<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 26, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AZTAR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7990 86-0636534
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
2390 EAST CAMELBACK ROAD
SUITE 400
PHOENIX, ARIZONA 85016
(602) 381-4100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
<TABLE>
<S> <C>
ROBERT M. HADDOCK WITH COPIES TO:
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL BRIAN G. CARTWRIGHT, ESQ.
OFFICER LATHAM & WATKINS
2390 EAST CAMELBACK ROAD 633 WEST FIFTH STREET,
SUITE 400 SUITE 4000
PHOENIX, ARIZONA 85016 LOS ANGELES, CALIFORNIA 90071
(602) 381-4100 (213) 485-1234
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR
SERVICE)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this registration statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration number for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier, effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS
OF SECURITIES TO BE AMOUNT TO BE PROPOSED OFFERING PROPOSED AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER NOTE(1) OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
8 7/8% Senior
Subordinated Notes due
2007................... $235,000,000 100% $235,000,000 $65,330
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION. DATED MAY 26, 1999.
PROSPECTUS
AZTAR CORPORATION
OFFER TO EXCHANGE
8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
We are offering to exchange all of our outstanding unregistered 8 7/8%
Senior Subordinated Notes due 2007 for our registered 8 7/8% Senior Subordinated
Notes due 2007. The unregistered notes and the registered notes are sometimes
collectively referred to as the notes. The unregistered notes were issued on May
3, 1999, and as of the date of this prospectus, an aggregate principal amount of
$235.0 million is outstanding. The terms of the registered notes are
substantially identical to the outstanding unregistered notes, except that the
registered notes are registered under the Securities Act of 1933, as amended,
and will not contain any legends restricting their transfer.
PLEASE CONSIDER THE FOLLOWING:
- - You should carefully review the risk factors beginning on page 16 of this
prospectus.
- - Our offer to exchange unregistered notes for registered notes will be open
until 5:00 p.m., New York City time, on , 1999, unless we extend
the offer.
- - You should carefully review the procedures for tendering the unregistered
notes beginning on page 29 of this prospectus. If you do not follow these
procedures, we may not exchange your unregistered notes for registered notes.
- - If you fail to tender your unregistered notes, you will continue to hold
unregistered notes and your ability to transfer them could be adversely
affected.
- - No public market currently exists for the unregistered notes. We do not intend
to list the registered notes on any securities exchange and, therefore, no
active public market is anticipated.
- - You may withdraw tenders of unregistered notes at any time before the exchange
offer expires.
- - We will not receive any proceeds from this exchange offer.
INFORMATION ABOUT THE NOTES:
- - We will pay interest on the notes on May 15 and November 15 of each year. The
first payment will be made on November 15, 1999.
- - We may redeem the notes at any time at the redemption prices beginning on page
90 of this prospectus. If we experience specific kinds of changes in control,
we must offer to repurchase the notes.
- - The notes are senior subordinated debt. They rank behind all of our current
and future indebtedness except for our 13 3/4% Senior Subordinated Notes due
2004, trade payables and indebtedness that expressly provides otherwise. The
notes effectively rank junior to all liabilities of our subsidiaries,
including trade and construction payables.
- - As of April 1, 1999, on a pro forma basis after giving effect to our
redemption on April 7, 1999 of $75 million of our 11% Senior Subordinated
Notes due 2002, the May 3, 1999 offering of the unregistered notes, and the
application of the net proceeds from the May offering to redeem the remaining
$125 million of our 11% Notes and repay a portion of the outstanding
borrowings under our revolving bank credit facility, we would have had
outstanding $71 million of senior indebtedness that ranked prior to the
registered notes, $180 million of senior subordinated indebtedness that ranked
equally with the registered notes and our subsidiaries would have had
outstanding $66 million of other liabilities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THE NOTES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NONE OF THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL
BOARD, THE NEW JERSEY CASINO CONTROL COMMISSION, THE NEW JERSEY DIVISION OF
GAMING ENFORCEMENT, THE INDIANA GAMING COMMISSION, THE MISSOURI GAMING
COMMISSION NOR ANY OTHER REGULATORY AGENCY OF ANY OTHER STATE HAS PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS OF THE
SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
-------------------------
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION......................... ii
INCORPORATION OF DOCUMENTS BY REFERENCE..................... iii
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS............. iv
PROSPECTUS SUMMARY.......................................... 1
RISK FACTORS................................................ 16
THE EXCHANGE OFFER.......................................... 27
USE OF PROCEEDS............................................. 35
CAPITALIZATION.............................................. 36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 37
BUSINESS.................................................... 51
REGULATION AND LICENSING.................................... 65
MANAGEMENT.................................................. 83
PRINCIPAL STOCKHOLDERS...................................... 85
DESCRIPTION OF SPECIFIC INDEBTEDNESS........................ 86
DESCRIPTION OF REGISTERED NOTES............................. 90
PLAN OF DISTRIBUTION........................................ 127
MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS........... 128
LEGAL MATTERS............................................... 128
EXPERTS..................................................... 128
INDEX TO FINANCIAL STATEMENTS............................... F-1
</TABLE>
i
<PAGE> 4
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-4 to register with the
Securities and Exchange Commission the registered notes to be issued in exchange
for the unregistered notes. This prospectus is part of that registration
statement. As allowed by the Commission's rules, this prospectus does not
contain all of the information you can find in the registration statement or the
exhibits to the registration statement.
Aztar is subject to the information requirements of the Securities Exchange
Act of 1934, as amended, and in accordance with the Exchange Act, files reports,
proxy statements and other information with the Securities and Exchange
Commission. These reports, proxy statements and other information filed by Aztar
with the Commission pursuant to the informational requirements of the Exchange
Act may be inspected and copied at the:
- public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and
- Regional Offices of the Commission:
Midwest Regional Office, Citicorp Center, Suite 1400, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661-2511
Northeast Regional Office, Suite 1300, 13th Floor, 7 World Trade Center,
New York, New York 10048.
Copies of these materials can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. You can obtain information on the operation of
the Public Reference Room by calling the Commission at 1-800-SEC-0330. The
Commission also maintains a Web site (http://www.sec.gov) that makes available
reports, proxy statements and other information regarding Aztar.
Shares of Aztar's Common Stock, par value $0.01 per share, are quoted on
the New York Stock Exchange under the symbol "AZR", and copies of the materials
described above may be inspected at the office of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
In addition, pursuant to the indenture for the notes, we have agreed:
- to file with the trustee for the notes copies of the annual reports and
of the information, documents and other reports that we are required to
file with the Commission within five days after they are required to be
filed with the Commission,
- upon request of any holder, to mail those annual reports, information,
documents and other reports to that holder, and
- if we are not subject to the reporting requirements of the Exchange Act,
to nonetheless file with the Commission and the trustee on a timely
basis, and upon request of any holder, promptly mail to that holder, the
annual reports, information, documents and other reports that we would be
required to file if we were subject to the reporting requirements of the
Exchange Act.
ii
<PAGE> 5
You may obtain a copy of the registration rights agreement and the
indenture for the notes, which are summarized in this prospectus, without
charge, by request directed to Aztar Corporation, 2390 East Camelback Road,
Suite 400, Phoenix, Arizona 85016, Attention: Corporate Communications Office,
telephone (602) 381-4111.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE MATTERS WE DISCUSS IN THIS PROSPECTUS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS OR IN DOCUMENTS INCORPORATED BY REFERENCE. IF YOU
ARE GIVEN ANY INFORMATION OR REPRESENTATIONS ABOUT THESE MATTERS THAT IS NOT
DISCUSSED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, YOU MUST NOT RELY ON
THAT INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY SECURITIES ANYWHERE OR TO ANYONE WHERE OR TO WHOM WE ARE NOT
PERMITTED TO OFFER OR SELL SECURITIES UNDER APPLICABLE LAW. OUR AFFAIRS MAY HAVE
CHANGED SINCE THE DATE OF THIS PROSPECTUS. WE CANNOT ASSURE YOU THAT THE
INFORMATION IN THIS PROSPECTUS OR IN THE DOCUMENTS WE INCORPORATE BY REFERENCE
IN THIS PROSPECTUS IS CORRECT AFTER THIS DATE.
INCORPORATION OF DOCUMENTS BY REFERENCE
We are incorporating by reference the following documents, all of which we
have filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, into and as a part of this prospectus:
(i) our annual report on Form 10-K for the fiscal year ended December
31, 1998;
(ii) the portions of our 1998 definitive Proxy Statement for our
Annual Meeting of Stockholders dated March 29, 1999 that have been
incorporated by reference into the 1998 Form 10-K;
(iii) our Quarterly Report on Form 10-Q for the quarter ended April 1,
1999; and
(iv) our Current Reports on Form 8-K dated April 19, 1999 and April
27, 1999.
Each document that we file pursuant to Section 13(a), 13(c), 14 and 15(d)
of the Exchange Act after the date of this prospectus and prior to the
termination of this exchange offer will be deemed to be incorporated by
reference in this prospectus and to be a part of this prospectus from the date
of filing of that document. Any statement contained in a document incorporated
or deemed to be incorporated by reference in this prospectus will be deemed to
be modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
prospectus modifies or supersedes that statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, on the request of any such person, a copy of any or all
of the foregoing documents incorporated in this prospectus by reference, other
than exhibits to those documents (unless those exhibits are specifically
incorporated by reference in those documents). Written or telephone requests for
these copies should be directed to 2390 East Camelback Road, Suite 400, Phoenix,
Arizona 85016, telephone (602) 381-4100.
iii
<PAGE> 6
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about us and our subsidiaries, including, among
other things, factors discussed under the heading "Risk Factors," in our filings
with the Securities and Exchange Commission and the following:
- the effect of economic, credit and capital market conditions;
- the impact of competition from other gaming operations;
- changes in laws or regulations and third party relations;
- approvals and decisions of courts, regulators and governmental bodies;
- our construction and development activities;
- changes in customer demand; and
- our anticipated growth strategies.
We caution prospective investors in the registered notes offered by this
prospectus that although we believe that the assumptions on which the
forward-looking statements contained in this prospectus are based are
reasonable, any of those assumptions could prove to be inaccurate and, as a
result, the forward-looking statements based on those assumptions also could be
materially incorrect. In light of these and other uncertainties, you should not
regard the inclusion of a forward-looking statement in this prospectus as a
representation by us that our plans and objectives will be achieved and you
should not place undue reliance on these forward-looking statements. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
iv
<PAGE> 7
PROSPECTUS SUMMARY
The following summary may not contain all the information that may be
important to you. You should read this entire prospectus, including the
financial data and related notes, before making an investment decision. The
terms "Aztar," "we," "our," and "us," as used in this prospectus, refer to Aztar
Corporation and its subsidiaries as a combined entity, except where it is clear
that these terms mean only Aztar Corporation. All references in this prospectus
to a fiscal year refer to the 52 or 53 weeks ended on the Thursday nearest to
December 31. You should carefully consider the information set forth under "Risk
Factors." In addition, some statements include forward-looking information which
involves risks and uncertainties. See "Disclosure Regarding Forward-Looking
Statements" on page iv.
AZTAR.
Aztar is a publicly traded gaming company that owns and operates three
land-based and two riverboat casinos in five distinct domestic gaming markets.
Four of these are core operating properties -- the Tropicana Casino and Resort
in Atlantic City, the Ramada Express in Laughlin, Nevada and our two riverboat
properties in Evansville, Indiana and Caruthersville, Missouri. The fifth
property, the Tropicana Resort and Casino in Las Vegas, is being operated
pending eventual redevelopment.
Here is an overview of our properties as of April 1, 1999:
<TABLE>
<CAPTION>
GAMING APPROXIMATE
---------------- CASINO
NUMBER OF SLOT TABLE SQUARE APPROXIMATE
PROPERTY NAME AND LOCATION ROOMS/SUITES MACHINES GAMES FOOTAGE PARKING
-------------------------- ------------ -------- ----- ----------- -----------
<S> <C> <C> <C> <C> <C>
NEW JERSEY
Tropicana Casino and Resort...... 1,624 3,705 172 124,000 3,300
NEVADA
Tropicana Resort and Casino(1)... 1,873 1,641 41 61,000 2,300
Ramada Express Hotel and Casino... 1,500 1,580 33 55,000 2,400
INDIANA
Casino Aztar Evansville.......... 250 1,291 73 37,250 1,700
MISSOURI
Casino Aztar Caruthersville...... -- 461 22 10,400 1,000
----- ----- --- ------- ------
TOTALS............................. 5,247 8,678 341 287,650 10,700
===== ===== === ======= ======
</TABLE>
- -------------------------
(1) We lease the Tropicana Las Vegas from a partnership in which we own a 50%
partnership interest and have an option to purchase the remaining 50%
partnership interest.
BUSINESS STRATEGY.
- IMPROVING CASH FLOW. During 1998, our five properties produced EBITDAR
of $154.5 million, an increase of 10.1% from 1997. The 1998 results
represent the third consecutive year of double-digit growth in EBITDAR,
and a 53% increase from the $101.2 million generated in 1995. We
accomplished this cash flow improvement through a combination of revenue
growth and tight cost controls. We drive revenue growth through targeted
marketing expenditures that have a clear and measurable purpose. We also
incentivize our property managers to achieve higher labor
1
<PAGE> 8
productivity and other savings that can improve operating margins. Management is
committed to continuing this EBITDAR growth trend.
[BAR GRAPH]
<TABLE>
<CAPTION>
YEAR EBITDAR(1)
---- ----------
<S> <C>
1996................................ $ 127.0
1997................................ $ 140.3
1998................................ $ 154.5
</TABLE>
-------------------------------
(1) EBITDAR means operating income before depreciation and amortization, rent
and preopening costs. EBITDAR should not be construed as an alternative to
operating income (as determined in accordance with generally accepted
accounting principles) as an indicator of Aztar's operating performance, or
to cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of liquidity. EBITDAR
information has been included to facilitate comprehension of financial
covenants in the indenture for the notes which are based, in part, on
EBITDAR. Our calculation of EBITDAR may not be comparable to similarly
titled measures reported by other companies.
- STRENGTHENING BALANCE SHEET. One of our primary goals has been to
deleverage our balance sheet and significantly reduce our cost of
borrowing. In 1998, we reduced our outstanding long-term debt (including
current portion) by $29 million and increased our cash position by $13
million from a year earlier, yielding a $42 million reduction in net
long-term debt minus cash.
[BAR GRAPH]
<TABLE>
<CAPTION>
YEAR LONG-TERM DEBT
---- --------------
<S> <C>
1996................................ $ 540.0
1997................................ $ 519.1
1998................................ $ 490.1
</TABLE>
Our plan is to replace our higher-coupon public debt that will be callable
later this year with borrowings under our existing lower-cost bank credit
facility. The result will be to both significantly reduce interest expense and
provide flexibility to reduce further outstanding debt.
- DISCIPLINED CAPITAL DECISIONS. Throughout our history, we have used a
disciplined return-on-invested-capital analysis in making decisions about
capital allocation. We continually evaluate whether capital should be
allocated to our core operating assets, to development and acquisition
activities, or to strengthen our balance sheet. Our standard has been to
undertake only capital projects that produce returns on invested capital
substantially in excess of our weighted average cost of capital. We will
continue to pursue capital opportunities that meet our strict criteria
for
2
<PAGE> 9
economic returns. In the event that we do not identify acquisition or
development opportunities that meet our criteria, we intend to continue
to reduce our outstanding indebtedness.
- ATTRACTIVE DEVELOPMENT OPPORTUNITIES. We regularly identify and evaluate
opportunities for further development of our existing properties,
potential acquisitions, and participation in emerging gaming markets.
Although we think that these opportunities are currently limited, our
strategy is to add strategic assets to our portfolio if we believe that
they will produce returns that meet our strict criteria. Future
development opportunities include expansion of the Tropicana Atlantic
City and redevelopment of the Tropicana Las Vegas. The Tropicana Las
Vegas sits on a 34-acre site at the southeast corner of Tropicana Avenue
and the Las Vegas Strip and is widely considered to be one of the best
development opportunities in Las Vegas. While we expect that
redevelopment of Tropicana Las Vegas could present an attractive
opportunity when market conditions improve, we have no current plans in
place for redevelopment.
OPERATING STRATEGY.
We strive to provide our customers with an entertaining adult casino
experience. We emphasize creating environments that are both friendly and fun
and that have a high perceived value to our customers. Our goal is to create
loyal repeat customers. Key components of our operating strategy include:
- EFFECTIVE MARKETING. Our marketing efforts are directed primarily at
customers from the local and nearby drive-in markets. We target the
middle to upper end player with particular emphasis on the higher margin
premium slot customer. We actively track customer casino activity and
engage in direct mail and telemarketing to encourage our more valuable
customers to frequent our properties. These database marketing systems
play an important role in our targeting efforts.
- OPERATING DISCIPLINE AND TIGHT COST CONTROLS. We emphasize in our
operations the importance of serving our customers, maintaining our
properties and providing a quality guest experience. We are, however,
continually mindful of the operating discipline required to do all of
this on a cost-effective basis. We work towards the optimal balance:
providing a great time for our customers while maintaining an attractive
operating margin.
- PROPERTY SPECIFIC STRATEGIES. We believe that each of our properties
operates in a unique market environment. We tailor the operating strategy
of each property to capitalize on these distinctive market dynamics.
TROPICANA ATLANTIC CITY.
Tropicana Casino and Resort is located on approximately 10 acres of land
with 220 yards of ocean frontage along the boardwalk in Atlantic City. The
primary target market for Tropicana Atlantic City is the area consisting of New
Jersey, New York, and Pennsylvania. Based on the most recent census data, there
are approximately 25 million persons within a 120-mile radius of Atlantic City
and 58 million persons within a 300-mile radius. The Atlantic City gaming market
has historically demonstrated continued growth despite the emergence of new
gaming venues across the country. The 12 hotel casinos in Atlantic City
generated approximately $4.0 billion in gaming revenues in 1998. There are
3
<PAGE> 10
several infrastructure developments that have recently been completed or which
are underway that may attract additional people to Atlantic City. These
developments include new housing and retail development, an upgrade and
expansion of the Atlantic City International Airport and a new convention center
with the largest exhibition space between New York and Washington D.C.
We expanded and renovated the Tropicana Atlantic City during 1995 and the
first half of 1996. The expansion included a 604-room hotel tower with a
concierge floor consisting of six large penthouse suites. We also constructed a
new hotel lobby, refurbished all of the existing hotel rooms and developed a new
entrance designed to improve traffic circulation throughout the casino. In
addition, we made extensive improvements to the casino. During 1997, we added
new casino facilities including the Change Your Life Casino which has been
designed to attract retail slot and video game players and the Crystal Room
which has been geared to appeal to the premium slot player. We also recently
constructed a new parking lot.
Our operating strategy is to focus on frequent visitors to Atlantic City.
We utilize our Atlantic City Tropicana database as the cornerstone of our
marketing efforts. Over 400,000 customers in our database were active in 1998,
providing approximately 1.8 million gaming patron days, an average of 4.5 gaming
days per player. These players generated in excess of $150 of revenue per gaming
day and accounted for approximately 73% of the Tropicana Atlantic City's casino
revenue in 1998. In addition, during weekends and peak demand periods, the
property has been reserving rooms for non-database cash paying patrons, insuring
availability of rooms for patrons who are new visitors to Atlantic City.
TROPICANA LAS VEGAS.
Tropicana Resort and Casino is located on an approximately 34-acre site on
the "Strip" in Las Vegas, Nevada. Together with the MGM Grand, Excalibur, Luxor,
Monte Carlo and New York-New York mega-resorts, the Tropicana Las Vegas is
located at the intersection known as the "New Four Corners" at Las Vegas
Boulevard and Tropicana Avenue. The Las Vegas gaming market consisted of
approximately 110,000 hotel rooms at the end of 1998. Gaming revenue in Las
Vegas grew to $5.0 billion in 1998.
Aztar leases the Tropicana Las Vegas, through our wholly-owned subsidiary,
from an unconsolidated partnership in which we have a noncontrolling 50%
interest. On February 2, 1998, we acquired an option to purchase the 50%
partnership interest that we do not own. The option agreement gives us an
unconditional right, but not the obligation, to purchase the partnership
interest for $120 million. This option agreement was amended on February 1, 1999
to extend the option until February 1, 2002.
The operating strategy at Tropicana Las Vegas is to exploit its unique
location in the "New Four Corners" area on the Las Vegas Strip where there are
over 18,000 hotel rooms in addition to ours. Our focus is on the mid-level
gaming business generated by these hotel rooms. We also continue to market to
drive-in customers from Southern California and to the convention and
tour-and-travel segments. Our goal is to maximize the operating cash flow of the
property while limiting capital expenditures.
While the Tropicana Las Vegas property provided less than 6% of our EBITDAR
in 1998, leaving us with limited current exposure in the Las Vegas market, it
offers an attractive long-term development opportunity. Ultimately, our goal is
to take advantage of the Tropicana Las Vegas' premier location at the "New Four
Corners" and its proximity to
4
<PAGE> 11
McCarran International Airport. We currently have no plan in place to redevelop
the Tropicana Las Vegas as current market conditions do not warrant a
redevelopment. The amount and timing of any future expenditure, and the extent
of any impact on existing operations, will depend on the nature of the
redevelopment that we ultimately undertake.
RAMADA EXPRESS.
Ramada Express Hotel and Casino is located on approximately 28 acres in
Laughlin, Nevada. Laughlin is situated on the Colorado River at Nevada's
southern tip. The Ramada Express features a Victorian-era railroad theme, which
includes a train that carries guests between the parking areas and the casino
hotel.
The Laughlin gaming market consists of approximately 11,000 rooms and its
gaming revenue for 1998 was $0.5 billion. The largest component of the Laughlin
market is comprised of customers over age 50. Accordingly, Ramada Express is
focused on providing an atmosphere that attracts these older customers and, in
particular, those who are retired or semi-retired. These customers make up the
fastest growing segment of gaming customers in Laughlin. We create events and
programs specifically geared to this older customer segment.
CASINO AZTAR EVANSVILLE.
Casino Aztar Evansville was the first gaming facility to open in Indiana.
It operates on the Ohio River in the heart of metropolitan Evansville and has
developed strong brand recognition in Southwest Indiana. The closest casino
property is approximately 100 miles and over a two-hour drive away. Based on the
most recent census data, approximately 400,000 persons reside within a 30-mile
radius of the property, approximately 850,000 persons live within a 60-mile
radius, and almost four million persons live within a 120-mile radius, which
includes the metropolitan Louisville, Kentucky area.
Casino Aztar Evansville is marketed to capture the patronage of the locals
market. Since the opening of our Evansville property in 1995, the property has
developed a strong base of loyal repeat customers and a reputation for good food
and lively entertainment. The property's convenient location and parking
structure provide customers with easy access to the hotel and casino, a factor
that we believe is particularly important in attracting and retaining our
customers.
CASINO AZTAR CARUTHERSVILLE.
Casino Aztar Caruthersville operates on a 37-acre site on the Mississippi
River in Caruthersville, Missouri. The property is located in the "boot heel" of
Missouri in close proximity to I-55, the major north-south interstate running
along the Mississippi River. It serves the southeast Missouri market including
the neighboring states of Illinois, Kentucky, Tennessee and Arkansas. Based on
the most recent census data, there are approximately 634,000 persons within a
60-mile radius of the property and three million persons within a 120-mile
radius, which includes metropolitan Memphis. We have positioned the property as
the local's community entertainment center, providing numerous targeted
attractions in addition to the casino.
5
<PAGE> 12
RECENT DEVELOPMENTS.
On April 7, 1999, we redeemed $75 million principal amount of our 11%
Senior Subordinated Notes due 2002. The redemption was funded with our revolving
bank credit facility and was the first part of our plan to restructure our debt
to reduce interest expense and increase financial flexibility. On June 2, 1999
we redeemed the remaining $125 million of our 11% Notes with a portion of the
proceeds from the May offering of the unregistered notes.
Effective April 30, 1999, Aztar and the lenders under the revolving bank
credit facility agreed to expand the maximum amount available under that
facility from $250 million to $300 million.
On May 18, 1999 Aztar announced that its board of directors has authorized
management to make discretionary repurchases of up to 3.5 million shares of its
common stock, or about eight percent of the shares of the common stock
outstanding. These repurchases, if any, may be made from time to time in the
open market or privately negotiated transactions, depending upon market prices
and other business factors. All Aztar stock repurchases are subject to covenants
in Aztar's senior subordinated note indentures and bank credit facility, the
most restrictive of which currently limits stock repurchases to $30 million.
