Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-4748
SUN INTERNATIONAL NORTH AMERICA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-0763055
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1415 E. Sunrise Blvd., Ft. Lauderdale, FL 33304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 954-713-2500
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
First Mortgage Non-Recourse
Pass-Through Notes American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
- continued -
Exhibit Index is presented on pages 80 through 93.
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
As of February 28, 1997, there were 100 shares of the registrant's
common stock outstanding, all of which were owned by one shareholder.
Accordingly there is no current market for any of such shares.
The registrant meets the conditions set forth in General Instruction
I(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K
w i th the reduced disclosure format permitted by that General
Instruction.
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PART I
ITEM 1. BUSINESS
(a) General Development of Business
Sun International North America, Inc. ("SINA") is a holding
company which, through its indirect wholly owned subsidiary, Resorts
International Hotel, Inc. ("RIH"), is principally engaged in the
ownership and operation of Resorts Casino Hotel in Atlantic City, New
Jersey. SINA was known as Resorts International, Inc. until June 30,
1995, and as Griffin Gaming & Entertainment, Inc. from June 30, 1995
until February 6, 1997. "SINA" is used herein to refer to the
corporation for all periods. SINA was incorporated in Delaware in
1958. The term "Company" as used herein includes SINA and/or one or
more of its subsidiaries as the context may require. On December 16,
1996 (the "Effective Time"), SINA became a wholly owned subsidiary of
Sun International Hotels Limited ("SIHL"), a corporation organized and
existing under the laws of the Commonwealth of The Bahamas, when Sun
Merger Corp., a wholly owned subsidiary of SIHL, was merged with and
into SINA (the "Merger"). See further discussion of the Merger below.
In Atlantic City, the Company owns and operates the Resorts
Casino Hotel, which has approximately 660 guest rooms, a 70,000
square foot casino, an 8,000 square foot simulcast parimutuel betting
and poker area and related facilities, located on the Boardwalk. See
" ( c ) Narrative Description of Business" below, and "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS."
Approximately 10 acres of Boardwalk property owned by the Company
is leased to Atlantic City Showboat, Inc. ("ACS") under a 99-year net
lease expiring in 2082 (the "Showboat Lease"). All lease payments due
under the Showboat Lease directly service the Company's interest
obligations under the Showboat Notes described under "(c) Narrative
Description of Business - Showboat Lease" below. The leased acreage
is the site of the Showboat Casino Hotel (the "Showboat") which is
operated by ACS. The Company also owns other real estate in the
Atlantic City area, most of which is vacant land.
Casino operations in Atlantic City are conducted under a casino
license which is subject to periodic review and renewal by action of
the New Jersey Casino Control Commission (the "Casino Control
Commission"). The Company's current license was renewed in January
1996 through January 31, 2000 subject to a financial stability review
after two years. See "Regulation and Gaming Taxes and Fees" under
"(c) Narrative Description of Business" below.
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Merger
The Merger was consummated pursuant to an Agreement and Plan of
Merger dated as of August 19, 1996 and amended as of October 10, 1996
(the "Merger Agreement"). The Merger Agreement was adopted by SINA's
shareholders at a special meeting held on December 10, 1996. The
Merger and the Merger Agreement are more fully described in SINA's
proxy statement dated November 1, 1996, relating to the special
meeting.
Pursuant to the Merger Agreement, each share of SINA common
stock, $.01 par value per share (the "SINA Common Stock"), outstanding
immediately prior to the Effective Time of the Merger was converted
into the right to receive .4324 of a fully paid and nonassessable
ordinary share, $.001 par value per share, of SIHL (the "Ordinary
Shares"). Cash is being paid to holders of SINA Common Stock in lieu
of any fractional Ordinary Shares. Also pursuant to the terms of the
Merger Agreement, each issued and outstanding share of Class B common
stock, $.01 par value per share, of SINA (the "Class B Stock") was
converted into the right to receive .1928 of a fully paid and
nonassessable Ordinary Share. As a result of this conversion, holders
of Class B Stock are no longer entitled to special rights with respect
to the election of members of the Board of Directors of SINA (the
Directors ) to which holders of Class B Stock were previously
entitled. As of the Effective Time, the .1928 Ordinary Share received
in exchange for a share of Class B Stock is trading as part of a unit
(the "Units") along with $1,000 principal amount of 11.375% Junior
Mortgage Notes due 2004 (the "Junior Mortgage Notes") issued by
Resorts International Hotel Financing, Inc. ("RIHF"), a subsidiary of
SINA. See "1997 Refinancing" below for discussion of an offer to
purchase the Junior Mortgage Notes. Pursuant to this offer, certain
fractional Ordinary Shares related to tendered Junior Mortgage Notes
were purchased by SIHL for cash. Whole Ordinary Shares that had been
related to tendered Junior Mortgage Notes remain outstanding and are
no longer traded as part of Units. Junior Mortgage Notes not tendered
continue to trade as part of Units.
SIHL has filed an application for a plenary casino license (the
"Plenary License") with the Casino Control Commission. On October 30,
1996, SIHL received an interim casino authorization ("ICA") from the
Casino Control Commission and the Casino Control Commission approved
the terms of an ICA trust document and the selection of an ICA
trustee. Pending final determination by the Casino Control Commission
with respect to SIHL's qualification for a Plenary License, all shares
of SINA Common Stock are held in a "stand by" trust (the "ICA Trust").
If SIHL receives a Plenary License, the ICA Trust will be terminated
and the shares of SINA Common Stock will revert to SIHL. If the
Casino Control Commission determines that there is reasonable cause to
believe that SIHL should not be granted a Plenary License, the ICA
Trust would be activated and the ICA trustee would take control of
SINA pending a final determination by the Casino Control Commission
with respect to SIHL's application for a Plenary License. In the
event SIHL's
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application for a Plenary License were denied, the ICA trustee would
be obligated to dispose of the SINA Common Stock and SIHL would be
entitled to receive the lesser of (i) the fair market value or (ii)
the price paid by SIHL for the securities.
As of the Effective Time, Merv Griffin resigned as Chairman of
the Board of SINA and SINA's other Directors also resigned from their
positions as Directors. As prescribed by the Merger Agreement, the
directors of Sun Merger Corp. immediately prior to the Effective Time
became the Directors of SINA as of the Effective Time. Those
Directors are Howard B. Kerzner, President of SIHL, Kevin DeSanctis,
Chief Operating Officer, North America and the Caribbean of SIHL, and
Charles D. Adamo, Executive Vice President - Corporate Development and
General Counsel of SIHL.
P u r suant to an accounting practice known as "push-down"
accounting, as of December 31, 1996, the Company adjusted its
consolidated net assets to reflect the amount of SIHL's investment in
SINA. Accordingly, the Company's consolidated assets and liabilities
were adjusted to their estimated fair values and the Company's
accumulated deficit was eliminated. See Note 1 of Notes to
Consolidated Financial Statements for further discussion of this
accounting treatment.
1997 Refinancing
In February 1997 RIHF mailed to each holder of 11% Mortgage Notes
due 2003 (the "Mortgage Notes") and Junior Mortgage Notes an Offer to
Purchase and Consent Solicitation Statement offering to purchase for
cash (the "Offer") the outstanding Mortgage Notes and Junior Mortgage
Notes and soliciting consents (the "Solicitation") for amending the
indentures pursuant to which these securities were issued (the
"Indentures") to, among other things, release the collateral for the
Mortgage Notes and the Junior Mortgage Notes. This collateral
consisted of liens on RIH's fee and leasehold interests in the Resorts
Casino Hotel, the contiguous parking garage and property and related
personal property. Holders who validly tendered their securities and
consents by February 26, 1997 (the "Consent Date") were entitled to
receive the purchase price of 106.733% for the Mortgage Notes and
107.447% for the Junior Mortgage Notes, accrued interest through March
12, 1997, and an additional 2.5% consent payment (the "Consent
Payment"). Holders who tendered their securities and consents
subsequent to the Consent Date but prior to the Offer's expiration on
March 10, 1997, were entitled to the purchase price and accrued
interest, but not the Consent Payment. $119,645,000 principal amount
of Mortgage Notes and $21,001,000 principal amount of Junior Mortgage
Notes were tendered. The purchase price and Consent Payments for
purchasing these tendered securities, excluding accrued interest,
totaled $153,712,000. $5,355,000 principal amount of Mortgage Notes
and $1,100,000 principal amount of Junior Mortgage Notes were not
validly tendered and, therefore, not purchased pursuant to the Offer.
These securities remain outstanding as unsecured
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obligations and operate under the Indentures, as amended. The
remaining Junior Mortgage Notes continue to trade as part of Units.
In connection with the Offer and Solicitation, SIHL and SINA (the
"Issuers") issued $200,000,000 principal amount of 9% Senior
Subordinated Notes due 2007 (the "New Notes") in a private placement
which, after costs, resulted in net proceeds to the Company of
approximately $194,000,000. The majority of these proceeds were used
to fund the Offer; the balance of the proceeds will be used for
general corporate purposes. The New Notes, which are unsecured
obligations, are unconditionally guaranteed by RIH, GGRI, Inc.
("GGRI"), the wholly owned subsidiary of SINA which owns RIH, and
certain of SIHL's other subsidiaries (the "Guarantors"). Because the
New Notes were issued in a private placement, they are restricted as
to transfer. According to a registration rights agreement among the
Issuers, the Guarantors and the initial purchasers (the "Purchasers")
in the private placement, the Issuers are obligated to exchange the
New Notes for registered securities with terms substantially identical
to the New Notes, to register the New Notes under the Securities Act
of 1933 or pay liquidated damages to the Purchasers.
1994 Restructuring
In April 1994 the Company s prepackaged bankruptcy plan of
reorganization (the "Plan") was confirmed by the United States
Bankruptcy Court for the District of Delaware and on May 3, 1994 the
Plan became effective. The Company s reorganization under the Plan
(the "Restructuring") included, among other things, (i) the sale of
the Company s Paradise Island operations and properties to SIHL, then
an unaffiliated company, (the "SIHL Sale") and (ii) the exchange of
$481,907,000 principal amount of public indebtedness for $160,000,000
principal amount of new debt securities, 40% of SINA Common Stock as
of the effective date of the Plan, the proceeds from the sale of the
Paradise Island operations and approximately $36,700,000 cash.
The Paradise Island assets disposed of included the Paradise
Island Resort & Casino, the Ocean Club Golf & Tennis Resort and the
Paradise Paradise Beach Resort. The assets sold included an 18-hole
golf course, approximately six miles of beach and water frontage and
other resort facilities on Paradise Island. A total of 562 acres on
Paradise Island, 218 of which were not used in the Company's former
operations and were available for future development, were included in
the sale. Also, certain assets located in Florida and used in
connection with the Company's former Paradise Island operations were
included in the sale. In addition, the Company's airline operation
was effectively disposed of in the sale by means of an option/put
agreement with a nominal option price. Pursuant to an agreement, the
Company operated the airline on behalf of the purchaser for a small
management fee through early May 1995.
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(b) Financial Information about Industry Segments
The information called for by this item is incorporated by
reference to the tables entitled "Revenues," "Contribution to
Consolidated Earnings (Loss) Before Extraordinary Items" and
"Identifiable Assets, Depreciation and Capital Additions" in "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS."
(c) Narrative Description of Business
Gaming Facilities
The Resorts Casino Hotel in Atlantic City, New Jersey, has a
70,000 square foot casino and a simulcast parimutuel betting and poker
area of approximately 8,000 square feet. At December 31, 1996, these
gaming areas contained 42 blackjack tables, 18 poker tables, 11
roulette tables, 10 dice tables, six Caribbean stud poker tables, four
baccarat tables, two let it ride poker tables, two three card poker
tables, two pai gow poker tables, two big six wheels, one sic bo
table, one pai gow table, 2,350 slot machines, and five betting
windows and four customer-operated terminals for simulcast parimutuel
betting. Also included in the simulcast area is a keno lounge which
has two keno cashier windows. There are also two keno windows in the
bus waiting area and one on the casino floor.
During 1996, the Company had total gaming revenues from its
Atlantic City casino of $257,081,000. This compares to total gaming
revenues of $267,757,000 for 1995 and $250,482,000 for 1994. In the
last several years, approximately twelve new table games have been
introduced in order to provide more variety than the basic five table
games of blackjack, roulette, craps, baccarat and big six, which were
the only games available for the initial 15 years of the gaming
industry in Atlantic City. With the installation of more innovative
slot machines and more aggressive marketing, the Company's slot
revenues have become a larger proportionate share of total gaming
revenues increasing from 51% in 1986 to 70% in 1996.
Casino gaming in Atlantic City is highly competitive and is
strictly regulated under the New Jersey Casino Control Act and
regulations promulgated thereunder (the "Casino Control Act"), which
affect virtually all aspects of the Company's Atlantic City casino
operations. See "Competition" and "Regulation and Gaming Taxes and
Fees" below.
Resort and Hotel Facilities
The Resorts Casino Hotel commenced operations in May 1978 and was
the first casino/hotel opened in Atlantic City. This was accomplished
by the conversion of the former Haddon Hall Hotel, a classic hotel
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structure originally built in the early 1900's, into a casino/hotel.
It is situated on approximately seven acres of land with approximately
310 feet of Boardwalk frontage overlooking the Atlantic Ocean. The
Resorts Casino Hotel consists of two hotel towers, the 15-story East
Tower and the nine-story North Tower. In addition to the casino
facilities described above, the casino/hotel complex includes
approximately 660 guest rooms and suites, the 1,400-seat Superstar
Theater, seven restaurants, one cocktail lounge, a VIP slot and table
player lounge, an indoor swimming pool, a health club and retail
stores. The complex also has approximately 50,000 square feet of
convention facilities, including eight large meeting rooms and a
16,000 square foot ballroom.
The Company owns a garage that is connected to the Resorts Casino
Hotel by a covered walkway. This garage is used for patrons' self
parking and accommodates approximately 700 vehicles. The Company also
leases a lot (and has an option to purchase that lot) which provides
valet parking for approximately 200 cars. In June 1995 the Company
acquired approximately 4.4 acres adjoining the Resorts Casino Hotel
(the "Chalfonte Site") which acreage currently provides additional
uncovered self parking for approximately 140 cars and valet parking
for approximately 430 cars. This acreage was previously leased by the
Company.
Consistent with industry practice, the Company reserves a portion
of its hotel rooms and suites as complimentary accommodations for
high-level casino wagerers. For 1996, 1995 and 1994 the average
occupancy rates, including complimentary rooms, which were primarily
provided to casino patrons, were 95%, 94% and 91%, respectively. The
average occupancy rate and weighted average daily room rental,
excluding complimentary rooms, were 52% and $54, respectively, for
1996. This compares with 51% and $59, respectively, for 1995, and 47%
and $64, respectively, for 1994.
Capital Improvements
The Company has pursued a major capital improvements program
since 1989 in order to compete more effectively in the Atlantic City
market. During these eight years capital additions at Resorts Casino
Hotel exceeded $130,000,000 (excluding land acquisitions discussed
below under "Expansion Plans"). In 1996 the Company's capital
expenditures at Resorts Casino Hotel included computer system
upgrades, the purchase of 147 slot machines (replacements for older
models) and other capital maintenance projects. In 1995 the Company
expanded its casino by approximately 10,000 square feet and added
approximately 315 slot machines. Also in 1995, a new restaurant,
California Pizza Kitchen, was constructed and opened, five suites were
renovated and the exterior of the building was painted. In 1994 the
Company purchased 221 slot machines, most of which replaced older
models, and completed various capital maintenance projects. In prior
years, the Company converted certain back-of-the-house space into an
8,000 square foot simulcast
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facility, opened the VIP slot and table player lounge, "Club Griffin,"
and converted the parking garage from valet to self-parking. The
Company has a continual capital maintenance program whereby it
renovates its guest rooms, replaces its slot machines with newer
models, renovates its public areas, including restaurants, as well as
improves its infrastructure such as elevators and air conditioning.
During 1997, the Company expects to begin enhancing the Resorts
Casino Hotel through the construction of additional parking, the
renovation of approximately 500 of the hotel rooms and various
improvements to the public areas. The planning for such renovation
has just recently begun, and the costs and schedule therefor have not
yet been determined. Thereafter, the Company intends to develop a
significant addition to the existing property, which is discussed
below under "Expansion Plans."
Expansion Plans
In June 1995, with the purchase of the Chalfonte Site which
includes approximately 265 feet of Boardwalk frontage, the Company
announced its intention to expand the Resorts Casino Hotel by
constructing hotel rooms, casino space and a parking garage on this
acreage. Since that time the Company entered into a five year lease
with an option to purchase approximately three acres to the north of
the Resorts Casino Hotel, purchased an adjacent parcel and was
successful in vacating the portion of North Carolina Avenue that lies
between the Chalfonte Site and the Resorts Casino Hotel. These
parcels, together with the Chalfonte Site, total more than nine acres,
all of which are expected to be utilized in the Company's expansion
plans. With the execution of the Merger Agreement, design activities
on the project became very limited, although the Company continued
with the process of obtaining certain permits.
Subsequent to closing the Merger, officials of SIHL announced
plans to transform Resorts Casino Hotel into a highly themed resort.
At present, the project is in the conceptual design stage and detailed
planning is expected to begin in 1998. The expansion is expected to
include additional hotel rooms and a highly themed casino and
entertainment complex. The new development would be integrated with
the existing Resorts Casino Hotel and, when completed during 2000,
management believes that it should be one of the first Las Vegas style
gaming entertainment complexes in Atlantic City. The size and scope
of the expansion depend, in part, upon the amount of additional land
the Company is able to acquire. In addition, the Company's ability to
carry out the expansion depends on a number of other factors,
including receipt of adequate financing and certain state and local
approvals.
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Marketing
In prior years the Company utilized the celebrity status of Merv
Griffin to market Resorts Casino Hotel. It is anticipated that in the
future such utilization will be substantially reduced as the Company s
marketing plan will be integrated into the SIHL corporate marketing
plan whereby marketing efforts among Resorts Casino Hotel and certain
of SIHL's other properties will be coordinated.
In Atlantic City, the Company's marketing strategy will continue
to focus on enhancing the appeal of the Resorts Casino Hotel to the
mid and premium-level slot and table game players, although slot
players have been, in recent years, the primary target of the
Company's marketing efforts. In 1993 the Company introduced the
"cash-back" program, which rewards slot players with cash refunds or
complimentaries based on their volume of play, and expanded and
upgraded "Hollywood Hills," its high-limit slot area. This area was
further expanded in late May 1995. In the fall of 1994, the Company
increased its charter flight program to recapture lost market share in
table win. The charter program was further expanded in 1995 to
attract mid-level slot players. In the fall of 1994, the Company
introduced the "Griffin Games," created by Merv Griffin, whereby slot
players are chosen at random to participate in daily slot tournaments
and the daily tournament winners qualify to participate in a $100,000
"winners tournament." In January 1995 the "Griffin Games" were
expanded to include patrons playing blackjack and, from January 1996
until their conclusion in October 1996, they were further expanded to
include roulette players. The Company also has a VIP slot and table
player lounge which serves complimentary food and beverages.
As in prior years, the Company continues to rely heavily on its
bus program to supply a critical mass of low to mid-level slot
players. During the latter part of 1995 and throughout 1996, the
subsidized cost for attracting bus patrons increased substantially in
the Atlantic City casino market. See "Casino/Hotel - Atlantic City,
New Jersey" under both "Revenues" and "Contribution to Consolidated
Earnings (Loss) Before Extraordinary Items" in "ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - RESULTS OF OPERATIONS" for a discussion of the Company's
increased promotional costs. In addition to the above, the Company
continues to emphasize entertainment as an integral part of its
marketing program. The musical variety show "Funderful," created and
produced by Merv Griffin, opened in September 1996 to excellent
reviews. This show will terminate in March 1997 and will be replaced
by mid-level headliners such as Melissa Manchester, Anthony Newley and
Freddie Roman. The entertainment schedule is supplemented on a
monthly basis with headliners who in 1996 included, among others,
Regis and Kathie Lee, Rosie O Donnell, Tony Danza, Wayne Newton, Tom
Jones and the Beach Boys.
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New Convention Center and Casino/Hotel Expansions
In January 1992, the State of New Jersey enacted legislation that
authorized a financing plan for the construction of a new convention
center to be located on a 30-acre site next to the Atlantic City train
station at the base of the Atlantic City Expressway. The Company
understands that the new convention center will have 500,000 square
feet of exhibit space and an additional 109,000 square feet of meeting
rooms. Construction of the new convention center began in early 1993
and its official opening is scheduled for May 1997.
The convention center is part of a broader plan that includes
expansion of the Atlantic City International Airport, the
transformation of the main entryway into Atlantic City into a new
corridor and the construction of a new 500 room convention hotel.
Officials have commented upon the need for improved commercial air
service into Atlantic City as a factor in the success of the proposed
convention center. See further discussion under "Transportation
Facilities" below. The corridor will link the new convention center
and hotel with the Boardwalk. In all, six blocks are to be
transformed into an expansive park with extensive landscaping, night-
time lighting, a large fountain and pool with a 86-foot lighthouse.
It is believed that additional hotel rooms are necessary to
support the convention center as well as to allow Atlantic City to
become a competitive destination resort. In April 1996 construction
of the 500 room convention hotel commenced; this hotel is expected to
open in November 1997. To further spur construction of new hotel
rooms and renovation of substandard hotel rooms into deluxe
accommodations, a total of $175,000,000 has been set aside by the
Casino Reinvestment Development Authority (the "CRDA"), a public
authority created under the Casino Control Act, to aid in financing
such projects. To date, the CRDA has approved the expansion projects
submitted by eight casino/hotels which are to receive CRDA financing
totaling approximately $140,000,000. More than 1,300 new hotel rooms
have already opened and approximately 2,200 more may be added, in
connection with this financing. Applications are currently being
evaluated by the CRDA for use of the remaining monies. Also, Mirage
Resorts, Inc. ("Mirage"), a Las Vegas, Nevada casino/hotel company,
has been selected to be the developer of an approximately 180 acre
tract in the Marina area of Atlantic City. Mirage proposes to build a
$750,000,000, 2,000 room casino/hotel, Boyd Gaming Corp. proposes to
build a $500,000,000, 1,000 room casino/hotel and Circus Circus
Enterprises, Inc. proposes to build a $600,000,000, 2,000 room
casino/hotel on that tract. The Company understands that the State of
New Jersey and Mirage have reached an agreement as to financing the
costs of constructing a tunnel and connector road link between the
Atlantic City Expressway and the Marina area, which infrastructure
improvements were considered requisite to the expansion plans
announced for the Marina area. The tunnel construction is scheduled
to start in mid-1998 and be completed by 2000. Mirage has
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indicated that its proposed resort will open shortly after the roadway
is complete. MGM Grand Inc. has also announced plans for the
construction of a new casino/hotel in the South Inlet section of
Atlantic City.
Although these developments are viewed as positive and favorable
to the future prospects of the Atlantic City gaming industry, the
Company, at this point, can make no representations as to whether, to
what extent or how these developments may affect its operations.
Transportation Facilities
The lack of an adequate transportation infrastructure in the
Atlantic City area continues to negatively affect the industry's
ability to attract patrons from outside a core geographic area. In
1989, Amtrak express rail service to Atlantic City commenced from
Philadelphia, New York, Washington and other major cities in the
northeast. This service was expected to improve access to Atlantic
City and expand the geographic size of the Atlantic City casino
industry's marketing base. However, Amtrak discontinued its express
rail service to Atlantic City in 1995.
Also, in 1989 the terminal at the Atlantic City International
Airport (located approximately 12 miles from Atlantic City) was
expanded to handle additional air carriers and large passenger jets.
A further expansion, which doubled the size of the terminal and added
departure gates, an improved baggage handling system and sheltered
walkways connecting the terminal and planes was completed in 1996.
However, scheduled service to that airport from major cities by
national air carriers remains extremely limited.
Since the inception of gaming in Atlantic City there has been no
significant change in the industry's marketing base or in the
principal means of transportation to Atlantic City, which continues to
be automobile and bus. The resulting geographic limitations and
traffic congestion have restricted Atlantic City's growth as a major
destination resort.
The Company continues to utilize day-trip bus programs. A
non-exclusive easement enables the Resorts Casino Hotel to utilize a
bus tunnel under the adjacent Trump Taj Mahal Casino Resort (the "Taj
Mahal"), which connects Pennsylvania and Maryland Avenues, and a
service road exit from the bus tunnel. This reduces congestion around
the Pennsylvania Avenue bus entrance to the Resorts Casino Hotel. To
accommodate its bus patrons, the Company has a waiting facility which
is located indoors, adjacent to the casino, and offers various
amenities.
In conjunction with a street beautification and housing project
that was recently given preliminary approval by the CRDA, that agency
is in the process of engaging consultants to explore the feasibility
of the
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beautification and widening of North Carolina Avenue which would allow
for improved traffic flow in a more appealing corridor from Absecon
Boulevard (Route 30) to the main entrance of Resorts Casino Hotel.
Also, as noted in "New Convention Center and Casino/Hotel Expansions"
above, construction of a tunnel and connector road link between the
Atlantic City Expressway and the Marina area is proposed to start in
mid-1998.
Competition
Competition in the Atlantic City casino/hotel industry is
intense. Casino/hotels compete primarily on the basis of promotional
allowances, entertainment, advertising, services provided to patrons,
caliber of personnel, attractiveness of the hotel and casino areas and
related amenities and parking facilities. The Resorts Casino Hotel
competes directly with 11 casino/hotels in Atlantic City which, in the
aggregate, contain approximately 1,000,000 square feet of gaming area,
including simulcast betting and poker rooms, and 9,600 hotel rooms.
In 1996 two competing properties in Atlantic City opened significant
expansions which, combined, added approximately 1,100 hotel rooms and
approximately 85,000 square feet of gaming space. Significant
additional expansion is expected in the near future due to the
previously discussed expansion projects to be financed by the CRDA, as
well as the construction of new casino/hotels announced for the Marina
area and the South Inlet section.
The Resorts Casino Hotel is located at the eastern end of the
Boardwalk adjacent to the Taj Mahal, which is next to the Showboat.
These three properties have a total of approximately 2,600 hotel rooms
and approximately 314,000 square feet of gaming space in close
proximity to each other. In 1996, the three casino/hotels combined
generated approximately 29% of the gross gaming revenue of Atlantic
City. A 28-foot wide enclosed pedestrian bridge between the Resorts
Casino Hotel and the Taj Mahal allows patrons of both hotels and
guests for events being held at the Resorts Casino Hotel and at the
Taj Mahal to move between the facilities without exposure to the
weather. A similar enclosed pedestrian bridge connects the Showboat
to the Taj Mahal, allowing patrons to walk under cover among all three
casino/hotels. The remaining nine Atlantic City casino/hotels are
located approximately one-half mile to one and one-half miles to the
west on the Boardwalk or in the Marina area of Atlantic City.
In recent years, competition for the gaming patron outside of
Atlantic City has become extremely intense. In 1988, only Nevada and
New Jersey had legalized casino operations. Currently, almost every
state in the United States has some form of legalized gaming. Also,
The Bahamas and other destination resorts in the Caribbean and Canada
have increased the competition for gaming revenue. Directly competing
with Atlantic City for the day-trip patron are two gaming properties
on Indian reservations in Connecticut. One is a casino/hotel operated
by the Pequot Tribe which currently has more than 4,500 slot machines
and
- 13 -<PAGE>
whose slot revenue for the year 1996 was almost $630,000,000, which is
more than twice the slot revenue of the largest casino/hotel in
Atlantic City. The other, the Mohegan Sun Casino which opened in
October 1996 and is co-managed by a subsidiary of SIHL, has more than
2,600 slot machines. In 1993 the Oneida Indians opened a casino near
Syracuse, New York, which they are now seeking to expand. Other
Indian tribes in the states of New York and Rhode Island are seeking
federal recognition in order to establish gaming operations which
would further increase the competition for day-trip patrons. In
addition, in late 1995 and during 1996, three racetracks in the State
of Delaware began operating slot machines.
This rapid expansion of casino gaming, particularly that which
has been or may be introduced into jurisdictions in close proximity to
Atlantic City, adversely affects the Company's operations as well as
the Atlantic City gaming industry.
Gaming Credit Policy
Credit is extended to selected gaming customers primarily in
order to compete with other casino/hotels in Atlantic City which also
extend credit to customers. Credit play represented 19% of table game
volume at the Resorts Casino Hotel in 1996, 19% in 1995 and 21% in
1994. The credit play percentage of table game volume for the
Atlantic City industry excluding RIH was 24% in 1996, 22% in 1995 and
23% in 1994. RIH's gaming receivables, net of allowance for
uncollectible amounts, were $3,823,000, $3,813,000 and $4,216,000 as
of December 31, 1996, 1995 and 1994, respectively. The collectibility
of gaming receivables has an effect on results of operations and
management believes that overall collections have been satisfactory.
Atlantic City gaming debts are enforceable under the laws of New
Jersey and certain other states, although it is not clear whether
other states will honor this policy or enforce judgments rendered by
the courts of New Jersey with respect to such debts.
Security Controls
Gaming at the Resorts Casino Hotel is conducted by Company
trained and supervised personnel. Prior to employment, all casino
personnel must be licensed under the Casino Control Act. Security
checks are made to determine, among other matters, that job applicants
for key positions have had no criminal ties or associations. The
Company employs extensive security and internal controls at its
casino. Security in the Resorts Casino Hotel utilizes closed circuit
video cameras to monitor the casino floor and money counting areas.
The count of monies from gaming is observed daily by government
representatives.
- 14 -<PAGE>
Seasonal Factors
The Company's business activities are strongly affected by
seasonal factors that influence the New Jersey beach tourist trade.
Higher revenues and earnings are typically realized from the Company's
Atlantic City operations during the middle third of the year.
Employees
During 1996 the Company had a maximum of approximately 3,800
employees, almost all of whom were located in Atlantic City. The
Company believes that its employee relations are satisfactory.
Approximately 1,600 of the Company's employees are represented by
unions. Of these employees, approximately 1,200 are represented by
the Hotel Employees and Restaurant Employees International Union Local
54, whose contract expires in September 1999. There are several union
contracts covering other union employees.
All of the Company's casino employees and casino hotel employees
must be licensed under the Casino Control Act. Casino hotel employees
are those employees whose work requires access to the casino, the
casino simulcasting facility or restricted casino areas. Each casino
and casino hotel employee must meet applicable standards pertaining to
such matters as financial responsibility, good character, ability,
casino training and experience and New Jersey residency. Hotel
employees are no longer required to be registered with the Casino
Control Commission.
Regulation and Gaming Taxes and Fees
General
The Company's operations in Atlantic City are subject to
regulation under the Casino Control Act, which authorizes the
establishment of casinos in Atlantic City, provides for licensing,
regulation and taxation of casinos and created the Casino Control
Commission and the Division of Gaming Enforcement to administer the
Casino Control Act. In general, the provisions of the Casino Control
Act concern: the ability, character and financial stability and
integrity of casino operators, their officers, directors and employees
and others financially interested in a casino; the nature and
suitability of hotel and casino facilities, operating methods and
conditions; and financial and accounting practices. Gaming operations
are subject to a number of restrictions relating to the rules of
games, type of games, credit play, size of hotel and casino
operations, hours of operation, persons who may be employed, companies
which may do business with casinos, the maintenance of accounting and
cash control procedures, security and other aspects of the business.
- 15 -<PAGE>
There were significant regulatory changes in recent years. In
addition to the approval of new games, the Casino Control Act was
amended to allow casinos to expand their casino floors before building
the requisite number of hotel rooms, subject to approval of the Casino
Control Commission. This amendment was designed to encourage hotel
room construction by giving casino licensees an incentive and an added
ability to generate cash flow to finance hotel construction. Previous
law only allowed for casino expansion if a casino built new hotel
rooms first. In addition, the minimum casino square footage has been
increased from 50,000 square feet to 60,000 square feet for the first
500 qualifying rooms and allows for an additional 10,000 square feet
for each additional 100 qualifying rooms over 500, up to a maximum of
200,000 square feet. Future costs of regulation have been reduced as
new legislation (i) no longer requires hotel employees to be
registered, (ii) extends the term for casino and casino key employee
license renewals from two years to four years and (iii) allows greater
efficiency by either reducing or eliminating the time permitted the
Casino Control Commission to approve internal controls, patron
complimentary programs and the movement of gaming equipment.
Casino License
A casino license is initially issued for a term of one year and
must be renewed annually by action of the Casino Control Commission
for the first two renewal periods succeeding the initial issuance of a
casino license. The Casino Control Commission may renew a casino
license for a period of four years, although the Casino Control
Commission may reopen licensing hearings at any time. A license is
not transferable and may be conditioned, revoked or suspended at any
time upon proper action by the Casino Control Commission. The Casino
Control Act also requires an operations certificate which, in effect,
has a term coextensive with that of a casino license.
On February 26, 1979, the Casino Control Commission granted a
casino license to RIH for the operation of the Company's Atlantic City
casino. In January 1996, RIH's license was renewed until January 31,
2000. RIH's renewed license is subject to a financial stability
review midway through the license period.
Restrictions on Ownership of Equity and Debt Securities
The Casino Control Act imposes certain restrictions upon the
ownership of securities issued by a corporation which holds a casino
license or is a holding, intermediary or subsidiary company of a
corporate licensee (collectively, "holding company"). Among other
restrictions, the sale, assignment, transfer, pledge or other
disposition of any security issued by a corporation which holds a
casino license is conditional and shall be ineffective if disapproved
by the Casino Control Commission. The restrictions imposed by the
Casino Control Act are more stringent for equity securities than for
debt
- 16 -<PAGE>
securities. If the Casino Control Commission finds that an individual
owner or holder of any securities of a corporate licensee or its
holding company must be qualified and is not qualified under the
Casino Control Act, the Casino Control Commission has the right to
propose any necessary remedial action. In the case of corporate
holding companies and affiliates whose securities are publicly traded,
the Casino Control Commission may require divestiture of the security
held by any disqualified holder who is required to be qualified under
the Casino Control Act.
In the event that entities or persons required to be qualified
refuse or fail to qualify and fail to divest themselves of such
security interest, the Casino Control Commission has the right to take
any necessary action, including the revocation or suspension of the
casino license. If any security holder of the licensee or its holding
company or affiliate who is required to be qualified is found
disqualified, it will be unlawful for the security holder to (i)
receive any dividends or interest upon any such securities, (ii)
exercise, directly or through any trustee or nominee, any right
conferred by such securities or (iii) receive any remuneration in any
form from the corporate licensee for services rendered or otherwise.
The Amended and Restated Certificate of Incorporation of SINA provides
that all securities of SINA are held subject to the condition that if
the holder thereof is found to be disqualified by the Casino Control
Commission pursuant to provisions of the Casino Control Act, then that
holder must dispose of his or her interest in the securities. The
Mortgage Notes, Junior Mortgage Notes and New Notes are all subject to
the qualification, divestiture and redemption provisions under the
Casino Control Act described herein. Because the Junior Mortgage
Notes are traded as part of Units along with fractions of SIHL
Ordinary Shares, for purposes of the Casino Control Act, these
securities are analyzed as both debt and equity securities.
Remedies
In the event that it is determined that a licensee has violated
the Casino Control Act, or if a security holder of the licensee
required to be qualified is found disqualified but does not dispose of
his securities in the licensee or holding company, under certain
circumstances the licensee could be subject to fines or have its
license suspended or revoked.
The Casino Control Act provides for the mandatory appointment of
a conservator to operate the casino and hotel facility if a license is
revoked or not renewed and permits the appointment of a conservator if
a license is suspended for a period in excess of 120 days. If a
conservator is appointed, the suspended or former licensee is entitled
to a "fair rate of return out of net earnings, if any, during the
period of the conservatorship, taking into consideration that which
amounts to a fair rate of return in the casino or hotel industry."
- 17 -<PAGE>
Under certain circumstances, upon the revocation of a license or
failure to renew, the conservator, after approval by the Casino
Control Commission and consultation with the former licensee, may
sell, assign, convey or otherwise dispose of all of the property of
the casino/hotel. In such cases, the former licensee is entitled to a
summary review of such proposed sale by the Casino Control Commission
and creditors of the former licensee and other parties in interest are
entitled to prior written notice of sale.
License Fees, Taxes and Investment Obligations
The Casino Control Act provides for casino license renewal fees,
other fees based upon the cost of maintaining control and regulatory
activities and various license fees for the various classes of
employees. In addition, a casino licensee is subject annually to a
tax of 8% of "gross revenue" (defined under the Casino Control Act as
casino win, less provision for uncollectible accounts up to 4% of
casino win) and license fees of $500 on each slot machine. Also, the
Casino Control Act has been amended to create an Atlantic City fund
(the "AC Fund") for economic development projects other than the
construction and renovation of casino/hotels. Beginning in fiscal
year 1995/1996 and for the following three fiscal years, if the amount
of money expended by the Casino Control Commission and the Division of
Gaming Enforcement is less than $57,300,000, the prior year s budget
for these agencies, the amount of the difference is to be contributed
to the AC Fund. Thereafter, beginning with fiscal year 1999/2000 and
for the following three fiscal years, an amount equal to the average
paid into the AC Fund for the previous four fiscal years shall be
contributed to the AC Fund. Each licensee s share of the amount to be
contributed to the AC Fund is based upon its percentage of the total
industry gross revenue for the relevant fiscal year. After eight
years, the casino licensee s requirement to contribute to this fund
ceases.
The following table summarizes, for the periods shown, the fees,
taxes and contributions assessed upon the Company by the Casino
Control Commission.
For the Year
1996 1995 1994
Gaming tax $20,661,000 $21,402,000 $19,996,000
License, investigation,
inspection and other fees 3,672,000 3,917,000 4,218,000
Contribution to AC Fund 570,000 224,000
$24,903,000 $25,543,000 $24,214,000
The Casino Control Act, as originally adopted, required a
licensee to make investments equal to 2% of the licensee's gross
revenue (the
- 18 -<PAGE>
"investment obligation") for each calendar year, commencing in 1979,
in which such gross revenue exceeded its "cumulative investments" (as
defined in the Casino Control Act). A licensee had five years from
the end of each calendar year to satisfy this investment obligation or
become liable for an "alternative tax" in the same amount. In 1984
the New Jersey legislature amended the Casino Control Act so that
these provisions now apply only to investment obligations for the
years 1979 through 1983. As discussed in Note 16 of Notes to
Consolidated Financial Statements certain issues have been raised
concerning the satisfaction of the Company's investment obligations
for the years 1979 through 1983.
Effective for 1984 and subsequent years, the amended Casino
Control Act requires a licensee to satisfy its investment obligation
by purchasing bonds to be issued by the CRDA or by making other
investments authorized by the CRDA, in an amount equal to 1.25% of a
licensee's gross revenue. If the investment obligation is not
satisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of gross revenue. Licensees are required to
make quarterly deposits with the CRDA against their current year
investment obligations. The Company's investment obligations for the
years 1996, 1995 and 1994 amounted to $3,229,000, $3,348,000 and
$3,124,000, respectively, and, with the exception of minor credits
received in 1995 and 1996 for making donations, have been satisfied
by deposits made with the CRDA. At December 31, 1996, the Company
held $6,859,000 face amount of bonds issued by the CRDA and had
$19,701,000 on deposit with the CRDA. The CRDA bonds issued through
1996 have interest rates ranging from 3.9% to 7% and have repayment
terms of between 20 and 50 years.
Showboat Lease
The Showboat has 739 guest rooms, a 60-lane bowling center, a
77,000 square foot casino and a 20,000 square foot simulcast betting
and poker room. The Showboat is situated on approximately 10 acres
which are owned by the Company and leased to ACS pursuant to the
Showboat Lease, a 99-year net lease dated October 26, 1983, as
amended. The Showboat Lease provided for an initial annual rental,
which commenced in March 1987, of $6,340,000, subject to annual
adjustment based upon changes in the consumer price index. The annual
rental was $8,805,000 for the 1996 lease year and is expected to
approximate $9,050,000 for the 1997 lease year.
The Company's First Mortgage Non-Recourse Pass-Through Notes due
June 30, 2000 (the "Showboat Notes") are secured and serviced by the
Showboat Lease, and all lease payments are made to the indenture
trustee for the Showboat Notes to meet the Company's interest
obligations under those notes. See Note 8 of Notes to Consolidated
Financial Statements.
The Showboat Lease provides that if, under New Jersey law, the
Company is prohibited from acting as lessor, including any finding by
- 19 -<PAGE>
the Casino Control Commission that the Company is unsuitable, the
Company must appoint a trustee, acceptable to the Casino Control
Commission, to act for the Company and collect all lease payments on
the Company's behalf. In that event, the trustee also must proceed to
sell the Company's interest in the Showboat Lease and the leased
property to a buyer qualified to act as lessor. The net proceeds of
any such sale, together with any unremitted rentals, would be paid to
the Company. Also, if the Company is no longer able to act as a
lessor, as aforesaid, ACS would have an option to acquire ownership of
the 10 acres leased from the Company. The option would be exercisable
during a period of not more than three months. The purchase price
would be an amount equal to the greater of $66,000,000 or the fair
market value of the leased acreage, as defined, but in no event may
the purchase price be more than 11 times the rent being paid by ACS in
the year in which the option may become effective. If the fair market
value is not ascertained within the time required by the Casino
Control Commission, then the purchase price would be the lesser of
$66,000,000 or 11 times the rent being paid by ACS in the year the
option may become effective. In the event of any sale of the leased
property under the circumstances described above, the disposition of
the proceeds of such sale would be governed by the indenture for the
Showboat Notes.
Under the Casino Control Act, both the Company and ACS, because
of their lessor-lessee relationship, are jointly and severally liable
for the acts of the other with respect to any violations of the Casino
Control Act by the other. In order to limit the potential liability
that could result from this provision, ACS, its parent, Ocean
Showboat, Inc., and the Company have entered into an indemnity
agreement pursuant to which they agree to indemnify each other from
all liabilities and losses which may arise as a result of acts of the
other party that violate the Casino Control Act. The Casino Control
Commission could determine, however, that the party seeking
indemnification is not entitled to, or is barred from, such
indemnification.
Other Properties
The Company owns approximately 39 acres, and has a lease with an
option to purchase approximately 3 acres, at various sites in Atlantic
City which the Company intends to develop or are available for sale.
See "ITEM 2. PROPERTIES."
(d) Financial Information about Foreign and Domestic Operations
and Export Sales
The Company's foreign operations and properties were disposed of
in May 1994 as part of the Restructuring described under "(a) General
Development of Business - 1994 Restructuring" above. See also "(b)
Financial Information about Industry Segments."
- 20 -<PAGE>
ITEM 2. PROPERTIES
Casino, Hotel and Related Properties
The Company's casino, resort hotel and related properties in
Atlantic City, the approximately 10 acre site of the Showboat and
certain other properties described below are owned in fee, except for
approximately 1.2 acres of the Resorts Casino Hotel site which are
leased pursuant to ground leases expiring from 2056 through 2067.
The Showboat Lease, including the land subject to the lease,
secures the payment of the Showboat Notes.
Other Properties
The Company owns various non-operating sites, approximating 39
acres, and has a lease with an option to purchase approximately three
acres in Atlantic City that could be developed. Included in these
parcels is the nine acres adjacent to the Resorts Casino Hotel which
the Company intends to develop. The Company also owns the two acre
site of the former Steeplechase Pier and has permits for
reconstruction of a pier on that site, which is directly across the
Boardwalk from Resorts Casino Hotel. Zoning changes have been
proposed in Atlantic City recently, which changes would allow casinos
on five of the City's piers, including the Company's pier site. These
proposed zoning rules would require developers to provide other
attractions besides slot machines and hotel rooms.
The Company also owns in fee an approximately 552 acre parcel
located in Atlantic City on Blackhorse Pike, of which approximately
545 acres are considered to be woodlands and wetlands ("Great
Island"). The Company also owns in fee various individual parcels of
property located in the area of Atlantic City known as the South Inlet
which in the aggregate constitute almost eight acres and a parcel in
Atlantic City consisting of approximately six acres and a warehouse
thereon. The Company is the owner of various additional properties at
scattered sites in Atlantic City. Principal among these is the
so-called "Trans Expo" site, approximately two acres located near the
site of the new convention center.
In recent years the commercial real estate market in Atlantic
City has been in a generally depressed state; however, in the last
year there has been a noticeable increase in interest by major
casino/hotel companies to enter the Atlantic City gaming industry.
The Company is currently engaged in preliminary negotiations to sell
parcels in the South Inlet section as well as the Trans Expo site.
- 21 -<PAGE>
ITEM 3. LEGAL PROCEEDINGS
U.S. Bankruptcy Court Action - Rogers
On September 25, 1995, Nathan Rogers, then a shareholder of SINA,
filed a Complaint in Adversary Proceeding in the Bankruptcy Court for
the District of New Jersey (the "NJ Bankruptcy Court"), which Court
approved the Company's 1990 plan of reorganization. The complaint
alleges that the Company did not comply with its 1990 plan of
reorganization in relation to the repayment by Merv Griffin of his
$11,000,000 promissory note. The complaint further alleges that the
Company violated the court order approving the 1990 plan of
reorganization by filing a pre-packaged plan of reorganization in
another district. The complaint seeks to have a trustee appointed for
the Company and to have the issuance of SINA Common Stock to Merv
Griffin pursuant to the 1990 plan of reorganization voided. The
Company filed a motion to dismiss the proceeding before the NJ
Bankruptcy Court. The hearing on that motion was held on April 29,
1996. On June 12, 1996 the Court dismissed the second claim. The
Court declined to dismiss the claim regarding compliance with the
repayment obligation on the basis that an issue of fact existed on
whether Rogers received notice of the 1994 bankruptcy filing in
Delaware. Discovery is proceeding. SINA has filed a motion for
summary judgment which is returnable on April 17, 1997.
U.S. District Court Action - SINA v. Lowenschuss
As previously reported, in September 1989 SINA filed an action in
the U.S. District Court for the Eastern District of Pennsylvania to
recover certain sums paid to the defendant, as trustee for two
Individual Retirement Accounts and the Fred Lowenschuss Associates
Pension Plan (the "Pension Plan"), for SINA stock in the 1988 merger,
in which SINA was acquired by Merv Griffin. This action was
transferred to the NJ Bankruptcy Court in connection with the
Company's former bankruptcy case commenced there in 1989.
In February 1992, the NJ Bankruptcy Court issued an opinion
granting partial summary judgment in favor of SINA on one of its six
causes of action. The NJ Bankruptcy Court reserved the issue of
remedies for trial.
I n A ugust 1992, Fred Lowenschuss filed for chapter 11
reorganization in the U. S. Bankruptcy Court for the District of
Nevada (the "Nevada Bankruptcy Court"). As a result, the NJ
Bankruptcy Court stayed SINA's action against Lowenschuss.
The Nevada Bankruptcy Court confirmed Fred Lowenschuss' plan of
reorganization in October 1993. SINA appealed certain portions of the
confirmation order and other orders of the Nevada Bankruptcy Court.
In June 1994, the U. S. District Court for the District of Nevada (the
- 22 -<PAGE>
"Nevada District Court") granted SINA's appeal in all respects. In
October 1995, the U.S. Court of Appeals for the Ninth Circuit affirmed
the Nevada District Court s ruling in all respects and in November
1995, the Court of Appeals denied Fred Lowenschuss petition for
rehearing. On June 10, 1996, the United States Supreme Court denied
Fred Lowenschuss' petition for a writ of certiorari.
On November 2 and 3, 1995, the NJ Bankruptcy Court held a trial
on the merits of SINA s claims against the trustee of the Pension
Plan. The NJ Bankruptcy Court heard oral arguments on February 29,
1996 and has not yet rendered a final judgment.
On March 8, 1996, Fred Lowenschuss, as trustee of various
Lowenschuss children's trusts (the "Trusts"), and Laurance
Lowenschuss, as trustee for the Pension Plan, filed a counterclaim and
a third party claim against SINA and First Interstate Trust Company,
in the NJ Bankruptcy Court alleging that the Pension Plan and the
Trusts timely surrendered certain securities for exchange under the
Company's 1990 plan of reorganization and that those securities were
wrongfully dishonored and returned. The Company replied to the
counterclaims in April 1996 and denied the allegations.
In connection with that litigation, Laurance Lowenschuss, as
trustee for the Pension Plan, and Fred Lowenschuss, as trustee of the
Trusts and as custodian, filed an action in May 1996 against SINA for
preliminary and permanent injunctive relief. The Lowenschusses sought
an order from the U.S. Bankruptcy Court for the District of Delaware
(the "Delaware Bankruptcy Court") to extend the post-confirmation bar
date of the Plan and to secure the return of certain escrowed
distributions to holders of Old Series Notes (as defined in the Plan).
On May 9, 1996, the Delaware Bankruptcy Court entered an order, to
which the parties had stipulated, extending the Lowenschuss' date of
surrender for Old Series Notes through November 10, 1996; by
stipulation, the date of surrender has been further extended through
May 12, 1997; any funds held in escrow under the Plan will not be
distributed before that date.
The foregoing litigation and bankruptcy proceedings have spawned
additional and related litigation, including the following: (i) an
injunction action brought by Fred Lowenschuss, wherein the Nevada
Bankruptcy Court enjoined SINA from proceeding against Fred
Lowenschuss individually; the Nevada District Court dismissed appeals
by both SINA and Fred Lowenschuss, and the Ninth Circuit, on March 6,
1997, affirmed the District Court's dismissal of Fred Lowenschuss'
appeal; (ii) a malicious prosecution action brought by Fred
Lowenschuss against SINA and its counsel that was dismissed by the
Nevada Bankruptcy Court and the Nevada District Court; on March 6,
1997, the Ninth Circuit affirmed the District Court's dismissal of
Lowenschuss' appeal and awarded SINA monetary sanctions, finding that
Lowenschuss' appeal was frivolous; and (iii) an action filed by
Laurance Lowenschuss, as trustee of the Pension Plan, in the Nevada
District Court against SINA, which was transferred
- 23 -<PAGE>
to the U.S. District Court for the District of New Jersey (the "NJ
District Court"); in January 1996, the NJ District Court referred the
matter to the NJ Bankruptcy Court which has stayed the action pending
that Court's issuance of its decision on the merits of the November 2
and 3, 1995 trial.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The disclosure required by Item 4 has been omitted pursuant to
General Instruction I of Form 10-K.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Since the Effective Time of the Merger, there has been no trading
market for SINA Common Stock, all of which is owned by SIHL, or SINA's
Class B Stock, all of which was canceled pursuant to the Merger.
No dividends were paid on SINA stock during the last two fiscal
years. The indentures pursuant to which the New Notes were issued
contain certain restrictions as to the payment of dividends by SINA.
- 24 -<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The information presented below should be read in conjunction with the consolidated financial statements,
including notes thereto, presented under "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA."
(In Thousands of Dollars)
<CAPTIONS>
For the Year Ended December 31,
Operating Information (Note A) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Operating revenues (Note B) $291,945 $301,740 $353,016 $ 439,564 $436,934
Earnings (loss) from operations (Note B) $ 25,903 $ 41,678 $(48,570) $ 12,898 $ 21,502
Recapitalization costs (Note C) (5,232) (8,789) (2,848)
Proceeds from Litigation Trust (Note D) 2,542
Other income (deductions), net (Note E) (25,640) (25,779) (47,631) (105,273) (73,456)
Earnings (loss) before income taxes and
extraordinary items 263 15,899 (98,891) (101,164) (54,802)
Income tax benefit (expense) (Note F) (1,000) 1,348
Earnings (loss) before extraordinary items 263 15,899 (98,891) (102,164) (53,454)
Extraordinary items (Note G) 190,008
Net earnings (loss) $ 263 $ 15,899 $ 91,117 $(102,164) $(53,454)
At December 31,
Balance Sheet Information (Note A) 1996 1995 1994 1993 1992
Total assets $552,848 $338,451 $317,248 $ 575,785 $568,950
Current maturities of long-term debt
(Note H) $ 636 $ 589 $ 5 $ 466,336 $ 828
Long-term debt, excluding current
maturities (Note H) $261,543 $217,356 $212,466 $ 85,029 $460,712
Shareholders' equity (deficit) $193,000 $ 25,947 $ 10,031 $(113,744) $(17,262)
/TABLE
<PAGE>
Notes to Selected Financial Data
Note A: See Note 1 of Notes to Consolidated Financial Statements for
a discussion of the Merger in 1996 and the related change in basis of
accounting.
See Note 3 of Notes to Consolidated Financial Statements for
a description of the transactions that occurred in connection with the
Restructuring, which was effective May 3, 1994.
Changes in operations during the past five years include the
following: As part of the Restructuring, on May 3, 1994, the Company
sold its Paradise Island subsidiaries as well as assets of SINA and
certain U.S. subsidiaries that supported the Paradise Island
operations, and the Company's scheduled airline operation which
serviced routes between South Florida and Paradise Island was
effectively disposed of. See "SIHL Sale" in Note 3 of Notes to
Consolidated Financial Statements.
Note B: In 1996 operating revenues include net proceeds of $1,320,000
from the sale of approximately two acres of undeveloped property in
Atlantic City and $65,000 of additional proceeds from a prior year's
sale of various parcels in Atlantic City. Earnings from operations
for 1996 include a net gain of $935,000 on these transactions.
The loss from operations in 1994 includes a $72,463,000 loss
on the SIHL Sale and a charge of $20,525,000 for the write-down of
certain non-operating properties to net realizable value. Operating
revenues for 1994 include the sales of various parcels of land in
Atlantic City for net proceeds of $534,000. Earnings from operations
include a net loss of $99,000 on those sales.
Operating revenues for 1993 include the sale of a residential
lot in The Bahamas for net proceeds of $445,000. Earnings from
operations for 1993 include a net gain of $224,000 on that sale.
Operating revenues for 1992 include the sale of a residential
lot in The Bahamas for net proceeds of $213,000. Earnings from
operations for 1992 include a net loss of $17,000 on that sale.
Note C: Recapitalization costs incurred in 1994, 1993 and 1992 relate
to the Restructuring described in Note 3 of Notes to Consolidated
Financial Statements.
Note D: Proceeds from Litigation Trust represents cash distributed to
the Company from a litigation trust (the "Litigation Trust")
established under a previous plan of reorganization to pursue certain
claims against a former affiliate.
Note E: This item includes interest income, interest expense and
amortization of debt discounts.
- 26 -<PAGE>
Note F: For the year 1992 the Company accounted for income taxes in
accordance with Statement of Financial Accounting Standards No. 96,
"Accounting for Income Taxes." Effective January 1, 1993 the Company
adopted Statement of Financial Accounting Standards No. 109,
" A ccounting for Income Taxes." There was no effect on the
accompanying financial data nor was there a cumulative effect of
adopting this statement.
See Note 14 of Notes to Consolidated Financial Statements for
further discussion of income taxes for 1996, 1995 and 1994. In August
1993 tax law changes were enacted which resulted in an increase in the
Company's federal income tax rate. This increase resulted in a
$1,000,000 increase in the Company's deferred income tax liability and
a deferred income tax provision of the same amount. The income tax
benefit reported in 1992 represents federal income tax refunds.
Note G: As described in Note 3 of Notes to Consolidated Financial
Statements, as part of the Restructuring the Company exchanged its
Senior Secured Redeemable Notes due April 15, 1994 (the "Series
Notes") for certain consideration. The difference between the
carrying value of the Series Notes and the sum of the fair values of
the items exchanged therefor resulted in a gain of $186,000,000 which
is reported as an extraordinary item.
In November 1994 RIH purchased 12,899 Units, then comprising
$12,899,000 principal amount of Junior Mortgage Notes and 12,899
shares of Class B Stock of SINA, at a price of $6,740,000. The
resulting gain of $4,008,000 was recorded as an extraordinary item.
Note H:These items are presented net of unamortized premiums
(discounts).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Liquidity
At December 31, 1996, the Company's current assets included
unrestricted cash and equivalents of $29,267,000. A substantial
amount of the unrestricted cash and equivalents is required for day-
to-day operations, including approximately $10,000,000 of currency and
coin on hand which amount varies by days of the week, holidays and
seasons, as well as additional cash balances necessary to meet current
working capital needs.
