10.54(8) Credit Agreement dated as of June 19, 1996, by and among the
Registrant and California Hotel and Casino as the Borrowers, certain
commercial lending institutions as the Lenders, Canadian Imperial
Bank of Commerce as the Agent, Bank of America National Trust
Savings Association and Wells Fargo Bank N.A. as Co-Managing Agents
and Bankers Trust Company, Credit Lyonnais and Societe Generale as
Co-Agents...........................................................
10.55(9) Property Purchase Agreement dated as of August 9, 1996, by and
between Steamboat Station Company, a Nevada general partnership, and
Boyd Reno, Inc., a Nevada corporation and wholly-owned subsidiary of
the Company.........................................................
10.56(9) Buy-Sell Agreement dated as of August 2, 1996, by and between the
Registrant and Casino Magic of Louisiana, Corp., a Louisiana
corporation.........................................................
12 Computation of Ratio of Earnings to Fixed Charges...................
23.1 Consent of Deloitte & Touche LLP....................................
23.2 Consent of Morrison & Foerster LLP (to be included in Exhibit 5.1 to
this Registration Statement)(to be filed by amendment)..............
23.3 Consent of Coopers & Lybrand L.L.P..................................
24 Powers of Attorney (previously filed)...............................
25 Statement of Eligibility of Trustee on Form T-1 (to be filed by
amendment)..........................................................
</TABLE>
<PAGE> 128
- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on Form
S-1, File No. 33-64006, which became effective on October 15, 1993.
(2) Incorporated by reference to the Registration Statement on Form S-1, File
No. 33-51672, of California Hotel and Casino and California Hotel Finance
Corporation, which became effective on November 18, 1992.
(3) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1995.
(4) Management contracts or compensatory plans or arrangements.
(5) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1994.
(6) Incorporated by reference to Registrant's Current Report on Form 8-K dated
April 26, 1996.
(7) Incorporated by reference to Registrant's Current Report on Form 8-K dated
June 7, 1996.
(8) Incorporated by reference to Registrant's Current Report on Form 8-K dated
June 19, 1996.
(9) Incorporated by reference to Registrant's Current Report on Form 8-K dated
August 16, 1996.
<PAGE> 1
EXHIBIT 4
INDENTURE
Between
BOYD GAMING CORPORATION,
Issuer,
CALIFORNIA HOTEL and CASINO,
BOYD TUNICA, INC.,
BOYD MISSISSIPPI, INC.,
BOYD KANSAS CITY, INC.,
BOYD KENNER, INC.,
MARE-BEAR, INC.,
SAM-WILL, INC.,
ELDORADO, INC., and
MSW, INC.,
the "Guarantors"
and
[ ],
Trustee
Dated as of September , 1996
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C> <C>
310 (a)(1)...................................................................... 7.10
(a)(2)...................................................................... 7.10
(a)(3)...................................................................... N.A.
(a)(4)...................................................................... N.A.
(a)(5)...................................................................... 7.10
(b) ................................................................. 7.08; 7.10
(c) ................................................................. N.A.
311 (a) ................................................................. 7.11
(b) ................................................................. 7.11
(c) ................................................................. N.A.
312 (a) ................................................................. 2.05
(b) ................................................................. 11.03
(c) ................................................................. 11.03
313 (a) ................................................................. 7.06
(b)(1)...................................................................... N.A.
(b)(2)...................................................................... 7.06
(c) ................................................................. 11.02
(d) ................................................................. 7.06
314 (a) ................................................................. 4.03; 4.08; 11.02
(b) ................................................................. N.A.
(c)(1)...................................................................... 11.04
(c)(2)...................................................................... 11.04
(c)(3)...................................................................... N.A.
(d) ................................................................. N.A.
(e) ................................................................. 11.05
(f) ................................................................. N.A.
315 (a) ................................................................. 7.01
(b) ................................................................. 7.05; 11.02
(c) ................................................................. 7.01
(d) ................................................................. 7.01
(e) ................................................................. 6.11
316 (a)(last sentence).......................................................... [ ]
(a)(1)(A)................................................................... 6.05
(a)(1)(B)................................................................... 6.04
(a)(2)...................................................................... N.A.
(b) ................................................................. 6.07
(c) ................................................................. 6.07
317 (a)(1)...................................................................... 6.08
(a)(2)...................................................................... 6.09
(b) ................................................................. 2.04
318 (a) ................................................................. 11.01
</TABLE>
N.A. means Not Applicable.
- ---------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed
to be part of this Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I Page
<S> <C> <C>
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions ...................................................... 1
SECTION 1.02. Other Definitions ................................................ 23
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act ................................................. 23
SECTION 1.04. Rules of Construction 24
ARTICLE II
The Securities
SECTION 2.01. Form and Dating .................................................. 24
SECTION 2.02. Execution and Authentication...................................... 25
SECTION 2.03. Registrar and Paying Agent........................................ 26
SECTION 2.04. Paying Agent To Hold Money in Trust............................... 26
SECTION 2.05. Securityholder Lists.............................................. 27
SECTION 2.06. Transfer and Exchange............................................. 27
SECTION 2.07. Replacement Securities............................................ 29
SECTION 2.08. Outstanding Securities............................................ 30
SECTION 2.09. Temporary Securities.............................................. 30
SECTION 2.10. Cancelation....................................................... 31
SECTION 2.11. Defaulted Interest................................................ 31
SECTION 2.12. Record Date....................................................... 32
SECTION 2.13. Computation of Interest........................................... 32
SECTION 2.14. CUSIP Numbers..................................................... 33
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee................................................ 33
SECTION 3.02. Selection of Securities To Be
Redeemed.......................................................... 33
SECTION 3.03. Notice of Redemption.............................................. 34
SECTION 3.04. Effect of Notice of Redemption.................................... 35
SECTION 3.05. Deposit of Redemption Price....................................... 35
SECTION 3.06. Securities Redeemed in Part....................................... 35
SECTION 3.07. Redemption Pursuant to Gaming Laws................................ 35
</TABLE>
<PAGE> 4
Contents, p. 2
<TABLE>
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Page
<S> <C> <C>
ARTICLE IV
Covenants
SECTION 4.01. Certain Suspended Covenants....................................... 37
SECTION 4.02. Payment of Securities............................................. 37
SECTION 4.03. SEC Reports....................................................... 37
SECTION 4.04. Limitation on Indebtedness........................................ 38
SECTION 4.05. Limitation on Restricted Payments................................. 39
SECTION 4.06. Limitation on Transactions with
Affiliates...................................................... 42
SECTION 4.07. Change of Control................................................. 43
SECTION 4.08. Compliance Certificate............................................ 45
SECTION 4.09. Further Instruments and Acts...................................... 45
SECTION 4.10. Limitation on Liens............................................... 45
SECTION 4.11. Limitation on Dividend and Other
Payment Restrictions Affecting
Restricted Subsidiaries.......................................... 46
SECTION 4.12. Limitation on Asset Sales; Event of
Loss............................................................. 47
SECTION 4.13. Guaranty by Par-A-Dice and EPM.................................... 50
SECTION 4.14. Maintenance of Properties and Other
Matters......................................................... 50
SECTION 4.15. Limitation on Activities of the
Company......................................................... 52
SECTION 4.16. Limitation on Status as an Investment
Company.......................................................... 52
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets...................................................... 52
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default................................................. 53
SECTION 6.02. Acceleration...................................................... 56
SECTION 6.03. Other Remedies.................................................... 56
SECTION 6.04. Waiver of Past Defaults........................................... 57
SECTION 6.05. Control by Majority............................................... 57
SECTION 6.06. Limitation on Suits............................................... 57
SECTION 6.07. Rights of Holders To Receive Payment.............................. 58
</TABLE>
<PAGE> 5
Contents, p. 3
<TABLE>
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Page
<S> <C> <C>
SECTION 6.08. Collection Suit by Trustee........................................ 58
SECTION 6.09. Trustee May File Proofs of Claim.................................. 58
SECTION 6.10. Priorities........................................................ 59
SECTION 6.11. Undertaking for Costs............................................. 59
SECTION 6.12. Waiver of Stay or Extension Laws.................................. 59
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee................................................. 60
SECTION 7.02. Rights of Trustee................................................. 61
SECTION 7.03. Individual Rights of Trustee...................................... 62
SECTION 7.04. Trustee's Disclaimer.............................................. 62
SECTION 7.05. Notice of Defaults................................................ 62
SECTION 7.06. Reports by Trustee to Holders..................................... 62
SECTION 7.07. Compensation and Indemnity........................................ 62
SECTION 7.08. Replacement of Trustee............................................ 63
SECTION 7.09. Successor Trustee by Merger....................................... 64
SECTION 7.10. Eligibility; Disqualification..................................... 65
SECTION 7.11. Preferential Collection of Claim
Against Company.................................................. 65
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance...................................................... 65
SECTION 8.02. Conditions to Defeasance.......................................... 67
SECTION 8.03. Application of Trust Money........................................ 68
SECTION 8.04. Repayment to Company.............................................. 68
SECTION 8.05. Indemnity for Government Obligations.............................. 69
SECTION 8.06. Reinstatement..................................................... 69
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders........................................ 69
SECTION 9.02. With Consent of Holders........................................... 70
SECTION 9.03. Compliance with Trust Indenture Act............................... 71
SECTION 9.04. Revocation and Effect of Consents and
Waivers......................................................... 71
SECTION 9.05. Notation on or Exchange of Securities............................. 72
</TABLE>
<PAGE> 6
Contents, p. 4
<TABLE>
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Page
<S> <C> <C>
SECTION 9.06. Trustee To Sign Amendments........................................ 72
SECTION 9.07. Payment for Consent............................................... 73
ARTICLE X
Subsidiary Guaranties
SECTION 10.01. Guaranties........................................................ 73
SECTION 10.02. Successors and Assigns............................................ 75
SECTION 10.03. No Waiver......................................................... 76
SECTION 10.04. Modification...................................................... 76
SECTION 10.05. Release of Guarantors............................................. 76
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls...................................... 76
SECTION 11.02. Notices........................................................... 77
SECTION 11.03. Communication by Holders with Other
Holders......................................................... 78
SECTION 11.04. Certificate and Opinion as to
Conditions Precedent............................................ 78
SECTION 11.05. Statements Required in Certificate or
Opinion......................................................... 78
SECTION 11.06. Rules by Trustee, Paying Agent and
Registrar......................................................... 79
SECTION 11.07. Legal Holidays.................................................... 79
SECTION 11.08. Governing Law..................................................... 79
SECTION 11.09. No Recourse Against Others........................................ 79
SECTION 11.10. Successors........................................................ 79
SECTION 11.11. Multiple Originals................................................ 79
SECTION 11.12. Table of Contents; Headings....................................... 79
SECTION 11.13. Severability...................................................... 80
</TABLE>
Exhibit A - Form of Security
<PAGE> 7
INDENTURE dated as of September, 1996,
between BOYD GAMING CORPORATION, a Nevada corporation
(the "Company"), CALIFORNIA HOTEL and CASINO, a
Nevada corporation, BOYD TUNICA, INC., a Mississippi
corporation, BOYD MISSISSIPPI, INC., a Mississippi
corporation, BOYD KANSAS CITY, INC., a Missouri
corporation, BOYD KENNER, INC., a Louisiana
corporation, MARE-BEAR, INC., a Nevada corporation,
SAM-WILL, INC., a Nevada corporation, ELDORADO, INC.,
a Nevada corporation, and MSW, INC., a Nevada
corporation (the "Guarantors"),and [TRUSTEE], a
corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's %
Senior Notes Due 2003 (the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Assets" means (i) any Property (other than cash,
cash equivalents or securities) to be owned by the Company or a Restricted
Subsidiary and used in a Related Business, (ii) the costs of improving,
restoring, replacing or developing any Property owned by the Company or a
Restricted Subsidiary which is used in a Related Business or (iii) Investments
in any other Person engaged primarily in a Related Business (including the
acquisition from third parties of Capital Stock of such Person) as a result of
which such other Person becomes a Restricted Subsidiary in compliance with the
procedure for designation of Restricted Subsidiaries set forth below in the
definition of "Restricted Subsidiary".
"Affiliate" means, with respect to any Person, a Person (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person, (ii) which directly
or indirectly through one or more intermediaries beneficially owns or holds 10%
or more of any class of the Voting Stock
<PAGE> 8
2
of such Person (or a 10% or greater equity interest in a Person which is not a
corporation) or (iii) of which 10% or more of any class of the Voting Stock (or,
in the case of a Person which is not a corporation, 10% or more of the equity
interest) is beneficially owned or held directly or indirectly through one or
more intermediaries by such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Asset Sale" means the sale, conveyance, transfer, lease or
other disposition, whether in a single transaction or a series of related
transactions (including, without limitation, dispositions pursuant to
Sale/Leaseback Transactions or pursuant to the merger of the Company or any of
its Restricted Subsidiaries with or into any Person other than the Company or
one of its Restricted Subsidiaries, but not including any dispositions to the
Company or any of its Restricted Subsidiaries), by the Company or one of its
Restricted Subsidiaries to any Person other than the Company or one of its
Restricted Subsidiaries of (i) any of the Capital Stock or other ownership
interests of any Subsidiary of the Company or (ii) any other Property of the
Company or any Property of its Restricted Subsidiaries, in each case not in the
ordinary course of business of the Company or such Restricted Subsidiary.
"Attributable Indebtedness" means Indebtedness deemed to be
Incurred in respect of a Sale/Leaseback Transaction and shall be, at the date of
determination, the present value (discounted at the actual rate of interest
implicit in such transaction, compounded annually), of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
<PAGE> 9
3
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors, to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Boyd Family" means William S. Boyd, any direct descendant or
spouse of such person, or any direct descendant of such spouse, and any trust or
other estate in which each person who has a beneficial interest, directly or
indirectly through one or more intermediaries, in Capital Stock of the Company
is one of the foregoing persons.
["Boyd Illinois" means [to be inserted].]