6
<PAGE> 13
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
Securities to be Exchanged...... On May 3, 1999, we issued $235.0 million in
aggregate principal amount of unregistered
notes in a transaction exempt from the
registration requirements of the Securities
Act of 1933. The terms of the registered
notes and the unregistered notes are
substantially identical in all material
respects, except that the registered notes
will be freely transferable by the holders
of the registered notes except as otherwise
provided in this prospectus. See
"Description of Registered Notes."
The Exchange Offer.............. $1,000 principal amount of registered notes
will be exchanged for each $1,000 principal
amount of unregistered notes. As of the date
of this prospectus, unregistered notes
representing $235.0 million in aggregate
principal amount are outstanding.
Based on interpretations by the Commission's
staff set forth in no-action letters issued
to third parties unrelated to us, we believe
that registered notes issued pursuant to the
exchange offer in exchange for unregistered
notes may be offered for resale, resold or
otherwise transferred by holders of the
registered notes without compliance with the
registration and prospectus delivery
provisions of the Securities Act, unless
you:
- are our "affiliate" within the
meaning of Rule 405 promulgated under
the Securities Act;
- are a broker-dealer who purchased
unregistered notes directly from us
for resale pursuant to Rule 144A or
any other available exemption under
the Securities Act;
- are acquiring the registered notes in
the exchange offer other than in the
ordinary course of your business; or
- have an arrangement or understanding
with any person to engage in the
distribution of the registered notes.
However, the Commission has not considered
the exchange offer in the context of a
no-action letter and we cannot be sure that
the staff of the Commission would make a
similar determination with respect to the
exchange offer as in these other
circumstances. Furthermore, each holder,
other
7
<PAGE> 14
than a broker-dealer, must acknowledge that
it is not engaged in, and does not intend to
engage in, a distribution of the registered
notes and has no arrangement or
understanding to participate in a
distribution of registered notes. Each
broker-dealer that receives registered notes
for its own account pursuant to the exchange
offer must acknowledge that it will comply
with the prospectus delivery requirements of
the Securities Act in connection with any
resale of the registered notes. Broker-
dealers who acquired unregistered notes
directly from us and not as a result of
market-making activities or other trading
activities may not rely on the staff's
interpretations discussed above or
participate in the exchange offer and must
comply with the prospectus delivery
requirements of the Securities Act in order
to resell the unregistered notes.
Exchange and Registration Rights
Agreement..................... We sold the unregistered notes on May 3,
1999 in a private placement in reliance on
Section 4(2) of the Securities Act. The
unregistered notes were immediately resold
by the broker-dealers that participated in
the offering of those notes as initial
purchasers in reliance on Rule 144A and
Regulation S under the Securities Act. In
connection with the sale, we entered into an
exchange and registration rights agreement
with the initial purchasers of the
unregistered notes requiring us to make the
exchange offer. The exchange and
registration rights agreement also requires
us to use our best efforts:
- to cause the registration statement
with respect to the exchange offer to
become effective under the Securities
Act by October 30, 1999 and
- complete the exchange offer by
December 14, 1999.
See "The Exchange Offer -- Purpose and
Effect." If we do not do so, we will pay
special additional interest on the
unregistered notes at an initial per week
rate of 0.005%.
Expiration Date................. The exchange offer will expire at 5:00 p.m.,
New York City time, , 1999, or
a later date and time if we extend it.
8
<PAGE> 15
Withdrawal...................... The tender of the unregistered notes
pursuant to the exchange offer may be
withdrawn at any time prior to 5:00 p.m.,
New York City time, on
, 1999, or any
later date and time to which we extend the
offer. Any unregistered notes not accepted
for exchange for any reason will be returned
without expense to the tendering holder of
the unregistered notes as soon as
practicable after the expiration or
termination of the exchange offer.
Interest on the Registered Notes
and the Unregistered Notes...... Interest on the registered notes will accrue
from the date of the original issuance of
the unregistered notes or from the date of
the last payment of interest on the
unregistered notes, whichever is later. No
additional interest will be paid on
unregistered notes tendered and accepted for
exchange.
Conditions to the Exchange
Offer........................... The exchange offer is subject to customary
conditions, some of which may be waived by us. See "The Exchange
Offer -- Conditions to the Exchange Offer."
Procedures for Tendering
Unregistered Notes............ If you wish to accept the exchange offer,
you must complete, sign and date the letter
of transmittal, or a copy of the letter of
transmittal, in accordance with the
instructions contained in this prospectus
and in the letter of transmittal, and mail
or otherwise deliver the letter of
transmittal, or the copy, together with the
unregistered notes and all other required
documentation, to the exchange agent at the
address set forth in this prospectus. If you
are a person holding the unregistered notes
through the Depository Trust Company and
wish to accept the exchange offer, you must
do so pursuant to the DTC's Automated Tender
Offer Program, by which you will agree to be
bound by the letter of transmittal. By
executing or agreeing to be bound by the
letter of transmittal, you will represent to
us that, among other things:
- the registered notes acquired
pursuant to the exchange offer are
being obtained in the ordinary course
of business of the person receiving
the registered notes, whether or not
that person is the registered holder
of the unregistered notes;
9
<PAGE> 16
- the holder is not engaging in and
does not intend to engage in a
distribution of the registered notes;
- the holder does not have an
arrangement or understanding with any
person to participate in a
distribution of the registered notes;
and
- the holder is not our "affiliate," as
defined under Rule 405 under the
Securities Act.
Pursuant to the exchange and registration
rights agreement if:
- we are not permitted to consummate
the exchange offer because the
exchange offer is not permitted by
applicable law or Commission policy;
or
- specified holders of unregistered
notes notify us within 20 days after
consummation of the exchange offer:
- that they are prohibited by law
or Commission policy from
participating in the exchange
offer;
- that they may not resell the
registered notes acquired by
them in the exchange offer to
the public without delivering a
prospectus and that this
prospectus is not appropriate or
available for these resales; or
- that they are broker-dealers and
own unregistered notes acquired
directly from us or one of our
affiliates,
we may be required to file a "shelf"
registration statement for a continuous
offering pursuant to Rule 415 under the
Securities Act in respect of the
unregistered notes.
We will accept for exchange any and all
unregistered notes which are properly
tendered (and are not withdrawn) in the
exchange offer prior to 5:00 p.m., New York
City time, on , 1999. The
registered notes issued pursuant to the
exchange offer will be delivered promptly
following the expiration date. See "The
Exchange Offer -- Terms of the Exchange
Offer."
10
<PAGE> 17
Exchange Agent.................. U.S. Bank National Association is serving as
exchange agent in connection with the
exchange offer.
Federal Income
Tax Considerations............ The exchange of unregistered notes for
registered notes pursuant to the exchange
offer should not constitute a sale or an
exchange for federal income tax purposes.
See "Material United States Federal Tax
Considerations."
Effect of Not Tendering......... Unregistered notes that are not tendered or
that are tendered but not accepted will,
following the completion of the exchange
offer, continue to be subject to the
existing restrictions on transfer. Except as
noted above, we will have no further
obligation to provide for the registration
under the Securities Act of these
unregistered notes.
11
<PAGE> 18
SUMMARY OF THE TERMS OF THE REGISTERED NOTES
The form and terms of the registered notes are the same as the form and
terms of the unregistered notes, except that the registered notes will be
registered under the Securities Act and will not contain any legends restricting
their transfer. The registered notes will evidence the same debt as the
unregistered notes and both the unregistered notes and the registered notes,
collectively, the "notes", are governed by the same indenture. The following
summary of terms applies equally to the registered notes and the unregistered
notes.
Issuer.......................... Aztar Corporation
2390 East Camelback Road, Suite 400
Phoenix, Arizona 85016
(602) 381-4100
Total amount of registered notes
offered....................... $235 million principal amount of 8 7/8%
Senior Subordinated Notes due 2007.
Maturity........................ May 15, 2007.
Interest........................ Annual fixed rate 8 7/8%.
Payment frequency -- every six months on May
15 and November 15. First
payment -- November 15, 1999.
Ranking......................... The registered notes are senior subordinated
debt.
They rank behind all of our current and
future indebtedness except for the 13 3/4%
Notes, trade payables and indebtedness that
expressly provides otherwise. The registered
notes will effectively rank junior to all
liabilities of our subsidiaries, including
trade and construction payables.
As of April 1, 1999, on a pro forma basis
after giving effect to our redemption on
April 7, 1999 of $75 million of our 11%
Notes, the May 3, 1999 offering of the
unregistered notes, and the application of
the net proceeds from the May offering to
redeem the remaining $125 million of our 11%
Notes and repay a portion of the outstanding
borrowings under our revolving bank credit
facility:
- we would have had outstanding $71
million of senior indebtedness that
ranked prior to the registered notes;
- we would have had outstanding $180
million of senior subordinated
indebtedness that ranked equally with
the registered notes; and
- our subsidiaries would have had
outstanding $66 million of other
liabilities.
12
<PAGE> 19
Optional Redemption............. At any time on or after May 15, 2003, we may
redeem some or all of the registered notes
at any time at the redemption prices listed
in the section "Description of Registered
Notes" under the heading "Optional
Redemption".
In addition, prior to May 15, 2003, we may
redeem some or all of the registered notes
at a price equal to 100% of the principal
amount plus the premium described in the
next sentence plus accrued and unpaid
interest, if any, to the redemption date.
The redemption premium will be equal to the
greater of (1) 1% of the principal amount
and (2) the excess of (A) the sum of the
present values of (i) 104.438% of the
principal amount and (ii) all required
interest payments through May 15, 2003,
excluding accrued but unpaid interest,
computed in each case using a discount rate
equal to the treasury rate at the time of
redemption plus 50 basis points over (B) the
principal amount.
Mandatory Offer to Repurchase... If we experience specific kinds of changes
of control, we must offer to repurchase the
registered notes at the prices listed in the
section "Description of Registered Notes"
under the heading "Repurchase Upon a Change
of Control".
Basic Covenants of Indenture.... We will issue the registered notes under an
indenture with U.S. Bank National
Association. The indenture will, among other
things, restrict our ability to:
- borrow money;
- pay dividends on stock or purchase
stock;
- make investments in affiliates;
- use assets as security in other
transactions; and
- merge with or into other companies.
These covenants are subject to important
exceptions. For more details, see the
section "Description of Registered Notes"
under the heading "Covenants".
Use of Proceeds................. We will not receive any cash proceeds from
the issuance of the registered notes.
Risk Factors.................... See "Risk Factors" for a discussion of some
factors you should carefully consider,
including factors affecting forward-looking
statements.
13
<PAGE> 20
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary consolidated financial and operating
data of Aztar and its subsidiaries. The summary financial operating and balance
sheet data as of and for each of the five fiscal years in the period ended
December 31, 1998 were derived from the audited consolidated financial
statements of Aztar and its subsidiaries. The summary financial, operating and
balance sheet data for the fiscal quarters ended April 2, 1998 and April 1, 1999
are derived from the unaudited interim consolidated financial statements of
Aztar and its subsidiaries. Aztar believes that these interim financial results
reflect all adjustments, these adjustments being normal recurring accruals,
which are necessary, in the opinion of management, for the fair presentation of
the results of the interim periods. The interim period, however, may not be
indicative of the results for the full year. Information for the 12 months ended
April 1, 1999 represents the information for the year ended 1998 minus the
quarter ended April 2, 1998 plus the quarter ended April 1, 1999. Results of
this period may not be indicative of results for the full year. All references
to Aztar's fiscal year refer to the 52 or 53 weeks ended on the Thursday nearest
to December 31. For additional information, see the consolidated financial
statements of Aztar and its subsidiaries appearing elsewhere in this prospectus.
The summary financial data should also be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------------------
1994 1995 1996 1997 1998
-------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT FOR RATIOS AND OTHER OPERATING DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues................................ $541,440 $ 572,869 $ 777,472 $ 782,357 $ 806,136
Operating income........................ 69,407 42,701 58,943 67,392 81,646
Net interest income (expense)........... (46,572) (47,801) (56,210) (60,517) (57,434)
Equity in unconsolidated partnership's
loss.................................. (4,169) (5,081) (4,793) (4,618) (4,336)
Income taxes............................ (1,862) 5,187 22,699 2,185 (8,368)
Income (loss) before extraordinary
items................................. 16,804 (4,994) 20,639 4,442 11,508
Extraordinary items(1).................. (2,708) -- -- -- (1,346)
Net income (loss)....................... 14,096 (4,994) 20,639 4,442 10,162
Ratio of earnings to fixed charges(2)... 1.29x -- -- 1.05x 1.31x
Fixed charges in excess of earnings..... -- 14,511 5,589 -- --
BALANCE SHEET DATA(3)(:)
Cash and cash equivalents............... $ 43,861 $ 26,527 $ 44,131 $ 46,129 $ 58,600
Total assets.......................... 915,359 1,013,238 1,119,582 1,091,496 1,077,702
Long-term debt.......................... 430,212 496,439 527,006 491,932 487,543
Series B ESOP convertible preferred
stock................................. 4,711 5,459 6,022 6,593 7,147
Shareholders' equity.................... 361,368 359,659 439,274 444,038 454,101
OTHER FINANCIAL DATA:
EBITDAR(4).............................. $116,330 $ 101,227 $ 126,980 $ 140,279 $ 154,512
Net cash provided by (used in) operating
activities............................ 61,633 59,175 48,139 49,489 86,401
Net cash provided by (used in) investing
activities............................ (68,409) (143,117) (124,472) (23,327) (30,640)
Net cash provided by (used in) financing
activities............................ 11,086 66,608 93,937 (24,164) (43,290)
Purchases of property and equipment..... 54,442 135,863 120,426 25,117 25,088
OTHER OPERATING DATA(3):
Number of hotel rooms................... 4,426 4,428 5,249 5,249 5,246
Number of slot machines................. 6,033 8,081 8,400 8,896 8,746
Number of table games................... 193 290 365 377 348
<CAPTION>
TWELVE
MONTHS QUARTER ENDED
ENDED -------------------------
APRIL 1, APRIL 2, APRIL 1,
1999 1998 1999
----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT FOR RATIOS AND OTHER OPERATING DATA)
<S> <C> <C> <C>
OPERATING DATA:
Revenues................................ $ 799,855 $ 196,825 $ 190,544
Operating income........................ 84,450 16,866 19,670
Net interest income (expense)........... (56,582) (14,720) (13,868)
Equity in unconsolidated partnership's
loss.................................. (4,219) (1,125) (1,008)
Income taxes............................ (9,907) (403) (1,942)
Income (loss) before extraordinary
items................................. 13,742 618 2,852
Extraordinary items(1).................. (1,346) -- --
Net income (loss)....................... 12,396 618 2,852
Ratio of earnings to fixed charges(2)... 1.37x 1.07x 1.32x
Fixed charges in excess of earnings..... -- -- --
BALANCE SHEET DATA(3)(:)
Cash and cash equivalents............... $ 40,606 $ 31,532 $ 40,606
Total assets.......................... 1,052,811 1,063,440 1,052,811
Long-term debt.......................... 478,831 484,447 478,831
Series B ESOP convertible preferred
stock................................. 7,252 6,733 7,252
Shareholders' equity.................... 456,799 444,535 456,799
OTHER FINANCIAL DATA:
EBITDAR(4).............................. $ 156,073 $ 35,349 $ 36,910
Net cash provided by (used in) operating
activities............................ 79,505 6,717 (179)
Net cash provided by (used in) investing
activities............................ (32,590) (6,230) (8,180)
Net cash provided by (used in) financing
activities............................ (37,841) (15,084) (9,635)
Purchases of property and equipment..... 27,038 3,862 5,812
OTHER OPERATING DATA(3):
Number of hotel rooms................... 5,247 5,177 5,247
Number of slot machines................. 8,678 8,853 8,678
Number of table games................... 341 380 341
</TABLE>
14
<PAGE> 21
- -------------------------
(1) During 1998, Aztar expensed the remaining unamortized deferred financing
costs associated with debt that was extinguished and recorded an
extraordinary loss of $1,346,000, which was net of an income tax benefit of
$725,000. During 1994, Aztar expensed the remaining unamortized deferred
financing costs and unamortized discount associated with debt that was
extinguished and recorded an extraordinary loss of $2,708,000, which was net
of an income tax benefit of $1,776,000.
(2) For purposes of determining the ratio of earnings to fixed charges, the term
"earnings" represents income (loss) from continuing operations before income
taxes and extraordinary items, plus fixed charges excluding capitalized
interest. The term "fixed charges" represents interest expense (including
amortization of debt issuance expense), capitalized interest and the portion
of operating lease rental expense considered to be representative of an
interest factor.
(3) Balance Sheet Data and Other Operating Data represent end of period data.
(4) EBITDAR means operating income before depreciation and amortization, rent
and preopening costs. EBITDAR should not be construed as an alternative to
operating income (as determined in accordance with generally accepted
accounting principles) as an indicator of Aztar's operating performance, or
to cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of liquidity. EBITDAR
information has been included to facilitate comprehension of financial
covenants in the indenture for the notes which are based, in part, on
EBITDAR. Our calculation of EBITDAR may not be comparable to similarly
titled measures reported by other companies.
15
<PAGE> 22
RISK FACTORS
You should carefully consider the following factors in addition to the
other information set forth in this prospectus before exchanging your
unregistered notes. Many of the risk factors set forth below are equally
applicable to the unregistered notes.
FAILURE TO EXCHANGE UNREGISTERED NOTES -- YOUR FAILURE TO TENDER YOUR
UNREGISTERED NOTES IN THE EXCHANGE OFFER COULD LIMIT THE TRADING MARKET AND
TRADING VALUE OF YOUR UNREGISTERED NOTES.
We will only issue registered notes in exchange for unregistered notes that
are timely received by the exchange agent together with all required documents,
including a properly completed and signed letter of transmittal. Therefore, you
should allow sufficient time to ensure timely delivery of the unregistered notes
and you should carefully follow the instructions on how to tender your
unregistered notes. Neither we nor the exchange agent are required to tell you
of any defects or irregularities with respect to your tender of the unregistered
notes. If you do not tender your unregistered notes or if we do not accept your
unregistered notes because you did not tender your unregistered notes properly,
then, after we consummate the exchange offer, you may continue to hold
unregistered notes that are subject to the existing transfer restrictions. In
addition, if you tender your unregistered notes for the purpose of participating
in a distribution of the registered notes, you will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the registered notes. If you are a broker-dealer
that receives registered notes for your own account in exchange for unregistered
notes that you acquired as a result of market-making activities or any other
trading activities, you will be required to acknowledge that you will deliver a
prospectus in connection with any resale of those registered notes.
The trading market for unregistered notes that are not exchanged in the
exchange offer could be adversely affected due to the limited amount, or
"float," of the unregistered notes that are expected to remain outstanding
following the exchange offer. Generally, a lower "float" of a security could
result in less demand to purchase that security and could, therefore, result in
lower prices for that security. For the same reason, to the extent that a large
amount of unregistered notes are not exchanged in the exchange offer, the
trading market for the unregistered notes could be adversely affected. See "Plan
of Distribution" and "The Exchange Offer."
SUBSTANTIAL LEVERAGE -- OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR
FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THESE
REGISTERED NOTES.
We have now and, after the exchange offer, will continue to have a
significant amount of debt. The following chart shows important credit
statistics and is presented on a pro forma basis after giving effect to our
April 7, 1999 redemption of $75 million of our 11% Notes, the May 3, 1999
offering of the unregistered notes and the application of the net
16
<PAGE> 23
proceeds from the May offering to redeem the remaining $125 million of our 11%
Notes and repay a portion of the outstanding borrowings under our revolving bank
credit facility:
<TABLE>
<CAPTION>
PRO FORMA AS OF
APRIL 1, 1999
--------------------------------------------
(IN MILLIONS, EXCEPT RATIO DATA, UNAUDITED)
<S> <C>
Total debt....................... $490.7
Stockholders' equity............. $452.7
Debt to equity ratio............. 1.08 x
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
FOR THE QUARTER ENDED
APRIL 1, 1999
--------------------------------------------
<S> <C>
Ratio of earnings to fixed
charges........................ 1.33 x
</TABLE>
In addition to our consolidated indebtedness, as of April 1, 1999, there
was approximately $59.4 million of off-balance sheet bank financing outstanding
at Tropicana Enterprises, the partnership that owns the land and improvements
constituting Tropicana Las Vegas. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and capital
resources." Hotel Ramada of Nevada, Aztar's wholly-owned subsidiary, leases
Tropicana Las Vegas from Tropicana Enterprises under a lease that expires in
2011. Tropicana Enterprises is an unconsolidated partnership in which Aztar has
a 50% interest. Hotel Ramada of Nevada's lease payments under the Tropicana Las
Vegas lease finance the payments required under Tropicana Enterprises' bank term
loan. Some property of Hotel Ramada of Nevada, including furniture, fixtures and
equipment, is pledged as collateral for Tropicana Enterprises' bank term loan.
Aztar has guaranteed the performance of Hotel Ramada of Nevada's obligations
under the lease, including the payment of rent.
Our substantial indebtedness could have important consequences to you. For
example, it could:
- make it more difficult for us to satisfy our obligations with respect to
these registered notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to fund future working capital, capital expenditures,
development costs and other general corporate requirements;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, development efforts and other general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the gaming industry;
- place us at a competitive disadvantage compared with our competitors that
have less debt; and
- limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional funds.
17
<PAGE> 24
See "Description of Registered Notes -- Repurchase Upon a Change of
Control" and "Description of Specific Indebtedness -- Bank credit facility."
We are required to maintain specified ratios and meet specified financial
condition tests under our existing debt agreements. If we do not comply with
these ratios and financial condition tests or any of the other restrictions in
our debt agreements, an event of default could occur. An event of default could
have a material adverse effect on our business if it is not cured or waived.
Also, if we default under our bank credit facility, the lenders could accelerate
the debt that we owe to them. If we are unable to pay those amounts, the lenders
under our bank credit facility could proceed against the collateral granted to
them to secure the debt outstanding. We cannot guarantee that in this event we
would have, or be able to obtain, sufficient funds to make these accelerated
payments, including payments on the registered notes.
ADDITIONAL BORROWINGS AVAILABLE -- DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND
OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD
FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries may be able to incur substantial additional debt in
the future. The terms of the indenture do not fully prohibit us or our
subsidiaries from doing so. In addition, if we designate some of our restricted
subsidiaries as unrestricted subsidiaries, those unrestricted subsidiaries would
be permitted to borrow beyond the limitations specified in the indenture and
engage in other activities in which restricted subsidiaries may not engage. As
of April 1, 1999, on a pro forma basis after giving effect to our redemption on
April 7, 1999 of $75 million of our 11% Senior Subordinated Notes due 2002, the
May 3, 1999 offering of the unregistered notes, the application of the net
proceeds from the May offering to redeem the remaining $125 million of our 11%
Notes and repay a portion of the outstanding borrowings under our revolving bank
credit facility, and the April 30, 1999 expansion of our revolving bank credit
facility to $300 million, our revolving bank credit facility would permit
additional borrowings of up to $281 million and all of those borrowings would be
senior to the registered notes. If new debt is added to our and our
subsidiaries' current debt levels, the related risks that we and they now face
could intensify.
See "Capitalization," "Summary Consolidated Financial Information,"
"Description of Registered Notes -- Repurchase Upon a Change of Control" and
"Description of Specific Indebtedness -- Bank credit facility."
ABILITY TO SERVICE DEBT -- TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness,
including these registered notes, and to fund planned capital expenditures and
development efforts will depend on our ability to generate cash in the future.
This, to some extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. Based on
our current level of operations and anticipated cost savings and operating
improvements, we believe our cash flow from operations, available cash and
available borrowings under our bank credit facility will be adequate to meet our
future liquidity needs for at least the next few years.
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We cannot assure you, however, that our business will generate sufficient
cash flow from operations, or that future borrowings will be available to us
under our bank credit facility in an amount sufficient to enable us to pay our
indebtedness, including these registered notes, or to fund our other liquidity
needs. We may need to refinance all or a portion of our indebtedness, including
these notes, on or before maturity. We cannot assure you that we will be able to
refinance any of our indebtedness, including our credit facility and these
registered notes, on commercially reasonable terms or at all. If we are unable
to generate sufficient cash flow and are unable to refinance or extend
outstanding borrowings, we may have to:
- reduce or delay planned expansion and capital expenditures;
- sell assets;
- restructure debt; or
- obtain additional equity or debt financing.
We cannot assure you that we could effect any of these financing strategies
on satisfactory terms, if at all. In addition, some state laws restrict the
ability of companies engaged in the gaming business to undertake some financing
transactions. These restrictions may prevent us from obtaining necessary
capital.
SUBORDINATION -- YOUR RIGHT TO RECEIVE PAYMENTS ON THESE NOTES IS JUNIOR TO SOME
OF OUR EXISTING INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS.