Significant cash outlays were made in the fourth quarter of 1996
in connection with the Merger and, although at December 31, 1996, the
Company's current liabilities exceeded its current assets by
$7,783,000,
- 27 -<PAGE>
with the financial support of SIHL, management of the Company does not
foresee any difficulty in meeting its current obligations as they
become due.
Capital Expenditures and Other Uses of Funds
In recent years, capital expenditures have consistently been a
significant use of financial resources. See capital additions by
geographic and business segment in the table entitled "Identifiable
Assets, Depreciation and Capital Additions" below.
Capital expenditures in 1994 for Resorts Casino Hotel totaled
$7,744,000 and included the purchase of 221 slot machines, most of
which replaced older models, the purchase of equipment and minor
renovations to accommodate keno and Caribbean stud poker and various
other capital maintenance projects. Capital expenditures in 1995 at
this property totaled $13,272,000. These included approximately
$4,000,000 for the conversion of certain existing facilities into an
additional 10,000 square feet of casino gaming area as the Company
modified a portion of its bus waiting area to house approximately 155
slot machines and converted Mr. G s lounge to accommodate
approximately 160 more slot machines. The cost noted above includes
the cost of slot machines and related equipment. The Company also
converted the space formerly occupied by the Celebrity Deli into a
California Pizza Kitchen and the Oceanside cocktail lounge at a cost
of approximately $2,900,000. The balance of capital expenditures for
1995 included approximately $900,000 for suite renovations, as well as
various other capital maintenance projects. Expenditures for
improvements at Resorts Casino Hotel during 1996 totaled $8,252,000.
These included computer system upgrades, the purchase of 147 slot
m a chines (replacements for older models), carpeting and other
maintenance projects. During 1997, the Company expects to begin
enhancing the Resorts Casino Hotel through the construction of
additional parking, the renovation of approximately 500 of the hotel
rooms and various improvements to public areas. The planning for such
renovation has just recently begun, and the costs and schedule
therefor have not yet been determined.
In 1995 the Company acquired the 4.4 acre Chalfonte Site on the
Boardwalk, adjacent to Resorts Casino Hotel, in exchange for certain
non-operating real estate in the marina area of Atlantic City and
approximately $6,100,000 in cash. In 1996 the Company entered into a
five year lease with an option to purchase approximately three acres
to the north of Resorts Casino Hotel. Also in 1996 RIH purchased an
adjacent property and demolished the improvements on it and the newly
leased property at an aggregate cost of approximately $4,900,000. In
1996 the Company was also successful in vacating the portion of North
Carolina Avenue that lies between the Chalfonte Site and the Resorts
Casino Hotel. In all, these parcels total more than nine acres, which
are expected to be utilized in the Company's expansion plans. With
the execution of the Merger Agreement, design activities on the
project
- 28 -<PAGE>
became very limited, although the Company continued with the process
of obtaining certain permits. During 1996 the Company spent
approximately $4,700,000 on Chalfonte project development costs,
including capitalized interest and real estate taxes.
Subsequent to closing the Merger, officials of SIHL announced
plans to transform Resorts Casino Hotel into a highly themed resort.
At present, the project is in the conceptual design stage and detailed
planning is expected to begin in 1998. The expansion is expected to
include additional hotel rooms and a highly themed casino and
entertainment complex. The size and scope of the expansion depend, in
part, upon the amount of additional land the Company is able to
acquire. In addition, the Company's ability to carry out the
expansion depends on a number of other factors, including receipt of
adequate financing and certain state and local approvals.
In November 1994 RIH purchased 12,899 Units, then comprising
$12,899,000 principal amount of Junior Mortgage Notes and 12,899
shares of Class B Stock, for $6,740,000.
Other significant uses of funds in recent years have been costs
of $6,417,000 in 1996 related to the Merger and costs of $8,738,000 in
1994 related to the Restructuring.
Capital Resources and Other Sources of Funds
In March 1997 the Company purchased $119,645,000 principal amount
of Mortgage Notes and $21,001,000 principal amount of Junior Mortgage
Notes upon consummation of the Offer. The purchase price and Consent
Payments for purchasing these tendered securities, excluding accrued
interest, totaled $153,712,000. In connection with the Offer and
Solicitation, SIHL and SINA issued $200,000,000 principal amount of
New Notes in a private placement which, after costs, resulted in net
proceeds to the Company of approximately $194,000,000. The majority
of these proceeds were used to fund the Offer; the balance of the
proceeds will be used for general corporate purposes. See Note 18 of
Notes to Consolidated Financial Statements for further discussion of
these transactions.
During 1996, 1995 and 1994 operations were the most significant
source of funds to the Company.
In 1995, in connection with the casino expansion at Resorts
Casino Hotel, the Company financed the purchase of slot machines and
related equipment with a $1,815,000 bank loan.
In 1994 The Griffin Group, Inc., a corporation controlled by Merv
Griffin, then Chairman of the Board of SINA, paid the $3,008,000
balance due SINA under a promissory note.
- 29 -<PAGE>
RESULTS OF OPERATIONS
Revenues
For the Year Ended December 31,
(In Thousands of Dollars) 1996 1995 1994
Casino/hotel:
Atlantic City, New Jersey:
Casino $257,081 $267,757 $250,482
Rooms 6,547 6,978 7,134
Food and beverage 13,044 12,704 14,609
Other casino/hotel 5,145 5,787 4,508
281,817 293,226 276,733
Paradise Island, The Bahamas(a):
Casino 28,115
Rooms 13,419
Food and beverage 13,646
Other casino/hotel 7,708
-0- -0- 62,888
Total casino/hotel 281,817 293,226 339,621
Real estate related -
Atlantic City, New Jersey 10,128 8,501 8,813
Airline(a) 5,674
Other segments 13 12
Intersegment eliminations (1,104)
Revenues from operations $291,945 $301,740 $353,016
(a) These operations were disposed of through the SIHL Sale.
Casino/hotel - Atlantic City, New Jersey
Casino revenues at RIH decreased by $10,676,000 in 1996 and
increased by $17,275,000 in 1995. In 1996 RIH's slot win decreased by
$7,050,000 due primarily to a decrease in hold percentage (ratio of
casino win to total amount wagered for slots or total amount of chips
purchased for table games), though the total amount wagered also
decreased. In 1996 the Company's table game win decreased by
$3,183,000 as the effects of a decrease in amounts wagered were
partially offset by the effects of an increased hold percentage.
Two factors negatively affected the Company's performance in 1996
- heightened competition for patrons in the Atlantic City market and
severe weather conditions during the first quarter of 1996.
- 30 -<PAGE>
A s competition for patrons has intensified, promotions -
complimentary services (rooms, food and beverage provided to patrons
without charge), cash giveaways and events - have increased.
Commencing in late 1995, and escalating dramatically in 1996, certain
competitors increased complimentaries and cash giveaways. Although
the Company did increase its promotions somewhat in early 1996 and
more significantly during the second and third quarters, it has
elected not to keep pace with the industry's increased promotions due
to the belief that the resulting increase in gaming win would not be
sufficient to justify the incremental costs incurred. (In this
regard, see "Casino/hotel - Atlantic City, New Jersey" under
"Contribution to Consolidated Earnings (Loss) Before Extraordinary
Items" for a discussion of RIH's increased costs of promotions.)
Consequently, the Company's market share of revenues has suffered.
Adding to the competition for patrons, expansions at two competing
Atlantic City properties opened in May 1996 which, combined, added
approximately 1,100 hotel rooms and approximately 85,000 square feet
of gaming space. Several other companies have announced plans to
expand existing or construct new casino/hotels in Atlantic City. See
"New Convention Center and Casino/Hotel Expansions" under "ITEM 1.
BUSINESS - (c) Narrative Description of Business" for related
discussion. The Company can give no assurance that the increased cost
of obtaining gaming revenues will not continue in future periods.
As noted above, the severe weather experienced during the first
quarter of 1996 adversely affected operations in that period as the
principal means of transportation to Atlantic City is by automobile or
bus. The impact of inclement weather is more severe on the Resorts
Casino Hotel than on competing properties which are more accessible
from main thoroughfares and which currently have more covered parking
and covered terminals for bus patrons.
In 1995 RIH s slot win increased by $16,310,000, due to increased
amounts wagered, and its table game win increased by $2,275,000,
primarily due to an increase in hold percentage. The increased
amounts wagered by slot patrons reflect the Company s 10,000 square-
foot casino expansion during 1995, which enabled RIH to increase its
number of slot machines by more than 15%, as well as increased
emphasis on bus and junket air programs.
Casino/hotel - Paradise Island, The Bahamas
The Company's Paradise Island casino/hotel facilities were
disposed of in the SIHL Sale effective May 3, 1994. The Company's
Paradise Island revenues for 1994 reflect the Company's operation of
the Paradise Island properties through April 30, 1994.
- 31 -<PAGE>
Real Estate Related
Atlantic City real estate related revenues in 1996, 1995 and 1994
largely represent rent from ACS pursuant to the Showboat Lease. Such
rent receipts are restricted for the payment of interest on the
Showboat Notes. See Note 8 of Notes to Consolidated Financial
Statements. Atlantic City real estate related revenues for 1996 and
1994 also include $1,385,000 and $534,000, respectively, from the sale
of certain properties in Atlantic City.
Airline
The Company's airline operation was effectively disposed of in
the SIHL Sale by means of an option/put agreement with a nominal
option price. Pursuant to an agreement, the Company operated the
airline on behalf of SIHL for a small management fee through early May
1995. All profits earned or losses incurred in such operation accrued
to or were borne by SIHL. Airline revenues presented in the segment
tables herein reflect airline operations through April 30, 1994.
- 32 -<PAGE>
Contribution to Consolidated Earnings (Loss)
Before Extraordinary Items
For the Year Ended December 31,
(In Thousands of Dollars) 1996 1995 1994
Casino/hotel:
Atlantic City, New Jersey $ 9,508 $ 26,346 $ 20,791
Paradise Island, The
Bahamas(a) 10,206
9,508 26,346 30,997
Real estate related -
Atlantic City, New Jersey 10,473 8,156 (13,494)
Airline(a) (7)
Other segments 127 (114) (19)
Management fees, net of
corporate expense 5,795 7,290 6,416
Loss on SIHL Sale (72,463)
Earnings (loss) from operations 25,903 41,678 (48,570)
Other income (deductions):
Interest income 3,233 3,518 2,686
Interest expense (24,529) (25,318) (35,271)
Amortization of debt discounts (4,344) (3,979) (15,046)
Recapitalization costs (5,232)
Proceeds from Litigation Trust 2,542
Earnings (loss) before
extraordinary items $ 263 $ 15,899 $(98,891)
(a) These operations were disposed of through the SIHL Sale.
Casino/hotel - Atlantic City, New Jersey
Casino, hotel and related operating results decreased by
$16,838,000 for 1996 due to a combination of decreased revenues
discussed above and a net increase in operating expenses. The most
significant variances in operating expenses were increases in casino
promotional costs ($7,600,000) and payroll and related expenses
($1,900,000) and decreases in the accrual for performance and
incentive bonuses ($1,700,000), depreciation expense ($1,100,000) and
casino win taxes ($700,000). Casino promotional costs increased
primarily due to cash giveaways to bus patrons as the cash giveaway
per person increased significantly, though the Company's number of bus
passengers was down slightly. The increase in payroll and related
costs was due to increased costs of union and other benefits and, to a
lesser extent, increased salary and wage rates; the average number of
employees was down slightly.
Casino, hotel and related operating results increased by
$5,555,000 for 1995 as the increased revenues described above were
partially offset
- 33 -<PAGE>
by a net increase in operating costs. The most significant variances
in operating expenses were increases in casino promotional costs
($7,300,000), casino win tax ($1,500,000), payroll and related costs
($1,000,000) and the accrual for performance and incentive bonuses
($1,000,000). Casino promotional costs increased due to an expanded
junket air program as well as increases in the amount of cash giveaway
to bus patrons. Casino win tax increased relative to the increase in
casino revenues. Payroll and related costs increased due to increased
salary and wage rates, as the average number of employees was down
slightly for the year.
For a discussion of competition in the Atlantic City casino/hotel
industry see "Competition" under "ITEM 1. BUSINESS - (c) Narrative
Description of Business."
Casino/hotel - Paradise Island, The Bahamas
The Company's Paradise Island casino/hotel facilities were
disposed of in the SIHL Sale effective May 3, 1994. The Paradise
Island operating results for 1994 reflect the Company's operation of
the Paradise Island properties through April 30, 1994.
Real Estate Related
Atlantic City real estate related results for 1994 include a
charge of $20,525,000 for the write-down of certain non-operating
properties to net realizable value. See Note 13 of Notes to
Consolidated Financial Statements. The comparison of earnings from
Atlantic City real estate related activities is also affected by (i) a
1996 gain of $935,000 on sales of certain properties in Atlantic City,
(ii) credits of $680,000 in 1996 and $400,000 in 1995 resulting from
the favorable settlement of certain prior years property tax appeals,
( i ii) a $580,000 credit in 1996 from a favorable litigation
settlement, (iv) a loss of $99,000 in 1994 on sales of certain
properties in Atlantic City and (v) annual increases in rental income
under the Showboat Lease described above.
Airline
The Company's airline operation was effectively disposed of in
the SIHL Sale by means of an option/put agreement with a nominal
option price. Pursuant to an agreement, the Company operated the
airline on behalf of SIHL for a small management fee through early May
1995. All profits earned or losses incurred in such operation accrued
to or were borne by SIHL. Operating results of the airline segment
presented herein include airline operations through April 30, 1994.
Management Fees, Net of Corporate Expense
This segment includes credits for management fees which SINA
charges certain subsidiaries based on three percent of their gross
- 34 -<PAGE>
revenues. The corresponding charges are included in the segments
where the respective subsidiary's operations are reported. Management
fees charged by SINA to RIH amounted to $9,363,000, $9,651,000 and
$9,082,000 in 1996, 1995 and 1994, respectively. Management fees
charged to other subsidiaries totaled $21,000 in 1996 and $1,971,000
in 1994.
Management fees, net of corporate expense, for 1995 includes a
$1,000,000 credit from a favorable litigation settlement.
Loss on SIHL Sale
See Note 3 of Notes to Consolidated Financial Statements for a
description of the SIHL Sale.
Other Income (Deductions)
The decreases in interest expense and amortization of debt
discounts for 1995 are attributable to the Restructuring, which
resulted in a significant decrease in the principal amount of debt
outstanding as well as a reduction in interest rates. Also affecting
the comparison of these expenses is the fact that the Company stopped
accruing interest and amortizing debt discounts on the Series Notes as
of March 21, 1994, the date the Company entered bankruptcy
proceedings, while the accrual of interest and amortization of
discounts on the Mortgage Notes and the Junior Mortgage Notes did not
start until May 3, 1994. See Note 8 of Notes to Consolidated
Financial Statements for a description of the Mortgage Notes and
Junior Mortgage Notes.
Recapitalization costs in 1994 include costs of financial
advisers retained to assist in the development and analysis of
financial alternatives which resulted in the Restructuring and other
legal and advisory fees incurred in connection with such
Restructuring. Also, in 1994 the Company recorded credits of
$3,256,000 resulting from the reversal of reserves provided in
connection with the Company's 1990 plan of reorganization.
Proceeds from Litigation Trust represent the distribution that
the Company received as a holder of units of beneficial interest in
the litigation trust established under the Company's 1990 plan of
reorganization.
Income Taxes
See Note 14 of Notes to Consolidated Financial Statements for a
discussion of the Company's income taxes during the years 1994 through
1996.
- 35 -<PAGE>
<TABLE>
Identifiable Assets, Depreciation and Capital Additions
(In Thousands of Dollars)
<CAPTION>
Identifiable assets
Less accumulated
depreciation and
Gross valuation Net Capital
assets allowances assets Depreciation additions
For the Year Ended
December 31, 1996 (a) December 31, 1996
<S> <C> <C> <C> <C> <C>
Casino/hotel - Atlantic City,
New Jersey $353,253 $ (3,758) $349,495 $12,364 $13,126
Real estate related -
Atlantic City, New Jersey 185,928 185,928 5,368
Corporate (b) 17,425 17,425 22 4
$556,606 $ (3,758) $552,848 $12,386 $18,498
For the Year Ended
December 31, 1995 December 31, 1995
Casino/hotel - Atlantic City,
New Jersey $269,595 $(65,747) $203,848 $13,434 $13,272
Real estate related -
Atlantic City, New Jersey 93,799 93,799
Other segments 100 100 27
Corporate (b) 40,754 (50) 40,704 18 47
$404,248 $(65,797) $338,451 $13,452 $13,346
/TABLE
<PAGE>
<TABLE>
Identifiable Assets, Depreciation and Capital Additions
(In Thousands of Dollars)
<CAPTION>
Identifiable assets
Less accumulated
depreciation and
Gross valuation Net Capital
assets allowances assets Depreciation additions
For the Year Ended
December 31, 1994 December 31, 1994
<S> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey $254,419 $(52,891) $201,528 $13,205 $ 7,744
Paradise Island, The
Bahamas (c) 3,732 1,958
254,419 (52,891) 201,528 16,937 9,702
Real estate related -
Atlantic City, New Jersey 87,647 87,647
Airline (c) 276 186
Corporate (b) 28,107 (34) 28,073 37 36
$370,173 $(52,925) $317,248 $17,250 $ 9,924
(a) See Note 1 of Notes to Consolidated Financial Statements for a discussion of the Merger in 1996 and the
related change in basis of accounting.
(b) Includes cash equivalents, restricted cash equivalents not pledged for operations and other corporate
assets.
(c) These operations were disposed of through the SIHL Sale.
/TABLE
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements and supplementary
data are presented on the following pages:
Page
Financial Statements Reference
Report of Independent Auditors 39
Consolidated Balance Sheets at December 31,
1996 and 1995 40
Consolidated Statements of Operations for the
years ended December 31, 1996, 1995 and 1994 42
Consolidated Statements of Cash Flows for the
years ended December 31, 1996, 1995 and 1994 43
Consolidated Statements of Changes in
Shareholders' Equity for the years ended
December 31, 1996, 1995 and 1994 44
Notes to Consolidated Financial Statements 45
Financial Statement Schedule:
Schedule II: Valuation Accounts for the
years ended December 31,
1996, 1995 and 1994 68
Supplementary Data
Selected Quarterly Financial Data (Unaudited) 69
- 38 -<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholder
Sun International North America, Inc.
We have audited the accompanying consolidated balance sheet of
Sun International North America, Inc. (formerly Griffin Gaming &
Entertainment, Inc.) as of December 31, 1996 (post-acquisition basis).
We have also audited the accompanying consolidated balance sheet as of
December 31, 1995, and the related consolidated statements of
operations, changes in shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1996 (pre-
acquisition basis). Sun International North America, Inc. is a wholly
owned subsidiary of Sun International Hotels Limited. Our audits also
included the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Sun International North America, Inc. at
December 31, 1996 (post-acquisition basis), and at December 31, 1995,
and the consolidated results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996 (pre-
acquisition basis), in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
s c hedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects
the information set forth therein.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 14, 1997,
except for Note 18, as to which the date is
March 17, 1997
- 39 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
December 31,
1996 1995
Assets (Note 1)
Current assets:
Cash (including cash equivalents
of $11,926 and $35,515) $ 29,267 $ 51,210
Restricted cash equivalents 4,538 4,362
Receivables, net 7,468 7,910
Inventories 1,194 2,447
Prepaid expenses 2,055 6,615
Total current assets 44,522 72,544
Land held for investment,
development or resale 185,769 93,795
Property and equipment:
Land and land rights 73,576 54,384
Land improvements 932 158
Hotels and other buildings 122,642 116,318
Furniture, machinery and equipment 13,746 50,142
Construction in progress 65 200
210,961 221,202
Less accumulated depreciation (62,227)
Net property and equipment 210,961 158,975
Deferred charges and other assets 12,673 13,137
Goodwill 98,923
$552,848 $338,451
See Notes to Consolidated Financial Statements.
- 40 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
December 31,
Liabilities and Shareholders' 1996 1995
Equity (Note 1)
Current liabilities:
Current maturities of long-term debt $ 636 $ 589
Accounts payable and accrued
liabilities 51,669 41,209
Total current liabilities 52,305 41,798
Long-term debt, net of unamortized
premiums (discounts) 261,543 217,356
Deferred income taxes 46,000 53,350
Commitments and contingencies (Note 16)
Shareholders' equity:
SINA Common Stock - 100 and
7,941,035 shares outstanding -
$.01 par value 79
Class B Stock - 35,000 shares
outstanding in 1995 - $.01 par
value
Capital in excess of par 193,000 129,572
Accumulated deficit (103,704)
Total shareholders' equity 193,000 25,947
$552,848 $ 338,451
See Notes to Consolidated Financial Statements.
- 41 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
For the Year Ended December 31,
1996 1995 1994
Revenues:
Casino $257,081 $267,757 $278,597
Rooms 6,547 6,978 20,553
Food and beverage 13,044 12,704 28,255
Other casino/hotel revenues 5,145 5,800 12,216
Other operating revenues 4,582
Real estate related 10,128 8,501 8,813
291,945 301,740 353,016
Expenses:
Casino 163,785 156,091 160,371
Rooms 3,592 3,698 6,030
Food and beverage 14,985 14,235 25,131
Other casino/hotel operating
expenses 33,636 34,281 46,446
Other operating expenses 3,483
Selling, general and
administrative 37,658 38,305 49,887
Depreciation 12,386 13,452 17,250
Write-down of non-operating
real estate 20,525
Loss on SIHL Sale 72,463
266,042 260,062 401,586
Earnings (loss) from operations 25,903 41,678 (48,570)
Other income (deductions):
Interest income 3,233 3,518 2,686
Interest expense, net of $977
capitalized in 1996 (24,529) (25,318) (35,271)
Amortization of debt discounts (4,344) (3,979) (15,046)
Recapitalization costs (5,232)
Proceeds from Litigation Trust 2,542
Earnings (loss) before
extraordinary items 263 15,899 (98,891)
Extraordinary items 190,008
Net earnings $ 263 $ 15,899 $ 91,117
See Notes to Consolidated Financial Statements.
- 42 -<PAGE>
<TABLE>
SUN INTERNATIONAL NORTH AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
<CAPTION>
For the Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 289,194 $ 300,089 $ 347,896
Cash paid to suppliers and employees (261,184) (242,511) (285,343)
Cash flow from operations before interest and income taxes 28,010 57,578 62,553
Interest received 3,254 3,431 2,882
Interest paid, net of amount capitalized (24,430) (25,088) (15,002)
Income taxes paid (244) (353) (285)
Net cash provided by operating activities 6,590 35,568 50,148
Cash flows from investing activities:
Cash proceeds from SIHL Sale, net of cash balances
transferred 39,747
Payments for property and equipment, including capitalized
interest and property taxes (18,498) (13,093) (9,924)
Purchase of land held for investment, development or resale (1,177) (6,154)
Purchase of 12,899 Units (6,740)
Proceeds from sales of land held for investment, development
or resale 1,385 650
CRDA deposits and bond purchases (3,070) (3,152) (3,044)
Net cash provided by (used in) investing activities (21,360) (22,399) 20,689
Cash flows from financing activities:
Payments of Merger costs (6,417)
Proceeds from borrowing 1,815
Cash (including cash proceeds of SIHL Sale) distributed
to noteholders (103,434)
Collection of note receivable from related party 3,008
Payments of recapitalization costs (8,738)
Proceeds from Litigation Trust 2,542
Repayments of non-public debt (589) (320) (118)
Proceeds from exercise of stock options 9 17
Net cash provided by (used in) financing activities (6,997) 1,512 (106,740)
Net increase (decrease) in cash and cash equivalents (21,767) 14,681 (35,903)
Cash and cash equivalents at beginning of period 55,572 40,891 76,794
Cash and cash equivalents at end of period $ 33,805 $ 55,572 $ 40,891
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<TABLE>
SUN INTERNATIONAL NORTH AMERICA, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In Thousands of Dollars)
<CAPTION>
SINA Capital
Common Class B in excess Accumulated Notes
Stock Stock of par deficit receivable
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $ 202 $102,092 $(210,720) $(5,318)
Shares issued to financial advisers in
settlement of recapitalization costs 6 859
Reduction of Group Note applied to
prepaid services 2,310
Collection of Group Note 3,008
Shares issued in exchange for Series
Notes 170 $-0- 24,245
Shares issued to affiliate of Griffin
Group in satisfaction of final
payment under service agreement 19 2,041
Net earnings for year 1994 91,117
Balance at December 31, 1994 397 -0- 129,237 (119,603) -0-
Reverse Stock Split (318) 318
Issuance of shares for stock options
exercised 17
Net earnings for year 1995 15,899
Balance at December 31, 1995 79 -0- 129,572 (103,704) -0-
Issuance of shares for stock options
exercised 9
Net earnings for year 1996 263
Transactions relating to Merger:
Cancel public shares (79) -0- 79
Issue shares to SIHL
Eliminate pre-Merger accumulated deficit (103,441) 103,441
Fair value adjustments 166,781
Balance at December 31, 1996 (Note 1) $ -0- $-0- $193,000 $ -0- $ -0-
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - MERGER AND BASIS OF ACCOUNTING
Sun International North America, Inc. ("SINA") is a holding
company which, through its indirect wholly owned subsidiary, Resorts
International Hotel, Inc. ("RIH"), is principally engaged in the
ownership and operation of Resorts Casino Hotel in Atlantic City, New
Jersey. SINA was known as Resorts International, Inc. until June 30,
1995, and as Griffin Gaming & Entertainment, Inc. from June 30, 1995
until February 6, 1997. "SINA" is used herein to refer to the
corporation for all periods. The term "Company" as used herein
includes SINA and/or one or more of its subsidiaries, as the context
may require.
On December 16, 1996 (the "Effective Time"), SINA became a wholly
owned subsidiary of Sun International Hotels Limited ("SIHL"), a
corporation organized under the laws of the Commonwealth of The
Bahamas, when Sun Merger Corp., a wholly owned subsidiary of SIHL, was
merged with and into SINA (the "Merger"). The Merger was consummated
pursuant to an Agreement and Plan of Merger dated as of August 19,
1996 and amended as of October 10, 1996 (the "Merger Agreement"). The
Merger Agreement was adopted by SINA's shareholders at a special
meeting held on December 10, 1996.
Pursuant to the Merger Agreement, each share of SINA common
stock, $.01 par value per share (the "SINA Common Stock"), outstanding
immediately prior to the Effective Time of the Merger was converted
into the right to receive .4324 of a fully paid and nonassessable
ordinary share, $.001 par value per share, of SIHL (the "Ordinary
Shares"). Cash is being paid to holders of SINA Common Stock in lieu
of any fractional Ordinary Shares. Also pursuant to the terms of the
Merger Agreement, each issued and outstanding share of Class B common
stock, $.01 par value per share, of SINA (the "Class B Stock") was
converted into the right to receive .1928 of a fully paid and
nonassessable Ordinary Share. Since the Effective Time, each .1928
Ordinary Share received in exchange for a share of Class B Stock
trades as part of a unit (the "Units") along with $1,000 principal
amount of 11.375% Junior Mortgage Notes due December 15, 2004 (the
"Junior Mortgage Notes") issued by Resorts International Hotel
Financing, Inc. ("RIHF"), a subsidiary of SINA.
The Merger was accounted for as a purchase and, according to an
accounting practice known as "push-down" accounting, the Company
adjusted its consolidated net assets to reflect the amount of SIHL's
investment in SINA. In doing so, the Company's consolidated assets
and liabilities were adjusted to their estimated fair values based on
independent appraisals, evaluations, estimations and other studies.
As such appraisals and other valuations are incomplete at this time,
the fair value adjustments reflected herein are management's
preliminary
- 45 -<PAGE>
determination of such values based on information currently available.
Once all appraisals and valuations are complete, it is possible that
additional valuation adjustments may be required. The allocation of
the excess of SIHL's investment in SINA over SINA's net book value was
as follows:
(In Thousands of Dollars)
Decrease in current assets $(13,475)
Increase in land held for investment,
development or resale 91,247
Increase in property and equipment 45,618
Decrease in deferred charges and other
assets (11,602)
Increase in goodwill 98,923
Increase in current liabilities (10,878)
Increase in long-term debt (40,479)
Decrease in deferred tax liability 7,427
$166,781
Goodwill, the excess of SIHL's investment over the fair value of
SINA's net assets, will be amortized on the straight-line basis over
40 years.
The appraisals and other valuation methods used to establish fair
values of certain of the Company's property and equipment also
provided revised estimates of remaining depreciable lives of such
assets which, particularly for hotels and other buildings, were
greater than those previously used by the Company.
Because the impact of the basis adjustments on the Company's
consolidated statement of operations for the period between the
Effective Time and December 31, 1996, was immaterial, the Company
recorded the basis adjustments as of December 31, 1996. The impact on
the Company's operations will be reflected in the Company's
consolidated statements of operations commencing January 1, 1997.
Pro Forma Information (Unaudited)
The following unaudited pro forma information reflects the
results of the Company's operations as though the Merger had occurred
at the beginning of each year presented and includes (i) adjustments
for amortization of goodwill, (ii) changes in amortization of debt
discounts (premiums) and depreciation due to basis adjustments, (iii)
for 1996, elimination of a gain on a property sale and (iv) tax
effects. The pro forma information is not necessarily indicative of
future results or what the Company's results of operations would
actually have been had the Merger occurred at the beginning of each
year.
- 46 -<PAGE>
(In Thousands of Dollars) 1996 1995
Operating revenues $291,945 $301,740
Net earnings $ 2,283 $ 10,776
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
SINA and its subsidiaries. All significant intercompany transactions
and balances have been eliminated in consolidation.
Accounting Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Revenue Recognition
The Company records as revenue the win from casino gaming
activities which represents the difference between amounts wagered and
amounts won by patrons. Revenues from hotel and related services and
from theater ticket sales are recognized at the time the related
service is performed.
Complimentary Services
The Consolidated Statements of Operations reflect each category
of operating revenues excluding the retail value of complimentary
services provided to casino patrons without charge. The retail value
of such complimentary services excluded from revenues amounted to
$30,267,000, $28,494,000 and $28,982,000 for the years 1996, 1995 and
1994, respectively. The rooms, food and beverage, and other
casino/hotel operations departments allocate a percentage of their
total operating expenses to the casino department for complimentary
services provided to casino patrons. These allocations do not
necessarily represent the incremental cost of providing such
complimentary services to casino patrons. Amounts allocated to the
casino department from the other operating departments were as
follows:
- 47 -<PAGE>
(In Thousands of Dollars) 1996 1995 1994
Rooms $ 5,190 $ 4,813 $ 4,236
Food and beverage 17,035 16,846 15,787
Other casino/hotel operations 6,586 6,403 7,467
Total allocated to casino $28,811 $28,062 $27,490
Cash Equivalents
The Company considers all of its short-term money market
securities purchased with maturities of three months or less to be
cash equivalents. The carrying value of cash equivalents approximates
fair value due to the short maturity of these instruments.
Inventories
Inventories of provisions, supplies and spare parts are carried
at the lower of cost (first-in, first-out) or market.
Property and Equipment
For the periods presented herein, property and equipment have
been depreciated over the estimated useful lives reported below using
the straight-line method for financial reporting purposes.
Land improvements 10 years
Hotels and other buildings 10 - 28 years
Furniture, machinery and equipment 3 - 5 years
In conjunction with the Merger, certain estimated useful lives
have been revised and will be used to depreciate property and
equipment for financial reporting purposes commencing in 1997.
Capitalized Interest and Property Taxes
Interest is capitalized on construction expenditures and land
under development at the weighted average rate of the Company's public
long-term debt excluding one such issue which is non-recourse to the
Company. Property taxes assessed on land under development are also
capitalized.
- 48 -<PAGE>
Casino Reinvestment Development Authority ("CRDA") Obligatory
Investments
Under the New Jersey Casino Control Act ("Casino Control Act"),
the Company is obligated to purchase CRDA bonds, which will bear a
below-market interest rate, or make an alternative qualifying
investment. The Company charges to expense an estimated discount
related to CRDA investment obligations as of the date the obligation
arises based on fair market interest rates of similar quality bonds in
existence as of that date. On the date the Company actually purchases
the CRDA bond, the estimated discount previously recorded is adjusted
to reflect the actual terms of the bonds issued and the then existing
fair market interest rate for similar quality bonds.
The discount on CRDA bonds purchased is amortized to interest
income over the life of the bonds using the effective interest rate
method.
Payment-In-Kind ("PIK") Interest Accrual
When the Company elects to satisfy its interest obligations
through PIK instead of cash interest payments, for financial statement
purposes, such interest is accrued at the estimated market value of
the securities to be issued. The discount resulting from the
difference between face value and estimated market value of the
additional securities decreases interest expense of the current period
and is amortized to expense over the remaining life of the issue.
Income Taxes
SINA and all of its domestic subsidiaries file consolidated U.S.
federal income tax returns.
The Company accounts for income taxes under the liability method
prescribed by Statement of Financial Accounting Standards No. 109
("SFAS 109"), "Accounting for Income Taxes." Under this method, the
deferred tax liability is determined based on the difference between
the financial reporting and tax bases of assets and liabilities and
enacted tax rates which will be in effect for the years in which the
differences are expected to reverse. Deferred tax liabilities are
recognized for differences that will result in taxable amounts in
future years. Deferred tax assets are recognized for differences that
will result in deductible amounts in future years and for
carryforwards. A valuation allowance is recognized based on estimates
of the likelihood that some portion or all of the deferred tax asset
will not be realized.
There are no income taxes in The Bahamas and the income of SINA's
former Bahamian subsidiaries was generally not subject to U.S. federal
income taxation until it was distributed to a U.S. parent. Deferred
- 49 -<PAGE>
federal income taxes were provided on the undistributed earnings of
Bahamian subsidiaries until their disposition.
Per Share Data
Because of the Merger, which resulted in a single shareholder of
SINA, per share data is not meaningful or comparable to that disclosed
in prior years' financial statements. As a result, no per share data
is included herein.
NOTE 3 - 1994 RESTRUCTURING
In April 1994 the Company s prepackaged bankruptcy plan of
reorganization (the "Plan") was confirmed by the United States
Bankruptcy Court for the District of Delaware and on May 3, 1994 (the
"Restructuring Date") the Plan became effective. The Company s
reorganization under the Plan (the "Restructuring") included, among
other things, (i) the sale of the Company s Paradise Island operations
and properties (the "SIHL Sale") and (ii) the exchange of $481,907,000
principal amount of Senior Secured Redeemable Notes due April 15, 1994
(the "Series Notes") for $160,000,000 principal amount of new debt
securities (see Note 8), 40% of SINA Common Stock on a fully diluted
basis (excluding certain stock options) as of the Restructuring Date,
the proceeds from the SIHL Sale and approximately $36,700,000 cash.
Included in the cash distributed to noteholders was a $2,542,000 cash
distribution which the Company received from a litigation trust (the
"Litigation Trust") established under a previous plan of
reorganization to pursue certain claims against a former affiliate.
The difference between the carrying value of the Series Notes and
the sum of the fair values of the items exchanged therefor resulted in
a gain of $186,000,000 which was reported as an extraordinary item.
SIHL Sale
Sun International Investments Limited ("SIIL"), then an unrelated
party, acquired a 60% interest in the Company s Paradise Island
operations, through SIHL, a subsidiary of SIIL formed for that
purpose. SIIL purchased 60% of the capital stock of SIHL for
$90,000,000 plus interest at 7.5% from January 1, 1994 through the
Restructuring Date. Pursuant to the purchase agreement, SIHL then
purchased 100% of the equity of Resorts International (Bahamas) 1984
Limited, SINA s former indirect Bahamian subsidiary which, along with
its subsidiaries, owned and operated the Company s Paradise Island
properties. Also, certain subsidiaries of SIHL acquired certain
assets of SINA and its U.S. subsidiaries which supported the Paradise
Island operations and assumed certain related liabilities. The
purchase price received from SIHL was $65,000,000 in cash, plus
interest at 7.5% from January 1, 1994 through the Restructuring Date,
and 2,000,000 Series A Ordinary Shares of SIHL (the "SIHL Shares")
which, at that time, amounted to the remaining 40%
- 50 -<PAGE>
of the capital stock of SIHL. These cash proceeds as well as the SIHL
Shares were distributed to holders of Series Notes pursuant to the
Plan.
Although the SIHL Sale was effective May 3, 1994, the
consolidated statements of operations and cash flows reflect the
Paradise Island operations through April 30, 1994. The loss on SIHL
Sale represents the difference between the carrying values and the
fair values of the assets and equity interests sold.
Recapitalization Costs
Recapitalization costs in 1994 include costs of financial
advisers retained to assist in the development and analysis of
financial alternatives which resulted in the Restructuring and other
legal and advisory fees incurred in connection with such
Restructuring. Also, recapitalization costs for 1994 include credits
of $3,256,000 recorded in the fourth quarter resulting from the
reversal of reserves provided in connection with the Company's 1990
plan of reorganization.
NOTE 4 - CASH EQUIVALENTS
Cash equivalents at December 31, 1996 included reverse repurchase
agreements (federal government securities purchased under agreements
to resell those securities) under which the Company had not taken
delivery of the underlying securities and investments in a money
market fund which invests exclusively in U.S. Treasury obligations.
Restricted cash equivalents included $3,694,000 and $3,595,000 at
December 31, 1996 and 1995, respectively, of escrowed Showboat Lease
(defined in Note 8) payments and accrued interest thereon.
- 51 -<PAGE>
NOTE 5 - RECEIVABLES
Components of receivables at December 31 were as follows:
(In Thousands of Dollars) 1996 1995
Gaming $ 7,449 $ 7,332
Less allowance for doubtful accounts (3,626) (3,519)
3,823 3,813
Non-gaming:
Hotel and related 802 1,163
Contracts and notes 198 205
Other 2,777 2,780
3,777 4,148
Less allowance for doubtful accounts (132) (51)
3,645 4,097
$ 7,468 $ 7,910
NOTE 6 - CRDA OBLIGATORY INVESTMENTS
The Casino Control Act, as originally adopted, required a
licensee to make investments equal to 2% of the licensee's gross
revenue (as defined in the Casino Control Act) (the "investment
obligation") for each calendar year, commencing in 1979, in which such
gross revenue exceeded its "cumulative investments" (as defined in the
Casino Control Act). A licensee had five years from the end of each
calendar year to satisfy this investment obligation or become liable
for an "alternative tax" in the same amount. In 1984 the New Jersey
legislature amended the Casino Control Act so that these provisions
now apply only to investment obligations for the years 1979 through
1983.
Effective for 1984 and subsequent years, the amended Casino
Control Act requires a licensee to satisfy its investment obligation
by purchasing bonds to be issued by the CRDA, or by making other
investments authorized by the CRDA, in an amount equal to 1.25% of a
licensee's gross revenue. If the investment obligation is not
satisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of gross revenue. Since 1985, a licensee has
been required to make quarterly deposits with the CRDA against its
current year investment obligation.
The CRDA bonds have interest rates ranging from 3.9% to 7% and
have repayment terms of between 20 and 50 years. RIH records charges
to expense to reflect the below-market interest rate payable on the
bonds it may have to purchase to fulfill its investment obligation at
the date the obligation arises. The charges in 1996, 1995 and 1994
for discounts on obligations arising in those years were $1,505,000,
$1,567,000 and $1,461,000, respectively.
- 52 -<PAGE>
From time to time RIH has donated certain funds it has had on
deposit with the CRDA in return for either relief from its obligation
to purchase CRDA bonds or credits against future CRDA deposits.
At December 31, 1996, RIH had $6,859,000 face value of bonds
issued by the CRDA and had $19,701,000 on deposit with the CRDA. These
bonds and deposits, net of an estimated discount charged to expense to
reflect the below-market interest rate payable on the bonds, are
included in other assets in the Company's Consolidated Balance Sheet.
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of accounts payable and accrued liabilities at
December 31 were as follows:
(In Thousands of Dollars) 1996 1995
Accrued payroll and related taxes and
benefits $11,115 $12,241
Accrued Merger and related costs 9,754
Accrued interest 7,938 7,839
Accrued gaming taxes, fees and related
assessments 6,705 7,211
Trade payables 2,800 2,163
Customer deposits and unearned revenues 1,685 2,081
Accrued costs of recapitalization 875 590
Other accrued liabilities 10,797 9,084
$51,669 $41,209
NOTE 8 - LONG-TERM DEBT
As part of the Restructuring in 1994, RIHF issued $125,000,000
principal amount of 11% Mortgage Notes (the "Mortgage Notes") due
September 15, 2003 and $35,000,000 principal amount of Junior Mortgage
Notes. The Mortgage Notes and the Junior Mortgage Notes are
guaranteed by RIH.
The Mortgage Notes are secured by a $125,000,000 promissory note
made by RIH (the "RIH Promissory Note"), the terms of which mirror the
terms of the Mortgage Notes. The RIH Promissory Note and RIH s
guaranty of the Mortgage Notes are secured by liens on the Resorts
Casino Hotel, consisting of RIH s fee and leasehold interests in the
Resorts Casino Hotel, the contiguous parking garage and property and
related personal property. The indenture pursuant to which the
Mortgage Notes were issued permits the liens securing the Mortgage
Notes to be subordinated to a lien securing a working capital facility
of up to $20,000,000.
- 53 -<PAGE>
The Junior Mortgage Notes were issued as part of Units with
SINA s Class B Stock. Pursuant to the Merger, these Units now consist
of $1,000 principal amount of Junior Mortgage Notes and .1928 Ordinary
Share. These fractional Ordinary Shares may not be transferred
separately from the related Junior Mortgage Note.
The Junior Mortgage Notes are secured by a $35,000,000 promissory
note made by RIH (the "RIH Junior Promissory Note"), the terms of
which mirror the terms of the Junior Mortgage Notes. The RIH Junior
Promissory Note and RIH s guaranty of the Junior Mortgage Notes are
also secured by liens on the Resorts Casino Hotel property as
described above. The liens securing the Junior Mortgage Notes are
subordinated to the liens securing the Mortgage Notes. Also, the
indenture pursuant to which the Junior Mortgage Notes were issued
permits the liens securing the Junior Mortgage Notes to be
subordinated to a lien securing a working capital facility of up to
$20,000,000.
The indentures pursuant to which the Mortgage Notes and the
Junior Mortgage Notes were issued (collectively, the "Indentures")
prohibit RIH and its subsidiaries from paying dividends, from making
other distributions in respect of their capital stock, and from
purchasing or redeeming their capital stock, with certain exceptions,
unless certain interest coverage ratios are attained. Also, the
Indentures restrict RIH and its subsidiaries from incurring additional
indebtedness, with certain exceptions, and limit intercompany loans by
RIH to SINA to loans from proceeds of a senior working capital
facility of up to $20,000,000 and other advances not in excess of
$1,000,000 in the aggregate at any time outstanding. As of December
31, 1996, RIH had $21,642,000 of cash and equivalents, all of which
was restricted as to distribution under these Indenture provisions.
A total of 35,000 Units were issued as part of the Restructuring
in May 1994. In November 1994 RIH purchased 12,899 Units, including
$12,899,000 principal amount of Junior Mortgage Notes, at a price of
$6,740,000. The resulting gain of $4,008,000 was reported as an
extraordinary item.
See Note 18 for discussion of certain financing transactions in
early 1997.
The First Mortgage Non-Recourse Pass-Through Notes due June 30,
2000 (the "Showboat Notes") were issued pursuant to the Company s 1990
plan of reorganization. The Company owns a 10-acre parcel of land in
Atlantic City underlying the Showboat Casino Hotel which parcel is
subject to a 99-year net lease (the "Showboat Lease") which expires in
2082. The Showboat Notes are non-recourse notes, secured by a
mortgage encumbering that 10-acre parcel, by a collateral assignment
of the Showboat Lease, and by a pledge of any proceeds of the sale of
such mortgage and collateral assignment.
- 54 -<PAGE>
The carrying value and fair value by component of long-term debt
at December 31 were as follows:
1996 1995
Carrying Fair Carrying Fair
(In Thousands of Dollars) Value Value Value Value
Mortgage Notes $125,000 $134,375 $125,000 $115,313
Unamortized premium
(discount) 7,500 (16,872)
132,500 108,128
Junior Mortgage Notes 35,000 35,000
Less notes held by RIH (12,899) (12,899)
22,101 23,869 22,101 20,333
Unamortized premium
(discount) 1,326 (3,468)
23,427 18,633
Showboat Notes 105,333 105,333 105,333 97,433
Unamortized discount (15,657)
105,333 89,676
Other 919 919 1,508 1,508
262,179 264,496 217,945 234,587
Less due within one year (636) (636) (589) (589)
$261,543 $263,860 $217,356 $233,998
The fair value presented above for the Company's long-term debt
as of December 31, 1996 is based on December 31 closing market prices
for Mortgage Notes and Junior Mortgage Notes, a valuation by an
investment banking firm for the Showboat Notes for which, although
publicly traded, no active market exists, and carrying value for other
debt, because other debt is not considered material to the total. The
fair value presented above for the Company's long-term debt as of
December 31, 1995 is based on December 31 closing market prices for
Mortgage Notes, Junior Mortgage Notes and Showboat Notes, and carrying
value for other debt.
Minimum principal payments of long-term debt outstanding as of
December 31, 1996, for the five years thereafter are as follows: 1997
- $636,000; 1998 - $283,000; 1999 - none; 2000 - $105,333,000; and
2001 - none.
In accordance with Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code,"
the Company stopped accruing interest and amortizing discounts on the
Series Notes as of March 21, 1994, the date the Company filed its
prepackaged bankruptcy cases.
- 55 -<PAGE>
The accrual of interest and amortization of discounts on the
Mortgage Notes and the Junior Mortgage Notes commenced on May 3, 1994.
Interest on the Mortgage Notes is payable semi-annually on March 15
and September 15 in each year. Interest on the Junior Mortgage Notes
is payable semi-annually on June 15 and December 15 in each year. In
certain circumstances, interest payable on the Junior Mortgage Notes
may be satisfied by the issuance of additional Units.
Interest on the Showboat Notes consists of a pass-through
(subject to certain adjustments) of the lease payments received under
the Showboat Lease. See Note 11 for a description of the Showboat
Lease. Interest is payable semi-annually on January 15 and July 15.
The effective interest rates on the Company's publicly held debt
during the three years ended December 31, 1996 were as follows:
Mortgage Notes - 14.1%; Junior Mortgage Notes - 14.8%; and Showboat
Notes - 11.2%. The effective interest rates on the Company's publicly
held debt after the basis adjustments recorded at December 31, 1996
were as follows: Mortgage Notes - 9.9%; Junior Mortgage Notes -
10.4%; and Showboat Notes - 8.4%.
NOTE 9 - SHAREHOLDERS' EQUITY
SINA is presently authorized to issue 100,000,000 shares of SINA
Common Stock, 120,000 shares of Class B Stock and 10,000,000 shares of
preferred stock. As a result of the Merger, the only shares of SINA
stock outstanding are 100 shares of SINA Common Stock, all of which
are owned by SIHL.
On June 27, 1995, SINA s shareholders approved a one-for-five
reverse stock split (the "Reverse Stock Split") of SINA Common Stock
which became effective on June 30, 1995. As of June 30, 1995,
$318,000 was reclassified from SINA Common Stock to capital in excess
of par in order to reflect the Reverse Stock Split. All references to
number of shares and prices of SINA Common Stock in the consolidated
financial statements and notes thereto for periods prior to June 30,
1995, have been retroactively restated to reflect the Reverse Stock
Split.
NOTE 10 - RELATED PARTY TRANSACTIONS
License and Services Agreements
In connection with the Merger, SINA and RIH entered into a
license and services agreement (the "License and Services Agreement")
with The Griffin Group, Inc. (the "Griffin Group"), a corporation
controlled by Merv Griffin, Chairman of the Board of SINA until the
Effective Time. The License and Services Agreement grants to the
Company a non-exclusive license to use the name and likeness of Merv
Griffin to advertise and promote the Company's casino/hotel properties
as well as SIHL's other properties in Connecticut and The Bahamas (the
"Casino Properties").
- 56 -<PAGE>
The Company also has the non-exclusive right to use certain shows and
gaming concepts set forth therein and the non-exclusive right to
services provided by Mr. Griffin, on a pay or play basis, as marketing
consultant and as host, producer, presenter and featured performer in
various shows to be presented at the Casino Properties.
As compensation under the License and Services Agreement, at the
Effective Time, the Company paid Griffin Group fees totaling
$10,973,000 for the license and services through September 16, 2001.
Also, all business, travel and other expenses incurred by Griffin
Group in connection with providing requested services are to be paid
by the Company as such expenses are incurred.
The License and Services Agreement is to continue until September
16, 2001 and provides for earlier termination by either the Company or
Griffin Group under certain circumstances. Upon any termination of
the agreement, Griffin Group is entitled to retain all monies paid to
it and is entitled to be paid all amounts owing to it as of the date
of termination. Additionally, in the event of any sale or other
disposition of any of the Casino Properties, the use of the name and
likeness of Mr. Griffin must cease with respect to such property.
In the License and Services Agreement the Company agreed to
indemnify, defend and hold harmless Griffin Group and Mr. Griffin
against certain claims, losses and costs, and to maintain certain
insurance coverage with Mr. Griffin and Griffin Group as named
insureds.
The License and Services Agreement terminated the previously
existing license and services agreement among the same parties (the
"1992 License Agreement"), which otherwise would have expired on
September 16, 1997. However, the License and Services Agreement
provides for the continuation of the license and services for the
remaining period of the 1992 License Agreement and calls for no
additional compensation for the period ending September 16, 1997 and
no repayments of amounts prepaid under the 1992 License Agreement. In
the 1992 License Agreement, Griffin Group granted SINA and RIH a
non-exclusive license to use the name and likeness of Merv Griffin to
advertise and promote the Company's facilities and operations. Also
pursuant to the 1992 License Agreement, Mr. Griffin was to provide
certain services to the Company, including serving as Chairman of the
Board of SINA and as a host, producer and featured performer in
various shows to be presented in Resorts Casino Hotel, and furnishing
marketing and consulting services.
The 1992 License Agreement provided for annual payments on
September 17, each representing a prepayment for the year ending two
years hence. In lieu of paying in cash, at the Company's option, the
Company could satisfy its obligation to make any of the payments
required under the 1992 License Agreement by reducing the amount of
the note receivable from Griffin Group (the "Group Note") described
below.
- 57 -<PAGE>
Compensation for the year ended September 16, 1994 was $2,100,000. In
September 1993 the Company notified Griffin Group that it would
satisfy its obligation to make the $2,205,000 payment for the year
ended September 16, 1995 by reducing the Group Note by that amount.
In May 1994, as part of the Restructuring, SINA reduced the Group Note
by $2,310,000 in satisfaction of the payment due in September 1994 for
the year ended September 16, 1996. The final payment required under
the 1992 License Agreement, $2,425,000, was to be due in September
1995. On August 1, 1994, following review and approval by the
independent members of SINA's Board of Directors, SINA agreed to issue
388,000 shares of SINA Common Stock to an affiliate of Griffin Group
in satisfaction of this final payment obligation. The closing price
of SINA Common Stock on the date of the agreement was $5.3125 per
share.
The 1992 License Agreement also provided for the issuance of
warrants, which were exercisable through May 3, 1998, to purchase
933,370 shares of SINA Common Stock at $6.00 per share to an affiliate
of Griffin Group. In connection with the Merger, these warrants were
converted into warrants to purchase Ordinary Shares.
Because of recent and expected changes in the Company's marketing
strategy, the significant reduction recently in Mr. Griffin's
participation in activities related to the Company's business and
uncertainties as to Mr. Griffin's providing future services to the
Company, all prepaid fees under the License and Services Agreement and
the 1992 License Agreement were written off in the process of
restating the Company's assets and liabilities at fair value in
connection with the Merger.
Notes Receivable from Related Parties
Pursuant to the Company's 1990 plan of reorganization, in
September 1990 SINA received $12,345,000 in cash and an $11,000,000
promissory note (the "Griffin Note") from Merv Griffin for certain
shares of SINA Common Stock purchased by him. In April 1993, in
accordance with the 1992 License Agreement, Mr. Griffin made a partial
payment of $4,100,000 on this note comprised of $3,477,000 principal
and $623,000 accrued interest. The Griffin Note, which then had a
remaining balance of $7,523,000, was canceled and a new note from
Griffin Group, the Group Note, in the amount of $7,523,000 was
substituted therefor. The Group Note was unconditionally guaranteed
as to principal and interest by Mr. Griffin and bore interest at the
rate of 3%. As noted above, the balance of the Group Note was reduced
by $2,205,000 in September 1993 and by $2,310,000 in May 1994 in
satisfaction of fees due to Griffin Group under the 1992 License
Agreement. Also in May 1994, as part of the Restructuring, Griffin
Group repaid the remaining principal balance of $3,008,000 and accrued
interest thereon.
- 58 -<PAGE>
Sale of Resorts Entertainment, Inc. ("REI")
REI, a subsidiary of SINA that was known as Griffin Entertainment,
Inc. until February 6, 1997, was formed in 1995 to pursue development and
production activities in the television, live entertainment and motion
picture industries. In March 1996, in order to enable the Company to
concentrate its efforts on expansion of its core gaming business, the
independent members of the Board of Directors of SINA accepted an
offer from Griffin Group to purchase the assets and ongoing operations
of REI at a purchase price to equal the amount of the Company's
expenditures on these assets and operations from their inception
in September 1995 through the consummation of the transaction. There
were no revenues offsetting these expenditures, which totaled
approximately $340,000 through April 30, 1996, the effective date of
the sale.
Other
Effective May 1, 1995 Thomas E. Gallagher became President and
Chief Executive Officer of SINA. Mr. Gallagher has been President and
Chief Executive Officer of Griffin Group since April 1992. In
connection with Mr. Gallagher s appointment as President and Chief
Executive Officer of SINA, following review and approval by
independent members of SINA s Board of Directors, SINA agreed to pay
$300,000 per year for his services in this capacity. In 1995 such
payments were made to Griffin Group where Mr. Gallagher remains
President and Chief Executive Officer. Effective January 1, 1996, Mr.
Gallagher was paid directly by SINA and the Company's payments to
Griffin Group for his services ceased.
The Company reimbursed Griffin Group $157,000, $183,000 and
$296,000 for charter air services related to Company business rendered
in 1996, 1995 and 1994, respectively.
In 1995 the Company entered into an agreement with Players Island
Resort Casino Spa ("Players Island"), a subsidiary of Players
International, Inc. ("Players"), to produce and present a stage show
in the theater of Players Island in Mesquite, Nevada. The Company
received $130,000 and $266,000 from Players Island under this
agreement for services rendered during 1996 and 1995, respectively,
which services resulted in a modest profit after expenses. Griffin
Group owns in excess of 10% of the outstanding common stock of
Players. Mr. Gallagher serves as a member of the Board of Directors
of Players.
Antonio C. Alvarez II, a shareholder of Alvarez & Marsal, Inc.,
was a member of the Board of Directors of SINA from September 1990
until the Restructuring Date. In 1994 the Company paid Alvarez &
Marsal, Inc. $225,000 and issued 22,500 shares (as adjusted for the
Reverse Stock Split) of SINA Common Stock as compensation for
financial advisory services rendered in connection with the
Restructuring.
- 59 -<PAGE>
NOTE 11 - SHOWBOAT LEASE
The Company leases to a subsidiary ("ACS") of Showboat, Inc., a
resort and casino operator, approximately 10 acres of land adjacent to
the Boardwalk in Atlantic City (included in land held for investment,
development or resale in the accompanying Consolidated Balance
Sheets). Under the 99-year net lease, lease payments are payable in
equal monthly installments on the first day of each month. The lease
payments for the lease year ending March 31, 1997, total $8,805,000.
The lease payments are adjusted annually, as of April 1, for changes
in the consumer price index.