"Boyd Notes" means the Company's 10.75% Senior Subordinated
Notes Due 2003 issued pursuant to the Indenture dated as of September 3, 1993,
between the Company and State Street Bank and Trust, a Massachusetts banking
corporation.
"Business Day" means each day which is not a Legal
Holiday.
"CHFC Notes" means the 11% Senior Subordinated Notes Due 2002
issued pursuant to the Indenture dated October 15, 1992, among California Hotel
Finance Corporation, a Nevada corporation, California Hotel and Casino, a Nevada
corporation, and State Street Bank and Trust Company, a Massachusetts banking
corporation.
"Capital Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP. For purposes of Section 4.10, Capital Lease Obligations shall be
deemed secured by a Lien on the property being leased.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of corporate stock, partnership
interests or any other participation, right, warrants, options or other interest
in the nature of an equity interest in such Person, but
<PAGE> 10
4
excluding any debt security convertible or exchangeable into such equity
interest.
"Change of Control" means the occurrence of any of the
following events: (i) any "person" or "group" (within the meaning of Sections
13(d)(3) and 14(d)(2) of the Exchange Act or any successor provision to either
of the foregoing, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act), other than the Permitted Holders and other than a Restricted
Subsidiary, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time) of 50%
or more of the total voting power of all classes of the Voting Stock of the
Company and/or warrants or options to acquire such Voting Stock, calculated on a
fully diluted basis; provided that for purposes of this clause (i), the members
of the Boyd Family shall be deemed to beneficially own any Voting Stock of a
corporation held by any other corporation (the "parent corporation") so long as
the members of the Boyd Family beneficially own (as so defined), directly or
indirectly through one or more intermediaries, in the aggregate 50% or more of
the total voting power of the Voting Stock of the parent corporation; (ii) the
sale, lease, conveyance or other transfer of all or substantially all of the
Property of the Company (other than to any Restricted Subsidiary); (iii) the
stockholders of the Company shall have approved any plan of liquidation or
dissolution of the Company; (iv) the Company consolidates with or merges into
another Person or any Person consolidates with or merges into the Company in any
such event pursuant to a transaction in which the outstanding Voting Stock of
the Company is reclassified into or exchanged for cash, securities or other
property, other than any such transaction where (a) the outstanding Voting Stock
of the Company is reclassified into or exchanged for Voting Stock of the
surviving corporation that is Capital Stock and (b) the holders of the Voting
Stock of the Company immediately prior to such transaction own, directly or
indirectly, not less than a majority of the Voting Stock of the surviving
corporation immediately after such transaction in substantially the same
proportion as before the transaction; or (v) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors (together with any new
<PAGE> 11
5
directors whose election or appointment by such board or whose nomination for
election by the stockholders of the Company was approved by a vote of either (A)
66 2/3% 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 or (B) members of the Boyd Family who beneficially own
(as defined for purposes of clause (i) above), directly or indirectly through
one or more intermediaries, in the aggregate 50% or more of the total voting
power of the Voting Stock of the Company) cease for any reason to constitute a
majority of the Board of Directors then in office.
"Change of Control Triggering Event" means both a Change of
Control and a Rating Decline with respect to the Securities; provided, however,
that a Change of Control Triggering Event shall not be deemed to have occurred
if (i) at the earlier of the public announcement of (x) a Change of Control or
(y) (if applicable) the intention of the Company to effect a Change of Control,
the Securities have Investment Grade Status and (ii) the Company effects
defeasance of the Securities pursuant to the provisions of Article VIII prior to
a Rating Decline.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commission" means the Securities and Exchange
Commission.
"Consolidated EBITDA" means, for any period, without
duplication, Consolidated Net Income, plus (i) Consolidated Fixed Charges, (ii)
provisions for taxes based on income to the extent such taxes were deducted in
determining Consolidated Net Income, (iii) consolidated depreciation expense,
(iv) consolidated amortization expense, and (v) other noncash items reducing
Consolidated Net Income, minus (vi) other noncash items increasing Consolidated
Net Income, all as determined on a consolidated basis for the Company and its
Restricted Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of
(i) Consolidated EBITDA during the Reference Period to (ii) the aggregate amount
of Consolidated Fixed Charges during the Reference Period.
<PAGE> 12
6
"Consolidated Fixed Charges" means, for any period, the total
interest expense of the Company and its consolidated Subsidiaries (other than
Unrestricted Subsidiaries), including (i) the interest component of Capital
Lease Obligations, (ii) one-third of the rental expense attributable to
operating leases, (iii) amortization of Indebtedness discount and commissions,
discounts and other similar fees and charges owed with respect to Indebtedness,
(iv) noncash interest payments, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs pursuant to Interest Rate Agreements, (vii) dividends
on all Preferred Stock of Restricted Subsidiaries held by Persons other than the
Company or a Restricted Subsidiary, (viii) interest attributable to the
Indebtedness of any other Person for which the Company or any Restricted
Subsidiary is responsible or liable as obligor, guarantor or otherwise
(including Indebtedness Guaranteed pursuant to Investment Guarantees) and (viii)
any dividend or distribution, whether in cash, property or securities, on
Disqualified Stock of the Company.
"Consolidated Net Income" means for any period, the net income
(loss) of the Company and its Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income (i) any net income (loss) of any
Person if such Person is not a Restricted Subsidiary, except that subject to the
limitations contained in (iv) below, (a) the Company's equity in the net income
of any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to the Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (iii) below) and
(b) the Company's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in determining such
Consolidated Net Income, (ii) any net income (loss) of any Person acquired by
the Company or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition, (iii) any net income (loss) of any
Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions, directly
or indirectly, to the Company, except that (a) subject to the limitations
<PAGE> 13
7
contained in (iv) below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been distributed by
such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend to
another Restricted Subsidiary, to the limitation contained in this clause) and
(b) the Company's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net Income, (iv)
any gain or loss realized upon the sale or other disposition of any Property of
the Company or its consolidated Subsidiaries (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the
ordinary course of business and any gain or loss realized upon the sale or other
disposition of any Capital Stock of any Person, (v) any extraordinary gain or
loss and (vi) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its Restricted Subsidiaries, determined
on a consolidated basis in accordance with GAAP, as of the end of the most
recent fiscal quarter of the Company ending at least 45 days prior to the taking
of any action for the purpose of which the determination is being made, as (i)
the par or stated value of all outstanding Capital Stock of the Company plus
(ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit
and (B) any amounts attributable to Disqualified Stock.
"Credit Facility" means the revolving credit facility, as
amended from time to time, among the Company, certain Subsidiaries and a
syndicate of banks, and any extensions, revisions, refinancings or replacements
thereof by an institutional lender or syndicate of institutional lenders.
"Currency Exchange Protection Agreement" means, in respect of
a Person, any foreign exchange contract, currency swap agreement, currency
option or other similar agreement or arrangement designed to protect such Person
against fluctuations in currency exchange rates.
<PAGE> 14
8
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Disqualified Stock" of a Person means any Capital Stock of
such Person: (i) that by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable) or otherwise (a) matures or
is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(b) is or may become redeemable or repurchaseable at the option of the holder
thereof, in whole or in part, or (c) is convertible or exchangeable or
exercisable for Indebtedness; and (ii) as to which the maturity, mandatory
redemption, conversion or exchange or redemption at the option of the holder
thereof occurs, or may occur, in the case of each of clauses (i) or (ii) on or
prior to the first anniversary of the Stated Maturity of the Securities;
provided, however, that such Capital Stock of the Company or any of its
Subsidiaries shall not constitute Disqualified Stock if it is redeemable prior
to the first anniversary of the Stated Maturity of the Securities only if: (A)
the holder or a beneficial owner of such Capital Stock is required to qualify
under the Gaming Laws and does not so qualify, or (B) the Board of Directors
determines in its reasonable, good faith judgment, as evidenced by a Board
Resolution, that as a result of a holder or beneficial owner owning such Capital
Stock, the Company or any of its Subsidiaries has lost or may lose any Gaming
License, which if lost or not reinstated, as the case may be, would have a
material adverse effect on the business of the Company and its Subsidiaries,
taken as a whole, or would restrict the ability of the Company or any of its
Subsidiaries to conduct business in any gaming jurisdiction.
"EPH" means East Peoria Hotel, Inc., an Illinois
corporation.
"Event of Loss" means, with respect to any Property, any (i)
loss, destruction or damage of such Property; or (ii) any condemnation, seizure
or taking, by exercise of the power of eminent domain or otherwise, of such
Property, or confiscation or requisition of the use of such Property.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
<PAGE> 15
9
"Fair Market Value" means with respect to any Property, the
price which could be negotiated in an arm's- length free market transaction, for
cash, between a willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair Market Value will
be determined, except as otherwise provided, (i) if such Property has a Fair
Market Value of less than $5 million, by any Officer or (ii) if such Property
has a Fair Market Value in excess of $5 million, by a majority of the Board of
Directors and evidenced by a Board Resolution, dated within 30 days of the
relevant transaction, delivered to the Trustee.
"GAAP" means generally accepted accounting principles in
effect on the date of this Indenture, including those set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as approved by a significant segment of the accounting profession. All
ratios and computations based on GAAP contained in this Indenture shall be
computed in conformity with GAAP consistently applied.
"Gaming Authority" means any of the Nevada Gaming Commission,
the Nevada Gaming Control Board, the Mississippi Gaming Commission, the
Mississippi State Tax Commission, the Missouri Gaming Commission, the National
Indian Gaming Commission, the Bureau of Indian Affairs, the Illinois Gaming
Board and any other agency (including, without limitation, any agency
established by a federally-recognized Indian tribe to regulate gaming on such
tribe's reservation) which has, or may at any time after the date of this
Indenture have, jurisdiction over the gaming activities of the Company or any of
its Subsidiaries or any successor to such authority.
"Gaming Facility" 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 or 100% of the equity interest of a Person the
primary business of which is ownership and operation of any of the foregoing.
<PAGE> 16
10
"Gaming Laws" means the gaming laws of a jurisdiction or
jurisdictions to which the Company or any of its Subsidiaries is, or may at any
time after the date of this Indenture be, subject.
"Gaming License" means any license, permit, franchise or other
authorization from any Governmental Authority required on the date of this
Indenture or at any time thereafter to own, lease, operate or otherwise conduct
the gaming business of the Company and its Subsidiaries, including all licenses
granted under Gaming Laws and other Legal Requirements.
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit, whether Federal,
state, county, district, city or other political subdivision, foreign or
otherwise and whether now or hereafter in existence, or any officer or official
of any thereof, including any Gaming Authority.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
first Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness of such other Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guaranties" means the guaranties of the
Guarantors given pursuant to Article X.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
<PAGE> 17
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"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), extend, assume, Guarantee or become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or obligation on the consolidated balance
sheet of such Person including by merger or operation of law (and "Incurrence",
"Incurred", "Incurrable" and "Incurring" shall have meanings correlative to the
foregoing). The accretion of principal of a noninterest bearing or other
discount security shall be deemed the Incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to
any Person, any indebtedness, secured or unsecured, contingent or otherwise,
which is for borrowed money (whether or not the recourse of the lender is to the
whole of the Property of such Person or only to a portion thereof), or the
principal amount of such indebtedness evidenced by bonds, notes, debentures or
similar instruments or representing the balance deferred and unpaid of the
purchase price of any property (excluding any balances that constitute customer
advance payments and deposits, accounts payable or trade payables, and other
accrued liabilities arising in the ordinary course of business) if and to the
extent any of the foregoing indebtedness would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, and shall also
include, to the extent not otherwise included (i) any Capital Lease Obligations,
(ii) Indebtedness of other Persons secured by a Lien to which the Property owned
or held by such Person is subject, whether or not the obligation or obligations
secured thereby shall have been assumed (the amount of such Indebtedness being
deemed to be the lesser of the value of such Property or the amount of the
Indebtedness so secured), (iii) Guarantees of Indebtedness of other Persons,
(iv) any Disqualified Stock, (v) any Attributable Indebtedness, (vi) all
obligations of such Person in respect of letters of credit, bankers' acceptances
or other similar instruments or credit transactions issued for the account of
such Person (including reimbursement obligations with respect thereto), other
than obligations with respect to letters of credit securing obligations (other
than obligations described in this definition) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such Person of a demand
for
<PAGE> 18
12
reimbursement following payment on the letter of credit, (vii) in the case of
the Company, Preferred Stock of its Restricted Subsidiaries and (viii)
obligations pursuant to any Interest Rate Agreement or Currency Rate Protection
Agreement. Notwithstanding the foregoing, Indebtedness shall not include any
interest or accrued interest until due and payable. For purposes of this
definition, the maximum fixed repurchase price of any Disqualified Stock or
Preferred Stock that does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Stock or Preferred Stock as if
such Disqualified Stock or Preferred Stock were repurchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture;
provided, however, that if such Disqualified Stock or Preferred Stock is not
then permitted to be repurchased, the repurchase price shall be the book value
of such Disqualified Stock or Preferred Stock. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability of any
other obligations described in clauses (i) through (viii) above in respect
thereof at such date.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the TIA that are deemed to be a part of and govern
this instrument, and any such supplemental indenture, respectively.
"Independent Advisor" means, an investment banking firm of
national standing with noninvestment-grade debt underwriting experience or any
third party appraiser of national standing; provided, however, that such firm or
appraiser is not an Affiliate of the Company.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other Property to others or payments for Property or
services for the account or use of others, or otherwise) to, or
<PAGE> 19
13
Incurrence of an Investment Guarantee or a Guarantee of any obligation of, or
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
securities or evidence of Indebtedness issued by, any other Person, including
the redesignation by the Board of Directors of a Person to be an Unrestricted
Subsidiary pursuant to the definition of "Unrestricted Subsidiary". In
determining the amount of any Investment in respect of any Property other than
cash, such Property shall be valued at its Fair Market Value at the time of such
Investment.
"Investment Grade Rating" means a rating equal to or higher
than Baa3 (or the equivalent) by Moody's (or any successor to the rating agency
business thereof), BBB- (or the equivalent) by S&P (or any successor to the
rating agency business thereof) and BBB- (or the equivalent) by Duff & Phelps
Credit Rating Co. (or any successor to the rating agency business thereof).