These registered notes rank behind all of our existing indebtedness and all
of our future borrowings other than our 13 3/4% Notes, trade payables, and any
future indebtedness that expressly provides that it ranks equal with, or
subordinated in right of payment to, these registered notes. As a result, upon
any distribution to our creditors in a bankruptcy, liquidation or reorganization
or similar proceeding relating to us or our property, the holders of our senior
debt will be entitled to be paid in full in cash before any payment may be made
with respect to these registered notes. Further, our bank credit facility is
secured by substantially all of our assets and those of our material
subsidiaries.
In addition, all payments on these notes will be blocked in the event of a
payment default on senior debt and may be blocked for up to 179 of 360
consecutive days in the event of non-payment defaults on senior debt.
In the event of our bankruptcy, liquidation or reorganization or similar
proceeding, holders of these registered notes will participate with the holders
of any outstanding 13 3/4% Notes, trade creditors and all other holders of our
subordinated indebtedness in the assets remaining after we have paid all of our
senior debt. However, because the indenture for these registered notes requires
that amounts otherwise payable to holders of these notes in a bankruptcy or
similar proceeding be paid to holders of senior debt instead, holders of these
registered notes may receive less, ratably, than holders of trade payables in
any such proceeding. In any of these cases, we may not have sufficient funds to
pay all of our creditors and holders of registered notes may receive less,
ratably, than the holders of senior debt.
The registered notes will effectively rank junior to all liabilities of our
subsidiaries, including trade and construction payables. As of April 1, 1999, on
a pro forma basis after giving effect to our redemption on April 7, 1999 of $75
million of our 11% Notes, the
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May 3, 1999 offering of the unregistered notes, and the application of the net
proceeds from the May offering to redeem the remaining $125 million of our 11%
Notes and repay a portion of the outstanding borrowings under our revolving bank
credit facility, we would have had outstanding $71 million of senior
indebtedness that ranked prior to the registered notes, $180 million of senior
subordinated indebtedness that ranked equally with the registered notes and our
subsidiaries would have had outstanding $66 million of other liabilities. In
addition, giving effect to the April 30, 1999 expansion of our revolving credit
facility to $300 million, approximately $281 million would have been available
for borrowing as additional senior debt under our bank credit facility. We will
be permitted to borrow substantial additional indebtedness, including senior
debt, in the future under the terms of the indenture.
SUBORDINATION TO SUBSIDIARY DEBT -- YOUR RIGHT TO RECEIVE PAYMENTS ON THESE
REGISTERED NOTES COULD BE ADVERSELY AFFECTED IF ANY OF OUR SUBSIDIARIES DECLARES
BANKRUPTCY, LIQUIDATES, OR REORGANIZES.
Aztar is organized as a holding company. We conduct all of our operations
through our subsidiaries and depend on the earnings and cash flows of our
subsidiaries to meet our debt and dividend obligations, including our
obligations with respect to these registered notes. Our subsidiaries have other
liabilities, including contingent liabilities, which could be substantial. Our
subsidiaries' assets constitute all of our operating assets. Because our
subsidiaries do not guaranty the payment of principal and interest on the
registered notes, holders of the registered notes will have no direct claim on
our subsidiaries' assets. Therefore, all existing and future obligations of our
subsidiaries, including debt, taxes, trade and construction payables, must be
paid in full before any amounts would become available for distribution to the
noteholders.
In the event of a bankruptcy, liquidation or reorganization of any of our
subsidiaries, holders of their indebtedness and their trade creditors will
generally be entitled to payment of their claims from the assets of those
subsidiaries before any assets are made available for distribution to us. As of
April 1, 1999, on a pro forma basis, these registered notes would have been
effectively junior to $137 million of indebtedness and other liabilities
(including trade payables) of our subsidiaries and approximately $281 million
would have been available to our subsidiaries for future borrowing under our
bank credit facility, giving effect to the April 30, 1999 expansion of our
revolving credit facility to $300 million.
FINANCING CHANGE OF CONTROL OFFER -- WE MAY NOT HAVE THE ABILITY TO RAISE THE
FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE
UPON SPECIFIC KINDS OF CHANGE OF CONTROL EVENTS.
Upon the occurrence of specific kinds of change of control events, we will
be required to offer to repurchase all outstanding registered notes. However, it
is possible that we will not have sufficient funds at the time of the change of
control to make the required repurchase of registered notes or that restrictions
in our bank credit facility will not allow this repurchase. In addition, some
important corporate events, including leveraged recapitalizations, that would
increase the level of our indebtedness, would not constitute a "Change of
Control" under the indenture. See "Description of Registered Notes -- Repurchase
Upon a Change of Control."
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NO PRIOR MARKET FOR NOTES -- YOU CANNOT BE SURE THAT AN ACTIVE TRADING MARKET
WILL DEVELOP FOR THESE REGISTERED NOTES.
The registered notes are a new issue of securities for which there is
currently no trading market. The registered notes will not be listed on any
securities exchange. The registered notes may trade at a discount from their
initial offering price, depending upon prevailing interest rates, the market for
similar securities, our performance and other factors. Prior to the May offering
of unregistered notes, there had been no market for the unregistered notes.
Since the issuance of the unregistered notes, there has been a limited trading
market for the notes and we cannot guarantee that this market will provide
adequate liquidity for holders who want to sell their notes. We have been
informed by the lead broker-dealer who participated in the offering of the
unregistered notes as an initial purchaser that they intend to make a market in
the registered notes, as well as the unregistered notes, as permitted by
applicable laws and regulations. However, the initial purchasers may cease their
market-making at any time. In addition, their market making activities may be
limited during the exchange offer and the pendency of a shelf registration
statement. Therefore, an active market for the registered notes may not develop.
See "The Exchange Offer" and "Plan of Distribution."
MANDATORY DISPOSITION -- YOU MAY BE REQUIRED TO DISPOSE OF OR REDEEM THE NOTES
PURSUANT TO GAMING LAWS.
The New Jersey and Nevada gaming authorities may currently require a holder
of the registered notes to be licensed or found qualified or suitable under
applicable laws and regulations. Missouri gaming authorities also have broad
authority to require some persons or entities, including the holders of
registered notes, to submit license applications and be licensed or found
qualified or suitable. It is possible that gaming authorities in other
jurisdictions could impose similar requirements. If, at any time, a holder of
registered notes is required to be licensed or found qualified under any
applicable gaming laws or regulations and that holder does not become so
licensed or found qualified or suitable, we will have the right, at our option,
- to require that holder of registered notes to dispose of all or a portion
of those registered notes within 120 days after the holder receives
notice of that finding, or at some other time as prescribed by the
applicable gaming authorities, or
- to redeem the registered notes of that holder upon not less than 30 nor
more than 60 days prior notice, or some other time period as may be
prescribed by the applicable gaming authorities.
TROPICANA ATLANTIC CITY -- WE DEPEND ON THE RESULTS OF TROPICANA ATLANTIC CITY.
ANY MATERIAL ADVERSE EFFECT ON THE OPERATIONS OF TROPICANA ATLANTIC CITY WOULD
HAVE A MATERIAL ADVERSE EFFECT ON US.
Approximately 52% of our consolidated revenues and 81% of our operating
income for the year ended December 31, 1998 were derived from the operations of
Tropicana Atlantic City. Because of the importance of the Tropicana Atlantic
City to our consolidated operating results, poor performance at Tropicana
Atlantic City could have a material adverse effect on us. Tropicana Atlantic
City experiences seasonal fluctuations in casino play that management believes
are typical of casino hotel operations in Atlantic City. Operating results
indicate that casino play is seasonally higher from May through October.
Consequently, our revenues during the first and fourth quarters have generally
been lower
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than for the second and third quarters, and from time to time we have
experienced losses in the first and fourth quarters. Any event that adversely
affects the operating results of Tropicana Atlantic City could have a material
adverse effect on our operations and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Operating Results." In addition, competition is expected to
intensify in the Atlantic City market in light of recent and proposed expansion
and new development activities. See "-- Competition."
TROPICANA LAS VEGAS -- OUR POTENTIAL REDEVELOPMENT OPPORTUNITY AT TROPICANA LAS
VEGAS IS HIGHLY UNCERTAIN, WOULD REQUIRE THIRD PARTY FINANCING AND ENTAILS
SIGNIFICANT RISKS.
While the redevelopment of Tropicana Las Vegas could present a good
opportunity in the future, we believe that current market conditions do not
justify this redevelopment. Moreover, we cannot assure you that we will ever
redevelop Tropicana Las Vegas. If market conditions change and we decide to move
forward with this redevelopment, the project would be risky. Any large scale
development activities would require financing from third parties, which we may
not be able to obtain on satisfactory terms, if at all. A project of this nature
can entail significant development and construction risks which can give rise to
delays or cost overruns, cause major disruptions to existing operations and
might require a temporary closing of part or all of the operations of Tropicana
Las Vegas. In addition, we would need to obtain state and local approvals. We
would need to restructure our relationship with Tropicana Enterprises and
perhaps exercise our option to purchase the remaining 50% partnership interest
of Tropicana Enterprises which we do not own. If we undertook this redevelopment
project we could not assure you that we could complete these or other steps
necessary to complete the project in a timely manner, or at all.
COMPETITION -- INTENSE COMPETITION COULD RESULT IN OUR LOSING MARKET SHARE OR
PROFITABILITY.
We face intense competition in each of the markets in which our land-based
gaming facilities are located. All of our casinos primarily compete with other
casinos in their geographic market and, to a lesser extent, with casinos in
other locations, including on Native American lands and on cruise ships, and
with other forms of legalized gaming in the United States, including state
sponsored lotteries, off-track wagering and card parlors. We expect this
competition to intensify as new gaming operators enter our markets and existing
competitors expand their operations. Some of our competitors have significantly
greater financial resources than us and as a result we may not be able to
successfully compete against them in the future. Several states have considered
legalizing casino gaming and others may in the future. Legalization of
large-scale, unlimited casino gaming in or near any major metropolitan area or
increased gaming in other areas could have an adverse economic impact on the
business of any or all of our gaming facilities, by diverting our customers to
competitors in those areas. In particular, the expansion of casino gaming in or
near any geographic area from which we attract or expect to attract a
significant number of our customers could have a material adverse effect on us.
Legislation is currently pending in Illinois that would allow riverboat
operators to conduct dockside gaming, lifting the cruising requirement for
Illinois riverboats. If this legislation is enacted, it will allow customers to
board at will, while customers at riverboat casinos in neighboring states,
including Missouri and Indiana, have to wait for boarding intervals. This added
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flexibility could enhance the ability of Illinois riverboats to compete with
Aztar's facilities in Evansville and Caruthersville.
Atlantic City. Tropicana Atlantic City competes with 11 other casinos in
Atlantic City. It also competes with two large Native American casinos in
Connecticut. Several companies have announced a desire to open new casino hotels
or expand existing properties in Atlantic City. The Atlantic City market also
faces additional future competition from the growing Native American casinos in
Connecticut and the possibility of competition from the potential legalization
of casino gaming in Delaware, Maryland, New York and Pennsylvania.
Las Vegas. Tropicana Las Vegas operates in the intensely competitive Las
Vegas market. There have recently been several major new casino hotels opened on
the Las Vegas strip and additional major casinos are under development, one of
which is expected to open in 1999. We cannot assure you that we will be able to
compete successfully with this additional capacity in this active market of
mega-casinos.
Laughlin. We compete with several other casinos in Laughlin. We also
compete with casinos outside of Laughlin, including the Mojave tribe's casino
hotel located approximately 8 miles south of Laughlin. The Laughlin market is
also affected by the Native American casinos in Arizona and California and
additional capacity in Las Vegas and the surrounding area.
Evansville. Casino Aztar Evansville competes primarily with an Indiana
riverboat in the Louisville, Kentucky market area that opened in November 1998
and a riverboat casino in Metropolis, Illinois. Casino Aztar Evansville also
competes with other Indiana riverboat casinos on the Ohio River in the
Cincinnati, Ohio market area and to a lesser extent with riverboat casinos in
other Indiana locations, none of which are in its primary 50-mile radius market
area. In fiscal December 1998, Casino Aztar Evansville had an 18% decrease in
casino revenue compared with fiscal December 1997 and in the first quarter of
1999 Casino Aztar Evansville had a 16% decrease in casino revenue compared with
the first quarter of 1998. We believe that these decreases were due to the
increased competition and severe winter weather in Evansville's feeder markets
in the last week of December 1998 and in January 1999. We anticipate a decrease
in casino revenue in 1999 compared with 1998 as a result of competition from a
new riverboat in the Louisville, Kentucky market area. In addition, the Indiana
Gaming Commission recently granted another operator a certificate of suitability
to operate a casino 35 miles southwest of Cincinnati, which is expected to open
in mid- to late-2000. Casino Aztar Evansville may also face additional future
competition from the potential legalization of casino gaming in Kentucky.
Caruthersville. Casino Aztar Caruthersville competes primarily with other
riverboat casinos in nearby states, including a riverboat in Metropolis,
Illinois and riverboat casinos in Mississippi. Casino Aztar Caruthersville also
competes to a lesser extent with riverboat casinos in other cities in Missouri,
none of which are in its primary 60-mile radius market area. Casino Aztar
Caruthersville may also face additional future competition from the potential
legalization of casino gaming in Arkansas.
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YEAR 2000 READINESS -- OUR YEAR 2000 COMPLIANCE EFFORTS MAY REQUIRE SUBSTANTIAL
RESOURCES AND THE POSSIBLE FAILURE BY US OR OTHER THIRD PARTIES TO BE YEAR 2000
COMPLIANT POSES RISKS.
We depend on our computer software programs and operating systems to
conduct virtually all aspects of our business. The inability of these programs
and systems to function correctly after December 31, 1999, particularly in our
hotel or casino systems, could disrupt our operations and have a material
adverse effect on us. We are also exposed to the risk that one or more of our
suppliers could experience year 2000 problems that impact the ability of these
suppliers to provide goods and services to us. Though we may obtain alternative
suppliers, the disruption of some services, including utilities, could,
depending upon the extent of the disruption, have a material adverse impact on
our operations.
We have established a year 2000 readiness program based on a coordinated
effort between our corporate level and responsible parties at each of our
locations. We cannot assure you that our year 2000 program will be effective,
that our estimates about the timing and cost of completing our program will be
accurate, or that our third party suppliers will timely resolve any or all year
2000 problems with their systems. We are currently in the final phase of our
year 2000 readiness program for all critical information technology systems. We
have identified year 2000 problems with our non-information technology systems
and are currently analyzing and correcting or replacing these systems.
We estimate that the total cost of addressing our year 2000 issues will be
approximately $7.9 million. This cost estimate is based on numerous assumptions,
including the assumptions that we have already identified our most significant
year 2000 issues and that our third party suppliers will timely complete their
year 2000 programs without cost to us. However, we cannot guarantee that these
assumptions are accurate, and actual results could differ materially from those
anticipated. Contingency plans are being developed by property, considering risk
levels of year 2000 noncompliance.
REGULATION -- WE ARE SUBJECT TO EXTENSIVE REGULATION. OUR FAILURE TO COMPLY MAY
HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS.
Regulation by gaming authorities. We face extensive state and local
regulation on our ownership and operation of gaming facilities. The states and
localities in which we conduct gaming operations require us to hold various
licenses, findings of suitability, registrations, permits and approvals. The
various gaming regulatory authorities, including the Nevada Gaming Commission,
the Nevada State Gaming Control Board, the New Jersey Casino Control Commission,
the New Jersey Division of Gaming Enforcement, the Missouri Gaming Commission
and the Indiana Gaming Commission may, among other things, limit, condition,
suspend or revoke our gaming authorizations, including our ability to own the
securities of any of our gaming subsidiaries for any cause deemed reasonable by
these licensing authorities. Substantial fines or forfeiture of assets for
violations of gaming laws or regulations may be levied against us, our
subsidiaries and the persons involved. If we are ever precluded from operating
one of our gaming facilities, we cannot assure you that we would be able to
recover our full investment.
To date, we have obtained all governmental licenses, findings of
suitability, registrations, permits and approvals necessary for the operation of
our gaming facilities. However, there can be no assurance that we can obtain any
new licenses, findings of suitability, registrations, permits or approvals that
may be required in the future or that
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existing ones will not be suspended or revoked. If we expand any of our current
gaming facilities in New Jersey, Nevada, Indiana, or Missouri or into new
jurisdictions we must obtain all additional licenses, findings of suitability,
registrations, permits and approvals of the gaming authorities. The approval
process can be time consuming and costly and has no assurance of success. See
"Regulation and Licensing."
Regulation of our riverboats. The riverboat gaming and support facilities
that we operate must comply with U.S. Coast Guard requirements as to boat
design, on-board facilities, equipment, personnel and safety or requirements of
state and local law, including the requirements of state gaming authorities, or
both. If any of our riverboat gaming and support facilities fail to meet these
requirements, we might be forced to stop operating the casino on it or connected
with it. Each of the floating riverboat facilities must hold a Certificate of
Inspection or must be approved by the American Bureau of Shipping for
stabilization and flotation, and may also be subject to local zoning and
building codes, as well as additional requirements mandated by state law or by
the gaming regulatory authority with jurisdiction over the facilities. The U.S.
Coast Guard requirements establish design standards, set limits on the operation
of the cruising vessels and require individual licensing of all personnel
involved with the operation of the cruising vessels. Loss of a Certificate of
Inspection or American Bureau of Shipping approval or other approval mandated by
state law or by the gaming regulatory authority with respect to our riverboat
facilities would preclude its use as a floating casino. In addition, U.S. Coast
Guard regulations require a hull inspection at a U.S. Coast Guard-approved dry
docking facility or an underwater hull survey for all cruising riverboats at
five-year intervals and state and local authorities may have additional
inspection requirements. The travel to and from this docking facility, as well
as the time required for inspections, could be significant. The loss of a
dockside casino or riverboat casino from service for any period of time could
adversely affect our business, financial condition and results of operations.
ENVIRONMENTAL RISKS -- WE ARE SUBJECT TO VARIOUS ENVIRONMENTAL REGULATIONS. OUR
FAILURE TO COMPLY MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS.
We are subject to federal, state and local environmental, safety and health
laws, regulations and ordinances that apply to non-gaming businesses generally,
including:
- the Clean Air Act;
- the Clean Water Act,
- the Occupational Safety and Health Act; and
- the Comprehensive Environmental Response, Compensation, and Liability
Act.
We have not made, and do not anticipate making, material expenditures with
respect to environmental, safety and health laws, regulations and ordinances.
However, the insurance coverage and attendant compliance costs associated with
these laws, regulations and ordinances may result in future additional costs to
our operations. For example, in
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1990 the U.S. Congress enacted the Oil Pollution Act to establish a
comprehensive federal oil spill response and liability framework. Pursuant to
the Oil Pollution Act, the Department of Transportation implemented regulations
requiring owners and operators of specific vessels, including Aztar, to
establish and maintain through the U.S. Coast Guard evidence of financial
responsibility sufficient to meet their potential liability under both the Oil
Pollution Act and the Comprehensive Environmental Response, Compensation, and
Liability Act for discharges or threatened discharges of oil or hazardous
substances. This requirement may be satisfied by either proof of adequate
insurance, including self-insurance, or the posting of a surety bond or
guaranty. Some of our properties currently have or had underground fuel storage
tanks and asbestos containing construction materials.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT.
We sold the unregistered notes on May 3, 1999. In connection with that
placement, we entered into the exchange and registration rights agreement dated
May 3, 1999, with the broker-dealers that participated in the May 1999 offering
as initial purchasers, which requires us to file a registration statement under
the Securities Act with respect to the registered notes. Upon the effectiveness
of that registration statement, we are required to offer to the holders of the
unregistered notes the opportunity to exchange their unregistered notes for a
like principal amount of registered notes, which will be issued without a
restrictive legend and which generally may be reoffered and resold by the holder
without registration under the Securities Act.
The registration rights agreement further provides that we must use our
best efforts to:
- cause the registration statement with respect to the exchange offer to
become effective under the Securities Act by October 30, 1999; and
- complete the exchange offer by December 14, 1999.
Except as provided below, upon the completion of the exchange offer, our
obligations with respect to the registration of the unregistered notes and the
registered notes will terminate. A copy of the exchange and registration rights
agreement has been filed as an exhibit to the registration statement, of which
this prospectus is a part, and this summary of the material provisions of the
exchange and registration rights agreement does not purport to be complete and
is qualified in its entirety by reference to the exchange and registration
rights agreement. As a result of the timely filing and the effectiveness of the
registration statement, Aztar will not have to pay specified additional interest
on the unregistered notes provided in the exchange and registration rights
agreement. Following the completion of the exchange offer, holders of
unregistered notes not tendered will not have any further registration rights
other than as set forth in the paragraphs below, and those unregistered notes
will continue to be subject to restrictions on transfer. Accordingly, the
liquidity of the market for the unregistered notes could be adversely affected
upon consummation of the exchange offer.
In order to participate in the exchange offer, a holder must represent to
us, among other things, that:
- the registered notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of business of the person receiving the
notes, whether or not that person is the registered holder of the
unregistered notes;
- the holder is not engaging in and does not intend to engage in a
distribution of the registered notes;
- the holder does not have an arrangement or understanding with any person
to participate in a distribution of the registered notes; and
- the holder is not our "affiliate," as defined under Rule 405 promulgated
under the Securities Act.
Under some circumstances specified in the exchange and registration rights
agreement, Aztar may be required to file a "shelf" registration statement for a
continuous
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offering pursuant to Rule 415 under the Securities Act in respect of the
unregistered notes. See "-- Procedure for Tendering" and "Registration Rights."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third parties unrelated to Aztar, Aztar believes that, with
the exceptions set forth below, registered notes issued pursuant to the exchange
offer may be offered for resale, resold and otherwise transferred by holders of
the registered notes without compliance with the registration and prospectus
delivery provisions of the Securities Act; unless the holder:
- is an "affiliate" of Aztar within the meaning of Rule 405 promulgated
under the Securities Act;
- is a broker-dealer who purchased unregistered notes directly from Aztar
for resale pursuant to Rule 144A or any other available exemption under
the Securities Act;
- acquired the registered notes in the exchange offer other than in the
ordinary course of the holder's business; or
- has an arrangement or understanding with any person to engage in the
distribution of the registered notes.
Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the registered notes cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that receives registered notes
for its own account in exchange for unregistered notes, where the unregistered
notes were acquired by that broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of those registered notes. See "Plan of
Distribution." Broker-dealers who acquired unregistered notes directly from us
and not as a result of market-making activities or other trading activities may
not rely on the staff's interpretations discussed above or participate in the
exchange offer and must comply with the prospectus delivery requirements of the
Securities Act in order to sell the unregistered notes.
CONSEQUENCES OF FAILURE TO EXCHANGE.
Following the completion of the exchange offer (except as set forth under
"-- Purpose and Effect" above), holders of unregistered notes not tendered will
not have any further registration rights and those unregistered notes will
continue to be subject to restrictions on transfer. Accordingly, the liquidity
of the market for a holder's unregistered notes could be adversely affected upon
completion of the exchange offer if the holder does not participate in the
exchange offer.
TERMS OF THE EXCHANGE OFFER.
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, Aztar will accept any and all unregistered
notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time,
on , 1999, or another date and time to which Aztar extends the
offer. Aztar will issue $1,000 principal amount of registered notes in exchange
for each $1,000 principal amount of outstanding unregistered notes accepted in
the exchange offer. Holders may tender some or all of their unregistered notes
pursuant to the exchange offer. However, unregistered notes may be tendered only
in integral multiples of $1,000 in principal amount.
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The form and terms of the registered notes are substantially the same as
the form and terms of the unregistered notes except that the registered notes
have been registered under the Securities Act and will not bear legends
restricting their transfer. The registered notes will evidence the same debt as
the unregistered notes and will be issued pursuant to, and entitled to the
benefits of, the indenture pursuant to which the unregistered notes were issued.
As of the date of this prospectus, unregistered notes representing $235.0
million in aggregate principal amount were outstanding and there was one
registered holder, a nominee of the Depository Trust Company. This prospectus,
together with the letter of transmittal, is being sent to that registered holder
and to others believed to have beneficial interests in the unregistered notes.
Aztar intends to conduct the exchange offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated under the Exchange Act.
Aztar will be deemed to have accepted validly tendered unregistered notes
when, as, and if it has given oral or written notice thereof to the exchange
agent. The exchange agent will act as agent for the tendering holders for the
purpose of receiving the registered notes from Aztar. If any tendered
unregistered notes are not accepted for exchange because of an invalid tender,
the occurrence of other events set forth under the heading "-- Conditions to the
Exchange Offer" or otherwise, certificates for any of these unaccepted
unregistered notes will be returned, without expense, to the tendering holder of
those unregistered notes as promptly as practicable after , 1999,
unless the exchange offer is extended.