Pursuant to the lease agreement, the Company is unable to
transfer its interest in the lease, other than to an affiliate,
without giving ACS the opportunity to purchase such interest at terms
no less favorable than agreed to by any other party.
As described in Note 8, the Showboat Notes are secured by a
mortgage encumbering the real property which is subject to the
Showboat Lease, by a collateral assignment of the Showboat Lease, and
by a pledge of any proceeds of the sale of such mortgage and
collateral assignment. Lease payments under the Showboat Lease are
required to be passed-through to holders of the Showboat Notes.
NOTE 12 - RETIREMENT PLANS
SINA and certain of its subsidiaries participate, and certain of
SINA's former subsidiaries participated, in a defined contribution
plan covering substantially all of their non-union employees. The
Company makes contributions to this plan based on a percentage of
eligible employee contributions. Total pension expense for this plan
was $725,000, $652,000 and $683,000 in 1996, 1995 and 1994,
respectively.
In addition to the plan described above, union and certain other
employees of RIH and certain former subsidiaries of SINA are covered
by multi-employer defined benefit pension plans to which the
subsidiaries make, or made, contributions. The Company's pension
expense for these plans totaled $1,051,000, $881,000 and $1,066,000 in
1996, 1995 and 1994, respectively.
NOTE 13 - WRITE-DOWN OF NON-OPERATING REAL ESTATE
The Company owns various non-operating sites in Atlantic City,
New Jersey, which are available for sale. Certain of these properties
could be developed while others are designated as wetlands. In 1994,
based on a study of these properties, the Company determined that
write-downs totaling $20,525,000 were appropriate in order to properly
reflect the net realizable value of these properties.
- 60 -<PAGE>
NOTE 14 - INCOME TAXES
In 1996 net operating losses ("NOLs") were generated for federal
and state tax purposes for which no benefits were recognized. The
Company did record a $77,000 current federal tax benefit resulting
from the carry back of capital losses to a prior year, which was
offset by a deferred tax provision of the same amount.
In 1995 and 1994 the Company recorded current tax provisions of
$350,000 and $300,000, respectively, representing estimated
Alternative Minimum Tax ("AMT") resulting from utilization of NOL
carryforwards to offset the regular taxable income generated in those
years. These current tax provisions were offset by deferred tax
benefits of the same amounts resulting from the carryforward of AMT
credits generated.
In 1995, taxable income was generated by recurring operations.
In 1994, however, the taxable income was largely generated by the sale
of the Paradise Island operations. Though this sale resulted in a
$72,463,000 loss for book purposes, the tax bases of the assets and
equity sold were significantly less than the book bases. The NOLs
utilized were available to the Company under the provisions of the
Internal Revenue Code for gains existing as of the date of change in
ownership. The gain on the exchange of the Series Notes in 1994 was
excludable from the Company's taxable income because the exchange
occurred pursuant to a plan confirmed by the Bankruptcy Court.
No state tax provision was recorded in 1995 or 1994 due to the
utilization of state NOL carryforwards in states where the Company
generated taxable income.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. With the application of push-down accounting in connection
with the Merger, the Company's consolidated assets and liabilities
were adjusted to their estimated fair values for financial reporting
purposes. Such revaluation is not permitted for income tax purposes.
This accounts for the majority of the changes in components of the
Company's net deferred tax liability shown below as of December 31.
- 61 -<PAGE>
(In Thousands of Dollars) 1996 1995
Deferred tax liabilities:
Basis differences on land held for
investment, development or resale $ (63,600) $ (32,700)
Basis differences on property and
equipment (42,200) (20,900)
Other (3,100) (3,100)
Total deferred tax liabilities (108,900) (56,700)
Deferred tax assets:
NOL carryforwards 197,500 197,000
Basis differences on land held for
investment, development or resale 9,300 16,000
Book reserves not yet deductible
for tax 26,300 14,350
Basis differences on debt 23,300 8,400
Tax credit carryforwards 1,000 1,000
Other 7,800 4,700
Total deferred tax assets 265,200 241,450
Valuation allowance for deferred
tax assets (202,300) (238,100)
Deferred tax assets, net of
valuation allowance 62,900 3,350
Net deferred tax liabilities $ (46,000) $ (53,350)
The effective income tax rate on the earnings (loss) before
extraordinary items varies from the statutory federal income tax rate
as a result of the following factors:
1996 1995 1994
Statutory federal income tax
rate 35.0% 35.0% (35.0%)
NOLs and temporary differences
for which no taxes were provided
or benefits recognized (44.7%) (37.6%) 37.2%
Other, principally meals and
entertainment 9.7% 2.6% (2.2%)
Effective tax rate 0.0% 0.0% 0.0%
For federal income tax purposes the Company had NOL carryforwards
of approximately $564,000,000 at December 31, 1996; however, due to
the change of ownership of SINA in 1996, these NOL carryforwards (the
"Pre-Change NOLs") are limited in their availability to offset future
taxable
- 62 -<PAGE>
income of the Company. As a result of these limitations,
approximately $10,200,000 of Pre-Change NOLs will become available for
use each year through the year 2009. An additional $130,000,000 of
these Pre-Change NOLs would be available to offset gains on sales of
assets owned at the date of change in ownership of the Company which
are sold within five years of that date. The remaining Pre-Change
NOLs are expected to expire unutilized. The restricted NOLs which the
Company believes may become available to the Company for utilization
in spite of the limitations expire as follows: $18,000,000 in 2004,
$128,000,000 in 2005, $23,000,000 in 2006, $31,000,000 in 2007,
$56,000,000 in 2008, $1,000,000 in 2009 and $6,000,000 in 2011.
Also at December 31, 1996, the Company had federal income tax
credit carryforwards of approximately $400,000, which are restricted
as to use and expire $100,000 per year between 2006 and 2009, and
federal AMT tax credits of approximately $600,000, which carry forward
indefinitely.
At December 31, 1996, SINA had approximately $206,000,000 of NOL
carryforwards in New Jersey which expire as follows: $20,000,000 in
1997, $30,000,000 in 1998, $46,000,000 in 1999, $66,000,000 in 2000,
$43,000,000 in 2001 and $1,000,000 in 2002.
At December 31, 1996, RIH had approximately $117,000,000 of NOL
carryforwards in New Jersey which expire as follows: $111,000,000 in
1997, $1,000,000 in 2001 and $5,000,000 in 2003.
The source of earnings (loss) before extraordinary items was as
follows:
(In Thousands of Dollars) 1996 1995 1994
U.S. source earnings (loss) $263 $15,899 $(106,487)
Foreign source earnings 7,596
Earnings (loss) before
extraordinary items $263 $15,899 $ (98,891)
- 63 -<PAGE>
NOTE 15 - STATEMENTS OF CASH FLOWS
Supplemental disclosures required by Statement of Financial
Accounting Standards No. 95, "Statement of Cash Flows," are presented
below.
(In Thousands of Dollars) 1996 1995 1994
Reconciliation of net earnings
to net cash provided
by operating activities:
Net earnings $ 263 $15,899 $ 91,117
Adjustments to reconcile net
earnings to net cash
provided by operating
activities:
Extraordinary items (190,008)
Loss on SIHL Sale 72,463
Write-down of non-operating
real estate 20,525
Depreciation 12,386 13,452 17,250
Amortization of debt discounts 4,344 3,979 15,046
Provision for doubtful
receivables 1,417 925 1,212
Provision for discount on
CRDA obligations, net of
amortization 1,497 1,561 1,456
Deferred tax provision
(benefit) 77 (350) (300)
Recapitalization costs 5,232
Proceeds from Litigation
Trust (2,542)
Net (gain) loss on asset
sales/dispositions (873) 36 107
Net increase in receivables (1,211) (2,579) (913)
Net (increase) decrease in
inventories and prepaid
expenses (7,426) 2,056 3,967
Net (increase) decrease in
deferred charges and other
assets (1,474) 215 1,073
Net increase (decrease) in
accounts payable and
accrued liabilities (2,410) 374 14,463
Net cash provided by
operating activities $ 6,590 $35,568 $ 50,148
- 64 -<PAGE>
(In Thousands of Dollars) 1996 1995 1994
Non-cash investing and
financing transactions:
Adjustments to consolidated
net assets to reflect
SIHL's investment in SINA
(see Note 1) $166,781
Exchange of real estate in
Atlantic City (at carrying
value of property exchanged) $1,501
Exchange of Series Notes for:
Mortgage Notes and Junior
Mortgage Notes (at
estimated market value) $135,300
SIHL Shares (at estimated
market value) 60,000
SINA Common Stock (at
estimated market value) 24,415
Other liabilities 125
Reduction in Group Note
applied to prepaid services 2,310
Issuance of SINA Common Stock
for prepaid services 2,060
Issuance of SINA Common Stock
in settlement of certain
recapitalization costs 865
Increase in liabilities for
additions to property and
equipment and other assets 80
NOTE 16 - COMMITMENTS AND CONTINGENCIES
Land Lease/Option
The Company entered into a five year lease effective August
1, 1996 (the "Lease Agreement"), to lease approximately 3
acres to the north of Resorts Casino Hotel and an additional .6
acres nearby (the "Leased Property"). In accordance with the Lease
Agreement (i) the Company is required to pay rent of $825,000 per
year plus related real estate taxes, (ii) the Company has an
option to purchase the Leased Property for $12,000,000 on July 31,
1997 and every consecutive July 31 until and
- 65 -<PAGE>
including the expiration date of the lease, July 31, 2001, and (iii)
the lessor has an option to require the Company to purchase the
Leased Property for $12,000,000 upon the expiration date of the lease.
CRDA
Certain issues have been raised by the CRDA and the State of New
Jersey Department of the Treasury (the "Treasury") concerning the
satisfaction of RIH s investment obligations for the years 1979
through 1983 (see Note 6). These matters were dormant for an
extensive period of time until late 1995 when the Company was
contacted by the CRDA. CRDA legal representatives have recently
indicated that Treasury may take a position that RIH owes additional
investment alternative taxes including interest and possibly
penalties. If these issues are determined adversely, RIH could be
required to pay the relevant amount in cash. Management of the
Company intends to contest these issues and believes a negotiated
settlement with an insignificant monetary cost to the Company is
possible.
Litigation
SINA and certain of its subsidiaries are defendants in certain
litigation. In the opinion of management, based upon advice of
counsel, the aggregate liability, if any, arising from such litigation
will not have a material adverse effect on the accompanying
consolidated financial statements.
NOTE 17 - GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION
Schedules of geographic and business segment information relating
to (i) revenues, (ii) contribution to consolidated earnings (loss)
before extraordinary items and (iii) identifiable assets, depreciation
and capital additions are included in "ITEM 7. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
NOTE 18 - 1997 REFINANCING
In February 1997 RIHF mailed to each holder of Mortgage Notes and
Junior Mortgage Notes an Offer to Purchase and Consent Solicitation
Statement offering to purchase for cash (the "Offer") the outstanding
Mortgage Notes and Junior Mortgage Notes and soliciting consents (the
"Solicitation") for amending the Indentures to, among other things,
release the collateral for these securities, which is described in
Note 8. Holders who validly tendered their securities and consents by
February 26, 1997 (the "Consent Date") were entitled to receive the
purchase price of 106.733% for the Mortgage Notes and 107.447% for the
Junior Mortgage Notes, accrued interest through March 12, 1997, and an
additional 2.5% consent payment (the "Consent Payment"). Holders who
tendered their securities and consents subsequent to the Consent Date
but prior to the Offer's expiration on March 10, 1997, were entitled
to
- 66 -<PAGE>
the purchase price and accrued interest, but not the Consent Payment.
$119,645,000 principal amount of Mortgage Notes and $21,001,000
principal amount of Junior Mortgage Notes were tendered. The purchase
price and Consent Payments for purchasing these tendered securities,
excluding accrued interest, totaled $153,712,000. $5,355,000
principal amount of Mortgage Notes and $1,100,000 principal amount of
Junior Mortgage Notes were not validly tendered and, therefore, not
purchased pursuant to the Offer. These securities remain outstanding
as unsecured obligations and operate under the Indentures, as amended.
Under the amended Indentures, the repayment terms, interest payment
terms and redemption provisions for the remaining Mortgage Notes and
Junior Mortgage Notes are unchanged; however, many of the restrictive
covenants as to payment of dividends and incurring additional
indebtedness, as disclosed in Note 8, have been deleted. See
discussion below for certain restrictions related to the New Notes.
The remaining Junior Mortgage Notes continue to trade as part of
Units.
In connection with the Offer and Solicitation, SIHL and SINA (the
"Issuers") issued $200,000,000 principal amount of 9% Senior
Subordinated Notes due 2007 (the "New Notes") in a private placement
which, after costs, resulted in net proceeds to the Company of
approximately $194,000,000. The majority of these proceeds were used
to fund the Offer; the balance of the proceeds will be used for
general corporate purposes. The New Notes, which are unsecured
obligations, are unconditionally guaranteed by RIH, GGRI, Inc., the
wholly owned subsidiary of SINA which owns RIH, and certain of SIHL's
subsidiaries (the "Guarantors"). RIH's guarantee of the New Notes is
senior to its guarantee of the Mortgage Notes and Junior Mortgage
Notes. Interest on the New Notes is payable on March 15 and September
15 in each year, commencing September 15, 1997. The indenture for the
New Notes contains certain covenants, including limitations on the
ability of the Issuers and the Guarantors to, among other things: (i)
incur additional indebtedness, (ii) incur certain liens, (iii) engage
in certain transactions with affiliates and (iv) pay dividends and
make certain other restricted payments. Because the New Notes were
issued in a private placement, they are restricted as to transfer.
According to a registration rights agreement among the Issuers, the
Guarantors and the initial purchasers (the "Purchasers") in the
private placement, the Issuers are obligated to exchange the New Notes
for registered securities with terms substantially identical to the
New Notes, to register the New Notes under the Securities Act of 1933
or pay liquidated damages to the Purchasers.
- 67 -<PAGE>
<TABLE> SCHEDULE II
SUN INTERNATIONAL NORTH AMERICA, INC.
VALUATION ACCOUNTS
(In Thousands of Dollars)
<CAPTION>
Balance at Additions Balance at
beginning charged to Deductions end of
of period expenses SIHL Sale (a) period
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1996:
Allowance for doubtful receivables:
Gaming $3,519 $1,317 $(1,210) $3,626
Other 51 100 (19) 132
$3,570 $1,417 $(1,229) $3,758
For the year ended December 31, 1995:
Allowance for doubtful receivables:
Gaming $3,819 $ 902 $(1,202) $3,519
Other 82 23 (54) 51
$3,901 $ 925 $(1,256) $3,570
For the year ended December 31, 1994:
Allowance for doubtful receivables:
Gaming $6,598 $ 846 $(2,248) $(1,377) $3,819
Other 1,276 366 (1,511) (49) 82
$7,874 $1,212 $(3,759) $(1,426) $3,901
(a) Write-off of uncollectible accounts, net of recoveries.
/TABLE
<PAGE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(In Thousands of Dollars)
The table below reflects selected quarterly financial data for the years 1996 and 1995.
<CAPTION>
1996 1995
For the Quarter First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $66,149 $76,824 $81,037 $67,935 $69,761 $76,700 $85,602 $69,677
Earnings from
operations $ 2,466 $10,125 $12,012 $ 1,300 $ 6,155 $12,182 $16,755 $ 6,586
Other income
(deductions), net
(a) (6,579) (6,327) (6,252) (6,482) (6,135) (6,486) (6,595) (6,563)
Net earnings (loss) $(4,113) $ 3,798 $ 5,760 $(5,182) $ 20 $ 5,696 $10,160 $ 23
(a) Includes interest income, interest expense and amortization of debt discounts.
/TABLE
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
The following Items have been omitted pursuant to General
Instruction I of Form 10-K: ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT; ITEM 11. EXECUTIVE COMPENSATION; ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT and
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Documents Filed as Part of This Report
1. The financial statement index required herein is incorporated by
reference to "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA."
2. The index of financial statement schedules required herein is
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA." Financial statement schedules not included
have been omitted because they are either not applicable or the
required information is shown in the consolidated financial
statements or notes thereto.
3. The following exhibits are filed herewith or incorporated by
reference:
Exhibit
Numbers Exhibit
(2)(a) Agreement and Plan of Merger, dated August 19, 1996,
among SIHL, Sun Merger Corp. and SINA. (Incorporated by
reference to Exhibit (2)(a) to Registrant's Form 8-K
Current Report dated August 19, 1996, in File No. 1-
4748.)
- 70 -<PAGE>
(2)(b) Amendment dated October 10, 1996 to the Agreement and
Plan of Merger among SIHL, Sun Merger Corp. and SINA.
(Incorporated by reference to Annex I to Registrant's
Definitive Proxy Statement dated November 1, 1996 on
Schedule 14A in File No. 1-4748.)
(2)(c) Stockholder Agreement, dated August 19, 1996, among SIHL
and the various Stockholders of SINA set forth therein.
(Incorporated by reference to Exhibit (2)(b) to
Registrant's Form 8-K Current Report dated August 19,
1996, in File No. 1-4748.)
(2)(d) Amendment dated October 10, 1996 to the Stockholder
Agreement among SIHL and the various Stockholders of SINA
set forth therein. (Incorporated by reference to Annex
II to Registrant's Definitive Proxy Statement dated
November 1, 1996 on Schedule 14A in File No. 1-4748.)
(2)(e) Stockholder Agreement, dated August 19, 1996, between
SINA and SIIL. (Incorporated by reference to Exhibit
(2)(c) to Registrant's Form 8-K Current Report dated
August 19, 1996, in File No. 1-4748.)
(2)(f) Amendment dated October 10, 1996 to the Stockholder
Agreement between SINA and SIIL. (Incorporated by
reference to Annex III to Registrant's Definitive Proxy
Statement dated November 1, 1996 on Schedule 14A in File
No. 1-4748.)
(3)(a)(1) Restated Certificate of Incorporation of SINA.
(Incorporated by reference to Exhibit (3)(a) to
Registrant's Form 10-Q Quarterly Report for the quarter
ended June 30, 1996, in File No. 1-4748.)
(3)(a)(2) Certificate of Amendment of Restated Certificate of
Incorporation of SINA.
(3)(b) Amended and Restated By-Laws of SINA. (Incorporated by
reference to Exhibit (3)(b) to Registrant's Form 10-Q
Quarterly Report for the quarter ended June 30, 1996, in
File No. 1-4748.)
(4)(a) See Exhibits (3)(a)(1), (3)(a)(2) and (3)(b) as to the
rights of holders of Registrant's common stock.
- 71 -<PAGE>
(4)(b)(1) Form of Indenture among RIHF, as issuer, RIH, as
guarantor, and State Street Bank and Trust Company of
Connecticut, National Association, as
trustee, with respect to RIHF 11% Mortgage Notes due
2003. (Incorporated by reference to Exhibit 4.04 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(b)(2) Form of Mortgage between RIH and State Street Bank and
Trust Company of Connecticut, National Association,
securing Guaranty of RIHF Mortgage Notes. (Incorporated
by reference to Exhibit 4.22 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(4)(b)(3) Form of Mortgage between RIH and RIHF, securing RIH
Promissory Note. (Incorporated by reference to Exhibit
4.23 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(b)(4) Form of Assignment of Agreements made by RIHF, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
RIH Promissory Note. (Incorporated by reference to
Exhibit 4.24 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(4)(b)(5) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Promissory
Note. (Incorporated by reference to Exhibit 4.25 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(b)(6) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
Guaranty of RIHF Mortgage Notes. (Incorporated by
reference to Exhibit 4.26 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(4)(b)(7) Form of Assignment of Operating Assets made by RIH, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
Guaranty of RIHF Mortgage Notes. (Incorporated by
reference to Exhibit 4.28 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(4)(b)(8) Form of Assignment of Operating Assets made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Promissory
Note. (Incorporated by reference to Exhibit 4.34 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
- 72 -<PAGE>
(4)(b)(9) Form of Amended and Restated $125,000,000 RIH Promissory
Note. (Incorporated by reference to Exhibit A to Exhibit
(4)(b)(1) hereto.)
(4)(b)(10) Form of First Supplemental Indenture dated as of March 5,
1997, among RIHF, as issuer, RIH, as guarantor, and State
Street Bank and Trust Company of Connecticut, National
Association, as trustee, with respect to RIHF 11%
Mortgage Notes due 2003.
(4)(c)(1) Form of Indenture between RIHF, as issuer, RIH, as
guarantor, and U.S. Trust Company of California, N.A., as
trustee, with respect to RIHF 11.375% Junior Mortgage
Notes due 2004. (Incorporated by reference to Exhibit
4.05 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(2) Form of Mortgage between RIH and U.S. Trust Company of
California, N.A., securing Guaranty of RIHF Junior
Mortgage Notes. (Incorporated by reference to Exhibit
4.29 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(3) Form of Mortgage between RIH and RIHF, securing RIH
Junior Promissory Note. (Incorporated by reference to
Exhibit 4.30 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(4)(c)(4) Form of Assignment of Agreements made by RIHF, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding RIH Junior Promissory Note.
(Incorporated by reference to Exhibit 4.31 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(c)(5) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Junior
Promissory Note. (Incorporated by reference to Exhibit
4.32 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(6) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding Guaranty of RIHF Junior Mortgage
Notes. (Incorporated by reference to Exhibit 4.33 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
- 73 -<PAGE>
(4)(c)(7) Form of Assignment of Operating Assets made by RIH, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding the Guaranty of the RIHF Junior
Mortgage Notes. (Incorporated by reference to Exhibit
4.35 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(8) Form of Assignment of Operating Assets made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Junior
Promissory Note. (Incorporated by reference to Exhibit
4.27 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(9) Form of Amended and Restated $35,000,000 RIH Junior
Promissory Note. (Incorporated by reference to Exhibit A
to Exhibit (4)(c)(1) hereto.)
(4)(c)(10) Form of First Supplemental Indenture dated as of March 5,
1997, between RIHF, as issuer, RIH, as guarantor, and
U.S. Trust Company of California, N.A., as trustee, with
respect to RIHF 11.375% Junior Mortgage Notes due 2004.
(4)(d) Indenture dated as of September 14, 1990, between the
registrant and The Bank of New York, as trustee, with
respect to registrant's First Mortgage Non-Recourse
Pass-Through Notes due June 30, 2000, with Exhibits as
executed. (Incorporated by reference to Exhibit (4)(b)
to registrant's Form 10-Q Quarterly Report for the
quarter ended September 30, 1990, in File No. 1-4748.)
(4)(e)(1) Form of Purchase Agreement for $200,000,000 principal
amount of 9% Senior Subordinated Notes due 2007 dated
March 5, 1997, among SIHL and SINA, as issuers, Bear,
Stearns & Co. Inc., Societe Generale Securities
Corporation and Scotia Capital Markets (USA) Inc., as
purchasers, and various subsidiaries of SIHL, including
RIH and GGRI, as guarantors.
(4)(e)(2) Form of Indenture dated as of March 10, 1997, between
SIHL and SINA, as issuers, various subsidiaries of SIHL,
including RIH and GGRI, as guarantors, and The Bank of
New York, as trustee, with respect to $200,000,000
principal amount of 9% Senior Subordinated Notes due
2007, and exhibits thereto.
- 74 -<PAGE>
(4)(e)(3) Form of Registration Rights Agreement dated as of March
5, 1997, by and among SIHL and SINA, as issuers, various
subsidiaries of SIHL, including RIH and GGRI, as
guarantors, and Bear, Stearns & Co. Inc., Societe
Generale Securities Corporation and Scotia Capital
Markets (USA) Inc., as purchasers.
(4)(e)(4) Form of Inter-Borrower Agreement dated as of March 10,
1997, between SIHL and SINA.
(10)(a)(1) Lease Agreement, dated October 26, 1983, between the
registrant and Ocean Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(i) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31,
1986, in File No. 1-4748.)
(10)(a)(2) First Amendment, dated January 15, 1985, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (assignee from affiliate
- Ocean Showboat, Inc.). (Incorporated by reference to
Exhibit (10)(a)(2) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1995, in
File No. 1-4748.)
(10)(a)(3) Second and Third Amendments, dated July 5 and October 28,
1985, respectively, to Lease Agreement, dated October 26,
1983, between the registrant and Atlantic City Showboat,
Inc. (Incorporated by reference to Exhibit (10)(c)(iii)
to registrant's Form 10-K Annual Report for the fiscal
year ended December 31, 1985, in File No. 1-4748.)
(10)(a)(4) Restated Third Amendment, dated August 28, 1986, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(iv) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1986, in File No. 1-4748.)
(10)(a)(5) Fourth Amendment, dated December 16, 1986, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(v) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31,
1986, in File No. 1-4748.)
(10)(a)(6) Fifth Amendment, dated February 1987, to Lease Agreement,
dated October 26, 1983, between the registrant and
Atlantic City Showboat, Inc. (Incorporated by reference
to Exhibit (10)(c)(vi) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1986, in
File No. 1-4748.)
- 75 -<PAGE>
(10)(a)(7) Sixth Amendment, dated March 13, 1987, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(vii) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1986, in File No. 1-4748.)
(10)(a)(8) Seventh Amendment, dated October 18, 1988, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(viii) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1988, in File No. 1-4748.)
(10)(b)(1)* SINA Executive Health Plan. (Incorporated by reference
to Exhibit (10)(c)(1) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1992, in
File No. 1-4748.)
(10)(b)(2)* Resorts Retirement Savings Plan. (Incorporated by
reference to Exhibit (10)(c)(2) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31,
1991, in File No. 1-4748.)
(10)(c)(1)* Employment Agreement, dated May 3, 1991, between SINA and
Matthew B. Kearney. (Incorporated by reference to
Exhibit (10)(d)(3) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1991, in
File No. 1-4748.)
(10)(c)(2)* Amendment to Employment Agreement, dated December 3,
1992, between SINA and Matthew B. Kearney. (Incorporated
by reference to Exhibit 10.24 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(10)(c)(3)* Second Amendment to Employment Agreement, dated September
2 4 , 1993, between SINA and Matthew B. Kearney.
(Incorporated by reference to Exhibit 10.25 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(10)(d)* Non-Competition and Confidentiality Agreement dated
December 16, 1996, among SINA, SIHL and Thomas E.
Gallagher.
Gallagher.
(10)(e)(1)* License and Services Agreement, dated as of September 17,
1992, among Griffin Group, SINA and RIH. (Incorporated
by reference to Exhibit 10.34(a) to registrant's Form S-4
Registration Statement in File No. 33-50733.)
- 76 -<PAGE>
(10)(e)(2)* Form of Amendment to License and Services Agreement,
dated as of September 17, 1992, among Griffin Group, SINA
and RIH. (Incorporated by reference to Exhibit 10.34(b)
to registrant's Form S-4 Registration Statement in File
No. 33-50733.)
(10)(e)(3) Form of License and Services Agreement among Griffin
Group, SINA and RIH. (Incorporated by reference to Annex
VI to registrant's Definitive Proxy Statement dated
November 1, 1996 on Schedule 14A in File No. 1-4748.)
(10)(f) Litigation Trust Agreement, dated as of September 17,
1990, among SINA, Resorts International Financing, Inc.,
Griffin Resorts Holding Inc. and Griffin Resorts Inc.
(now GGRI, Inc.). (Incorporated by reference to Exhibit
1.46 to Exhibit 35 to the Form 8 Amendment dated November
16, 1990, to registrant's Form 8-K Current Report dated
August 30, 1990, in File No. 1-4748.)
(10)(g) Form of Intercreditor Agreement by and among RIHF, RIH,
SINA, GGRI, Inc., State Street Bank and Trust Company of
Connecticut, National Association, U.S. Trust Company of
California, N.A. and any lenders which provide additional
facilities. (Incorporated by reference to Exhibit 10.64
to registrant's Form S-4 Registration Statement in File
No. 33-50733.)
(10)(h) Form of Nominee Agreement between RIHF and RIH.
(Incorporated by reference to Exhibit 10.57 to Form S-1
Registration Statement in File No. 33-53371.)
(27)(a) Financial data schedule.
(27)(b) Restated financial data schedule for the year ended
12/31/95.
_________________
* Management contract or compensatory plan.
Registrant agrees to file with the Securities and Exchange
Commission, upon request, copies of any instrument defining the rights
of the holders of its consolidated long-term debt.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated December 16, 1996, was filed
by SINA to report the change in control of SINA as a result of the
Merger. No amendments to previously filed Forms 8-K were filed during
the fourth quarter of 1996.
- 77 -<PAGE>
(c) Exhibits Required by Item 601 of Regulation S-K
The exhibits listed in Item 14(a)3. of this report, and not
incorporated by reference to a separate file, follow "SIGNATURES."
(d) Financial Statement Schedules Required by Regulation S-X
The financial statement schedules required by Regulation S-X are
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA."
- 78 -<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SUN INTERNATIONAL NORTH AMERICA, INC.
(Registrant)
Date: March 20, 1997 By /s/ Matthew B. Kearney
Matthew B. Kearney
Executive Vice President - Finance
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By /s/ Howard B. Kerzner March 20, 1997
Howard B. Kerzner
Director
By /s/ Charles D. Adamo March 20, 1997
Charles D. Adamo
Director
By /s/ Matthew B. Kearney March 20, 1997
Matthew B. Kearney
Executive Vice President - Finance
(Principal Executive Officer and
Principal Financial Officer)
By /s/ David G. Bowden March 20, 1997
David G. Bowden
Vice President - Controller
(Principal Accounting Officer)
- 79 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(2)(a) Agreement and Plan of Incorporated by
Merger, dated August 19, reference to Exhibit
1996, among SIHL, Sun (2)(a) to Registrant's
Merger Corp. and SINA. Form 8-K Current Report
dated August 19, 1996,
in File No. 1-4748.
(2)(b) Amendment dated October Incorporated by
10, 1996 to the reference to Annex I to
Agreement and Plan of Registrant's Definitive
Merger among SIHL, Sun Proxy Statement dated
Merger Corp. and SINA. November 1, 1996 on
Schedule 14A in File No.
1-4748.
(2)(c) Stockholder Agreement, Incorporated by
dated August 19, 1996, reference to Exhibit
among SIHL and the (2)(b) to Registrant's
various Stockholders of Form 8-K Current Report
SINA set forth therein. dated August 19, 1996,
in File No. 1-4748.
(2)(d) Amendment dated October Incorporated by
10, 1996 to the reference to Annex II to
Stockholder Agreement Registrant's Definitive
among SIHL and the Proxy Statement dated
various Stockholders of November 1, 1996 on
SINA set forth therein. Schedule 14A in File No.
1-4748.
(2)(e) Stockholder Agreement, Incorporated by
dated August 19, 1996, reference to Exhibit
between SINA and SIIL. (2)(c) to Registrant's
Form 8-K Current Report
dated August 19, 1996,
in File No. 1-4748.
- 80 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(2)(f) Amendment dated October Incorporated by
10, 1996 to the reference to Annex III
Stockholder Agreement to Registrant's
between SINA and SIIL. Definitive Proxy
Statement dated November
1, 1996 on Schedule 14A
in File No. 1-4748.
(3)(a)(1) Restated Certificate of Incorporated by
Incorporation of SINA. reference to Exhibit
(3)(a) to Registrant's
Form 10-Q Quarterly
Report for the quarter
ended June 30, 1996, in
File No. 1-4748.
(3)(a)(2) Certificate of Amendment Filed herewith.
of Restated Certificate
of Incorporation of
SINA.
(3)(b) Amended and Restated By- Incorporated by
Laws of SINA. reference to Exhibit
(3)(b) to Registrant's
Form 10-Q Quarterly
Report for the quarter
ended June 30, 1996, in
File No. 1-4748.
(4)(a) See Exhibits (3)(a)(1),
(3)(a)(2) and (3)(b) as
to the rights of holders
of Registrant's common
stock.
- 81 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(4)(b)(1) Form of Indenture among Incorporated by
RIHF, as issuer, RIH, as reference to Exhibit
guarantor, and State 4.04 to registrant s
Street Bank and Trust Form S-4 Registration
Company of Connecticut, Statement in File No.
National Association, as 33-50733.
trustee, with respect to
RIHF 11% Mortgage Notes
due 2003.
(4)(b)(2) Form of Mortgage between Incorporated by
RIH and Street Bank and reference to Exhibit
Trust Company of 4.22 to registrant s
Connecticut, National Form S-4 Registration
Association, securing Statement in File No.
Guaranty of RIHF 33-50733.
Mortgage Notes.
(4)(b)(3) Form of Mortgage between Incorporated by
RIH and RIHF, securing reference to Exhibit
RIH Promissory Note. 4.23 to registrant s
Form S-4 Registration
Statement in File No.
33-50733.
(4)(b)(4) Form of Assignment of Incorporated by
Agreements made by RIHF, reference to Exhibit
as Assignor, to State 4.24 to registrant s
Street Bank and Trust Form S-4 Registration
Company of Connecticut, Statement in File No.
National Association, as 33-50733.
Assignee, regarding RIH
Promissory Note.
- 82 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(4)(b)(5) Form of Assignment of Incorporated by
Leases and Rents made by reference to Exhibit
RIH, as Assignor, to 4.25 to registrant s
RIHF, as Assignee, Form S-4 Registration
regarding RIH Promissory Statement in File No.
Note. 33-50733.
(4)(b)(6) Form of Assignment of Incorporated by
Leases and Rents made by reference to Exhibit
RIH, as Assignor, to 4.26 to registrant s
State Street Bank and Form S-4 Registration
Trust Company of Statement in File No.
Connecticut, National 33-50733.
Association, as
Assignee, regarding
Guaranty of RIHF
Mortgage Notes.
(4)(b)(7) Form of Assignment of Incorporated by
Operating Assets made by reference to Exhibit
RIH, as Assignor, to 4.28 to registrant s
State Street Bank and Form S-4 Registration
Trust Company of Statement in File No.
Connecticut, National 33-50733.
Association, as
Assignee, regarding
Guaranty of RIHF
Mortgage Notes.
(4)(b)(8) Form of Assignment of Incorporated by
Operating Assets made by reference to Exhibit
RIH, as Assignor, to 4.34 to registrant s
RIHF, as Assignee, Form S-4 Registration
regarding RIH Promissory Statement in File No.
Note. 33-50733.
- 83 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(4)(b)(9) Form of Amended and Incorporated by
Restated $125,000,000 reference to Exhibit A
RIH Promissory Note. to Exhibit (4)(b)(1)
hereto.
(4)(b)(10) Form of First Filed herewith.
Supplemental Indenture
dated as of March 5,
1997, among RIHF, as
issuer, RIH, as
guarantor, and State
Street Bank and Trust
Company of Connecticut,
National Association, as
trustee, with respect to
RIHF 11% Mortgage Notes
due 2003.
(4)(c)(1) Form of Indenture Incorporated by
between RIHF, as issuer, reference to Exhibit
RIH, as guarantor, and 4.05 to registrant's
U.S. Trust Company of Form S-4 Registration
California, N.A., as Statement in File No.
trustee, with respect to 33-50733.
RIHF 11.375% Junior
Mortgage Notes due 2004.
(4)(c)(2) Form of Mortgage between Incorporated by
RIH and U.S. Trust reference to Exhibit
Company of California, 4.29 to registrant's
N.A., securing Guaranty Form S-4 Registration
of RIHF Junior Mortgage Statement in File No.
Notes. 33-50733.
- 84 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(4)(c)(3) Form of Mortgage between Incorporated by
RIH and RIHF, securing reference to Exhibit
RIH Junior Promissory 4.30 to registrant's
Note. Form S-4 Registration
Statement in File No.
33-50733.
(4)(c)(4) Form of Assignment of Incorporated by
Agreements made by RIHF, reference to Exhibit
as Assignor, to U.S. 4.31 to registrant's
Trust Company of Form S-4 Registration
California, N.A., as Statement in File No.
Assignee, regarding RIH 33-50733.
Junior Promissory Note.
(4)(c)(5) Form of Assignment of Incorporated by
Leases and Rents made by reference to Exhibit
RIH, as Assignor, to 4.32 to registrant's
RIHF, as Assignee, Form S-4 Registration
regarding RIH Junior Statement in File No.
Promissory Note. 33-50733.
(4)(c)(6) Form of Assignment of Incorporated by
Leases and Rents made by reference to Exhibit
RIH, as Assignor, to 4.33 to registrant's
U.S. Trust Company of Form S-4 Registration
California, N.A., as Statement in File No.
Assignee, regarding 33-50733.
Guaranty of RIHF Junior
Mortgage Notes.
- 85 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(4)(c)(7) Form of Assignment of Incorporated by
Operating Assets made by reference to Exhibit
RIH, as Assignor, to 4.35 to registrant's
U.S. Trust Company of Form S-4 Registration
California, N.A., as Statement in File No.
Assignee, regarding the 33-50733.
Guaranty of the RIHF
Junior Mortgage Notes.
(4)(c)(8) Form of Assignment of Incorporated by
Operating Assets made by reference to Exhibit
RIH, as Assignor, to 4.27 to registrant's
RIHF, as Assignee, Form S-4 Registration
regarding RIH Junior Statement in File No.
Promissory Note. 33-50733.
(4)(c)(9) Form of Amended and Incorporated by
Restated $35,000,000 RIH reference to Exhibit A
Junior Promissory Note. to Exhibit (4)(c)(1)
hereto.
(4)(c)(10) Form of First Filed herewith.
Supplemental Indenture
dated as of March 5,
1997, between RIHF, as
issuer, RIH, as
guarantor, and U.S.
Trust Company of
California, N.A., as
trustee, with respect to
RIHF 11.375% Junior
Mortgage Notes due 2004.
- 86 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(4)(d) Indenture dated as of Incorporated by
September 14, 1990, reference to Exhibit
between the registrant (4)(b) to registrant's
and The Bank of New Form 10-Q Quarterly
York, as trustee, with Report for the quarter
respect to registrant's ended September 30,
First Mortgage 1990, in File No.
Non-Recourse 1-4748.
Pass-Through Notes due
June 30, 2000, with
Exhibits as executed.
(4)(e)(1) Form of Purchase Filed herewith.
Agreement for
$200,000,000 principal
amount of 9% Senior
Subordinated Notes due
2007 dated March 5,
1997, among SIHL and
SINA, as issuers, Bear,
Stearns & Co. Inc.,
Societe Generale
Securities Corporation
and Scotia Capital
Markets (USA) Inc., as
purchasers, and various
subsidiaries of SIHL,
including RIH and GGRI,
as guarantors.
- 87 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(4)(e)(2) Form of Indenture dated Filed herewith.
as of March 10, 1997,
between SIHL and SINA,
as issuers, various
subsidiaries of SIHL,
including RIH and GGRI,
as guarantors, and The
Bank of New York, as
trustee, with respect to
$200,000,000 principal
amount of 9% Senior
Subordinated Notes due
2007, and exhibits
thereto.
(4)(e)(3) Form of Registration Filed herewith.
Rights Agreement dated
as of March 5, 1997, by
and among SIHL and SINA,
as issuers, various
subsidiaries of SIHL,
including RIH and GGRI,
as guarantors, and Bear,
Stearns & Co. Inc.,
Societe Generale
Securities Corporation
and Scotia Capital
Markets (USA) Inc., as
purchasers.
(4)(e)(4) Form of Inter-Borrower Filed herewith.
Agreement dated as of
March 10, 1997, between
SIHL and SINA.
- 88 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(10)(a)(1) Lease Agreement, dated Incorporated by
October 26, 1983, reference to Exhibit
between the registrant (10)(c)(i) to
and Ocean Showboat, Inc. registrant's Form 10-K
Annual Report for the
fiscal year ended
December 31, 1986, in
File No. 1-4748.
(10)(a)(2) First Amendment, dated Incorporated by
January 15, 1985, to reference to Exhibit
Lease Agreement, dated (10)(a)(2) to
October 26, 1983, registrant's Form 10-K
between the registrant Annual Report for the
and Atlantic City fiscal year ended
Showboat, Inc. (assignee December 31, 1995, in
from affiliate - Ocean File No. 1-4748.
Showboat, Inc.).
(10)(a)(3) Second and Third Incorporated by
Amendments, dated July 5 reference to Exhibit
and October 28, 1985, (10)(c)(iii) to
respectively, to Lease registrant's Form 10-K
Agreement, dated October Annual Report for the
26, 1983, between the fiscal year ended
registrant and Atlantic December 31, 1985, in
City Showboat, Inc. File No. 1-4748.
(10)(a)(4) Restated Third Incorporated by
Amendment, dated August reference to Exhibit
28, 1986, to Lease (10)(c)(iv) to
Agreement, dated October registrant's Form 10-K
26, 1983, between the Annual Report for the
registrant and Atlantic fiscal year ended
City Showboat, Inc. December 31, 1986, in
File No. 1-4748.
- 89 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(10)(a)(5) Fourth Amendment, dated Incorporated by
December 16, 1986, to reference to Exhibit
Lease Agreement, dated (10)(c)(v) to
October 26, 1983, registrant's Form 10-K
between the registrant Annual Report for the
and Atlantic City fiscal year ended
Showboat, Inc. December 31, 1986, in
File No. 1-4748.
(10)(a)(6) Fifth Amendment, dated Incorporated by
February 1987, to Lease reference to Exhibit
Agreement, dated October (10)(c)(vi) to
26, 1983, between the registrant's Form 10-K
registrant and Atlantic Annual Report for the
City Showboat, Inc. fiscal year ended
December 31, 1986, in
File No. 1-4748.
(10)(a)(7) Sixth Amendment, dated Incorporated by
March 13, 1987, to Lease reference to Exhibit
Agreement, dated October (10)(c)(vii) to
26, 1983, between the registrant's Form 10-K
registrant and Atlantic Annual Report for the
City Showboat, Inc. fiscal year ended
December 31, 1986, in
File No. 1-4748.
(10)(a)(8) Seventh Amendment, dated Incorporated by
October 18, 1988, to reference to Exhibit
Lease Agreement, dated (10)(c)(viii) to
October 26, 1983, registrant's Form 10-K
between the registrant Annual Report for the
and Atlantic City fiscal year ended
Showboat, Inc. December 31, 1988, in
File No. 1-4748.
- 90 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(10)(b)(1) SINA Executive Health Incorporated by
Plan. reference to Exhibit
(10)(c)(1) to
registrant's Form 10-K
Annual Report for the
fiscal year ended
December 31, 1992, in
File No. 1-4748.
(10)(b)(2) Resorts Retirement Incorporated by
Savings Plan. reference to Exhibit
(10)(c)(2) to
registrant's Form 10-K
Annual Report for the
fiscal year ended
December 31, 1991, in
File No. 1-4748.
(10)(c)(1) Employment Agreement, Incorporated by
dated May 3, 1991, reference to Exhibit
between SINA and Matthew (10)(d)(3) to
B. Kearney. registrant's Form 10-K
Annual Report for the
fiscal year ended
December 31, 1991, in
File No. 1-4748.
(10)(c)(2) Amendment to Employment Incorporated by
Agreement, dated reference to Exhibit
December 3, 1992, 10.24 to registrant's
between SINA and Matthew Form S-4 Registration
B. Kearney. Statement in File No.
33-50733.
- 91 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(10)(c)(3) Second Amendment to Incorporated by
Employment Agreement, reference to Exhibit
dated September 24, 10.25 to registrant's
1993, between SINA and Form S-4 Registration
Matthew B. Kearney. Statement in File No.
33-50733.
(10)(d) Non-Competition and Filed herewith.
Confidentiality
Agreement dated December
16, 1996, among SINA,
SIHL and Thomas E.
Gallagher.
(10)(e)(1) License and Services Incorporated by
Agreement, dated as of reference to Exhibit
September 17, 1992, 10.34(a) to registrant's
among Griffin Group, Form S-4 Registration
SINA and RIH. Statement in File No.
33-50733.
(10)(e)(2) Form of Amendment to Incorporated by
License and Services reference to Exhibit
Agreement, dated as of 10.34(b) to registrant's
September 17, 1992, Form S-4 Registration
among Griffin Group, Statement in File No.
SINA and RIH. 33-50733.
(10)(e)(3) Form of License and Incorporated by
Services Agreement among reference to Annex VI to
Griffin Group, SINA and registrant's Definitive
RIH. Proxy Statement dated
November 1, 1996 on
Schedule 14A in File No.
1-4748.
- 92 -<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-K for the fiscal year
ended December 31, 1996
EXHIBIT INDEX
Reference to previous
Exhibit filing or this
Number Exhibit Form 10-K
(10)(f) Litigation Trust Incorporated by
Agreement, dated as of reference to Exhibit
September 17, 1990, 1.46 to Exhibit 35 to
among SINA, Resorts the Form 8 Amendment
International Financing, dated November 16, 1990,
Inc., Griffin Resorts to registrant's Form 8-K
Holding Inc. and Griffin Current Report dated
Resorts Inc. (now GGRI, August 30, 1990, in File
Inc.). No. 1-4748.
(10)(g) Form of Intercreditor Incorporated by
Agreement by and among reference to Exhibit
RIHF, RIH, SINA, GGRI, 10.64 to registrant's
Inc., State Street Bank Form S-4 Registration
and Trust Company of Statement in File No.
Connecticut, National 33-50733.
Association, U.S. Trust
Company of California,
N.A. and any lenders
which provide additional
facilities.
(10)(h) Form of Nominee Incorporated by
Agreement between RIHF reference to Exhibit
and RIH. 10.57 to Form S-1
Registration Statement
in File No. 33-53371.
(27)(a) Financial data schedule. Filed herewith.
(27)(b) Restated financial data Filed herewith.
schedule for the year
ended 12/31/95.
- 93 -<PAGE>
EXHIBIT (3)(a)(2)
CERTIFICATE OF AMENDMENT
of
RESTATED CERTIFICATE OF INCORPORATION
(PURSUANT TO SECTION 242)
Griffin Gaming & Entertainment, Inc., a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That, pursuant to Section 228 of the General
Corporation Law, on January 31, 1997, the Board of Directors and
Sole Shareholder of the Corporation adopted the following
resolution to amend the Restated Certificate of Incorporation of
the Corporation:
RESOLVED, that Article I of the Restated Certificate of
Incorporation of Griffin Gaming & Entertainment, Inc. be amended
to change the name of the Corporation to Sun International North
America, Inc.
IN WITNESS WHEREOF, said Griffin Gaming &
Entertainment, Inc. has caused this certificate to be signed by
Matthew B. Kearney, its Executive Vice President, this 4th day of
February, 1997.
GRIFFIN GAMING & ENTERTAINMENT, INC.
/s/Matthew B. Kearney
Matthew B. Kearney
Executive Vice President
<PAGE>
EXHIBIT (4)(b)(10)
EXECUTION COPY
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
$125,000,000
11% Mortgage Notes Due 2003
____________________________________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 5, 1997
______________________________________________
Resorts International Hotel, Inc., as Guarantor
State Street Bank and Trust Company of Connecticut,
National Association, as Trustee
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of March 5,
1997 (this "First Supplemental Indenture"), among Resorts
International Hotel Financing, Inc., as issuer (the
"Company"), Resorts International Hotel, Inc., as guarantor
(the "Guarantor"), and State Street Bank and Trust Company
of Connecticut, National Association, as trustee (the
"Trustee").
Capitalized terms used herein but not otherwise
defined herein shall have the meanings given to such terms
in the Indenture, dated as of May 3, 1994, among the
Company, the Guarantor and the Trustee (the "Indenture").
Recitals
WHEREAS, the Company, the Guarantor and the
Trustee entered into the Indenture pursuant to which the
Company issued its 11% Mortgage Notes Due 2003 (the
"Securities");
WHEREAS, in connection with the Indenture, (i) the
Guarantor and the Company entered into a Mortgage, dated as
of May 3, 1994, an Assignment of Leases and Rents, dated as
of May 3, 1994, and an Assignment of Operating Assets, dated
as of May 3, 1994, (ii) the Company, the Guarantor and the
Trustee entered into an Assignment of Agreements, dated as
of May 3, 1994 (the "Assignment"), and (iii) the Guarantor
and the Trustee entered into a Mortgage, dated as of May 3,
1994 (collectively, the "Security Documents");
WHEREAS, the Company has caused to be delivered to
the holders of the Securities an Offer to Purchase and
Consent Solicitation Statement, dated February 7, 1997 (as
the same may be amended from time to time, the "Statement"),
and a related Consent and Letter of Transmittal, pursuant to
which (i) the Company has offered to purchase for cash all
of the outstanding Securities (such offer on the terms set
forth in the Statement and such Consent and Letter of
Transmittal, the "Offer") and (ii) the Company has solicited
consents to the execution and delivery of this First
Supplemental Indenture;
WHEREAS, Section 11.02 of the Indenture provides
that the Company, the Guarantor and the Trustee may amend or<PAGE>
2
supplement the Indenture and the Securities and enter into
certain transactions with the consent of the holders of not
less than 66 % in Outstanding Amount of the Securities then
Outstanding (the "Requisite Holders"), subject to
paragraphs (a), (b), (c), (d) and (e) thereof;
WHEREAS, the Company has received the consents of
the Requisite Holders to the execution and delivery of this
First Supplemental Indenture;
WHEREAS, all actions necessary to make this First
Supplemental Indenture a legal, valid and binding obligation
of the parties hereto in accordance with its terms and the
terms of the Indenture have been performed; and
WHEREAS, the Company, the Guarantor and the
Trustee desire to enter into, execute and deliver this First
Supplemental Indenture in compliance with the provisions of
the Indenture.
NOW, THEREFORE, the Company and the Guarantor do
hereby covenant and agree to and with the Trustee, for the
Ratable Benefit of Holders of the Securities, as follows.
ARTICLE ONE
AMENDMENTS TO INDENTURE
This First Supplemental Indenture to the Indenture
is hereby amended as follows:
1.1. Amendment of Article One. Article One
("Definitions and Other Provisions of General Application")
of the Indenture is hereby amended by deleting from
Section 1.01 ("Definitions") the definition of "Mortgage
Documents" in its entirety and inserting in lieu thereof the
following: "Mortgage Documents" means the RIH Promissory
Note.".
1.2 Amendment of Article Four. Article Four
("Guaranty") of the Indenture is hereby amended by deleting
in its entirety Section 4.03 ("Mortgage Securing Guaranty")<PAGE>
3
and inserting in lieu thereof the following:
"[intentionally omitted]".
1.3 Amendment of Article Six. Article Six
("Security") of the Indenture is hereby amended by deleting
in their entirety Sections 6.01 ("Assignment Agreement"),
6.02 ("Recording, Etc."), 6.03 ("Custody of Mortgage
Documents") and 6.04 ("Suits to Protect the Trust Estate and
Mortgage Documents"), and inserting in each case in lieu
thereof the following: "[intentionally omitted]".
1.4 Amendment of Article Seven. Article Seven
("Remedies") of the Indenture is hereby amended by deleting
paragraph (c) of Section 7.01 ("Events of Default") thereof
in its entirety and inserting in lieu thereof the following:
"[intentionally omitted]".
1.5 Amendment of Article Ten. Article Ten
("Consolidation, Merger, Conveyance, Transfer or Lease") of
the Indenture is hereby amended by deleting in their
entirety Sections 10.01 ("Consolidation, Merger, Conveyance
or Transfer Only on Certain Terms") and 10.04 ("Limitation
on Sales of Trust Estate"), and inserting in each case in
lieu thereof the following: "[intentionally omitted]".
1.6. Amendment of Article Twelve.
(a) Article Twelve ("Covenants") of the Indenture is hereby
amended by deleting in their entirety Sections 12.05 ("To
Keep Books; Inspection by Trustee"), 12.07 ("Limitation on
Dividends and Restricted Payments"), 12.08 ("Limitation on
Additional Indebtedness and Issuance of Notes"), 12.09
("Limitation on Repayment of Subordinated Indebtedness"),
12.10 ("Limitation on Certain Transactions"), 12.11
("Restriction of Activities"), 12.12 ("Limitation on
Subsidiaries; Consolidated Group"), 12.13 ("Limitations on
Liens"), 12.16 ("Maintenance of Properties"), 12.17
("Insurance"), 12.20 ("Validity of Liens") and 12.21
("Transactions with Stockholders and Affiliates"), and
inserting in each case in lieu thereof the following:
"[intentionally omitted]".
(b) Article Twelve ("Covenants") of the Indenture
is hereby further amended by deleting paragraphs (a), (b)
and (e) of Section 12.06 ("Reports and Compliance<PAGE>
4
Certificates") thereof in their entirety and inserting in
each case in lieu thereof the following: "[intentionally
omitted]".
ARTICLE TWO
SECURITY DOCUMENTS
2.1. Obligations. The parties hereto hereby
agree that all obligations, liabilities, covenants and
agreements of each of the parties hereto under or in
connection with the Security Documents are hereby terminated
and canceled and are of no further force or effect.
2.2. Release. The parties hereto do hereby
release and discharge any and all right, title and interest
that they may have or that they may be entitled to by virtue
of the Security Documents and do hereby declare any and all
liens created by virtue of the Security Documents fully
released and discharged.
2.3. Consent. In satisfaction of Section 1.02(d)
of the Assignment, the Trustee hereby consents to and
approves of the release and discharge by the Company of any
and all of its right, title and interest that it may have or
that it may be entitled to by virtue of the Assignment in
the Assigned Properties (as defined in the Assignment).
2.4. Filings. (a) Upon the execution of this
First Supplemental Indenture, the Company or the Guarantor,
as the case may be, shall provide written notice to the
other parties hereto of any Uniform Commercial Code
termination statements, irrevocable stock powers, mortgage
release documents or other instruments or documents
(collectively, the "Filing Documents") that the Company or
the Guarantor, as the case may be, will require, in its sole
discretion, in order to release and discharge any right,
title or interest that any party hereto may have or that it
may be entitled to by virtue of the Security Documents.
(b) Upon the effectiveness of this First
Supplemental Indenture pursuant to Section 3.4 hereof, the
parties hereto shall deliver the Filing Documents, duly<PAGE>
5
executed and validly authorized, to the Company or the
Guarantor, as the case may be.
ARTICLE THREE
MISCELLANEOUS
3.1 Acceptance by Trustee. The Trustee accepts
the amendments to the Indenture effected by this First
Supplemental Indenture and agrees to execute the trusts
created by the Indenture as hereby amended, but only upon
the terms and conditions set forth in the Indenture.
3.2 Trustee's Disclaimer. The Trustee shall not
be responsible for and makes no representation as to the
validity or adequacy of this First Supplemental Indenture or
the Securities, and it shall not be responsible for any
statement of the Company in this First Supplemental
Indenture or any document issued in connection with the
Offer.
3.3 Ratification. Except as hereby expressly
amended, the Indenture and the Securities issued thereunder
are in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in
full force and effect. This First Supplemental Indenture
shall form a part of the Indenture and the First
Supplemental Indenture and the Indenture shall be read,
taken and construed as one and the same instrument for all
purposes, and every Holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture
shall be bound hereby.
3.4 Effectiveness. This First Supplemental
Indenture shall become effective as of the date first above
written; provided, however, that the provisions of Article
One and Article Two (other than Section 2.4(a)) hereto shall
not become operative until the Offer is consummated on the
Payment Date.
3.5 Governing Law. This First Supplemental
Indenture shall be governed by, and construed in accordance<PAGE>
6
with, the laws of the State of New York, regardless of the
laws that might otherwise govern under applicable principles
of conflicts of law of the State of New York.
3.6 Counterpart Originals. This instrument may
be executed in any number of counterparts or with
counterpart signatures, each of which as executed shall be
deemed to be an original, but all such counterparts shall
constitute one and the same instrument.<PAGE>
7
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this First Supplemental Indenture to be duly executed and
attested, all as of the day and year first above written.
RESORTS INTERNATIONAL
HOTEL FINANCING, INC.
By: _____________________
Name:
Title:
(Corporate Seal)
Attest: _____________
RESORTS INTERNATIONAL
HOTEL, INC.