"Investment Grade Status" means any time at which the ratings
of the Securities by two of three of Moody's (or any successor to the rating
agency business thereof), S&P (or any successor to the rating agency business
thereof) and Duff & Phelps Credit Rating Co. (or any successor to the rating
agency business thereof) are Investment Grade Ratings; provided, however, that
one of such two must be Moody's or S&P.
"Investment Guarantee" means any Guarantee by the Company or a
Restricted Subsidiary of Indebtedness of a Permitted Joint Venture; provided
such Guarantee complies with the requirements of clause (viii) of Section
4.05(b); provided further that only such Indebtedness of such Permitted Joint
Venture Guaranteed by the Company or a Restricted Subsidiary that matures by its
terms prior to the time (if any) that the ability of the Company or a Restricted
Subsidiary to control the day-to-day operations of such Permitted Joint Venture
(pursuant to a management contract or otherwise) is scheduled to expire may
constitute Indebtedness subject to an Investment Guarantee.
"Issue Date" means the date on which the
Securities are initially issued.
"Legal Requirements" means all laws, statutes and ordinances
and all rules, orders, rulings, regulations, directives, decrees, injunctions
and requirements of all Governmental Authorities, that are now or may hereafter
be
<PAGE> 20
14
in existence, and that may be applicable to the Company or any Subsidiary or
Affiliate thereof or the Trustee (including building codes, zoning and
environmental laws, regulations and ordinances and Gaming Laws), as modified by
any variances, special use permits, waivers, exceptions or other exemptions
which may form time to time be applicable.
"Lien" means with respect to any Property of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including any Capital
Lease Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing). Any
Sale/Leaseback Transaction shall be deemed to constitute a Lien on the Property
which is the subject of such Sale/Leaseback Transaction securing the
Attributable Indebtedness represented thereby.
"Mirage Joint Venture" means [to be inserted].
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale, net of
attorney's fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Net Proceeds" from any Asset Sale or Event of Loss by any
Person or its Restricted Subsidiaries means cash and cash equivalents received
in respect of the Property sold or with respect to which an Event of Loss
occurred net of (i) all reasonable out-of-pocket expenses of such Person or such
Restricted Subsidiary Incurred in connection with an Asset Sale of such type,
including, without limitation, all legal, title and recording tax expenses,
commissions and fee and expenses incurred (but excluding any finder's fee or
broker's fee payable to any Affiliate of such Person) and all Federal, state,
provincial, foreign and local taxes arising in connection with such Asset Sale
or Event of Loss that are paid or required to be accrued as a liability under
<PAGE> 21
15
GAAP by such Person or its Restricted Subsidiaries, (ii) all payments made by
such Person or its Restricted Subsidiaries on any Indebtedness which is secured
by such Property in accordance with the terms of any Lien upon or with respect
to such Property or which must, by the terms of such Lien, or in order to obtain
a necessary consent to such Asset Sale or by applicable law, be repaid out of
the proceeds from such Asset Sale or Event of Loss and (iii) all contractually
required distributions and other payments made to minority interest holders (but
excluding distributions and payments to Affiliates of such Person) in Restricted
Subsidiaries of such Person as a result of such Asset Sale; provided, however,
that, in the event that any consideration for an Asset Sale (which would
otherwise constitute Net Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Proceeds only at such
time as it is released to such Person or its Restricted Subsidiaries from
escrow; and provided further, however, that any noncash consideration received
in connection with an Asset Sale or Event of Loss which is subsequently
converted to cash shall be deemed to be Net Proceeds at and from the time of
such conversion.
"Non-Recourse Indebtedness" means Indebtedness of a Person to
the extent that under the terms thereof or pursuant to applicable law (i) no
personal recourse shall be had against such Person for the payment of the
principal of or interest or premium, if any, on such Indebtedness, and (ii)
enforcement of obligations on such Indebtedness is limited only to recourse
against interests in Property purchased with the proceeds of the Incurrence of
such Indebtedness and as to which neither the Company nor any of its Restricted
Subsidiaries provides any credit support or is liable.
"Officer" means the Chief Executive Officer,
President, the Treasurer, or any Executive Vice President or
Vice President of the Company.
"Officers' Certificate" means a certificate signed by two
Officers at least one of whom shall be the principal executive officer,
principal accounting officer or principal financial officer of the Company.
"Opinion of Counsel" means a written opinion from
legal counsel who is acceptable to the Trustee. The counsel
<PAGE> 22
16
may be an employee of or counsel to the Company or the Trustee.
"Par-A-Dice" means Par-A-Dice Gaming Corporation,
an Illinois corporation.
"Par-A Dice Acquisition" means the acquisition by the Company
of Par-A-Dice and EPH pursuant to a Stock Purchase Agreement dated April 26,
1996.
"Permitted FF&E Financing" means Indebtedness of the Company
or any of its Restricted Subsidiaries that is Incurred to finance the
acquisition or lease after the date of this Indenture of newly acquired or
leased furniture, fixtures or equipment ("FF&E") used directly in the operation
of a Gaming Facility owned or leased by the Company or its Restricted
Subsidiaries and secured by a Lien on such FF&E in an amount not to exceed 100%
of the cost of the FF&E so purchased or leased.
"Permitted Holders" means the Boyd Family and any group (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) comprised
solely of members of the Boyd Family.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) a Restricted Subsidiary or a Person which will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees made in the ordinary course of business
consistent with past
<PAGE> 23
17
practices of the Company or such Restricted Subsidiary, as the case may be;
(vii) stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction or judgments; and (viii) securities received
pursuant to clause (ii) of Section 4.12(a).
"Permitted Joint Venture" means a Person in which a Permitted
Joint Venture Investment has been made by the Company or any Restricted
Subsidiary.
"Permitted Joint Venture Investment" means any Investment in a
Person primarily engaged or preparing to engage in a Related Business if,
immediately after giving effect to such Investment, the Company or a Restricted
Subsidiary will own at least 50.0% of the shares of Capital Stock (including at
least 50.0% of the total voting power thereof) of such Person, and will control
the day-to-day operations of such Person pursuant to a management contract or
otherwise.
"Permitted Liens" means (i) Liens for taxes, assessments or
governmental charges or levies on the Property of the Company or any Restricted
Subsidiary if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in good faith and by appropriate
proceedings; (ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens on the Property of the Company or any
Restricted Subsidiary which secure payment of obligations arising in the
ordinary course of business; (iii) Liens on the Property of the Company or any
Restricted Subsidiary in favor of issuers of performance bonds and surety bonds
obtained in the ordinary course of business; (iv) other Liens on the Property of
the Company or any Restricted Subsidiary incidental to the conduct of their
respective businesses or the ownership of their respective Properties which were
not created in connection with the Incurrence of Indebtedness or the obtaining
of advances or credit and which do not in the aggregate materially detract from
the value of their respective Properties or materially impair the use thereof in
the operation of their respective businesses; (v) pledges or deposits by the
Company or any Restricted Subsidiary under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to
<PAGE> 24
18
which the Company or any Restricted Subsidiary is a party, or deposits to secure
public or statutory obligations of the Company or any Restricted Subsidiary, or
deposits for the payment of rent, in each case Incurred in the ordinary course
of business; (vi) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and do not materially
detract from the value of such Property; and (vii) Liens securing obligations to
the Trustee pursuant to the compensation and indemnity provisions of this
Indenture.
"Permitted Refinancing Indebtedness" means any renewals,
extensions, substitutions, refinancings or replacements of any Indebtedness,
including any successive extensions, renewals, substitutions, refinancings or
replacements (and including refinancings by the Company of Indebtedness of a
Restricted Subsidiary) so long as (i) the aggregate amount of Indebtedness
represented thereby is not increased by such renewal, extension, substitution,
refinancing or replacement, (ii) the Average Life and Stated Maturity is not
shortened and (iii) the new Indebtedness shall not be senior in right of payment
to the Indebtedness that is being extended, renewed, substituted, refinanced or
replaced; provided, however, that Permitted Refinancing Indebtedness shall not
include (a) Indebtedness of a Subsidiary that refinances Indebtedness of the
Company or another Subsidiary or (b) Indebtedness of the Company that refinances
the Indebtedness of an Unrestricted Subsidiary.
"Person" means any individual, corporation, company (including
limited liability company), partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"pro forma" means, with respect to any calculation
made or required to be made pursuant to the terms hereof, a
<PAGE> 25
19
calculation in accordance with Article XI of Regulation S-X promulgated under
the Securities Act (to the extent applicable), as interpreted in good faith by
the Board of Directors after consultation with the independent certified public
accountants of the Company, or otherwise a calculation made in good faith by the
Board of Directors after consultation with the independent certified public
accountants of the Company, as the case may be.
"Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible, including, without limitation, Capital Stock in any
other Person (but excluding Capital Stock or other securities issued by such
first Person).
"Rating Agencies" means S&P, Duff & Phelps Credit
Rating Co. and Moody's or any successor to the respective
rating agency businesses thereof.
"Rating Decline" shall have occurred if at any date within 90
calendar days after the date of public disclosure of the occurrence of a Change
of Control (which period will be extended for so long as the Company's debt
ratings are under publicly announced review for possible downgrading (or without
an indication of the direction of a possible ratings change) by either Moody's
or S&P or their respective successors) the Securities no longer have Investment
Grade Status.
"Reference Period" means the period of four consecutive fiscal
quarters ending with the last full fiscal quarter immediately preceding the date
of a proposed Incurrence, Restricted Payment or other transaction.
"Related Business" means the business conducted (or proposed
to be conducted) by the Company and its Subsidiaries in connection with any
Gaming Facility and any and all reasonably related businesses necessary for, in
support, furtherance or anticipation of and/or ancillary to or in preparation
for, such business including, without limitation, the development, expansion or
operation of any Gaming Facility (including any land-based, dockside, riverboat
or other type of casino), owned, or to be owned, leased or managed by the
Company or one of its Subsidiaries.
<PAGE> 26
20
"Related Person" means any legal or beneficial owner of 5% or
more of any class of Capital Stock of the Company or any of its Subsidiaries.
"Restricted Payment" means (i) any dividend or distribution
(whether made in cash, property or securities) declared or paid on or with
respect to any shares of Capital Stock of the Company or to the Company's
stockholders except for such dividends or distributions payable solely in
Capital Stock of the Company (other than Disqualified Stock of the Company);
(ii) a payment made by the Company or any Restricted Subsidiary (other than to
the Company or a Restricted Subsidiary) to purchase, redeem, acquire or retire
any Capital Stock of the Company or Capital Stock of any Affiliate of the
Company or any warrants, rights or options, to directly or indirectly purchase
or acquire any such Capital Stock or any securities exchangeable for or
convertible into any such Capital Stock; (iii) a payment made by the Company or
any Restricted Subsidiary to redeem, repurchase, defease or otherwise acquire or
retire for value, prior to any scheduled maturity, scheduled sinking fund or
mandatory redemption payment (other than the purchase, repurchase, or other
acquisition of any Indebtedness subordinate in right of payment to the
Securities purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the
date of acquisition), Indebtedness of the Company or any Guarantor which is
subordinate (whether pursuant to its terms or by operation of law) in right of
payment to the Securities or the Guaranties; or (iv) any Investment (other than
a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company
that (A) has not been designated by the Board of Directors as an Unrestricted
Subsidiary or (B) was an Unrestricted Subsidiary but has been redesignated by
the Board of Directors as a Restricted Subsidiary, in each case as provided
under the definition of Unrestricted Subsidiary; provided, however, that no
Subsidiary shall become a Restricted Subsidiary unless, immediately after giving
pro forma effect to such designation, the Company would be able to incur at
least $1.00 of additional Indebtedness pursuant to Section 4.04(a).
"Sale/Leaseback Transaction" means, with respect to any
Person, any direct or indirect arrangement pursuant to which Property is sold or
transferred by such Person or a
<PAGE> 27
21
Restricted Subsidiary of such Person and is thereafter leased back from the
purchaser or transferee thereof by such Person or one of its Restricted
Subsidiaries.
"Securities Act" means the Securities Act of 1933,
as amended.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of the McGraw-Hill Companies, Inc.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which a payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i)
Investments in U.S. Government Obligations maturing within 90 days of the date
of acquisition thereof, (ii) Investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 90 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America or any state thereof having capital,
surplus and undivided profits aggregating in excess of $500,000,000 and whose
long-term debt is rated "A-3" or higher, "A-" or higher or "A-" or higher
according to Moody's, S&P or Duff & Phelps Credit Rating Co. (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)), respectively,
(iii) repurchase obligations with a term of not more than 7 days for underlying
securities of the types described in clause (i) entered into with a bank meeting
the
<PAGE> 28
22
qualifications described in clause (ii) above, and (iv) Investments in
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than the Company or an Affiliate of the Company)
organized and in existence under the laws of the United States of America with a
rating at the time as of which any Investment therein is made of "P-1" (or
higher) according to Moody's, "A-1" (or higher) according to S&P or "A-1" (or
higher) according to Duff & Phelps Credit Rating Co. (or such similar equivalent
rating by at least one "nationally recognized statistical rating organization"
(as defined in Rule 436 under the Securities Act)).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "TIA" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939, as so amended.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company which at the time of determination shall be an Unrestricted Subsidiary
(as designated by the Board of Directors) and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary (unless such Subsidiary owns any Capital Stock of or
owns or holds any Lien on any Property of the Company or any other Subsidiary of
the Company which is not a Subsidiary of the Subsidiary to be so designated);
provided that either (A) the Subsidiary to be so designated has total assets of
$1,000 or less or (B) such designation is effective immediately upon such entity
becoming a Subsidiary of the Company. Subject to clause (ii) above, the Board of
Directors may redesignate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that immediately after giving pro forma effect to such
redesignation, the Company would be able to incur at least $1.00 of additional
Indebtedness pursuant to Section 4.04(a).