Holders who tender unregistered notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
unregistered notes in the exchange offer. We will pay all charges and expenses,
other than some applicable taxes, applicable to the exchange offer. See "-- Fees
and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS.
The expiration date will be 5:00 p.m., New York City time, on
, 1999, unless Aztar, in its sole discretion, extends the
exchange offer, in which case the expiration date will mean the latest date and
time to which the exchange offer is extended. In order to extend the exchange
offer, Aztar will notify the exchange agent and each registered holder of any
extension by oral or written notice prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
Aztar reserves the right, in its sole discretion:
- to delay accepting any unregistered notes, to extend the exchange offer
or, if any of the conditions set forth under "-- Conditions to Exchange
Offer" have not been satisfied, to terminate the exchange offer, by
giving oral or written notice of the delay, extension or termination to
the exchange agent; or
- to amend the terms of the exchange offer in any manner.
In order to keep the registration statement effective for the period
required by the exchange and registration rights agreement, Aztar may file
post-effective amendments to the registration statement.
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PROCEDURES FOR TENDERING
Only a holder of unregistered notes may tender the unregistered notes in
the exchange offer. Except as set forth under "-- Book Entry Transfer," to
tender in the exchange offer a holder must complete, sign, and date the letter
of transmittal, or a copy of the letter of transmittal, have the signatures on
the letter of transmittal guaranteed if required by the letter of transmittal,
and mail or otherwise deliver the letter of transmittal or copy to the exchange
agent prior to the expiration date. In addition:
- the exchange agent must receive certificates for the unregistered notes
along with the letter of transmittal prior to the expiration date;
- the exchange agent must receive prior to the expiration date a timely
confirmation of a book-entry transfer of the unregistered notes, if that
procedure is available, into the exchange agent's account at the
Depository Trust Company (the "Book-Entry Transfer Facility") following
the procedure for book-entry transfer described below; or
- you must comply with the guaranteed delivery procedures described below.
To be tendered effectively, the exchange agent must receive the letter of
transmittal and other required documents at the address set forth under
"-- Exchange Agent" prior to the expiration date.
Your tender, if not withdrawn before the expiration date, will constitute
an agreement between you and Aztar in accordance with the terms and subject to
the conditions set forth in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF UNREGISTERED NOTES AND THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND
RISK. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT YOU USE AN OVERNIGHT
OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT
SEND ANY LETTER OF TRANSMITTAL OR UNREGISTERED NOTES TO AZTAR. YOU MAY REQUEST
YOUR BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT
THESE TRANSACTIONS FOR YOU.
Any beneficial owner whose unregistered notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the letter of transmittal and delivering the owner's
unregistered notes, either make appropriate arrangements to register ownership
of the unregistered notes in the beneficial owner's name or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act unless unregistered notes
tendered pursuant thereto are tendered:
- by a registered holder who has not completed the box entitled "Special
Registration Instruction" or "Special Delivery Instructions" on the
letter of transmittal; or
- for the account of an eligible guarantor institution.
30
<PAGE> 37
If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed, the guarantee must be by any eligible guarantor
institution that is a member of or participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or an
eligible guarantor institution.
If the letter of transmittal is signed by a person other than the
registered holder of any unregistered notes listed in the letter of transmittal,
the unregistered notes must be endorsed or accompanied by a properly completed
bond power, signed by the registered holder as that registered holder's name
appears on the unregistered notes.
If the letter of transmittal or any unregistered notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, these persons should so indicate when signing, and evidence
satisfactory to Aztar of their authority to so act must be submitted with the
letter of transmittal unless waived by Aztar.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of tendered unregistered notes will be
determined by Aztar in its sole discretion, which determination will be final
and binding. Aztar reserves the absolute right to reject any and all
unregistered notes not properly tendered or any unregistered notes that would,
in the opinion of counsel, be unlawful to accept. Aztar also reserves the right
to waive any defects, irregularities or conditions of tender as to particular
unregistered notes. Aztar's interpretation of the terms and conditions of the
exchange offer, including the instructions in the letter of transmittal, will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of unregistered notes must be cured within the time
that Aztar will determine. Although Aztar intends to notify holders of defects
or irregularities with respect to tenders of unregistered notes, neither Aztar,
the exchange agent, nor any other person will incur any liability for failure to
give the notification. Tenders of unregistered notes will not be deemed to have
been made until the defects or irregularities have been cured or waived. Any
unregistered notes received by the exchange agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived will
be returned by the exchange agent to the tendering holders, unless otherwise
provided in the letter of transmittal, as soon as practicable following
, 1999, unless the exchange offer is extended.
In addition, Aztar reserves the right in its sole discretion to purchase or
make offers for any unregistered notes that remain outstanding after the
expiration date or, as set forth under "-- Conditions to the exchange offer," to
terminate the exchange offer and, to the extent permitted by applicable law,
purchase unregistered notes in the open market, in privately negotiated
transactions, or otherwise. The terms of any of these purchases or offers could
differ from the terms of the exchange offer.
By tendering, each holder will represent to Aztar that, among other things:
- the registered notes acquired in the exchange offer are being obtained in
the ordinary course of business of the person receiving these registered
notes, whether or not that person is the registered holder;
- the holder is not engaging in and does not intend to engage in a
distribution of the registered notes;
- the holder does not have any arrangement or understanding with any person
to participate in the distribution of the registered notes; and
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<PAGE> 38
- the holder is not an "affiliate," as defined under Rule 405 of the
Securities Act, of Aztar.
In all cases, issuance of registered notes for unregistered notes that are
accepted for exchange pursuant to the exchange offer will be made only after
timely receipt by the exchange agent of certificates for these unregistered
notes or a timely book-entry confirmation of these unregistered notes into the
exchange agent's account at the Book-Entry Transfer Facility, a properly
completed and duly executed letter of transmittal or, with respect to the DTC
and its participants, electronic instructions in which the tendering holder
acknowledges its receipt of and agreement to be bound by the letter of
transmittal and all other required documents. If any tendered unregistered notes
are not accepted for any reason set forth in the terms and conditions of the
exchange offer or if unregistered notes are submitted for a greater principal
amount than the holder desires to exchange, these unaccepted or non-exchanged
unregistered notes will be returned without expense to the tendering Holder
thereof or, in the case of unregistered notes tendered by book-entry transfer
into the exchange agent's account at the Book-Entry Transfer Facility pursuant
to the book-entry transfer procedures described below, these nonexchanged
unregistered notes will be credited to an account maintained with that
Book-Entry Transfer Facility, in each case, as promptly as practicable after the
expiration or termination of the exchange offer.
Each broker-dealer that receives registered notes for its own account in
exchange for unregistered notes, where those unregistered notes were acquired by
that broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of those registered notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account for the
unregistered notes at the Book-Entry Transfer Facility for the exchange offer
within two business days after the date of this prospectus, and any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of unregistered notes being tendered by causing the
Book-Entry Transfer Facility to transfer those unregistered notes into the
exchange agent's account at the Book-Entry Transfer Facility in accordance with
that Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of unregistered notes may be effected through book-entry transfer at
the Book-Entry Transfer Facility, the letter of transmittal or copy of the
letter of transmittal, with any required signature guarantees and any other
required documents, must, in any case other than as set forth in the following
paragraph, be transmitted to and received by the exchange agent at the address
set forth under "-- Exchange Agent" on or prior to the expiration date or the
guaranteed delivery procedures described below must be complied with.
DTC's Automated Tender Offer Program is the only method of processing
exchange offers through DTC. To accept the exchange offer through this program,
participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy letter of
transmittal. DTC is obligated to communicate those electronic instructions to
the exchange agent. To tender unregistered notes through this program, the
electronic instructions sent to DTC and transmitted by DTC to the exchange agent
must contain the character by which the participant acknowledges its receipt of
and agrees to be bound by the letter of transmittal.
32
<PAGE> 39
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the unregistered notes desires to tender
unregistered notes and the unregistered notes are not immediately available, or
time will not permit that holder's unregistered notes or other required
documents to reach the exchange agent before the expiration date, or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if:
- the tender is made through an eligible guarantor institution;
- prior to the expiration date, the exchange agent receives from that
eligible guarantor institution a properly completed and duly executed
letter of transmittal or a facsimile duly executed letter of transmittal
and notice of guaranteed delivery, substantially in the form provided by
Aztar by telegram, telex, facsimile transmission, mail or hand delivery,
setting forth the name and address of the holder of unregistered notes
and the amount of unregistered notes tendered, stating that the tender is
being made by guaranteed delivery and guaranteeing that within three New
York Stock Exchange, Inc. trading days after the date of execution of the
notice of guaranteed delivery, the certificates for all physically
tendered unregistered notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, will be deposited by the eligible
institution with the exchange agent; and
- the certificates for all physically tendered unregistered notes, in
proper form for transfer, or confirmation of a book-entry transfer, as
the case may be, are received by the exchange agent within three NYSE
trading days after the date of execution of the notice of guaranteed
delivery.
WITHDRAWAL RIGHTS
Tenders of unregistered notes may be withdrawn at any time prior to 5:00
p.m., New York City time, on the expiration date.
For a withdrawal of a tender of unregistered notes to be effective, a
written or, for DTC participants, electronic Automated Tender Offer Program
transmission, notice of withdrawal must be received by the exchange agent at its
address set forth under "-- Exchange Agent" prior to 5:00 p.m., New York City
time, on the expiration date. Any notice of withdrawal must:
- specify the name of the person having deposited the unregistered notes to
be withdrawn;
- identify the unregistered notes to be withdrawn, including the
certificate number or numbers and principal amount of the unregistered
notes;
- in the case of a written notice of withdrawal, be signed by the holder in
the same manner as the original signature on the letter of transmittal by
which the unregistered notes were tendered, including any required
signature guarantees, or be accompanied by documents of transfer
sufficient to have the trustee register the transfer of the unregistered
notes into the name of the person withdrawing the tender; and
- specify the name in which these unregistered notes are to be registered,
if different from that of the person having deposited the unregistered
notes to be withdrawn.
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<PAGE> 40
All questions as to the validity, form, eligibility, and time of receipt of
these notices will be determined by Aztar. This determination will be final and
binding on all parties. Any unregistered notes so withdrawn will be deemed not
to have been validly tendered for exchange for purposes of the exchange offer.
Any unregistered notes which have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder of the unregistered
notes without cost to that holder as soon as practicable after withdrawal,
rejection of tender, or termination of the exchange offer. Properly withdrawn
unregistered notes may be retendered by following one of the procedures under
"-- Procedures for Tendering" at any time on or prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, Aztar is not
required to accept for exchange, or to issue registered notes in exchange for,
any unregistered notes and may terminate or amend the exchange offer if, at any
time before the acceptance of those unregistered notes for exchange or the
exchange of the registered notes for those unregistered notes, it determines
that the exchange offer violates applicable law, any applicable interpretation
of the staff of the Commission or any order of any governmental agency or court
of competent jurisdiction.
The foregoing conditions are for Aztar's sole benefit and may be asserted
by Aztar regardless of the circumstances giving rise to any of these conditions
or may be waived by Aztar in whole or in part at any time and from time to time
in its sole discretion. Aztar's failure to exercise any of the foregoing rights
at any time is not a waiver of any of these rights and each of these rights will
be an ongoing right which may be asserted at any time and from time to time.
In addition, Aztar will not accept for exchange any unregistered notes
tendered, and no registered notes will be issued in exchange for those
unregistered notes, if at the time any stop order is threatened or in effect
with respect to the registration statement of which this prospectus constitutes
a part or the qualification of the indenture under the Trust Indenture Act of
1939, as amended. In any of those events Aztar will use every reasonable effort
to obtain the withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
All executed letters of transmittal should be directed to the exchange
agent. The U.S. Bank National Association has been appointed as exchange agent
for the exchange offer. Questions, requests for assistance and requests for
additional copies of this prospectus or of the letter of transmittal should be
directed to the exchange agent addressed as follows:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Specialized Finance Department
BY FACSIMILE:
(ELIGIBLE INSTITUTIONS ONLY)
(651) 244-1537
FOR INFORMATION OR
CONFIRMATION BY TELEPHONE:
(651) 244-5011
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<PAGE> 41
Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.
FEES AND EXPENSES
Aztar will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone by
our officers and employees. Aztar will pay the estimated cash expenses to be
incurred in connection with the exchange offer, which include fees and expenses
of the exchange agent, accounting, legal, printing and related fees and
expenses.
TRANSFER TAXES
Holders who tender their unregistered notes for exchange will not be
obligated to pay any transfer taxes in connection with that tender or exchange,
except that holders who instruct Aztar to register registered notes in the name
of, or request that unregistered notes not tendered or not accepted in the
exchange offer be returned to, a person other than the registered tendering
holder will be responsible for the payment of any applicable transfer tax on
those unregistered notes.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the registered
notes. In consideration for issuing the registered notes as contemplated in this
prospectus, we will receive in exchange unregistered notes in like principal
amount, which will be canceled. Accordingly, there will not be any increase in
our outstanding indebtedness.
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<PAGE> 42
CAPITALIZATION
The following table sets forth the total consolidated capitalization of
Aztar as of April 1, 1999, and as adjusted to give effect to our April 7, 1999
redemption of $75 million of our 11% Notes, the May 3, 1999 offering of the
unregistered notes and the application of the net proceeds from the May offering
to redeem the remaining $125 million of our 11% Notes and repay a portion of the
outstanding borrowings under our revolving bank credit facility. See "Use of
Proceeds." You should read this information in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Aztar's consolidated financial statements and accompanying notes thereto
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
APRIL 1, 1999
----------------------
ACTUAL AS ADJUSTED
------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents................................... $ 40.6 $ 40.6
====== ======
Current maturities of long-term debt........................ $ 2.5 $ 2.5
------ ------
Long-term debt (excluding current portion)
8 7/8% Senior Subordinated Notes Due 2007................. -- 235.0
11% Senior Subordinated Notes Due 2002.................... 200.0 --
13 3/4% Senior Subordinated Notes Due 2004(a)............. 178.3 178.3
Reducing revolving credit note (floating rate); matures
June 30, 2003.......................................... 45.0 19.4
Term loan (floating rate); matures June 30, 2005.......... 49.6 49.6
Other notes payable; 7% to 14.6%; maturities to 2002...... .6 .6
Obligations under capital leases.......................... 5.3 5.3
------ ------
Total long-term debt...................................... 478.8 488.2
------ ------
Total debt........................................ 481.3 490.7
Preferred stock............................................. 7.3 7.3
Shareholders' equity........................................ 456.8 452.7(b)
------ ------
Total capitalization.............................. $945.4 $950.7
====== ======
</TABLE>
- -------------------------
(a) Represents $180 million principal amount outstanding less unamortized
discount of $1.7 million.
(b) The reduction reflects the payment of a redemption premium and the write-off
of the unamortized deferred financing charges in connection with the
redemption of the 11% Notes net of income tax benefit.
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<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS.
The following table sets forth our revenues, EBITDAR and operating income
on a consolidated basis and the portions thereof generated by each of our five
casino properties.
<TABLE>
<CAPTION>
YEAR ENDED QUARTER ENDED
------------------------ -----------------------------
1996 1997 1998 APRIL 2, 1998 APRIL 1, 1999
------ ------ ------ ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
REVENUES:
Tropicana Atlantic City........ $385.9 $399.2 $418.9 $100.1 $ 97.3
Tropicana Las Vegas............ 167.4 156.4 154.2 37.6 35.8
Ramada Express................. 82.5 83.4 85.3 21.3 25.2
Casino Aztar Evansville........ 115.2 119.3 123.6 31.3 26.4
Casino Aztar Caruthersville.... 26.5 24.1 24.1 6.5 5.8
------ ------ ------ ------ ------
Consolidated................ 777.5 782.4 806.1 196.8 190.5
EBITDAR(1):
Tropicana Atlantic City........ $ 62.9 $ 80.1 $ 95.3 $ 21.3 $ 21.5
Tropicana Las Vegas............ 18.5 10.0 9.2 1.5 3.0
Ramada Express................. 18.6 18.2 17.4 4.7 6.6
Casino Aztar Evansville........ 39.5 41.5 43.5 11.2 8.2
Casino Aztar Caruthersville.... (.2) .5 1.7 .5 .8
Corporate...................... (12.3) (10.0) (12.6) (3.9) (3.2)
------ ------ ------ ------ ------
Consolidated................ 127.0 140.3 154.5 35.3 36.9
OPERATING INCOME (LOSS):
Tropicana Atlantic City........ $ 36.0 $ 50.7 $ 66.5 $ 13.9 $ 14.7
Tropicana Las Vegas............ .8 (9.3) (10.6) (3.5) (1.9)
Ramada Express................. 11.2 10.6 10.6 2.9 5.3
Casino Aztar Evansville........ 27.5 28.8 29.8 8.0 5.0
Casino Aztar Caruthersville.... (3.7) (2.8) (1.5) (.3) --
Corporate...................... (12.9) (10.6) (13.2) (4.1) (3.4)
------ ------ ------ ------ ------
Consolidated................ 58.9 67.4 81.6 16.9 19.7
</TABLE>
- -------------------------
(1) EBITDAR means operating income before depreciation and amortization, rent
and preopening costs. EBITDAR should not be construed as an alternative to
operating income (as determined in accordance with generally accepted
accounting principles) as an indicator of Aztar's operating performance, or
to cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of liquidity. EBITDAR
information has been included to facilitate comprehension of financial
covenants in the indenture for the notes which are based, in part, on
EBITDAR. Our calculation of EBITDAR may not be comparable to similarly
titled measures reported by other companies.
QUARTER ENDED APRIL 1, 1999 COMPARED TO QUARTER ENDED APRIL 2, 1998.
Our consolidated revenues in the 1999 first quarter were $190.5 million
compared to $196.8 million in the 1998 first quarter. Consolidated casino
revenue was $10.1 million or 6% lower in the 1999 versus 1998 first quarter,
reflecting decreases at all properties except for Ramada Express, which had an
increase. The declines in casino revenue at Tropicana Atlantic City and our
riverboat properties were due in part to bad winter weather. Consolidated rooms
revenue was $3.5 million or 29% higher in the 1999 versus 1998 first
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<PAGE> 44
quarter, primarily reflecting increases at our properties in Nevada.
Consolidated operating income was $19.7 million in the 1999 first quarter, a 17%
improvement over $16.9 million in the 1998 first quarter. Consolidated rent
expense was $1.4 million or 27% lower in the 1999 versus 1998 first quarter due
to a decreased number of operating leases at Tropicana Atlantic City as a result
of a shift from operating leases to capital leases or ownership. The
consolidated provision for doubtful accounts was $1.2 million or 39% lower in
the 1999 versus 1998 first quarter, reflecting decreases in the allowance for
potential uncollectible markers at Tropicana Atlantic City and Tropicana Las
Vegas as a result of a lower volume of table games play at those properties.
Consolidated interest expense was $0.9 million or 6% lower in the 1999
versus 1998 first quarter primarily as a result of lower levels of debt
outstanding.
Tropicana Atlantic City. Total revenues at Tropicana Atlantic City were
$97.3 million in the 1999 first quarter, down 3% from $100.1 million in the 1998
first quarter. Casino revenue was 3% lower in the 1999 versus 1998 first
quarter, primarily reflecting an 11% decrease in games revenue, partially offset
by a 2% increase in slot revenue. The decline in games revenue was a result of a
decrease in the volume of play due in large part to bad winter weather in
January.
Tropicana Atlantic City had operating income of $14.7 million in the 1999
first quarter, a 6% improvement over $13.9 million in the 1998 first quarter.
Casino costs were 2% lower in the 1999 versus 1998 first quarter due to the
decrease in casino revenue. The provision for doubtful accounts was $0.7 million
lower in the 1999 versus 1998 first quarter, reflecting a decrease as a result
of the lower volume of table games play. Operating income is after rent and
depreciation and amortization expenses. Rent expense decreased to $0.5 million
in the 1999 first quarter from $1.9 million in the 1998 first quarter due to a
decreased number of operating leases as a result of a shift from operating
leases to capital leases or ownership. Depreciation and amortization was $6.3
million in the first quarter of 1999 compared to $5.5 million in the first
quarter of last year.
Tropicana Las Vegas. At Tropicana Las Vegas, total revenues were $35.8
million in the 1999 first quarter, a 5% decrease from $37.6 million in the 1998
first quarter. Casino revenue was 21% lower in the 1999 versus 1998 first
quarter, primarily due to a 45% decrease in games revenue combined with a 6%
decrease in slot revenue. Almost half of the decrease in games revenue was
attributable to lower baccarat revenue, which decreased as a result of an 89%
decline in the volume of play as the Las Vegas Tropicana continued its program
to reduce the increasingly expensive high-end games business. Rooms revenue was
$2.8 million or 41% higher in the 1999 versus 1998 first quarter as a result of
increased occupancy and average daily rate.
Tropicana Las Vegas had an operating loss of $1.9 million in the 1999 first
quarter compared to $3.5 million in the 1998 first quarter. Casino costs were
25% lower in the 1999 versus 1998 first quarter, primarily due to the decrease
in casino revenues. Consistent with the increase in rooms revenue, rooms costs
were 16% higher in the 1999 versus 1998 first quarter. The provision for
doubtful accounts was $0.5 million lower in the 1999 versus 1998 first quarter
as a result of a lower volume of baccarat play. Operating loss is after rent and
depreciation and amortization expenses. Rent expense was $2.4 million in the
1999 first quarter compared with $2.5 million in the 1998 first quarter.
Depreciation and amortization was $2.5 million in both periods.
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<PAGE> 45
Ramada Express. At Ramada Express, total revenues were $25.2 million in the
1999 first quarter, up 18% from $21.3 million in the 1998 first quarter.
Operating income was $5.3 million in the 1999 first quarter, an 84% improvement
over $2.9 million in the 1998 first quarter. Operating income is after rent and
depreciation and amortization expenses. Rent expense was $0.2 million in the
1999 first quarter compared to $0.1 million in the 1998 first quarter.
Depreciation and amortization was $1.1 million in the 1999 first quarter
compared to $1.7 million in the 1998 first quarter.
Casino Aztar Evansville. Total revenues at Casino Aztar Evansville were
$26.4 million in the 1999 first quarter, down 16% from $31.3 million in last
year's first quarter. Casino revenue was down 16% in the 1999 versus 1998 first
quarter. The introduction in November 1998 of a riverboat casino in the
Louisville, Kentucky area, in combination with severe winter weather in January
and March of 1999, negatively impacted results at Casino Aztar Evansville.
Operating income was $5.0 million in the 1999 first quarter, a 37% decrease from
$8.0 million in the 1998 first quarter. Operating income is after rent and
depreciation and amortization expenses. Rent expense was $0.8 million in both
periods and depreciation and amortization was $2.4 million in both periods.
Casino Aztar Caruthersville. Total revenues at Casino Aztar Caruthersville
were $5.8 million in the 1999 first quarter, a 10% decrease from $6.5 million in
the 1998 first quarter due in large part to unfavorable weather. Casino Aztar
Caruthersville had an operating loss of $41,000 in the first quarter of 1999
compared to $0.3 million in the first quarter of 1998. Operating loss is after
depreciation and amortization of $0.8 million in both periods.
FISCAL YEAR 1998 COMPARED WITH FISCAL YEAR 1997.
Our consolidated revenues were $806.1 million for 1998, an increase of 3%
from $782.4 million in 1997. Casino revenue was the primary source of the
increase and the Atlantic City Tropicana was the principal location providing
the increase.
Consolidated operating income in 1998 was $81.6 million compared with $67.4
million in 1997. The consolidated provision for doubtful accounts increased by
$2.0 million in 1998 compared with 1997 as a result of increasing the allowance
for potential uncollectible markers associated with the emphasis on the games
segment of the market at the Atlantic City Tropicana. Excluding the increase in
the consolidated provision for doubtful accounts, operating costs increased by
only 1% in 1998. Consolidated rent expense decreased $2.0 million in 1998
compared with 1997 primarily as a result of buying out operating leases or
converting them to capital leases at the Atlantic City Tropicana. The analysis
of the performance of each of our properties follows.
Tropicana Atlantic City. Tropicana Casino and Resort in Atlantic City, New
Jersey had total revenues of $418.9 million in 1998 compared with $399.2 million
in 1997 and operating income of $66.5 million in 1998 compared with $50.7
million in 1997. Casino revenue was up $18.2 million in 1998 from 1997.