By: _____________________
Name:
Title:
(Corporate Seal)
Attest: ______________
STATE STREET BANK AND
TRUST COMPANY OF
CONNECTICUT, NATIONAL
ASSOCIATION
By: _____________________
Name:
Title:
(Corporate Seal)
Attest: ________________
<PAGE>
EXHIBIT (4)(c)(10)
EXECUTION COPY
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
$35,000,000
11 % Junior Mortgage Notes Due 2004
____________________________________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 5, 1997
______________________________________________
Resorts International Hotel, Inc., as Guarantor
U.S. Trust Company of California, N.A., as Trustee
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of March 5,
1997 (this "First Supplemental Indenture"), among Resorts
International Hotel Financing, Inc., as issuer (the
"Company"), Resorts International Hotel, Inc., as guarantor
(the "Guarantor"), and U.S. Trust Company of California,
N.A., as trustee (the "Trustee").
Capitalized terms used herein but not otherwise
defined herein shall have the meanings given to such terms
in the Indenture, dated as of May 3, 1994, among the
Company, the Guarantor and the Trustee (the "Indenture").
Recitals
WHEREAS, the Company, the Guarantor and the
Trustee entered into the Indenture pursuant to which the
Company issued its 11 % Junior Mortgage Notes Due 2004 (the
"Securities");
WHEREAS, in connection with the Indenture, (i) the
Guarantor and the Company entered into a Mortgage, dated as
of May 3, 1994, and an Assignment of Leases and Rents, dated
as of May 3, 1994, (ii) the Company, the Guarantor and the
Trustee entered into an Assignment of Agreements, dated as
of May 3, 1994 (the "Assignment"), and (iii) the Guarantor
and the Trustee entered into a Mortgage, dated as of May 3,
1994 (collectively, the "Security Documents");
WHEREAS, the Company has caused to be delivered to
the holders of the Securities an Offer to Purchase and
Consent Solicitation Statement, dated February 7, 1997 (as
the same may be amended from time to time, the "Statement"),
and a related Consent and Letter of Transmittal, pursuant to
which (i) the Company has offered to purchase for cash all
of the outstanding Securities (such offer on the terms set
forth in the Statement and such Consent and Letter of
Transmittal, the "Offer") and (ii) the Company has solicited
consents to the execution and delivery of this First
Supplemental Indenture;
WHEREAS, Section 11.02 of the Indenture provides
that the Company, the Guarantor and the Trustee may amend or
supplement the Indenture and the Securities and enter into
certain transactions with the consent of the holders of not<PAGE>
2
less than 66 % in Outstanding Amount of the Securities then
Outstanding (the "Requisite Holders"), subject to
paragraphs (a), (b), (c), (d) and (e) thereof;
WHEREAS, the Company has received the consents of
the Requisite Holders to the execution and delivery of this
First Supplemental Indenture;
WHEREAS, all actions necessary to make this First
Supplemental Indenture a legal, valid and binding obligation
of the parties hereto in accordance with its terms and the
terms of the Indenture have been performed; and
WHEREAS, the Company, the Guarantor and the
Trustee desire to enter into, execute and deliver this First
Supplemental Indenture in compliance with the provisions of
the Indenture.
NOW, THEREFORE, the Company and the Guarantor do
hereby covenant and agree to and with the Trustee, for the
Ratable Benefit of Holders of the Securities, as follows.
ARTICLE ONE
AMENDMENTS TO INDENTURE
This First Supplemental Indenture to the Indenture
is hereby amended as follows:
1.1. Amendment of Article One. Article One
("Definitions and Other Provisions of General Application")
of the Indenture is hereby amended by deleting from
Section 1.01 ("Definitions") the definition of "Mortgage
Documents" in its entirety and inserting in lieu thereof the
following: ""Mortgage Documents" means the RIH Junior
Promissory Note.".
1.2 Amendment of Article Four. Article Four
("Guaranty") of the Indenture is hereby amended by deleting
in its entirety Section 4.03 ("Mortgage Securing Guaranty")
and inserting in lieu thereof the following:
"[intentionally omitted]".<PAGE>
3
1.3 Amendment of Article Six. Article Six
("Security") of the Indenture is hereby amended by deleting
in their entirety Sections 6.01 ("Assignment Agreement"),
6.02 ("Recording, Etc."), 6.03 ("Custody of Mortgage
Documents") and 6.04 ("Suits to Protect the Trust Estate and
Mortgage Documents"), and inserting in each case in lieu
thereof the following: "[intentionally omitted]".
1.4 Amendment of Article Seven. Article Seven
("Remedies") of the Indenture is hereby amended by deleting
paragraph (c) of Section 7.01 ("Events of Default") thereof
in its entirety and inserting in lieu thereof the following:
"[intentionally omitted]".
1.5 Amendment of Article Ten. Article Ten
("Consolidation, Merger, Conveyance, Transfer or Lease") of
the Indenture is hereby amended by deleting in their
entirety Sections 10.01 ("Consolidation, Merger, Conveyance
or Transfer Only on Certain Terms") and 10.04 ("Limitation
on Sales of Trust Estate"), and inserting in each case in
lieu thereof the following: "[intentionally omitted]".
1.6. Amendment of Article Twelve.
(a) Article Twelve ("Covenants") of the Indenture is hereby
amended by deleting in their entirety Sections 12.05 ("To
Keep Books; Inspection by Trustee"), 12.07 ("Limitation on
Dividends and Restricted Payments"), 12.08 ("Limitation on
Additional Indebtedness and Issuance of Notes"), 12.09
("Limitation on Repayment of Subordinated Indebtedness"),
12.10 ("Limitation on Certain Transactions"), 12.11
("Restriction of Activities"), 12.12 ("Limitation on
Subsidiaries; Consolidated Group"), 12.13 ("Limitations on
Liens"), 12.16 ("Maintenance of Properties"), 12.17
("Insurance"), 12.20 ("Validity of Liens"), 12.21
("Transactions with Stockholders and Affiliates") and 12.22
("Limitation on Open Market Purchases"), and inserting in
each case in lieu thereof the following: "[intentionally
omitted]".
(b) Article Twelve ("Covenants") of the Indenture
is hereby further amended by deleting paragraphs (a), (b)
and (e) of Section 12.06 ("Reports and Compliance
Certificates") thereof in their entirety and inserting in<PAGE>
4
each case in lieu thereof the following: "[intentionally
omitted]".
ARTICLE TWO
SECURITY DOCUMENTS
2.1. Obligations. The parties hereto hereby
agree that all obligations, liabilities, covenants and
agreements of each of the parties hereto under or in
connection with the Security Documents are hereby terminated
and canceled and are of no further force or effect.
2.2. Release. The parties hereto do hereby
release and discharge any and all right, title and interest
that they may have or that they may be entitled to by virtue
of the Security Documents and do hereby declare any and all
liens created by virtue of the Security Documents fully
released and discharged.
2.3. Consent. In satisfaction of Section 1.02(d)
of the Assignment, the Trustee hereby consents to and
approves of the release and discharge by the Company of any
and all of its right, title and interest that it may have or
that it may be entitled to by virtue of the Assignment in
the Assigned Properties (as defined in the Assignment).
2.4. Filings. (a) Upon the execution of this
First Supplemental Indenture, the Company or the Guarantor,
as the case may be, shall provide written notice to the
other parties hereto of any Uniform Commercial Code
termination statements, irrevocable stock powers, mortgage
release documents or other instruments or documents
(collectively, the "Filing Documents") that the Company or
the Guarantor, as the case may be, will require, in its sole
discretion, in order to release and discharge any right,
title or interest that any party hereto may have or that it
may be entitled to by virtue of the Security Documents.
(b) Upon the effectiveness of this First
Supplemental Indenture pursuant to Section 3.4 hereof, the
parties hereto shall deliver the Filing Documents, duly
executed and validly authorized, to the Company or the
Guarantor, as the case may be.<PAGE>
5
ARTICLE THREE
MISCELLANEOUS
3.1 Acceptance by Trustee. The Trustee accepts
the amendments to the Indenture effected by this First
Supplemental Indenture and agrees to execute the trusts
created by the Indenture as hereby amended, but only upon
the terms and conditions set forth in the Indenture.
3.2 Trustee's Disclaimer. The Trustee shall not
be responsible for and makes no representation as to the
validity or adequacy of this First Supplemental Indenture or
the Securities, and it shall not be responsible for any
statement of the Company in this First Supplemental
Indenture or any document issued in connection with the
Offer.
3.3 Ratification. Except as hereby expressly
amended, the Indenture and the Securities issued thereunder
are in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in
full force and effect. This First Supplemental Indenture
shall form a part of the Indenture and the First
Supplemental Indenture and the Indenture shall be read,
taken and construed as one and the same instrument for all
purposes, and every Holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture
shall be bound hereby.
3.4 Effectiveness. This First Supplemental
Indenture shall become effective as of the date first above
written; provided, however, that the provisions of Article
One and Article Two (other than Section 2.4(a)) hereto shall
not become operative until the Offer is consummated on the
Payment Date.
3.5 Governing Law. This First Supplemental
Indenture shall be governed by, and construed in accordance
with, the laws of the State of New York, regardless of the
laws that might otherwise govern under applicable principles
of conflicts of law of the State of New York.<PAGE>
6
3.6 Counterpart Originals. This instrument may
be executed in any number of counterparts or with
counterpart signatures, each of which as executed shall be
deemed to be an original, but all such counterparts shall
constitute one and the same instrument.<PAGE>
7
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this First Supplemental Indenture to be duly executed and
attested, all as of the day and year first above written.
RESORTS INTERNATIONAL
HOTEL FINANCING, INC.
By: _____________________
Name:
Title:
(Corporate Seal)
Attest: _____________
RESORTS INTERNATIONAL
HOTEL, INC.
By: _____________________
Name:
Title:
(Corporate Seal)
Attest: ______________
U.S. TRUST COMPANY OF
CALIFORNIA, N.A.
By: _____________________
Name:
Title:
(Corporate Seal)
Attest: ________________
<PAGE>
$200,000,000
SUN INTERNATIONAL HOTELS LIMITED
SUN INTERNATIONAL NORTH AMERICA, INC.
9% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
March 5, 1997
<PAGE>
PURCHASE AGREEMENT
March 5, 1997
BEAR, STEARNS & CO. INC.
SOCIETE GENERALE SECURITIES
CORPORATION
SCOTIA CAPITAL MARKETS (USA) INC.
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
Sun International Hotels Limited, an international business company
organized under the laws of the Commonwealth of The Bahamas ("Sun
International"), and Sun International North America, Inc., a Delaware
corporation and a wholly owned subsidiary of Sun International ("SINA" and,
collectively with Sun International, the "Issuers"), propose, subject to the
terms and conditions stated herein, to issue and sell to you (the "Initial
Purchasers") $200,000,000 aggregate principal amount of their 9% Senior
Subordinated Notes due 2007 (the "Securities"), to be issued pursuant to an
indenture dated as of March 10, 1997 (the "Indenture") between the Issuers, the
Guarantors signatory hereto (the "Guarantors") and The Bank of New York, as
trustee (the "Trustee"). The Securities are to be guaranteed (the "Guarantees")
by the Guarantors. The Guarantees shall be in the form contained in the
Indenture. Unless the context requires otherwise, all references herein to the
Securities shall be deemed to include the Guarantees.
The Securities will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption therefrom. The Issuers have prepared a preliminary
offering memorandum, dated February 25, 1997 (such preliminary offering
memorandum being hereinafter referred to as the "Preliminary Offering
<PAGE>
Memorandum"), and an offering memorandum, dated March 5, 1997 (such offering
memorandum, in the form first furnished to the Initial Purchasers for use in
connection with the offering of Securities, being hereinafter referred to as the
"Offering Memorandum"), setting forth information regarding the Issuers and the
Securities. Each Issuer hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Securities. All capitalized terms used and not
defined herein shall have the meaning set forth in the Offering Memorandum.
The Issuers understand that you propose to make an offering of the
Securities on the terms set forth in the Offering Memorandum, as soon as you
deem advisable after this Agreement has been executed as delivered, (i) to
persons in the United States whom you reasonably believe to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
promulgated by the Securities and Exchange Commission (the "Commission") under
the Act, as such rule may be amended from time to time ("Rule 144A"), in a
transaction under Rule 144A and (ii) to institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Act), provided that such
offers and sales are made in the manner contemplated by Section 3(a), (d) and
(e) hereof.
1. Representations and Warranties of the Issuers and the Guarantors. Each
of the Issuers and Guarantors, jointly and severally, represents and warrants
to, and agrees with, you that:
(a) As of their respective dates, the Offering Memorandum and the
Preliminary Offering Memorandum do not, and at the Closing Date (as defined
herein) the Offering Memorandum will not, contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties contained
in this paragraph (a) shall not apply to statements in or omissions from the
Preliminary Offering Memorandum or the Offering Memorandum (or any supplement or
amendment to them) made in reliance upon and in conformity with information
relating to any Initial Purchaser furnished to the Issuers by or on behalf of
such Initial Purchaser through Bear, Stearns & Co. Inc. ("Bear, Stearns"). The
Issuers and the Initial Purchasers acknowledge for all purposes under this
Agreement (including this paragraph and Section 6 hereof) that the statements
set forth in the last paragraph of the cover page of the Offering Memorandum,
the first (including the tables therein), second and third paragraphs and the
fifth and sixth
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sentence of the fourth paragraph of the section entitled "Plan of Distribution"
in the Offering Memorandum constitute the only information (the "Initial
Purchasers' Information") furnished to the Issuers by or on behalf of any
Initial Purchaser through Bear, Stearns expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum and that the Initial Purchasers
shall not be deemed to have provided any information (and therefore are not
responsible for any statements or omissions) pertaining to any arrangement or
agreement with respect to any party other than the Initial Purchasers.
(b) Each Issuer and Guarantor has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to carry
on its business as it is currently being conducted or is proposed to be
conducted (as discussed in the Offering Memorandum) and to own, lease and
operate its properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified could not, singly or
in the aggregate, have a material adverse effect on the properties, results of
operations, financial condition or prospects of Sun International and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(c) The capitalization of Sun International is as set forth in the
Offering Memorandum under the caption "Capitalization" in the column
"Historical." All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each of the Guarantors are duly authorized and
validly issued and fully paid and nonassessable, and owned by Sun International,
free and clear of any security interest, mortgage, pledge, claim, lien,
encumbrance or adverse interest of any nature (each, a "Lien") and of any
restrictions on transfer, voting trusts or other defects of title whatsoever
except for the pledges of the shares of Sun International's subsidiaries under
the Amended and Restated Revolving Credit Agreement dated as of November 1,
1996, as amended, among Sun Bahamas, Sun International, certain of the Company's
subsidiaries and certain financial institutions and The Bank of Nova Scotia, as
administrative and collateral agent (the "Existing Credit Agreement"). There are
no outstanding subscriptions, rights, warrants, options, calls, convertible or
exchangeable securities, commitments of sale or Liens related to or entitling
any person to purchase or otherwise to acquire any shares of the capital stock
of, or other ownership interest in, Sun International or any Guarantor, except
as disclosed in the Offering Memorandum.
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(d) The Securities, the Guarantees and the Indenture conform in all
material respects to the descriptions thereof contained in the Offering
Memorandum.
(e) All the outstanding shares of capital stock of Sun International
have been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights; the management agreement
between Trading Cove Associates ("TCA") and the Mohegan Tribe conforms in all
material respects to the description thereof contained in the Offering
Memorandum; each of the agreements described in the Offering Memorandum to which
Sun International, any of its subsidiaries, Sun Resorts Limited ("SRL"), Societe
de Participation et d'Investissements dans les Casinos ("SPIC") or TCA is a
party conforms in all material respects to the description thereof contained in
the Offering Memorandum, and Sun International believes that each such agreement
is effective and enforceable against the other party, except as disclosed in the
Offering Memorandum.
(f) Neither Sun International nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws, or (ii) in default in the
performance of any obligation, bond, agreement, debenture, note, or any other
evidence of indebtedness or any indenture, mortgage, deed of trust or other
contract, lease or other instrument to which Sun International or any of its
subsidiaries is a party or by which it or any of them is bound, or to which any
of the property of Sun International or any of its subsidiaries is subject
except, in the case of clause (ii), for such defaults that could not reasonably
be expected to have a Material Adverse Effect.
(g) Each Issuer and Guarantor has all the requisite corporate power to
execute, deliver and perform its obligations under this Agreement and to
authorize, issue and sell the Securities and Guarantees being sold by it. The
execution, delivery and performance of this Agreement, the registration rights
agreement of even date herewith relating to the Securities (the "Registration
Rights Agreement") and the Indenture, the issuance and sale of the Securities,
compliance by each Issuer and each Guarantor with all the provisions hereof and
thereof and the consummation of the transactions contemplated hereby and thereby
will not require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body (except
those already received and such as may be required under state securities laws
or Blue Sky laws and with respect to the Registration Rights Agreement, the Act
and the regulations of the National Association of Securities Dealers, Inc.
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(the "NASD")) and will not conflict with or constitute a breach or violation of
(i) any of the charters or by-laws of Sun International or any of its
subsidiaries, (ii) any of the terms or provisions of, or constitute a default
under or cause an acceleration of, any obligation, bond, agreement or condition
contained in any bond, note, debenture or other evidence of indebtedness or any
indenture, mortgage, deed of trust or other contract, lease or other instrument
to which Sun International or any of its subsidiaries is a party or by which it
or any of them is bound, or to which any of the property of Sun International or
any of its subsidiaries is subject or (iii) any laws, administrative regulations
or rulings or orders of any court or governmental agency, body or official
having jurisdiction over Sun International, any of its subsidiaries or their
respective properties, except in the case of clauses (ii) and (iii) for such
conflicts, breaches or violations that could not reasonably be expected to have
a Material Adverse Effect.
(h) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any governmental body, agency or official
which prevents the issuance of the Securities, prevents or suspends the use of
the Offering Memorandum or the Preliminary Offering Memorandum or suspends the
sale of the Securities in any jurisdiction referred to in Section 3(a) hereof;
no injunction, restraining order or order of any nature by any foreign, Federal
or state court of competent jurisdiction has been issued with respect to Sun
International or any of its subsidiaries which would prevent or suspend the
issuance or sale of the Securities or the use of the Offering Memorandum or the
Preliminary Offering Memorandum in any jurisdiction referred to in Section 3(a)
hereof; and no action, suit or proceeding before any court or arbitrator or any
governmental body, agency or official, domestic or foreign, is pending against
or, to the best knowledge of Sun International, threatened against, Sun
International or any of its subsidiaries which, if adversely determined, could
interfere with or adversely affect the issuance of the Securities or in any
manner draw into question the validity of this Agreement, the Securities, the
Indenture or the Registration Rights Agreement.
(i) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, pending against or, to the
knowledge of Sun International, affecting Sun International or any of its
subsidiaries or any of their respective assets or properties, which could have a
Material Adverse Effect, or which could materially and adversely affect the
performance by either Issuer or any Guarantor of its obligations pursuant to
this Agreement or the transactions contemplated hereby and, to the best
knowledge of
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Sun International, except as disclosed in the Offering Memorandum, no such
action, suit or proceeding is threatened or contemplated.
(j) Except as disclosed in the Offering Memorandum, (i) neither Sun
International nor any of its subsidiaries is in violation of any federal, state,
local or foreign laws or regulations relating to pollution or protection of
human health or the environment (collectively, the "Environmental Laws"); and
(ii) (A) neither Sun International nor any of its subsidiaries has received any
communication (written or oral), whether from a governmental authority or
otherwise, alleging any such violation or noncompliance, and there are no
circumstances, either past or present or that are reasonably foreseeable, that
could reasonably be expected to lead to such violation in the future, (B) there
is no pending or, to the best of Sun International's knowledge, threatened
claim, action, investigation or notice (written or oral) by any person or entity
alleging potential liability for investigatory, cleanup, or governmental
responses costs, or natural resources or property damages, or personal injuries,
attorneys' fees or penalties, relating to (x) the presence in or release into
the environment of any emissions, discharges or releases of toxic or hazardous
substances, materials or wastes or petroleum and petroleum products at any
location owned, leased or operated by Sun International or any of its
subsidiaries, now or in the past, or (y) circumstances forming the basis of any
violation or alleged violation of any Environmental Law (collectively,
"Environmental Claims") and (C) to the best knowledge of Sun International,
there are no past or present actions, activities, circumstances, conditions,
events or incidents that could form the basis of any Environmental Claim against
Sun International or any of its subsidiaries, now or in the past, or against any
person or entity whose liability for any Environmental Claim Sun International
or any of its subsidiaries has retained or assumed either contractually or by
operation of law, in each of clauses (i) and (ii) that could reasonably be
expected to have a Material Adverse Effect.
(k) Except as disclosed in the Offering Memorandum, (i) each of Sun
International, its subsidiaries, the persons listed as executive officers under
the caption "Management" in the Offering Memorandum, TCA, SRL and SPIC has all
certificates, consents, exemptions, orders, permits, licenses, authorizations or
other approvals or rights of and from, and has made all declarations and filings
with, all foreign, Federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, including,
without limitation, all such authorizations with respect to engaging in gaming,
hotel and resort operations, as applicable, in The Bahamas, Connecticut, New
Jersey, France, Mauritius and the Comoros required to own, lease, license and
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use its properties and assets and to conduct its current business in the manner
described in the Offering Memorandum (it being understood that Sun International
only has Interim Casino Authorization in connection with its gaming operations
in the State of New Jersey) (each, an "Authorization"), except to the extent
that the failure to possess such Authorizations could not reasonably be expected
to have a Material Adverse Effect; (ii) all such Authorizations are valid and in
full force and effect, except as could not reasonably be expected to have a
Material Adverse Effect; (iii) each of Sun International, its subsidiaries, each
of the persons listed as executive officers under the caption "Management" in
the Offering Memorandum, TCA, SRL and SPIC is in compliance in all respects with
the terms and conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities and governing bodies having
jurisdiction with respect thereto, except as could not reasonably be expected to
have a Material Adverse Effect, and (iv) none of Sun International, its
subsidiaries, the persons listed as executive officers under the caption
"Management" in the Offering Memorandum, SRL, SPIC nor TCA has received any
notice of proceedings relating to the revocation or modification of any such
Authorization and no such Authorization contains any restrictions except as
could not reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the Offering Memorandum, none of Sun International, any of its
subsidiaries, any of the persons listed as executive officers under the caption
"Management" in the Offering Memorandum, SRL, TCA nor SPIC has any reason to
believe that (i) any Regulatory Authority (as defined below) is considering
modifying, limiting, conditioning, suspending, revoking or not renewing any such
Authorizations of Sun International, any of its subsidiaries, any of the persons
listed as executive officers under the caption "Management" in the Offering
Memorandum, SRL, SPIC or TCA or (ii) that the National Indian Gaming Commission,
the Bureau of Indian Affairs, or regulatory authorities in The Bahamas,
Connecticut, New Jersey, France, Mauritius or the Comoros (collectively the
"Regulatory Authorities"), or any other governmental agencies are investigating
Sun International, any of its subsidiaries, SRL, SPIC or TCA or related parties
(other than normal overseeing reviews of the Regulatory Authorities incident to
the gaming, hotel or casino activities of Sun International, its subsidiaries,
any of the persons listed as executive officers under the caption "Management"
in the Offering Memorandum, SRL, SPIC and TCA), which investigation could
reasonably be expected to have a Material Adverse Effect.
(l) Except as disclosed in the Offering Memorandum or as could not
reasonably be expected to have a Material Adverse Effect, Sun International and
each of its subsidiaries has good and valid title, free and clear of all Liens
except Liens for taxes not yet due and payable and except for the pledges
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under the Existing Credit Agreements, to all property and assets described in
the Offering Memorandum as being owned by it and such properties and assets are
in the condition and suitable for use as so described. All leases to which Sun
International or any of its subsidiaries is a party are valid and binding and no
default has occurred or is continuing thereunder, which could reasonably be
expected to have a Material Adverse Effect.
(m) Sun International, SINA and each Guarantor maintain insurance at
least in such amounts and covering at least such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties.
(n) Arthur Andersen LLP and Ernst & Young LLP, the firms of
accountants that have certified the applicable financial statements of Sun
International, SINA, Resorts International Hotel Financing, Inc. and Resorts
International Hotel, Inc., filed with the Commission, are independent public
accountants with respect to such corporations as applicable, as required by the
Act.
(o) The financial statements, together with the related schedules and
notes included in the Offering Memorandum, comply as to form in all material
respects with the requirements of the Act and present fairly the consolidated
financial position, results of operations and changes in financial position of
Sun International, SINA and their subsidiaries at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles in the United States of America ("GAAP") consistently
applied throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data set forth in the Offering
Memorandum are accurately presented and prepared on a basis consistent with such
financial statements and the books and records of Sun International and SINA, as
applicable. The pro forma financial statements and other pro forma financial
information included in the Offering Memorandum present fairly in all material
respects the information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases described
therein, and, in the opinion of Sun International, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
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(p) Except as described in the Offering Memorandum, subsequent to the
respective dates as of which information is given in the Offering Memorandum and
up to the Closing Date (i) neither Sun International nor any of its subsidiaries
has incurred any liabilities or obligations, direct or contingent, which are
material to Sun International and its subsidiaries, singly or in the aggregate,
nor entered into any material transaction not in the ordinary course of
business, (ii) there has been no decision or judgment in the nature of
litigation, administrative or regulatory proceedings or arbitration that could
reasonably be expected to have a Material Adverse Effect and (iii) there has not
been any material adverse change or any development which could involve, singly
or in the aggregate, a material adverse change, in the properties, results of
operations, financial condition or prospects of Sun International and its
subsidiaries, taken as a whole (any of the items set forth in clauses (i),(ii)
or (iii) of this paragraph (p), a "Material Adverse Change").
(q) Neither Sun International nor any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act")
or (ii) a "holding company" or a "subsidiary company" of a holding company, or
an "affiliate" thereof within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(r) No authorization, approval, consent or order of, or filing with,
any court or governmental body, agency or official, including the Regulatory
Authorities, is necessary in connection with the transactions contemplated by
this Agreement except such as may be required by the state securities or Blue
Sky laws or regulations and, with respect to the Registration Rights Agreement,
the Act and the regulations of the NASD and except for the approval of the New
Jersey Casino Control Commission, which approval will be obtained on or prior to
the Closing Date; neither Sun International nor any of its affiliates is
presently doing business with the government of Cuba or with any person or
affiliate located in Cuba; each of this Agreement, the Offering Memorandum, the
Indenture and the Registration Rights Agreement has been presented to the
Regulatory Authorities to the extent required by law, and such documents and the
transactions contemplated hereby or thereby have been approved by or on behalf
of the Regulatory Authorities to the extent required by law, except for the
approval of the New Jersey Casino Control Commission, which approval will be
obtained on or prior to the Closing Date, and such approvals have not been
revoked, modified or rescinded.
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(s) Sun International and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(t) All material Tax (as defined below) returns required to be filed
by Sun International and each of its subsidiaries in any jurisdiction have been
filed and all such returns are true, complete and correct in all material
respects. All material Taxes that are due or claimed to be due from Sun
International and its subsidiaries have been paid other than those (i) currently
payable without penalty or interest or (ii) being contested in good faith and by
adequate proceedings and, in either case, for which adequate reserves have been
established on the books and records of Sun International and its consolidated
subsidiaries in accordance with GAAP. Sun International and its subsidiaries are
not parties to any material pending action, proceeding, inquiry or investigation
by any governmental authority for the assessment or collection of Taxes, nor
does Sun International have any knowledge of any such proposed or threatened
action, proceeding, inquiry, or investigation. For purposes of this Agreement,
the terms "Tax" and "Taxes" shall mean all Federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additional to tax, or penalties
applicable thereto.
(u) None of the Issuers nor any agent acting on their behalf has taken
or will take any action that is reasonably likely to cause the issuance or sale
of the Securities to violate Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System, in each case as in effect on the Closing Date.
(v) All of Sun International's subsidiaries that are not Guarantors
when considered together as if one subsidiary would not constitute a
"significant subsidiary" as such term is defined in or by Regulation S-X under
the Act.
(w) The Securities and the Guarantees to be issued and sold hereunder
have been duly and validly authorized by the Issuers and the Guaran-
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tors, respectively, and the Securities and the Guarantees, when they are
authenticated by the Trustee and issued, sold and delivered in accordance with
this Agreement and the Indenture against payment therefor as provided by this
Agreement, will have been duly and validly executed, authenticated, issued and
delivered and will constitute valid and binding obligations of the Issuers and
the Guarantors, respectively, enforceable against the Issuers and the
Guarantors, respectively, in accordance with their terms and entitled to the
benefits provided by the Indenture, except to the extent that enforcement
thereof may be limited by (A) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity.
(x) The Indenture has been duly and validly authorized and, when
executed and delivered by the Issuers, the Guarantors and the Trustee, will
constitute a valid and binding obligation of the Issuers and the Guarantors,
enforceable against each of them in accordance with its terms, except to the
extent that enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity.
(y) Each of this Agreement and the Registration Rights Agreement has
been duly and validly authorized, executed and delivered by the Issuers and the
Guarantors and constitutes a valid and binding agreement of the Issuers and the
Guarantors, enforceable against each of them in accordance with its terms,
except (i) to the extent that enforcement thereof may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (B) general
principals of equity and (ii) as rights to indemnity and contribution hereunder
may be limited by applicable law.
(z) When the Securities are issued and delivered pursuant to this
Agreement, such Securities will not be of the same class (within the meaning of
Rule 144A) as securities of Sun International or any of its subsidiaries which
are listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation system.
(aa) None of Sun International, SINA, the Guarantors or any of their
subsidiaries or any affiliate of any of them (as defined in Rule 501(b) under
the Act) has, directly or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as defined in
the
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Act) which is or will be integrated with the sale of the Securities in a manner
that would require the registration of the Securities under the Act; provided,
however, that the Issuers and Guarantors make no representations or warranties
as to the activities of the Initial Purchasers.
(bb) None of Sun International, SINA, the Guarantors or any of their
subsidiaries or any person acting on their behalf has (i) engaged, in connection
with the offering of the Securities, in any form of general solicitation or
general advertising (as those terms are used within the meaning of Regulation D
under the Act) or (ii) solicited offers for, or offered or sold, such Securities
by means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act; provided,
however, that the Issuers and Guarantors make no representations or warranties
as to the activities of the Initial Purchasers.
(cc) Each certificate signed by any officer of Sun International or
any of its subsidiaries and delivered to the Initial Purchasers or counsel for
the Initial Purchasers in connection herewith shall be deemed to be a
representation and warranty by Sun International or such subsidiary to each
Initial Purchaser as to the matters covered thereby.
2. Purchase, Sale and Delivery of the Securities. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, (i) the Issuers hereby
agree to issue and sell the Securities to the several Initial Purchasers, and
(ii) each Initial Purchaser hereby agrees, severally and not jointly, to
purchase from the Issuers, at a purchase price of 97.302% of the principal
amount thereof (the "Purchase Price"), the respective principal amount of
Securities set forth in Schedule I hereto opposite the name of such Initial
Purchaser, plus accrued interest, if any, from March 10 to the Closing Date.
Delivery of and payment of the Purchase Price for the Securities shall be
made in your offices at 245 Park Avenue, New York, New York 10167, or at such
other location as may be mutually acceptable. Such delivery and payment shall be
made at 10:00 a.m., New York time, on March 10, 1997, or at such other time as
shall be agreed upon by you and the Issuers. The time and date of such delivery
and payment are herein called the "Closing Date." Delivery of the Securities
shall be made to you for your account against payment of the purchase price for
the Securities by wire transfer of immediately available funds
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to an account or accounts to be designated by the Issuers at least one business
day prior to the Closing Date.
The Securities shall be registered in such name or names and in such
authorized denominations as you may request in writing at least two full
business days prior to the Closing Date. The Issuers will permit you to examine
and package such Securities for delivery at least one full business day prior to
the Closing Date.
The Initial Purchasers have advised the Issuers that the Initial Purchasers
propose to offer the Securities for resale upon the terms and conditions set
forth in this Agreement and in the Offering Memorandum. Each of the Initial
Purchasers hereby, severally, and not jointly, represents and warrants to, and
agrees with, the Issuers that it (i) has not and will not solicit offers for, or
offer or sell, such Securities by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act) or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act, (ii) will solicit offers for such Securities pursuant to Rule 144A or
resales not involving a public offering, as applicable, only from, and will
offer, sell or deliver such Securities, as part of its distribution thereof,
only to, respectively, (A) persons in the United States whom it reasonably
believes to be qualified institutional buyers within the meaning of Rule 144A
("Qualified Institutional Buyers") and (B) institutional "accredited investors,"
as defined in Rule 501(a)(1), (2), (3) or (7) under the Act, provided, however,
that each such "accredited investor" must complete and deliver to such Initial
Purchaser an investment letter substantially in the form of Annex A to the
Offering Memorandum prior to acceptance of any order, (iii) is a Qualified
Institutional Buyer, with such knowledge and experience in financial and
business matters as are necessary in order to evaluate the merits and risks of
an investment in the Securities and (iv) will, during its initial distribution
of the Securities, unless prohibited by applicable law, furnish to each person
to whom it offers any Securities a copy of the Preliminary Offering Memorandum
or inform each such person that a copy of such Preliminary Offering Memorandum
is available upon request and will, during its initial distribution of the
Securities, furnish to each person to whom it sells any Securities a copy of the
Offering Memorandum.
3. Covenants of the Issuers. Each Issuer and Guarantor covenants and
agrees with you as follows:
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(a) Each Issuer and Guarantor will cooperate with the Initial
Purchasers in endeavoring to qualify the Securities for sale under the
securities laws of such jurisdictions as the Initial Purchasers may reasonably
have designated in writing and will make such applications, file such documents,
and furnish such information as may be reasonably required for that purpose,
provided that no Issuer or Guarantor shall be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent. The Issuers and Guarantors will, from time to time, prepare and file
such statements, reports, and other documents, as are or may be required to
continue such qualifications in effect for so long a period as the Initial
Purchasers may reasonably request for distribution of the Securities.
(b) At any time prior to the completion of the distribution of the
Securities by the Initial Purchasers to purchasers who are not affiliates
thereof, the Issuers will give the Initial Purchasers notice of their intention
to prepare any supplement or amendment to the Offering Memorandum, will furnish
the Initial Purchasers with copies of any such amendment, supplement or other
document a reasonable amount of time prior to such proposed filing or use, and
will not use any such amendment or supplement to which the Initial Purchasers or
counsel for the Initial Purchasers shall reasonably object within five days of
being furnished a copy thereof.
(c) The Issuers have furnished or will furnish to the Initial
Purchasers such number of copies of the Offering Memorandum (as amended or
supplemented) as the Initial Purchasers may reasonably request.
(d) At any time prior to the completion of the distribution of the
Securities by the Initial Purchasers to purchasers who are not affiliates
thereof, the Issuers will advise you promptly and, if requested by you, confirm
such advice in writing, of the happening of any event that makes any statement
of a material fact made in the Offering Memorandum (as amended or supplemented
from time to time) untrue or which requires the making of any addition to or
change in the Offering Memorandum (as amended or supplemented from time to time)
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. If, during the period specified in the
first sentence of this paragraph, any event shall occur as a result of which it
is necessary, in the reasonable opinion of counsel for the Initial Purchasers,
to amend or supplement the Offering Memorandum in order to make the Offering
Memorandum not misleading in the light of the circumstances existing at the time
it is
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delivered to a purchaser, the Issuers will forthwith amend or supplement the
Offering Memorandum (in form and substance reasonably satisfactory to counsel
for the Initial Purchasers) so that, as so amended or supplemented, the Offering
Memorandum will not include an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to the
purchaser, not misleading, and the Issuers will furnish to the Initial
Purchasers a reasonable number of copies of such amendment or supplement.
(e) At any time prior to completion of the distribution of the
Securities by the Initial Purchasers to purchasers who are not affiliates
thereof, Sun International and each of its subsidiaries will, as required, file
promptly all documents required to be filed with the Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act.
(f) None of Sun International, SINA, the Guarantors or their
subsidiaries will solicit any offer to buy or offer or sell the Securities by
means of any form of general solicitation or general advertising.
(g) None of Sun International, SINA, the Guarantors or their
subsidiaries or any affiliate of any of them (as defined in Rule 501(b) of the
Act) will offer, sell or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in the Act) which will be integrated with the sale
of the Securities in a manner that would require the registration of the
Securities under the Act.
(h) During the period from the Closing Date to three years after the
Closing Date, none of Sun International, SINA, the Guarantors or their
subsidiaries will not, and will not permit any "affiliate" (as defined in Rule
144 under the Act) of any of them to, resell any of the Securities that have
been reacquired by them, except for Securities purchased by Sun International or
its subsidiaries or any of their affiliates and resold in a transaction
registered under the Act.
(i) Sun International and SINA will, so long as the Securities are
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Act, either (i) file reports and other information with the Commission
under Section 13 or 15(d) of the Exchange Act, or (ii) in the event it is not
subject to Section 13 or 15(d) of the Exchange Act, make available to holders of
the Securities and prospective purchasers of the Securities designated
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by such holders, upon request of such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Act to permit
compliance with Rule 144A in connection with resales of the Securities.
(j) The Issuers will, if requested by the Initial Purchasers, use
their best efforts in cooperation with the Initial Purchasers to permit the
Securities to be eligible for clearance and settlement through The Depository
Trust Company.
(k) Each of the Securities will bear the legend contained in "Notice
to Investors" in the Offering Memorandum and upon the other terms stated
therein, except after such Securities are resold or exchanged pursuant to a
registration statement effective under the Act.
(l) Sun International will, for the shorter of the period the
Securities remain outstanding and five years from the Closing Date, deliver to
the Initial Purchasers copies of annual reports and copies of all other
documents, reports and information furnished by Sun International or any of its
subsidiaries to their securityholders or filed with any securities exchange
pursuant to the requirements of such exchange or with the Commission pursuant to
the Act or the Exchange Act.
(m) The Issuers shall apply the net proceeds of their sale of the
Securities as set forth in the Offering Memorandum.
(n) The Issuers shall not invest, or otherwise use the proceeds
received by the Issuers from their sale of the Securities in such a manner as
would require Sun International or any of its subsidiaries to register as an
investment company under the 1940 Act or the rules and regulations thereunder.
(o) For a period of 90 days after the date of this Agreement, except
as described in or contemplated by the Offering Memorandum, the Issuers will
not, without your prior written consent (which consent will not be unreasonably
or untimely withheld), issue, sell, offer or agree to sell, or otherwise dispose
of, directly or indirectly, any debt securities of the Issuers or their
subsidiaries (other than the Securities or the New Notes) (it being understood
that debt incurred under the Existing Credit Agreement, as amended, is not a
debt security).
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(p) The Issuers and the Guarantors will not claim the benefit of any
usury laws against any holders of Securities or Guarantees, respectively.
(q) Each Issuer will use its reasonable best efforts to do and perform
all things required or necessary to be done and performed under this Agreement
by such Issuer prior to the Closing Date and to satisfy all conditions precedent
to the delivery of the Securities.
4. Payment of Expenses. The Issuers agree with you, jointly and
severally, that, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, they will pay and be responsible
for all costs, charges, liabilities, expenses, fees and taxes incurred in
connection with or incident to (i) the preparation, printing (including word
processing), distribution and delivery of the Offering Memorandum (including
financial statements and exhibits), each preliminary offering memorandum, and
all amendments and supplements to any of them, (ii) the preparation, printing
(including word processing), execution, distribution and delivery of this
Agreement, the Indenture, the Registration Rights Agreement, the certificates
representing the Securities, the preliminary and final Blue Sky memoranda and
all other agreements, memoranda, correspondence and other documents printed,
distributed and delivered in connection with the offering of the Securities
(excluding in each case any fees and disbursements of counsel for the Initial
Purchasers, other than such fees and disbursements relating to the printing and
delivery of the preliminary and final Blue Sky Memoranda specified in clause
(iii) below), (iii) the qualification of the Securities for offer and sale under
the securities or Blue Sky laws of the jurisdictions referred to in paragraph
3(a) (including in each case the reasonable fees and disbursements of counsel
for the Initial Purchasers relating to such qualification and any memoranda
relating thereto and any filing fees in connection therewith), (iv) furnishing
such copies of the Offering Memorandum, the Preliminary Offering Memorandum and
all amendments and supplements thereto as may be reasonably requested for use in
connection with the offering or sale of the Securities by the Initial Purchasers
or by dealers to whom Securities may be sold, (v) the rating of the Securities
by one or more rating agencies, (vi) the fees and expenses of the Trustee and
any agent of the Trustee and the fees and disbursements of counsel for the
Trustee in connection with the Indenture and the Securities and (vii) the
performance by the Issuers of their other obligations under this Agreement,
including (without limitation) the cost of printing and engraving the
certificates representing the Securities and all expenses and taxes incident to
the sale and delivery of the Securities to you. The Issuers hereby agree and
acknowl-
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edge that the Initial Purchasers shall not be responsible for any fees or
expenses of the Issuers in connection with the performance by either of them of
their obligations under this Agreement.
5. Conditions of Initial Purchasers' Obligations. The several obligations
of the Initial Purchasers to purchase the Securities under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers and the
Guarantors contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing Date.
Each Issuer and Guarantor shall have performed or complied with all of its
obligations and agreements herein contained and required to be performed or
complied with by it prior to the Closing Date.
(b) (i) Since the date of the latest balance sheet of Sun
International included in the Offering Memorandum there shall not have been any
Material Adverse Change, or any development involving a prospective Material
Adverse Change, (ii) since the date of the latest balance sheet of Sun
International included in the Offering Memorandum there shall not have been any
material adverse change, or any development involving a prospective material
adverse change, in the capital stock or debt of Sun International or its
subsidiaries, (iii) Sun International and its subsidiaries shall have no
liability or obligation, direct or contingent, which is material to Sun
International and its subsidiaries, taken as a whole, other than those reflected
in the Offering Memorandum and (iv) on the Closing Date you shall have received
a certificate of Sun International and the Guarantors, dated the Closing Date,
signed by the Chief Financial Officer and Executive Vice President-Corporate
Development of Sun International, in their capacities as officers of Sun
International and the Guarantors, confirming the matters set forth in paragraphs
(a) and (b) of this Section 5.
(c) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Charles D. Adamo, Esq., General Counsel of Sun International, to the
effect that:
(i) (A) all Authorizations of Sun International and its
subsidiaries are valid and in full force and effect; and (B) to the best of
such counsel's knowledge, each of Sun International, its subsidiaries and
TCA is in compliance in all material respects
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with the terms and conditions of all such Authorizations and with the rules
and regulations of the regulatory authorities and governing bodies having
jurisdiction with respect thereto, except where the failure to have such
Authorizations or to be in compliance could not reasonably be expected to
have a Material Adverse Effect;
(ii) the descriptions in the Offering Memorandum of contracts to
which any of Sun International, any of its subsidiaries, SRL, SPIC or TCA
is a party have been reviewed by such counsel and are accurate summaries
thereof in all material respects (except for financial data included
therein or omitted therefrom, as to which counsel need express no opinion);
(iii) Sun International and each of its subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where
the failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect;
(iv) neither (i) Sun International nor any of the Guarantors is
in violation of its respective charter or by-laws and (ii) Sun
International nor any of its subsidiaries is in default in the performance
of any obligation, bond, agreement or condition contained in any bond,
note, debenture, indenture or other evidence of indebtedness or any
indenture, mortgage, deed of trust or other contract, lease or other
instrument to which Sun International or any of its subsidiaries is a party
or by which it or any of its subsidiaries or their respective property is
bound, except, in each case, for defaults which could not reasonably be
expected to have a Material Adverse Effect;
(v) there are no legal or governmental proceedings pending or,
except as disclosed in the Offering Memorandum, to such counsel's
knowledge, threatened to which Sun International, SINA or any Guarantor is
a party or to which any of their respective property is subject which, if
determined adversely, would reasonably be expected to have a Material
Adverse Effect or
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<PAGE>
adversely affect the performance by either Issuer or any Guarantor of its
obligations pursuant to this Agreement; and
(vi) the execution, delivery and performance of this Agreement,
the Indenture and the Registration Rights Agreement by the Issuers, the
issuance and sale of the Securities and the Guarantees, compliance by the
Issuers with all the provisions hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of (A) any of the charters or by-laws of
Sun International or any of its subsidiaries, (B) any of the terms or
provisions of, or constitute a default under, or cause an acceleration of,
any obligation, bond, agreement, or condition contained in any bond, note,
debenture, or other evidence of indebtedness or any indenture, mortgage,
deed of trust or other contract, lease or other instrument to which Sun
International or any of its subsidiaries is a party or by which Sun
International or any of its subsidiaries or their respective properties are
subject or (C) to such counsel's knowledge, any laws, administrative
regulations or rulings or orders of any court or governmental agency, body
or official having jurisdiction over Sun International, any of its
subsidiaries or their respective properties except in the case of clauses
(B) and (C) for such conflicts, breaches or violations that could not
reasonably be expected to have a Material Adverse Effect.
In addition, such counsel shall state that no facts have come to such
counsel's attention that caused such counsel to believe that the Offering
Memorandum, as amended or supplemented, as of its date and the Closing Date
contained an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Without limiting the
foregoing, such counsel may further state that it assumes no responsibility for,
and has not independently verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and other financial, accounting
and statistical data included in the Offering Memorandum.
(d) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Cravath, Swaine & Moore, United States counsel for Sun International,
to the effect that:
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(i) based solely on certificates from the Secretary of State of
Delaware, each of SINA and GGRI, Inc. (collectively, the "Delaware
Obligors") has been duly incorporated and is a corporation validly existing
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Offering Memorandum;
(ii) to our knowledge, no authorization, approval or other action
by, and no notice to, consent of, order of, or filing with, any United
States federal or New York governmental or regulatory body is required for
the consummation of the transactions contemplated by the Purchase Agreement
or the Registration Rights Agreement, except such as may be required under
the blue sky laws of any jurisdiction or, with respect to the Registration
Rights Agreement, the Act and the regulations of the NASD;
(iii) the Securities (including the Guarantees) and Indenture
conform in all material respects as to legal matters to the descriptions
thereof contained in the Offering Memorandum;
(iv) the Indenture has been duly authorized, executed and
delivered by each Issuer and Guarantor and constitutes a legal, valid and
binding obligation of each Issuer and Guarantor enforceable against each
Issuer and Guarantor in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time
in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at
law);
(v) the Securities (including the Guarantees) have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchasers pursuant to the Purchase Agreement, will constitute legal, valid
and binding obligations of each Issuer and Guarantor entitled to the
benefits of the Indenture
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<PAGE>
and enforceable against each Issuer and Guarantor in accordance with their
terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding in equity or at law);
(vi) assuming (A) the accuracy of, and compliance with, the
representations, warranties and covenants of the Issuers and the Guarantors
in Section 1 and Section 3 of the Purchase Agreement, (B) the accuracy of,
and compliance with, the representations, warranties and covenants of the
Initial Purchasers in Section 2 of the Purchase Agreement, (C) the accuracy
of the representations and warranties of each of the purchasers to whom the
Initial Purchasers initially resell the Securities as specified in Section
2 of the Purchase Agreement, (D) the compliance by the Initial Purchasers
with the offering and transfer procedures and restrictions described in the
Offering Memorandum and (E) receipt by the purchasers to whom the Initial
Purchasers initially resell the Securities of a copy of the Offering
Memorandum prior to such sale, it is not necessary in connection with the
offer, sale and delivery of the Securities or in connection with the
initial resale of such Securities in the manner contemplated by the
Purchase Agreement and the Offering Memorandum to register the Securities
under the Act, it being understood that no opinion is expressed as to any
subsequent resale of any Securities;
(vii) each of the Purchase Agreement and the Registration Rights
Agreement has been duly authorized, executed and delivered by the Delaware
Obligors;
(viii) the statements made in the Offering Memorandum under the
heading "Tax Consequences--Certain United States Tax Considerations" as
they purport to describe the material tax consequences of an investment in
the Securities, fairly summarize the matters therein described; and
(ix) neither Sun International nor any of its subsidiaries is an
"investment company" within the meaning of, or
22
<PAGE>
is registered or otherwise required to be registered under, the Investment
Company Act of 1940, as amended.
In addition, such counsel shall state that it has participated in
conferences with certain officers of, and with the accountants for, Sun
International concerning the preparation of the Offering Memorandum. Such
counsel shall also advise you that, although it has made certain inquiries and
investigations in connection with the preparation of the Offering Memorandum,
the limitations inherent in the role of outside counsel are such that it cannot
and does not assume responsibility for the accuracy or completeness of the
statements made in the Offering Memorandum and that, subject to the foregoing,
such counsel's work in connection with this matter did not disclose any
information that gave such counsel reason to believe that the Offering
Memorandum as of its date and the Closing Date, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may further state that it
assumes no responsibility for, expresses no view as to, and has not
independently verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial, accounting and statistical
data included in the Offering Memorandum. Such counsel may also state that it
has assumed in its examination of all relevant documents the genuineness of all
signatures, has relied as to factual matters upon the statements of officers and
other representatives of Sun International and as to matters relating to the
laws of other jurisdictions, on the opinions of local counsel for Sun
International in such jurisdictions, as to which laws such counsel need express
no opinion.
(e) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Harry B. Sands and Company, Bahamian counsel for Sun International, to
the effect that:
(i) Sun International and each of the Bahamian Guarantors has
been duly incorporated, is validly existing as a corporation in good
standing under the laws of the Commonwealth of The Bahamas and has the
corporate power and authority required to carry on its business as it is
currently being conducted or
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<PAGE>
is proposed to be conducted (as discussed in the Offering Memorandum) and
to own, lease and operate its properties;
(ii) Sun International and the Bahamian Guarantors have all the
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement, the Indenture and the Registration Rights
Agreement and to authorize, issue and sell the Securities and Guarantees as
contemplated by this Agreement;
(iii) the Securities have been duly and validly authorized,
executed and delivered by Sun International and the Guarantees have been
duly and validly authorized, executed and delivered by the Bahamian
Guarantors;
(iv) all of the outstanding shares of capital stock of, or other
ownership interests in, each of Sun International's subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable (to the extent governed by Bahamas law), and are owned by
Sun International, free and clear of any Lien except for the pledges by Sun
International under the Existing Credit Agreement;
(v) all the outstanding shares of capital stock of Sun
International have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or similar rights;
(vi) each of this Agreement, the Indenture and the Registration
Rights Agreement has been duly and validly authorized, executed and
delivered by Sun International and each of the Bahamian Guarantors;
(vii) the capitalization of Sun International is as set forth in
the Offering Memorandum under the caption "Capitalization" in the column
"Historical"; the statements in the Offering Memorandum under the captions
"Enforceability of Civil Liabilities," "Risk Factors - Regulatory and
Political Factors", "Business - Certain Matters Affecting Sun
International's Bahamas Operations" and "Tax Consequences - Certain
Bahamian Tax
24
<PAGE>
Considerations," insofar as such statements constitute summaries of
Bahamian statutes, regulations, legal and governmental proceedings and
contracts to which Sun International or any of its subsidiaries is a party,
have been reviewed by such counsel and are accurate summaries thereof in
all material respects;
(viii) the execution, delivery and performance of this
Agreement, the Indenture and the Registration Rights Agreement by Sun
International and each of the Bahamaian Guarantors, the issuance and sale
of the Securities and the Guarantees, compliance by Sun International and
each of the Bahamian Guarantors, as applicable, with all the provisions
hereof and thereof and the consummation of the transactions contemplated
hereby and thereby will not conflict with or constitute a breach or
violation of (i) any Bahamian laws or administrative regulations, (ii)
rulings or orders of any Bahamian court or governmental agency, body or
official having jurisdiction over Sun International, any of its Bahamian
subsidiaries or their respective properties or (iii) the respective
Memorandum or Articles of Association of Sun International or any of its
Bahamiam Subsidiaries;
(ix) no authorization, approval, consent or order of any
governmental or regulatory agency, body or official or any court of the
Commonwealth of The Bahamas is required to be obtained in connection with
the issuance and sale of the Securities or the consummation of the
transactions contemplated by this Agreement;
(x) there is no requirement under any Bahamas statute, rule or
regulation with respect to gaming which requires that any holder of the
Securities, solely in its capacity as a holder of the Securities, to apply
for or receive any individual license, any individual certificate or any
other authorization from any Bahamas authority to acquire or hold
Securities under the Indenture; and
(xi) to the best of such counsel's knowledge, after due inquiry,
neither Sun International nor any of its Bahamian subsidiaries is in
default or violation of any Bahamian laws, administrative regulations or
order of any court or governmental agency,
25
<PAGE>
body, department, authority, board or official or other regulatory body.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the
Closing Date, of Dorsey & Whitney and Rome McGuigan Sabanosh P.C., special
counsel to the Issuers, to the effect that:
(i) Sun Cove has been duly incorporated, is a corporation validly
existing and in good standing under the laws of the State of Connecticut,
with full corporate power and authority to own, lease and operate its
properties and conduct its businesses as described in the Offering
Memorandum;
(ii) the Indenture, the Purchase Agreement and the Registration
Rights Agreement have been duly authorized and executed and delivered by
Sun Cove;
(iii) the Guarantee has been duly authorized, executed and
delivered by Sun Cove;
(iv) the execution, delivery and performance of this Agreement,
the Indenture and the Registration Rights Agreement by Sun Cove, the
issuance and sale of the Guarantee, compliance by Sun Cove with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not conflict with or constitute a
breach or violation of (i) any Connecticut laws or administrative
regulations, (ii) rulings or orders of any Connecticut court or
governmental agency, body or official having jurisdiction over Sun Cove or
its properties or (iii) the charter and by-laws of Sun Cove;
(v) none of the issuance and sale of the Securities or the
performance of the Issuers' obligations pursuant to this Agreement, the
Registration Rights Agreement or the Indenture or the performance by TCA
under the Mohegan Sun Casino management agreement or the performance of the
TCA partnership agreement will violate any Federal, tribal or Connecticut
statute, rule or regulation with respect to gaming to which any of the
Issu-
26
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ers, their subsidiaries or TCA is subject or by which any of them is bound
or to which any of their properties are subject;
(vi) no authorization, approval, consent or order of any Federal,
tribal or Connecticut authority with jurisdiction over gaming is required
to be obtained in connection with the issuance and sale of the Securities
and the transactions contemplated by this Agreement and the Registration
Rights Agreement;
(vii) there is no requirement under any Federal, tribal or
Connecticut statute, rule or regulation with respect to gaming which
requires any holder of the Securities, solely in its capacity as a holder
of the Securities, to apply for or receive any individual license, any
individual certificate or any other authorization from any Federal, tribal
or Connecticut authority to acquire or hold Securities under the Indenture;
(viii) each of the Issuers, their subsidiaries, TCA and their
employees has such permits from all regulatory or governmental officials,
bodies and tribunals, Federal, tribal or Connecticut, with respect to
engaging in gaming operations, as are necessary to own, lease and operate
its respective properties and to conduct its business in the manner
described in the Offering Memorandum; and
(ix) the TCA partnership agreement is a valid and binding
agreement of Sun Cove, enforceable against Sun Cove in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws now or hereafter in effect
relating to creditors' rights generally and to general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity).