Any such designation by the Board of Directors will be
evidenced to the Trustee by filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying (i) that
<PAGE> 29
23
such designation complies with the foregoing provisions and (ii) giving the
effective date of such designation, such filing with the Trustee to occur within
75 days after the end of the fiscal quarter of the Company in which such
designation is made (or, in the case of a designation made during the last
fiscal quarter of the Company's fiscal year, within 120 days after the end of
such fiscal year).
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" means securities of any class or classes of a
Person, the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for corporate directors (or Persons performing equivalent
functions).
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the
Company all the Capital Stock of which (other than directors' qualifying shares)
is owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction"........................................................................... 4.06(a)
"Bankruptcy Law".................................................................................. 6.01
"Change of Control Offer"......................................................................... 4.07(a)
"Change of Control Payment"....................................................................... 4.07(a)
"Change of Control Payment Date".................................................................. 4.07(b)
"Claiming Guarantor"............................................................................. 10.08
"Contributing Guarantor"......................................................................... 10.08
"covenent defeasance option"..................................................................... 8.01(b)
"Custodian"....................................................................................... 6.01
"Defaulted Interest"............................................................................. 2.11
"Depositary"..................................................................................... 2.02
"Events of Dafault"............................................................................... 6.01
"Excess Proceeds"................................................................................ 4.12
"Global Security"................................................................................ 2.02
"incorporated provision.......................................................................... 11.01
"legal defeasance option"........................................................................ 8.01(b)
"Legal Holiday".................................................................................. 11.07
</TABLE>
<PAGE> 30
24
<TABLE>
<S> <C>
"Obligations".................................................................................... 10.01
"Paying Agent"................................................................................... 2.03
"Prepayment Offer"................................................................................ 4.12
"Prepayment Offer Notice"......................................................................... 4.12
"Purchase Date"................................................................................... 4.12
"Registrar"....................................................................................... 2.03
"Successor"....................................................................................... 5.01
"Suspended Covenants"............................................................................. 4.01
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee"
means the Trustee.
"obligor" on the indenture securities means the
Company and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the
context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
<PAGE> 31
25
(5) words in the singular include the plural and
words in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be the
greater of (i) the maximum liquidation value of such Preferred Stock or
(ii) the maximum mandatory redemption or mandatory repurchase price
with respect to such Preferred Stock.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. The Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). The Company shall furnish any such legend not
contained in Exhibit A to the Trustee in writing. Each Security shall be dated
the date of its authentication. The terms of the Securities set forth in Exhibit
A are part of the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
<PAGE> 32
26
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers authenticate Securities for original issue up to the aggregate
principal amount stated in the Securities in the form of one or more Global
Securities (herein defined as the "Global Security" or "Global Securities"),
which (i) shall represent, and shall be denominated in an amount equal to the
aggregate principal amount of, the outstanding Securities, (ii) shall be
registered in the name of the depositary (the "Depositary"), which shall
initially be The Depository Trust Company, for such Global Security or Global
Securities or its nominee, (iii) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction and (iv) shall bear a
legend substantially to the following effect: "Unless and until it is exchanged
in whole or in part for the individual Securities represented hereby, this
Global Security may not be transferred except as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
by a Depositary or any such nominee to a successor Depositary or a nominee of
successor Depositary." The aggregate principal amount of Securities outstanding
at any time may not exceed such amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Secur- ities and of their transfer and exchange.
The Company may have one or more coregistrars and one or more additional
<PAGE> 33
27
paying agents. The term "Paying Agent" includes any addi- tional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, coregistrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date
<PAGE> 34
28
as the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a coregistrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(1)
of the Uniform Commercial Code are met. When Securities are presented to the
Registrar or a coregistrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or coregistrar's
request. The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section.
Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or any
coregistrar may deem and treat the person in whose name a Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any coregistrar shall be
affected by notice to the contrary.
A Global Security may be transferred, in whole but not in part
and in the manner provided in this Section, only to a nominee of the Depositary
for such Global Security, or to the Depositary, or a successor Depositary for
such Global Security selected or approved by the Company, or to a nominee of
such successor Depositary.
If at any time the Depositary for the Global Security or
Global Securities notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or Global Securities or if at
any time the Depositary for the Global Security or Global Securities shall no
longer be eligible or in good standing under the Exchange Act, or other
applicable statute or regulation, the Company shall appoint a successor
Depositary with respect to
<PAGE> 35
29
such Global Security or Global Securities. If a successor Depositary for such
Global Security or Global Securities is not appointed by the Company within 90
days after the Company receives such notice or becomes aware of such
ineligibility, the Company will execute, and the Trustee, upon receipt of a
written order for the authentication and delivery of individual Securities in
exchange for such Global Security or Global Securities, will authenticate and
deliver individual Securities in definitive form in an aggregate principal
amount equal to the outstanding principal amount of the Global Security or
Global Securities in exchange for such Global Security or Global Securities.
The Company may at any time and in its sole discretion
determine that the Securities shall no longer be represented by such Global
Security or Global Securities. Also, if an Event of Default has occurred and is
continuing, the Securities shall no longer be represented by such Global
Security or Global Securities. In any such event the Company will execute, and
the Trustee, upon receipt of a written order for the authentication and delivery
of individual Securities in exchange in whole or in part for such Global
Security or Global Securities, will authenticate and deliver individual
Securities in definitive form in an aggregate principal amount equal to the
outstanding principal amount of such Global Security or Global Securities in
exchange for such Global Security or Global Securities.
In any exchange provided for in any of the preceding two
paragraphs, the Company will execute and the Trustee will authenticate and
deliver individual Securities in definitive registered form in authorized
denominations. Upon the exchange of a Global Security for individual Securities,
such Global Security shall be cancelled by the Trustee. Securities issued in
exchange for a Global Security pursuant to this Section shall be registered in
such names and in such authorized denominations as the Depositary for such
Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Securities to the persons in whose names such Securities are so registered.
None of the Company, the Trustee, any Paying Agent or the
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global
<PAGE> 36
30
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Depositary has advised the Company that, subject to the
above, it will take any action permitted to be taken by a Holder (including the
presentation of Securities for exchange as described above) only at the
direction of one or more participants to whose account interests in the Global
Security or Global Securities are credited and only in respect of such portion
of the aggregate principal amount of Securities as to which such participant or
participants has or have given such direction.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee or the Company. If required by
the Trustee or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from
any loss which any of them may suffer if a Security is replaced. The Company and
the Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancelation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or
<PAGE> 37
31
maturity date money sufficient to pay all principal and interest payable on that
date with respect to the Securities (or portions thereof) to be redeemed or
maturing, as the case may be, then on and after that date such Securities (or
portions thereof) cease to be outstanding and interest on them ceases to accrue.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction or consent or any
amendment, modification or other change to this Indenture, Securities owned by
the Company or by an Affiliate of the Company shall be disregarded and treated
as if they were not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent or any amendment, modification or other change to this Indenture,
only Securities which the Trustee knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith shall not be
disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to the Securities and that the pledgee is
not the Company or an Affiliate of the Company.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.10. Cancelation. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancelation.
<PAGE> 38
32
SECTION 2.11. Defaulted Interest. Any interest on any Security
which is payable, but is not punctually paid or duly provided for, on the dates
and in the manner provided in the Securities and this Indenture (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant record date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities are registered at
the close of business on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
special record date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such special record date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the special
record date therefor to be given to each Holder, not less than 10 days
prior to such special record date. Notice of the proposed payment of
such Defaulted Interest and the special record date therefor having
been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Securities are registered at the close of business on
such special record date.
(ii) The Company may make payment of any Defaulted Interest on
the Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
<PAGE> 39
33
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.11, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.12. Record Date. The Company may set a record date
for purposes of determining the identity of Securityholders entitled to vote or
to consent to any action by vote of consent authorized or permitted by Sections
6.04 and 6.05. Unless this Indenture provides otherwise, such record date shall
be the later of 30 days prior to the first solicitation of such consent or the
date of the most recent list of Holders furnished to the Trustee pursuant to
Section 2.05 prior to such solicitation.
SECTION 2.13. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360- day year of twelve 30-day
months. For disclosure purposes under the Interest Act (Canada), whenever in
this Indenture or the Securities interest at a specified rate is to be
calculated on the basis of a period less than a calendar year, the yearly rate
of interest to which such rate is equivalent is such rate multiplied by the
actual number of days in the relevant calendar year and divided by the number of
days in such period.
SECTION 2.14. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers and, if it does so, the Trustee shall use the
CUSIP numbers in notices of redemption or exchange as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP numbers printed in the notice or on the
Securities and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company will promptly notify the Trustee
of any change in the CUSIP numbers.
<PAGE> 40
34
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee, which record date shall be
not less than 15 days after the date of notice to the Trustee.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
<PAGE> 41
35
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemp-
tion price;
(5) if fewer than all the outstanding Securities
are to be redeemed, the identification and principal
amounts of the particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to
which the Securities called for redemption are being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
<PAGE> 42
36
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued inter- est (subject
to the right of Holders of record on the relevant record date to receive
interest due on the related interest payment date) on all Securities to be
redeemed on that date other than Securities or portions of Securities called for
redemption which have been delivered by the Company to the Trustee for
cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
SECTION 3.07. Redemption Pursuant to Gaming Laws. (a)
Notwithstanding the provisions of Sections 3.02 and 3.03 and any related
paragraphs of the Securities, if any Gaming Authority requires that a Holder or
beneficial owner of Securities must be licensed or found qualified or suitable
to hold or own the Securities, but that Person is not licensed or found
qualified or suitable within any time specified by such Gaming Authority, or
such Gaming Authority denies a license to or finds unqualified or unsuitable
such Person, the Company will have the right at its option to require such
Person to dispose of such Person's Securities within the time period prescribed
by the Company (or such other time period as may be prescribed by any Gaming
Authority, which time period shall be specified in a written notice from the
Company). If such Holder or beneficial owner, having been given the opportunity
by the Company to dispose of such Securities, fails to dispose of such
Securities within the prescribed time period, the Company shall have the right
to call for redemption such Securities by notice of redemption to such Person.1
[(b) On any redemption of Securities pursuant to
this Section 3.07, the Redemption Price shall be the lesser
- ---------------
(1) Note that the Description of Notes currently specifies a 30 day disposition
period. Either the Description of Notes or this provision should be modified so
that each is consistent with the other.
<PAGE> 43
37
of (i) the lowest closing sale price of the Securities on any trading day during
the 120-day period commencing on the date upon which the Company shall have
received notice from a Gaming Authority of such Holder's disqualification or
(ii) the price at which such Holder or beneficial owner acquired the Securities,
unless a different redemption price is required by such Gaming Authority, in
which event such required price shall be the Redemption Price. Each Holder and
beneficial owner, by accepting a Security, agrees to the provisions of this
Section 3.07 and any related paragraphs of the Securities of such series and
agrees to inform the Issuer upon request of the price at which such Holder or
beneficial owner acquired such Holder's or beneficial owner's Securities 2]
(c) Any redemption notice given by the Company under this
Section 3.07 shall state (i) that the Securities are being called for redemption
as a result of the Holder's or beneficial owner's status under the relevant
Gaming Laws, (ii) the Redemption Date, (iii) the Redemption Price and (iv) the
place or places where such Securities are to be surrendered for payment of the
Redemption Price.
ARTICLE IV
Covenants
SECTION 4.01. Certain Suspended Covenants. During any period
of time that (i) the Securities have Investment Grade Status and (ii) no Default
or Event of Default has occurred and is continuing under this Indenture with
respect to the Securities, the Company and its Restricted Subsidiaries will not
be subject to the provisions of Sections 4.04, 4.05 and 4.12 (collectively, the
"Suspended Covenants"). In the event that the Company and its Restricted
Subsidiaries are not subject to the Suspended Covenants with respect to the
Securities for any period of time as a result of the preceding sentence and,
subsequently, at least two of the three Rating Agencies withdraw their ratings
or assign the Securities a rating below the required Investment Grade Ratings,
then the Company and its Restricted Subsidiaries will thereafter again be
subject to the Suspended Covenants for the benefit
- ---------------
(2) [Nevada counsel should review. Also, consider whether this provision
should be included in Note.]
<PAGE> 44
38
of the Securities and compliance with the Suspended Covenants with respect to
Restricted Payments made after the time of such withdrawal or assignment will be
calculated in accordance with Section 4.05 as if such Section had been in effect
during the entire period of time from the Issue Date with respect to the Notes.
SECTION 4.02. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.03. SEC Reports. The Company shall file with the
Trustee and provide Securityholders, within 15 days after it files them with the
Commission, copies of its annual report and the information, documents and other
reports which the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may
not be required to remain subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall continue to file with the
Commission and provide the Trustee and Securityholders with the annual reports
and the information, documents and other reports which are specified in Sections
13 and 15(d) of the Exchange Act. The Company also shall comply with the other
provisions of TIA Section 314(a).
SECTION 4.04. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur any
Indebtedness unless no Event of Default has occurred and is continuing and
unless (after giving effect to (i) the Incurrence of such Indebtedness as if
such Indebtedness was Incurred at the beginning of the Reference Period and (if
applicable) the application of the net proceeds thereof to repay other
Indebtedness as if the application of such proceeds occurred at the beginning of
the Reference Period, (ii) the Incurrence and retirement of any other
Indebtedness since the first day of the Reference Period as if such
<PAGE> 45
39
Indebtedness was Incurred or retired at the beginning of the Reference Period
and (iii) the acquisition or disposition of any company or business by the
Company or any Restricted Subsidiary since the first day of the Reference Period
including any acquisition or disposition which will be consummated
contemporaneously with the Incurrence of such Indebtedness, as if such
acquisition or disposition occurred at the beginning of the Reference Period),
the Company's Consolidated Fixed Charge Coverage Ratio would exceed 2.0 to 1.