Tropicana Atlantic City continued its emphasis that began in 1995 on the games
revenue segment of the business and benefited from an increase in the table
games hold percentage to 15.8% in 1998 from 14.5% in 1997. Games revenue
increased by $10.2 million or 8% in 1998 compared with 1997. Slot revenue also
increased in 1998 compared with 1997. Slot revenue was up 3% in 1998. The slot
revenue percentage of total casino revenue decreased to 65% in 1998 from 66% in
1997. The percentage was 71% in 1996 and 76% in the 1995 to 1993 time frame.
Rooms
39
<PAGE> 46
revenue increased 21% in 1998 compared with 1997 as a result of an increase in
rooms occupied on a non-complimentary basis and an increase in the average daily
room rate.
Rooms costs were 18% higher in 1998 compared with 1997 primarily due to the
increase in rooms revenue. The provision for doubtful accounts was $3.8 million
higher in 1998 compared with 1997 as a result of the emphasis on the games
business. Excluding the provision for doubtful accounts, operating costs in 1998
were essentially even with 1997. Utilities expense was $1.1 million lower in
1998 compared with 1997 primarily due to a favorable electrical power contract
that began in November 1997. Operating income is after depreciation and
amortization of $24.3 million in 1998 compared with $22.1 million in 1997 and
rent expense of $4.5 million in 1998 compared with $7.3 million in 1997. Rent
expense decreased as a result of a shift away from operating leases to capital
leases or ownership.
Tropicana Las Vegas. Tropicana Resort and Casino in Las Vegas, Nevada had
total revenues of $154.2 million in 1998 compared with $156.4 million in 1997
and an operating loss of $10.6 million in 1998 compared with an operating loss
of $9.3 million in 1997. Operating loss is after rent expense of $10.0 million
in 1998 compared with $9.8 million in 1997 and depreciation and amortization of
$9.8 million in 1998 compared with $9.5 million in 1997.
Casino revenue decreased by $3.6 million in 1998 from 1997 as a result of a
decrease in table games revenue. Table games revenue other than baccarat
decreased as a result of a decrease in the hold percentage, which decreased to
15.6% from 18.6% in 1997. The volume of baccarat play decreased by 35% in 1998
from 1997 on top of a 40% decrease in 1997 from 1996 as we experienced a
decrease in baccarat play by Asian guests as a result of economic turmoil in
Asia and a strategic decision to place less emphasis on Asian players. The
volume of baccarat play was much higher in 1996 than it had been in recent prior
years. Baccarat revenue as a percent of casino revenue declined to 9% in 1998
and 1997 compared with 14% in 1996. Baccarat revenue was only 1% of casino
revenue in 1995. Baccarat revenue in 1998 benefited from an increase in the hold
percentage, which increased to 28.8% from 18.6% in 1997. Slot revenue increased
by 5% in 1998 over 1997. Casino costs were substantially unchanged in 1998 from
1997. The hotel occupancy rate increased to 92% in 1998 from 88% in 1997 in
spite of the increased competition in the Las Vegas market.
Ramada Express. Ramada Express Hotel and Casino in Laughlin, Nevada had
total revenues of $85.3 million in 1998 compared with $83.4 million in 1997.
Casino revenue increased by $2.0 million in 1998 compared with 1997. The trends
in 1998 were similar to those experienced in 1997 and 1996 with the exception of
the overall market. The overall market was slightly up in 1998 from 1997, which
is in contrast to the last several years of decreases in the overall market.
However, the overall market remains weak as competition continues from Indian
casinos and expansions in Las Vegas. Casino costs and marketing costs were
higher as Aztar incurred increased costs in order to increase market share in
this market. As a result, the operating margin, as measured by operating income
before depreciation and amortization, declined to 20% in 1998 from 21% in 1997,
compared with 22% in 1996 and 24% in 1995.
Operating income at Ramada Express was $10.6 million in 1998 compared with
$10.6 million in 1997. Operating income is after depreciation and amortization
of $6.2 million in 1998 compared with $7.1 million in 1997 and rent expense of
$0.6 million in 1998 compared with $0.5 million in 1997.
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<PAGE> 47
Casino Aztar Evansville. Casino Aztar Evansville in Evansville, Indiana had
total revenues of $123.6 million in 1998 compared with $119.3 million in 1997.
Casino revenue was up 4% in 1998 from 1997 in spite of increased competition
from expanded riverboat capacity in the Cincinnati, Ohio market area and a new
riverboat in the Louisville, Kentucky market area. The admissions in 1998 and
1997 were 2.1 million and the win per admission was $52.83 in 1998 compared with
$51.18 in 1997. The new riverboat in the Louisville area opened in November
1998. In fiscal December 1998, Casino Aztar Evansville had an 18% decrease in
casino revenue compared with fiscal December 1997 due to the increased
competition and severe winter weather in Evansville's feeder markets in the last
week of December 1998. We anticipate a decrease in casino revenue in 1999
compared with 1998 as a result of competition from a new riverboat in the
Louisville, Kentucky market area. In addition, a certificate of suitability was
granted to operate a riverboat casino on the Ohio River to be located in Indiana
between the Louisville area and the Cincinnati area. This riverboat is
anticipated to open in mid- to late-2000.
Operating income was $29.8 million in 1998 compared with $28.8 million in
1997. Operating income is after depreciation and amortization of $9.8 million in
1998 compared with $9.3 million in 1997 and rent expense of $3.9 million in 1998
compared with $3.4 million in 1997.
Casino Aztar Caruthersville. Casino Aztar Caruthersville in Caruthersville,
Missouri had total revenues of $24.1 million in 1998 and 1997 and an operating
loss of $1.5 million in 1998 compared with an operating loss of $2.8 million in
1997. The operating losses are after depreciation and amortization of $3.2
million in 1998 compared with $3.3 million in 1997. During 1998, we focused on
reducing our operating costs and were able to reduce these costs by 5% compared
with 1997 and at the same time were able to maintain our revenue stream. We have
some unused land at this site and we are encouraging third party developers to
develop facilities on this land that would complement our operations.
Development Costs. In connection with pursuing the development of our
business in specific gaming jurisdictions, we expensed approximately $0.5
million in 1998 compared with $0.1 million in 1997.
Interest Expense. Interest expense was $59.6 million in 1998 compared with
$62.5 million in 1997. The decrease in interest expense was primarily a result
of lower levels of debt outstanding.
Income Taxes. We are responsible, with some exceptions, for the taxes of
Ramada Inc. through December 20, 1989. See "Note 1. Significant Accounting
Policies -- Basis of Consolidated Statements" of the Notes to Consolidated
Financial Statements for the year ended December 31, 1998. Income taxes for 1997
included a non-recurring tax benefit of $2.3 million primarily related to cash
received as a result of a settlement between the IRS and Ramada Inc. Income
taxes for 1996 included a benefit of approximately $21 million related to this
settlement.
Extraordinary Items. During 1998, we expensed the remaining unamortized
deferred financing costs in connection with the extinguishment of our prior
credit facility and our prior supplemental credit facility. These items were
reflected as an extraordinary loss of $1.3 million, which was net of an income
tax benefit of $0.7 million.
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<PAGE> 48
FISCAL YEAR 1997 COMPARED WITH FISCAL YEAR 1996.
Our consolidated revenues were $782.4 million for 1997, an increase of 1%
from $777.5 million in 1996. Rooms revenue was higher in 1997 than in 1996
because the new hotel tower at the Atlantic City Tropicana that opened in late
April 1996 added approximately 60% to the room capacity at that property and we
opened our 250-room hotel at Casino Aztar Evansville in December 1996. A factor
that limited the increase in consolidated revenues was that the 1997 fiscal year
included 52 weeks whereas the 1996 fiscal year included 53 weeks.
Consolidated operating income in 1997 was $67.4 million. Consolidated
operating income in 1996 was $58.9 million after the effects of $3.0 million in
preopening cost write-offs in connection with the new hotel tower at the
Atlantic City Tropicana and the fourth-quarter 1996 opening of a pavilion,
parking garage and hotel at Casino Aztar Evansville. The consolidated provision
for doubtful accounts increased by $7.1 million in 1997 compared with 1996 as a
result of increasing the allowance for potential uncollectible markers
associated with Asian guests at the Las Vegas Tropicana and the premium table
game business at both Tropicanas. Consolidated rent expense increased $5.7
million in 1997 compared with 1996 primarily as a result of an increased number
of operating leases associated with expanded casino facilities at the Atlantic
City Tropicana. The analysis of the performance of each of Aztar's properties
follows.
Tropicana Atlantic City. Tropicana Casino and Resort had total revenues of
$399.2 million in 1997 compared with $385.9 million in 1996 and operating income
of $50.7 million in 1997 compared with $36.0 million in 1996. The 1996 operating
income is after the write-off of $2.3 million of preopening costs associated
with the opening of a new hotel tower, an expanded casino and a name change from
TropWorld to Tropicana. The 1996 operating margin was negatively impacted by
severe winter weather and disruption from the construction of the new hotel
tower and improvements made to the casino.
Casino revenue was up $6.7 million in 1997 compared with 1996. Tropicana
Atlantic City continued its emphasis on the games revenue segment of the
business and had a full-year benefit of the improvements made to the casino in
1996. As a result of this, games revenue increased by $21.1 million or 21% in
1997 over 1996 in spite of a slight decline in the table games hold percentage.
Slot revenue decreased in 1997 compared with 1996 as a result of a decrease in
coin offers to slot players. Rooms revenue increased 39% in 1997 compared with
1996 as a result of a 30% increase in rooms occupied on a non-complimentary
basis and an increase in the average daily room rate. The availability of rooms
increased in late April 1996 when the new hotel tower increased capacity by 60%.
Casino costs were $13.4 million lower in 1997 than in 1996. A $20.5 million
reduction in coin offers to slot players was partially offset by increased costs
associated with the games segment of the business. The reduction in coin offers
consisted of a $14.3 million reduction in direct mail and cash-back coin offers
and a $6.2 million reduction in line and charter bus coin. Marketing costs were
$6.9 million higher and the provision for doubtful accounts was $1.9 million
higher in 1997 compared with 1996 as a result of the emphasis on the games
business. Rooms costs were 26% higher in 1997 compared with 1996 primarily due
to increased direct costs associated with the increase in occupied rooms.
Operating income is after depreciation and amortization of $22.1 million in
1997 compared with $21.7 million in 1996 and rent expense of $7.3 million in
1997 compared
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<PAGE> 49
with $2.9 million in 1996. Rent expense increased as a result of an increased
number of equipment operating leases associated with the improved facilities.
Tropicana Las Vegas. Tropicana Resort and Casino had total revenues of
$156.4 million in 1997 compared with $167.4 million in 1996 and an operating
loss of $9.3 million in 1997 compared with operating income of $0.8 million in
1996. Operating loss or income is after rent expense of $9.8 million in 1997
compared with $9.1 million in 1996 and depreciation and amortization of $9.5
million in 1997 compared with $8.6 million in 1996.
Casino revenue decreased by 12% in 1997 from 1996 primarily as a result of
a decrease in baccarat revenue. The volume of baccarat play decreased by 40% in
1997 compared with 1996 as we experienced a decrease in baccarat play by Asian
guests. Slot revenue decreased by 10% in 1997 compared with 1996 due to a supply
increase in the market. Casino costs were 6% lower in 1997 than in 1996 as a
result of the lower casino revenue. The provision for doubtful accounts
increased by $5.0 million in 1997 compared with 1996 as a result of increasing
the allowance for uncollectible markers associated with Asian guests and the
premium table game business.
Ramada Express. Ramada Express Hotel and Casino had total revenues of $83.4
million in 1997 compared with $82.5 million in 1996. Casino revenue increased in
an overall market that again declined in 1997. Casino costs and marketing costs
were higher as we incurred increased costs in order to increase market share in
this declining market.
Operating income at Ramada Express was $10.6 million in 1997 compared with
$11.2 million in 1996. Operating income is after depreciation and amortization
of $7.1 million in both 1997 and 1996 and rent expense of $0.5 million in 1997
compared with $0.3 million in 1996.
Casino Aztar Evansville. Casino Aztar Evansville had total revenues of
$119.3 million in 1997 compared with $115.2 million in 1996 and operating income
of $28.8 million in 1997 compared with $27.5 million in 1996. The 1996 operating
income is after the write-off of $0.7 million of preopening costs associated
with the opening of the passenger pavilion, parking garage and 250-room hotel.
Casino revenue was down only slightly in 1997 from 1996 as a decrease in
admissions as a result of the increased competition from other riverboats in
Indiana was offset by an increase in win per admission. The admissions in 1997
were 2.1 million compared with 2.4 million in 1996 and the win per admission was
$51.18 in 1997 compared with $45.85 in 1996. Rooms revenue was $2.7 million in
1997, an increase of $2.6 million over 1996 as the hotel opened in December
1996. Food and beverage revenue increased $3.0 million over 1996 as the
passenger pavilion containing expanded food and beverage facilities opened in
the fourth quarter of 1996.
Rooms costs and food and beverage costs increased with the increase in
revenues. As a result of the expanded facilities, property taxes and insurance,
along with depreciation and amortization, also increased. Casino Aztar
Evansville reduced marketing costs by 20% in 1997 from 1996. These costs were
higher in 1996 as the operation established itself in the market. Operating
income is after depreciation and amortization of $9.3 million in 1997 compared
with $8.3 million in 1996 and rent expense of $3.4 million in 1997 compared with
$3.0 million in 1996.
Casino Aztar Caruthersville. Casino Aztar Caruthersville had total revenues
of $24.1 million in 1997 compared with $26.5 million in 1996 and an operating
loss of
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<PAGE> 50
$2.8 million in 1997 compared with an operating loss of $3.7 million in 1996.
The operating losses are after depreciation and amortization of $3.3 million in
1997 compared with $3.5 million in 1996. During 1997, we eliminated some
marginal business, which resulted in lower revenues and reduced costs. In
addition, we opened a climate-controlled pavilion and an outdoor arena. These
facilities are used for exhibitions, entertainment, rodeo competitions and other
events.
Development Costs. In connection with pursuing the development of our
business in specific gaming jurisdictions, as well as in jurisdictions in which
gaming has not been approved, we expensed approximately $0.1 million in 1997
compared with $2.1 million in 1996.
Interest Expense. Interest expense was $62.5 million in 1997 compared with
$58.6 million in 1996. The increase in interest expense was primarily a result
of discontinuing the capitalization of interest as our major construction
projects were completed in phases in 1996.
LIQUIDITY AND CAPITAL RESOURCES.
SOURCES AND USES.
During 1998, we obtained our new "bank credit facility" financing
consisting of a $250 million reducing revolving credit facility maturing on June
30, 2003 and a $50 million term loan maturing on June 30, 2005. Effective April
30, 1999, Aztar and the lenders under the revolving bank credit facility agreed
to expand the maximum amount available under that facility from $250 million to
$300 million. The revolving credit facility and the term loan bear interest at a
floating rate. The new financing is an improvement over our prior credit
facilities because it increases the availability of funds, provides more
flexibility, reduces interest margins and extends the maturity. The initial
funds borrowed under the revolving credit facility were used to prepay the
balance outstanding and extinguish our prior reducing revolving credit facility
maturing on December 31, 1999. The balance outstanding under the prior revolving
credit facility at the time of prepayment was $135 million. The funds received
under the term loan were used to repay a portion of the new revolving credit
facility. Our $25 million supplemental reducing revolving loan agreement
maturing on March 15, 1999 was extinguished concurrently with our prior
revolving credit facility. There were no borrowings under the supplemental
credit facility from its inception through the date it was extinguished.
At April 1, 1999, the outstanding balance under our revolving credit
facility was $45 million. The maximum amount available under the revolving
credit facility will be reduced quarterly by $12 million commencing on September
30, 2000. The revolving credit facility imposes various restrictions on us,
including limitations on our ability to incur additional debt, commit funds to
capital expenditures, merge or sell assets. The revolving credit facility
prohibits dividends on our common stock (other than dividends payable in common
stock) and repurchases of our common stock in excess of $30 million with limited
exceptions. In addition, the revolving credit facility contains quarterly
financial tests, including a minimum requirement for operating cash flow, a
minimum ratio of fixed charge coverage and maximum ratios of total debt and
senior debt to operating cash flow. At April 1, 1999, the ratio of total debt to
operating cash flow was 3.37 to 1 and the maximum ratio allowable was 5.25 to 1.
This maximum ratio allowable decreases to 5.00 to 1 at June 30, 1999 and
continues to decrease periodically, beginning June 30, 2000, in increments of
.25 or .50, until it is 4.00 to 1 at June 30, 2002 and thereafter. At April 1,
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<PAGE> 51
1999, the ratio of senior debt to operating cash flow was 1.03 to 1 and the
maximum ratio allowable was 3.50 to 1. This maximum ratio allowable decreases to
3.00 to 1 at June 30, 1999 and thereafter.
The $50 million term loan calls for quarterly principal payments of
$125,000 beginning on September 30, 1999 through June 30, 2004, and $11,875,000
beginning on September 30, 2004 through maturity. The term loan imposes
restrictions on us that are similar to those imposed by our subordinated debt.
During 1998, our cash flow from operating activities was principally used
to pay down debt and to purchase property and equipment that was primarily
routine in nature.
On April 7, 1999, we redeemed $75 million principal amount of our 11% Notes
at 101.571% of the face amount plus accrued interest. On June 2, 1999 we
redeemed the remaining $125 million of our 11% Notes at 101.571% of the face
amount plus accrued interest. This redemption was funded with a portion of the
proceeds from the May offering of the unregistered notes. Our 13 3/4% Notes
become callable at a premium on October 1, 1999. If credit is available at
favorable rates, we may pursue a refinancing of our 13 3/4% Notes during 1999.
The unamortized deferred financing charges associated with the 11% Notes and the
premium paid to retire this debt were written-off as extraordinary charges. If
we are successful in refinancing the 13 3/4% Notes, the unamortized deferred
financing charges and unamortized discount associated with these notes, and any
premium paid to retire these notes, would also be written-off as an
extraordinary charge. At April 1, 1999, the unamortized items relating to the
11% Notes and the 13 3/4% Notes totaled $9.1 million.
FUTURE DEVELOPMENT.
Tropicana Enterprises, a Nevada general partnership in which Aztar is a
noncontrolling 50% partner, owns the real property and a portion of the personal
property that Aztar leases in the operation of Tropicana Las Vegas. On February
2, 1998, Aztar acquired an option to purchase the 50% partnership interest that
it does not own. The option agreement gives Aztar an unconditional right, but
not the obligation, to purchase the partnership interest for $120 million. The
option agreement was amended in February 1999 to extend the option until
February 2002. We currently have no plans to redevelop Tropicana Las Vegas.
Current market conditions do not warrant redevelopment. We expect that
redevelopment of Tropicana Las Vegas could present a good opportunity when
market conditions improve. The amount and timing of any future expenditure, and
the extent of any impact on existing operations, will depend on the nature of
the redevelopment ultimately undertaken by us.
We own land that is next to our facilities in Atlantic City. This land
could be used in the future for additional development.
COMMITMENTS.
Aztar is committed to making rent payments that service Tropicana
Enterprises' bank term loan. During 1998, the maturity of this bank term loan
was extended to June 30, 2003 from December 31, 1999. The Tropicana Enterprises'
bank term loan calls for monthly principal payments of $0.3 million to $0.4
million, with a final payment of approximately $43 million due at maturity. At
April 1, 1999, the balance of the Tropicana Enterprise loan was approximately
$59.4 million.
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<PAGE> 52
The Tropicana Las Vegas lease agreement contains a provision that requires
Aztar to maintain an additional security deposit with the lessor of
approximately $21 million in cash or a letter of credit if the Tropicana Las
Vegas operation fails to meet financial tests. The financial tests are
calculated quarterly based on the preceding twelve months of operations. A
determination was made for the year ended December 31, 1998, that the additional
security deposit would be required by May 15, 1999. However, the lessor waived
the requirement of this additional security deposit. For the period ended April
1, 1999, a determination was made that no additional security deposit is
required because the Tropicana Las Vegas operation met financial tests under the
lease agreement.
MARKET RISK.
Market risk is the risk of loss arising from adverse changes in market
rates and prices, including interest rates, foreign currency exchange rates,
commodity prices and equity prices. Our primary exposure to market risk is
interest rate risk associated with our Casino Reinvestment Development Authority
investments, long-term debt and Series B ESOP convertible preferred stock. We do
not utilize these financial instruments for trading purposes. We manage our
interest rate risk on long-term debt by managing the mix of our fixed-rate and
variable-rate debt.
The following table provides information at December 31, 1998, about our
financial instruments that are sensitive to changes in interest rates. The table
presents principal cash flows (in millions) and related weighted average
interest rates by expected maturity dates.
<TABLE>
<CAPTION>
FAIR
1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
---- ---- ---- ------ ----- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Other investments
Fixed rate.......................... -- -- -- -- -- $ 21.0 $ 21.0 $ 21.0
Average interest rate............... -- -- -- -- -- 4.9%
Liabilities
Long-term debt, including current
portion
Fixed rate.......................... $2.4 $3.1 $2.0 $200.9 $ 0.2 $178.4 $387.0 $411.6
Average interest rate............... 9.8% 9.4% 9.7% 11.0% 10.6% 14.0%
Variable rate....................... $0.1 $0.5 $0.6 $ 0.5 $53.6 $ 47.8 $103.1 $103.1
Average interest rate*
Series B ESOP convertible preferred
stock
Fixed rate............................ -- -- -- -- -- $ 7.1 $ 7.1 $ 7.1
Average dividend rate................. -- -- -- -- -- 8.0%
</TABLE>
- -------------------------
* Interest is based upon, at our option, a one-, two-, three- or six-month
Eurodollar rate plus a margin of 2.5% for our $50 million term loan and a
one-, two-, three- or six-month Eurodollar rate plus a margin ranging from
1.00% to 2.25%, or the prime rate plus a margin ranging from zero to 1.00% for
our revolving bank credit facility. The applicable margin is dependent upon
Aztar's outstanding indebtedness and operating cash flow.
On April 7, 1999, we redeemed $75 million principal amount of our 11% Notes
at 101.571% of the face amount plus accrued interest. This redemption was funded
with borrowings under our revolving bank credit facility. On May 3, 1999 we
issued $235 million principal amount of 8 7/8% unregistered notes due May 15,
2007. A portion of the net proceeds from the issuance of the unregistered notes
was used to redeem the remaining $125 million principal amount of the 11% Notes
at 101.571% of the face amount plus accrued interest on June 2, 1999. The
balance of the net proceeds from the issuance of the unregistered notes was used
to repay a portion of the outstanding borrowings under our revolving bank credit
facility.
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<PAGE> 53
YEAR 2000.
Background. In the past, many computer software programs were written using
two digits rather than four to define the applicable year. As a result,
date-sensitive computer software may recognize a date using "00" as the year
1900 rather than the year 2000. This is generally referred to as the year 2000
issue. If this situation occurs, the potential exists for computer system
failures or miscalculations by computer programs, which could disrupt
operations.
We use computer systems in virtually all aspects of our business. Year 2000
problems in the hotel or casino systems at our properties could disrupt
operations at the affected properties and have a material adverse impact upon
our operating results. We are also exposed to the risk that one or more of our
suppliers could experience year 2000 problems that impact the ability of these
suppliers to provide goods and services. Though this is not considered as
significant a risk with respect to the suppliers of goods, due to the
availability of alternative suppliers, the disruption of some services,
including utilities, could, depending upon the extent of the disruption, have a
material adverse impact on our operations.
Approach. We have established a coordinated effort between our corporate
level and responsible parties at each of our properties to address year 2000
issues. We require each property to submit a monthly status report to the
corporate office, which is then reviewed with each property. The audit committee
of Aztar's board of directors discusses the status of each property's year 2000
readiness at least quarterly. Our year 2000 readiness program consists of four
phases:
Phase 1 Compile information about technology (IT) and non-IT systems that
may be sensitive to the year 2000 problem.
Phase 2 Identify and prioritize the critical systems from the inventory of
systems compiled in Phase 1 and inquire of third parties with whom
we do significant business, including vendors and suppliers, as to
the state of their year 2000 readiness.
Phase 3 Analyze the critical systems to determine which systems are not
year 2000 compliant and evaluate the costs to repair or replace
those systems.
Phase 4 Repair or replace noncompliant systems and test those systems for
which representation as to year 2000 compliance has not been
received or for which representation was received but has not been
confirmed.
Status of IT Systems. We use software purchased from vendors in virtually
all critical technology systems at our properties. In some instances, we modify
vendor-supplied software systems to enhance them. In many cases, the solution to
the year 2000 issue is simply to install a vendor-tested software upgrade and
further test the upgrade through internally generated test data. In other cases,
the solution is to purchase and install new vendor software that is year 2000
compliant. The cost and effort of installing and testing new software systems is
more extensive than merely upgrading them and therefore contains a greater risk
to us.