(g) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Kozlov, Seaton, Romanini & Brooks, P.C., New Jersey counsel to Sun
International, to the effect that:
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(i) RIH has been duly incorporated and is a corporation validly
existing and in good standing under the laws of the State of New Jersey,
with full corporate power and authority to own, lease and operate its
properties and conduct its businesses as described in the Offering
Memorandum;
(ii) the Indenture, the Purchase Agreement and the Registration
Rights Agreement have been duly authorized, executed and delivered by RIH;
(iii) the Guarantee has been duly authorized, executed and
delivered by RIH;
(iv) the execution, delivery and performance of this Agreement,
the Indenture and the Registration Rights Agreement by RIH, the issuance
and sale of the Guarantee, compliance by RIH with all the provisions hereof
and thereof and the consummation of the transactions contemplated hereby
and thereby will not conflict with or constitute a breach or violation of
(i) any New Jersey laws or administrative regulations, (ii) rulings or
orders of any New Jersey court or governmental agency, body or official
having jurisdiction over RIH or its properties or (iii) the charter and
by-laws of RIH;
(v) none of the issuance and sale of the Securities or the
performance of the Issuers' obligations pursuant to this Agreement, the
Registration Rights Agreement or the Indenture will violate any New Jersey
statute, rule or regulation with respect to gaming to which any of the
Issuers or their subsidiaries is subject or by which any of them is bound
or to which any of their properties are subject;
(vi) no authorization, approval, consent or order of any New
Jersey authority with jurisdiction over gaming is required to be obtained
in connection with the issuance and sale of the Securities and the
transactions contemplated by this Agreement and the Registration Rights
Agreement, except as have been obtained from the NJCCC;
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<PAGE>
(vii) there is no requirement under any New Jersey statute, rule
or regulation with respect to gaming which requires any holder of the
Securities, solely in its capacity as a holder of the Securities, to apply
for or receive any individual license, any individual certificate or any
other authorization from any New Jersey authority to acquire or hold
Securities under the Indenture;
(viii) each of the Issuers and their subsidiaries has such
permits from all New Jersey regulatory or governmental officials, bodies
and tribunals with respect to engaging in gaming operations, as are
necessary to own, lease and operate its respective properties and to
conduct its business in the manner described in the Offering Memorandum;
and
(ix) the statements in the Offering Memorandum under the
captions "Risk Factors - Consummation of the Merger Prior to Receipt of
Plenary License," "Risk Factors - Regulatory and Political Factors" and
"Business - Certain Matters Affecting Sun International's Atlantic City
Operations," insofar as such statements constitute summaries of New Jersey
statutes, regulations, legal and governmental proceedings, have been
reviewed by such counsel and are accurate thereof in all material respects.
(h) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Smith-Hughes, Raworth & McKenzie, British Virgin Islands counsel to Sun
International, to the effect that:
(i) Sun International Management Limited ("SIML") is a
corporation duly organized, validly existing and in good standing under the
laws of the British Virgin Islands;
(ii) the Indenture, the Purchase Agreement and the Registration
Rights Agreement have been duly authorized, executed and delivered by SIML;
(iii) the Guarantee has been duly authorized, executed and
delivered by SIML;
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(iv) the execution, delivery and performance of this Agreement,
the Indenture and the Registration Rights Agreement by SIML, the issuance
and sale of the Guarantee, compliance by SIML with all the provisions
hereof and thereof and the consummation of the transactions contemplated
hereby and thereby will not conflict with or constitute a breach or
violation of (i) any British Virgin Islands laws or administrative
regulations, (ii) rulings or orders of any British Virgin Islands court or
governmental agency, body or official having jurisdiction over SIML or its
properties or (iii) the charter and by-laws of SIML;
(v) to the best knowledge of such counsel, after due inquiry,
SIML is not in material default under, or in material violation of, any
material laws or regulations or any order of any court or governmental
agency, authority, department, board or other regulatory body.
The opinions of Cravath, Swaine & Moore, Harry B. Sands and Company, Dorsey
& Whitney, Rome McGuigan Sabanosh P.C., Kozlov, Seaton, Romanini & Brooks, P.C.
and Smith-Hughes, Raworth & McKenzie described in paragraphs (d), (e), (f), (g)
and (h) above shall be rendered to you at the request of Sun International and
shall so state therein.
(i) You shall have received from Skadden, Arps, Slate, Meagher & Flom
LLP, counsel for the Initial Purchasers, an opinion dated the Closing Date as to
such matters as the Initial Purchasers may reasonably require.
(j) You shall have received at or prior to the Closing Date from
Skadden, Arps, Slate, Meagher & Flom LLP a memorandum or summary, in form and
substance satisfactory to the Initial Purchasers, with respect to the
qualification for offering and sale by the Initial Purchasers of the Securities
under the state securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may reasonably have designated to Sun International.
(k) You shall have received (i) on each of the date hereof and the
Closing Date a letter, dated the date hereof and the Closing Date, respectively,
in form and substance satisfactory to you, of Arthur Andersen LLP, and (ii) on
the date hereof a letter, dated the date hereof, in form and substance
satisfactory to you, of Ernst & Young LLP, in each case confirming that they are
independent public accountants within the meaning of the Act and the applicable
30
<PAGE>
published Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules examined by them comply in form in all
material respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations, and containing such other statements
and information as is ordinarily included in accountants' "comfort letters" to
Initial Purchasers with respect to the financial statements and certain
financial and statistical information contained in the Offering Memorandum.
(l) The Initial Purchasers were notified by the Nasdaq Stock Market,
Inc. that it had designated the Securities as PORTAL eligible.
(m) The Registration Rights Agreement shall have been executed and
delivered by the Issuers.
(n) Concurrently with or promptly after the Closing, the Tender Offer
shall have been consummated.
(o) All approvals required by the New Jersey Casino Control Commission
necessary for the issuance of the Securities shall have been obtained.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Initial Purchasers and to Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Initial Purchasers.
If any of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to counsel for the
Initial Purchasers pursuant to this Section 5 shall not be in all material
respects reasonably satisfactory in form and substance to you and such counsel,
all your obligations hereunder may be cancelled by you at, or at any time prior
to, the Closing Date. Notice of such cancellation shall be given to Sun
International in writing, or by telephone, telex or telegraph, confirmed in
writing.
6. Indemnification.
(a) The Issuers and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Initial Purchaser, (ii) each person, if
any, who controls any Initial Purchaser within the meaning of Section 15 of the
31
<PAGE>
Act or Section 20(a) of the Exchange Act and (iii) the respective officers,
directors, partners, employees, representatives and agents of any Initial
Purchaser or any controlling person, against any and all losses, liabilities,
claims, damages and out-of-pocket expenses whatsoever (including but not limited
to reasonable attorneys' fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
investigation or proceeding, commenced or threatened, or any claim whatsoever,
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which you or any such person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the Issuers and the Guarantors will not
be liable in any such case to the extent, but only to the extent, that any such
loss, liability, claim, damage or expense are caused by an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with the Initial Purchasers' Information, furnished in writing to the
Issuers by or on behalf of any Initial Purchaser through Bear, Stearns expressly
for use in the Offering Memorandum or the Preliminary Offering Memorandum (or
any amendment or supplement thereto); provided, further, that the Issuers and
the Guarantors shall not be liable to any Initial Purchaser with respect to any
untrue statement or alleged untrue statement or omission or alleged omission in
any preliminary offering memorandum to the extent that any such liabilities of
an Initial Purchaser result from the fact that such Initial Purchaser sold
Securities to a person as to whom it shall be established by a court of
competent jurisdiction in a final judgment not subject to appeal or review that
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Offering Memorandum or of the Offering Memorandum as then
amended or supplemented if the Issuers have previously furnished copies thereof
to such Initial Purchaser and the liabilities of such Initial Purchaser result
from an untrue statement or omission of a material fact contained in the
preliminary offering memorandum which was corrected in the Offering Memorandum
or in the Offering Memorandum as then amended or supplemented. This indemnity
agreement will be in addition to any liability which the Issuers and the
Guarantors may otherwise have, including under this Agreement.
32
<PAGE>
(b) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless (i) the Issuers and the Guarantors, (ii) each
person, if any, who controls any Issuer or any Guarantor within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the
respective officers, directors, partners, employees, representatives and agents
of the Issuers, the Guarantors and any controlling person, against any and all
losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Offering Memorandum or the
Offering Memorandum, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with the Initial Purchasers' Information. This indemnity
agreement will be in addition to any liability which the Initial Purchasers may
otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent such
indemnifying party has been materially prejudiced by such failure as determined
by a court of competent jurisdiction in a final judgment not subject to appeal
or review). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reason-
33
<PAGE>
ably satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties,
it being understood, however, that the indemnifying parties shall not, in
connection with any one such action or separate but substantially similar
related actions arising out of the same general allegations or circumstances, be
liable for fees and expenses of more than one separate firm of attorneys (in
addition to any appropriate local counsel) at any time for the indemnified
parties. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent; provided, however, that such consent was
not unreasonably withheld.
7. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 6 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, then each indemnifying party shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by any Issuer or Guarantor, any contribution
received by any Issuer or Guarantor from persons, other than you, who may also
be liable for contribution, including persons who control any Issuer or
Guarantor within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and directors of any Issuer or Guarantor) to which any indemnifying
person may be subject, in such proportions as is appropriate to reflect the
relative benefits received by the Issuers and the Guarantors, on one hand and
the Initial Purchasers, on the other hand, from the offering of the Securities
or, if such allocation is not permitted by applicable law,
34
<PAGE>
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Issuers and the Guarantors,
on one hand and the Initial Purchasers, on the other hand, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Issuers and the Guarantors, on one hand
and the Initial Purchasers, on the other hand, shall be deemed to be in the same
proportion, (x) in the case of the Issuers and the Guarantors, the total
proceeds from the offering (net of initial purchaser discounts and commissions
but before deducting expenses) received by the Issuers and the Guarantors and
(y) in the case of the Initial Purchasers, the initial purchaser discounts and
commissions received by the Initial Purchasers, respectively, in each case as
set forth in the table on the cover page of the Offering Memorandum. The
relative fault of the Issuers and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuers and the Guarantors, on the one hand, or the
Initial Purchasers, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Issuers, the Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this Section 7, (i) in no case shall
any Initial Purchaser be liable or responsible for any amount in excess of the
initial purchaser discount applicable to the Securities purchased by such
Initial Purchaser hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser, and each person, if any, who controls any Issuer or
Guarantor within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each director of any Issuer or Guarantor shall have the same
rights to contribution as any Issuer or Guarantor, subject in each case to
clauses (i) and (ii) of this Section 7. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such
35
<PAGE>
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 7 or
otherwise. No party shall be liable for contribution with respect to any action
or claim settled without its consent; provided, however, that such consent was
not unreasonably withheld.
8. Default by an Initial Purchaser.
(a) If any Initial Purchaser shall default in its obligation to
purchase the Securities hereunder, any other Initial Purchaser may in its
discretion arrange for itself or for another party or parties to purchase such
Securities to which such default relates on the terms contained herein. In the
event that within five (5) calendar days after such a default you do not arrange
for the purchase of the Securities to which such default relates as provided in
this Section 8, this Agreement shall thereupon terminate, without liability on
the part of the Issuers with respect thereto (except in each case as provided in
Section 4, 6(a) and 7 hereof) or the non-defaulting Initial Purchasers, but
nothing in this Agreement shall relieve a defaulting Initial Purchaser of its
liability, if any, to the other Initial Purchasers and the Issuers for damages
occasioned by its or their default hereunder.
(b) In the event that the Securities to which the default relates are
to be purchased by any non-defaulting Initial Purchaser, or are to be purchased
by another party or parties as aforesaid, you or the Issuers shall have the
right to postpone the Closing Date for a period, not exceeding seven (7)
business days, in order to effect whatever changes may thereby be made necessary
in the Offering Memorandum or in any other documents and arrangements. The term
"Initial Purchaser" as used in this Agreement shall include any party
substituted under this Section 8 with like effect as if it had originally been a
party to this Agreement with respect to such Securities.
9. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of you and the Issuers contained in this
Agreement, including the agreements contained in Section 4, the indemnity
agreements contained in Section 6 and the contribution agreements contained in
Section 7, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of you or any controlling person thereof or
by or on behalf of the Issuers and Guarantors, any of their respective officers
and directors or any controlling person thereof, and shall survive delivery of
any payment for the Securities to and by you. The representations contained in
36
<PAGE>
Section 1 and the agreements contained in Sections 4, 6, 7 and 10(c) hereof
shall survive the termination of this Agreement including pursuant to Section 10
hereof.
10. Termination.
(a) You shall have the right to terminate this Agreement at any time
prior to the Closing Date if (A) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for Sun International's securities or
securities in general; or (B) trading generally on the New York or American
Stock Exchanges shall have been suspended, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for securities shall
have been required, on the New York or American Stock Exchanges by the New York
or American Stock Exchanges or by order of the Commission or any other
governmental authority having jurisdiction; or (C) a general banking moratorium
has been declared by New York State, federal or Bahamian authorities or if any
new restriction materially adversely affecting the distribution of the
Securities shall have become effective; or (D)(i) the United States becomes
engaged in hostilities or there is an escalation of hostilities involving the
United States or there is a declaration of a national emergency or war by the
United States or (ii) there shall have been a change in political, financial or
economic conditions if the effect of any such event in (i) or (ii) is such as in
your judgment makes it impracticable or inadvisable to proceed with the
offering, sale and delivery of the Securities on the terms contemplated by the
Offering Memorandum.
(b) Any notice of termination pursuant to this Section 10 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 10(a) hereof or (ii) Section 8(a) hereof, or if the sale of
the Securities provided for herein is not consummated because any condition to
your obligations set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Issuers or Guarantors to perform any
agreement herein or comply with any provision hereof, the Issuers and Guarantors
will, jointly and severally, subject to demand by you, reimburse you for all
out-of-pocket expenses (including the fees and expenses of your counsel),
incurred by you in connection herewith.
37
<PAGE>
11. Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and (a) if to any Issuer, to
Charles D. Adamo, Esq., Sun International Hotels Limited, Coral Towers, Paradise
Island, The Bahamas, with a copy to Cravath, Swaine & Moore, 825 Eighth Avenue,
New York, New York, 10019, Attention: James M. Edwards, Esq. and (b) if to any
Initial Purchaser, to Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New
York 10167, Attention: Corporate Finance Department, with a copy to Skadden,
Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Suite 3400, Los
Angeles, California 90071, Attention: Nicholas P. Saggese, Esq., or in any case
to such other address as the person to be notified may have requested in
writing.
12. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon you and the Issuers and Guarantors and the controlling
persons, directors, officers, employees and agents referred to in Sections 6 and
7, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Securities from you.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT TO ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
38
<PAGE>
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
39
<PAGE>
If the foregoing correctly sets forth the understanding between you and the
Issuers and Guarantors, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
SUN INTERNATIONAL HOTELS LIMITED
By: ________________________________________
Name:
Title:
SUN INTERNATIONAL NORTH AMERICA, INC.
By: ________________________________________
Name:
Title:
SUN INTERNATIONAL BAHAMAS LIMITED
By: ________________________________________
Name:
Title:
PARADISE ISLAND LIMITED
By: ________________________________________
Name:
Title:
<PAGE>
ISLAND HOTEL COMPANY LIMITED
By: ________________________________________
Name:
Title:
PARADISE BEACH INN LIMITED
By: ________________________________________
Name:
Title:
PARADISE ENTERPRISES LIMITED
By: ________________________________________
Name:
Title:
PARADISE ACQUISITIONS LIMITED
By: ________________________________________
Name:
Title:
<PAGE>
SUN INTERNATIONAL MANAGEMENT LIMITED
By: ________________________________________
Name:
Title:
SUN COVE, LTD.
By: ________________________________________
Name:
Title:
RESORTS INTERNATIONAL HOTEL, INC.
By: ________________________________________
Name:
Title:
GGRI, INC.
By: ________________________________________
Name:
Title:
<PAGE>
Accepted, as of the date first above written.
BEAR, STEARNS & CO. INC.
By: ________________________________________
Name:
Title:
SOCIETE GENERALE SECURITIES CORPORATION
By: ________________________________________
Name:
Title:
SCOTIA CAPITAL MARKETS (USA) INC.
By: ________________________________________
Name:
Title:
<PAGE>
SCHEDULE I
Principal Amount of Securities
Initial Purchasers to be Purchased
- ------------------ ------------------------------
Bear, Stearns & Co. Inc. $120,000,000
Societe Generale Securities Corporation 50,000,000
Scotia Capital Markets (USA) Inc. 30,000,000
------------
TOTAL $200,000,000
<PAGE>
================================================================================
SUN INTERNATIONAL HOTELS LIMITED
and
SUN INTERNATIONAL NORTH AMERICA, INC.,
Issuers,
and
THE GUARANTORS NAMED HEREIN
and
THE BANK OF NEW YORK,
Trustee
----------------
INDENTURE
Dated as of March 10, 1997
----------------
$200,000,000
9% Senior Subordinated Notes due 2007
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1)............................................................... 7.10
(a)(2)............................................................... 7.10
(a)(3)............................................................... N.A.
(a)(4)............................................................... N.A.
(a)(5)............................................................... 7.10
(b) ............................................................... 7.8;
............................................................... 7.10;
............................................................... 13.2
(c) ............................................................... N.A.
311(a) ............................................................... 7.11
(b) ............................................................... 7.11
(c) ............................................................... N.A.
312(a) ............................................................... 2.5
(b) ............................................................... 13.3
(c) ............................................................... 13.3
313(a) ............................................................... 7.6
(b)(1)............................................................... N.A.
(b)(2)............................................................... 7.6
(c) ............................................................... 7.6;
............................................................... 13.2
(d) ............................................................... 7.6
314(a) ............................................................... 4.7;
............................................................... 4.6
(b) ............................................................. N.A.
(c)(1)............................................................... 2.2;
............................................................... 7.2;
............................................................... 13.4
(c)(2)............................................................... 7.2;
............................................................... 13.4
(c)(3)............................................................... N.A
(d) ............................................................... N.A
(e) ............................................................... 13.5
(f) ............................................................... N.A.
315(a) ............................................................... 7.1(b)
(b) ............................................................... 7.5;
............................................................... 7.6;
............................................................... 13.2
(c) ............................................................... 7.1(a)
(d) ............................................................... 7.2;
............................................................... 6.11;
............................................................... 7.1(c)
(e) ............................................................... 6.14
316(a)(last sentence)................................................... 2.9
(a)(1)(A) ........................................................... 6.11
(a)(1)(B) ........................................................... 6.12
(a)(2)............................................................... N.A.
i
<PAGE>
TIA Indenture
Section Section
- ------- -------
(b) ............................................................... 6.12;
............................................................... 6.8
317(a)(1)............................................................... 6.3
(a)(2)............................................................... 6.4
(b) ............................................................... 2.4
318(a) ............................................................... 13.1
- ----------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.............................................. 1
Section 1.2 Incorporation by Reference of TIA........................ 21
Section 1.3 Rules of Construction.................................... 22
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating.......................................... 22
Section 2.2 Execution and Authentication............................. 23
Section 2.3 Registrar and Paying Agent............................... 24
Section 2.4 Paying Agent to Hold Assets in Trust..................... 24
Section 2.5 Securityholder Lists..................................... 25
Section 2.6 Transfer and Exchange.................................... 25
Section 2.7 Replacement Securities................................... 32
Section 2.8 Outstanding Securities................................... 32
Section 2.9 Treasury Securities...................................... 33
Section 2.10 Temporary Securities..................................... 33
Section 2.11 Cancellation............................................. 33
Section 2.12 Defaulted Interest....................................... 34
Section 2.13 CUSIP Numbers ............................................34
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption...................................... 34
Section 3.2 Redemption Pursuant to Gaming Laws....................... 36
Section 3.3 Notices to Trustee....................................... 36
Section 3.4 Selection of Securities to Be Redeemed................... 36
Section 3.5 Notice of Redemption..................................... 37
Section 3.6 Effect of Notice of Redemption........................... 38
Section 3.7 Deposit of Redemption Price.............................. 38
Section 3.8 Securities Redeemed in Part.............................. 39
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities.................................... 39
Section 4.2 Maintenance of Office or Agency.......................... 40
Section 4.3 Limitation on Restricted Payments........................ 40
Section 4.4 Corporate Existence...................................... 41
Section 4.5 Payment of Taxes and Other Claims........................ 41
Section 4.6 Compliance Certificate; Notice of Default................ 42
Section 4.7 Reports.................................................. 43
Section 4.8 Waiver of Stay, Extension or Usury Laws.................. 43
Section 4.9 Limitation on Transactions with Affiliates............... 44
iii
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Page
----
Section 4.10 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock........... 44
Section 4.11 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries................... 45
Section 4.12 Limitation on Liens Securing Indebtedness................ 46
Section 4.13 Limitation on Sale of Assets and
Subsidiary Stock...................................... 46
Section 4.14 Limitation on Layering Indebtedness.......................51
Section 4.15 Limitation on Lines of Business.......................... 51
Section 4.16 Limitation on Status as Investment Company............... 51
Section 4.17 Future Subsidiary Guarantors............................. 51
Section 4.18 Payment for Consent.......................................51
Section 4.19 Suspended Covenants.......................................52
Section 4.20 Payment of Additional Amounts.............................52
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 Limitation on Merger, Sale or Consolidation.............. 54
Section 5.2 Successor Corporation Substituted........................ 55
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default........................................ 55
Section 6.2 Acceleration of Maturity Date; Rescission
and Annulment......................................... 57
Section 6.3 Collection of Indebtedness and Suits for
Enforcement by Trustee................................ 59
Section 6.4 Trustee May File Proofs of Claim......................... 59
Section 6.5 Trustee May Enforce Claims Without
Possession of Securities.............................. 60
Section 6.6 Priorities............................................... 61
Section 6.7 Limitation on Suits...................................... 61
Section 6.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest....................... 62
Section 6.9 Rights and Remedies Cumulative........................... 62
Section 6.10 Delay or Omission Not Waiver............................. 63
Section 6.11 Control by Holders....................................... 63
Section 6.12 Waiver of Past Default................................... 63
Section 6.13 Undertaking for Costs.................................... 64
Section 6.14 Restoration of Rights and Remedies....................... 64
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ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee........................................ 65
Section 7.2 Rights of Trustee........................................ 66
Section 7.3 Individual Rights of Trustee............................. 67
Section 7.4 Trustee's Disclaimer..................................... 67
Section 7.5 Notice of Default........................................ 68
Section 7.6 Reports by Trustee to Holders............................ 68
Section 7.7 Compensation and Indemnity............................... 68
Section 7.8 Replacement of Trustee................................... 69
Section 7.9 Successor Trustee by Merger, Etc......................... 70
Section 7.10 Eligibility; Disqualification............................ 71
Section 7.11 Preferential Collection of Claims
Against Issuers....................................... 71
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or
Covenant Defeasance................................... 71
Section 8.2 Legal Defeasance and Discharge........................... 71
Section 8.3 Covenant Defeasance...................................... 72
Section 8.4 Conditions to Legal or Covenant Defeasance............... 72
Section 8.5 Deposited Cash and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions........................ 74
Section 8.6 Repayment to Issuers..................................... 75
Section 8.7 Reinstatement............................................ 75
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent
of Holders............................................ 76
Section 9.2 Amendments, Supplemental Indentures and
Waivers with Consent of Holders....................... 76
Section 9.3 Compliance with TIA...................................... 78
Section 9.4 Revocation and Effect of Consents........................ 78
Section 9.5 Notation on or Exchange of Securities.................... 79
Section 9.6 Trustee to Sign Amendments, Etc.......................... 79
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 10.1 Repurchase of Securities at Option
of the Holder upon Change of Control.................. 80
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ARTICLE XI
GUARANTEES
Section 11.1 Guarantees............................................... 82
Section 11.2 Execution and Delivery of Guarantee...................... 84
Section 11.3 Certain Bankruptcy Events................................ 85
Section 11.4 Limitation on Merger, Consolidation,
Etc. of Guarantors.................................... 85
Section 11.5 Future Guarantors........................................ 85
ARTICLE XII
SUBORDINATION
Section 12.1 Securities Subordinated to Senior Debt................... 86
Section 12.2 No Payment on Securities in Certain
Circumstances......................................... 86
Section 12.3 Securities Subordinated to Prior Payment
of All Senior Debt on Dissolution,
Liquidation or Reorganization......................... 88
Section 12.4 Securityholders to Be Subrogated to
Rights of Holders of Senior Debt...................... 89
Section 12.5 Obligations of the Issuers Unconditional................. 89
Section 12.6 Trustee Entitled to Assume Payments
Not Prohibited in Absence of Notice................... 90
Section 12.7 Application by Trustee of Assets
Deposited with It..................................... 90
Section 12.8 Subordination Rights Not Impaired by
Acts or Omissions of the Issuers,
Guarantors or Holders of Senior Debt,
Etc.; Modifications.................................. 91
Section 12.9 Securityholders Authorize Trustee to
Effectuate Subordination of Securities................ 92
Section 12.10 Right of Trustee to Hold Senior Debt..................... 92
Section 12.11 Article XII Not to Prevent Events of
Default............................................... 92
Section 12.12 No Fiduciary Duty of Trustee to Holders
of Senior Debt........................................ 93
ARTICLE XIII
MISCELLANEOUS
Section 13.1 TIA Controls............................................. 93
Section 13.2 Notices.................................................. 93
Section 13.3 Communications by Holders with Other
Holders............................................... 94
Section 13.4 Certificate and Opinion as to Conditions
Precedent............................................. 94
Section 13.5 Statements Required in Certificate or
Opinion............................................... 95
Section 13.6 Rules by Trustee, Paying Agent, Registrar................ 95
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Section 13.7 Legal Holidays........................................... 95
Section 13.8 Governing Law............................................ 96
Section 13.9 No Adverse Interpretation of Other
Agreements............................................ 96
Section 13.10 No Recourse Against Others............................... 96
Section 13.11 Successors............................................... 96
Section 13.12 Duplicate Originals...................................... 97
Section 13.13 Severability............................................. 97
Section 13.14 Table of Contents, Headings, Etc......................... 97
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EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Guarantee
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INDENTURE, dated as of March 10, 1997, among Sun International
Hotels Limited, an international business company organized under the laws of
the Commonwealth of The Bahamas ("Sun International"), Sun International North
America, Inc., a Delaware corporation and a wholly owned subsidiary of Sun
International ("SINA" and, together with Sun International, the "Issuers"), the
Guarantors referred to below and The Bank of New York, a New York banking
corporation, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Issuer's 9%
Senior Subordinated Notes due 2007:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Acceleration Notice" shall have the meaning specified in Section
6.2.
"Acquired Indebtedness" means Indebtedness or Disqualified Capital
Stock of any person existing at the time such person becomes a Subsidiary of
either of the Issuers or is merged or consolidated into or with either of the
Issuers or any of their Subsidiaries.
"Acquisition" means the purchase or other acquisition of any person
or all or substantially all the assets of any person by any other person, or the
acquisition of assets that constitute all or substantially all of an operating
unit of business, whether by purchase, merger, consolidation, or other transfer,
and whether or not for consideration.
"Additional Amounts" shall have the meaning specified in Section
4.20.
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with Sun International.
For purposes of this definition, the term "control" means the power to direct
the management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, provided, that, with respect to ownership interest in Sun
International and its Subsidiaries a Beneficial Owner of 10% or more of the
total voting power normally entitled to vote in the election of directors,
managers or trustees, as applicable, shall for such purposes be deemed to
constitute control.
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"Affiliate Transaction" shall have the meaning specified in
Section 4.9.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" shall have the meaning specified in Section 4.13.
"Asset Sale Offer" shall have the meaning specified in Section 4.13.
"Asset Sale Offer Amount" shall have the meaning specified in
Section 4.13.
"Asset Sale Offer Price" shall have the meaning specified in Section
4.13.
"Average Life" means, as of the date of determination, with respect
to any security or instrument, the quotient obtained by dividing (i) the sum of
the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal (or redemption) payment of
such security or instrument and (b) the amount of each such respective principal
(or redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" has the meaning attributed
to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue
Date), whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York or
the New York Stock Exchange are authorized or obligated by law or executive
order to close.
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<PAGE>
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not otherwise itself capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.
"Capitalized Lease Obligation" means, as applied to any person, any
lease of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such person, as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such person.
"Cash" or "cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public or private debts.
"Cash Equivalent" means (a) (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500 million or (iii) commercial paper
issued by others rated at least A-1 or the equivalent thereof by Standard &
Poor's Corporation or at least P-1 or the equivalent thereof by Moody's
Investors Service, Inc., and in the case of each of (i), (ii) and (iii) above
maturing within one year after the date of acquisition or (b) shares of money
market mutual funds or similar funds having assets in excess of $500 million.
"Change of Control" means (i) Sun International ceases to be the
"beneficial owner," directly or indirectly, of 100% of the Equity Interests of
SINA; (ii) any sale, transfer or other conveyance, whether direct or indirect,
of all or substantially all of the assets, on a consolidated basis, of Sun
International or SINA, in one transaction or a series of related transactions
(in each case other than to a person that is a Permitted Holder); (iii) any
merger or consolidation of Sun International with or into any person if,
immediately after giving effect to such transaction, any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable) (other than a Permitted Holder) is or becomes
the "beneficial owner," directly or indirectly, of more than 50% of the total
voting power in the aggregate normally entitled to vote in the election of
directors, managers, or trustees, as applicable, of the surviving entity or
entities; (iv) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other
than a Permitted Holder) is or becomes the "beneficial
3
<PAGE>
owner," directly or indirectly, of more than 50% of the total voting power in
the aggregate of all classes of Capital Stock of Sun International then
outstanding normally entitled to vote in elections of directors; (v) during any
period of 12 consecutive months after the Issue Date, individuals who at the
beginning of any such 12-month period constituted the Board of Directors of Sun
International or SINA (together with any new directors whose election by such
Board or whose nomination for election by the shareholders of Sun International
or SINA, as applicable, was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of Sun
International or SINA then in office; or (vi) the adoption of a plan relating to
the liquidation or dissolution of either of the Issuers.
"Change of Control Offer" shall have the meaning specified in
Section 10.1.
"Change of Control Purchase Date" shall have the meaning specified
in Section 10.1.
"Change of Control Purchase Price" shall have the meaning specified
in Section 10.1.
"Change of Control Triggering Event" shall be deemed to have
occurred if either of the Rating Agencies shall downgrade or withdraw their
rating of the Notes as a result of, or, in any case, within 90 days of, a Change
of Control.
"Consolidated Coverage Ratio" of any person on any date of
determination (a "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided, that for purposes of
such calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period, (ii)
transactions giving rise to the need to calculate the Consolidated Coverage
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (iii) the incurrence of any Indebtedness or issuance of any Disqualified
Capital Stock during the Refer-
4
<PAGE>
ence Period or subsequent to the Reference Period and on or prior to the
Transaction Date (and the application of the proceeds therefrom to the extent
used to refinance or retire other Indebtedness) shall be assumed to have
occurred on the first day of such Reference Period, and (iv) the Consolidated
Fixed Charges of such person attributable to interest on any Indebtedness or
dividends on any Disqualified Capital Stock bearing a floating interest (or
dividend) rate shall be computed on a pro forma basis as if the rate in effect
on the Transaction Date had been the applicable rate for the entire period,
unless such person or any of its Subsidiaries is a party to an Interest Swap or
Hedging Obligation (which shall remain in effect for the 12-month period
immediately following the Transaction Date) that has the effect of fixing the
interest rate on the date of computation, in which case such rate (whether
higher or lower) shall be used.
"Consolidated EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) Consolidated
income tax expense, (ii) Consolidated depreciation and amortization expense,
provided that consolidated depreciation and amortization of a Subsidiary that is
a less than wholly owned Subsidiary shall only be added to the extent of the
equity interest of such person in such Subsidiary and (iii) Consolidated Fixed
Charges, less any non-cash interest income.
"Consolidated Fixed Charges" of any person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations) of such person
and its Consolidated Subsidiaries during such period, including (i) original
issue discount and non-cash interest payments or accruals on any Indebtedness,
(ii) the interest portion of all deferred payment obligations and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, but
excluding interest payments on SINA's First Mortgage Non-Recourse Pass Through
Notes due June 30, 2000, and (b) the amount of dividends accrued or payable (or
guaranteed) by such person or any of its Consolidated Subsidiaries in respect of
preferred stock (other than by Subsidiaries of such person to such person or
such person's wholly owned Subsidiaries). For purposes of this definition, (x)
interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by Sun International to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP
and (y) interest expense
5
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attributable to any Indebtedness represented by the guaranty by such person or a
Subsidiary of such person of an obligation of another person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed.
"Consolidated Net Income" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains (but not losses)
which are either extraordinary (as determined in accordance with GAAP), unusual
or nonrecurring (including any gain from the sale or other disposition of assets
or currency transactions outside the ordinary course of business or from the
issuance or sale of any capital stock), (b) the net income, if positive, of any
person, other than a Consolidated Subsidiary, in which such person or any of its
Consolidated Subsidiaries has an interest, except to the extent of the amount of
any dividends or distributions actually paid in cash to such person or a wholly
owned Consolidated Subsidiary of such person during such period, but in any case
not in excess of such person's pro rata share of such person's net income for
such period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such person's Consolidated Subsidiaries
to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or bylaws or any other agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Consolidated
Subsidiary, except for existing restrictions under the Credit Agreement and (e)
the net income attributable to the lease with respect to the 10 acres under the
Showboat Casino Hotel in Atlantic City, New Jersey.
"Consolidated Net Worth" of any person at any date means the
aggregate consolidated stockholders' equity of such person (plus amounts of
equity attributable to preferred stock) and its Consolidated Subsidiaries, as
would be shown on the consolidated balance sheet of such person prepared in
accordance with GAAP, adjusted to exclude (to the extent included in calculating
such equity), the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such person and its Consolidated
Subsidiaries.
"Consolidated Subsidiary" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such person in accordance with GAAP.
6
<PAGE>
"Credit Agreement" means the credit agreement dated as of November
1, 1996 by and among Sun International Bahamas Limited, Sun International,
certain of Sun International's subsidiaries, certain financial institutions and
The Bank of Nova Scotia, as administrative and collateral agent, providing for
an aggregate $250 million revolving credit facility (excluding any amounts with
respect to Interest Swap and Hedging Obligations complying with the provisions
set forth below) (which amount may be increased to $375 million and may be
increased to $500 million upon the later of the Paradise Island Expansion
Opening and December 31, 1998), including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and/or related documents may be amended,
restated, supplemented, renewed, replaced or otherwise modified from time to
time whether or not with the same agent, trustee, representative lenders or
holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term "Credit Agreement" shall
include agreements in respect of Interest Swap and Hedging Obligations with
lenders party to the Credit Agreement or their affiliates entered into for bona
fide hedging purposes and not entered into for speculative purposes and shall
also include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any Credit Agreement and all
refundings, refinancings and replacements of any Credit Agreement, including any
agreement (i) extending or shortening the maturity of any Indebtedness incurred
thereunder or contemplated thereby, (ii) adding or deleting borrowers or
guarantors thereunder, so long as borrowers and issuers include one or more of
Sun International and its Subsidiaries and their respective successors and
assigns, (iii) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder, provided that on the date such Indebtedness
is incurred it would not be prohibited by clause (a) of the definition of
"Permitted Indebtedness," or (iv) otherwise altering the terms and conditions
thereof in a manner not prohibited by the terms hereof.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Debt Incurrence Ratio" shall have the meaning specified in Section
4.10.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form of the
Note attached hereto as Exhibit A that do not include the information called for
by footnotes 1 and 3 thereof.
7
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"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.3
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Capital Stock" means (i) except as set forth in (ii),
with respect to any person, Equity Interests of such person that, by its terms
or by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Securities and (ii) with respect to
any Subsidiary of such person (other than the Guarantors), any Equity Interests
other than any common equity with no preference, privileges, or redemption or
repayment provisions.
"Equity Interest" of any person means any shares, interests,
participations or other equivalents (however designated) in such person's
equity, and shall in any event include any Capital Stock issued by, or
partnership or membership interests in, such person.
"Event of Default" shall have the meaning specified in Section 6.1.
"Event of Loss" means, with respect to any property or asset, any
(i) loss, destruction or damage of such property or asset or (ii) any
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such property or asset, or confiscation or requisition of the use
of such property or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Exchange Offer" means the offer by the Issuers and the Guarantors
to exchange the Series B Notes and Guarantees thereof for the Original Notes and
Guarantees thereof made pursuant to the Registration Rights Agreement.
"Exempted Affiliate Transaction" means transactions solely between
Sun International and any of its wholly owned Subsidiaries or solely among
wholly owned Subsidiaries of Sun International.
8
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"FF&E Indebtedness" means any Indebtedness of a person to any seller
or other person incurred to finance the acquisition (including in the case of a
Capitalized Lease Obligation, the lease) of any gaming facility or hotel or
gaming or hotel related fixtures, furniture or equipment which is directly
related to a Related Business of Sun International and which is incurred
concurrently with such acquisition and is secured only by the assets so
financed.
"GAAP" means United States generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Issue Date.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or a foreign government, any state, province or any city or
other political subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof, responsible for gaming licenses
held by Sun International or a Subsidiary of Sun International.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 3
to the form of Security attached hereto as Exhibit A.
"Guarantee" shall have the meaning provided in Section 11.1.
"Guarantors" means Sun International Bahamas Limited, Paradise
Island Limited, Island Hotel Company Limited, Paradise Beach Inn Limited,
Paradise Enterprises Limited, Paradise Acquisitions Limited, Sun International
Management Limited, Sun Cove Limited, Resorts International Hotel, Inc., and
GGRI, Inc. and any future newly created, acquired or designated Subsidiary of
Sun International.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"incur" shall have the meaning specified in Section 4.10.
"Incurrence Date" shall have the meaning specified in Section 4.10.
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"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such any person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except those incurred in the ordinary course of its business that would
constitute ordinarily trade payables to trade creditors that are not more than
60 days past their original due date, (iv) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks, (v) relating to any Capitalized
Lease Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such person with respect to any letter of credit; (b) all net
obligations of such person under Interest Swap and Hedging Obligations; (c) all
liabilities and obligations of others of the kind described in the preceding
clause (a) or (b) that such person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such person and (d)
any and all deferrals, renewals, extensions, refinancing and refundings (whether
direct or indirect) of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (a), (b) or (c),
or this clause (d), whether or not between or among the same parties, and (e)
all Disqualified Capital Stock of such person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified
Capital Stock, such Fair Market Value to be determined in good faith by the
board of directors of the issuer (or managing general partner of the issuer) of
such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Initial Purchasers" means Bear, Stearns & Co. Inc., Societe
Generale Securities Corporation and Scotia Capital Markets (USA) Inc.
"Interest Payment Date" means the stated due date of an installment
of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar
10
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agreement, interest rate exchange agreement, currency exchange agreement or any
other agreement or arrangement designed to protect against fluctuations in
interest rates or currency values, including, without limitation, any
arrangement whereby, directly or indirectly, such person is entitled to receive
from time to time periodic payments calculated by applying either a fixed or
floating rate of interest on a stated notional amount in exchange for periodic
payments made by such person calculated by applying a fixed or floating rate of
interest on the same notional amount.
"Investment" by any person in any other person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other person or any agreement to make any such acquisition; (b) the making
by such person of any deposit with, or advance, loan or other extension of
credit to, such other person (including the purchase of property from another
person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable or deposits
arising in the ordinary course of business); (c) other than guarantees of
Indebtedness of Sun International or any Subsidiary to the extent permitted by
Section 4.10, the entering into by such person of any guarantee of, or other
credit support or contingent obligation with respect to, Indebtedness or other
liability of such other person; (d) the making of any capital contribution by
such person to such other person; and (e) the designation by the Board of
Directors of Sun International of any person to be an Unrestricted Subsidiary.
Sun International shall be deemed to make an Investment in an amount equal to
the fair market value of the net assets of any subsidiary (or, if neither Sun
International nor any of its Subsidiaries has theretofore made an Investment in
such subsidiary, in an amount equal to the Investments being made), at the time
that such subsidiary is designated an Unrestricted Subsidiary, and any property
transferred to an Unrestricted Subsidiary from Sun International or a Subsidiary
shall be deemed an Investment valued at its fair market value at the time of
such transfer.
"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) or BBB- (or the equivalent) by S&P (or any successor to the
rating agency business thereof).
"Investment Grade Status" means any time at which the ratings of the
Notes by both Moody's (or any successor to the
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rating agency business thereof) and S&P (or any successor to the rating agency
business thereof) are Investment Grade Ratings.
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
"Issuer" means each party named as such in this Indenture until a
successor replaces it pursuant to the Indenture and thereafter means such
successor.
"Junior Security" means any Qualified Capital Stock and any
Indebtedness of an Issuer or a Guarantor, as applicable, that (i) is
subordinated in right of payment to Senior Debt at least to the same extent as
the Notes or the Guarantee, as applicable, (ii) has no scheduled installment of
principal due, by redemption, sinking fund payment or otherwise, on or prior to
the Stated Maturity of the Notes, (iii) does not have covenants or default
provisions materially more beneficial to the holders of the Notes than those in
effect with respect to the Notes on the Issue Date and (iv) was authorized by an
order or decree of a court of competent jurisdiction that gave effect to (and
states in such order or decree that effect has been given to) the subordination
of such securities to all Senior Debt of the applicable Issuer or Guarantor not
paid in full in cash or Cash Equivalents in connection with such reorganization;
provided that all such Senior Debt is assumed by the reorganized corporation and
the rights of the holders of any such Senior Debt are not, without the consent
of such holders, altered by such reorganization, which consent shall be deemed
to have been given if the holders of such Senior Debt, individually or as a
class, shall have approved such reorganization.
"Legal Holiday" shall have the meaning provided in Section 13.7.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"Liquidated Damages" shall have the meaning specified in the
Registration Rights Agreement.
"Maturity Date," when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at Stated Maturity, a Change of Control Purchase
Date, a purchase date with respect to an Asset Sale Offer or by declaration of
acceleration, call for redemption or otherwise.
"Moody's" means Moody's Investor Services, Inc.
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"Net Cash Proceeds" means the aggregate amount of Cash or Cash
Equivalents received by Sun International in the case of a sale of Qualified
Capital Stock and by Sun International and its Subsidiaries in respect of an
Asset Sale plus, in the case of an issuance of Qualified Capital Stock upon any
exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of Sun International that were
issued for cash on or after the Issue Date, the amount of cash originally
received by Sun International upon the issuance of such securities (including
options, warrants, rights and convertible or exchangeable debt) less, in each
case, the sum of all payments, fees, commissions and reasonable and customary
expenses (including, without limitation, the fees and expenses of legal counsel
and investment banking fees and expenses) incurred in connection with such Asset
Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only,
less the amount (estimated reasonably and in good faith by Sun International) of
income, franchise, sales and other applicable taxes required to be paid by Sun
International or any of its respective Subsidiaries in connection with such
Asset Sale.
"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 none of the Issuers or any of its Subsidiaries
provides any credit support or is liable.
"Non-Strategic Real Estate" means (i) any real estate on Paradise
Island in the Bahamas, other than the real estate upon which the Atlantis Resort
& Casino property is located, and (ii) any real property in and around Atlantic
City, New Jersey, other than the Resorts Casino Hotel, the former site of the
Chalfonte Hotel and any other real estate contiguous to such sites.
"Notes" See "Securities."
"Offering Memorandum" means the Offering Memorandum of the Issuers
dated March 10, 1997 with respect to the Securities.
"Officer" means, with respect to the Issuers, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary or Assistant
Secretary.
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"Officers' Certificate" means, with respect to the Issuers or any
Guarantor, a certificate signed by two Officers of both of the Issuers or such
Guarantor and otherwise complying with the requirements of Sections 13.4 and
13.5.
"Opinion of Counsel" means a written opinion from legal counsel to
the Issuers complying with the requirements of Sections 13.4 and 13.5. Unless
otherwise required by this Indenture, the counsel may be in-house counsel to the
Issuers.
"Original Notes" means the 9% Senior Subordinated Notes due 2007, as
amended and supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.
"Paradise Island Expansion Opening" means the time when Sun
International's approximately $450 million expansion of its Atlantis Resort &
Casino property located on Paradise Island, The Bahamas, as more fully described
in the Offering Memorandum, shall have been substantially completed and the new
hotel and casino comprising the expansion shall be ready for occupancy and
operation.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permitted Holder" means Solomon Kerzner, his immediate family or a
trust or similar entity existing solely for his benefit or for the benefit of
his immediate family.
"Permitted Indebtedness" means Indebtedness incurred as follows:
(a) the Issuers and the Guarantors may incur (i) Indebtedness
pursuant to the Credit Agreement up to an aggregate principal amount outstanding
(including any Indebtedness issued to refinance, refund or replace such
Indebtedness) at any time of $375 million (excluding any amounts with respect to
Interest Swap and Hedging Obligations) (which amount may be increased to $500
million upon the later to occur of the Paradise Island Expansion Opening or
December 31, 1998), minus the amount of any such Indebtedness retired with Net
Cash Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale
(provided any commitment in respect of such Indebtedness is permanently reduced)
and (ii) the Issuers and the Guarantors may incur Indebtedness with respect to
Interest Swap and Hedging Obligations entered into for bona fide hedging
purposes and not entered into for speculative purposes;
(b) the Issuers and the Guarantors may incur Indebtedness
evidenced by the Notes and the Guarantees and repre-
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sented by the Indenture up to the amounts specified therein as of the date
thereof;
(c) the Issuers and the Guarantors may incur FF&E Indebtedness
on or after the Issue Date, provided, that (i) such FF&E Indebtedness is
Non-Recourse Indebtedness and (ii) such Indebtedness shall not constitute more
than 100% of the cost (determined in accordance with GAAP) to the Issuers or
such Guarantor, as applicable, of the property so purchased or leased;
(d) the Issuers and the Guarantors may incur Indebtedness
solely in respect of bankers acceptances and performance bonds (to the extent
that such incurrence does not result in the incurrence of any obligation to
repay any obligation relating to borrowed money of others), all in the ordinary
course of business in accordance with customary industry practices, in amounts
and for the purposes customary in their industry;
(e) the Issuers may incur Indebtedness to any wholly owned
Subsidiary, and any wholly owned Subsidiary may incur Indebtedness to any other
wholly owned Subsidiary or to an Issuer; provided, that, in the case of
Indebtedness of the Issuers (other than Indebtedness that is required to be
pledged to the lenders under the Credit Agreement), such obligations shall be
unsecured and subordinated in all respects to the Issuers' obligations pursuant
to the Notes, and the date of any event that causes a Subsidiary to no longer be
a wholly owned Subsidiary shall be an Incurrence Date; and
(f) the Issuers and their Subsidiaries, as applicable, may
incur Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (b) and (f) of this
definition or incurred under the Debt Incurrence Ratio contained in Section 4.10
or which is outstanding on the Issue Date (after giving effect to consummation
of the Tender Offer) so long as such Refinancing Indebtedness is secured only by
the assets that secured the Indebtedness so refinanced or otherwise replaced.
"Permitted Investment" means (a) any Investment in any of the Notes;
(b) any Investment in Cash Equivalents; (c) any Investment in intercompany notes
to the extent permitted under clause (b) of the definition of "Permitted
Indebtedness"; (d) any Investment in a person in a Related Business who, after
such Investment, becomes a Subsidiary of an Issuer and a Guarantor of the Notes;
and (e) any Investment in any property or assets to be used by an Issuer or
Guarantor in a Related Business.
"Permitted Lien" means (a) any Lien securing the Notes; (b) any Lien
securing Indebtedness of a person existing at the time such person becomes a
Subsidiary or is merged with or into either of the Issuers or a Subsidiary of
either of the Issuers or
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Liens securing Indebtedness incurred in connection with an Acquisition, provided
that such Liens were in existence prior to the date of such acquisition, merger
or consolidation, were not incurred in anticipation thereof, and do not extend
to any other assets; (c) any Lien in favor of either of the Issuers or any
Guarantor; and (d) any Lien arising from FF&E Indebtedness permitted to be
incurred under clause (c) of the definition of "Permitted Indebtedness",
provided such Lien relates solely to the property which is subject to such FF&E
Indebtedness.
"person" means any individual, limited liability company,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
"principal" of any Indebtedness (including the Securities) means the
principal of such Indebtedness plus any applicable premium, if any, on such
Indebtedness.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal or mixed and
whether tangible, intangible, contingent, indirect or direct.
"Public Equity Offering" means an underwritten public offering of
Common Stock of Sun International.
"Qualified Capital Stock" means any Capital Stock of Sun
International that is not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Indebtedness of
Sun International issued on or after the Issue Date with the Net Cash Proceeds
received by Sun International from the substantially concurrent sale of
Qualified Capital Stock or any exchange of Qualified Capital Stock for any
Capital Stock or Indebtedness of Sun International issued on or after the Issue
Date.
"Rating Agencies" means S&P and Moody's or any successor to the
respective rating agency businesses thereof.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemp-
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tion set forth in Paragraph 5 in the form of Security, which shall include in
each case accrued and unpaid interest with respect to such Security to the
applicable Redemption Date.
"Reference Period" with regard to any person means the four full
fiscal quarters (or such lesser period during which such person has been in
existence) ended immediately preceding any date upon which any determination is
to be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified
Capital Stock (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) such Refinancing Indebtedness of any Subsidiary of Sun
International shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Subsidiary, (B) such Refinancing Indebtedness
shall (x) not have an Average Life shorter than the Indebtedness or Disqualified
Capital Stock to be so refinanced at the time of such Refinancing and (y) in all
respects, be no less subordinated or junior, if applicable, to the rights of
Holders of the Notes than was the Indebtedness or Disqualified Capital Stock to
be refinanced and (C) such Refinancing Indebtedness shall have a final stated
maturity or redemption date, as applicable, no earlier than the final stated
maturity or redemption date, as applicable, of the Indebtedness or Disqualified
Capital Stock to be so refinanced.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Issuers, the Guarantors and the Initial Purchasers,
dated as of the Issue Date.
"Related Business" means the gaming or hotel business and other
businesses necessary for, or in the good faith judgment of the Board of
Directors of Sun International, incident to,
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connected with, arising out of, or developed or operated to permit or facilitate
the conduct or pursuit of the gaming or hotel business (including developing or
operating sports or entertainment facilities, retail facilities, restaurants,
night clubs, transportation and communications services or other related
activities or enterprises and any additions or improvements thereto) and
potential opportunities in the gaming or hotel business.
"Representative" means The Bank of Nova Scotia or any successor or
successors under the Credit Agreement.
"Restricted Payment" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such person or any parent or Subsidiary of such person, (b)
any payment on account of the purchase, redemption or other acquisition or
retirement for value of Equity Interests of such person or any Subsidiary or
parent of such person, (c) other than with the proceeds from the substantially
concurrent sale of, or in exchange for, Refinancing Indebtedness, any purchase,
redemption, or other acquisition or retirement for value of, any payment in
respect of any amendment of the terms of or any defeasance of, any Subordinated
Indebtedness, directly or indirectly, by such person or a parent or Subsidiary
of such person prior to the scheduled maturity, any scheduled repayment of
principal, or scheduled sinking fund payment, as the case may be, of such
Indebtedness and (d) any Investment by such person, other than a Permitted
Investment; provided, however, that the term "Restricted Payment" does not
include (i) any dividend, distribution or other payment on or with respect to
Equity Interests of an Issuer to the extent payable solely in shares of
Qualified Capital Stock of such Issuer; or (ii) any dividend, distribution or
other payment to the Issuers, or to any Guarantors, by Sun International or any
of its Subsidiaries.
"Required Regulatory Redemption" shall have the meaning specified in
Section 3.2.
"S&P" means Standard and Poor's Ratings Group, a division of the
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"Securities" or "Notes" means, prior to the Exchange Offer, the
Original Notes, and after the Exchange Offer, the Original Notes (if any) and
the Series B Notes, in each case as amended or modified from time to time in
accordance with the terms hereof, issued under this Indenture.
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"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with respect
to the Securities in global form, or any successor entity thereto.
"Securityholder" See "Holder."
"Senior Debt" of Sun International, SINA or any Guarantor means
Indebtedness (including and together with all monetary obligations in respect of
the Credit Agreement, and interest, whether or not allowable, accruing on
Indebtedness incurred pursuant to the Credit Agreement after the filing of a
petition initiating any proceeding under any bankruptcy, insolvency or similar
law or which would have accrued but for such filing) of Sun International, SINA
or such Guarantor arising under the Credit Agreement or that, by the terms of
the instrument creating or evidencing such Indebtedness, is expressly designated
Senior Debt and made senior in right of payment to the Notes or the applicable
Guarantee; provided, that in no event shall Senior Debt include (a) Indebtedness
to any Subsidiary of Sun International or any officer, director or employee of
Sun International or any Subsidiary of Sun International (other than
Indebtedness that is required to be pledged to the lenders under the Credit
Agreement), (b) Indebtedness incurred in violation of the terms of the Indenture
including, without limitation, Indebtedness claiming to be subordinated to any
other Indebtedness and senior to the Notes (c) Indebtedness to trade creditors,
(d) Disqualified Capital Stock, and (e) any liability for taxes owed or owing by
Sun International, SINA or such Guarantor.
"Series B Notes" means the Series B 9% Senior Subordinated Notes due
2007, in substantially the form set forth on the Form of Note set forth as
Exhibit A hereto, to be issued pursuant to this Indenture in connection with the
Exchange Offer.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X under the Securities Act, as in effect on the Issue Date.
"Stated Maturity," when used with respect to any Note, means March
15, 2007.
"Subordinated Indebtedness" means Indebtedness of Sun International,
SINA or a Guarantor that is subordinated in right of payment to the Notes or
such Guarantee, as applicable, in any respect or, for purposes of the definition
of Restricted Payments only, has a stated maturity on (except for the Notes) or
after the Stated Maturity.
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"Subsidiary," with respect to any person, means (i) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by such person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person, (ii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of Sun International or any Subsidiary of
Sun International. Unless the context requires otherwise, Subsidiary means each
direct and indirect Subsidiary of Sun International.
"Tender Offer" means the tender offer (to be consummated
concurrently with the issuance of the Notes hereunder) by Resorts International
Hotel Financing, Inc., an indirect wholly owned subsidiary of Sun International,
to purchase approximately $160 million of its mortgage notes, as more fully
described in the Offering Memorandum.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss. 77aaa-77bbbb) as in effect on the date of the execution of this Indenture,
except as permitted in Section 9.3.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.6.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group) of the Trustee including any vice president,
assistant vice president, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the corporate trust department (or any successor group) of the Trustee to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
"Unrestricted Subsidiary" means any subsidiary of Sun International
(other than SINA) that does not own any Capital Stock of, or own or hold any
Lien on any property of, Sun International or any other Subsidiary of Sun
International or SINA and that shall be designated an Unrestricted Subsidiary by
the Board
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of Directors of Sun International; provided, that (i) such subsidiary shall not
engage, to any substantial extent, in any line or lines of business activity
other than a Related Business, (ii) neither immediately prior thereto nor after
giving pro forma effect to such designation would there exist a Default or Event
of Default and (iii) immediately after giving pro forma effect thereto, Sun
International could incur at least $1.00 of Indebtedness pursuant to the Debt
Incurrence Ratio in Section 4.10. The Board of Directors of Sun International
may designate any Unrestricted Subsidiary to be a Subsidiary, provided, that (i)
no Default or Event of Default is existing or will occur as a consequence
thereof and (ii) immediately after giving effect to such designation, on a pro
forma basis, Sun International could incur at least $1.00 of Indebtedness
pursuant to the Debt Incurrence Ratio in Section 4.10. Each such designation
shall be evidenced by filing with the Trustee a certified copy of the resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions.
"U.S. Government Obligations" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"wholly owned Subsidiary" means a Subsidiary all the Equity
Interests of which are owned by Sun International or one or more wholly owned
Subsidiaries of Sun International, except for directors' qualifying shares.
Section 1.2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers and any
other obligor on the Securities.
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All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 1.3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words
in the plural include the singular;
(v) provisions apply to successive events and
transactions;
(vi) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(vii) references to Sections or Articles means reference
to such Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto which
Exhibit is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Issuers shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as Exhibit A hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
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The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Issuers and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.2 Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Issuers shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security, but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Original Notes for original issue
in the aggregate principal amount of up to $200,000,000 and shall authenticate
Series B Notes for original issue in the aggregate principal amount of up to
$200,000,000, in each case upon a written order of the Issuers in the form of an
Officers' Certificate; provided that such Series B Notes shall be issuable only
upon the valid surrender for cancellation of Original Notes of a like aggregate
principal amount in accordance with the Registration Rights Agreement. The
Officers' Certificate shall specify the amount of Securities to be authenticated
and the date on which the Securities are to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$200,000,000, except as provided in Section 2.7. Upon the written order of the
Issuers in the form of an Officers' Certificate, the Trustee shall authenticate
Securities in substitution of Securities originally issued to reflect any name
change of either of the Issuers.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate Securities. Unless otherwise provided in the
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 an Agent to deal with the Issuers, any Affiliate of the Issuers
or any of their respective Subsidiaries.