(b) Notwithstanding the foregoing limitation, the Company may
Incur the following Indebtedness: (i) Indebtedness evidenced by the Securities;
(ii) Indebtedness outstanding on the Issue Date; (iii) so long as no Event of
Default has occurred and is continuing, Indebtedness under the Credit Facility
in an aggregate amount outstanding at any time not to exceed $500 million, which
amount shall be permanently reduced by the amount of Net Proceeds used to repay
Indebtedness under the Credit Facility, and not subsequently reinvested in
Additional Assets or used to purchase Securities; (iv) Indebtedness of the
Company or a Restricted Subsidiary owing to and held by a Restricted Subsidiary
or the Company; provided, however, that any subsequent issuance or transfer of
any Capital Stock or other event that results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any subsequent transfer of any such
Indebtedness except to the Company or a Restricted Subsidiary shall be deemed in
each case to constitute the Incurrence of such Indebtedness by the issuer
thereof; (v) Indebtedness under Interest Rate Agreements entered into for the
purpose of limiting interest rate risks, provided that the obligations under
such agreements are related to payment obligations on Indebtedness otherwise
permitted by the terms of this covenant; (vi) Indebtedness under Currency
Exchange Protection Agreements, provided that such Currency Exchange Protection
Agreements were entered into for the purpose of limiting exchange rate risks in
connection with transactions entered into in the ordinary course of business;
(vii) Indebtedness in connection with one or more standby letters of credit,
performance bonds or completion guarantees issued in the ordinary course of
business or pursuant to self-insurance obligations and not in connection with
the borrowing of money or the obtaining of advances or credit; (viii)
Indebtedness outstanding under Permitted FF&E Financings which are either (x)
Non-Recourse Indebtedness of the Company and its Restricted Subsidiaries or (y)
limited
<PAGE> 46
40
in amount for each Gaming Facility owned or leased by the Company or any of its
Restricted Subsidiaries to the lesser of (1) the amount of FF&E used in such
Gaming Facility and financed by such Permitted FF&E Financing or (2) $10
million; (ix) so long as no Event of Default has occurred and is continuing,
Indebtedness of the Company not otherwise permitted to be Incurred pursuant to
the provisions of paragraph (a) above or this paragraph in an aggregate amount
Incurred not to exceed $25 million; or (x) Permitted Refinancing Indebtedness
Incurred in respect of Indebtedness outstanding pursuant to the provisions of
Section 4.04(a) or clauses (i), (ii), (iii), (viii) and this clause (x) of this
Section 4.04(b).
SECTION 4.05. Limitation on Restricted Payments. (a) The
Company shall not make, and shall not permit any Restricted Subsidiary to make,
any Restricted Payment if at the time of, and after giving effect to, such
proposed Restricted Payment, (a) a Default or an Event of Default shall have
occurred and be continuing, (b) the Company could not Incur at least $1.00 of
additional Indebtedness pursuant to Section 4.04(a) or (c) the aggregate amount
of such Restricted Payment and all other Restricted Payments made from and after
the date of this Indenture (the amount of any Restricted Payment, if made other
than in cash, to be based upon Fair Market Value) would exceed an amount equal
to the sum of (i) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the end of the most recent fiscal
quarter ended immediately prior to the date of this Indenture to the end of the
most recent fiscal quarter ended immediately prior to the date of such
Restricted Payment (or, in the case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); (ii) the aggregate Net Cash Proceeds
received by the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the end of the most recent fiscal quarter
ended immediately prior to the date of this Indenture (other than an issuance or
sale to a Subsidiary of the Company or an employee stock ownership plan or other
trust established by the Company or any of its Subsidiaries or pursuant to
clauses (iii) or (iv) of Section 4.05(b)); (iii) the amount by which
Indebtedness of the Company or any Guarantor is reduced on the Company's balance
sheet upon the conversion or exchange (other than an issuance or sale to a
Subsidiary of the Company or an employee stock ownership plan or other trust
established by the Company or any of its Subsidiaries) subsequent to the end of
the most recent fiscal quarter ended immediately prior to the date of this
<PAGE> 47
41
Indenture, of any Indebtedness of the Company or any Guarantor convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash or other property distributed by the Company or any
Restricted Subsidiary upon such conversion or exchange); (iv) the amount equal
to the net reduction in Investments resulting from (A) payments of dividends,
repayments of loans or advances or other transfers of assets to the Company or
any Guarantor or the satisfaction or reduction (other than by means of payments
by the Company or any Restricted Subsidiary) of obligations of other Persons
which have been Guaranteed by the Company or any Guarantor or (B) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries which
execute Guaranties, in each case such net reduction in Investments being (x)
valued as provided in the definition of "Investment" set forth in Section 1.01,
(y) in an amount not to exceed the aggregate amount of Investments previously
made by the Company or any Guarantor which were treated as a Restricted Payment,
and (z) included in this clause (iv) only to the extent not included in
Consolidated Net Income; (v) payments of dividends, repayments of loans or
advances or other transfers of assets to the Company or any Guarantor from the
Mirage Joint Venture to the extent such dividends, repayments, advances or other
transfers exceed $100 million; and (vi) $75 million.
(b) The provisions of the preceding paragraph shall not
prohibit: (i) the payment of any dividend within 60 days after the date of its
declaration if such dividend could have been paid on the date of its declaration
in compliance with such provisions; provided that at the time of payment of such
dividend no Default under any provision of this Indenture other than this
Section 4.05 shall have occurred and be continuing (or would result therefrom);
(ii) the redemption or repurchase of any Capital Stock or Indebtedness of the
Company (other than any Capital Stock or Indebtedness which is held or
beneficially owned by, or issued by, any member of the Boyd Family, the Company
or any Affiliate of the Company) (A) if the holder or beneficial owner of such
Capital Stock or Indebtedness is required to qualify under the Gaming Laws and
does not so qualify or (B) if necessary in the reasonable, good faith judgment
of the Board of Directors, as evidenced by a Board Resolution, to prevent the
loss or secure the reinstatement of any Gaming License which if lost or not
reinstated, as the case may be, would have a material adverse effect on the
business of the Company and its Subsidiaries, taken as a whole, or
<PAGE> 48
42
would restrict the ability of the Company or any of its Subsidiaries to conduct
business in any gaming jurisdiction; (iii) any purchase, redemption or other
acquisition or retirement of Capital Stock of the Company made by exchange for,
or out of the proceeds of the substantially concurrent sale of, Capital Stock
(other than Disqualified Stock) of the Company; (iv) any purchase, redemption or
other acquisition or retirement of the Indebtedness of any Person made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock (other than Disqualified Stock) of the Company; (v) any purchase,
redemption, defeasance or other acquisition or retirement for value of
Indebtedness from the proceeds of Permitted Refinancing Indebtedness; (vi) any
purchase, redemption or other retirement of the CHFC Notes and the Boyd Notes;
(vii) Investments not to exceed $100 million in the Mirage Joint Venture; (viii)
Investment Guarantees to the extent permitted by Section 4.04 that constitute
Permitted Joint Venture Investments and Guarantee (with full rights of
subrogation) Indebtedness Incurred by a Permitted Joint Venture to acquire or
construct Gaming Facilities provided that such Indebtedness (A) is not expressly
subordinated in right of payment or otherwise to any other Indebtedness of such
Permitted Joint Venture and (B) is secured by first priority security interests
in such Gaming Facilities, and (ix) payments pursuant to Investment Guarantees
which were entered into in compliance with clause (viii) of this Section
4.05(b).
(c) The full amount of any Restricted Payments pursuant to
clauses (i) and (ii) of Section 4.05(b) (but not pursuant to clauses (iii),
(iv), (v), (vi) and (vii) of Section 4.05(b)) shall be included in the
calculation of the aggregate amount of the Restricted Payments referred to in
Section 4.05(a). With respect to any Investment Guarantee, (x) if at any time
the Company or any Restricted Subsidiary ceases to control the day-to-day
operations of the Permitted Joint Venture the Indebtedness of which is
Guaranteed by the Investment Guarantee, the full amount of such Investment
Guarantee shall thereafter be included in the calculation of the aggregate
amount of Restricted Payments referred to in Section 4.05(a) and (y) if the
Company or a Restricted Subsidiary retains such control, any amount actually
paid pursuant to such Investment Guarantee shall be included in the calculation
of the aggregate amount of Restricted Payments referred to in the next preceding
paragraph.
<PAGE> 49
43
SECTION 4.06. Limitation on Transactions with Affiliates. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, conduct any business or enter into or suffer to exist
any transaction or series of transactions (including the purchase, sale,
transfer, lease or exchange of any Property, the making of any Investment, the
giving of any Guarantee or the rendering or receiving of any service) with, from
or for the benefit of, (1) any Affiliate, (2) any Related Person or (3) any
officer or director of any Affiliate or a Related Person (an "Affiliate
Transaction") unless (i) the terms of such Affiliate Transaction are (a) in
writing, (b) in the best interest of the Company or such Restricted Subsidiary,
as the case may be, and (c) at least as favorable to the Company or such
Restricted Subsidiary, as the case may be, as those that could be obtained at
the time of such Affiliate Transaction in a similar transaction in arm's-length
dealings with a Person who is not such an Affiliate, Related Person or officer
or director of an Affiliate or Related Person, (ii) with respect to each
Affiliate Transaction involving aggregate payments to either party in excess of
$5 million, the Company delivers to the Trustee an Officers' Certificate
certifying that such Affiliate Transaction was approved by a majority of the
disinterested members of the Board of Directors and that such Affiliate
Transaction complies with clause (i), and (iii) with respect to each Affiliate
Transaction involving aggregate payments in excess of $10 million, the Company
delivers to the Trustee an opinion letter from an Independent Advisor to the
effect that such Affiliate Transaction is fair, from a financial point of view.
(b) Notwithstanding the limitation of Section 4.06(a), the
Company may enter into or suffer to exist the following: (i) any transaction
pursuant to any contract in existence on the Issue Date; (ii) any Restricted
Payment permitted to be made pursuant to Section 4.05; (iii) any transaction or
series of transactions between the Company and one or more of its Restricted
Subsidiaries or between two or more of its Restricted Subsidiaries; and (iv) the
payment of compensation (including amounts paid pursuant to employee benefit
plans) for the personal services of officers, directors and employees of the
Company or any of its Restricted Subsidiaries, so long as the Board of Directors
in good faith shall have approved the terms thereof and deemed the services
theretofore or thereafter to be performed for such compensation or fees to be
fair consideration therefor.
<PAGE> 50
44
SECTION 4.07. Change of Control. (a) Upon the occurrence of
(i) a Change of Control or, (ii) in the event the Securities at the earlier of
the public announcement of (x) a Change of Control or (y) (if applicable) the
intention of the Company to effect a Change of Control have Investment Grade
Status, a Change of Control Triggering Event, each Holder shall have the right
to require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Securities pursuant to the offer
described below (the "Change of Control Offer") at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the purchase date (the "Change of Control Payment").
(b) Within 30 days following (i) any Change of Control or,
(ii) in the event the Securities at the earlier of the public announcement of
(x) a Change of Control or (y) (if applicable) the intention of the Company to
effect a Change of Control have Investment Grade Status, a Change of Control
Triggering Event, the Company shall mail a notice to each Holder stating, among
other things: (1) that a Change of Control or Change of Control Triggering
Event, as the case may be, has occurred and a Change of Control Offer is being
made pursuant to this Section 4.07 and that all Securities (or portions thereof)
timely tendered will be accepted for payment; (2) the purchase price and the
purchase date, which shall be, subject to any contrary requirements of
applicable law, no earlier than 30 days nor later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date"); (3) that any Note
(or portion thereof) accepted for payment (and for which payment has been duly
provided on the Change of Control Payment Date) pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date; (4) that any Securities (or portions thereof) not tendered will continue
to accrue interest; (5) a description of the transaction or transactions
constituting the Change of Control or Change of Control Triggering Event, as the
case may be; and (6) the procedures that Holders must follow in order to tender
their Securities (or portions thereof) for payment and the procedures that
Holders must follow in order to withdraw an election to tender Securities (or
portions thereof) for payment.
(c) Not later than the date upon which written notice required
by Section 4.07(b) is delivered to the Trustee, the Company shall irrevocably
deposit with the Trustee or with a paying agent (or, if the Company is acting
<PAGE> 51
45
as its own paying agent, segregate and hold in trust) in Temporary Cash
Investments an amount equal to the purchase price plus accrued and unpaid
interest, if any, to the Holders entitled thereto, to be held for payment in
accordance with the provisions of this Section 4.07. Holders electing to have a
Security purchased will be required to surrender the Security, with an
appropriate form duly completed, to the Company at the address specified in the
notice at least five Business Days prior to the purchase date. Holders will be
entitled to withdraw their election if the Trustee or the Company receives not
later than three Business Days prior to the purchase date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security which was delivered for purchase by the Holder,
the certificate number of such Security and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, the Company shall deliver to the
Trustee the Securities or portions thereof which have been properly tendered to
and are to be accepted by the Company. The Trustee shall, on the purchase date,
mail or deliver payment of the purchase price to each tendering Holder. In the
event that the aggregate purchase price of the Securities delivered by the
Company to the Trustee is less than the amount deposited with the Trustee, the
Trustee shall deliver the excess to the Company immediately after the end of the
payment date.
(e) The Company will comply, to the extent applicable, with
the requirements of Rule 14e-1 under the Exchange Act, and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the purchase of Securities in connection with a
Change of Control or Change of Control Triggering Event, as the case may be. To
the extent that the provisions of any securities laws or regulations conflict
with the provisions relating to the Change of Control Offer, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under Section 4.07 by virtue thereof.
SECTION 4.08. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they
<PAGE> 52
46
would normally have knowledge of any Default and whether or not the signers know
of any Default that occurred during such period. If they do, the certificate
shall describe the Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with TIA
Section 314(a)(4).