We are currently in Phase 4 of our year 2000 readiness program for all
critical IT systems at all properties. Some of these IT systems require internal
programming rather than upgrades. The more programming required, the greater the
risk to our year 2000 readiness. The following chart shows for each critical IT
system at each of our properties
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<PAGE> 54
whether an upgrade or conversion is underway and the date when installation and
testing of these systems is expected to be completed. In addition, the chart
identifies the IT systems where internal programming is required and the extent
of these programming requirements. We expect to complete year 2000 compliance on
IT systems by September 1999. We cannot assure you that we will be able to
achieve these goals by the dates indicated or at all.
<TABLE>
<CAPTION>
TROPICANA TROPICANA RAMADA CASINO AZTAR CASINO AZTAR
SYSTEM ATLANTIC CITY LAS VEGAS EXPRESS EVANSVILLE CARUTHERSVILLE
------ ------------- --------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C>
CASINO Conversion * Upgrade ** Upgrade Upgrade Upgrade
6/99 Done 7/99 7/99 7/99
SLOTS Upgrade Upgrade ** Conversion* Upgrade Upgrade
Done Done 9/99 6/99 Done
HOTEL Conversion ** Upgrade Conversion Upgrade N/A
Done Done Done Done
FINANCIAL Conversion Upgrade Upgrade Upgrade Upgrade
Done Done 6/99 6/99 6/99
POINT OF SALE/ Upgrade Upgrade Conversion Upgrade Upgrade
INVENTORY Done 7/99 6/99 Done 5/99
</TABLE>
- -------------------------
* Indicates more significant internal programming also required
** Indicates minor internal programming also required
Status of Non-IT Systems. We use embedded technology including
microcontrollers or date-sensitive computer chips in our facilities, including
fire safety and security systems, elevators, heating and cooling monitoring
systems and surveillance systems. We are in Phase 3 and 4 in our process of
ensuring year 2000 readiness in these non-IT systems. Our program for ensuring
year 2000 compliance for our non-IT systems includes
(1) sending letters to vendors of critical non-IT systems asking for
the year 2000 status for each embedded chip or technology,
(2) meeting with vendors who provide maintenance for these non-IT
systems to assess year 2000 readiness and
(3) testing these systems using test data wherever possible.
We expect to substantially complete year 2000 compliance on critical non-IT
systems by June 1999.
Costs. The total cost of making our systems year 2000 compliant is
estimated to be approximately $7.9 million. Approximately $7.5 million of this
amount relates to the acquisition of new computer hardware and software systems
as follows: new hardware and software at Tropicana Atlantic City ($5.7 million);
new software at Ramada Express ($1.2 million) and personal computer upgrades and
other systems company-wide ($0.6 million). These costs will be capitalized and
depreciated over their expected useful lives.
The estimated costs related to internal programming modifications and the
administration of our year 2000 project are approximately $0.4 million, and
these costs are being expensed as incurred. Approximately $40,000 of these costs
were expensed in the quarter ended April 1, 1999 and approximately $0.2 million
were expensed in 1998.
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<PAGE> 55
As of April 1, 1999, approximately $6.5 million has been spent on year 2000
issues. The year 2000 issue has not caused other Aztar IT system projects to be
deferred; in fact, it has accelerated the spending on IT systems overall.
Risk Assessment. The greatest risk is if one or more of our properties'
critical IT systems, including casino or hotel, or non-IT Systems, including
cooling or heating, experience problems due to year 2000 issues which cause
business interruptions or customer service problems. We are also exposed to the
risk of possible failure of systems external to our operations. These external
risk factors arise from the fact that our operations, like most businesses, are
dependent upon numerous other private, public and governmental entities. While
these external risk factors are not our responsibility and the remediation of
these factors is beyond our control, we are attempting to monitor these risks
and form contingency plans as warranted. As a result of these external risk
factors, we may be adversely impacted even if our own IT systems and non-IT
Systems are year 2000 compliant. External risk factors being monitored include
utility service to our properties; banking networks which may affect our or our
customers' access to cash and travel service disruptions to our properties. We
believe that any year 2000 problems, should they arise, would be short-term in
nature and not affect our liquidity or financial condition. However, because New
Year's week is a very busy period for our properties, year 2000 problems at a
given property could negatively impact first-quarter 2000 results.
Contingency Plans. Contingency plans are being developed for each property.
We will consider risk levels of non-compliance as the year 2000 implementation
and testing process continues. On an on-going basis, each property maintains
specific emergency manual procedures and back-up plans and these plans are being
enhanced to deal with potential year 2000 problems should they arise.
OTHER MATTERS.
In June 1998, the Financial Accounting Standards Board adopted Statement of
Financial Accounting Standards No. 133 entitled "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. If
specific conditions are met, a derivative may be specifically designated as a
hedge of specific financial exposures. The accounting for changes in the fair
value of a derivative depends on the intended use of the derivative and, if it
is used in hedging activities, it depends on its effectiveness as a hedge. SFAS
133 is effective for all fiscal quarters of fiscal years beginning after June
15, 1999. SFAS 133 should not be applied retroactively to financial statements
of prior periods. Aztar will adopt SFAS 133 when required. Because of our
minimal use of derivatives, we do not anticipate that the adoption of SFAS 133
will have a significant effect on Aztar's earnings or financial position.
In accordance with the FASB Statement of Financial Accounting Standards No.
121 entitled "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," we performed a review of whether
anticipated net cash flows in connection with our Casino Aztar Caruthersville
operation will be sufficient to recover our investment in that operation. At
December 31, 1998, we had approximately $43 million in carrying value of
long-lived assets and some identifiable intangibles associated with Casino Aztar
Caruthersville. In performing this review, we considered a number of factors,
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<PAGE> 56
including, but not limited to, anticipated revenues and the duration thereof,
expected operating costs, the competitive environment and future legislative and
regulatory changes. Although the results of our review did not have an effect on
the carrying value for Casino Aztar Caruthersville at December 31, 1998 there
can be no assurance that this will be true in the future.
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BUSINESS
AZTAR.
Aztar is a publicly traded gaming company that owns and operates three
land-based and two riverboat casinos in five distinct domestic gaming markets.
Four of these are core operating properties -- the Tropicana Casino and Resort
in Atlantic City, the Ramada Express in Laughlin, Nevada and our two riverboat
properties in Evansville, Indiana and Caruthersville, Missouri. The fifth
property, the Tropicana Resort and Casino in Las Vegas, is being operated
pending eventual redevelopment.
Here is an overview of our properties as of April 1, 1999:
<TABLE>
<CAPTION>
GAMING
---------------- APPROXIMATE
NUMBER OF SLOT TABLE CASINO SQUARE APPROXIMATE
PROPERTY NAME AND LOCATION ROOMS/SUITES MACHINES GAMES FOOTAGE PARKING
-------------------------- ------------ -------- ----- ------------- -----------
<S> <C> <C> <C> <C> <C>
NEW JERSEY
Tropicana Casino and
Resort.................... 1,624 3,705 172 124,000 3,300
NEVADA
Tropicana Resort and
Casino(1)................. 1,873 1,641 41 61,000 2,300
Ramada Express Hotel and
Casino.................... 1,500 1,580 33 55,000 2,400
INDIANA
Casino Aztar Evansville...... 250 1,291 73 37,250 1,700
MISSOURI
Casino Aztar
Caruthersville............ -- 461 22 10,400 1,000
----- ----- --- ------- ------
TOTALS......................... 5,247 8,678 341 287,650 10,700
===== ===== === ======= ======
</TABLE>
- -------------------------
(1) We lease the Tropicana Las Vegas from a partnership in which we own a 50%
partnership interest and have an option to purchase the remaining 50%
partnership interest.
BUSINESS STRATEGY.
- IMPROVING CASH FLOW. During 1998, our five properties produced EBITDAR of
$154.5 million, an increase of 10.1% from 1997. The 1998 results
represent the third consecutive year of double- digit growth in EBITDAR,
and a 53% increase from the $101.2 million generated in 1995. We
accomplished this cash flow improvement through a combination of revenue
growth and tight cost controls. We drive revenue growth through targeted
marketing expenditures that have a clear and measurable purpose. We also
incentivize our property managers to achieve higher labor productivity
and other savings that can improve operating margins. Management is
committed to continuing this EBITDAR growth trend.
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[BAR GRAPH]
<TABLE>
<CAPTION>
YEAR EBITDAR(1)
---- ----------
<S> <C>
1996................................ $ 127.0
1997................................ $ 140.3
1998................................ $ 154.5
</TABLE>
(1) EBITDAR means operating income before depreciation and amortization, rent
and preopening costs. EBITDAR should not be construed as an alternative to
operating income (as determined in accordance with generally accepted
accounting principles) as an indicator of Aztar's operating performance, or
to cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of liquidity. EBITDAR
information has been included to facilitate comprehension of financial
covenants in the indenture for the notes which are based, in part, on
EBITDAR. Our calculation of EBITDAR may not be comparable to similarly
titled measures reported by other companies.
- STRENGTHENING BALANCE SHEET. One of our primary goals has been to
deleverage our balance sheet and significantly reduce our cost of
borrowing. In 1998, we reduced our outstanding long-term debt including
current portion by $29 million and increased our cash position by $13
million from a year earlier, yielding a $42 million reduction in net
long-term debt minus cash.
[BAR GRAPH]
<TABLE>
<CAPTION>
YEAR LONG-TERM DEBT
---- --------------
<S> <C>
1996................................ $ 540.0
1997................................ $ 519.1
1998................................ $ 490.1
</TABLE>
Our plan is to replace our higher-coupon public debt that will be callable
later this year with borrowings under our existing lower-cost bank credit
facility. The result will be to both significantly reduce interest expense
and provide flexibility to reduce further outstanding debt. In 1998, we
put in place a bank credit facility with larger borrowing capacity on more
favorable terms and with improved interest rates. Effective April 30,
1999, Aztar and the lenders under the revolving bank credit facility
agreed to expand the maximum amount available under that facility from
$250 million to $300 million. We also recently amended its terms to
provide for up to $205 million to be used toward the replacement of
subordinated debt.
- DISCIPLINED CAPITAL DECISIONS. Throughout our history, we have used a
disciplined return-on-invested-capital analysis in making decisions about
capital allocation. We continually evaluate whether capital should be
allocated to our core operating assets, to development and acquisition
activities, or to strengthen our balance sheet. Our standard has been to
undertake only capital projects that produce returns on invested capital
substantially in excess of our weighted average cost of capital. We will
continue to pursue capital opportunities that meet our strict criteria
for economic returns. In the event that we do not identify acquisition or
development
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<PAGE> 59
opportunities that meet our criteria, we intend to continue to reduce our
outstanding indebtedness.
- ATTRACTIVE DEVELOPMENT OPPORTUNITIES. We regularly identify and evaluate
opportunities for further development of our existing properties,
potential acquisitions, and participation in emerging gaming markets.
Although we think that these opportunities are currently limited, our
strategy is to add strategic assets to our portfolio if we believe that
they will produce returns that meet our strict criteria. Future
development opportunities include:
Atlantic City. We own land next to the Tropicana Atlantic City. The 1996
expansion of the Tropicana Atlantic City created significant economic
value and we believe there may be additional opportunity for further
strategic development.
Las Vegas. Our most promising longer-term opportunity is the redevelopment
of the Tropicana Las Vegas. This 34-acre site at the southeast corner of
Tropicana Avenue and the Las Vegas Strip is widely considered to be one of
the best development opportunities in Las Vegas. We currently lease the
Tropicana Las Vegas from a partnership in which we own a 50% interest. We
hold an option, exercisable until February 2002, to acquire the remaining
50% interest in the partnership that is owned by a third party. This
option provides us up to three years to assess market conditions in Las
Vegas and the rate of absorption of the latest round of new casino supply.
While we expect that redevelopment of Tropicana Las Vegas could present an
attractive opportunity when market conditions improve, we have no current
plans in place for redevelopment.
OPERATING STRATEGY.
We strive to provide our customers with an entertaining adult casino
experience. We emphasize creating environments that are both friendly and fun
and that have a high perceived value to our customers. Our goal is to create
loyal repeat customers. Key components of our operating strategy include:
- EFFECTIVE MARKETING. Our marketing efforts are directed primarily at
customers from the local and nearby drive-in markets. We target the
middle to upper end player with particular emphasis on the higher margin
premium slot customer. We actively track customer casino activity and
engage in direct mail and telemarketing to encourage our more valuable
customers to frequent our properties. These database marketing systems
play an important role in our targeting efforts.
- OPERATING DISCIPLINE AND TIGHT COST CONTROLS. We emphasize in our
operations the importance of serving our customers, maintaining our
properties and providing a quality guest experience. We are, however,
continually mindful of the operating discipline required to do all of
this on a cost-effective basis. We work towards the optimal balance:
providing a great time for our customers while maintaining an attractive
operating margin.
- PROPERTY SPECIFIC STRATEGIES. We believe that each of our properties
operates in a unique market environment. We tailor the operating strategy
of each property to capitalize on these distinctive market dynamics.
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<PAGE> 60
TROPICANA ATLANTIC CITY.
Description. Tropicana Casino and Resort is located on approximately 10
acres of land with 220 yards of ocean frontage along the boardwalk in Atlantic
City. The Tropicana Atlantic City features 1,624 hotel rooms and a 124,000
square foot casino with 3,705 slot machines, 172 table games, a baccarat lounge,
a poker room and keno. This facility has parking facilities to accommodate 3,300
vehicles. The Tropicana Atlantic City also features:
- a 1,700 seat theatrical showroom which regularly presents headliner
entertainment;
- approximately 47,000 square feet of meeting, convention and banquet
space;
- four gourmet restaurants and several medium-priced restaurants; and
- other amenities including indoor and outdoor swimming pools, tennis
courts, a health and fitness club and a jogging track.
We expanded and renovated Tropicana Atlantic City during 1995 and the first
half of 1996 to capitalize on the recent and anticipated growth of the Atlantic
City market. The expansion included a 604-room hotel tower with a concierge
floor consisting of six large penthouse suites. We also constructed a new hotel
lobby, refurbished all of the existing hotel rooms and developed a new entrance
designed to improve traffic circulation throughout the casino. In addition, we
made extensive improvements to the casino, including introducing a new baccarat
room and a new Asian games room. The new games room caters to the domestic Asian
gaming community, offering pai gow, tile games and mini-baccarat.
During 1997, we added new casino facilities at the Tropicana Atlantic City.
The Change Your Life Casino offers a variety of the most popular reel and video
game machines with denominations and payouts geared to provide high jackpots and
attract the retail customer. The Crystal Room has an elegant decor, furnishings
and service and is geared to appeal to the premium slot player. We also recently
constructed a new parking lot that accommodates 381 vehicles directly across
from our existing parking structure.
Operating Strategy. Our operating strategy is to focus on frequent visitors
to Atlantic City. We utilize our Atlantic City Tropicana database as the
cornerstone of our marketing efforts. Over 400,000 customers in our database
were active in 1998, providing approximately 1.8 million gaming patron days, an
average of 4.5 gaming days per player. These players generated in excess of $150
of revenue per gaming day and accounted for approximately 73% of the Tropicana
Atlantic City's casino revenue in 1998. In addition, during weekends and peak
demand periods, the property has been reserving rooms for non-database cash
paying patrons, insuring availability of rooms for patrons who are new visitors
to Atlantic City.
Market Overview. The Atlantic City gaming market has historically
demonstrated continued growth despite the emergence of new gaming venues across
the country. The 12 hotel casinos in Atlantic City generated approximately $4.0
billion in gaming revenues in 1998. There are several infrastructure
developments that have recently been completed or which are underway that may
attract additional people to Atlantic City. These developments include new
housing and retail development, an upgrade and expansion of the Atlantic City
International Airport and a new convention center with the largest exhibition
space between New York and Washington D.C.
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The primary target market for Tropicana Atlantic City is the area
consisting of New Jersey, New York, and Pennsylvania. Based on the most recent
census data, there are approximately 25 million persons within a 120-mile radius
of Atlantic City and 58 million persons within a 300-mile radius. Several major
casino operators have announced plans to develop projects or expand existing
facilities in the marina or the boardwalk areas. The marina projects are not
expected to open for a number of years. When these projects open they will
create increased competition in Atlantic City. However, our view is that these
new projects, if well-designed and executed, may also attract new patrons to the
Atlantic City gaming market. If so, this will mitigate concern about the
ultimate impact of those projects on our existing Atlantic City operations. Our
view is based on our experience following the opening of our 604-room expansion
at the Tropicana Atlantic City. Within a short period of time, those rooms
experienced a high level of occupancy and proved to be productive in generating
incremental revenue and cash flow. Cash rooms revenue in 1998 has increased by
almost 150% over the pre-expansion levels, indicating that we are reaching
beyond our regular casinos customers who would customarily be provided with
complimentary rooms. This lends support to our belief that the Atlantic City
market is supply constrained, not demand constrained and that the increase of
hotel rooms and "must see" attractions will expand the market, capturing more of
the 58 million people within the 300-mile radius.
TROPICANA LAS VEGAS.
Description. Tropicana Resort and Casino is located on an approximately
34-acre site on the "Strip" in Las Vegas, Nevada. The Tropicana has 1,873 hotel
rooms and suites and a 61,000 square foot casino containing 1,641 slot machines
and 41 table games. The facility also has parking to accommodate approximately
2,300 vehicles. Tropicana Las Vegas also features:
- one of the world's largest indoor/outdoor swimming pools;
- a five-acre water park and tropical garden;
- approximately 100,000 square feet of convention and exhibit space;
- seven restaurants; and
- the Folies Bergere, the longest running production show in Las Vegas.
Together with the MGM Grand, Excalibur, Luxor, Monte Carlo and New York-New
York mega-resorts, the Tropicana Las Vegas is located at the intersection known
as the "New Four Corners" at Las Vegas Boulevard and Tropicana Avenue. We made
modifications in 1996 and 1997 to enhance the Tropicana Las Vegas'
attractiveness to new visitors, including opening more direct access to the
property from surrounding casinos. We also renovated the appearance of the front
of the property tying into the pedestrian bridges that connect the four corners
of the intersection. In addition, we enhanced the look and the feel of the
casino and renovated our casino lounge. In 1997, we replaced a large number of
our slot machines with models featuring newer technology.
Lease Description. Aztar leases the Tropicana Las Vegas, through our
wholly-owned subsidiary, from an unconsolidated partnership in which we have a
noncontrolling 50% interest. The lease payment in 1998 was approximately $12.8
million, which includes third party rent and principal and interest servicing
the Tropicana Las Vegas partnership debt. The partnership's debt was
approximately $59.4 million at April 1, 1999 and is not
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<PAGE> 62
consolidated on Aztar's balance sheet. On February 2, 1998, we acquired an
option to purchase the 50% partnership interest that we do not own. The option
agreement gives us an unconditional right, but not the obligation, to purchase
the partnership interest for $120 million. This option agreement was amended on
February 1, 1999 to extend the option until February 1, 2002.
Operating strategy. The operating strategy at Tropicana Las Vegas is to
exploit its unique location in the "New Four Corners" area on the Las Vegas
Strip where there are over 18,000 hotel rooms in addition to ours. Our focus is
on the mid-level gaming business generated by these hotel rooms. We also
continue to market to drive-in customers from Southern California and to the
convention and tour-and-travel segments. Our goal is to maximize the operating
cash flow of the property while limiting capital expenditures.
Long-term development opportunity. While the Tropicana Las Vegas property
provided less than 6% of our EBITDAR in 1998, leaving us with limited current
exposure in the Las Vegas market, it offers an attractive long-term development
opportunity. Ultimately, our goal is to take advantage of the Tropicana Las
Vegas' premier location at the "New Four Corners" and its proximity to McCarran
International Airport. We currently have no plan in place to redevelop the
Tropicana Las Vegas as current market conditions do not warrant a redevelopment.
We expect that redevelopment of Tropicana Las Vegas could present a good
opportunity when market conditions improve. The amount and timing of any future
expenditure, and the extent of any impact on existing operations, will depend on
the nature of the redevelopment that we ultimately undertake.
Market Overview. The Las Vegas gaming market consisted of approximately
110,000 hotel rooms at the end of 1998. Gaming revenue in Las Vegas grew to $5.0
billion in 1998, a 2% increase over 1997.
RAMADA EXPRESS.
Description. Ramada Express Hotel and Casino is located on approximately 28
acres in Laughlin, Nevada. Laughlin is situated on the Colorado River at
Nevada's southern tip. The Ramada Express features a Victorian-era railroad
theme, which includes a train that carries guests between the parking areas and
the casino hotel. The property has 1,500 hotel rooms and a 55,000 square foot
casino containing 1,580 slot machines and 33 table games. The facility also has
parking to accommodate 2,400 vehicles. Ramada Express also features:
- three restaurants;
- a lounge; and
- special events and retail space.
Operating Strategy. The largest component of the Laughlin market is
comprised of customers over age 50. Accordingly, Ramada Express is focused on
providing an atmosphere that attracts these older customers and, in particular,
those who are retired or semi-retired. These customers make up the fastest
growing segment of gaming customers in Laughlin. One of the two guest towers is
for adults-only and our hotel room pricing program tends to discourage families
with children. We create events and programs specifically geared to this older
customer segment. For example, we have had success with nostalgic entertainment
shows that harken back to the 1940's and 1950's and celebrate the heroism of
military veterans from World War II and the Korean and Vietnam conflicts.
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Market Overview. The Laughlin gaming market consists of approximately
11,000 rooms and its gaming revenue for 1998 was $0.5 billion, a 2% increase
over 1997. This increase in 1998 reverses a trend of declining gaming revenues
during the prior four years.
CASINO AZTAR EVANSVILLE.
Description. Casino Aztar Evansville was the first gaming facility to open
in Indiana. It operates on the Ohio River in Evansville. The facility contains
approximately 37,250 square feet of casino space with 1,291 slot machines and 73
table games. In December 1996, we opened a 250-room hotel. The casino riverboat
is certified to carry 2,700 passengers and a crew of 300 and has parking for
1,700 vehicles. The 40,000 square foot pavilion which accompanies the riverboat
contains passenger ticketing and pre-boarding facilities, including:
- three restaurants;
- a sidewalk cafe;
- an entertainment lounge; and
- a gift shop.
Operating Strategy. Casino Aztar Evansville is marketed to capture the
patronage of the locals market. Since the opening of our Evansville property in
1995, the property has developed a strong base of loyal repeat customers and a
reputation for good food and lively entertainment. The property's convenient
location and parking structure provide customers with easy access to the hotel
and casino, a factor that we believe is particularly important in attracting and
retaining our customers.
Market Overview. Casino Aztar Evansville is located in the heart of
metropolitan Evansville and has developed strong brand recognition in Southwest
Indiana. The closest casino property is approximately 100 miles and over a
two-hour drive away. Based on the most recent census data, approximately 400,000
persons reside within a 30-mile radius of the property, approximately 850,000
persons live within a 60-mile radius, and almost four million persons live
within a 120-mile radius, which includes the metropolitan Louisville, Kentucky
area. Additionally, the economy in the Evansville area is vibrant, fueled most
recently by the opening of a large Toyota truck manufacturing facility for which
Toyota has already announced expansion plans. Gaming revenue in the Southern
Indiana market (four riverboats) grew by 46% in 1998 to $0.5 billion. Although,
we believe that Casino Aztar Evansville has a strong base of loyal customers,
the property operates in a more competitive environment due to the opening of a
new riverboat near Louisville, Kentucky.
CASINO AZTAR CARUTHERSVILLE.
Description. Casino Aztar Caruthersville operates on a 37-acre site on the
Mississippi River in Caruthersville, Missouri, strategically located near
Interstates 55 and 155. The casino riverboat has a capacity of 800 passengers
plus crew. It contains approximately 10,400 square feet of casino space with 461
slot machines and 22 table games. The facility
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has parking for 1,000 vehicles including recreational vehicles. The property's
passenger pavilion provides ticketing and pre-boarding facilities, including:
- a restaurant;
- a sports lounge; and
- a snack bar and other amenities.
During 1997, we opened a climate-controlled pavilion and an outdoor arena
which we use for exhibitions, entertainment, rodeo competitions and other
events. We have obtained consent from the Missouri Gaming Commission to utilize
our pre-boarding barge area as additional permitted gaming space under our
license. This will permit us to increase the number of slot machines at the
property by 40%. Should there be a relaxation of simulated cruising restrictions
and individual loss limits, our competitive position would significantly improve
in relation to riverboats in neighboring jurisdictions, most notably Tunica,
Mississippi, which is over 100 miles away.
Operating Strategy. We have positioned the property as the local's
community entertainment center, providing numerous targeted attractions in
addition to the casino. We have been successful at staging country western and
other concerts, rodeos, truck and tractor pulls and similar popular events. The
pavilion also houses an attractive and popular sports bar.