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Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
Section 2.3 Registrar and Paying Agent.
The Issuers shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
in the Borough of Manhattan, The City of New York where Securities may be
presented for payment ("Paying Agent") and an office or agency where notices and
demands to or upon the Issuers in respect of the Securities may be served. The
Issuers may act as Registrar or Paying Agent, except that, for the purposes of
Articles III, VIII, X and Section 4.13 neither Issuer nor any Affiliate thereof
shall act as Paying Agent. The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Issuers may have one or more
co-Registrars and one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent. The Issuers hereby initially appoint the
Trustee as Registrar and Paying Agent, and the Trustee hereby initially agrees
so to act.
The Issuers shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Issuers shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Issuers fail to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Issuers initially appoint The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Securities.
The Issuers initially appoint the Trustee to act as Securities
Custodian with respect to the Global Securities.
Section 2.4 Paying Agent to Hold Assets in Trust.
The Issuers shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the benefit
of Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest (and Liquidated Damages, if any) on, the Securities
(whether such assets have been distributed to it by the Issuers or any other
obligor on the Securities), and shall notify the Trustee in writing of any
Default by the Issuers (or any other obligor on the Securities) in making any
such payment. If either Issuer or any Subsidiary thereof acts as Paying Agent,
it shall segregate such assets and hold them as a separate trust fund for
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the benefit of the Holders or the Trustee. The Issuers at any time may require a
Paying Agent to distribute all assets held by it to the Trustee and account for
any assets disbursed and the Trustee may at any time during the continuance of
any payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Issuers to the Paying Agent, the Paying Agent (if
other than either of the Issuers) shall have no further liability for such
assets.
Section 2.5 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
Holders. If the Trustee is not the Registrar, the Issuers shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders. The Trustee, the Registrar and the Issuers shall provide a
current securityholder list to any Gaming Authority upon demand.
Section 2.6 Transfer and Exchange.
(a) When Definitive Securities are presented to the Registrar
or a co-Registrar with a request
(x) to register the transfer of such Definitive
Securities or
(y) to exchange such Definitive Securities for an
equal principal amount of Definitive Securities of
other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Issuers and
the Registrar or co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that
are Definitive Securities, shall be accompanied by the following
additional information and documents, as applicable:
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(A) If such Transfer Restricted Securities
are being delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification from such
Holder to that effect (in substantially the form set forth on the
reverse of the Security); or
(B) if such Transfer Restricted Security
is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act, a certification to that effect
(in the form set forth on the reverse of the Security); or
(C) if such Transfer Restricted Security is
being transferred (i) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities Act,
(ii) pursuant to an effective registration statement under the
Securities Act, (iii) to an "institutional accredited investor"
within the meaning of Rule 501(A)(1), (2), (3) or (7) under the
Securities Act that is acquiring the Security for its own account,
or for the account of such an institutional accredited investor, in
each case in a minimum principal amount of $100,000, not with a view
to or for offer or sale in connection with any distribution in
violation of the Securities Act or (iv) in reliance on another
exemption from the registration requirements of the Securities Act,
a certification to that effect (in the form set forth on the reverse
of the Security) and in the case of (iii) above a transferee letter
of representation in substantially the form set forth in the
Offering Memorandum and in the case of (i), (iii) and (iv) above, if
the Issuers or the Registrar so request, an Opinion of Counsel
reasonably acceptable to the Issuers and to the Registrar to the
effect that such transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
of a
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Definitive Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Registrar, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, a certification, substantially in the form set forth on the
reverse of the Security, that such Definitive Security is being
transferred to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Security is a
Transfer Restricted Security, written instructions directing the Registrar
to make, or to direct the Securities Custodian to make, an endorsement on
the Global Security to reflect an increase in the aggregate principal
amount of the Securities represented by the Global Security,
then the Registrar shall cancel such Definitive Security and cause, or direct
the Securities Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Issuers shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of the
Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Security for
a Definitive Security.
(i) Any person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Trustee of written instructions
or such other form of instructions as is customary for the Depository from
the Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Security and upon receipt by the Trustee of a written
order or such other form of instructions as is customary for the
Depository or the Person designated by the Depository as having such a
beneficial interest in a Transfer Restricted Security only, the following
addi-
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tional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depository as being the
beneficial owner, a certification from such person to that effect
(in substantially the form set forth on the reverse of the
Security); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under
the Securities Act, a certification to that effect from the
transferor (in the form set forth on the reverse of the Security);
or
(C) if such beneficial interest is being
transferred (i) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities Act,
(ii) pursuant to an effective registration statement under the
Securities Act, (iii) to an "institutional accredited investor"
within the meaning of Rule 501(A)(1), (2), (3) or (7) under the
Securities Act that is acquiring the security for its own account,
or for the account of such an institutional accredited investor, in
each case in a minimum principal amount of $100,000, not with a view
to or for offer or sale in connection with distribution in violation
of the Securities Act or (iv) in reliance on another exemption from
the registration requirements of the Securities Act, a certification
to that effect from the transferee or transferor (in the form set
forth on the reverse of the Security) and in the case of (iii) above
a transferee letter of representation in substantially the form set
forth in the Offering Memorandum and in the case of (i), (iii) and
(iv) above, if the Issuers or the Registrar so requests, an Opinion
of Counsel reasonably acceptable to the Issuers and to the Registrar
to the effect that such transfer is in compliance with the
Securities Act,
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then the Registrar or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and the Trustee will authenticate and deliver to the
transferee a Definitive Security in the appropriate principal amount.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section 2.6(d)
shall be registered in such names and in such authorized denominations as
the Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Registrar shall
deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of
Depository. If at any time:
(i) the Depository for the Securities notifies the
Issuers that the Depository is unwilling or unable to continue as
Depository for the Global Securities and a successor Depository for the
Global Securities is not appointed by the Issuers within 90 days after
delivery of such notice; or
(ii) the Issuers, in their sole discretion, notify the
Trustee in writing that they elect to cause the issuance of Definitive
Securities under this Indenture,
then the Issuers will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and make available for delivery Definitive Securities, in an
aggregate principal amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
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(g) Legends. Each Security certificate evidencing the Global
Securities and the Definitive Securities (and all Securities issued in exchange
therefor or substitution thereof) shall bear a legend in substantially the
following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT, (d) TO AN INSTITUTIONAL ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF
$100,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED IN
THE CASE OF (d) UPON DELIVERY OF A TRANSFEREE LETTER OF
REPRESENTATION AND IN THE CASE OF (b), (c) AND (e) UPON AN OPINION
OF COUNSEL IF THE ISSUERS OR REGISTRAR SO REQUEST), (2) TO THE
ISSUERS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. THESE SECURI-
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TIES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH
APPLICABLE GAMING LAWS."
(h) Cancellation and/or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or cancelled, such Global
Security shall be returned to or retained and cancelled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Security
is exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) Obligations with respect to Transfers and Exchanges of
Definitive Securities.
(i) To permit registrations of transfers and exchanges,
the Issuers shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-Registrar's
request.
(ii) No service charge shall be made for any
registration of transfer or exchange, but the Issuers may require payment
of a sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments, or similar governmental charge payable upon
exchanges or transfers pursuant to Section 2.2, 2.10, 3.6, 4.13, 9.5 or
10.1).
(iii) Except for a redemption of Securities pursuant to
Section 3.2 or upon an order of any Gaming Authority, the Registrar or
co-Registrar shall not be required to register the transfer of or exchange
of (a) any Definitive Security selected for redemption in whole or in part
pursuant to Article III, except the unredeemed portion of any Definitive
Security being redeemed in part, or (b) any Security for a period
beginning 15 days before the mailing of a notice of an offer to repurchase
pursuant to Article XII or Section 4.13 hereof or a notice of redemption
of Securities pursuant to Article III hereof and ending at the close of
business on the day of such mailing.
(iv) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
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respect to any transfer of any interest in any Security other than to
require delivery of such certificates and other documentation or evidence
as expressly required by, and to do so if and when expressly required by
the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
Section 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the Trustee to the effect that the Security has
been lost, destroyed or wrongfully taken, the Issuers shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
are met. If required by the Trustee or the Issuers, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of both the
Issuers and the Trustee, to protect the Issuers, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced. The Issuers may
charge such Holder for their reasonable, out-of-pocket expenses in replacing a
Security.
Every replacement Security is an additional obligation of the
Issuers.
Section 2.8 Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Issuers or
an Affiliate of the Issuers holds the Security, except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Issuers or an Affiliate of the Issuers) holds cash sufficient to pay
all of the principal and interest (and Liquidated Damages, if any) due on the
Securities payable on that date and payment of the Securities called for
redemption is not otherwise prohibited, then on and after that date such
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Securities cease to be outstanding and interest on them ceases to accrue.
Section 2.9 Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Issuers, any Guarantor and Affiliates of the
Issuers or of any Guarantor shall be disregarded, except that, for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, amendment, supplement, waiver or consent, only Securities that a
Trust Officer of the Trustee actually knows are so owned shall be disregarded.
Section 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the Issuers may
prepare, the Guarantors shall endorse and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Issuers reasonably and in
good faith consider appropriate for temporary Securities. Without unreasonable
delay, the Issuers shall prepare, the Guarantors shall endorse and the Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as permanent Securities authenticated
and delivered hereunder.
Section 2.11 Cancellation.
The Issuers at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Issuers or an Affiliate of the Company), and no one else, shall
cancel and, at the written direction of the Issuers, shall dispose of all
Securities surrendered for transfer, exchange, payment or cancellation in
accordance with its customary procedures. Subject to Section 2.7, the Issuers
may not issue new Securities to replace Securities it has paid or delivered to
the Trustee for cancellation. No Securities shall be authenticated in lieu of or
in exchange for any Securities cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Securities and as permitted by this
Indenture.
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Section 2.12 Defaulted Interest.
If the Issuers default in a payment of interest (and Liquidated
Damages, if any) on the Securities, the Issuers shall pay the defaulted interest
(and Liquidated Damages, if any), plus (to the extent lawful) interest on the
defaulted interest (and Liquidated Damages, if any), to the persons who are
Holders on a Record Date (or at the Issuers' option a subsequent special record
date) which date shall be the fifteenth day next preceding the date fixed by the
Issuers for the payment of defaulted interest, whether or not such day is a
Business Day, unless the Trustee fixes another record date. At least 15 days
before the subsequent special record date, the Issuers shall mail to each Holder
with a copy to the Trustee a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest (and Liquidated
Damages, if any), and interest payable on such defaulted interest (and
Liquidated Damages), if any, to be paid.
Section 2.13 CUSIP Numbers.
The Issuers in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Issuers will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption.
Redemption of Securities shall be made only in accordance with this
Article III. At their election, the Issuers may redeem the Securities in whole
or in part, at any time or from time to time on or after March 15, 2002, at the
Redemption Prices specified under the caption "Redemption," in the Form of Note
attached as Exhibit A hereto, plus accrued but unpaid interest (and Liquidated
Damages, if any) to the Redemption Date. Except as provided in this paragraph,
the next following paragraph, Section 3.2 and paragraph 5 of the Notes, the
Notes may not otherwise be redeemed at the option of the Company.
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On or prior to March 15, 2000, upon a Public Equity Offering of
Ordinary Shares for cash of Sun International, up to $70 million aggregate
principal amount of the Securities may be redeemed at the option of the Issuers
with cash from the Net Cash Proceeds of such Public Equity Offering, at 109% of
the principal amount thereof (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date), plus accrued but unpaid interest (and Liquidated
Damages, if any) to the date of redemption; provided, however, that immediately
following each such redemption not less than $130 million aggregate principal
amount of the Notes are outstanding, provided, further that such redemption
shall occur within 120 days of such Public Equity Offering.
The Notes may be redeemed at the option of the Issuers, in whole but
not in part, upon not less than 30 nor more than 60 days' notice given as
provided herein, at any time at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest, if any, thereon, plus Liquidated
Damages, if any, to the date fixed for redemption if, as a result of any change
in or amendment to the laws, treaties, rulings or regulations of The Bahamas, or
of any political subdivision or taxing authority thereof or therein, or any
change in the official position of the applicable taxing authority regarding the
application or interpretation of such laws, treaties, rulings or regulations
(including a holding judgment or order of a court of competent jurisdiction) or
any execution thereof or amendment thereto, which is enacted into law or
otherwise becomes effective after the Issue Date, either Issuer is or would be
required on the next succeeding Interest Payment Date to pay Additional Amounts
on the Notes as a result of the imposition of a Bahamian withholding tax and the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Issuers which do not cause the Issuers to
incur any material costs. The Issuers shall also pay to holders on the
redemption date any Additional Amounts then due and which will become due as a
result of the redemption or would otherwise be payable.
Prior to the publication of any notice of redemption in accordance
with the foregoing, the Issuers shall deliver to the Trustee an Officers'
Certificate stating that (i) the payment of Additional Amounts cannot be avoided
by the use of any reasonable measures available to the Issuers which do not
cause the Issuers to incur any material costs and (ii) the Issuers are entitled
to effect such redemption based on the written, substantially unqualified
Opinion of Counsel, which counsel shall be reasonably acceptable to the Trustee,
and the Issuers have or will become obligated to pay Additional Amounts as a
result of such change or amendment. The notice, once delivered by the Issuers to
the Trustee, will be irrevocable.
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Section 3.2 Redemption Pursuant to Gaming Laws.
If a Holder or a beneficial owner of a Note is required by any
Gaming Authority to be found suitable to hold the Notes, the Holder shall apply
for a finding of suitability within 30 days after a Gaming Authority request or
sooner if so required by such Gaming Authority. The applicant for a finding of
suitability must pay all costs of the investigation for such finding of
suitability. If a Holder or beneficial owner is required to be found suitable to
hold the Notes and is not found suitable by a Gaming Authority, the Holder
shall, to the extent required by applicable law, dispose of his Notes within 30
days or within that time prescribed by a Gaming Authority, whichever is earlier.
If the Holder fails to dispose of his Notes within such time period, the Issuers
may, at their option, redeem such Holder's Notes (a "Required Regulatory
Redemption") at, depending on applicable law, (i) the principal amount thereof,
together with accrued and unpaid interest (and Liquidated Damages, if any) to
the date of the finding of unsuitability by a Gaming Authority, (ii) the amount
that such Holder paid for the Notes, (iii) the fair market value of the Notes,
(iv) the lowest of clauses (i), (ii) and (iii), or (v) such other amount as may
be determined by the appropriate Gaming Authority.
Section 3.3 Notices to Trustee.
If the Issuers elect to redeem Securities pursuant to this Article
III, they shall notify the Trustee in writing of the date on which the Notes are
to be redeemed ("Redemption Date") and the principal amount of Securities to be
redeemed and whether they want the Trustee to give notice of redemption to the
Holders in the name of and at the expense of the Issuers.
If the Issuers elect to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Issuers shall give each notice to the Trustee provided for in
this Section 3.3 at least 45 days (unless a shorter period is acceptable to the
Trustee) before the Redemption Date (unless a different notice period shall be
required by a Gaming Authority with respect to a Required Regulatory
Redemption).
Section 3.4 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof (except in the case of a Required Regulatory Redemption),
the Trustee shall select from among such
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Securities to be redeemed pro rata or by lot or by such other method as the
Trustee shall determine to be fair and appropriate and in such manner as
complies with any applicable legal and stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Issuers
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
Section 3.5 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Issuers shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed (unless a different
notice period shall be required by any Gaming Authority). At the Issuers'
request, the Trustee shall give the notice of redemption in the Issuers' name
and at the Issuers' expense. Each notice for redemption shall identify the
Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of
accrued but unpaid interest (and Liquidated Damages, if any) to be paid
upon such redemption;
(3) the name, address and telephone number of the
Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice to
collect the Redemption Price;
(5) that, unless (a) the Issuers default in their
obligation to deposit cash with the Paying Agent in accordance with
Section 3.7 hereof, interest on Securities called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of
the Holders of such Securities is to receive payment of the Redemption
Price, including accrued but unpaid interest (and Liquidated Damages, if
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any), upon surrender to the Paying Agent of the Securities called for
redemption and to be redeemed;
(6) if any Security is being redeemed in part,
the portion of the principal amount, equal to $1,000 or any integral
multiple thereof, of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued;
(7) if less than all the Securities are to be
redeemed, the identification of the particular Securities (or portion
thereof) to be redeemed, as well as the aggregate principal amount of such
Securities to be redeemed and the aggregate principal amount of Securities
to be outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be
redeemed; and
(9) that the notice is being sent pursuant to this
Section 3.5 and pursuant to the optional redemption provisions of
Paragraph 5 of the Securities.
Section 3.6 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.5,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued but unpaid interest (and
Liquidated Damages, if any). Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price,
including interest (and Liquidated Damages, if any), if any, accrued to and
unpaid on the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the Interest Payment Date, the accrued
interest (and Liquidated Damages, if any) shall be payable to the Holder of the
redeemed Securities registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
Section 3.7 Deposit of Redemption Price.
On or before the Redemption Date, the Issuers shall deposit with the
Paying Agent (other than the Issuers or an Affiliate of either of the Issuers)
cash sufficient to pay the
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Redemption Price of, including accrued but unpaid interest on (and Liquidated
Damages, if any), all Securities to be redeemed on such Redemption Date (other
than Securities or portions thereof called for redemption on that date that have
been delivered by the Issuers to the Trustee for cancellation). The Paying Agent
shall promptly return to the Issuers any cash so deposited which is not required
for that purpose upon the written request of the Issuers.
If the Issuers comply with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Issuers to comply with the preceding paragraph and the other
provisions of this Article III, interest shall continue to accrue and be paid
from the Redemption Date until such payment is made on the unpaid principal,
and, to the extent lawful, on any interest not paid on such unpaid principal, in
each case at the rate and in the manner provided in Section 4.1 hereof and the
Securities.
Section 3.8 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Issuers shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities.
The Issuers shall pay the principal of and interest (and Liquidated
Damages, if any) on the Securities on the dates and in the manner provided in
the Securities and this Indenture. An installment of principal of or interest
(and Liquidated Damages, if any) on the Securities shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Issuers or an
Affiliate of either of the Issuers) holds for the benefit of the Holders, on or
before 10:00 a.m. New York City time on that date, cash deposited and designated
for and sufficient to pay the installment.
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The Issuers shall pay interest on overdue principal and on overdue
installments of interest (and Liquidated Damages, if any) at the rate specified
in the Securities compounded semi-annually, to the extent lawful.
Section 4.2 Maintenance of Office or Agency.
The Issuers and the Guarantors shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Issuers and the Guarantors in respect of the Securities and this Indenture
may be served. The Issuers and the Guarantors shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Issuers and the Guarantors shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 13.2.
The Issuers and the Guarantors may also from time to time designate
one or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Issuers and the Guarantors of their obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York,
for such purposes. The Issuers and the Guarantors shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. The Issuers and the Guarantors
hereby initially designate the principal corporate trust office of the Trustee
as such office.
Section 4.3 Limitation on Restricted Payments.
The Issuers and the Guarantors shall not, and shall not permit any
of their Subsidiaries to, individually or collectively, directly or indirectly,
make any Restricted Payment if, after giving effect to such Restricted Payment
on a pro forma basis, (i) a Default or an Event of Default shall have occurred
and be continuing, (ii) Sun International is not permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio contained
in Section 4.10, or (iii) the aggregate amount of all Restricted Payments made
by Sun International and its Subsidiaries, including after giving effect to such
proposed Restricted Payment, from and after the Issue Date, would exceed the sum
of (a) 50% of the aggregate Consolidated Net Income of Sun International for the
period (taken as one accounting period) commencing January 1, 1996 to and
including the last
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day of the fiscal quarter ended immediately prior to the date of each such
calculation (or, in the event Consolidated Net Income for such period is a
deficit, then minus 100% of such deficit) (not giving pro forma effect to the
Merger for periods prior to its consummation), plus (b) the aggregate Net Cash
Proceeds received by Sun International from the sale of its Qualified Capital
Stock (other than (i) to a Subsidiary of Sun International and (ii) to the
extent applied in connection with a Qualified Exchange) after the Issue Date,
plus (c) $50 million.
The immediately preceding paragraph, however, will not prohibit (x)
a Qualified Exchange, (y) the payment of any dividend on Capital Stock within 60
days after the date of its declaration if such dividend could have been made on
the date of such declaration in compliance with the foregoing provisions and (z)
the redemption or repurchase of any Capital Stock or Indebtedness of the Issuers
or their Subsidiaries (other than Capital Stock or Indebtedness held by SIIL,
its shareholders or Permitted Holders), if the holder or beneficial owner of
such Capital Stock or Indebtedness is required to be found suitable by any
Gaming Authority to own or vote any security and is found unsuitable by any such
Gaming Authority to so own or vote such security. The full amount of any
Restricted Payment made pursuant to the foregoing clauses (y) and (z) (but not
pursuant to clause (x)) of the immediately preceding sentence, however, will be
deducted in the calculation of the aggregate amount of Restricted Payments
available to be made referred to in clause (iii) of the immediately preceding
paragraph.
Section 4.4 Corporate Existence.
Subject to Article V, the Issuers and the Guarantors shall do or
cause to be done all things necessary to preserve and keep in full force and
effect their corporate existence and the corporate or other existence of each of
their Subsidiaries in accordance with the respective organizational documents of
each of them and the rights (charter and statutory) and corporate franchises of
the Issuers and the Guarantors and each of their Subsidiaries; provided,
however, that neither the Issuers nor any of the Guarantors shall be required to
preserve, with respect to itself, any right or franchise, and with respect to
any of their Subsidiaries, any such existence, right or franchise, if (a) the
Board of Directors of Sun International shall determine reasonably and in good
faith that the preservation thereof is no longer desirable in the conduct of the
business of the Issuers and (b) the loss thereof is not disadvantageous in any
material respect to the Holders.
Section 4.5 Payment of Taxes and Other Claims.
The Issuers and the Guarantors shall, and shall cause each of their
Subsidiaries to, pay or discharge or cause to be
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paid or discharged, before the same shall become delinquent, (i) all taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Issuers,
any Guarantor or any of their Subsidiaries or properties and assets of the
Issuers, any Guarantor or any of their Subsidiaries and (ii) all lawful claims,
whether for labor, materials, supplies, services or anything else, which have
become due and payable and which by law have or may become a Lien upon the
property and assets of the Issuers, any Guarantor or any of their Subsidiaries;
provided, however, that neither the Issuers nor any Guarantor shall be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
Section 4.6 Compliance Certificate; Notice of Default.
(a) The Issuers shall deliver to the Trustee within 120 days
after the end of their fiscal year an Officers' Certificate, one of the signers
of which shall be the principal executive, financial or accounting officer of
the Issuers, complying (whether or not required) with Section 314(a)(4) of the
TIA and stating that a review of their activities and the activities of their
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Issuers have kept, observed, performed and fulfilled its obligations (without
regard to notice requirements or grace periods) under this Indenture and further
stating, as to each such Officer signing such certificate, whether or not the
signer knows of any failure by the Issuers, any Guarantor or any Subsidiary of
the Issuers or any Guarantor to comply with any conditions or covenants in this
Indenture and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end on
any date other than the current fiscal year end date.
(b) So long as not contrary to the then current recommendation
of the American Institute of Certified Public Accountants, the Issuers shall
deliver to the Trustee within 120 days after the end of each of their fiscal
years a written report of a firm of independent certified public accountants
with an established national reputation stating that in conducting their audit
for such fiscal year, nothing has come to their attention that caused them to
believe that the Issuers or any Subsidiary of the Issuers were not in compliance
with the provisions set forth in Section 4.3, 4.10 or 4.13 or Article X of this
Indenture.
(c) The Issuers shall, so long as any of the Securities are
outstanding, deliver to the Trustee, immediately
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upon becoming aware of any Default or Event of Default under this Indenture, an
Officers' Certificate specifying such Default or Event of Default and what
action the Issuers are taking or propose to take with respect thereto. The
Trustee shall not be deemed to have knowledge of a Default or an Event of
Default unless one of its Trust Officers receives notice of the Default giving
rise thereto from the Issuers or any of the Holders.
Section 4.7 Reports.
Whether or not Sun International or SINA is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, each of Sun
International and SINA shall deliver to the Trustee and to each Holder within 15
days after it is or would have been (if it were subject to such reporting
obligations) required to furnish such with the Commission, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission, if such entity were
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Issuers' certified independent public accountants as such would be required in
such reports to the Commission, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required and, to the extent permitted by the Exchange Act or the
Commission, file with the Commission the annual, quarterly and other reports
which it is or would have (if it were subject to such reporting obligations)
been required to file with the Commission. Delivery of such reports, information
and documents to the Trustee is for informational purposes only and the
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Issuers' compliance with any of their covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
Section 4.8 Waiver of Stay, Extension or Usury Laws.
Each of the Issuers and each Guarantor covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law wherever enacted which would
prohibit or forgive the Issuers or any Guarantor from paying all or any portion
of the principal of or interest (and Liquidated Damages, if any) on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that they may lawfully do so) each of the Issuers
and each Guarantor hereby expressly waives all benefit or advantage of any such
law insofar as such law applies to the Securi-
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ties, and covenant that it shall not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 4.9 Limitation on Transactions with Affiliates.
None of the Issuers or any of their Subsidiaries will be permitted
on or after the Issue Date to enter into or suffer to exist any contract,
agreement, arrangement or transaction with any Affiliate (an "Affiliate
Transaction"), or any series of related Affiliate Transactions (other than
Exempted Affiliate Transactions) (i) unless it is determined that the terms of
such Affiliate Transaction are fair and reasonable to Sun International or such
Subsidiary, as applicable, and no less favorable to Sun International or such
Subsidiary, as applicable, than could have been obtained in an arm's length
transaction with a non-Affiliate and (ii) if involving consideration to either
party in excess of $2 million, unless such Affiliate Transaction(s) has been
approved by a majority of the members of the Board of Directors that are
disinterested in such transaction and (iii) if involving consideration to either
party in excess of $15 million, unless in addition to the foregoing Sun
International, prior to the consummation thereof, obtains a written favorable
opinion as to the fairness of such transaction to Sun International from a
financial point of view from an independent investment banking firm of national
reputation.
Section 4.10 Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock.
Except as set forth below in this covenant, the Issuers and the
Guarantors will not, and will not permit any of their Subsidiaries to,
individually or collectively, directly or indirectly, issue, assume, guaranty,
incur, become directly or indirectly liable with respect to (including as a
result of an Acquisition), or otherwise become responsible for, contingently or
otherwise (individually and collectively, to "incur" or, as appropriate, an
"incurrence"), any Indebtedness or any Disqualified Capital Stock (including
Acquired Indebtedness), except Permitted Indebtedness. Notwithstanding the
foregoing, if (i) no Event of Default shall have occurred and be continuing at
the time of, or would occur after giving effect on a pro forma basis to, such
incurrence of Indebtedness or Disqualified Capital Stock and (ii) on the date of
such incurrence (the "Incurrence Date"), the Consolidated Coverage Ratio of Sun
International for the Reference Period immediately preceding the Incurrence
Date, after giving effect on a pro forma basis to such incurrence of such
Indebtedness or Disqualified Capital Stock and, to the extent set forth in the
definition of Consolidated Coverage Ratio, the use of proceeds thereof, would be
at least 2.0 to l (the "Debt
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Incurrence Ratio"), then the Issuers and the Guarantors may incur such
Indebtedness or Disqualified Capital Stock.
Acquired Indebtedness shall be deemed to have been incurred at the
time the person who incurred such Indebtedness becomes a Subsidiary of either of
the Issuers (including upon designation of any Unrestricted Subsidiary or other
person as a Subsidiary) or is merged with or into or consolidated with either of
the Issuers or a Subsidiary of either of the Issuers, as applicable.
Section 4.11 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
The Issuers and the Guarantors will not, and will not permit any of
their Subsidiaries to, individually or collectively, directly or indirectly,
create, assume or suffer to exist any consensual restriction on the ability of
any Subsidiary of Sun International, SINA or such Guarantor to pay dividends or
make other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, Sun International, SINA, the
Guarantors or any Subsidiary of any of them, or to guaranty the Notes, except
(a) restrictions imposed by the Notes or herein, (b) restrictions imposed by
applicable law, (c) existing restrictions under the Credit Agreement, (d)
restrictions under any Acquired Indebtedness not incurred in violation of the
Indenture or any agreement relating to any property, asset, or business acquired
by Sun International or any of its Subsidiaries, which restrictions in each case
existed at the time of acquisition, were not put in place in connection with or
in anticipation of such acquisition and are not applicable to any person, other
than the person acquired, or to any property, asset or business, other than the
property, assets and business so acquired, (e) any such restriction or
requirement imposed by Indebtedness incurred under paragraph (a) of the
definition of "Permitted Indebtedness," provided such restriction or requirement
is no more restrictive than that imposed by the Credit Agreement as of the Issue
Date, (f) restrictions with respect solely to a Subsidiary of Sun International
imposed pursuant to a binding agreement that has been entered into for the sale
or disposition of all or substantially all of the Equity Interests or assets of
such Subsidiary, provided such restrictions apply solely to the Equity Interests
or assets of such Subsidiary that are being sold, (g) restrictions on transfer
contained in FF&E Indebtedness incurred pursuant to paragraph (c) of the
definition of "Permitted Indebtedness," provided such restrictions relate only
to the transfer of the property acquired with the proceeds of such FF&E
Indebtedness, and (h) in connection with and pursuant to Permitted Refinancings,
replacements of restrictions imposed pursuant to clauses (a), (c) or (d) of this
paragraph that are not more
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restrictive than those being replaced and do not apply to any other person or
assets than those that would have been covered by the restrictions in the
Indebtedness so refinanced. Notwithstanding the foregoing, neither (a) customary
provisions restricting subletting or assignment of any lease, license or
contract entered into in the ordinary course of business, consistent with
industry practice, nor (b) Liens permitted under the terms of the Indenture
shall in and of themselves be considered a restriction on the ability of the
applicable Subsidiary to transfer such agreement or assets, as the case may be.
Section 4.12 Limitation on Liens Securing Indebtedness.
The Issuers and the Guarantors will not, and will not permit any of
their Subsidiaries to, individually or collectively, create, incur, assume or
suffer to exist any Lien of any kind, other than Permitted Liens, upon any of
their respective assets now owned or acquired on or after the date of the
Indenture or upon any income or profits therefrom securing any Indebtedness of
the Issuers, the Guarantors or any of their Subsidiaries other than Senior Debt,
unless the Issuers and Guarantors each provide, and cause their Subsidiaries to
provide, concurrently therewith, that the Notes are equally and ratably so
secured, provided that, if such Indebtedness is Subordinated Indebtedness, the
Lien securing such Subordinated Indebtedness shall be subordinate and junior to
the Lien securing the Notes with the same relative priority as such Subordinated
Indebtedness shall have with respect to the Notes.
Section 4.13 Limitation on Sale of Assets and Subsidiary Stock.
The Issuers and the Guarantors will not, and will not permit any of
their Subsidiaries to, individually or collectively, in one or a series of
related transactions, convey, sell, transfer, assign or otherwise dispose of,
directly or indirectly, any of its property, business or assets, including by
merger or consolidation (in the case of a Guarantor or a Subsidiary of Sun
International or SINA), and including any sale or other transfer or issuance of
any Equity Interests of any Subsidiary of Sun International or SINA, whether by
Sun International, SINA or a Subsidiary of either or through the issuance, sale
or transfer of Equity Interests by a Subsidiary of Sun International or SINA,
and including any sale and leaseback transaction (an "Asset Sale"), unless
(i)(a) within 360 days after the date of such Asset Sale, the Net Cash Proceeds
therefrom (the "Asset Sale Offer Amount") are applied to the optional redemption
of the Notes in accordance with the terms of the Indenture or to the repurchase
of the Notes pursuant to an irrevocable, unconditional cash offer (the "Asset
Sale Offer") to repurchase Notes at a purchase price of 100% of principal amount
(the "Asset Sale Offer
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Price") together with accrued and unpaid interest and Liquidated Damages, if
any, to the date of payment, made within 330 days of such Asset Sale or (b)
within 330 days following such Asset Sale, the Asset Sale Offer Amount is (1)
invested in assets and property (other than notes, bonds, obligation and
securities) which in the good faith judgment of the Board will immediately
constitute or be a part of a Related Business of Sun International, SINA or such
Subsidiary (if it continues to be a Subsidiary) immediately following such
investment or (2) used to permanently reduce Senior Debt (provided that in the
case of a revolver or similar arrangement that makes credit available, such
commitment is so permanently reduced by such amount), (ii) no more than the
greater of (A) $20 million or (B) 15% of the total consideration for such Asset
Sale or series of related Asset Sales consists of consideration other than cash
or Cash Equivalents, provided however, that more than 15% of the total
consideration may consist of consideration other than cash or Cash Equivalents
if (A) the portion of such consideration that does not consist of cash or Cash
Equivalents consists of assets of a type ordinarily used in the operation of a
Related Business (including Capital Stock of a person that becomes a wholly
owned Subsidiary and that holds such assets) to be used by the Issuers or a
Subsidiary in the conduct of a Related Business, (B) the terms of such Asset
Sale have been approved by a majority of the members of the Board of Directors
of Sun International having no personal stake in such transaction, and (C) if
the value of the assets being disposed of by the Issuers or such Subsidiary in
such transaction (as determined in good faith by such members of the Board of
Directors) is at least $10 million, the Board of Directors of Sun International
has received a written opinion of a nationally recognized investment banking
firm to the effect that such Asset Sale is fair, from a financial point of view,
to Sun International and Sun International has delivered a copy of such opinion
to the Trustee, (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) if the value of the assets disposed of is
at least $5 million, the Board of Directors of Sun International determines in
good faith that Sun International or such Subsidiary, as applicable, receives
fair market value for such Asset Sale (as evidenced by a resolution of the Board
of Directors).
Notwithstanding the foregoing provisions of the prior paragraph:
(i) Sun International and its Subsidiaries may, in the
ordinary course of business, convey, sell, transfer, assign or otherwise
dispose of inventory acquired and held for resale in the ordinary course
of business;
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(ii) Sun International and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Article V;
(iii) Sun International and its Subsidiaries may sell or
dispose of damaged, worn out or other obsolete property in the ordinary
course of business so long as such property is no longer necessary for the
proper conduct of the business of Sun International or such Subsidiary, as
applicable;
(iv) the Issuers and the Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets to any Issuer or any of
their wholly owned Guarantors; and
(v) the Issuers may sell their Equity Interests in Sun France
and Non-Strategic Real Estate.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds from Asset Sales not applied to the uses set forth in (i) above (the
"Excess Proceeds") exceeds $20 million and that each Asset Sale Offer shall
remain open for 20 Business Days following its commencement (the "Asset Sale
Offer Period"). Upon expiration of the Asset Sale Offer Period, the Issuers
shall apply the Asset Sale Offer Amount plus an amount equal to accrued and
unpaid interest and Liquidated Damages, if any, to the purchase of all Notes
properly tendered (on a pro rata basis if the Asset Sale Offer Amount is
insufficient to purchase all Notes so tendered) at the Asset Sale Offer Price
(together with accrued and unpaid interest and Liquidated Damages, if any). To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Asset Sale Offer Amount, the Issuers may use any
remaining Net Cash Proceeds for general corporate purposes as otherwise
permitted by the Indenture and following the consummation of each Asset Sale
Offer the Excess Proceeds amount shall be reset to zero. For purposes of (ii)
above, total consideration received means the total consideration received for
such Asset Sales minus the amount of (a) Senior Debt assumed by a transferee
which assumption permanently reduces the amount of Indebtedness outstanding on
the Issue Date or permitted pursuant to clause (a) or (c) of the definition of
Permitted Indebtedness (including that in the case of a revolver or similar
arrangement that makes credit available, such commitment is so reduced by such
amount), (b) FF&E Indebtedness secured solely by the assets sold and assumed by
a transferee and (c) property that within 30 days of such Asset Sale is
converted into Cash or Cash Equivalents).
All Net Cash Proceeds from an Event of Loss shall be invested, used
for prepayment of Senior Debt, or used to repurchase Notes, all within the
period and as otherwise provided
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above in clauses (i)(a) or (i)(b) of the first paragraph of this covenant.
In addition to the foregoing, Sun International will not, and will
not permit any Subsidiary to, directly or indirectly make any Asset Sale of any
of the Equity Interests of any Subsidiary except (i) pursuant to an Asset Sale
of all the Equity Interests of such Subsidiary or (ii) pursuant to an Asset Sale
of shares of common stock with no preferences or special rights or privileges
and with no redemption or prepayment provisions, provided that after such sale
the Issuers or their Subsidiaries own at least 50.1% of the voting and economic
interests of the Capital Stock of such Subsidiary.
Notice of an Asset Sale Offer shall be sent, on or prior to the
commencement of the Asset Sale Offer, by first-class mail, by the Issuers to
each Holder at its registered address, with a copy to the Trustee. The Asset
Sale Offer shall remain open for at least 20 Business Days following its
commencement. The notice to the Holders shall contain all information,
instructions and materials required by applicable law or otherwise material to
such Holders' decision to tender Securities pursuant to the Asset Sale Offer.
The notice, which (to the extent consistent with this Indenture) shall govern
the terms of an Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being made
pursuant to such notice and this Section 4.13;
(2) the Asset Sale Offer Amount, the Asset Sale
Offer Price (including the amount of accrued but unpaid interest (and
Liquidated Damages, if any)), and the date of purchase;
(3) that any Security or portion thereof not
tendered or accepted for payment will continue to accrue interest if
interest is then accruing;
(4) that, unless the Issuers default in
depositing cash with the Paying Agent (which may not for purposes of this
Section 4.13, notwithstanding anything in this Indenture to the contrary,
be the Issuers or any Affiliate of either of the Issuers) in accordance
with the last paragraph of this clause (b), any Security, or portion
thereof, accepted for payment pursuant to the Asset Sale Offer shall cease
to accrue interest after the Asset Sale Purchase Date;
(5) that Holders electing to have a Security, or
portion thereof, purchased pursuant to an
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Asset Sale Offer will be required to surrender their Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent (which may not for purposes of
this Section 4.13, notwithstanding any other provision of this Indenture,
be the Issuers or any Affiliate of either of the Issuers) at the address
specified in the notice;
(6) that Holders will be entitled to withdraw
their elections, in whole or in part, if the Paying Agent receives, prior
to the expiration of the Asset Sale Offer, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Securities the Holder is withdrawing and a statement containing a
facsimile signature and stating that such Holder is withdrawing his
election to have such principal amount of Securities purchased;
(7) that if Securities in a principal amount in
excess of the principal amount of Securities to be acquired pursuant to
the Asset Sale Offer are tendered and not withdrawn, the Issuers shall
purchase Securities on a pro rata basis (with such adjustments as may be
deemed appropriate by the Issuers so that only Securities in denominations
of $1,000 or integral multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were purchased
only in part will be issued new Securities equal in principal amount to
the unpurchased portion of the Securities surrendered; and
(9) the circumstances and relevant facts regarding
such Asset Sales.
The Issuers agree that any Asset Sale Offer shall be made in
compliance with all applicable laws, rules, and regulations, including, if
applicable, Regulation 14E of the Exchange Act and the rules and regulations
thereunder and all other applicable Federal and state securities laws, and any
provisions of this Indenture which conflict with such laws shall be deemed to be
superseded by the provisions of such laws.
On or before the date of purchase, the Issuers shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the Asset
Sale Offer (on a pro rata basis if required pursuant to paragraph (7) above),
(ii) deposit with the Paying Agent cash sufficient to pay the Asset Sale Offer
Price for all Securities or portions thereof so accepted and (iii) deliver to
the Trustee Securities so accepted together with an
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Officers' Certificate setting forth the Securities or portions thereof being
purchased by the Issuers. The Paying Agent shall promptly mail or deliver to
Holders of Securities so accepted payment in an amount equal to the Asset Sale
Offer Price for such Securities, and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Issuers to the Holder thereof.
Section 4.14 Limitation on Layering Indebtedness.
The Issuers and the Guarantors will not, individually or
collectively, directly or indirectly, incur, or suffer to exist any Indebtedness
that is subordinate in right of payment to any other Indebtedness of either
Issuer or any Guarantor unless, by its terms, such Indebtedness is subordinate
in right of payment to, or ranks pari passu with, the Notes or the Guarantee, as
applicable.
Section 4.15 Limitation on Lines of Business.
None of the Issuers or any of their Subsidiaries shall directly or
indirectly engage to any substantial extent in any line or lines of business
activity other than that which, in the good faith judgment of the Board of
Directors of the Sun International, is a Related Business.
Section 4.16 Limitation on Status as Investment Company.
None of Sun International or any of its Subsidiaries shall become
required to be registered as an "investment company" (as that term is defined in
the Investment Company Act of 1940, as amended), or otherwise become subject to
regulation under the Investment Company Act.
Section 4.17 Future Subsidiary Guarantors.
The Issuers covenant and agree that they shall cause each person
that becomes a Subsidiary of either Issuer to execute a Guarantee in the form of
Exhibit B hereto and shall cause such Subsidiary to enter into a supplemental
indenture for the purpose of jointly and severally guaranteeing, irrevocably and
unconditionally, on a senior subordinated basis, the Issuers' obligations to pay
principal, premium and interest (and Liquidated Damages, if any) on the Notes.
Section 4.18 Payment for Consent.
None of the Issuers or any of their Subsidiaries or Unrestricted
Subsidiaries shall, directly or indirectly, pay or
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cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of any Securities for, or as an inducement to, any
consent, waiver or amendment of any of the terms or provisions of the Indenture
or the Securities unless such consideration is offered to be paid or agreed to
be paid to all Holders of the Securities which so consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement, which solicitation documents must be mailed to all
Holders of the Securities prior to the expiration of the solicitation.
Section 4.19 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 the Indenture with respect to the Securities, the Issuers and
their Subsidiaries will not be subject to Section 4.3, 4.10 or 4.13
(collectively, the "Suspended Covenants"). In the event that the Issuers and
their 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, either of the Rating Agencies withdraws its rating or assigns the
Securities a rating below the required Investment Grade Ratings, then the
Issuers and their Subsidiaries will thereafter again be subject to the Suspended
Covenants for the benefit of the Securities and compliance with Section 4.3 made
after the time of such withdrawal or assignment will be calculated in accordance
with the terms of Section 4.3 as if such covenant had been in effect during the
entire period of time from the Issue Date with respect to the Securities.
Section 4.20 Payment of Additional Amounts.
The Issuers will, subject to the limitations and exceptions set
forth below, pay to each Holder such amounts (the "Additional Amounts") as may
be necessary in order that every net payment or deemed payment of (i) principal,
premium, Liquidated Damages and interest, if any, with respect to a Note, or
(ii) net proceeds on the sale or exchange of a Note, each after deduction or
withholding for or on account of any taxes, duties, assessments or governmental
charges of whatever nature imposed or levied by or on behalf of the government
of The Bahamas or any authority thereof or therein having power to tax, will
result in the receipt by the Holders of the amounts that would have been
received by them had no such deduction or withholding been required; provided,
however, that no such Additional Amounts shall be payable in respect of any Note
for:
(1) any tax, duty, assessment, or other governmental charge which
would not have been imposed but for the fact that such Holder:
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(a) is a resident, domiciliary or national of, or
engaged in business or maintains a permanent establishment or was
physically present in, The Bahamas or any political subdivision thereof or
therein or otherwise has some connection with The Bahamas other than the
mere ownership of, or receipt of payment under, such Note;
(b) presented such Note for payment in The Bahamas or
any political subdivision thereof or therein, unless such Note could not
have been presented for payment elsewhere; or
(c) presented such Note for payment more than 30 days
after the date on which the payment in respect of such Note became due and
payable or provided for, whichever is later, except to the extent that the
Holder would have been entitled to such Additional Amounts if it had
presented such Note for payment on any day within such period of 30 days;
(2) any estate, inheritance, gift, sales, transfer, or similar tax,
assessment or other governmental charge or any taxes, duties, assessments or
other governmental charges that are payable otherwise than by deduction or
withholding from payments on the Notes;
(3) any tax, duty, assessment, or other governmental charge imposed
on a Holder that is not the beneficial owner of a Note to the extent that the
beneficial owner would not have been entitled to the payment of Additional
Amounts had the beneficial owner directly held the Note; or
(4) any combination of items (1), (2) and (3).
Whenever there is mentioned herein in any context, the payment of
the principal of or any premium or interest on, or in respect of, any Note or
the net proceeds received on the sale or exchange of any Note, such mention
shall be deemed to include mention of the payment of Additional Amounts provided
for in the Indenture to the extent that, in such context, Additional Amounts
are, were or would be payable in respect thereof pursuant to the Indenture.
Without limiting a Holder's right to receive payment of Additional
Amounts, in the event that Additional Amounts actually paid with respect to the
Notes are based on rates of deduction or withholding of Bahamian taxes in excess
of the appropriate rate applicable to the Holder of such Notes and, as a result
thereof, such Holder of Notes is entitled to make a claim for a refund or credit
of such excess, then such Holder of Notes shall, by accepting the Notes and
receiving a payment of Additional Amounts, be deemed to have assigned and
transferred all right,
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title and interest to any such claim for a refund or credit of such excess to
the Issuers. By making such assignment, the Holder of Notes makes no
representation or warranty that the Issuers will be entitled to receive such
claim for a refund or credit and incurs no other obligation with respect
thereto.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 Limitation on Merger, Sale or Consolidation.
Neither of the Issuers will, directly or indirectly, consolidate
with or merge with or into another person or sell, lease, convey or transfer all
or substantially all of its assets (computed as to each Issuer on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of affiliated Persons or adopt a Plan of Liquidation,
unless (i) either (a) Sun International or SINA, as applicable, is the resulting
surviving or transferee entity (the "Successor Company") or (b) the Successor
Company or, in the case of a Plan of Liquidation, the entity which receives the
greatest value from such Plan of Liquidation is a corporation organized under
the laws of the Commonwealth of the Bahamas (in the case of Sun International
only) or the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of Sun
International or SINA, as applicable, in connection with the Notes and the
Indenture; (ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis to such transaction; (iii)
immediately after giving effect to such transaction on a pro forma basis, the
Consolidated Net Worth of the Successor Company or, in the case of a Plan of
Liquidation, the entity which receives the greatest value from such Plan of
Liquidation is at least equal to the Consolidated Net Worth of Sun International
or SINA, as applicable, immediately prior to such transaction; and (iv)
immediately after giving effect to such transaction on a pro forma basis, the
Successor Company or, in the case of a Plan of Liquidation, the entity which
receives the greatest value from such Plan of Liquidation would immediately
thereafter be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio set forth in Section 4.10.
On or prior to the consummation of the proposed transaction, the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture executed in connection therewith comply with this Indenture. The
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Trustee shall be entitled to conclusively rely upon such Officers' Certificate
and Opinion of Counsel.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of all or substantially all of the properties and assets of
one or more Subsidiaries, the interest of Sun International or SINA, as
applicable, in which constitutes all or substantially all of the properties and
assets of Sun International or SINA, as applicable, shall be deemed to be the
transfer of all or substantially all of the properties and assets of Sun
International, or SINA, as applicable.
Section 5.2 Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of Sun International or SINA, as applicable, or
consummation of a Plan of Liquidation in accordance with the foregoing, the
successor corporation formed by such consolidation or into which Sun
International or SINA is merged or to which such transfer is made or, in the
case of a Plan of Liquidation, the entity which receives the greatest value from
such Plan of Liquidation shall succeed to, and be substituted for, and may
exercise every right and power of, Sun International or SINA, as applicable,
under the Indenture with the same effect as if such successor corporation had
been named therein as Sun International or SINA, as applicable, and Sun
International or SINA, as applicable, shall be released from the obligations
under the Notes and the Indenture except with respect to any obligations that
arise from, or are related to, such transaction.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, 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):
(1) the failure by the Issuers to pay any
installment of interest or Liquidated Damages, if any, on the Securities
as and when the same becomes due and payable and the continuance of any
such failure for 30 days;
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(2) the failure by the Issuers to pay all or any
part of the principal, or premium, if any, on the Securities when and as
the same becomes due and payable at maturity, redemption, by acceleration
or otherwise, whether or not prohibited by the subordination provisions of
the Indenture, including, without limitation, payment of the Change of
Control Purchase Price or the Asset Sale Offer Price, or otherwise;
(3) the failure by either of the Issuers or any of
their Subsidiaries otherwise to comply with Section 4.13 and Articles V
and X;
(4) (A) failure by either of the Issuers or any of
their Subsidiaries to observe or perform any other covenant or agreement
contained in Article IV (except as provided in clauses (1), (2) and (3)
above) and the continuance of such failure for a period of 30 days after
written notice is given to the Issuers by the Trustee or to the Issuers
and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Securities outstanding, or (B) failure by either of the
Issuers or any of their Subsidiaries to observe or perform any other
covenant or agreement contained in the Securities or herein (except as
provided for in clauses (1), (2), (3) and (4)(A) above) and the
continuance of such failure for 60 days after written notice is given to
the Issuers by the Trustee or the Issuers and the Trustee by the Holders
of at least 25% in aggregate principal amount of Securities outstanding;
(5) a decree, judgment, or order by a court of
competent jurisdiction shall have been entered adjudicating either or both
of the Issuers or any of their Significant Subsidiaries as bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization of either or both of the Issuers or any of their
Significant Subsidiaries under any bankruptcy or similar law, and such
decree or order shall have continued undischarged and unstayed for a
period of 60 consecutive days; or a decree or order of a court of
competent jurisdiction, judgment appointing a receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency for either or both of the
Issuers, any of their Significant Subsidiaries, or any substantial part of
the property of any such person, or for the winding up or liquidation of
the affairs of any such person, shall have been entered, and such decree,
judgment, or order shall have remained in force undischarged and unstayed
for a period of 60 days;
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(6) either or both of the Issuers or any of their
Significant Subsidiaries shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking reorganization under any bankruptcy or similar law or similar
statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a Custodian, receiver, liquidator, trustee,
or assignee in bankruptcy or insolvency of it or any substantial part of
its assets or property, or shall make a general assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts as
they become due;
(7) a default in Indebtedness of either of the
Issuers or any of their Subsidiaries with an aggregate principal amount in
excess of $10 million (a) resulting from the failure to pay any principal
at final stated maturity or (b) as a result of which the maturity of such
Indebtedness has been accelerated prior to its stated maturity; and
(8) final unsatisfied judgments not covered by
insurance aggregating in excess of $10 million, at any one time rendered
against either of the Issuers or any of their Subsidiaries and either (a)
the commencement by any creditor of any enforcement proceeding upon any
such judgment that is not promptly stayed or (b) such judgment is not
stayed, bonded or discharged within 60 days.
Section 6.2 Acceleration of Maturity Date; Rescission and Annulment.
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clauses (5) and (6), above, relating to either of the
Issuers or any of their Significant Subsidiaries), then in every such case,
unless the principal of all of the Securities shall have already become due and
payable, either the Trustee or the Holders of 25% in aggregate principal amount
of the Securities then outstanding, by notice in writing to the Issuers (and to
the Trustee if given by Holders) (an "Acceleration Notice"), may declare all
principal and premium, if any, determined as set forth below, and accrued and
unpaid interest and Liquidated Damages, if any, thereon to be due and payable
immediately; provided, however, that if any Senior Debt is outstanding pursuant
to the Credit Agreement, such acceleration shall not be effective until the
earlier of (x) the fifth Business Day after the giving to Sun International and
the Representative of such written notice, unless such Event of Default is cured
or waived prior to such date and (y) the date of accelera-
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tion of any Senior Debt under the Credit Agreement. If an Event of Default
specified in clauses (5) and (6) above relating to either of the Issuers or any
of their Significant Subsidiaries occurs, all principal and accrued interest
thereon will be immediately due and payable on all outstanding Securities
without any declaration or other act on the part of Trustee or the Holders.
At any time after such a declaration of acceleration being made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of a
majority in aggregate principal amount of then outstanding Securities, by
written notice to the Issuers and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Issuers have paid or deposited with the Trustee
a sum sufficient to pay
(A) all overdue interest (and Liquidated
Damages, if any) on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due
otherwise than by such declaration of acceleration, and
interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue interest (and
Liquidated Damages, if any) at the rate borne by the
Securities,
(D) all sums paid or advanced by the Trustee
hereunder and the compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel,
and
(2) all Events of Default, other than the non-payment of
amounts which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.12.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective for any Event of Default or event which with notice or lapse of time
or both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
out-
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standing Security, unless all such affected Holders agree, in writing, to waive
such Event of Default or other event. No such waiver shall cure or waive any
subsequent default or impair any right consequent thereon.
Section 6.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Issuers covenant that if an Event of Default in payment of
principal, premium, or interest (and Liquidated Damages, if any) specified in
Section 6.1(1) or (2) occurs and is continuing, the Issuers shall, upon demand
of the Trustee, pay to it, for the benefit of the Holders of such Securities,
the whole amount then due and payable on such Securities for principal, premium
(if any) and interest (and Liquidated Damages, if any), and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest (and Liquidated
Damages, if any), at the rate borne by the Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses, disbursements and advances
of the Trustee, its agents and counsel.
If the Issuers fail to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Issuers or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Issuers or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Issuers or any other obligor upon the
Securities or the property of the Issuers or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
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shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Issuers for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise to take any and
all actions under the TIA, including
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest (and Liquidated
Damages, if any) owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel) and of the Holders
allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of
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the Holders of the Securities in respect of which such judgment has been
recovered.
Section 6.6 Priorities.
Subject to Article XII, any money collected by the Trustee pursuant
to this Article VI shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal, premium (if any) or interest (and Liquidated Damages, if any),
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest (and Liquidated Damages, if any)
on, the Securities in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal,
premium (if any) and interest (and Liquidated Damages, if any), respectively;
and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
Section 6.7 Limitation on Suits.
No Holder of any Security shall have any right to order or direct
the Trustee to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(A) such Holder has previously given written
notice to the Trustee of a continuing Event of
Default;
(B) the Holders of not less than 25% in
principal amount of then outstanding Securities shall
have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(C) such Holder or Holders have offered to
the Trustee reasonable security or indemnity against the
costs, expenses and liabilities to be incurred or
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reasonably probable to be incurred in compliance with
such request;
(D) the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity
has failed to institute any such proceeding; and
(E) no direction inconsistent with such
written request has been given to the Trustee during
such 60-day period by the Holders of a majority in
principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 6.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and interest (and
Liquidated Damages, if any) on, such Security on the Maturity Dates or Interest
Payment Dates, as applicable, of such payments as expressed in such Security (in
the case of redemption, the Redemption Price on the Redemption Date; in the case
of a Change of Control, the Change of Control Purchase Price, on the Change of
Control Purchase Date; and in the case of an Asset Sale, the Asset Sale Offer
Price on the relevant purchase date); and to institute suit for the enforcement
of any such payment, and such rights shall not be impaired without the consent
of such Holder.
Section 6.9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or
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otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VI or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 6.11 Control by Holders.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, provided, that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Holders not taking
part in such direction, and
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
Section 6.12 Waiver of Past Default.
Subject to Section 6.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding Securities may, by
written notice to the Trustee on behalf of all Holders, prior to the declaration
of the maturity of the Securities, waive any past default hereunder and its
consequences, except a default
(A) in the payment of the principal of,
premium, if any, or interest (and Liquidated Damages, if
any) on, any Security as specified in clauses (1) and
(2) of Section 6.1, or
(B) in respect of a covenant or provision
hereof which, under Article IX, cannot be modified or
amended
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without the consent of the Holder of each outstanding
Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
Section 6.13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, 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,
suffered or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 6.13 shall not apply to any
suit instituted by the Issuers, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in aggregate principal amount of the outstanding Securities, or to
any suit instituted by any Holder for enforcement of the payment of principal
of, or premium (if any) or interest (and Liquidated Damages, if any) on, any
Security on or after the Maturity Date of such Security.