SECTION 4.09. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.10. Limitation on Liens. The Company shall not, and
shall not permit any Guarantor or Par-A-Dice and EPH to, directly or indirectly,
Incur or suffer to exist, any Lien upon any of its Property, whether now owned
or hereafter acquired, or any interest therein or any income or profits
therefrom, unless it has made or will make effective provision whereby the
Securities will be secured by such Lien equally and ratably with (or prior to)
all other Indebtedness of the Company or any Guarantor, Par-A-Dice or EPH
secured by such Lien except for: (i) Permitted Liens; (ii) Liens on assets
financed through Permitted FF&E Financings securing Indebtedness permitted under
clause (viii) of Section 4.04(b); (iii) Liens on the Property of the Company or
any Guarantor, Par-A-Dice or EPH existing on the date of this Indenture; (iv)
Liens securing Indebtedness Incurred pursuant to the Credit Facility; (v) Liens
in favor of the Company or a Guarantor; (vi) Liens on the Property of a Person
(except for Par-A-Dice and EPH) at the time such Person becomes a Guarantor;
provided, however, that any such Lien may not extend to any other Property of
the Company or any Guarantor or [Boyd Illinois]; provided further, however, that
any such Lien was not Incurred in anticipation of or in connection with the
transaction or series of related transactions pursuant to which such Person
became a Guarantor; or (vii) Liens to secure any refinancing, refunding,
extension, renewal or replacement (or successive refinancings, refundings,
extensions, renewals or replacements) as a whole or in part of any Indebtedness
secured by any Lien referred to in the foregoing clauses (ii), (iii), (vi) and
(vii); provided, however, that (x) such new Lien shall be limited to all or part
of the same Property subject to the original Lien (plus improvements on such
Property) and (y) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the outstanding principal
<PAGE> 53
47
amount or, if greater, committed amount of the Indebtedness described under
clauses (ii), (iii), (vi) or (vii) and (B) an amount necessary to pay any fees
and expenses, including premiums, related to such refinancing, refunding,
extension, renewal or replacement.
SECTION 4.11. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. The Company shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to (a)(i) pay dividends
or make any other distributions to the Company or any other Restricted
Subsidiary (A) on its Capital Stock or (B) with respect to any other interest or
participation in, or measured by, its profits, or (ii) pay any indebtedness owed
to the Company or any other Restricted Subsidiary or (b) make loans or advances
to the Company or any other Restricted Subsidiary or (c) transfer any of its
Property to the Company or any other Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) agreements in
effect on the Issue Date; (ii) applicable law; (iii) customary nonassignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices; (iv) Permitted Refinancing Indebtedness;
provided, however, that the restrictions contained in the agreements governing
such Permitted Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being refinanced; or (v)
agreements in existence with respect to a Restricted Subsidiary at the time it
is so designated; provided, however, that such agreements are not entered into
in anticipation or contemplation of such designation. Nothing contained in this
covenant shall prevent the Company or any Restricted Subsidiary from granting
any Lien permitted by Section 4.10.
SECTION 4.12. Limitation on Asset Sales; Event of Loss. (a)
Other than upon an Event of Loss, the Company shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale
after the Issue Date, where the Property subject to such Asset Sale has an
aggregate Fair Market Value equal to or in excess of $10 million, unless: (i)
the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the Property subject to such Asset Sale; (ii) at least 75% of such
consideration consists
<PAGE> 54
48
of cash or Temporary Cash Investments; provided, however, that for purposes of
this clause (ii), (x) the assumption of Indebtedness of the Company or a
Restricted Subsidiary which is not subordinated to the Securities or any
Guarantee shall be deemed to be Temporary Cash Investments if the Company, such
Restricted Subsidiary, and all other Restricted 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, (y) any securities or notes received
by the Company or such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash or Temporary
Cash Investments within 10 business days of the date of such Asset Sale shall be
deemed to be Temporary Cash Investments and (z) the Company and its Restricted
Subsidiaries may receive consideration in the form of securities exceeding 25%
of the consideration for one or more Asset Sales so long as the Company and its
Restricted Subsidiaries do not hold such securities having an aggregate Fair
Market Value in excess of $50 million at any time outstanding; (iii) 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
(iv) the Board of Directors determines in good faith that such Asset Sale
complies with clauses (i) and (ii).
(b) Upon an Event of Loss incurred by the Company or any of
its Restricted Subsidiaries, the Net Proceeds received from such Event of Loss
shall be applied in the same manner as proceeds from Asset Sales described in
Section 4.12(a) and pursuant to the procedures set forth in this Section 4.12.
(c) Within 270 days after the receipt of the Net Proceeds of
an Asset Sale or Event of Loss, an amount equal to 100% of the Net Proceeds from
such Asset Sale or Event of Loss may be applied by the Company or a Restricted
Subsidiary (A) to permanently repay, redeem or repurchase Indebtedness of the
Company or Indebtedness of any Restricted Subsidiary or (B) to reinvest in
Additional Assets (including by means of an Investment in Additional Assets by a
Restricted Subsidiary with Net Proceeds received by the Company or another
Restricted Subsidiary); provided, however, that if the Company or any Restricted
Subsidiary contractually commits within such 270-day period to apply such Net
Proceeds within 180 days of such contractual
<PAGE> 55
49
commitment in accordance with the above clauses (A) or (B), and such Net
Proceeds are subsequently applied as contemplated in such contractual
commitment, then the requirement for application of Net Proceeds set forth in
this Section 4.12(c) shall be considered satisfied.
(d) Any Net Proceeds from an Asset Sale or Event of Loss that
are not used in accordance with Section 4.12(c) shall constitute "Excess
Proceeds". When the aggregate amount of Excess Proceeds exceeds $20 million
(taking into account income earned on such Excess Proceeds), the Company shall
make an offer to purchase (the "Prepayment Offer"), on a pro rata basis, from
all Holders of the Securities, an aggregate principal amount of Securities equal
to the Excess Proceeds, at a price in cash at least equal to 100% of the
principal amount thereof, plus accrued and unpaid interest, in accordance with
Section 4.12(e) summarized herein and set forth in this Indenture. To the extent
that any portion of the Excess Proceeds remains after compliance with the
preceding sentence and provided that all Holders have been given the opportunity
to tender the Securities for repurchase in accordance with Section 4.12(e), the
Company or such Restricted Subsidiary may use such remaining amount for general
corporate purposes and the amount of Excess Proceeds shall be reset to zero.
Pending application of Net Proceeds pursuant to clause (A) and (B) of Section
4.12(c), such Net Proceeds will be invested in Temporary Cash Investments.
(e) Within 10 Business Days after the amount of Excess
Proceeds exceeds $20 million, the Company shall send a written notice, by
first-class mail, to the Holders (the "Prepayment Offer Notice"), accompanied by
such information regarding the Company and its Subsidiaries as the Company in
good faith believes will enable such Holders to make an informed decision with
respect to the Prepayment Offer. The Prepayment Offer Notice will state, among
other things, (i) that the Company is offering to purchase Securities pursuant
to Section 4.12, (ii) that any Security (or any portion thereof) accepted for
payment (and for which payment has been duly provided on the Purchase Date)
pursuant to the Prepayment Offer shall cease to accrue interest after the
Purchase Date, (iii) the purchase price and purchase date, which shall be,
subject to any contrary requirements of applicable law, no less than 30 days nor
more than 60 days from the date the Prepayment Offer Notice is mailed (the
"Purchase Date"), (iv) the aggregate principal amount of Securities (or portions
thereof) to be purchased and (v) a
<PAGE> 56
50
description of the procedure which Holders must follow in order to tender their
Securities (or portions thereof) and the procedures that Holders must follow in
order to withdraw an election to tender their Securities (or portions thereof)
for payment.
(f) Not later than the date upon which written notice required
by Section 4.12(e) is delivered to the Trustee, the Company shall irrevocably
deposit with the Trustee or with a paying agent (or, if the Company is acting as
its own paying agent, segregate and hold in trust) in Temporary Cash Investments
an amount equal to the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto, to be held for payment in accordance with the
provisions of this Section. Holders electing to have a Security purchased will
be required to surrender the Security, with an appropriate form duly completed,
to the Company at the address specified in the notice at least five Business
Days prior to the purchase date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than three Business
Days prior to the purchase date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Security which was delivered for purchase by the Holder, the certificate number
of such Security and a statement that such Holder is withdrawing his election to
have such Security purchased.
(g) On the purchase date, the Company shall deliver to the
Trustee the Securities or portions thereof which have been properly tendered to
and are to be accepted by the Company. The Trustee shall, on the purchase date,
mail or deliver payment of the purchase price to each tendering Holder. In the
event that the aggregate purchase price of the Securities delivered by the
Company to the Trustee is less than the amount deposited with the Trustee, the
Trustee shall deliver the excess to the Company immediately after the end of the
payment date.
(h) The Company will comply, to the extent applicable, with
the requirements of Rule 14e-1 under the Exchange Act, and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the purchase of Securities required by this
Section. To the extent that the provisions of any securities laws or regulations
conflict with the provisions relating to the Prepayment Offer, the Company will
comply with the applicable securities laws and
<PAGE> 57
51
regulations and will not be deemed to have breached its obligations under
Section 4.12 by virtue thereof.
SECTION 4.13. Guaranty by Par-A-Dice and EPH. The Company
shall use all reasonable efforts, and shall cause Par-A-Dice and EPH to use all
reasonable efforts, to obtain all necessary approvals of Gaming Authorities in
the State of Illinois for Par-A-Dice and EPH to execute a supplemental
indenture, in the form prescribed by this Indenture and containing its Guaranty,
in favor of the Holders at the consummation of the Par-A-Dice Acquisition or as
soon thereafter as possible. Regardless of whether such approval is obtained, at
all times following consummation of the Par-A-Dice Acquisition, Par-A-Dice and
EPH [shall be designated as Restricted Subsidiaries and] will be subject to all
of the covenants applicable to a Guarantor under this Indenture.
SECTION 4.14. Maintenance of Properties and Other Matters. (a)
The Company shall, and shall cause each of its Subsidiaries to, maintain its
Properties in good working order and condition and make all necessary repairs,
renewals and replacements; provided, however, that nothing in this provision
shall prevent the Company or any of its Subsidiaries from discontinuing the
operation and maintenance of any of its Properties, if such discontinuance is,
in the judgment of the Company, both desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and not disadvantageous in
any material respect to the Holders.
(b) The Company shall, and shall cause each of its
Subsidiaries to, insure and keep insured, with financially sound and reputable
insurers, so much of their respective Properties and in such amounts as is
usually and customarily insured by Persons engaged in a similar business with
respect to Properties of a similar character against loss by fire [and the
extended coverage perils]. None of the Company or any of its Subsidiaries shall
maintain a system of self-insurance in lieu of or in combination with the
foregoing insurance with respect to its Properties; provided that deductibles
under the insurance policy or policies of the Company and its Subsidiaries shall
not be considered to be self-insurance as long as such deductibles accord with
financially sound and approved practices of Persons owning or operating
Properties of a similar character and maintaining similar insurance coverage.
<PAGE> 58
52
(c) The Company shall, and shall cause each of its
Subsidiaries to, keep proper books and records of accounts in which full and
correct entries will be made of all its business transactions in accordance with
GAAP. The Company shall cause the books and records of accounts of the Company
and its Subsidiaries to be examined, either on a consolidated or on an
individual basis, by one or more firms of independent public accountants not
less frequently than annually. The Company shall, and shall cause each of its
Subsidiaries to, prepare its financial statements in accordance with GAAP.
(d) The Company shall, and shall cause each of its
Subsidiaries to, comply with all Legal Requirements and to obtain any licenses,
permits, franchises or other authorizations, including Gaming Licenses, from
Governmental Authorities necessary to the ownership or operation of its
Properties or to the conduct of its business.
(e) Notwithstanding the provisions of Section 4.14(a), (b),
(c) or (d), failure by the Company or any of its Subsidiaries to comply with
such provisions shall not be deemed to be a breach of such provisions to the
extent that such failure would not have a material adverse effect on the Company
and its Subsidiaries, taken as a whole.
SECTION 4.15. Limitation on Activities of the Company. The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
engage in (through acquisition or otherwise) any business other than a Related
Business.
SECTION 4.16. Limitation on Status as an Investment Company.
The Company shall not, and shall not permit any of its Subsidiaries to, become
an "investment company" (as that term is defined in the Investment Company Act
of 1940), to the extent such status would subject the Company or any such
Subsidiary to regulation under the Investment Company Act, except for
Subsidiaries established for the purpose of financing the operating businesses
of the Company and its Subsidiaries.
<PAGE> 59
53
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets.
Neither the Company nor any Guarantor shall merge or consolidate with or into
any other entity (other than a merger or consolidation of a Guarantor with or
into the Company or another Guarantor, and other than a merger or consolidation
of a Guarantor where the surviving entity is not the Company or a Subsidiary of
the Company) or in one transaction or a series of related transactions sell,
convey, assign, transfer, lease or otherwise dispose of all or substantially all
of its Property unless: (i) the entity formed by or surviving any such
consolidation or merger (if the Company or such Guarantor is not the surviving
entity) or the Person to which such sale, assignment, transfer, lease or
conveyance is made (the "Successor") (a) shall be a corporation organized and
existing under the laws of the United States of America or a State thereof or
the District of Columbia and such corporation expressly assumes, by supplemental
indenture satisfactory to the Trustee, executed and delivered to the Trustee by
such corporation, the due and punctual payment of the principal, premium, if
any, and interest on all the Securities, according to their tenor, and the due
and punctual performance and observance of all the covenants and conditions of
this Indenture to be performed by the Company or such Guarantor, as the case may
be, and (b) the Successor shall have all Gaming Licenses required to operate all
Gaming Facilities to be owned by such Successor; (ii) in the case of a sale,
transfer, assignment, lease, conveyance or other disposition of all or
substantially all of the Company's Property or of such Guarantor's Property,
such Property shall have been transferred as an entirety or virtually as an
entirety to one Person; (iii) immediately before and after giving effect to such
transaction or series of transactions on a pro forma basis, no Default or Event
of Default shall have occurred and be continuing; (iv) immediately after giving
effect to such transaction or series of transactions on a pro forma basis
(including, without limitation, any Indebtedness Incurred or anticipated to be
Incurred in connection with such transaction or series of transactions), the
Company or the Successor, as the case may be, would be able to Incur at least
$1.00 of additional Indebtedness under Section 4.04(a); and (v) immediately
after giving effect to such transaction or series of transactions on a pro forma
basis including, without limitation, any Indebtedness
<PAGE> 60
54
Incurred or anticipated to be Incurred in connection with such transaction or
series of transactions), the Company or the Successor shall have a Consolidated
Net Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to the transaction or series of transactions.