Market Overview. Casino Aztar Caruthersville is located in the "boot heel"
of Missouri in close proximity to I-55, the major north-south interstate running
along the Mississippi River. It serves the southeast Missouri market including
the neighboring states of Illinois, Kentucky, Tennessee and Arkansas. Based on
the most recent census data, there are approximately 634,000 persons within a
60-mile radius of the property and three million persons within a 120-mile
radius, which includes metropolitan Memphis.
EMPLOYEES.
Aztar employs approximately 10,800 people. Approximately 3,300 Aztar
employees are represented by unions. Of the approximately 5,000 employees at
Tropicana Atlantic City, approximately 1,800 are covered by collective
bargaining contracts. Substantially all of these employees are covered by a
contract that expires on September 14, 1999 and a small number are covered by
contracts that expire in 2001. At Tropicana Las Vegas, approximately 1,500 of
the 2,600 employees are covered by collective bargaining contracts.
Substantially all of these employees are covered by contracts that expire in
2002. A small number of these employees are covered by a contract that expired
on March 31, 1999 and these employees are working under an extension agreement
until a new contract is negotiated. Of the remaining employees, a few are
covered by a contract that expires on July 31, 1999 and the remainder are
covered by contracts that expire in 2000 or 2003. At Ramada Express there are
approximately 1,500 employees, none of which are covered by collective
bargaining agreements. Aztar has approximately 1,200 employees and 400
employees, respectively, at Casino Aztar Evansville and Casino Aztar
Caruthersville, none of which are covered by collective bargaining agreements.
PROPERTIES.
Tropicana Atlantic City. Tropicana Atlantic City is located on an
approximately 10-acre site in Atlantic City, New Jersey. In addition, we have
accumulated approximately
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1/2 acres next to our operating site for future development. In July 1993,
Tropicana Atlantic City became wholly-owned by Aztar.
Tropicana Las Vegas. Tropicana Las Vegas is located on a 34-acre site in
Las Vegas, Nevada. Tropicana Enterprises owns the Tropicana Las Vegas and leases
it to Hotel Ramada of Nevada, a wholly-owned subsidiary of Aztar. Hotel Ramada
of Nevada operates the casino and hotel under the lease which expires in 2011.
Adamar of Nevada owns a noncontrolling 50% general partnership interest in
Tropicana Enterprises. The remaining 50% general partnership interest in
Tropicana Enterprises is held by various individuals and trusts associated with
the Jaffe family subject to preferences on liquidation. On February 2, 1998, we
acquired an option to purchase the 50% partnership interest that we do not own.
The option agreement gives us an unconditional right, but not the obligation, to
purchase the partnership interest for $120 million. This option agreement was
amended on February 1, 1999 to extend the option until February 1, 2002. The
amount and timing of any future expenditure, and the extent of any impact on
existing operations, will depend on the nature of the redevelopment that we
ultimately undertake.
Ramada Express. Ramada Express is located on an approximate 28-acre site in
Laughlin, Nevada. Ramada Express is wholly-owned by Aztar.
Casino Aztar Evansville. Casino Aztar Evansville operates on and from a
base 8-acre site next to the Ohio River in downtown Evansville, Indiana.
Approximately 4 1/2 acres are leased. The lease was entered into in 1995 for 10
years. The lease has 3 options to renew for 5 years each. The remaining
approximately 3 1/2 acres are wholly-owned by us.
Casino Aztar Caruthersville. Casino Aztar Caruthersville operates on and
from a 37-acre site next to the Mississippi River in downtown Caruthersville,
Missouri. The site and facilities are wholly-owned by us. We have some unused
land at this site and we are encouraging third party developers to develop
facilities on this land that would complement our operations.
General. We lease our corporate headquarters located in Phoenix, Arizona
and own or lease some other facilities which are not material to our operations.
Substantially all land, casino hotel buildings, casino riverboats,
pavilions, furnishings and equipment owned by us are pledged as collateral under
our bank credit facility.
LEGAL PROCEEDINGS.
Aztar is a defendant in an action originally filed in the United States
District Court for the Middle District of Florida, Orlando Division entitled
William H. Poulos, On Behalf of Himself and All Others Similarly Situated vs.
Caesars World, Inc., et al., filed on April 26, 1994. This action was
consolidated with another subsequently filed action in that court entitled
William Ahearn, On Behalf of Himself and All Others Similarly Situated v.
Caesars World, Inc., et al., (the "Actions" or collectively, the "Poulos/Ahearn
Case"). Both Actions were brought under RICO and state common law and seek
compensatory and punitive damages in excess of $1 billion from the defendants.
The complaints allege that the defendants took part in a scheme intended to
induce people to play video poker and electronic slot machines based on false
beliefs concerning how those machines actually operate as well as the extent to
which there is actually an opportunity to win on any given play. The precise
nature of Aztar's role in the alleged fraud and the conspiracy to defraud is not
discernible from the complaint.
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On September 26, 1995, an action entitled Larry Schreier, On Behalf of
Himself and All Others Similarly Situated vs. Caesars World, Inc., et al. Case
No. CV-S-95-00923-DWH(RJJ) (the "Schreier Case") was commenced in the United
States District Court for the District of Nevada. The Schreier Case is identical
to the Poulos/Ahearn Case in all material respects, except that the named
plaintiff in the Schreier case purports to represent a smaller and more
precisely defined class of persons than the plaintiffs in the Poulos/Ahearn
Case. The defendants (including Aztar) moved to dismiss the Schreier complaint
on the same grounds as in the previously described Poulos/ Ahearn case, as well
as on the ground that this case was filed for an improper purpose, an attempt to
circumvent prior rulings of the Court in the Poulos/Ahearn Case. On August 15,
1996, District Judge Lloyd D. George granted the motion to dismiss, without
prejudice. An amended complaint containing the same principal allegations was
filed on September 30, 1996. The defendants (including Aztar) filed motions to
dismiss the amended complaint for failure to state a claim and on other grounds.
The Plaintiff opposed these motions.
The Poulos/Ahearn Case and the Schreier Case were consolidated, as was the
action entitled William H. Poulos, On behalf of Himself and All Others Similarly
Situated vs. Ambassador Cruise Lines, Inc., et al., Case No. CV-S-95-936
LDG(RLH) (the "Cruise Ship" case). (The allegations in the Cruise Ship case are
nearly identical to those made in the Poulos/Ahearn and Schreier cases, and are
made against a group of defendants consisting of several manufacturers and
distributors of gaming devices, as well as numerous cruise ship operators and
companies which operate cruise ship casinos.) The Poulos/ Ahearn Case, the
Schreier Case and the Cruise Ship Case are collectively referred to as the
"Consolidated Cases."
On February 14, 1997, the Plaintiffs filed a consolidated amended complaint
in the Consolidated Cases. On March 21, 1997, the Defendants moved to dismiss
the consolidated amended complaint for failure to state a claim and on other
grounds. The Plaintiffs opposed these motions. The defendants filed reply
memoranda in support of the motions. The motions were argued on November 3,
1997.
On December 19, 1997, the court entered orders deciding the motions in the
Consolidated Cases. The substance of those orders is as follows:
1. The motion to dismiss was granted as to the "wire fraud" allegation
in the RICO claim; the balance of the motion to dismiss the RICO claims was
denied.
2. The motion to strike some parts of the consolidated amended
complaint was granted in part.
3. The remaining motions (to dismiss and to stay or abstain) were
denied.
4. The plaintiffs were permitted to delete Mr. Ahearn, and add Ms.
McElmore as a class representative.
The plaintiffs in the Consolidated Cases filed a second consolidated
amended complaint on January 9, 1998. The Second Consolidated Amended Complaint
contains claims which are nearly identical to those in the previously dismissed
complaints. The defendants answered, denying the substantive allegations of the
Second Consolidated Amended Complaint. On March 18, 1998, the plaintiffs filed a
motion for class certification. On March 19, 1998, the Magistrate Judge granted
defendants' motion seeking to bifurcate discovery into "class" and "merits"
phases, and to stay "merits" discovery
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pending a decision on plaintiffs' motion for class certification. On August 7,
1998, the defendants filed their opposition to the motion for class
certification. The plaintiffs' reply memorandum was filed on August 25, 1998,
and the matter has been submitted to the judge for decision. The stay of merits
discovery remains in effect until the court decides the motion for class
certification.
We believe that plaintiffs' allegations are without merit, and we intend to
defend the actions vigorously.
We are a party to various claims, legal actions and complaints arising in
the ordinary course of business or asserted by way of defense or counterclaim in
actions filed by us. Management believes that its defenses are substantial in
each of these matters and that our legal posture can be successfully defended or
satisfactorily settled without material adverse effect on our consolidated
financial statements.
TRADEMARKS.
We use a variety of trade names, service marks and trademarks and believe
that we have all the licenses necessary to conduct our business. We have
registered several service marks and trademarks with the United States Patent
and Trademark Office or otherwise acquired the licenses to use those which are
material to the conduct of our business.
Substantially all of our trademarks and service names have been assigned to
the lenders under Aztar's bank credit facility.
Aztar, Hotel Ramada of Nevada and Adamar of New Jersey, Inc. are the
beneficiaries of an agreement with Tropicana Enterprises, which owns some
properties related to Tropicana Las Vegas, and the Jaffe family regarding the
use of the name "Tropicana" for the operation of a casino hotel in New York
State if gaming were to be authorized in New York State. Pursuant to that
agreement, Aztar has registered the name under the Lanham Act. Under some
events, the right to use the name reverts to Tropicana Enterprises.
Ramada Inc. has licensed Aztar to use the name "Ramada" in conjunction with
the operation of Ramada Express, and will not use or permit the use of the name
"Ramada" in Laughlin, Nevada by any other person or entity.
We have registered the following important trademarks or service marks:
Aztar, Casino Aztar, Trop, Trop Park, and The Island of Las Vegas. Aztar
believes there are no other trademarks or service marks the use of which is
material to the conduct of our business as a whole.
COMPETITION.
We face intense competition in each of the markets in which our land-based
gaming facilities are located. All of our casinos primarily compete with other
casinos in their geographic market. Our properties compete to a lesser extent
with casinos in other locations, including on Native American lands and on
cruise ships, and with other forms of legalized gaming in the United States,
including state-sponsored lotteries, off-track wagering and card parlors. Some
of our competitors have significantly greater financial resources than we do.
Several states have considered legalizing casino gaming and others may in the
future. Legalization of large-scale, unlimited casino gaming in or near any
major metropolitan area or increased gaming in other areas could have an adverse
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economic impact on the business of any or all of our gaming facilities.
Legislation is currently pending in Illinois that would allow riverboat
operators to conduct dockside gaming, lifting the cruising requirement for
Illinois riverboats. If this legislation is enacted, it will allow customers to
board at will, while customers at riverboat casinos in neighboring states,
including Missouri and Indiana, have to wait for boarding intervals. This added
flexibility could enhance the ability of Illinois riverboats to compete with
Aztar's facilities in Evansville and Caruthersville.
Tropicana Atlantic City. There are 11 casino hotel facilities operating in
Atlantic City which compete with Tropicana Atlantic City. No new casinos have
opened in Atlantic City since April 1990 but many of the existing casinos
increased their gaming capacities between 1994 and 1996 and a few casino hotels
have had major expansions. Other companies have announced a desire to open or
expand casinos in the future. Accordingly, we expect that there will be a
substantial increase in the number of hotel rooms and casinos in Atlantic City
in the next few years. This expansion will likely increase competition, although
it may also expand the overall market for gaming in Atlantic City.
Tropicana Atlantic City also competes with casinos on Native American lands
in Connecticut. In 1992, the Mashantucket Pequot tribe began operating the
Foxwoods High Stakes Casino and Bingo Hall, one of the largest casinos in the
United States, in Ledyard, Connecticut. The Mohegan tribe began operating a
casino in Connecticut in 1996 and is currently working on a significant
expansion. In addition, slot machines have been added to race tracks in Delaware
and West Virginia. The adoption of legislation approving casino gaming in any
jurisdiction near New Jersey, particularly Delaware, Maryland, New York or
Pennsylvania, could have a material adverse effect on the Atlantic City market,
depending on the form and scope of this gaming.
Tropicana Las Vegas. Our Las Vegas property operates on the intensely
competitive Las Vegas strip. Several major casino hotels opened on the Las Vegas
strip during the last several years, including Monte Carlo, Mandalay Bay,
Venetian, Bellagio, and New York-New York. Two major casino hotels on the strip
are under construction, of which Paris is expected to open in 1999, and
announcements have been made for other new developments. In addition, several
casino hotels have opened or have been expanded in other parts of Las Vegas or
near Las Vegas. New developments appear to have expanded the Las Vegas market.
We cannot assure you, however, that the increased competition from the new
casinos will not have an adverse effect on Tropicana Las Vegas.
Ramada Express. In the Laughlin market, there have been expansions of
existing casino hotels. In addition, the Mojave tribe operates a casino hotel in
Nevada approximately 8 miles south of Laughlin. The Laughlin market has also
been affected by the Native American casinos in Arizona and California and
additional capacity in Las Vegas and the surrounding area.
Casino Aztar Evansville. Casino Aztar Evansville competes primarily with an
Indiana riverboat in the Louisville, Kentucky market area and the riverboat
casino in Metropolis, Illinois. The new riverboat in the Louisville area opened
in November 1998. We suffered an 18% decrease in casino revenue at Casino Aztar
Evansville in December 1998 compared with December 1997 and in the first quarter
of 1999, Casino Aztar Evansville had a 16% decrease in casino revenue compared
with the first quarter of 1998. We believe that these decreases were due to the
increased competition and severe winter weather in Evansville's feeder markets
in the last week of December 1998 and in January 1999. We expect that casino
revenues will decrease in 1999 as compared with 1998 as a result of
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competition from this new riverboat. Casino Aztar Evansville also competes with
two other Indiana riverboat casinos on the Ohio River in the Cincinnati, Ohio
market area. It also competes with riverboat casinos in other Indiana locations,
none of which are in its primary 50-mile radius market area. In addition, the
Indiana Gaming Commission recently granted another operator a certificate of
suitability to operate a casino 35 miles southwest of Cincinnati, which is
expected to open in mid- to late-2000. Casino Aztar Evansville may also face
additional future competition from the potential legalization of casino gaming
in Kentucky.
Casino Aztar Caruthersville. Casino Aztar Caruthersville competes primarily
with other riverboat casinos in nearby states, including a riverboat in
Metropolis, Illinois and riverboat casinos in Mississippi that attract residents
of Casino Aztar Caruthersville's secondary Memphis, Tennessee market. Casino
Aztar Caruthersville also competes to a lesser extent with riverboat casinos in
other cities in Missouri, none of which are in its primary 60-mile radius market
area. Casino Aztar Cartersville may also face additional future competition from
the potential legalization of casino gaming in Arkansas.
General. Competition involves not only the quality of casino, room,
restaurant, entertainment and convention facilities, but also room, food and
beverage prices. The level of gaming activity at our properties also varies
significantly from time to time depending on factors including:
- general economic conditions;
- offering of special events and promotions;
- hotel occupancies;
- the extent and quality of complimentary services to attract high-stakes
players;
- in Atlantic City, casino customers arriving under bus programs;
- personal attention offered to guests and casino customers;
- advertising;
- entertainment;
- slot machine pay-out rates; and
- credit policies with respect to high-stakes players.
As a result, our operating results can be adversely affected by significant
cash outlays for advertising and promotion and complimentary services to
patrons, the amount and timing of which are partially dictated by the policies
of competitors. If our operating revenues are insufficient to allow management
the flexibility to match the promotions of competitors, the number of our casino
patrons may decline, which may have an adverse effect on our financial
performance.
SEASONALITY.
We experience significant fluctuations in our operating results due to
seasonality. Tropicana Atlantic City experiences seasonal fluctuations in casino
play that is higher during the months of May through October. As a result, our
revenues during the first and fourth quarters have generally been lower than for
the second and third quarters and from
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time to time we have experienced losses in the first and fourth quarters.
Because Atlantic City Tropicana's operating results especially depend upon
operations in the summer months, any event that adversely affects the operating
results of Tropicana Atlantic City during that period could have a material
adverse effect on our operations and financial condition. Given Atlantic City's
location, it is also subject to occasional adverse weather conditions including
storms and hurricanes that would impede access to Atlantic City and adversely
impact our operations.
The gaming markets in Las Vegas and Laughlin experience a slight decrease
in gaming activity in the hot summer months and during the holiday period
between Thanksgiving and Christmas. Our casino riverboats experience higher
casino revenues in the spring and summer months than in the fall and winter
months.
PLAYER CREDIT.
We conduct our gaming activities on a credit as well as a cash basis,
except in Missouri, which prohibits gaming on a credit basis. Table games
players are typically extended more credit than slot players, and high-stakes
players are typically extended more credit than patrons who tend to wager lower
amounts. We currently market to customers in all gaming segments. Our credit
policy varies from facility to facility based upon the various types of
customers at each facility. Gaming debts are legally enforceable under the
current laws of Indiana, New Jersey and Nevada, however, it is not clear that
all other states or that foreign countries will honor these policies. We have
made provisions for estimated uncollectible gaming receivables in order to
reduce gaming receivables to amounts deemed to be collectible. However, our
inability to collect gaming receivables could have a material adverse effect on
our results of operations.
SECURITY AND SURVEILLANCE.
Gaming operations at our casinos are also subject to risk of substantial
loss as a result of employee or patron dishonesty, credit fraud or illegal slot
machine manipulation. We have in place stringent control procedures to minimize
these risks, including supervision of employees, monitoring by electronic
surveillance equipment and use of two-way mirrors. However, we cannot assure you
that losses will not occur. In New Jersey, our activities are observed and
monitored on an ongoing basis by agents of both the New Jersey Casino Control
Commission and the New Jersey Division of Gaming Enforcement, each of which
maintains a staff on the premises of Tropicana Atlantic City. Similarly, in
Nevada our gaming subsidiaries must comply with specific regulatory requirements
concerning casino and game security and surveillance. The gaming operations of
Tropicana Las Vegas and Ramada Express are subject to routine audit and
supervision by agents of the Nevada State Gaming Control Board. In Missouri and
Indiana, our casino riverboat operations are subject to the control procedures
of the Missouri Gaming Commission and the Indiana Gaming Commission,
respectively. The Missouri Gaming Commission maintains a staff at Casino Aztar
Caruthersville and the Indiana Gaming Commission maintains a staff at Casino
Aztar Evansville.
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REGULATION AND LICENSING
GENERAL.
Regulatory aspects of the gaming business are pervasive in nature and the
following description should not be construed as a complete summary of all the
regulatory requirements faced by Aztar. Gaming authorizations, once obtained,
can be suspended or revoked for a variety of reasons. If Aztar is ever precluded
from operating one of its gaming facilities, it would, to the extent permitted
by law, seek to recover its investment by sale of the property affected, but
Aztar cannot guarantee that it would recover its full investment.
From time to time, legislative and regulatory changes are proposed, and
court decisions rendered, that could be adverse to Aztar. In addition, from time
to time, investigations are conducted relating to the gaming industry. Tropicana
Atlantic City, Casino Aztar Caruthersville and Casino Aztar Evansville are
required to report particular cash transactions to the U.S. Department of the
Treasury pursuant to the Bank Secrecy Act. Violation of the reporting
requirements of the Bank Secrecy Act could result in civil as well as criminal
penalties, including fines, imprisonment or both, which in turn could result in
the revocation, suspension, imposition of conditions upon or failure to renew
the casino license of the affected facility. The States of Nevada and Indiana
have adopted regulations similar to the Bank Secrecy Act that require the Nevada
and Indiana facilities to document and report specific currency transactions to
the Nevada State Gaming Control Board and the Indiana Gaming Commission,
respectively. Violation of these regulations could result in action by Nevada or
Indiana authorities to fine or revoke, suspend, impose conditions upon or fail
to renew the Nevada or Indiana facilities' licenses and Aztar's licensing
approval. Except to the extent of a violation as noted above, these reporting
requirements are not expected to have any adverse effects on Aztar's casino
operations.
NEVADA.
The ownership and operation of casino gaming facilities in Nevada are
subject to (a) the Nevada Gaming Control Act and the regulations promulgated
under that Act, referred to collectively as the "Nevada Act" and (b) various
local regulations. The gaming operations of the Tropicana Las Vegas and Ramada
Express are subject to the licensing and regulatory control of the Nevada Gaming
Commission, the Nevada State Gaming Control Board and the Clark County Liquor
and Gaming Licensing Board. Each of the Nevada Commission, Nevada Control Board
and Clark County Board are collectively referred to as the "Nevada Gaming
Authorities."
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things:
- the prevention of unsavory or unsuitable persons from having a direct or
indirect involvement with gaming at any time or in any capacity;
- the establishment and maintenance of responsible accounting practices and
procedures;
- the maintenance of effective controls over the financial practices of
licensees, including the establishment of minimum procedures for internal
fiscal affairs and
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the safeguarding of assets and revenues, providing reliable record
keeping and requiring the filing of periodic reports with the Nevada
Gaming Authorities;
- the prevention of cheating and fraudulent practices; and
- the provision of a source of state and local revenues through taxation
and licensing fees.
Change in these or other laws, regulations and procedures that apply to
Aztar could have an adverse effect on Aztar.
Hotel Ramada of Nevada is Aztar's wholly-owned subsidiary which operates
the casino at Tropicana Las Vegas. Ramada Express, Inc., is Aztar's wholly-owned
subsidiary which operates the Ramada Express casino in Laughlin. Hotel Ramada of
Nevada and Ramada Express, Inc. are both required to be licensed by the Nevada
Gaming Authorities. The gaming licenses require the periodic payment of fees and
taxes and are not transferable. Aztar is registered by the Nevada Commission as
a publicly traded corporation ("Registered Corporation") and is therefore
required periodically to submit detailed financial and operating reports to the
Nevada Commission and furnish any other information which the Nevada Commission
may require. No person may become a stockholder of, or receive any percentage of
profits from, Hotel Ramada of Nevada or Ramada Express, Inc. without first
obtaining licenses and approvals from the Nevada Gaming Authorities. Aztar,
Hotel Ramada of Nevada, and Ramada Express, Inc. have obtained from the Nevada
Gaming Authorities the various registrations, approvals, permits and licenses
required in order to engage in gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, Aztar, Hotel Ramada of
Nevada or Ramada Express, Inc. in order to determine whether the individual is
suitable or should be licensed as a business associate of a gaming licensee.
Officers, directors and some key employees of Hotel Ramada of Nevada and Ramada
Express, Inc. must file applications with the Nevada Gaming Authorities and may
be required to be licensed or found suitable by the Nevada Gaming Authorities.
Some officers, directors and key employees of Aztar who are actively and
directly involved in gaming activities of Hotel Ramada of Nevada and Ramada
Express, Inc. may be required to be licensed or found suitable by the Nevada
Gaming Authorities. The Nevada Gaming Authorities may deny an application for
licensing for any cause which they deem reasonable. A finding of suitability is
comparable to licensing, and both require submission of detailed personal and
financial information followed by a thorough investigation. The applicant for
licensing or a finding of suitability must pay all the costs of the
investigation. Changes in licensed positions must be reported to the Nevada
Gaming Authorities and in addition to their authority to deny an application for
a finding of suitability or licensure, the Nevada Gaming Authorities have
jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with Aztar, Hotel Ramada of Nevada or Ramada Express, Inc., the
companies involved would have to sever all relationships with this person. In
addition, the Nevada Commission may require Aztar, Hotel Ramada of Nevada or
Ramada Express, Inc. to terminate the employment of any person who refuses to
file appropriate applications. Determinations of suitability or of questions
pertaining to licensing are not subject to judicial review in Nevada.
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Aztar, Hotel Ramada of Nevada and Ramada Express, Inc. are required to
submit detailed financial and operating reports to the Nevada Commission.
Substantially all material loans, leases, sales of securities and similar
financing transactions by Hotel Ramada of Nevada and Ramada Express, Inc. must
be reported to, or approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated by Hotel Ramada of
Nevada or Ramada Express, Inc., the gaming licenses held by Hotel Ramada of
Nevada or Ramada Express, Inc. could be limited, conditioned, suspended or
revoked, subject to compliance with particular statutory and regulatory
procedures. In addition, Hotel Ramada of Nevada, Ramada Express, Inc., Aztar and
the persons involved could be subject to substantial fines for each separate
violation of the Nevada Act at the discretion of the Nevada Commission. Further,
a supervisor could be appointed by the Nevada Commission to operate Aztar's
Nevada gaming properties and, under some circumstances, earnings generated
during the supervisor's appointment (except for the reasonable rental value of
Aztar's Nevada gaming properties) could be forfeited to the State of Nevada.
Limitation, conditioning or suspension of any gaming license or the appointment
of a supervisor could (and revocation of any gaming license would) materially
adversely affect Aztar.