Section 6.14 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Issuers, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
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ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
Section 7.1 Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied in or read into this
Indenture which are adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of
subsection (b) of this Section 7.1.
(ii) 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 grossly negligent in ascertaining the pertinent
facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in
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good faith in accordance with a direction received by it pursuant to
Section 6.12.
(d) The Trustee shall comply with any order or directive of a
Gaming Authority that the Trustee submit, at the expense of the Issuers, an
application for any license, finding of suitability or other approval pursuant
to any gaming law and will cooperate fully and completely in any proceeding
related to such application; provided, however, that in the event the Trustee in
its reasonable judgment determines that complying with such order or directive
would subject it or its officers or directors to unreasonable or onerous
requirements, the Trustee may, at its option, resign as Trustee in lieu of
complying with such order or directive; and provided, further, that no
resignation shall become effective until a successor Trustee is appointed and
delivers a written acceptance in accordance with Section 7.8 hereof.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or at the request, order or direction of the Holders
or in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(f) Every provision of this Indenture that in any way relates
to the Trustee is subject to subsections (a), (b), (c), (d) and (e) of this
Section 7.1.
(g) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Issuers.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
Section 7.2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document believed
by it to be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection and may require an Officers' Certificate
or an Opinion of Counsel, which shall conform to Sections 13.4 and 13.5. The
Trustee shall not
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be liable for any action it takes or omits to take in good faith in reliance on
such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Except with respect to Section 4.1, the Trustee shall have
no duty to inquire as to the performance of the Issuers' covenants in Article IV
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.1(1), 6.1(2) and 4.1, or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.
Section 7.3 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 Issuers, any
Guarantor, any of their respective Subsidiaries, or their respective Affiliates
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
Section 7.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities and 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 in
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the Securities (other than the Trustee's certificate of authentication) or for
the use or application of any funds received by a Paying Agent other than the
Trustee.
Section 7.5 Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is actually known to the Trustee, the Trustee shall mail to each
Securityholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except in the case of a Default
or an Event of Default in payment of principal (or premium, if any) of, or
interest (and Liquidated Damages, if any) on, any Security (including the
payment of the Change of Control Purchase Price on the Change of Control
Purchase Date, the Redemption Price on the Redemption Date, and the Asset Sale
Offer Price on the relevant purchase date), the Trustee may withhold the notice
if and so long as a Trust Officer in good faith determines that withholding the
notice is in the interest of the Securityholders.
Section 7.6 Reports by Trustee to Holders.
If required by law, within 60 days after each January 31 beginning
with the January 31 following the date of this Indenture, the Trustee shall mail
to each Securityholder a brief report dated as of such January 31 that complies
with TIA ss. 313(a). If required by law, the Trustee also shall comply with TIA
ss.ss. 313(b) and 313(c).
The Issuers shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Issuers and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
Section 7.7 Compensation and Indemnity.
The Issuers shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Issuers and the Trustee
for its services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuers shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses shall include the reasonable compensation,
disbursements, fees and expenses of the Trustee's agents, accountants, experts
and counsel.
The Issuers shall indemnify the Trustee (in its capacity as Trustee,
Registrar and Paying Agent) and each of its offi-
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cers, directors, attorneys-in-fact and agents for, and hold it harmless against,
any claims, loss, damage, demand, fee, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel), loss or liability incurred by them without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of this trust and their rights or duties hereunder including the reasonable
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Issuers promptly of any claim asserted
against the Trustee for which it may seek indemnity. The Issuers shall defend
the claim and the Trustee shall provide reasonable cooperation at the Issuers'
expense in the defense. The Trustee may have separate counsel and the Issuers
shall pay the reasonable fees and expenses of such counsel; provided, that the
Issuers will not be required to pay such fees and expenses if they assume the
Trustee's defense and there is no conflict of interest between the Issuers and
the Trustee in connection with such defense. The Issuers need not pay for any
settlement made without their written consent. The Issuers need not reimburse
any expense or indemnify against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.
To secure the Issuers' payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest (and Liquidated
Damages, if any) on particular Securities.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Issuers' obligations under this Section 7.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Issuers' obligations pursuant to Article VIII of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
Section 7.8 Replacement of Trustee.
The Trustee may resign by so notifying the Issuers in writing. The
Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Issuers and the Trustee in
writing and may appoint a successor trustee with the Issuers' consent. The
Issuers may remove the Trustee if:
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(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 7.7,
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. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holder or Holders of at least 10% in principal amount of the outstanding
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 replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
Section 7.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate
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trust business to, another corporation, the resulting, surviving or transferee
corporation without any further act shall, if such resulting, surviving or
transferee corporation is otherwise eligible hereunder, be the successor
Trustee.
Section 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA ss.
310(a)(1) and TIA ss. 310(a)(5). The Trustee shall have a combined capital and
surplus of at least $25,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA ss. 310(b).
Section 7.11 Preferential Collection of Claims against Issuers.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant
Defeasance.
The Issuers may, at their option at any time, elect to have Section
8.2 or Section 8.3 applied to all outstanding Securities upon compliance with
the conditions set forth below in this Article VIII.
Section 8.2 Legal Defeasance and Discharge.
Upon the Issuers' exercise under Section 8.1 of the option
applicable to this Section 8.2, the Issuers and the Guarantors shall be deemed
to have been discharged from their respective obligations with respect to all
outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Issuers shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of Section 8.5 and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all their other obligations under such Securities and this Indenture
(and the Trustee, on demand of and at the expense of the Issuers, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the
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rights of Holders of outstanding Securities to receive solely from the trust
fund described in Section 9.4, and as more fully set forth in such section,
payments in respect of the principal of, premium, if any, and interest (and
Liquidated Damages, if any) on such Securities when such payments are due, (b)
the Issuers' obligations with respect to such Securities under Sections 2.4,
2.6, 2.7, 2.10 and 4.2, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Issuers' obligations in connection therewith and
(d) this Article VIII. Subject to compliance with this Article VIII, the Issuers
may exercise their option under this Section 8.2 notwithstanding the prior
exercise of their option under Section 8.3 with respect to the Securities.
Section 8.3 Covenant Defeasance.
Upon the Issuers' exercise under Section 8.1 of the option
applicable to this Section 8.3, the Issuers shall be released from their
obligations under the covenants contained in Sections 4.3, 4.6, 4.7, 4.9, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15 and 4.16, Article V and Article X with respect to
the outstanding Securities on and after the date the conditions set forth below
are satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities, the Issuers
need not comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document, but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.1 of the option applicable to this Section
8.3, Sections 6.1(3) through 6.1(8) shall not constitute Events of Default.
Section 8.4 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Issuers shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article VIII
applicable to it)
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as trust funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of such Securities, (a) cash in an amount, or (b) U.S. Government
Obligations which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, cash in an amount, or (c) a combination
thereof, in such amounts, as in each case will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge the
principal of, premium, if any, and interest (and Liquidated Damages, if any) on
the outstanding Securities on the stated maturity or on the applicable
redemption date, as the case may be, of such principal or installment of
principal, premium, if any, or interest (and Liquidated Damages, if any);
provided that the Trustee shall have been irrevocably instructed to apply such
cash and the proceeds of such U.S. Government Obligations to said payments with
respect to the Securities.
(b) In the case of an election under Section 8.2, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably satisfactory to the Trustee confirming that (i) the Issuers have
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance has not occurred;
(c) In the case of an election under Section 8.3, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the United States
to the effect that the Holders of the outstanding Securities 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 in the same
amount, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such deposit or,
insofar as Section 7.1(5) or 7.1(6) is concerned, at any time in the period
ending on the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period);
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(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which either of the
Issuers or any of their Subsidiaries is a party or by which either of the
Issuers or any of their Subsidiaries is bound;
(f) In the case of an election under either Section 8.2 or
8.3, the Issuers shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Issuers pursuant to its election under
Section 8.2 or 8.3 was not made by the Issuers with the intent of preferring the
Holders over other creditors of the Issuers or with the intent of defeating,
hindering, delaying or defrauding creditors of the Issuers or others;
(g) The Issuers shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel in the United States, each
stating that the conditions precedent provided for, in the case of the Officers'
Certificate, in subsections (a) through (f) of this Section 8.4 and, in the case
of the Opinion of Counsel, subsections (a) (with respect to the validity and
perfection of the security interest), (b), (c) and (e) of this Section 8.4 have
been complied with as contemplated by this Section 8.4.
Section 8.5 Deposited Cash and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.6, all cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant
to Section 8.4 in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through any Paying Agent
as the Trustee may determine, to the Holders of such Securities of all sums due
and to become due thereon in respect of principal, premium, if any, and interest
(and Liquidated Damages, if any), but such money need not be segregated from
other funds except to the extent required by law.
The Issuers shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Securities.
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Section 8.6 Repayment to Issuers.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the request
of the Issuers any cash or U.S. Government Obligations held by it as provided in
Section 8.4 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereto delivered to the
Trustee (which may be the opinion delivered under Section 8.4(a)), are in excess
of the amount thereof which would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Issuers, in trust for the payment of the principal of, premium, if
any, or interest (and Liquidated Damages, if any) on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
(and Liquidated Damages, if any) has become due and payable shall be paid to the
Issuers on their request; and the Holder of such Security shall thereafter look
only to the Issuers for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Issuers cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Issuers.
Section 8.7 Reinstatement.
If the Trustee or Paying Agent is unable to apply any cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Issuers' obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3
until such time as the Trustee or Paying Agent is permitted to apply such money
in accordance with Section 8.2 and 8.3, as the case may be; provided, however,
that, if the Issuers make any payment of principal of, premium, if any, or
interest (and Liquidated Damages, if any) on any Security following the
reinstatement of its obligations, the Issuers shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the Cash held by
the Trustee or Paying Agent.
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ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Issuers or any Guarantor,
when authorized by Board Resolutions, and the Trustee, at any time and from time
to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or
to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with
the provisions of this Indenture, provided such action pursuant to
this clause (1) shall not adversely affect the interests of any
Holder in any respect;
(2) to add to the covenants of the Issuers for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Issuers or to make any other change that does not
adversely affect the rights of any Holder; provided, that the
Issuers have delivered to the Trustee an Opinion of Counsel stating
that such change does not adversely affect the rights of any Holder;
(3) to provide for additional Guarantors of the
Securities;
(4) to evidence the succession of another person to
either of the Issuers, and the assumption by any such successor of
the obligations of such Issuer, herein and in the Securities in
accordance with Article V; or
(5) to comply with the TIA.
Section 9.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders.
Subject to Section 6.8 and the last sentence of this paragraph, with
the consent of the Holders of not less than a majority in aggregate principal
amount of then outstanding Securities, by written act of said Holders delivered
to the Issuers and the Trustee, the Issuers and any Guarantor, when authorized
by Board Resolutions, and the Trustee may amend or supplement this Indenture or
the Securities or enter into an indenture or indentures supplemental hereto for
the purpose of
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adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or the Securities or of modifying in any manner the
rights of the Holders under the this Indenture or the Securities. Subject to
Section 6.8 and the last sentence of this paragraph, the Holder or Holders of a
majority, in principal amount of then outstanding Securities may waive
compliance by the Issuers or any Guarantor with any provision of this Indenture
or the Securities. Notwithstanding the foregoing provisions of this Section 9.2,
without the consent of each Holder affected thereby, no such amendment,
supplemental indenture or waiver shall:
(1) reduce the percentage of principal amount of
Securities whose Holders must consent to an amendment, supplement or
waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of
interest (and Liquidated Damages, if any) on any Security;
(3) reduce the principal amount of any Security, or
reduce the Change of Control Purchase Price or the Asset Sale Offer
Price;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article III in a
manner adverse to any Holder;
(6) make any changes in the provisions concerning
waivers of Defaults or Events of Default by Holders of the
Securities (except to increase any percentage of Securities required
to consent to a waiver or to provide that certain other provisions
of the Indenture cannot be modified or waived without the consent of
the Holder of each outstanding Security affected thereby) or the
rights of Holders to recover the principal or premium of, interest
(and Liquidated Damages, if any) on, or redemption payment with
respect to, any Security;
(7) make any changes in Section 6.8, 6.12 or this third
sentence of this Section 9.2; or
(8) make the principal of, or the interest (and
Liquidated Damages, if any) on, any Security payable with anything
or at anywhere other than as provided for in this Indenture and the
Securities as in effect on the date hereof; or
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(9) make the Securities or Guarantees further
subordinated in right of payment to any extent or under any
circumstances to any other indebtedness.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Issuers to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
After an amendment, supplement or waiver under this Section 9.2 or
9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Issuers may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 9.3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by written notice to
the Issuers or the person designated by the Issuers as the person to whom
consents should be sent if such revocation is received by the Issuers or such
person before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Issuers notwithstanding
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the provisions of the TIA. If a record date is fixed, then notwithstanding the
last sentence of the immediately preceding paragraph, those persons who were
Holders at such record date, and only those persons (or their duly designated
proxies), shall be entitled to revoke any consent previously given, whether or
not such persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (9) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest (and Liquidated Damages, if any) on a
Security, on or after the respective dates set for such amounts to become due
and payable expressed in such Security, or to bring suit for the enforcement of
any such payment on or after such respective dates.
Section 9.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Issuers or
the Trustee so determines, the Issuers in exchange for the Security shall issue,
the Guarantors shall endorse and the Trustee shall authenticate a new Security
that reflects the changed terms. Any failure to make the appropriate notation or
to issue a new Security shall not affect the validity of such amendment,
supplement or waiver.
Section 9.6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX, provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article IX is authorized or permitted by this Indenture.
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ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 10.1 Repurchase of Securities at Option of the Holder upon
Change of Control.
(a) In the event that a Change of Control Triggering Event
occurs, each Holder of Securities shall have the right, at such Holder's option,
subject to the terms and conditions of this Indenture, to require the Issuers to
repurchase all or any part of such Holder's Notes (provided, that the principal
amount of such Notes at maturity must be $1,000 or an integral multiple thereof)
on the date that is no later than 45 Business Days after the occurrence of such
Change of Control Triggering Event (the "Change of Control Purchase Date"), at a
cash price equal to 101% of the principal amount thereof (the "Change of Control
Purchase Price"), plus accrued but unpaid interest (and Liquidated Damages), if
any, to the Change of Control Purchase Date.
(b) In the event that, pursuant to this Section 10.1, the
Issuers shall be required to commence an offer to purchase Notes (a "Change of
Control Offer"), the Issuers shall follow the procedures set forth in this
Section 10.1 as follows:
(1) the Change of Control Offer shall commence within 20
Business Days following the Change of Control Triggering Event;
(2) the Change of Control Offer shall remain open for at
least 20 Business Days;
(3) within 5 Business Days following the expiration of
a Change of Control Offer, the Issuers shall purchase all of the
tendered Securities at the Change of Control Purchase Price, plus
accrued interest (and Liquidated Damages, if any);
(4) if the Change of Control Purchase Date is on or
after an interest payment record date and on or before the related
interest payment date, any accrued interest (and Liquidated Damages,
if any) will be paid to the Person in whose name a Security is
registered at the close of business on such record date, and no
additional interest will be payable to Securityholders who tender
Securities pursuant to the Change of Control Offer;
(5) the Issuers shall use their best efforts to provide
the Trustee with notice of the
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Change of Control Offer at least 5 Business Days before the commencement
of any Change of Control Offer; and
(6) on or before the commencement of any Change of
Control Offer, the Issuers or the Trustee (upon the request and at
the expense of the Issuers) shall send, by first-class mail, a
notice to each of the Securityholders, which (to the extent
consistent with this Indenture) shall govern the terms of the Change
of Control Offer and shall state:
(i) that the Change of Control Offer is being made
pursuant to this Section 10.1 and that all Securities, or portions
thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the
amount of accrued but unpaid interest (and Liquidated Damages, if
any)) and the Change of Control Purchase Date;
(iii) that any Security, or portion thereof, not
tendered or accepted for payment will continue to accrue interest;
(iv) that, unless the Issuers default in depositing cash
with the Paying Agent in accordance with the last paragraph of this
subsection (b), or such payment is prevented for any reason, any
Security, or portion thereof, accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Change of Control Purchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be
required to surrender the Security, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Security
completed, to the Paying Agent (which may not for purposes of this
Section 10.1, notwithstanding anything in this Indenture to the
contrary, be the Issuers or any Affiliate of either of the Issuers)
at the address specified in the notice prior to the expiration of
the Change of Control Offer;
(vi) that Holders will be entitled to withdraw their
election, in whole or in part, if the Paying Agent receives, prior
to the expiration of the Change of Control Offer, a facsimile
transmission or letter setting forth the name of
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the Holder, the principal amount of the Securities the Holder is
withdrawing and a statement containing a facsimile signature and
stating that such Holder is withdrawing his election to have such
principal amount of Securities purchased; and
(vii) a brief description of the events resulting in
such Change of Control Triggering Event.
Any such Change of Control Offer shall comply with any and all
applicable provisions of Federal and state laws, including those regulating
tender offers, if applicable, and any provisions of this Indenture which
conflict with such laws shall be deemed to be superseded by the provisions of
such laws.
On or before the Change of Control Purchase Date, the Issuers shall
(i) accept for payment Securities or portions thereof properly tendered pursuant
to the Change of Control Offer prior to the expiration of the Change of Control
Offer, (ii) deposit with the Paying Agent cash sufficient to pay the Change of
Control Purchase Price (including accrued and unpaid interest (and Liquidated
Damages, if any)) of all Securities so tendered and (iii) deliver to the Trustee
Securities so accepted together with an Officers' Certificate listing the
Securities or portions thereof being purchased by the Issuers. The Paying Agent
shall promptly pay to the Holders of Securities so accepted payment in an amount
equal to the Change of Control Purchase Price (plus accrued and unpaid interest
(and Liquidated Damages, if any)), and the Trustee shall promptly authenticate
and mail or deliver to such Holders a new Security equal in principal amount to
any unpurchased portion of the Security surrendered.
ARTICLE XI
GUARANTEES
Section 11.1 Guarantees.
(a) In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the Guarantors
hereby irrevocably and unconditionally guarantees, jointly and severally, on a
senior subordinated basis (the "Guarantee") to each Holder of a Security
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Securities or the obligations of the Issuers under this Indenture or the
Securities, that: (w) the principal and premium (if any) of and interest (and
Liquidated Damages, if any) on the Securities will be paid in full when due,
whether at the maturity or interest payment date, by accel-
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eration, call for redemption, upon an Change of Control Offer, an Asset Sale
Offer or otherwise; (x) all other obligations of the Issuers to the Holders or
the Trustee under this Indenture or the Securities will be promptly paid in full
or performed, all in accordance with the terms of this Indenture and the
Securities; and (y) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, they will be paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration, call for redemption, upon an Offer to
Purchase or otherwise. Failing payment when due of any amount so guaranteed for
whatever reason, each Guarantor shall be obligated to pay the same before
failure so to pay becomes an Event of Default.
(b) Each Guarantor hereby agrees that its obligations with
regard to this Guarantee shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence of
any action to enforce the same, the recovery of any judgment against the
Issuers, any action to enforce the same or any other circumstances that might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Issuers,
the any right to require a proceeding first against the Issuers or right to
require the prior disposition of the assets of the Issuers to meet its
obligations, protest, notice and all demands whatsoever and covenants that this
Guarantee will not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either the Issuers or any Guarantor, or any Custodian,
Trustee, or similar official acting in relation to either the Issuers or such
Guarantor, any amount paid by either the Issuers or such Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it will
not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Guarantor further agrees that, as between
such Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand, (i) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Section 6.2 for the purposes of this Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration as to the
Issuers of the obligations guaranteed hereby, and (ii) in the event of any
declaration of acceleration of those obligations as provided in Section 6.2,
those obligations (whether or not due and payable) will forthwith become due and
payable by each of the Guarantors for the purpose of this Guarantee.
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(d) Each Guarantor and by its acceptance of a Security issued
hereunder each Holder hereby confirms that it is the intention of all such
parties that the guarantee by such Guarantor set forth in Section 11.1(a) not
constitute a fraudulent transfer or conveyance for purpose of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law. To effectuate the foregoing intention, the
Holders and such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under its guarantee set forth in Section 11.1(a) shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to the
following paragraph of this Section 11.1(d), result in the obligations of such
Guarantor under such guarantee not constituting such a fraudulent transfer or
conveyance.
Each Guarantor that makes any payment or distribution under Section
11.1(a) shall be entitled to a contribution from each other Guarantor equal to
its Pro Rata amount of such payment or distribution so long as the exercise of
such right does not impair the rights of the Holders under the Guarantees. For
purposes of the foregoing, the "Pro Rata amount" of any Guarantor means the
percentage of the net assets of all Guarantors held by such Guarantor,
determined in accordance with GAAP.
Section 11.2 Execution and Delivery of Guarantee.
To evidence its Guarantee set forth in Section 11.1, each Guarantor
agrees that a notation of such Guarantee substantially in the form annexed
hereto as Exhibit B shall be endorsed on each Security authenticated and
delivered by the Trustee and that this Indenture shall be executed on behalf of
such Guarantor by two Officers or an Officer and an Assistant Secretary by
manual or facsimile signature.
Each Guarantor agrees that its Guarantee set forth in Section 11.1
shall remain in full force and effect and apply to all the Securities
notwithstanding any failure to endorse on each Security a notation of such
Guarantee.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security on which a Guarantee
is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of each Guarantor.
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Section 11.3 Certain Bankruptcy Events.
Each Guarantor hereby covenants and agrees that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of either of
the Issuers, such Guarantor shall not file (or join in any filing of), or
otherwise seek to participate in the filing of, any motion or request seeking to
stay or to prohibit (even temporarily) execution on the Guarantee and hereby
waives and agrees not to take the benefit of any such stay of execution, whether
under Section 362 or 105 of the United States Bankruptcy Code or otherwise.
Section 11.4 Limitation on Merger, Consolidation, Etc. of
Guarantors.
No Guarantor shall consolidate or merge with or into (whether or not
such Guarantor is the surviving person) another person unless (i) subject to the
provisions of the following paragraph, the person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee, pursuant to which such person shall
unconditionally guarantee, on a senior subordinated basis, all of such
Guarantor's obligations under such Guarantor's guarantee and the Indenture on
the terms set forth in the Indenture; and (ii) immediately before and
immediately after giving effect to such transaction on a pro forma basis, no
Default or Event of Default shall have occurred or be continuing.
Notwithstanding the foregoing, upon the sale or disposition (whether
by merger, stock purchase, asset sale or otherwise) of a Guarantor or all or
substantially all of its assets to an entity which is not a Subsidiary or the
designation of a Subsidiary as an Unrestricted Subsidiary, which transaction is
otherwise in compliance with the Indenture (including, without limitation, the
provisions of Section 4.13), such Guarantor will be deemed released from its
obligations under its Guarantee of the Notes; provided, however, that any such
termination shall occur only to the extent that all obligations of such
Guarantor under all of its guarantees of, and under all of its pledges of assets
or other security interests which secure, any Indebtedness of either Issuer or
any of their Subsidiaries shall also terminate upon such release, sale or
transfer.
Section 11.5 Future Guarantors.
Upon the acquisition by the Issuers or any Guarantor of the Capital
Stock of any person, if, as a result of such acquisition, such Person becomes a
Subsidiary, such Subsidiary shall fully and unconditionally guarantee on a
senior subordinated basis the obligations of the Issuers with respect to payment
and
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performance of the Securities and the other obligations of the Issuers under
this Indenture to the same extent that such obligations are guaranteed by the
other Guarantors pursuant to Section 11.1; and, within 60 days of the date of
such occurrence, such Subsidiary shall execute and deliver to the Trustee a
supplemental indenture making such Subsidiary a party to this Indenture.
ARTICLE XII
SUBORDINATION
Section 12.1 Securities Subordinated to Senior Debt.
The Issuers, the Guarantors and each Holder, by its acceptance of
Securities, agree that (a) the payment of the principal of and interest on the
Securities and (b) any other payment in respect of the Securities, including on
account of the acquisition or redemption of the Securities by the Issuers or the
Guarantors (including, without limitation, pursuant to Section 4.13 or 10.1) is
subordinated, to the extent and in the manner provided in this Article XII, to
the prior payment in full in Cash or Cash Equivalents of all Senior Debt of the
Issuers and the Guarantors, and that these subordination provisions are for the
benefit of the holders of Senior Debt.
This Article XII shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt, and such provisions are made for the benefit of the holders of
Senior Debt, and such holders are made obligees hereunder and any one or more of
them may enforce such provisions.
Section 12.2 No Payment on Securities in Certain Circumstances.
(a) No payment of any kind or character from any source may be
made by or on behalf of the Issuers or a Guarantor, as applicable, on account of
the principal of, premium, if any, or interest or Liquidated Damages or
Additional Amounts on the Securities (including any repurchases of Securities
and rescission payments), or on account of the redemption provisions of the
Securities, for cash or property (other than from the trust described in Article
VIII), (i) upon the maturity of any Senior Debt of the Issuers or such Guarantor
by lapse of time, acceleration (unless waived) or otherwise, unless and until
all principal of, premium, if any, the interest on and any fee or other amount
due in respect of such Senior Debt are first paid in full in cash or Cash
Equivalents or otherwise to the extent holders accept satisfaction of amounts
due by settlement in other than cash or Cash Equivalents, or (ii) in the event
of default in the payment of any principal of, premium, if any, or interest on
or any fee
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or other amount due in respect of Senior Debt of the Issuers or such Guarantor
when it becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise (a "Payment Default"), unless and
until such Payment Default has been cured or waived or otherwise has ceased to
exist.
(b) Upon (i) the happening of an event of default (other than
a Payment Default) that permits the holders of Senior Debt to declare such
Senior Debt to be due and payable and (ii) written notice of such event of
default given to the Trustee by the Representative under the Credit Agreement or
the holders of an aggregate of at least $25 million principal amount outstanding
of any other Senior Debt or their representative (a "Payment Blockage Notice"),
then, unless and until such event of default has been cured or waived or
otherwise has ceased to exist, no payment (by set-off or otherwise) may be made
by or on behalf of the Issuers or any Guarantor which is an obligor under such
Senior Debt on account of the principal of, premium, if any or interest or
Liquidated Damages or Additional Amounts on the Securities, including any
repurchases of Securities and rescission payments, or on account of the
redemption provisions of the Securities, other than payments from the trust
described in Article VIII; provided, however, that so long as the Credit
Agreement is in effect, a Payment Blockage Notice may only be given by the
Representative under the Credit Agreement unless otherwise agreed in writing by
the requisite lenders under the Credit Agreement. Notwithstanding the
immediately preceding sentence, unless the Senior Debt in respect of which such
event of default exists has been declared due and payable in its entirety within
179 days after the Payment Blockage Notice is delivered as set forth above (the
"Payment Blockage Period") (and such declaration has not been rescinded or
waived), at the end of the Payment Blockage Period, the Issuers and the
Guarantors shall be required to pay, unless a Payment Default has then occurred
and is continuing, all sums not paid to the Holders of the Notes during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Notes. Any number of Payment Blockage
Notices may be given; provided, however, that (i) not more than one Payment
Blockage Notice shall be given within a period of any 360 consecutive days, and
(ii) no default that existed upon the date of such Payment Blockage Notice or
the commencement of such Payment Blockage Period (whether or not such event of
default is on the same issue of Senior Debt) shall be made the basis for the
commencement of any other Payment Blockage Period, unless such event of default
shall have been cured or waived for a period of not less than 90 days.
(c) In furtherance of the provisions of Section 12.1, in the
event that, notwithstanding the foregoing provisions of this Section 12.2 or the
provisions of Section 12.3, any
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payment or distribution of assets (other than from the trust described in
Article VIII and, in the case of Section 12.3, Junior Securities) shall be
received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by such provisions, such payment or distribution
shall be held in trust for the benefit of the holders of such Senior Debt, and
shall be paid or delivered by the Trustee or such Holders, as the case may be,
to the holders of such Senior Debt remaining unpaid or unprovided for or to
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior Debt
may have been issued, ratably according to the aggregate principal amounts
remaining unpaid on account of such Senior Debt held or represented by each, for
application to the payment of all such Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt in full in cash or Cash Equivalents
or otherwise to the extent holders accept satisfaction of amounts due by
settlement in other than cash or Cash Equivalents after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
Section 12.3 Securities Subordinated to Prior Payment of All Senior
Debt on Dissolution, Liquidation or Reorganization.
Upon any distribution of assets of either Issuer or any Guarantor
upon any dissolution, winding up, total or partial liquidation or reorganization
of either Issuer or a Guarantor, whether voluntary or involuntary, in
bankruptcy, insolvency, receivership or a similar proceeding or upon assignment
for the benefit of creditors or any marshalling of assets or liabilities:
(a) the holders of all Senior Debt of such Issuer or such
Guarantor, as applicable, will first be entitled to receive payment on account
of all principal of, premium, if any, interest on and fees and other amounts
payable in respect of such Senior Debt in full in cash or Cash Equivalents or
otherwise to the extent holders accept satisfaction of amounts due by settlement
in other than cash or Cash Equivalents before the Holders are entitled to
receive any payment on account of principal of, premium, if any, and interest
and Liquidated Damages or Additional Amounts on the Securities, including any
repurchase of Securities and rescission payments, or on account of the
redemption provisions of the Securities, other than Junior Securities or from
the trust described in Article VIII; and
(b) any payment or distribution of assets of such Issuer or
such Guarantor of any kind or character from any source, whether in cash,
property or securities (other than Junior Securities or from the trust described
in Article VIII) to which the Holders or the Trustee on behalf of the Holders
would be entitled (by set-off or otherwise), except for the provisions of
Article VIII, will be paid by the liquidating trustee or agent
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or other person making such a payment or distribution directly to the holders of
such Senior Debt or their representative to the extent necessary to make payment
in full in cash or Cash Equivalents on all such Senior Debt remaining unpaid,
after giving effect to any concurrent payment or distribution to the holders of
such Senior Debt.
Section 12.4 Securityholders to Be Subrogated to Rights of Holders
of Senior Debt.
Subject to the payment in full in Cash or Cash Equivalents of all
Senior Debt of the Issuers and the Guarantors as provided herein, the Holders of
Securities shall be subrogated to the rights of the holders of such Senior Debt
to receive payments or distributions of assets of the Issuers and the Guarantors
applicable to the Senior Debt until all amounts owing on the Securities shall be
paid in full, and for the purpose of such subrogation no such payments or
distributions to the holders of such Senior Debt by or on behalf of the Issuers
or the Guarantors, or by or on behalf of the Holders by virtue of this Article
XII, which otherwise would have been made to the Holders shall, as between the
Issuers and Guarantors and the Holders, be deemed to be payment by the Issuers
or Guarantors or on account of such Senior Debt, it being understood that the
provisions of this Article XII are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
such Senior Debt, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XII shall have been
applied, pursuant to the provisions of this Article XII, to the payment of
amounts payable under Senior Debt of the Issuers or the Guarantors, then the
Holders shall be entitled to receive from the holders of such Senior Debt any
payments or distributions received by such holders of Senior Debt in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Debt in full in Cash or Cash Equivalents.
Section 12.5 Obligations of the Issuers Unconditional.
Nothing contained in this Article XII or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Issuers and
Guarantors and the Holders, the obligation of each such Person, which is
absolute and unconditional, to pay to the Holders the principal of, premium, if
any, and interest and Liquidated Damages on the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the Issuers
and the Guarantors other than the holders of the Senior Debt, nor shall anything
herein or therein prevent the Trustee or any Holder from
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exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article XII and under
the proviso to Section 6.2, of the holders of Senior Debt in respect of cash,
property or securities of the Issuers or the Guarantors received upon the
exercise of any such remedy or otherwise. Notwithstanding anything to the
contrary in this Article XII or elsewhere in this Indenture or in the
Securities, upon any distribution of assets of the Issuers referred to in this
Article XII, the Trustee, subject to the provisions of Sections 6.1 and 6.2, and
the Holders shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
Trustee or agent or other Person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Issuers and the Guarantors, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XII so long as such court has been apprised of the
provisions of, or the order, decree or certificate makes reference to, the
provisions of this Article XII. Nothing in this Section 12.5 shall apply to the
claims of, or payments to, the Trustee under or pursuant to Section 6.7.
Section 12.6 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than two Business Days prior to such payment,
written notice thereof from the Issuers or from one or more holders of Senior
Debt or from any representative therefor and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
shall be entitled in all respects conclusively to assume that no such fact
exists. The Issuers shall give prompt written notice to the Trustee of any fact
actually known to the Issuers which would prohibit the making of any payment to
or by the Trustee in respect of the Securities.
Section 12.7 Application by Trustee of Assets Deposited with It.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Securityholders
and, to the extent allocated for the payment of Securities, shall not be subject
to the subordination provisions of this Article XII. Otherwise, any deposit of
assets with
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the Trustee or any Paying Agent (whether or not in trust) for the payment of
principal of or interest on any Securities shall be subject to the provisions of
Sections 12.1, 12.2, 12.3 and 12.4; provided that, if prior to two Business Days
preceding the date on which by the terms of this Indenture any such assets may
become distributable for any purpose (including without limitation, the payment
of either principal of or interest on any Security) the Trustee or such Paying
Agent shall not have received with respect to such assets the written notice
provided for in Section 12.6, then the Trustee or such Paying Agent shall have
full power and authority to receive such assets and to apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it on or after such date.
Section 12.8 Subordination Rights Not Impaired by Acts or Omissions
of the Issuers, Guarantors or Holders of Senior Debt, Etc.; Modifications.
No right of any present or future holders of any Senior Debt to
enforce subordination provisions contained in this Article XII shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Issuers, the Guarantors or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Issuers or the Guarantors with
the terms of this Indenture, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of Senior Debt may
extend, renew, modify or amend the terms of the Senior Debt or any security
therefor and release, sell or exchange such security and otherwise deal freely
with the Issuers and the Guarantors, all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders. The subordination
provisions are solely for the benefit of the holders from time to time of Senior
Debt and may not be rescinded, cancelled, amended or modified in any way other
than any amendment or modification that would not adversely affect the rights of
any holder of Senior Debt or any amendment or modification that is consented to
by each holder of Senior Debt that would be affected thereby. The subordination
provisions of this Article XII shall continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Senior Debt
is, pursuant to applicable law, avoided, recovered or rescinded or must
otherwise be restored or returned by any holder of Senior Debt, whether as a
"voidable preference," "fraudulent conveyance," "fraudulent transfer," or
otherwise, all as though such payment or performance had not been made.
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Section 12.9 Securityholders Authorize Trustee to Effectuate
Subordination of Securities.
Each Holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article XII and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Issuers or any Guarantor (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Issuers and
the Guarantors) the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Debt or their representative to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee or
the holders of Senior Debt or their representative to vote in respect of the
claim of any Securityholder in any such proceeding.
Section 12.10 Right of Trustee to Hold Senior Debt.
The Trustee shall be entitled to all of the rights set forth in this
Article XII in respect of any Senior Debt at any time held by it to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall
be construed to deprive the Trustee of any of its rights as such holder.
Section 12.11 Article XII Not to Prevent Events of Default.
The failure to make a payment on account of principal of, premium,
if any, or interest on the Securities by reason of any provision of this Article
XII shall not be construed as preventing the occurrence of a Default or an Event
of Default under Section 7.1 or in any way limit the rights of the Trustee or
any Holder to pursue any other rights or remedies with respect to the
Securities.
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Section 12.12 No Fiduciary Duty of Trustee to Holders of Senior
Debt.
Notwithstanding anything to the contrary herein, the Trustee shall
not be deemed to owe any fiduciary duty to any present or future holders of
Senior Debt, and shall not be liable to any such holders (other than for its
willful misconduct or negligence) if it shall in good faith mistakenly pay over
or distribute to the Holders of Securities or the Issuers or Guarantors or any
other Person, cash, property or securities to which any holders of Senior Debt
shall be entitled by virtue of this Article XII or otherwise. The Trustee
undertakes to perform or to observe only such of the covenants and obligations
as are specifically set forth in this Article XII, and no implied covenants or
obligations with respect to such holders of Senior Debt shall be implied in this
Indenture against the Trustee. Nothing in this Section 12.12 shall affect the
obligation of any other such Person to hold such payment for the benefit of, and
to pay such payment over to, the holders of Senior Debt or their representative.
In the event of any conflict between the fiduciary duty of the Trustee to the
Holders of Securities and its duty to the holders of Senior Debt, the Trustee is
expressly authorized to resolve such conflict in favor of the Holders.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
Section 13.2 Notices.
Any notices or other communications to the Issuers, the Guarantors
or the Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Issuers or any Guarantor:
Sun International Hotels Limited
Coral Towers
Paradise Island, Bahamas
Attention: General Counsel
Telephone: (242) 363-2516
Telecopy: (242) 363-3703
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if to the Trustee:
The Bank of New York
101 Barclay St,Floor 21 W
New York, New York
Attention: Corporate Trust Administration
Telephone: (212) 815-5192
Telecopy: (212) 815-5915
The Issuers, the Guarantors or the Trustee by notice to each other
party may designate additional or different addresses as shall be furnished in
writing by such party. Any notice or communication to the Issuers, the
Guarantors or the Trustee shall be deemed to have been given or made as of the
date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; and 5 Business Days after mailing if sent by registered or certified
mail, postage prepaid (except that a notice of change of address shall not be
deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him 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 13.3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Guarantors, the Trustee, the Registrar and any
other person shall have the protection of TIA ss. 312(c).
Section 13.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to
take any action under this Indenture, the Issuers 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
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Indenture relating to the proposed action have been complied with;
and
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion
of such counsel, all such conditions precedent have been complied
with.
Section 13.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
each such person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion
of Counsel may rely on an Officers' Certificate or certificates of
public officials.
Section 13.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or
at a meeting of Securityholders. The Paying Agent or Registrar
may make reasonable rules for its functions.
Section 13.7 Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York are not required to be open. If a payment date is a Legal Holiday in New
York, New York, payment may be made at such place on the next succeeding
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day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 13.8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE ISSUERS AND EACH GUARANTOR HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE ISSUERS AND EACH
GUARANTOR IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE ISSUERS OR ANY GUARANTOR IN ANY OTHER
JURISDICTION.
Section 13.9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of any of the Issuers, the Guarantors or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 13.10 No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Issuers or the Guarantors shall not have any liability for any
obligations of the Issuers or the Guarantors under the Securities or this
Indenture. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
Section 13.11 Successors.
All agreements of the Issuers and the Guarantors in this Indenture
and the Securities shall bind their successors.
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All agreements of the Trustee in this Indenture shall bind its successor.
Section 13.12 Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
Section 13.13 Severability.
In case any one or more of the provisions in this Indenture or in
the Securities shall be held invalid, illegal or unenforceable, in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 13.14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
SUN INTERNATIONAL HOTELS LIMITED
By: ____________________________________
Name:
Title:
SUN INTERNATIONAL NORTH AMERICA, INC.
By: ____________________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By: ____________________________________
Name:
Title:
GUARANTORS:
SUN INTERNATIONAL BAHAMAS LIMITED
By: ____________________________________
Name:
Title:
<PAGE>
PARADISE ISLAND LIMITED
By: ____________________________________
Name:
Title:
ISLAND HOTEL COMPANY LIMITED
By: ____________________________________
Name:
Title:
PARADISE BEACH INN LIMITED
By: ____________________________________
Name:
Title:
PARADISE ENTERPRISES LIMITED
By: ____________________________________
Name:
Title:
PARADISE ACQUISITIONS LIMITED
By: ____________________________________
Name:
Title:
SUN INTERNATIONAL MANAGEMENT LIMITED
By: ____________________________________
Name:
Title:
<PAGE>
SUN COVE, LTD.
By: ____________________________________
Name:
Title:
RESORTS INTERNATIONAL HOTEL, INC.
By: ____________________________________
Name:
Title:
GGRI, INC.
By: ____________________________________
Name:
Title:
<PAGE>
Exhibit A
[FORM OF NOTE]
SUN INTERNATIONAL HOTELS LIMITED
SUN INTERNATIONAL NORTH AMERICA, INC.
9% SENIOR SUBORDINATED NOTES
DUE 2007
Unless and until it is exchanged in whole or in part for Securities
in definitive form, this Security may not be transferred except as a whole by
the Depository to a nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the Issuers or their agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.(1)
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY
- ----------
(1) This paragraph should only be added if the Security is issued in global
form.
A-1
<PAGE>
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (d) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN
THE MEANING OF RULE 501 (A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE
IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $100,000, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED IN THE CASE OF (d)
UPON DELIVERY OF A TRANSFEREE LETTER OF REPRESENTATION AND IN THE
CASE OF (b), (c) AND (e) UPON AN OPINION OF COUNSEL IF THE ISSUERS
OR REGISTRAR SO REQUEST), (2) TO THE ISSUERS OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM
IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE. THESE SECURITIES MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH APPLICABLE GAMING LAWS.
If a Holder or a beneficial owner of a Note is required by any Gaming Authority
to be found suitable, the Holder shall apply for a finding of suitability within
30 days after a Gaming Authority request or sooner if so required by such Gaming
Authority. The applicant for a finding of suitability must pay all costs of the
investigation for such finding of suitability. If a Holder or beneficial
A-2
<PAGE>
owner is required to be found suitable and is not found suitable by a Gaming
Authority, the Holder shall, to the extent required by applicable law, dispose
of his Notes within 30 days or within that time prescribed by a Gaming
Authority, whichever is earlier. If the Holder fails to dispose of his Notes
within such time period, the Issuers may, at their option, redeem such Holder's
Notes at, depending on applicable law, (i) the principal amount thereof,
together with accrued and unpaid interest (and Liquidated Damages, if any) to
the date of the finding of unsuitability by a Gaming Authority, (ii) the amount
that such Holder paid for the Notes, (iii) the fair market value of the Notes,
(iv) the lowest of clauses (i), (ii) and (iii), or (v) such other amount as may
be determined by the appropriate Gaming Authority.
A-3
<PAGE>
CUSIP NO.______
No. $
Sun International Hotels Limited, an international business company
organized under the laws of the Commonwealth of The Bahamas ("Sun
International"), and Sun International North America, Inc., a Delaware
corporation and a wholly owned subsidiary of Sun International ("SINA" and,
together with Sun International, the "Issuers," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promise, jointly and severally, to pay to _____, or registered
assigns, the principal sum of _____ Dollars, on March 15, 2007.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
A-4
<PAGE>
IN WITNESS WHEREOF, the Issuers have caused this Instrument to be
duly executed under its corporate seal.
SUN INTERNATIONAL HOTELS LIMITED
By: ____________________________________
Name:
Title:
Attest: _______________
SUN INTERNATIONAL NORTH AMERICA, INC.
By: ____________________________________
Name:
Title:
Attest: _______________
A-5
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
THE BANK OF NEW YORK,
As Trustee
By: ____________________________________
Authorized Signatory
A-6
<PAGE>
SUN INTERNATIONAL HOTELS LIMITED
SUN INTERNATIONAL NORTH AMERICA, INC.
9% SENIOR SUBORDINATED NOTES
DUE 2007
1. Interest.
Sun International Hotels Limited, an international business company
organized under the laws of the Commonwealth of The Bahamas ("Sun
International"), and Sun International North America, Inc., a Delaware
corporation and a wholly owned subsidiary of Sun International ("SINA" and,
together with Sun International, the "Issuers"), jointly and severally, promise
to pay interest on the principal amount of this Security at a rate of 9% per
annum. To the extent it is lawful, the Issuers promise to pay interest on any
interest payment due but unpaid on such principal amount at a rate of 9% per
annum compounded semi-annually.
The Issuers will pay interest semi-annually on March 15 and
September 15 of each year (each, an "Interest Payment Date"), commencing
September 15, 1997. Interest on the Securities will accrue from the most recent
date to which interest has been paid on the Securities pursuant to the Indenture
or, if no interest has been paid, from March 10, 1997. Interest will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Issuers shall pay interest (and Liquidated Damages, if any) on
the Securities (except defaulted interest) to the persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. Except as provided below, the Issuers shall pay
principal and interest (and Liquidated Damages, if any) in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for payment of public and private debts ("Cash"). The Securities will be payable
as to principal, premium and interest (and Liquidated Damages, if any) at the
office or agency of the Issuers maintained for such purpose within the City and
State of New York or, at the option of the Issuers, payment of principal,
premium and interest (and Liquidated Damages, if any) may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest (and Liquidated Damages,
if any)
A-7
<PAGE>
and premium on all Global Securities and all other Securities the Holders of
which shall have provided written wire transfer instructions to the Issuers and
the Paying Agent.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as Paying
Agent and Registrar. The Issuers may change any Paying Agent, Registrar or
Co-registrar without notice to the Holders. The Issuers or any of their
respective Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or Co-registrar.
4. Indenture.
The Issuers issued the Securities under an Indenture, dated March
10, 1997 (the "Indenture"), among the Issuers, the Guarantors named therein and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. 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, as in effect on the date of the Indenture. The Securities
are subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are senior
subordinated obligations of the Issuers limited in aggregate principal amount to
$200,000,000.
5. Redemption.
Except as provided in this Paragraph 5 or as provided in Section 3.2
of the Indenture, the Issuers shall not have the right to redeem any Securities.
The Securities are redeemable in whole or from time to time in part at any time
on or after March 15, 2002, at the option of the Issuers, at the Redemption
Price (expressed as a percentage of principal amount) set forth below, if
redeemed during the 12-month period commencing March 15 of each of the years
indicated below, in each case (subject to the right of Holders of record on the
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date), plus any accrued but unpaid interest (and
Liquidated Damages, if any) to the Redemption Date.
Year Redemption Price
---- ----------------
2002................................... 104.50%
2003................................... 103.00%
2004................................... 101.50%
2005 and thereafter.................... 100.00%
A-8
<PAGE>
On or prior to March 15, 2000, upon a Public Equity Offering of
Ordinary Shares for cash of Sun International, up to $70 million aggregate
principal amount of the Securities may be redeemed at the option of the Issuers
with cash from the Net Cash Proceeds of such Public Equity Offering, at 109% of
the principal amount thereof (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date), plus accrued but unpaid interest (and Liquidated
Damages, if any) to the date of redemption; provided, however, that immediately
following each such redemption not less than $130 million aggregate principal
amount of the Notes are outstanding, provided, further that such redemption
shall occur within 120 days of such Public Equity Offering.
The Notes may be redeemed at the option of the Issuers, in whole but
not in part, upon not less than 30 nor more than 60 days' notice given as
provided herein, at any time at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest, if any, thereon, plus Liquidated
Damages, if any, to the date fixed for redemption if, as a result of any change
in or amendment to the laws, treaties, rulings or regulations of The Bahamas, or
of any political subdivision or taxing authority thereof or therein, or any
change in the official position of the applicable taxing authority regarding the
application or interpretation of such laws, treaties, rulings or regulations
(including a holding judgment or order of a court of competent jurisdiction) or
any execution thereof or amendment thereto, which is enacted into law or
otherwise becomes effective after the Issue Date, either Issuer is or would be
required on the next succeeding Interest Payment Date to pay Additional Amounts
on the Notes as a result of the imposition of a Bahamian withholding tax and the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Issuers which do not cause the Issuers to
incur any material costs. The Issuers shall also pay to holders on the
redemption date any Additional Amounts then due and which will become due as a
result of the redemption would otherwise be payable.
If a Holder or a beneficial owner of a Note is required by any
Gaming Authority to be found suitable, the Holder shall apply for a finding of
suitability within 30 days after a Gaming Authority request or sooner if so
required by such Gaming Authority. The applicant for a finding of suitability
must pay all costs of the investigation for such finding of suitability. If a
Holder or beneficial owner is required to be found suitable and is not found
suitable by a Gaming Authority, the Holder shall, to the extent required by
applicable law, dispose of his Notes within 30 days or within that time
prescribed by a Gaming Authority, whichever
A-9
<PAGE>
is earlier. If the Holder fails to dispose of his Notes within such time period,
the Issuers may, at their option, redeem such Holder's Notes at, depending on
applicable law, (i) the principal amount thereof, together with accrued and
unpaid interest (and Liquidated Damages, if any) to the date of the finding of
unsuitability by a Gaming Authority, (ii) the amount that such Holder paid for
the Notes, (iii) the fair market value of the Notes, (iv) the lowest of clauses
(i), (ii) and (iii), or (v) such other amount as may be determined by the
appropriate Gaming Authority.
Any redemption of the Notes shall comply with Article III of the
Indenture.
6. Notice of Redemption.
Except as required by a Gaming Authority with respect to a
redemption provided for in Section 3.2 of the Indenture, notice of redemption
will be mailed by first class mail at least 30 days but not more than 60 days
before the Redemption Date (unless a shorter notice shall be required by any
Governmental Authority) to each Holder of Securities to be redeemed at his
registered address. Securities in denominations larger than $1,000 may be
redeemed in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, plus any accrued but unpaid interest (and Liquidated Damages, if any) to
the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar 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 need not register the transfer
of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of
it for all purposes.
A-10
<PAGE>
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Issuers at their written request. After that, all liability of the Trustee
and such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Issuer at any time deposit into an irrevocable trust with the
Trustee Cash or U.S. Government Obligations sufficient to pay the principal of
and interest (and Liquidated Damages, if any) on the Securities to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Issuers will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding its obligation to
pay the principal of and interest (and Liquidated Damages, if any) on the
Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding, and any
existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
comply with the TIA or make any other change that does not adversely affect the
rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Issuers and their respective Subsidiaries to, among other things, incur
additional Indebtedness and Disqualified Capital Stock, make payments in respect
of its Capital Stock, enter into transactions with Affiliates, incur Liens,
merge or consolidate with any other person and sell, lease, transfer or
otherwise dispose of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications and exceptions.
The Issuers must annually report to the Trustee on compliance with such
limitations.
A-11
<PAGE>
13. Change of Control.
In the event there shall occur any Change of Control Triggering
Event, each Holder of Securities shall have the right, at such Holder's option
but subject to the limitations and conditions set forth in the Indenture, to
require the Issuers to purchase on the Change of Control Purchase Date in the
manner specified in the Indenture, all or any part (in integral multiples of
$1,000) of such Holder's Securities at a cash price equal to 101% of the
principal amount thereof, together with accrued but unpaid interest (and
Liquidated Damages, if any) to and including the Change of Control Purchase
Date.
14. Certain Asset Sales.
The Indenture imposes certain limitations on the ability of the
Issuers to sell assets. In the event the proceeds from a permitted Asset Sale
exceed certain amounts, as specified in the Indenture, the Issuers generally
will be required either to reinvest the proceeds of such Asset Sale in its
business, use such proceeds to retire debt, or to make an asset sale offer to
purchase a certain amount of each Holder's Securities at 100% of the principal
amount thereof, plus accrued interest, if any, to the purchase date, as more
fully set forth in the Indenture.
15. Gaming Laws.
The rights of the Holder of this Security and any owner of any
beneficial interest in this Security are subject to various gaming laws and the
jurisdiction and requirements of the Gaming Authorities and the further
limitations and requirements set forth in the Indenture.
16. Ranking.
Payment of principal, premium, if any, and interest on the
Securities is subordinated, in the manner and to the extent set forth in the
Indenture, to the prior payment in full of all Senior Debt.
17. Successors.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
18. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate
A-12
<PAGE>
principal amount of Securities then outstanding may declare all the Securities
to be due and payable immediately in the manner and with the effect provided in
the Indenture. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the Trustee in its exercise
of any trust or power.
19. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuers or their respective Affiliates, and may otherwise deal with the Issuers
or their Affiliates as if it were not the Trustee.
20. No Recourse Against Others.
No direct or indirect stockholder, director, officer or employee, as
such, past, present or future of the Issuers or any successor corporation shall
have any personal liability in respect of the obligations of the Issuers under
the Securities or the Indenture by reason of his status as such stockholder,
director, officer or employee. Each Holder of a Security by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
21. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
22. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities.
No
A-13
<PAGE>
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
24. Governing Law.
The Indenture and the Securities shall be governed by and construed
in accordance with the internal laws of the State of New York.
A-14
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of
assignee _________________
and irrevocably appoint ___________ agent to transfer this Security on the books
of the Issuers. The agent may substitute another to act for him.
Dated: __________ Signed: _____________________________________________________
________________________________________________________________________
(Sign exactly as your name appears on the other side of
this Security)
Signature guarantee: ____________________________________
A-15
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.13 or Article X of the Indenture, check the appropriate
box:
|_| Section 4.13
|_| Article X
If you want to elect to have only part of this Security purchased by
the Issuers pursuant to the Indenture, state the principal amount you want to
have purchased:
$___________
Date: ________________ Signature: _____________________________________________
(Sign exactly as your name appears on the other side of this Security)
Signature guarantee: ____________________________________
A-16
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Signature of
Amount of Amount of Principal Amount authorized
decrease in increase in of this Global signatory of
Principal Amount Principal Amount Security following Trustee or
of this Global of this Global such decrease (or Securities
Date of Exchange Security Security increase) Custodian
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(2) This schedule should only be added if the Security is issued in global
form.
A-17
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES(3)
Re: 9% SENIOR SUBORDINATED NOTES DUE 2007 OF SUN INTERNATIONAL HOTELS LIMITED
AND SUN INTERNATIONAL NORTH AMERICA, INC.
This Certificate relates to $______ principal amount of Securities held
in(4) |_| book-entry or |_| definitive form by _______ (the "Transferor").
The Transferor:
|_| has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depository a Security or
Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above-captioned Securities and as provided in
Section 2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because:(5)
|_| Such Security is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
|_| Such Security is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance
- ----------
(3) The following should be included only for Original Notes.
(4) Check applicable box.
A-18
<PAGE>
on Rule 144A (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
|_| Such Security is being transferred in accordance with (i) Rule 144 or
Regulation S under the Securities Act, (ii) pursuant to an effective
registration statement under the Securities Act, (iii) to an "institutional
accredited investor" within the meaning of Rule 501(A)(1), (2), (3) or (7) under
the Securities Act that is acquiring the Security for its own account, or for
the account of such an institutional accredited investor, in each case in a
minimum principal amount of $100,000, not with a view to or for offer or sale in
connection with any distribution in violation of the Securities Act or (iv) in
reliance on another exemption from registration under the Securities Act (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
To effect such transfer, the Registrar or the Issuers may require delivery of an
Opinion of Counsel and in case of a transfer pursuant to clause (iii) above,
will require a transferee letter of representation.
______________________________________
[INSERT NAME OF TRANSFEROR]
By: __________________________________
Dated:___________________
A-19
<PAGE>
EXHIBIT B
FORM OF GUARANTEE
For value received, __________________, a _______________
corporation, hereby irrevocably, unconditionally guarantees on a senior
subordinated basis to the Holder of the Security upon which this Guarantee is
endorsed the due and punctual payment, as set forth in the Indenture pursuant to
which such Security and this Guarantee were issued, of the principal of, premium
(if any) and interest (and Liquidated Damages, if any) on such Security when and
as the same shall become due and payable for any reason according to the terms
of such Security and Article XI of the Indenture. The Guarantee of the Security
upon which this Guarantee is endorsed will not become effective until the
Trustee signs the certificate of authentication on such Security.
______________________________________
By: __________________________________
Attest: ______________________________
B-1
<PAGE>
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of March 5, 1997
by and among
SUN INTERNATIONAL HOTELS LIMITED
and
SUN INTERNATIONAL NORTH AMERICA, INC.
as Issuers,
THE GUARANTORS NAMED HEREIN
and
BEAR, STEARNS & CO. INC.