The Successor shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Securities.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. The following
events shall be "Events of Default":
(i) default with respect to payment of interest on any of the
Securities when it becomes due and payable, and the continuance of such
default for a period of 30 days;
(ii) default with respect to payment of principal or premium, if
any, on any of the Securities when due at maturity, upon acceleration,
required purchase or otherwise;
(iii) failure by the Company or any Guarantor to
observe, perform or comply with Article V herein;
(iv) failure by the Company or the Guarantors to observe,
perform or comply with any of the other covenants and agreements in
this Indenture and such failure to observe, perform or comply continues
for a period of 30 days after receipt by the Company of a written
notice from the Trustee or Holders of not less than 25% of aggregate
principal amount of the Securities than outstanding;
(v) Indebtedness of the Company or any Restricted
Subsidiary is not paid when due within any applicable
grace period or is accelerated by the holders thereof
<PAGE> 61
55
and, in either case, the total amount of such unpaid or
accelerated Indebtedness exceeds $10 million;
(vi) the entry by a court of competent jurisdiction of one or
more judgments or orders against the Company or any Restricted
Subsidiary in an uninsured aggregate amount in excess of $10 million
and such judgment or order is not discharged, waived, stayed or
satisfied for a period of 60 consecutive days;
(vii) the Company or any Restricted Subsidiary
pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for
relief against it in an involuntary case;
(C) consents to the appointment of a Custo-
dian of it or for any substantial part of its
property;
(D) makes a general assignment for the bene-
fit of its creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or
any Restricted Subsidiary or for any substantial
part of its property; or
(C) orders the winding up or liquidation of
the Company or any Restricted Subsidiary;
or any similar relief is granted under any foreign laws
and the order or decree remains unstayed and in effect
for 60 days;
(ix) any revocation, suspension or loss of any
Gaming License which results in the cessation of
<PAGE> 62
56
business for a period of more than 90 consecutive days of the business
of any Gaming Facility owned, leased or operated directly or indirectly
by the Company or any of its Subsidiaries (other than any voluntary
relinquishment of a Gaming License if such relinquishment is, in the
reasonable, good faith judgment of the Board of Directors, evidenced by
a Board Resolution, both desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and not
disadvantageous in any material respect to the Holders); or
(x) any Guaranty ceases to be in full force and effect (other
than pursuant to the terms of this Indenture) or is declared null and
void or any Guarantor denies that it has any further liability under
its Guaranty or gives notice to such effect.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (iv), (v), (vi) or (ix) is not an Event
of Default until the Trustee or the Holders of at least 25% in principal amount
of the Securities notify the Company of the Default and the Company does not
cure such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default with
respect to the Securities (other than an Event
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57
of Default resulting from Section 6.01(vii) or (viii)) shall have occurred and
be continuing, the Trustee or the registered holders of not less than 25% in
aggregate principal amount of the Securities then outstanding may accelerate the
maturity of all the Securities in which event the Securities shall become
immediately due and payable; provided, however, that after such acceleration but
before a judgment or decree based on acceleration is obtained by the Trustee,
the registered holders of a majority in aggregate principal amount of the
Securities then outstanding, may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the nonpayment of
accelerated principal, have been cured or waived as provided in this Indenture.
In case an Event of Default resulting from Section 6.01(vii) or (viii) shall
occur, the Securities shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the Holders.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceed-
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58
ing for any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the Trustee determines is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any action
hereunder, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
SECTION 6.06. Limitation on Suits. No Holder will have any
right to institute any proceeding with respect to this Indenture or for any
remedy thereunder, unless: (i) such Holder shall have previously given to the
Trustee written notice of a continuing Event of Default; (ii) Holders of at
least 25% in aggregate principal amount of the Securities then outstanding shall
have made written request and offered reasonable indemnity to the Trustee to
institute such proceeding as a trustee; and (iii) the Trustee shall not have
received from the Holders of a majority in aggregate principal amount of the
Securities then outstanding a direction inconsistent with such request and shall
have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a Holder for enforcement of
payment of the principal of and premium, if any, or interest on such Security on
or after the respective due dates expressed in such Security.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or principal speci-
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59
fied in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal and interest remaining unpaid (together with
interest on such unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee col-
lects any money or property pursuant to this Article VI, it
shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Sec-
tion 7.07;
SECOND: to Securityholders for amounts due and
unpaid on the Securities for principal and interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securi-
ties for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
<PAGE> 66
60
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully refrain from doing so) shall not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and shall not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default: (1)
the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and (2) in the absence of
bad faith on its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
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61
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that: (1) this paragraph does not limit the effect of paragraph (b) of
this Section; (2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
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(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any
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63
Security (including payments pursuant to the mandatory redemption provisions of
such Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each beginning with the following the date
of this Indenture, and in any event prior to in each year, the Trustee
shall mail to each Securityholder a brief report dated as of that
complies with TIA Section 313(a). The Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Commission and each stock exchange (if
any) on which the Securities are listed. The Company agrees to notify promptly
the Trustee whenever the Securities become listed on any stock exchange and of
any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee may have separate counsel and the Company shall pay the
fees and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct, negligence or bad faith.
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To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on Securities under Article VIII or otherwise.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(vii) or (viii) with
respect to the Company, the expenses are intended to constitute expenses of
administration under Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of
acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held
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65
by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 25% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. No obligor upon the Securities
or Person directly controlling,
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controlled by, or under common control with such obligor shall serve as Trustee
upon the Securities. The Trustee shall comply with TIA Section 310(b); provided,
however, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article III hereof, and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon (other than Securities replaced pursuant
to Section 2.07), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Sections 8.01(c)
and 8.06, cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company at
any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.01, 4.03 (to the extent that the failure to comply with such Section 4.03
shall not violate the TIA), 4.04, 4.05, 4.06, 4.07, 4.10, 4.11, 4.12, 4.13,
4.14, 4.15 and Article V and the related operation of Section 6.01(iii)
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and (iv), and the operation of Sections 6.01 (v), (vi) (with respect to
Restricted Subsidiaries), (vii) (with respect to Restricted Subsidiaries),
(viii), (ix) or (x) ("covenant defeasance option"). The Company may exercise its
legal defeasance option notwithstanding its prior exercise of its covenant
defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section
6.01(iii), (iv), (v), (vi), (vii) (with respect to Restricted Subsidiaries),
(viii) (with respect to Restricted Subsidiaries), (ix) or (x) (except to the
extent covenants or agreements referenced in such Sections remain applicable).
If the Company exercised its legal defeasance option or its covenant defeasance
option, each Guarantor shall be released from all its obligations under its
Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations for
the payment of principal and interest on the Securities
to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will
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provide cash at such times and in such amounts as will be sufficient to
pay principal and interest when due on all the Securities to maturity
or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(vii) or (viii) with
respect to the Company occurs which is continuing at the end of the
period;
(4) no Default has occurred and is continuing on
the date of such deposit and after giving effect
thereto;
(5) the deposit does not constitute a default
under any other agreement binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(7) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from the Internal Revenue Service a
ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm
that, the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance
had not occurred;
(8) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Security- holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
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69
(9) the Company delivers to the Trustee an Offi- cers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article VIII have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obliga- tions. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee
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or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add additional Guarantees with respect to
the Securities, including Guaranties;
(5) to release a Guarantor from its Guaranty if
such Guarantor is sold in compliance with the
provisions set forth in Section 10.06;
(6) to secure the Securities;
(7) to add to the covenants of the Company or any Guarantor
for the benefit of the Holders or to surrender any right or power
herein conferred upon the Company or any Guarantor;
(8) to comply with any requirements of the
Commission in connection with qualifying this Indenture
under the TIA; or
(9) to make any change that does not adversely
affect the rights of any Securityholder.
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After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company, the
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities. However, without the
consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders
must consent to an amendment;
(2) reduce the rate of or extend the time for
payment of interest on any Security;
(3) reduce the principal of or extend the Stated
Maturity of any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article III;
(5) make any Security payable in money other than
that stated in the Security;
(6) impair the right of any Holder to receive payment of
principal of and interest on such Holder's Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment
on or with respect to such Holder's Notes;
(7) subordinate in right of payment, or otherwise
subordinate, the Notes to any other obligation of the
Company or any Guarantor;
(8) release any security interest in favor of the
Notes or Guaranties;
(9) make any change in any Guaranty that would
adversely affect the Holders; or
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(10) make any change in Section 6.04 or 6.07 or the
second sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
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SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In sign- ing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such (i) amendment is authorized or permitted by this Indenture and
that all conditions precedent to the execution, delivery and performance of such
amendment have been satisfied; (ii) the Company has all necessary corporate
power and authority to execute and deliver the amendment and that the execution,
delivery and performance of such amendment has been duly authorized by all
necessary corporate action; (iii) the execution, delivery and performance of the
amendment do not conflict with, or result in the breach of or constitute a
default under any of the terms, conditions or provisions of (a) this Indenture,
(b) the Certificate of Incorporation or By-Laws of the Company, (c) any law or
regulation applicable to the Company, (d) any material order, writ, injunction
or decree of any court or governmental instrumentality applicable to the Company
or (e) any material agreement or instrument to which the Company is subject;
(iv) such amendment has been duly and validly executed and delivered by the
Company, and this Indenture together with such amendment constitutes a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles; and (v) this
Indenture together with such amendment complies with the TIA.
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SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Subsidiary Guaranties
SECTION 10.01. Guaranties. Each Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture and the Securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture and the Securities (all
the foregoing being hereinafter collectively called the "Obligations"). Each
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Guarantor and that
such Guarantor will remain bound under this Article X notwithstanding any
extension or renewal of any Obligation.
Each Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Guarantor waives notice of any default under the
Securities or the Obligations. The obligations of each Guarantor hereunder shall
not be affected by (a) the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any right or remedy against the Company or any
other Person under this Indenture, the Securities or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the
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Trustee for the Obligations or any of them; (e) the failure of any Holder or the
Trustee to exercise any right or remedy against any other guarantor of the
Obligations; or (f) any change in the ownership of such Guarantor.
Each Guarantor further agrees that its Guaranty herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the
Obligations.
Except as expressly set forth in Sections 8.01(b), 11.02 and
11.06, the obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Securities or
any other agreement, by any waiver or modification of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
obligations, or by 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
such Guarantor or would otherwise operate as a discharge of such Guarantor as a
matter of law or equity.
Each Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Obligation when and as the same shall become due, whether
at maturity, by acceleration,
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by redemption or otherwise, or to perform or comply with any other Obligation,
each Subsidiary Guarantor hereby promises to and will, upon receipt of written
demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders or the Trustee an amount equal to the sum of (i) the unpaid amount of
such Obligations, (ii) accrued and unpaid interest on such Obligations (but only
to the extent not prohibited by law) and (iii) all other monetary Obligations of
the Company to the Holders and the Trustee.
Each Guarantor agrees that, as between it, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations Guaranteed hereby may be accelerated as provided in Article VI for
the purposes of such Guarantor's Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article VI, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Guarantor for the purposes of this Section.
Each and all costs and expenses (including reasonable
attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights
under this Section.
SECTION 10.02. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate amount
of the obligations guaranteed hereunder by any Guarantor shall not exceed the
maximum amount that can be hereby guaranteed without rendering this Indenture,
as it relates to such Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
SECTION 10.03. Successors and Assigns. This Article X shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
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SECTION 10.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article X shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article X at
law, in equity, by statute or otherwise.
SECTION 10.05. Modification. No modification, amendment or
waiver of any provision of this Article X, nor the consent to any departure by
any Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Trustee, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice to or demand on any Guarantor in any case shall entitle such Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
SECTION 10.06. Release of Guarantors. 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 where the surviving entity to such consolidation or
merger is not a Subsidiary of the Company, in circumstances where such sale,
consolidation or merger is not prohibited under Section 4.12, such Guarantor
shall be deemed automatically and unconditionally released and discharged from
all obligations under its Guaranty and this Article X without any further action
required on the part of the Trustee or any Holder.
SECTION 10.07. Indemnity and Subrogation. In addition to all
such rights of indemnity and subrogation as the Guarantors may have under
applicable law (but subject to Section 10.09 ), the Company agrees that (a) in
the event a payment shall be made by any Guarantor under any Guaranty, the
Company shall indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be subrogated to the rights of the person to whom such
payment shall have been made to the extent of such payment.
<PAGE> 84
78
SECTION 10.08. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 10.09) that, in the event a
payment shall be made by any other Guarantor under any Guaranty and such other
Guarantor (the "Claiming Guarantor") shall not have been fully indemnified by
the Company as provided in Section 10.07, the Contributing Guarantor shall
indemnify the Claiming Guarantor in an amount equal to the amount of such
payment multiplied by a fraction, the numerator of which shall be the net worth
of the Contributing Guarantor on the date hereof and the denominator of which
shall be the aggregate net worth of all the Guarantors on the date hereof (or,
in the case of any Guarantor becoming a party hereto pursuant to Section 9.01,
the date of the amendment hereto executed and delivered by such Guarantor). Any
Contributing Guarantor making any payment to a Claiming Guarantor pursuant to
this Section 10.08 shall be subrogated to the rights of such Claiming Guarantor
under Section 10.07 to the extent of such payment.
SECTION 10.09. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors under Sections
10.07 and 10.08 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the payment obligations hereunder. No
failure on the part of the Company or any Guarantor to make the payments
required by Sections 10.07 and 10.08 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor with respect to any Guaranty, and each Guarantor
shall remain liable for the full amount of the obligations of such Guarantor
under each such Guaranty.
SECTION 10.10. Termination. Sections 10.07, 10.08 and 10.09
shall survive and be in full force and effect so long as any payment obligation
hereunder is outstanding and has not been indefeasibly paid in full in cash, and
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment obligation hereunder is rescinded or must otherwise be restored
by any Holder or any Guarantor upon the bankruptcy or reorganization of the
Company, any Guarantor or otherwise.
SECTION 10.11. No Waiver; Amendment. No failure on the part of
any Guarantor to exercise, and no delay in exercising, any right, power or
remedy hereunder shall
<PAGE> 85
79
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy by any Guarantor preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law. None of the Guarantors shall be deemed to have waived any
rights hereunder unless such waiver shall be in writing and signed by such
parties.
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of, Sections 310 to 318, inclusive, of
the TIA, such imposed duties or incorporated provision shall control.
SECTION 11.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Boyd Gaming Corporation
2950 South Industrial Road
Las Vegas, Nevada 89109
Attention of Office of the Secretary
if to any Guarantor:
In care of Boyd Gaming Corporation
295 South Industrial Road
Las Vegas, Nevada 89109
Attention of Corporate Secretary
if to the Trustee:
[ ]
<PAGE> 86
80
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Security- holder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
<PAGE> 87
81
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such
certificate or opinion has read such covenant or condi-
tion;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.06. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 11.07. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to be
open in the State of New York. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 11.08. GOVERNING LAW. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 11.09. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of
<PAGE> 88
82
the Company under the Securities or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Securities.
SECTION 11.10. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 11.11. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 11.12. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
SECTION 11.13. Severability. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
BOYD GAMING CORPORATION,
by
-----------------------------
Name:
Title:
<PAGE> 89
83
CALIFORNIA HOTEL AND CASINO,
by
------------------------------
Name:
Title:
BOYD TUNICA, INC.,
by
------------------------------
Name:
Title:
BOYD MISSISSIPPI, INC.,
by
------------------------------
Name:
Title:
BOYD KANSAS CITY, INC.,
by
------------------------------
Name:
Title:
BOYD KENNER, INC.,
by
------------------------------
Name:
Title:
<PAGE> 90
84
MARE-BEAR, INC.,
by
------------------------------
Name:
Title:
SAM-WILL, INC.,
by
------------------------------
Name:
Title:
ELDORADO, INC.,
by
------------------------------
Name:
Title:
MSW, INC.,
by
------------------------------
Name:
Title:
[TRUSTEE],
by
------------------------------
Name:
Title:
<PAGE> 91
EXHIBIT A
[FORM OF FACE OF SECURITY]
No. $
% Senior Note Due 2003
CUSIP No.
Boyd Gaming Corporation, a Nevada corporation, promises to pay to ,
or registered assigns, the principal sum of Dollars on , 2003.
Interest Payment Dates: and .
Record Dates: and .
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
BOYD GAMING CORPORATION,
by ______________________
Name:
Title:
[CORPORATE SEAL]
CALIFORNIA HOTEL AND CASINO,
by ______________________
Name:
Title:
BOYD TUNICA, INC.,
by ______________________
Name:
Title:
<PAGE> 92
2
BOYD MISSISSIPPI, INC.,
by ______________________
Name:
Title:
BOYD KANSAS CITY, INC.,
by ______________________
Name:
Title:
BOYD KENNER, INC.,
by ______________________
Name:
Title:
MARE-BEAR, INC.,
by ______________________
Name:
Title:
SAM-WILL, INC.,
by ______________________
Name:
Title:
<PAGE> 93
3
ELDORADO, INC.,
by ______________________
Name:
Title:
MSW, INC.,
by ______________________
Name:
Title:
Attest:
By:_______________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
[ ],
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:_____________________________
Authorized Signatory
<PAGE> 94
4
[FORM OF REVERSE SIDE OF SECURITY]
% Senior Note Due 2003
1. Interest
Boyd Gaming Corporation, a Nevada corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company will pay
interest semiannually on [] and [] of each year. Interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from [], 1996. Interest will be computed on the basis of
a 360-day year of twelve 30-day months. The Company shall pay interest on
overdue principal at the rate borne by the Securities plus 1% per annum, and it
shall pay interest on overdue installments of interest at the same rate to the
extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the [] or [] next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States of America that at the time of payment is legal tender for payment
of public and private debts. However, the Company may pay principal and interest
by check payable in such money. It may mail an interest check to a Holder's
registered address.
<PAGE> 95
5
3. Paying Agent and Registrar
Initially, [ ], a New York banking corporation (the "Trustee"), will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of [],
1996 (the "Indenture"), between the Company, the Guarantors and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the TIA for a statement of
those terms.
The Securities are general unsecured obligations of the Company
limited to $[200,000,000] aggregate principal amount (subject to Section 2.07 of
the Indenture). The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into consensual restrictions upon the
payment of certain dividends and distributions by such Restricted Subsidiaries,
issue or sell shares of capital stock of such Restricted Subsidiaries, enter
into or permit certain transactions with Affiliates, create or incur Liens and
make Asset Sales. The Indenture also imposes limitations on the ability of the
Company or the Guarantors to consolidate or merge with or into any other Person
or permit any other Person to merge with or into the Company, or sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Property of the Company.
<PAGE> 96
6
5. Optional Redemption
The Securities may not be redeemed prior to [], 200[]. On and after
that date, the Company may redeem the Securities in whole at any time or in part
from time to time at the following redemption prices (expressed in percentages
of principal amount), plus accrued interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the related interest payment date):
If redeemed during the 12-month period beginning [] of the year
indicated below:
Year Percentage
200[] []%
200[] []%
200[] []%
and thereafter, beginning [], 200[], at 100%.
6. Notice of Redemption
At least 30 calendar days but not more than 60 calendar days before
a Redemption Date, the Company will send a notice of redemption, first-class
mail, postage prepaid, to Holders of Securities to be redeemed at the addresses
of such Holders as they appear in the Security Register.
If less than all of the Securities are to be redeemed at any time,
the Securities to be redeemed will be chosen by the Trustee in accordance with
the Indenture. If any Security is redeemed subsequent to a Record Date with
respect to any Interest Payment Date specified above and on or prior to such
Interest Payment Date, then any accrued interest will be paid on such Interest
Payment Date to the Holder of the Security at the close of business on such
Record Date. If money in an amount sufficient to pay the Redemption Price of all
Securities (or portions thereof) to be redeemed on the Redemption Date is
deposited with the Paying Agent on or before the applicable Redemption Date and
certain other conditions are satisfied, interest on the Securities to be
redeemed on the applicable Redemption Date will cease to accrue.
<PAGE> 97
7
The Securities are not subject to any sinking fund.
7. Repurchase of Securities at the Option of Holders upon
Change of Control
Upon the occurrence of (i) a Change of Control or, (ii) in the event
the Securities at the earlier of the public announcement of (x) Change of
Control or (y) (if applicable) the intention of the Company to effect a Change
of Control have Investment Grade Status, a Change of Control Triggering Event
with respect to the Securities, each Holder of Securities shall have the right
to require the Company to purchase such Holder's Securities, in whole, or in
part in a principal amount that is an integral multiple of $1,000, pursuant to a
Change of Control Offer, at a purchase price in cash equal to 101% of the
principal amount thereof on any Change of Control Payment Date plus accrued and
unpaid interest, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control Triggering
Event, the Company shall send, or cause to be sent, by first-class mail, postage
prepaid, a notice regarding the Change of Control Offer to the Trustee and each
Holder of Securities. The Holder of this Security may elect to have this
Security or a portion hereof in an authorized denomination purchased by
completing the form entitled "Option of Holder to Elect Purchase" appearing
below and tendering this Security pursuant to the Change of Control Offer.
Unless the Company defaults in the payment of the Change of Control Purchase
Price with respect thereto, all Securities or portions thereof accepted for
payment pursuant to the Change of Control Offer will cease to accrue interest
from and after the Change of Control Payment Date.
8. Repurchase of Securities at the Option of Holders upon
Asset Sale or Event of Loss
If at any time the Company or any Restricted Subsidiary engages in
any Asset Sale and/or and Event of Loss, as a result of which the aggregate
amount of Excess Proceeds exceeds $20,000,000, the Company shall, within five
Business days of the date the amount of Excess Proceeds exceeds $20,000,000, use
the then-existing Excess Proceeds to make an offer to purchase from all Holders,
on a pro rata
<PAGE> 98
8
basis, Securities in an aggregate principal amount equal to the maximum
principal amount that may be purchased out of the then-existing Excess Proceeds,
at a purchase price in cash equal to 100% of the principal amount thereof on any
Purchase Date plus accrued and unpaid interest thereon, if any, to the Purchase
Date. Upon completion of a Prepayment Offer (including payment for accepted
Securities), any surplus Excess Proceeds that were the subject of such offer
shall cease to be Excess Proceeds, and the Company may then use such amounts for
general corporate purposes.
Within five Business days of the date the amount of Excess Proceeds
exceeds $20,000,000, the Company shall send, or cause to be sent, by first-class
mail, postage prepaid, a notice regarding the Prepayment Offer to each Holder of
Securities. The Holder of this Security may elect to have this Security or a
portion hereof in an authorized denomination purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below and tendering this
Security pursuant to the Prepayment Offer. Unless the Company defaults in the
payment of the purchase price with respect thereto, all Securities or portions
thereof selected for payment pursuant to the Prepayment Offer will cease to
accrue interest from and after the Purchase Date.
9. Guaranties
To secure the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, each Guarantor has agreed to
guarantee the Obligations on a senior basis pursuant to the terms of the
Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture.
<PAGE> 99
9
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the outstanding Securities and (ii) any past
Default and its consequences may be waived with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Holder of Securities, the Company and the Trustee may amend
the Indenture or the Securities (i) to cure any ambiguity, omission, defect or
inconsistency; (ii) to comply with Article V of the Indenture; (iii) to provide
for uncertificated Securities in addition to or in place of certificated
Securities; (iv) to add additional Guarantees with repsect to the Securities;
(v) to release a Guarantor if such Guarantor is sold in compliance with Section
10.06 of the Indenture; (vi) to secure the Securities; (vii) to
<PAGE> 100
10
add additional covenants or to surrender rights and powers conferred on the
Company; (vii) to comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the TIA; or (ix) to
make any change that does not adversely affect the rights of any Securityholder
in any material respect.
15. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities, subject to
certain limitations, may declare all the Securities to be immediately due and
payable. Certain events of bankruptcy or insolvency are Events of Default and
shall result in the Securities being immediately due and payable upon the
occurrence of such Events of Default without any further act of the Trustee or
any Holder.
Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power under the Indenture. The Holders of a majority in principal amount of the
outstanding Securities, by written notice to the Company and the Trustee, may
rescind any declaration of acceleration and its consequences if the rescission
would not conflict with any judgment or decree, and if all Events of Default
have been cured or waived except nonpayment of principal and interest that has
become due solely because of the acceleration.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
<PAGE> 101
11
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN SAID STATE WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAWS.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security. Requests may be made to:
Boyd Gaming Corporation
2950 South Industrial Road
Las Vegas, Nevada
Attention: General Counsel
<PAGE> 102
12
21. Ranking
The Securities will rank pari passu in right of payment with all
existing and future Senior Indebtedness of the Company and principal, premium
(if any) and interest with respect to the Securities will be senior in right of
payment with all future subordinated indebtedness of the Company.
22. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
<PAGE> 103
13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The
agent may substitute another to act for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guarantee:________________________________
(Signature must be guaranteed)
<PAGE> 104
14
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY
PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.07 OR 4.12 OF
THE INDENTURE, CHECK THE BOX:
/ /
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY
PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.07 OR 4.12 OF THE INDENTURE,
STATE THE AMOUNT:
$
DATE: __________________ YOUR SIGNATURE: __________________
(SIGN EXACTLY AS YOUR NAME APPEARS
ON THE OTHER SIDE OF THE SECURITY)
SIGNATURE GUARANTEE:_______________________________________
(SIGNATURE MUST BE GUARANTEED)
<PAGE> 1
EXHIBIT 12
BOYD GAMING CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the Years Ended June 30,
-----------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Earnings before Income Taxes...................... $ 49,600 $ 64,199 $18,155 $31,603 $ 9,633
Add:
Fixed Charges................................... 59,455 58,295 48,667 36,422 40,959
Less:
Capitalized Interest............................ (4,300) (7,100) (6,600) -- --
-------- -------- ------- ------- -------
Earnings (A)...................................... $104,755 $115,394 $60,222 $68,025 $50,592
======== ======== ======= ======= =======
Fixed Charges:
Interest Expense................................ $ 52,360 $ 48,443 $39,472 $33,888 $38,493
Capitalized Interest............................ 4,300 7,100 6,600 -- --
Amortization of Issue Costs..................... 1,835 1,832 1,832 1,832 1,832
Portion of rents representative
of interest factor............................ 960 920 763 702 634
-------- -------- ------- ------- -------
Fixed Charges (B)................................. $ 59,455 $ 58,295 $48,667 $36,422 $40,959
======== ======== ======= ======= =======
Ratio of Earnings to Fixed Charges
(A divided by B)................................ 1.76 1.98 1.24 1.87 1.24
======== ======== ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in Amendment No. 1 to Registration Statement No.
333-05555 of Boyd Gaming Corporation on Form S-3 relating to the issuance of
$200,000,000 Senior Notes due 2003 of our report dated August 23, 1996,
appearing in the Prospectus, which is part of this Registration Statement. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
September 3, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Boyd Gaming Corporation (Boyd Gaming) on Form S-3 relating to the offering of
$200 million of Senior Notes of Boyd Gaming of our report dated March 15, 1996,
except for footnote 11 for which the date is May 23, 1996, relating to the
consolidated financial statements of Par-A-Dice Gaming Corporation as of
December 31, 1995 and 1994, and for each of the three years ended December 31,
1995, included in the Current Report of Boyd Gaming on Form 8-K dated June 7,
1996.
We also consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
August 30, 1996