SOCIETE GENERALE SECURITIES CORPORATION
and
SCOTIA CAPITAL MARKETS (USA) INC.,
as Purchasers
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of March 5, 1997, among Sun International Hotels Limited, a Bahamian
international company, and Sun International North America, Inc., a Delaware
corporation (the "Issuers"), the Guarantors as defined herein (the "Guarantors")
and Bear, Stearns & Co. Inc., Societe Generale Securities Corporation and Scotia
Capital Markets (USA) Inc. (together, the "Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated March 5,
1997, among the Issuers, the Guarantors named therein and the Purchasers (the
"Purchase Agreement"), which provides for the sale by the Issuers and the
Guarantors to the Purchasers of $200,000,000 aggregate principal amount of 9%
Senior Subordinated Notes due 2007 (the "Securities"). In order to induce the
Purchasers to enter into the Purchase Agreement, the Issuers and the Guarantors
have agreed to provide to the Purchasers and their respective direct and
indirect transferees, among other things, the registration rights for the
Securities set forth in this Agreement. The execution of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings (and, unless otherwise indicated, capitalized terms used herein without
definition shall have the meanings ascribed to them by the Purchase Agreement):
Advice: See Section 5.
Applicable Period: See Section 2.
Closing Date: The Closing Date as defined in the Purchase Agreement.
Effectiveness Period: See Section 3.
<PAGE>
Effectiveness Target Date: The 165th day following the Closing Date.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2.
Exchange Registration Statement: See Section 2.
Exchange Securities: See Section 2.
Filing Date: The 45th day after the Closing Date.
Guarantors: The Guarantors (as defined in the Indenture).
Holder: Any holder of Transfer Restricted Securities.
Indenture: The Indenture, dated as of the date hereof, among the Issuers,
the Guarantors and The Bank of New York, as trustee, pursuant to which the
Securities are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Issuers: See the introductory paragraph of this Agreement.
Liquidated Damages: See Section 4.
Participating Broker-Dealer: See Section 2.
Person: An individual, trustee, corporation, partnership, joint stock
company, trust, limited liability company, unincorporated association, union,
business association, firm or other legal entity.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a
2
<PAGE>
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Exchange Securities and/or the Transfer Restricted Securities (as
applicable) covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Purchasers: See the introductory paragraph to this Agreement.
Registration Default: See Section 4.
Registration Statement: Any registration statement of the Issuers and the
Guarantors, including, but not limited to, the Exchange Registration Statement,
the Shelf Registration or that otherwise covers any of the Transfer Restricted
Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 promulgated pursuant to the Securities Act, as currently
in effect, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A promulgated pursuant to the Securities Act, as
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated pursuant to the Securities Act, as currently
in effect, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: See the introductory paragraphs to this Agreement.
3
<PAGE>
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2.
Shelf Registration: See Section 3.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Securities upon original issuance
thereof and at all times subsequent thereto, until in the case of any such
Securities (i) a Registration Statement covering such Securities has been
declared effective by the SEC and such Securities have been disposed of in
accordance with such effective Registration Statement, (ii) such Securities are
sold in compliance with Rule 144 or (iii) such Securities cease to be
outstanding.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Securities.
Underwritten registration or underwritten offering: A registration in which
securities of the Issuers are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
(a) The Issuers and the Guarantors agree to file with the SEC as soon as
practicable after the Closing Date, but in no event later than the Filing Date,
an offer to exchange (the "Exchange Offer") any and all of the Transfer
Restricted Securities for a like aggregate principal amount of debt securities
of the Issuers and the Guarantors which are substantially identical to the
Securities, except that the identity of the Guarantors may be different from the
Guarantors that initially guaranteed the Securities pursuant to the Indenture so
long as the Securities are at all times guaranteed in compliance with the
Indenture (the "Exchange Securities") (and which are entitled to the benefits of
the Indenture or a trust indenture which is identical to the Indenture (other
than such changes to the Indenture or any such
4
<PAGE>
identical trust indenture as are necessary to comply with any requirements of
the SEC to effect or maintain the qualification thereof under the TIA) and
which, in either case, has been qualified under the TIA), except that the
Exchange Securities shall have been registered pursuant to an effective
Registration Statement in compliance with the Securities Act. The Exchange Offer
will be registered pursuant to the Securities Act on an appropriate form (the
"Exchange Registration Statement") and will comply with all applicable tender
offer rules and regulations promulgated pursuant to the Exchange Act and shall
be duly registered or qualified pursuant to all applicable state securities or
Blue Sky laws. The Exchange Offer shall not be subject to any condition, other
than that the Exchange Offer does not violate any applicable law or
interpretation of the staff of the SEC. No securities shall be included in the
Registration Statement covering the Exchange Offer other than the Exchange
Securities. The Issuers and the Guarantors agree to use their best efforts to
(x) cause the Exchange Registration Statement to become effective pursuant to
the Securities Act on or before the Effectiveness Target Date; (y) keep the
Exchange Offer open for not less than 20 business days (or such longer period
required by applicable law) after the commencement of the Exchange Offer; and
(z) consummate the Exchange Offer within 45 days after the earlier of the
effectiveness thereof or the Effectiveness Target Date. Each Holder who
participates in the Exchange Offer will be required to represent that any
Exchange Securities received by it will be acquired in the ordinary course of
its business, that at the time of the consummation of the Exchange Offer such
Holder will have no arrangement or understanding with any Person to participate
in the distribution of the Exchange Securities, and that such Holder is not an
affiliate of the Issuers within the meaning of Rule 405 of the Securities Act
(or that if it is such an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent
applicable). Each Holder that is not a Participating Broker-Dealer will be
required to represent that it is not engaged in, and does not intend to engage
in, the distribution of the Exchange Securities. Each Holder that is (i) a
Participating Broker-Dealer and (ii) will receive Exchange Notes for its own
account in exchange for the Transfer Restricted Securities that it acquired as
the result of market making or other trading activities will be re-
5
<PAGE>
quired to acknowledge that it will deliver a Prospectus as required by law in
connection with any resale of such Exchange Securities. Upon consummation of the
Exchange Offer in accordance with this Agreement, the Issuers and the Guarantors
shall have no further obligation to register Transfer Restricted Securities
pursuant to Section 2(c) and Section 3 of this Agreement.
(b) The Issuers and the Guarantors shall include within the Prospectus
contained in the Exchange Registration Statement a section entitled "Plan of
Distribution," acceptable to the Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Securities received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"). Such "Plan of Distribution" section shall also
allow the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Securities.
The Issuers and the Guarantors shall use their best efforts to keep the
Exchange Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act, for a period of 180 days after consummation of the Exchange
Offer (or such longer period if extended pursuant to the last paragraph of
Section 5) (the "Applicable Period").
In connection with the Exchange Offer, the Issuers shall:
(a) mail as promptly as practicable to each Holder a copy of the
Prospectus forming part of the Exchange Registration Statement, together
with an appropriate letter of transmittal and related documents;
6
<PAGE>
(b) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York; and
(c) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last business day on which
the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer, the Issuers
and the Guarantors shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly to each
Holder of Securities, Exchange Securities equal in principal amount to the
Securities of such Holder so accepted for exchange.
(c) If (1) prior to the consummation of the Exchange Offer, applicable
interpretations of the staff of the SEC do not permit the Issuers and the
Guarantors to effect the Exchange Offer as contemplated herein, or (2) the
Exchange Offer is not consummated within 210 days of the Closing Date for any
reason, then the Issuers shall promptly deliver to the Holders and the Trustee
written notice thereof (the "Shelf Notice") and the Issuers and the Guarantors
shall file a Registration Statement pursuant to Section 3. Following the
delivery of a Shelf Notice to the Holders of Transfer Restricted Securities, the
Issuers and the Guarantors shall not have any further obligation to conduct the
Exchange Offer pursuant to this Section 2, provided that the Issuers and the
Guarantors shall have the right, nonetheless, to proceed to consummate the
Exchange Offer notwithstanding their obligations pursuant to this Section 2(c)
(and, upon such consummation, their obligation to consummate a Shelf
Registration pursuant to clause (2) above shall terminate).
7
<PAGE>
3. Shelf Registration
If the Issuers are required to deliver a Shelf Notice as contemplated by
Section 2(c), then:
(a) Shelf Registration. The Issuers and the Guarantors shall prepare and
file with the SEC, as promptly as practicable following the delivery of the
Shelf Notice, a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Transfer Restricted
Securities (the "Shelf Registration"). The Shelf Registration shall be on Form
F-3 or another appropriate form permitting registration of such Transfer
Restricted Securities for resale by the Holders in the manner or manners
reasonably designated by them (including, without limitation, one or more
underwritten offerings). The Issuers and the Guarantors shall not permit any
securities other than the Transfer Restricted Securities to be included in the
Shelf Registration. The Issuers and the Guarantors shall use their best efforts,
as described in Section 5(b), to cause the Shelf Registration to be declared
effective pursuant to the Securities Act as promptly as practicable following
the filing thereof and to keep the Shelf Registration continuously effective
under the Securities Act until the earlier of (i) the date which is 36 months
after the Closing Date, (ii) the date that all Transfer Restricted Securities
covered by the Shelf Registration have been sold in the manner set forth and as
contemplated in the Shelf Registration or (iii) there ceases to be outstanding
any Transfer Restricted Securities (the "Effectiveness Period").
(b) Supplements and Amendments. The Issuers and the Guarantors shall use
their best efforts to keep the Shelf Registration continuously effective by
supplementing and amending the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities covered by such Registration Statement and by any
underwriter of such Transfer Restricted Securities.
8
<PAGE>
4. Liquidated Damages
(a) The Issuers, the Guarantors and the Purchasers agree that the Holders
of Transfer Restricted Securities will suffer damages if the Issuers or any
Guarantor fail to fulfill their obligations pursuant to Section 2 or Section 3
hereof and that it would not be possible to ascertain the extent of such
damages. Accordingly, in the event of such failure by the Issuers or any
Guarantor to fulfill such obligations, the Issuers and the Guarantors hereby
agree to pay liquidated damages ("Liquidated Damages") to each Holder of
Transfer Restricted Securities under the circumstances and to the extent set
forth below:
(i) if neither the Exchange Registration Statement nor the Shelf
Registration has been filed with the SEC on or prior to the Filing Date; or
(ii) if neither the Exchange Registration Statement nor the Shelf
Registration is declared effective by the SEC on or prior to the
Effectiveness Target Date; or
(iii) if (A) an Exchange Registration Statement is declared effective
by the SEC, and (B) the Issuers and the Guarantors have not exchanged
Exchange Securities for all Securities validly tendered in accordance with
the terms of the Exchange Offer on or prior to 45 days following the
earlier of (i) the effectiveness thereof or (ii) the Effectiveness Target
Date; or
(iv) the Shelf Registration has been declared effective by the SEC and
such Shelf Registration ceases to be effective or usable at any time during
the Effectiveness Period, without being succeeded on the same day
immediately by a post-effective amendment to such Registration Statement
that cures such failure and that is itself immediately declared effective
on the same day;
(any of the foregoing, a "Registration Default") then the Issuers shall pay to
each Holder of Transfer Restricted Securities Liquidated Damages in an amount
equal to 0.5% per annum of the principal amount of Transfer Restricted
9
<PAGE>
Securities held by such Holder during the first 90-day period immediately
following the occurrence of such Registration Default. The amount of such
Liquidated Damages will increase by an additional 0.5% per annum of the
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period, until all Registration Defaults have been cured;
provided, however, that Liquidated Damages shall not at any time exceed 2.0% per
annum of the principal amount of Transfer Restricted Securities. Following the
cure of all Registration Defaults relating to any Transfer Restricted
Securities, the accrual of Liquidated Damages with respect to such Transfer
Restricted Securities will cease. A Registration Default under clause (i) above
shall be cured on the date that either the Exchange Registration Statement or
the Shelf Registration is filed with the SEC; a Registration Default under
clause (ii) above shall be cured on the date that either the Exchange
Registration Statement or the Shelf Registration is declared effective by the
SEC; a Registration Default under clause (iii) above shall be cured on the
earlier of the date (A) the Exchange Offer is consummated or (B) a Shelf
Registration Statement is declared effective; and a Registration Default under
clause (iv) above shall be cured on the earlier of (A) the date that the
post-effective amendment curing the deficiency in the Shelf Registration is
declared effective or (B) the Effectiveness Period expires.
(b) The Issuers shall notify the Trustee within one business day after each
and every date on which a Registration Default occurs (an "Event Date").
Liquidated Damages shall be paid by the Issuers to the Holders by wire transfer
of immediately available funds to the accounts specified by them or by mailing
checks to their registered addresses if no such accounts have been specified on
or before the semi-annual interest payment date provided in the Indenture. Each
obligation to pay Liquidated Damages shall be deemed to commence accruing on the
applicable Event Date and to cease accruing when all Registration Defaults have
been cured. In no event shall the Issuers pay Liquidated Damages in excess of
the maximum applicable amount set forth above, regardless of whether one or
multiple Registration Defaults exist.
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5. Registration Procedures
In connection with the registration of any Exchange Securities or Transfer
Restricted Securities pursuant to Sections 2 or 3 hereof, the Issuers and the
Guarantors shall effect such registration to permit the sale of such Exchange
Securities or Transfer Restricted Securities (as applicable) in accordance with
the intended method or methods of disposition thereof, and pursuant thereto the
Issuers and the Guarantors shall:
(a) Prepare and file with the SEC, a Registration Statement or Registration
Statements as prescribed by Section 2 or 3, and to use their best efforts to
cause such Registration Statement(s) to become effective and remain effective as
provided herein; provided that, if (1) such filing is pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuers shall, if requested, furnish to
and afford you a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein and
all exhibits thereto) proposed to be filed (at least 3 business days prior to
such filing, or such later date as is reasonable under the circumstances) and
shall use their best efforts to reflect in each such document, when so filed
with the SEC, such comments as you may reasonably and timely propose.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the periods required by Section 2 or Section 3, as
applicable; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder with respect to the disposition of
all securities
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covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus; the
Issuers and the Guarantors shall be deemed not to have used their best efforts
to keep a Registration Statement effective during the Applicable Period if they
voluntarily take any action that would result in selling Holders of the Transfer
Restricted Securities covered thereby or Participating Broker-Dealers seeking to
sell Exchange Securities not being able to sell such Transfer Restricted
Securities or such Exchange Securities during that period, unless (i) such
action is required by applicable law, or (ii) such action is taken by them in
good faith and for valid business reasons (not including avoidance of their
obligations hereunder), including the acquisition or divestiture of assets.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Transfer Restricted Securities,
or each such Participating Broker-Dealer known to the Issuers, as the case may
be, their counsel and the managing underwriters, if any, promptly and confirm
such notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon request,
obtain, without charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits), (ii) of
the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Transfer Restricted Securities the
representations and warranties of the Issuers or the Guarantors contained in any
agreement (including any
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underwriting agreement) contemplated by Section 5(l) below cease to be true and
correct, (iv) of the receipt by the Issuers or the Guarantors of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Transfer Restricted
Securities or the Exchange Securities to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose, (v) of the happening of any event or any
information becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
Issuers' and the Guarantors' reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Transfer Restricted Securities
or the Exchange Securities (as applicable) to be sold by any Participating
Broker-Dealer, for sale in any jurisdiction, and, if any such order is issued,
to use their reasonable best efforts to obtain the withdrawal of any such order
at the earliest possible moment.
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(e) If a Shelf Registration is filed pursuant to Section 3 and if requested
by the managing underwriters, if any, and the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities being sold in connection
with an underwritten offering, (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, or such Holders or counsel reasonably request to be
included therein, (ii) make all required filings of such prospectus supplement
or such post-effective amendment as soon as practicable after the Issuers have
received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment, and (iii) supplement or make amendments
to such Registration Statement with such information as the managing
underwriter, if any, and such Holders and counsel reasonably request to be
included therein.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, furnish to each selling Holder of Transfer Restricted
Securities and to each such Participating Broker-Dealer who so requests, as the
case may be, their counsel and each managing underwriter, if any, without
charge, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, deliver to each selling Holder of Transfer Restricted
Securities pursuant to a Shelf Registration, or each such Participating
Broker-Dealer, as the case may be, their counsel, and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by
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reference therein as such Persons may reasonably request; and, subject to the
last paragraph of this Section 5, the Issuers and the Guarantors hereby consent
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders of Transfer Restricted Securities or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Transfer Restricted Securities covered by or the sale by Participating
Broker-Dealers of the Exchange Securities pursuant to such Prospectus and any
amendment or supplement thereto.
(h) If a Shelf Registration is filed pursuant to Section 3, cooperate with
the selling Holders of Transfer Restricted Securities and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company, and enable such Transfer
Restricted Securities to be in such denominations and registered in such names
as the managing underwriters, if any, or Holders may reasonably request.
(i) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) above, as promptly as practicable prepare and (subject to
Section 5(a) above) file with the SEC, at the expense of the Issuers and the
Guarantors, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of the Transfer
Restricted Securities being sold thereunder or to the purchasers of the Exchange
Securities to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(j) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, (i) provide the Trustee with
certificates for the Transfer Restricted Securities in a form eligible for
deposit with The Depository Trust Company and (ii) provide a CUSIP number for
the Transfer Restricted Securities.
(k) In connection with an underwritten offering of Transfer Restricted
Securities pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings and take all such other
actions as are reasonably requested by the managing underwriters in order to
expedite or facilitate the registration or the disposition of such Transfer
Restricted Securities, and in such connection, (i) make such representations and
warranties to the underwriters, with respect to the business of the Issuers, the
Guarantors and their subsidiaries and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Issuers and the Guarantors and updates thereof in
form and substance reasonably satisfactory to the managing underwriters,
addressed to the underwriters covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by underwriters; (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the managing
underwriters from the independent certified public accountants of the Issuers
and the Guarantors (and, if necessary, any other independent certified public
accountants of any subsidiary of the Issuers or the Guarantors or of any
business acquired by either of them for which financial statements and financial
data are, or are required to be, included in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings and such other matters as are reasonably
requested by underwriters as permitted by Statement on
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Auditing Standards No. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
Transfer Restricted Securities covered by such Registration Statement and the
managing underwriters or agents) with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(l) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, (i) make available for inspection by any selling Holder of
such Transfer Restricted Securities being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any such
disposition of Transfer Restricted Securities, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter (collectively,
the "Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate documents
and properties of the Issuers, the Guarantors and their subsidiaries
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise any applicable due diligence responsibilities, and (ii) cause the
officers, directors and employees of the Issuers, the Guarantors and their
subsidiaries to supply all information in each case reasonably requested by any
such Inspector in connection with such Registration Statement. Information
supplied pursuant to clauses (i) and (ii) above which the Issuers determine, in
good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors, unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
such Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of compe-
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tent jurisdiction or (iii) the information in such Records has been made
generally available to the public.
(m) Provide an indenture trustee for the Transfer Restricted Securities or
the Exchange Securities, as the case may be, and cause the Indenture to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Transfer Restricted
Securities; and in connection therewith, cooperate with the trustee under any
such indenture and the holders of the Transfer Restricted Securities, to effect
such changes to such indenture as may be required for such indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use its best
efforts to cause such trustee to execute, all documents as may be required to
effect such changes, and all other forms and documents required to be filed with
the SEC to enable such indenture to be so qualified in a timely manner.
(n) Comply with all applicable rules and regulations of the SEC and, as
soon as reasonably practicable, make generally available to its securityholders
consolidated earnings statements (which need not be audited) of the Issuers that
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
(o) If an Exchange Offer is to be consummated, upon delivery of the
Transfer Restricted Securities by Holders to the Issuers (or to such other
Person as directed by the Issuers) in exchange for the Exchange Securities, the
Issuers and the Guarantors shall mark, or cause to be marked, on such Transfer
Restricted Securities that such Transfer Restricted Securities are being
cancelled in exchange for the Exchange Securities; in no event shall such
Transfer Restricted Securities be marked as paid or otherwise satisfied.
(p) Cooperate with each seller of Transfer Restricted Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Transfer Restricted Securities and their respective counsel
in connection with any filings required to be made with the National Association
of Securities Dealers, Inc. (the "NASD").
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(q) Use their best efforts to take all other steps necessary to effect the
registration of the Transfer Restricted Securities or Exchange Securities, as
applicable, covered by a Registration Statement contemplated hereby.
The Issuers may require each seller of Transfer Restricted Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Transfer Restricted Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, as the Issuers may, from time to time, reasonably request. The Issuers
may exclude from such registration the Transfer Restricted Securities of any
seller or Participating Broker-Dealer who fails to furnish such information
within a reasonable time after receiving such request.
Each Holder of Transfer Restricted Securities and each Participating
Broker-Dealer agrees by acquisition of such Transfer Restricted Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, that, upon receipt of any notice from the Issuers of the happening of
any event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or
5(c)(vi), such Holder will forthwith discontinue disposition of such Transfer
Restricted Securities covered by such Registration Statement or Prospectus or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(j), or until it is advised in writing (the
"Advice") by the Issuers that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Issuers give any notice of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi), the time period
for the effectiveness of such Registration Statement set forth in Section 2 or
Section 3 hereof, as applicable, shall be extended by the number of days from
the date of such notice to the date when each selling Holder covered by such
Registration Statement shall have received copies of the supplemental or amended
Prospectus contemplated by
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Section 5(j) or shall have received the Advice that the use of the applicable
Prospectus may be resumed.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance with
this Agreement by the Issuers or the Guarantors shall be borne by the Issuers
and the Guarantors, whether or not the Exchange Offer or a Shelf Registration is
filed or becomes effective, including, without limitation, (i) all registration
and filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Transfer Restricted Securities or
Exchange Securities (x) where the Holders of Transfer Restricted Securities are
located, in the case of the Exchange Securities, or (y) as provided in Section
5(h), in the case of Transfer Restricted Securities or Exchange Securities to be
sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Transfer Restricted Securities or Exchange Securities in a form
eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Transfer Restricted Securities or
Exchange Securities to be sold by any Participating Broker-Dealer during the
Applicable Period, by the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities included in any Registration Statement or of
such Exchange Securities, as the case may be), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Issuers and
the Guarantors, (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(l)(iii) (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) rating agency fees, (vii) Securities Act liability
insurance, if the Issuers and the Guarantors desire such insurance, (viii) fees
and expenses of all other Persons retained by the Issuers or the Guarantors,
(ix) internal expenses of the Issuers and the
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Guarantors (including, without limitation, all salaries and expenses of officers
and employees of the Issuers and the Guarantors performing legal or accounting
duties), (x) the expense of any annual audit, (xi) the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange and (xii) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements, and indentures. Nothing contained in
this Section 6 shall create an obligation on the part of the Issuers or any
Guarantor to pay or reimburse any Holder for any underwriting commission or
discount attributable to any such Holder's Transfer Restricted Securities
included in an underwritten offering pursuant to a Registration Statement filed
in accordance with the terms of this Agreement, or to guarantee such Holder any
profit or proceeds from the sale of such Securities.
(b) In connection with any Shelf Registration hereunder, the Issuers and
the Guarantors shall reimburse the Holders of the Transfer Restricted Securities
being registered in such registration for the reasonable fees and disbursements
of not more than one counsel (in addition to one local counsel in each relevant
jurisdiction) chosen by the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities to be included in such Registration
Statement and other reasonable out-of-pocket expenses of the Holders of Transfer
Restricted Securities reasonably incurred in connection with the registration of
the Transfer Restricted Securities.
7. Indemnification
Each Issuer and each Guarantor agrees, jointly and severally, to indemnify
and hold harmless (i) each of the Purchasers, each Holder of Transfer Restricted
Securities, each Holder of Exchange Securities, each Participating
Broker-Dealer, (ii) each person, if any, who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) any such
Person (any of the persons referred to in this clause (ii) being hereinafter
referred to as a "controlling person"), and (iii) the respective officers,
directors, partners, employees, representatives and agents of any of such Person
or any controlling person (any person referred to in
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clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Person") to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, judgments, actions and expenses (including,
without limitation, and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Issuers shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by (i) any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Indemnified Person furnished to the Issuers or any underwriter in writing by
such Indemnified Person expressly for use therein, or (ii) any untrue statement
contained in or omission from a preliminary prospectus if a copy of the
Prospectus (as then amended or supplemented, if the Issuers shall have furnished
to or on behalf of the Holder participating in the distribution relating to the
relevant Registration Statement any amendments or supplements thereto) was not
sent or given by or on behalf of such Holder to the person asserting any such
losses, liabilities, claims, damages or expenses who purchased Securities, if
such is required by law at or prior to the written confirmation of the sale of
such Securities to such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented). The Issuers and the Guarantors shall
notify the Trustee promptly of the institution, threat or assertion of any
claim, proceeding (including any governmental investigation) or litigation of
which it or they shall have become aware in connection with the matters ad-
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dressed by this Agreement which involves the Issuers, any Guarantor or an
Indemnified Person.
In connection with any Registration Statement in which a Holder of Transfer
Restricted Securities is participating, such Holder of Transfer Restricted
Securities agrees, severally and not jointly, to indemnify and hold harmless the
Issuers, the Guarantors and their directors and officers and each person who
controls the Issuers or the Guarantors within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers and the Guarantors to each Indemnified
Person, but only with reference to information relating to such Indemnified
Person furnished to the Issuers in writing by such Indemnified Person expressly
for use in any Registration Statement or Prospectus, any amendment or supplement
thereto, or any preliminary prospectus. The liability of any Indemnified Person
pursuant to this paragraph shall in no event exceed the net proceeds received by
such Indemnified Person from sales of Transfer Restricted Securities giving rise
to such obligations.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
person") in writing, and the indemnifying person shall have the right to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying person
may reasonably designate in such proceeding and shall pay the reasonable fees
and expenses actually incurred by such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party, unless (i) the indemnifying person and the
indemnified party shall have mutually agreed in writing to the contrary, (ii)
the indemnifying person failed to assume the defense within a reasonable time
after the commencement of the action and employ counsel reasonably satisfactory
to the indemnified party
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or (iii) the named parties to any such action (including any impleaded parties)
include both such indemnified party and the indemnifying person, or any
affiliate of the indemnifying person and such indemnified party shall have been
reasonably advised by counsel that either (x) there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying person or such affiliate of the indemnifying
person or (y) a conflict may exist between such indemnified party and the
indemnifying person or such affiliate of the indemnifying person (in which case
the indemnifying person shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, that
the indemnifying person shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such indemnified parties, which firm shall be
designated in writing by indemnified parties who sold a majority in aggregate
principal amount of Transfer Restricted Securities sold by all such indemnified
parties and any such separate firm for the Issuers and the Guarantors, their
directors, their officers and such control persons of the Issuers and the
Guarantors shall be designated in writing by the Issuers. The indemnifying
person shall not be liable for any settlement of any proceeding effected without
its written consent, which consent shall not be unreasonably withheld, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying person agrees to indemnify any indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
person shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an indemnified party in respect of any losses,
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claims, damages, liabilities, or expenses referred to therein (other than by
reason of the exceptions provided therein), then each indemnifying person under
such paragraphs, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities, or expenses (i) in such
proportion as is appropriate to reflect the relative benefits of the indemnified
party on the one hand and the indemnifying person(s) on the other in connection
with the statements or omissions that resulted in such losses, claims, damages,
liabilities, or expenses or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying person(s) and the indemnified party, as
well as any other relevant equitable considerations. The relative fault of the
indemnifying person(s), on the one hand, and any indemnified parties, on the
other, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying person(s), on the one hand, or by such indemnified parties, on the
other, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if such
indemnified parties were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any reasonable legal or
other expenses actually incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall an indemnified party be required
to contribute any amount in excess of the amount by which proceeds received by
such indemnified party from sales of Transfer Restricted Secu-
25
<PAGE>
rities exceeds the amount of any damages that such indemnified party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7 will
be in addition to any liability which the indemnifying persons may otherwise
have to the indemnified parties referred to above. The indemnified parties'
obligations to contribute pursuant to Section 7 are several in proportion to the
respective principal amount of Securities sold by each of the indemnified
parties hereunder and not joint.
8. Rules 144 and 144A
The Issuers and the Guarantors covenant that they will file the reports
required to be filed by them pursuant to the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder in a timely manner
and, if at any time the Issuers and the Guarantors are not required to file such
reports, they will, upon the request of any Holder of Transfer Restricted
Securities, make available information required by Rules 144 and 144A under the
Securities Act in order to permit sales pursuant to Rule 144 and Rule 144A.
9. Underwritten Registrations
(a) If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Transfer Restricted Securities included in such offering and reasonably
acceptable to the Issuers.
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder, unless such Holder (i) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in any customary
underwriting arrangements entered into in
26
<PAGE>
connection therewith and (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if requested
(pursuant to a timely written notice) by the managing underwriters in an
underwritten offering or placement agent in a private offering of the Company's
debt securities, not to effect any private sale or distribution (including a
sale pursuant to Rule 144(k) and Rule 144A, but excluding non-public sales to
any of its affiliates, officers, directors, employees and controlling persons)
of any of the Securities except pursuant to an Exchange Offer, during the period
beginning 10 days prior to, and ending 90 days after, the closing date of the
underwritten offering.
The foregoing provisions shall not apply to any Holder of Transfer
Restricted Securities if such Holder is prevented by applicable statute or
regulation from entering into any such agreement.
The Issuers and the Guarantors agree without the written consent of the
managing underwriters in an underwritten offering of Transfer Restricted
Securities covered by a Registration Statement filed pursuant to Section 3
hereof, not to effect any public or private sale or distribution of their
respective debt securities, including a sale pursuant to Regulation D or Rule
144A under the Securities Act, during the period beginning 10 days prior to, and
ending 90 days after, the closing date of each underwritten offering made
pursuant to such Registration Statement; provided, however, that such period
shall be extended by the number of days from and including the date of the
giving of any notice pursuant to Section 5(c)(v) or 5(c)(vi) hereof to and
including the date when each seller of Transfer Restricted Securities covered by
such Registration Statement shall have received the copies of the supplemented
or amended Prospectus contemplated by Section 5(j) hereof and provided further,
that no such offering restriction shall apply to more than one such underwritten
offering per twelve-month period.
27
<PAGE>
10. Miscellaneous
(a) Remedies. In the event of a breach by the Issuers of any of their
obligations under this Agreement, each Holder of Transfer Restricted Securities,
in addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Purchasers, in the Purchase Agreement, or
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Subject to Section 4, the
Issuers and the Guarantors agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by them of any of the
provisions of this Agreement and hereby further agree that, in the event of any
action for specific performance in respect of such breach, they shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. None of the Issuers or any Guarantor will
enter into any agreement with respect to any of their respective securities
which will grant to any Person piggy-back registration rights with respect to an
Exchange Registration Statement or a Shelf Registration.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Issuers have obtained the written consent of holders of at least a
majority of the then outstanding aggregate principal amount of Transfer
Restricted Securities and Exchange Securities held by Participating
Broker-Dealers holding Exchange Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders and Participating
Broker-Dealers holding Exchange Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders and
Participating Broker-Dealers holding Exchange Securities may be given by holders
of at least a majority in aggregate principal amount of the Transfer Restricted
Securities and Exchange Securities held by Participating Broker-Dealers being
sold by such holders pursuant to such Registration Statement; provided that
28
<PAGE>
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Transfer Restricted Securities, at the most
current address given by the Trustee to the Issuers; and
(ii) if to the Issuers or the Guarantors, Charles D. Adamo, Sun
International Hotels Limited, Coral Towers, Paradise Island (Tel: 242-363-
2202)(Fax: 242-363-4581), with a copy to Cravath, Swaine & Moore, 825
Eighth Avenue, New York, New York 10019, Attention: James M. Edwards, Esq.
(Tel: 212-474-1688)(Fax: 212-474-3700).
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; ten business days after
being deposited in the mail, postage prepaid, if mailed; three business days
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities. The Issuers and the Guarantors agree
that the holders of the Securities shall be third party beneficiaries to the
agreements made hereunder by the Issuers and the Guarantors and each holder
shall have the right to enforce such agreements directly to the extent it
29
<PAGE>
deems such enforcement necessary or advisable to protect its rights hereunder.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT TO ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and
30
<PAGE>
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Entire Agreement. This Agreement, together with the Purchase Agreement,
is intended by the parties as a final expression of their agreement, and is
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.
(k) Securities Held by the Issuers, the Guarantors or Their Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Transfer Restricted Securities is required hereunder, Transfer Restricted
Securities held by the Issuers, any Guarantor or any of their affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
31
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
SUN INTERNATIONAL HOTELS LIMITED
By: ________________________________________
Name:
Title:
SUN INTERNATIONAL NORTH AMERICA, INC.
By: ________________________________________
Name:
Title:
GUARANTORS:
SUN INTERNATIONAL BAHAMAS LIMITED
By: ________________________________________
Name:
Title:
PARADISE ISLAND LIMITED
By: ________________________________________
Name:
Title:
ISLAND HOTEL COMPANY LIMITED
By: ________________________________________
Name:
Title:
<PAGE>
PARADISE BEACH INN LIMITED
By: ________________________________________
Name:
Title:
PARADISE ENTERPRISES LIMITED
By: ________________________________________
Name:
Title:
PARADISE ACQUISITIONS LIMITED
By: ________________________________________
Name:
Title:
SUN INTERNATIONAL MANAGEMENT LIMITED
By: ________________________________________
Name:
Title:
SUN COVE, LTD.
By: ________________________________________
Name:
Title:
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
By: ________________________________________
Name:
Title:
GGRI, INC.
By: ________________________________________
Name:
Title:
<PAGE>
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first
above written.
BEAR, STEARNS & CO. INC.
SOCIETE GENERALE SECURITIES CORPORATION
SCOTIA CAPITAL MARKETS (USA) INC.
BY: BEAR, STEARNS & CO. INC.
By: ________________________________________
Name:
Title:
EXHIBIT (4)(e)(4)
INTER-BORROWER AGREEMENT dated as of
March 10, 1997, between SUN INTERNATIONAL
HOTELS LIMITED, an international business
company organized under the laws of the
Commonwealth of The Bahamas ("Sun"), and SUN
INTERNATIONAL NORTH AMERICA, INC., a Delaware
corporation ("SINA").
WHEREAS Sun and SINA are co-obligors on
$200 million principal amount of senior subordinated notes
(the "Notes") under an Indenture (the "Indenture") dated as
of March 10, 1997 among Sun, SINA, various subsidiaries of
Sun, as guarantors (the "Guarantors"), and the Bank of
New York, as trustee (the "Trustee");
WHEREAS Sun and SINA intend to use a significant
portion of the proceeds of the offering of the Notes to
retire certain existing indebtedness of SINA and the
remaining portion of such proceeds for various corporate
purposes of Sun and SINA; and
WHEREAS Sun and SINA wish to properly allocate
their respective responsibilities with respect to the Notes;
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings contained herein and for other
good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
Use of Proceeds
SECTION 1.01. Allocation. Upon consummation of
the sale of the Notes, Sun and SINA shall allocate the
proceeds from the sale of the Notes (the "Proceeds") between
them. The portion of the Proceeds that is used to refinance
existing indebtedness of SINA or otherwise used in SINA's
business shall be deemed the SINA Proceeds. The remaining
Proceeds shall be deemed the Sun Proceeds.<PAGE>
2
ARTICLE II
Payment
SECTION 2.01. Several Payment Obligations. Sun
and SINA shall severally pay all interest (including
liquidated damages and additional amounts, if any) and
principal on the Notes attributable to Sun Proceeds and the
SINA Proceeds, respectively. The several obligations
hereunder shall include all obligations under the Notes and
the Indenture, including any redemption or rights of holders
of Notes to require repurchase of Notes.
SECTION 2.02. Reimbursement. If Sun or SINA
makes any payment with respect to the Notes that is greater
than its obligation set forth in Section 2.01 above, it
shall be promptly reimbursed by the other for any such
excess.
SECTION 2.03. No Limitation of Rights of
Noteholders. Nothing in this Agreement shall affect the
rights of holders of Notes to collect amounts due under the
Notes or to enforce any other obligation of Sun or SINA
under the Notes or the Indenture. The rights and
obligations set forth in this Agreement are set forth for
purposes of allocating solely as between Sun and SINA their
equitable responsibilities relative to each other with
respect to their joint obligations under the Notes and the
Indenture.
ARTICLE III
Indemnification
SECTION 3.01. Indemnification. Sun and SINA
hereby indemnify each other and their respective affiliates
from and against and agree to hold each of them harmless
from any and all damage, loss, liability and expense,
including reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with
any action, suit or proceeding incurred or suffered by
either of them or their affiliates arising out of any breach
of any covenant or agreement made or to be performed
pursuant to this Agreement.<PAGE>
3
SECTION 3.02. Procedures. The party seeking
indemnification (the "Indemnified Party") hereunder shall
give prompt notice to the party against whom indemnity is
sought (the "Indemnifying Party") at the assertion of any
claim, or the commencement of any suit, action or
proceeding, in respect of which indemnification may be
sought hereunder. The Indemnifying Party may, and at the
request of the Indemnified Party shall, participate in and
control the defense of any such suit, action or proceeding
at its own expense. The Indemnifying Party shall not be
liable for any settlement effected without its consent of
any claim, litigation or proceeds in respect of which
indemnification may be sought hereunder.
ARTICLE IV
Miscellaneous
SECTION 4.01. Notices. All notices, requests and
other communications hereunder shall be in writing
(including fax) and shall be sent, delivered or mailed,
addressed, or faxed:
(a) if to Sun, to:
Sun International Hotels Limited
Atlantis Hotel Executive Offices
Coral Towers
Paradise Island, The Bahamas
(T) (809) 363-2516
(F) (809) 363-2703
Attention of Charles Adamo, Esq.
with a copy to:
James M. Edwards, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
(T) (212) 474-1688
(F) (212) 474-3700<PAGE>
4
(b) if to SINA, to:
Sun International North America, Inc.
c/o Griffin Gaming & Entertainment
1133 Boardwalk
Atlantic City, NJ 08401
(T) (609) 340-6100
(F) (609) 345-3260
Attention of Mr. Matthew Kearney
Each such notice, request or other communication shall be
given (i) by hand delivery, (ii) by nationally recognized
courier service or (iii) by fax, receipt confirmed. Each
such notice, request or communication shall be effective
(A) if delivered by hand or by nationally recognized courier
service, when delivered at the address specified in this
Section 4.01 (or in accordance with the latest unrevoked
written direction from such party) and (B) if given by fax,
when such fax is transmitted to the fax number specified in
this Section 4.01 (or in accordance with the latest
unrevoked written direction from such party), and the
appropriate confirmation is received.
SECTION 4.02. Interpretation. The headings
contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words
"included", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation".
SECTION 4.03. Severability. The provisions of
this Agreement shall be deemed severable and the invalidity
or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is
found to be invalid or unenforceable in any jurisdiction,
(a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this
Agreement and the application of such provision to other<PAGE>
5
persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of
such provision, or the application thereof, in any other
jurisdiction.
SECTION 4.04. Counterparts. This Agreement may
be executed in one or more counterparts, each of which shall
be deemed an original and all of which shall, taken
together, be considered one and the same agreement, it being
understood that both parties need not sign the same
counterpart.
SECTION 4.05. Entire Agreement; No Third Party
Beneficiaries. This Agreement together with the Indenture
(a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof
and (b) is not intended to confer upon any person, other
than the parties hereto, any rights or remedies hereunder.
SECTION 4.06. Further Assurances. Each party
shall execute, deliver, acknowledge and file such other
documents and take such further actions as may be reasonably
requested from time to time by the other party hereto to
give effect to and carry out the transactions contemplated
herein.
SECTION 4.07. Governing Law; Equitable Remedies.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under
applicable principles of conflicts of law.<PAGE>
6
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered, all as of the
date first set forth above.
SUN INTERNATIONAL HOTELS
LIMITED,
by
Name:
Title:
SUN INTERNATIONAL NORTH
AMERICA, INC.,
by
Name:
Title:
<PAGE>
EXHIBIT (10)(d)
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
Agreement made as of the 16th day of December, 1996,
by and among Griffin Gaming & Entertainment, Inc., a Delaware
corporation (the "Company"), Sun International Hotels, Ltd., a
corporation organized and existing under the laws of The
Commonwealth of The Bahamas ("Sun"), and Thomas E. Gallagher
("Executive").
WHEREAS, Executive is a senior executive of the
Company and has devoted a substantial amount of his business,
time and efforts to its business affairs; and
WHEREAS, Sun has agreed to acquire all of the
outstanding stock of the Company; and
WHEREAS, as a result of the acquisition, Executive's
employment may be terminated; and
WHEREAS, the Company and Sun believe that, because of
the expertise, knowledge and contacts of Executive in the gaming
industry, it is important that Executive not compete with the
business of the Company should Executive's employment be
terminated; and
WHEREAS, the Company is willing to provide payments
to Executive for agreeing not to compete with the Company in the
event that Executive's employment is terminated and Sun is
willing to guarantee such payments;<PAGE>
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements hereinafter set forth and
intending to be legally bound hereby, the parties hereto agree as
follows:
1. Definitions. For all purposes of this
Agreement, the following terms shall have the meanings specified
in this Section unless the context clearly otherwise requires:
(a) "Board" shall mean the board of directors of the
Company or its successor.
(b) "Termination Date" shall mean the date of
receipt of the Notice of Termination described in Section 2
hereof or any later date specified therein, as the case may be.
(c) "Termination of Employment" shall mean the
termination of Executive's actual employment relationship with
the Company.
2. Notice of Termination. Any Termination of
Employment shall be communicated by a Notice of Termination to
Executive given in accordance with Section 13 hereof. For
purposes of this Agreement, a "Notice of Termination" means a
written notice that Executive is to be terminated and if the
Termination Date is other than the date of receipt of such
notice, specifies the Termination Date (which date shall not be
more than 15 days after the giving of such notice).
- 2 -<PAGE>
3. Payment upon Termination. In the event of
Executive's Termination of Employment for any reason, and in
exchange for Executive's undertakings pursuant to Sections 7 and
8, the Company shall pay Executive the amount of $2,750,000.
Subject to the provisions of Section 9, payment shall be made in
3 installments of $1,375,000, on the later of the Termination
Date or January 2, 1997, and $825,000 and $550,000 on January 2
of the next two immediately succeeding years. Further, Sun
agrees to cause the Company to make all payments to Executive of
the sums due at the times stated above or to make such payments
to Executive directly.
4. Other Payments. Executive agrees and
acknowledges that he shall not be entitled to any payments or
benefits under any other plan, policy or program of the Company
relating to the period specified in Sections 7 and 8.
5. Establishment of Trust. The Company may
establish an irrevocable trust fund pursuant to a trust agreement
to hold assets to satisfy its obligations hereunder. Funding of
such trust fund shall be subject to the Board's discretion, as
set forth in the agreement pursuant to which the fund will be
established.
6. Enforcement. In the event that the Company
shall fail or refuse to make timely payment of any amounts due
- 3 -<PAGE>
Executive under Sections 3 and 4 because of a dispute with
Executive, the Company shall pay to an escrow agent, who shall
invest such sum with interest to be paid to the prevailing party,
any amount remaining unpaid under Section 3 or 4. In such event,
the parties shall then engage in arbitration in the City of New
York, New York in accordance with the commercial arbitration
rules then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be
selected by the Company and Executive, respectively, and the
third of whom shall be selected by the other two arbitrators.
Any award entered by the arbitrators shall be final, binding and
nonappealable and judgment may be entered thereon by either party
in accordance with applicable law in any court of competent
jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrators shall have no authority to modify
any provision of this Agreement or to award a remedy for a
dispute involving this Agreement other than a benefit
specifically provided under or by virtue of the Agreement. If
Executive prevails on any material issue which is the subject of
such arbitration, the Company shall be responsible for all of the
fees of the American Arbitration Association and the arbitrators
and any expenses relating to the conduct of the arbitration
(including reasonable attorneys' fees and expenses). Otherwise,
- 4 -<PAGE>
each party shall be responsible for his or its own expenses
relating to the conduct of the arbitration (including reasonable
attorneys' fees and expenses) and shall share the fees of the
American Arbitration Association.
7. Confidential Information. Executive recognizes
and acknowledges that, by reason of his employment by and service
to the Company, he has had access to confidential information of
the Company and its affiliates, including, without limitation,
information and knowledge pertaining to the Company's business,
which consists of customer and related information, current and
future marketing plans and techniques, designs and drawings for
developmental projects of the Company and budgets and related
financial information ("Confidential Information").
"Confidential Information" shall not include information obtained
or possessed by reason of Executive's positions or capacities
with Players International, Inc., a Nevada corporation
("Players"), or The Griffin Group, Inc. or their respective
affiliates. Executive acknowledges that such Confidential
Information is a valuable and unique asset and covenants that he
will not, for a period of three years after the Termination Date,
disclose any such Confidential Information to any person for any
reason whatsoever without the prior written authorization of the
Company, unless such information is in the public domain through
- 5 -<PAGE>
no fault of Executive or otherwise available to Executive from
sources other than the Company or except as may be required by
law.
8. Non-Competition.
(a) For a period of three years after the
Termination Date, Executive will not, unless acting with the
prior written consent of the Company, (which, only in the case of
other businesses in Atlantic City, will not be unreasonably
withheld on or after 18 months following the Termination Date) or
except as provided in paragraph (b) directly or indirectly, own,
manage, operate, join, control, finance or participate in the
ownership, management, operation, control or financing of, or be
connected as an officer, director, employee, partner, principal,
agent, representative, consultant or otherwise with, or use or
permit his name to be used in connection with, any business or
enterprise which is directly involved in the operation of a
casino hotel anywhere within the Company's "service area." For
the purposes of this Section, "service area" shall mean the
geographic area comprising the city of Atlantic City, New Jersey,
the state of Connecticut and The Commonwealth of The Bahamas.
(b) The foregoing restrictions shall not be
construed to prohibit (i) the ownership by Executive of less than
five percent (5%) of any class of securities of any corporation
- 6 -<PAGE>
which is engaged in any of the foregoing businesses having a
class of securities registered pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), provided that such
ownership represents a passive investment and that neither
Executive nor any group of persons including Executive in any
way, either directly or indirectly, manages or exercises control
of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other than
exercising his rights as a shareholder, or seeks to do any of the
foregoing, (ii) any activities undertaken by Executive in
connection with the business of Players (with which Executive is
currently associated), or any successor thereto or affiliate
thereof, (1) outside of the service area, as defined above, (2)
not related to the actual operation of a casino hotel in Atlantic
City, New Jersey, or (3) after 18 months from the Termination
Date, in Atlantic City, New Jersey or (iii) any activities
undertaken by Executive in connection with the business of a
multi-jurisdiction gaming business or enterprise so long as
Executive's has no involvement in the operations of that business
or enterprise within the Company's service area, as defined
above.
(c) Executive further covenants and agrees that for
a period of one year after the Termination Date, he will not,
- 7 -<PAGE>
directly or indirectly, solicit or hire, or encourage the
solicitation or hiring of, any person who was a managerial or
higher level employee of the Company at any time during the term
of Executive's employment by the Company by any employer other
than the Company for any position as an employee, independent
contractor, consultant or otherwise. The foregoing covenant of
Executive shall not apply to any person who is involuntarily
terminated by the Company or whose termination agreement with the
Company permits such a position or after 6 months have elapsed
after the date on which such person voluntarily terminates
employment from the Company.
9. Equitable Relief.
(a) Executive acknowledges that the restrictions
contained in Sections 7 and 8 are reasonable and necessary to
protect the legitimate interests of the Company and its
affiliates, that the Company would not have entered into this
Agreement in the absence of such restrictions, and that any
violation of any provision of those Sections will result in
irreparable injury to the Company. Executive represents that his
experience and capabilities are such that the restrictions
contained in Section 8 will not prevent Executive from obtaining
employment or otherwise earning a living at the same general
level of economic benefit as anticipated by this Agreement.
- 8 -<PAGE>
Executive further represents and acknowledges that (i) he has
been advised by the Company to consult his own legal counsel in
respect of this Agreement, and (ii) that he has had full
opportunity, prior to execution of this Agreement, to review
thoroughly this Agreement with his counsel.
(b) Executive agrees that the Company shall be
entitled to preliminary and permanent injunctive relief, without
the necessity of proving actual damages, as well as a return (or
a cancellation of the obligation to pay under Section 3) of that
portion of the payments that have been made (or would have been
made) to Executive under Section 3 that are attributable to the
period during which and after Executive is finally determined, by
a court of last resort, unless no appeal is taken, to have
violated the requirements of Sections 7 or 8. In the event that
any of the provisions of Sections 7 or 8 should ever be
adjudicated to exceed the time, geographic, service, or other
limitations permitted by applicable law in any jurisdiction, then
such provisions shall be deemed reformed in such jurisdiction to
the maximum time, geographic, service, or other limitations
permitted by applicable law.
(c) Executive irrevocably and unconditionally (i)
agrees that any suit, action or other legal proceeding arising
out of Sections 7 or 8, including without limitation, any action
- 9 -<PAGE>
commenced by the Company for preliminary and permanent injunctive
relief or other equitable relief, may be brought in the United
States District Court for the District of New Jersey, or if such
court does not have jurisdiction or will not accept jurisdiction,
in any court of general jurisdiction in Atlantic County, New
Jersey, (ii) consents to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding, and (iii)
waives any objection which Executive may have to the laying of
venue of any such suit, action or proceeding in any such court.
Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a
manner permitted by the notice provisions of Section 13.
(d) Executive agrees that he will provide, and that
the Company may similarly provide, a copy of Section 8 to any
business or enterprise if there is a potential for conflict with
the provisions of Section 8, (i) which he may directly or
indirectly own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing or
control, or (ii) with which he may be connected with as an
officer, director, employee, partner, principal, agent,
representative, consultant or otherwise, or in connection with
which he may use or permit his name to be used; provided,
- 10 -<PAGE>
however, that this provision shall not apply after expiration of
the time period set forth therein.
10. No Set-Off. Except as provided in Section 9,
the Company's (and Sun's) obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company (or sun) may
have against Executive or others.
11. Taxes. Any payment required under this
Agreement shall be subject to all requirements of the law with
regard to the withholding of taxes, filing, making of reports and
the like, and the Company shall use its best efforts to satisfy
promptly all such requirements.
12. Successor Company. The Company shall require
any successor or successors (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company,
by agreement in form and substance satisfactory to Executive, to
acknowledge expressly that this Agreement is binding upon and
enforceable against the Company in accordance with the terms
hereof, and to become jointly and severally obligated with the
Company to perform this Agreement in the same manner and to the
- 11 -<PAGE>
same extent that the Company would be required to perform if no
such succession or successions had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used
in this Agreement, the Company shall mean the Company as
hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
13. Notice. All notices and other communications
required or permitted hereunder or necessary or convenient in
connection herewith shall be in writing and shall be delivered
personally or mailed by registered or certified mail, return
receipt requested, or by overnight express courier service, as
follows:
If to the Company, to: 1133 Boardwalk
Atlantic City, NJ 08401
ATTN: President
If to Sun, to: Sun International Hotels Ltd.
N 4777
Paradise Island
Nassau, Bahamas
Attn: Charles Adamo,
Fax # 242-363-4581
If to Executive, to: T. E. Gallagher
780 Third Avenue, Suite 1801
New York, NY 10017
or to such other names or addresses as the Company, Sun or
Executive, as the case may be, shall designate by notice to the
- 12 -<PAGE>
other party hereto in the manner specified in this Section. Any
such notice shall be deemed delivered and effective when received
in the case of personal delivery, five days after deposit,
postage prepaid, with the U.S. Postal Service in the case of
registered or certified mail, or on the next business day in the
case of overnight express courier service.
14. Governing Law. This Agreement shall be governed
by and interpreted under the laws of the state of New Jersey
without giving effect to any conflict of laws provisions.
15. Contents of Agreement, Amendment and Assignment.
(a) This Agreement supersedes all prior agreements,
sets forth the entire understanding between the parties hereto
with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment
executed by Executive and approved by the Board.
(b) Nothing in this Agreement shall be construed as
giving Executive any right to be retained in the employ of the
Company.
(c) All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective heirs, representatives,
successors and assigns of the parties hereto, except that the
- 13 -<PAGE>
duties and responsibilities of Executive and the Company
hereunder shall not be assignable in whole or in part.
16. Severability. If any provision of this
Agreement or application thereof to anyone or under any
circumstances shall be determined to be invalid or unenforceable,
such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or
application.
17. Remedies Cumulative; No Waiver. No right
conferred upon Executive by this Agreement is intended to be
exclusive of any other right or remedy, and each and every such
right or remedy shall be cumulative and shall be in addition to
any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by Executive
in exercising any right, remedy or power hereunder or existing at
law or in equity shall be construed as a waiver thereof.
18. Miscellaneous. All section headings are for
convenience only. This Agreement may be executed in several
counterparts, each of which is an original. It shall not
- 14 -<PAGE>
be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be
legally bound, have executed this Agreement as of the date first
above written.
GRIFFIN GAMING & ENTERTAINMENT, INC.
/s/Matthew B. Kearney /s/Thomas E. Gallagher
Thomas E. Gallagher
ATTEST:
Secretary
SUN INTERNATIONAL HOTELS, LTD.
/s/Charles D. Adamo
ATTEST:
Secretary
- 15 -<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN
INTERNATIONAL NORTH AMERICA, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND
NOTES THERETO INCLUDED IN THE FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
PLEASE SEE FOOTNOTE 5 RELATING TO INFORMATION IN THIS FDS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> $33,805<F1>
<SECURITIES> 0
<RECEIVABLES> $8,251
<ALLOWANCES> $3,758
<INVENTORY> $1,194
<CURRENT-ASSETS> $44,522
<PP&E> $210,961
<DEPRECIATION> 0
<TOTAL-ASSETS> $552,848
<CURRENT-LIABILITIES> $52,305
<BONDS> $261,543<F2>
<COMMON> $0
0
0
<OTHER-SE> $193,000
<TOTAL-LIABILITY-AND-EQUITY> $552,848
<SALES> 0
<TOTAL-REVENUES> $291,945
<CGS> 0
<TOTAL-COSTS> $215,998<F3>
<OTHER-EXPENSES> $12,386<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $28,873
<INCOME-PRETAX> $263
<INCOME-TAX> 0
<INCOME-CONTINUING> $263
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $263
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $11,926 AND
RESTRICTED CASH EQUIVALENTS OF $4,538.
<F2>INCLUDING UNAMORTIZED PREMIUMS.
<F3>EXCLUDES DEPRECIATION.
<F4>DEPRECIATION EXPENSE.
<F5>SEE NOTE 1 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN SUN
INTERNATIONAL NORTH AMERICA, INC.'S FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996 FOR DISCUSSION OF A MERGER IN DECEMBER 1996 AND
THE RELATED CHANGE IN BASIS OF ACCOUNTING.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN
INTERNATIONAL NORTH AMERICA, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND
NOTES THERETO INCLUDED IN THE FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995,
EXCEPT AS NOTED BELOW IN FOOTNOTE 3, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> $55,572<F1>
<SECURITIES> 0
<RECEIVABLES> $8,495
<ALLOWANCES> $3,570
<INVENTORY> $2,447
<CURRENT-ASSETS> $72,544
<PP&E> $221,202
<DEPRECIATION> $62,227
<TOTAL-ASSETS> $338,451
<CURRENT-LIABILITIES> $41,798
<BONDS> $217,356<F2>
<COMMON> $79
0
0
<OTHER-SE> $25,868
<TOTAL-LIABILITY-AND-EQUITY> $338,451
<SALES> 0
<TOTAL-REVENUES> $301,740
<CGS> 0
<TOTAL-COSTS> $208,305<F3>
<OTHER-EXPENSES> $13,452<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $29,297
<INCOME-PRETAX> $15,899
<INCOME-TAX> 0
<INCOME-CONTINUING> $15,899
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $15,899
<EPS-PRIMARY> $1.87
<EPS-DILUTED> $1.83
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $35,515 AND
RESTRICTED CASH EQUIVALENTS OF $4,362.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F3>EXCLUDES DEPRECIATION; RESTATED TO EXCLUDE $326 RECLASSIFIED
TO SELLING, GENERAL & ADMINISTRATIVE EXPENSE.
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