Any beneficial holder of Aztar's voting securities, regardless of the
number of shares owned, may be required to file an application, be investigated,
and have his suitability as a beneficial holder of Aztar's voting securities
determined if the Nevada Commission has reason to believe that this ownership
would otherwise be inconsistent with the declared policies of the State of
Nevada. The applicant must pay all costs of investigation incurred by the Nevada
Gaming Authorities in conducting this investigation.
The Nevada Act requires any person who acquires more than 5% of Aztar's
voting securities to report the acquisition to the Nevada Commission. The Nevada
Act requires that beneficial owners of more than 10% of Aztar's voting
securities apply to the Nevada Commission for a finding of suitability within
thirty days after the chairman of the Nevada Control Board mails the written
notice requiring this filing. Under some circumstances, an "institutional
investor," as defined in the Nevada Act, which acquires more than 10%, but not
more than 15%, of Aztar's voting securities may apply to the Nevada Commission
for a waiver of the finding of suitability if the institutional investor holds
the voting securities for investment purposes only. An institutional investor
will not be deemed to hold voting securities for investment purposes unless the
voting securities were acquired and are held in the ordinary course of business
as an institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of directors
of Aztar, any change in Aztar's corporate charter, bylaws, management, policies
or operations of Aztar, or any of its gaming affiliates, or any other action
which the Nevada Commission finds to be inconsistent with holding Aztar's voting
securities for investment purposes only. Activities which are not deemed to be
inconsistent with holding voting securities for investment purposes only
include:
- voting on all matters voted on by stockholders;
- making financial and other inquiries of management of the type normally
made by securities analysts for informational purposes and not to cause a
change in its management, policies or operations; and
- other activities as the Nevada Commission may determine to be consistent
with this investment intent.
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If the beneficial holder of voting securities who must be found suitable is
a corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within thirty days after being ordered to do so by the Nevada Commission
or the chairman of the Nevada Control Board, may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the common stock of a
Registered Corporation beyond the period of time as may be prescribed by the
Nevada Commission may be guilty of a criminal offense. Aztar is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with Aztar, Hotel Ramada of
Nevada or Ramada Express, Inc., Aztar
- pays that person any dividend or interest upon its voting securities,
- allows that person to exercise, directly or indirectly, any voting right
conferred through securities held by that person,
- pays remuneration in any form to that person for services rendered or
otherwise, or
- fails to pursue all lawful efforts to require the unsuitable person to
relinquish his voting securities for cash at fair market value.
Additionally, the Clark County Board has taken the position that it has the
authority to approve all persons owning or controlling the stock of any
corporation controlling a gaming license.
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation, including Aztar, to file
applications, be investigated and be found suitable to own the debt security of
a Registered Corporation. If the Nevada Commission determines that a person is
unsuitable to own the security, then pursuant to the Nevada Act, the Registered
Corporation can be sanctioned, including the loss of its approvals, if without
the prior approval of the Nevada Commission, it:
- pays to the unsuitable person any dividend, interest, or any distribution
whatsoever;
- recognizes any voting right by the unsuitable person in connection with
the securities;
- pays the unsuitable person remuneration in any form; or
- makes any payment to the unsuitable person by way of principal,
redemption, conversion, exchange, liquidation, or similar transaction.
Aztar is required to maintain a current stock ledger in Nevada which may be
examined by the Nevada Gaming Authorities at any time. If any securities are
held in trust by an agent or by a nominee, the record holder may be required to
disclose the identity of the beneficial owner to the Nevada Gaming Authorities.
A failure to make this disclosure may be grounds for finding the record holder
unsuitable. Aztar is also required to render maximum assistance in determining
the identity of the beneficial owner. The Nevada Commission has the power to
require Aztar's stock certificates to bear a legend
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indicating that the securities are subject to the Nevada Act. However, to date,
the Nevada Commission has not imposed this requirement on Aztar.
Aztar may not make a public offering of any securities without the prior
approval of the Nevada Commission if the securities or the proceeds therefrom
are intended to be used to construct, acquire or finance gaming facilities in
Nevada, or to retire or extend obligations incurred for these purposes. This
approval, if given, does not constitute a finding, recommendation or approval by
the Nevada Commission or the Nevada Control Board as to the accuracy or adequacy
of the prospectus or the investment merits of the securities. Any representation
to the contrary is unlawful.
On May 22, 1997, the Nevada Commission granted Aztar prior approval to make
public offerings for a period of two years subject to some conditions (the
"Shelf Approval"). However, the Shelf Approval may be rescinded for good cause
without prior notice upon the issuance of an interlocutory stop order by the
chairman of the Nevada Control Board. The Shelf Approval does not constitute a
finding, recommendation or approval by the Nevada Commission or the Nevada
Control Board as to the accuracy or adequacy of the prospectus or the investment
merits of the securities offered. Any representation to the contrary is
unlawful.
The exchange offer will constitute a public offering that will require the
prior approval of the Nevada Commission. Aztar has filed an application with the
Nevada Control Board and Nevada Commission for a new Shelf Approval which will
be considered in May 1999. On May 12, 1999, the Nevada Control Board took action
to recommend to the Nevada Commission that Aztar's application for a new Shelf
Approval be approved. On May 27, 1999, the Nevada Commission is scheduled to
consider the Nevada Control Board's recommendation that it approve Aztar's
application for a new Shelf Approval. If a new Shelf Approval is granted by the
Nevada Commission, then the exchange offer will be able to be made pursuant to
the new Shelf Approval. However, if a new Shelf Approval is not granted by the
Nevada Commission, then the exchange offer will require the separate prior
approval of the Nevada Commission. There can be no assurance that a new Shelf
Approval or the exchange offer will be approved by the Nevada Commission in a
timely fashion, if at all.
Changes in control of Aztar through merger, consolidation, stock or asset
acquisitions, management or consulting agreements, or any act or conduct by a
person whereby he obtains control, may not occur without the prior approval of
the Nevada Commission. Entities seeking to acquire control of a Registered
Corporation must satisfy the Nevada Control Board and Nevada Commission in a
variety of stringent standards prior to assuming control of the Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated and
licensed as part of the approval process relating to the transaction.
The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse
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effects of these business practices upon Nevada's gaming industry and to further
Nevada's policy to:
- assure the financial stability of corporate gaming operators and their
affiliates;
- preserve the beneficial aspects of conducting business in the corporate
form; and
- promote a neutral environment for the orderly governance of corporate
affairs.
Approvals are, in some circumstances, required from the Nevada Commission
before Aztar can make exceptional repurchases of voting securities above the
current market price thereof and before a corporate acquisition opposed by
management can be consummated. The Nevada Act also requires prior approval of a
plan of recapitalization proposed by Aztar's board of directors in response to a
tender offer made directly to the Registered Corporation's stockholders for the
purposes of acquiring control of the Registered Corporation.
License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based upon
either:
- a percentage of the gross revenues received;
- the number of gaming devices operated; or
- the number of table games operated.
A casino entertainment tax is also paid by Hotel Ramada of Nevada and
Ramada Express, Inc. where entertainment is furnished in connection with the
selling of food, refreshments or merchandise in a cabaret, nightclub, cocktail
lounge or casino showroom.
Any person who is licensed, required to be licensed, registered, required
to be registered or is under common control with these persons (a "Licensee", or
collectively, "Licensees"), and who proposes to become involved in a gaming
venture outside of Nevada is required to deposit with the Nevada Control Board,
and thereafter maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation of the Nevada Control Board of their participation in
this foreign gaming. The revolving fund is subject to increase or decrease in
the discretion of the Nevada Commission. Thereafter, Licensees are required to
comply with specific reporting requirements imposed by the Nevada Act. A
Licensee is also subject to disciplinary action by the Nevada Commission if it
knowingly violates any laws of the foreign jurisdiction pertaining to the
foreign gaming operation, fails to conduct the foreign gaming operation in
accordance with the standards of honesty and integrity required of Nevada gaming
operations, engages in activities that are harmful to the State of Nevada or its
ability to collect gaming taxes and fees, or employs a person in the foreign
operation who has been denied a license or finding of suitability in Nevada on
the ground of personal unsuitability.
The sale of alcoholic beverages by Hotel Ramada of Nevada and Ramada
Express, Inc. is subject to licensing, control and regulation by the Clark
County Board. All licenses are revocable and are not transferable. The Clark
County Board has full power to limit, condition, suspend or revoke any license,
and any this disciplinary action could (and
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revocation would) have a material adverse effect upon the operations of Aztar,
Hotel Ramada of Nevada or Ramada Express, Inc.
NEW JERSEY.
The ownership and operation of casino hotel facilities and gaming
activities in Atlantic City, New Jersey, are subject to extensive state
regulation under the New Jersey Casino Control Act and the regulations of the
New Jersey Casino Control Commission. In general, the New Jersey Act and
regulations provide for more extensive controls over a broader scope of
gaming-related activities than does the Nevada regulatory system.
The New Jersey Act and regulations concern primarily the financial
stability and character of casino licensees, their intermediary and holding
companies, their employees, their security holders and others financially
interested in casino operations, the nature of hotel and casino facilities and a
wide range of gaming and non-gaming related operations. The New Jersey Act and
regulations include detailed provisions concerning, among other things:
- financial and accounting practices used in connection with casino
operations;
- residence and equal employment opportunities for employees of casino
operators, contractors for casino facilities and others;
- rules of games, levels of supervision of games and methods of selling and
redeeming chips;
- manner of granting credit, duration of credit and enforceability of
gaming debts;
- manufacture, distribution and sale of gaming equipment;
- security standards;
- management control procedures;
- accounting and cash control methods;
- reports to gaming authorities;
- advertising of casinos; and
- standards for entertainment and distribution of alcoholic beverages in
casinos.
A number of these provisions require practices which are different from
those in Nevada and some of them result in casino operating costs being higher
than those in comparable facilities in Nevada.
The New Jersey Act also established the New Jersey Division of Gaming
Enforcement (the "New Jersey Division") to investigate all license applications,
enforce the provisions of the New Jersey Act and attendant regulations and
prosecute all proceedings for violations of the New Jersey Act and regulations
before the New Jersey Commission. The New Jersey Division also conducts audits
and continuing reviews of all casino operations.
Adamar of New Jersey, Inc., a wholly-owned subsidiary of Aztar, has been
licensed (subject to quadrennial renewal) by the New Jersey Commission to
operate Tropicana Atlantic City. In November 1982, the New Jersey Commission
granted a plenary license
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to Adamar of New Jersey, Inc. In November 1995, the license was renewed for a
period of four years. Aztar and Ramada New Jersey Holdings Corporation, another
of Aztar's New Jersey gaming subsidiaries, have been approved as qualified
holding companies for Adamar of New Jersey, Inc.'s casino license. Officers and
directors of Aztar, Ramada New Jersey Holdings Corporation and Adamar of New
Jersey, Inc. and employees who work at casino hotel facilities operated by
Adamar of New Jersey, Inc. also have been or must be qualified, licensed or
registered. In addition, all contracts affecting the facilities are subject to
approval, and all enterprises that conduct business with Adamar of New Jersey,
Inc. must register with the New Jersey Commission and those enterprises that
conduct gaming related businesses or that conduct business on a regular and
continuing basis, as defined by the regulations under the New Jersey Act, must
be licensed by the New Jersey Commission.
The New Jersey Commission has broad discretion regarding the issuance,
renewal, revocation and suspension of casino licenses. Casino licenses are not
transferable. A casino hotel facility must also continually satisfy specific
requirements concerning, among other things, the number of qualifying sleeping
units and the relationship between the number of qualifying sleeping units and
the square footage of casino space. Aztar believes that Tropicana Atlantic City
continues to meet these requirements.
The New Jersey Act further provides that each person who directly or
indirectly holds any beneficial interest or ownership of the securities issued
by a casino licensee or any of its intermediary or holding companies, those
persons who, in the opinion of the New Jersey Commission, have the ability to
control the casino licensee or its intermediary or holding companies or elect a
majority of the board of directors of said companies, other than a banking or
other licensed lending institution which makes a loan or holds a mortgage or
other lien acquired in the ordinary course of business, and lenders and
underwriters of said companies may be required to seek qualification from the
New Jersey Commission. However, because Aztar is a publicly traded holding
company, in accordance with the provisions of the New Jersey Act, a waiver of
qualification may be granted by the New Jersey Commission, with the concurrence
of the director of the New Jersey Division, if it is determined that said
persons or entities are not significantly involved in the activities of Adamar
of New Jersey, Inc. and, in the case of security holders, do not have the
ability to control Aztar or elect one or more of its directors. There exists a
rebuttable presumption that any person holding 5% or more of the equity
securities of a casino licensee's intermediary or holding company or a person
having the ability to elect one or more of the directors of such a company has
the ability to control the company and thus must obtain qualification from the
New Jersey Commission.
Notwithstanding this presumption of control, the New Jersey Act provides
for a waiver of qualification for passive "institutional investors," as defined
by the New Jersey Act, if the institutional investor purchased the securities
for investment purposes only and where the securities constitute
- less than 10% of the equity securities of a casino licensee's holding or
intermediary company or
- debt securities of a casino licensee's holding or intermediary company
representing a percentage of the outstanding debt of the company not
exceeding 20% or a percentage of any issue of the outstanding debt of the
company not exceeding 50%.
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The waiver of qualification is subject to some conditions including, upon
request of the New Jersey Commission, filing a certified statement that the
institutional investor has no intention of influencing or affecting the affairs
of the issuer. A waiver of qualification may also be granted to institutional
investors holding a higher percentage of securities of a casino licensee's
holding or intermediary company upon a showing of good cause.
If the institutional investor is granted a waiver and subsequently
determines to influence or affect the affairs of the issuer, it must provide not
less than 30 days notice of this intent and file with the New Jersey Commission
an application for qualification before taking any action which may influence or
affect the affairs of the issuer, except that an institutional investor holding
voting securities will be permitted to vote on matters put to the vote of the
holders of outstanding voting securities. If an institutional investor that has
been granted a waiver subsequently changes its investment intent, or if the New
Jersey Commission finds reasonable cause to believe that the institutional
investor may be found unqualified, no action other than divestiture will be
taken by the investor with respect to the security holdings until the investor
complies with the provisions of the New Jersey Act concerning Interim Casino
Authorization. The provisions of the New Jersey Act concerning Interim Casino
Authorization provide that whenever a security holder of either equity or debt
is required to qualify pursuant to the New Jersey Act, the security holder will,
within 30 days after the New Jersey Commission determines that qualification is
required or declines to waive qualification,
- file a completed application for qualification, along with an executed
and approved Trust Agreement, wherein all securities of the holding or
intermediary company held by that security holder are placed in trust
pending qualification, or
- file a notice of intent to divest itself of the securities as the New
Jersey Commission may require so as to remove the need for qualification,
which securities must be divested within 120 days from the date the
determination was made.
The New Jersey Act further requires that corporate licensees and their
subsidiaries, intermediaries and holding companies adopt specific provisions in
their certificates of incorporation that require some remedial action in the
event that an individual owner of any security of such company is found
disqualified under the New Jersey Act. The required certificate of incorporation
provisions vary depending on whether the stock of the company subject to the
requirements of the New Jersey Act is publicly or privately traded. Pursuant to
the New Jersey Act, the certificate of incorporation of a publicly held company
must provide that any securities of the corporation are held subject to the
condition that if a holder is found to be disqualified by the New Jersey
Commission pursuant to the New Jersey Act the holder will dispose of his
interest in the company. The certificate of incorporation of a privately held
company must create the absolute right of the company to repurchase at the
market price or purchase price, whichever is the lesser, any security, share or
other interest in the company in the event the New Jersey Commission disapproves
a transfer in accordance with the provisions of the New Jersey Act.
Aztar is a publicly held company and, accordingly, a provision has been
placed in its restated certificate of incorporation which provides that a holder
of its securities must dispose of the securities if the holder is found
disqualified under the New Jersey Act. In addition, Aztar's restated certificate
of incorporation provides that it may redeem the stock of any holder found to be
disqualified.
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If, at any time, it is determined that Adamar of New Jersey, Inc. has
violated the New Jersey Act or regulations, or if any security holder of Aztar,
Adamar of New Jersey, Inc. or Ramada New Jersey Holdings Corporation who is
required to be qualified under the New Jersey Act is found disqualified but does
not dispose of the securities, Adamar of New Jersey, Inc. could be subject to
fines or its license could be suspended or revoked. If Adamar of New Jersey,
Inc.'s license is revoked, the New Jersey Commission could appoint a conservator
to operate and to dispose of any casino hotel facilities of Adamar of New
Jersey, Inc. Net proceeds of a sale by a conservator and net profits of
operations by a conservator (at least up to an amount equal to a fair return on
Adamar of New Jersey, Inc.'s investment which is reasonable for casinos or
hotels) would be paid to Adamar of New Jersey, Inc.
In addition to compliance with the New Jersey Act and regulations relating
to gaming, any facility built in Atlantic City by Adamar of New Jersey, Inc. or
any other subsidiary of Aztar must comply with the New Jersey and Atlantic City
laws and regulations relating to, among other things, the Coastal Area
Facilities Review Act, construction of buildings, environmental considerations,
operation of hotels and the sale of alcoholic beverages.
The New Jersey Commission is authorized to establish fees for the issuance
or renewal of casino licenses. Yearly casino hotel alcoholic beverage license
fees are payable for each facility in any of five specified categories in any
licensed casino hotel. There is also an annual license fee on each slot machine.
The New Jersey Commission is also authorized by regulation to establish annual
fees for the issuance and renewal of licenses other than casino licenses.
The New Jersey Act imposes an annual tax of eight percent on gross revenues
(as defined in the New Jersey Act). In addition, casino licensees are required
to invest one and one-quarter percent of gross casino revenues for the purchase
of bonds to be issued by the Casino Reinvestment Development Authority or make
other approved investments equal to that amount; in the event the investment
requirement is not met, the casino licensee is subject to a tax in the amount of
two and one-half percent on gross revenues.
MISSOURI.
On November 3, 1992, a statewide referendum authorized gaming in the state
of Missouri on the Missouri and the Mississippi Rivers. Local approval from the
home dock municipality, as required by the legislation, was also obtained from
the City of Caruthersville in the November 3, 1992 election. On April 29, 1993,
Missouri enacted revised legislation (the "Missouri Gaming Law") which amended
the existing legislation. The Missouri Gaming Law established the Missouri
Gaming Commission, which is responsible for the licensing and regulation, and
enforcement with respect to some aspects, of riverboat gaming in Missouri and
has the discretion to approve license applications for riverboat gaming
facilities. In July 1993, Aztar was chosen by the City of Caruthersville as the
preferred applicant to develop a gaming facility, and on September 20, 1993,
Aztar's subsidiary, Aztar Missouri Gaming Corporation, filed its initial
application with the Missouri Gaming Commission. The Missouri Gaming Commission
conducted a formal investigation of Aztar Missouri Gaming Corporation's
application and granted an owner/operator gaming license to Aztar Missouri
Gaming Corporation on April 26, 1995.
In a decision handed down on January 25, 1994, the Missouri Supreme Court
held that games of chance were prohibited under the Missouri constitution. On
April 5, 1994,
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Missouri voters narrowly defeated the adoption of a constitutional amendment
that would have excepted excursion boats and floating facilities from the
constitutional prohibition on lotteries. Local voters did re-approve gaming in
the City of Caruthersville in the April 5, 1994 election. Following the April 5,
1994 election, the Missouri legislature amended the existing Missouri Gaming Law
to clarify some definitions and to resolve some constitutional questions raised
in the Missouri Supreme Court decision. Pursuant to the Missouri Gaming Law, as
revised, the Missouri Gaming Commission has issued eleven gaming licenses
throughout the state: one in Caruthersville, four in the St. Louis area, five in
the Kansas City area, and one in St. Joseph.
In a statewide election held on November 8, 1994, Missouri voters approved
the adoption of an amendment to the Missouri Constitution which permits the
legislature to allow games of chance to be conducted on excursion boats and
floating facilities on the Mississippi River and the Missouri River. As a result
of the amendment, full-scale gaming, subject to Missouri Gaming Law, is now
available in Missouri.
Opponents of gaming in Missouri have brought several legal challenges to
gaming in the past and may possibly bring similar challenges in the future. On
November 25, 1997, the Missouri Supreme Court overturned a state lower court and
held that a portion of the Missouri Gaming Law that authorized excursion gaming
facilities in "artificial basins" up to 1,000 feet from the Mississippi or
Missouri rivers was unconstitutional. This ruling created uncertainty as to the
legal status of several excursion gaming riverboat facilities in the state;
however, as Aztar Missouri Gaming Corporation facilities were fully on the
Mississippi River, they did not appear to be affected. On November 3, 1998, a
statewide referendum was held, whereby the voters amended the constitution to
allow "artificial basins" for existing facilities, effectively overturning the
above Missouri Supreme Court decision. There can be no assurances that any
future challenges, if brought, would not further interfere with full-scale
gaming operations in Missouri, including the operations of Aztar Missouri Gaming
Corporation.
Under the Missouri Gaming Law, the ownership and operation of riverboat
gaming facilities in Missouri are subject to extensive state and local
regulation. Aztar, Aztar Missouri Gaming Corporation, any subsidiaries, and some
of their officers and employees are and will be subject to specific regulations.
As part of the application and licensing process for a gaming license, the
applicant must submit detailed financial, operating and other reports to the
Missouri Gaming Commission. Each applicant has an ongoing duty to update the
information provided to the Missouri Gaming Commission in the application. Aztar
Missouri Gaming Corporation has frequently updated its application materials
since it was initially licensed. In addition to the information required of the
applicant, directors, officers and other key persons must submit Personal
Disclosure Forms, which include detailed personal financial information, and are
subject to thorough investigations. In addition, some officers and directors of
Aztar, as well as Aztar itself, have submitted Personal Disclosure Forms and
applications to the Missouri Gaming Commission. All gaming employees must obtain
an occupational license issued by the Missouri Gaming Commission.
The operators' licenses are issued through application to the Missouri
Gaming Commission, which requires, among other things:
- investigations into an applicant's character, financial responsibility
and experience qualifications and
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- that applicants furnish:
S financial information, referenced above;
S detailed information about the applicant's history, business,
affiliations, officers, directors and owners;
S an affirmative action plan for the hiring and training of minorities
and women; and
S an economic development or impact report.
License fees are a minimum of $50,000 for the initial application and
$25,000 annually thereafter. Licenses are to last for a term of two to three
years, except that the initial license and first renewal granted to each gaming
operator are to be for terms of one year. Aztar Missouri Gaming Corporation was
relicensed in March 1999 for a period of two years.
Aztar and Aztar Missouri Gaming Corporation have requested approval from
the Missouri Gaming Commission to restructure the licensee entity in Missouri,
and that request is presently before the Missouri Gaming Commission.
The Missouri Gaming Commission may revoke or suspend gaming licenses and
impose other penalties for violations of the Missouri Gaming Law and the rules
and regulations promulgated thereunder, including without limitation, forfeiture
of all gaming equipment used for improper gaming and fines of up to three times
a licensee's highest daily gross adjusted receipts during the preceding twelve
months. The gaming licenses may not be transferred nor pledged as collateral,
and the Missouri Gaming Law regulations bar a licensee from taking any of the
following actions without prior notice to, and approval by, the Missouri Gaming
Commission:
- any issuance of an ownership interest of five percent or more of the
issued and outstanding ownership interest;
- any private incurrence of debt by the licensee or any holding company of
$1,000,000 or more;
- any public issuance of debt by a licensee or its holding company; and
- defined "significant related party transactions".
In addition, the licensee must notify the Missouri Gaming Commission of
other transactions, including the transfer of five percent or more of an
ownership interest in the licensee or holding company and any transaction of at
least $1,000,000. The restrictions on transfer of ownership apply to Aztar as
well as the direct licensee, Aztar Missouri Gaming Corporation. Gaming equipment
and corporate stock of some licensees may not be pledged except in narrow
circumstances and subject to some regulatory conditions.
Missouri statutes and administrative rules contain detailed requirements
concerning the operation of a licensed excursion gaming boat facility,
including:
- a charge of two dollars per gaming customer that licensees must pay to
the Missouri Gaming Commission;
- requirements regarding minimum payouts;
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- a 20% tax on adjusted gross receipts;
- prohibitions against providing credit to gaming customers, except for the
use of credit cards and cashing checks; and
- a requirement that each licensee reimburse the Missouri Gaming Commission
for all costs of any Missouri Gaming Commission staff necessary to
protect the public on the licensee's riverboat.
Licensees also must submit audited quarterly financial reports to the
Missouri Gaming Commission and pay the associated auditing fees. Other areas of
operation which are subject to regulation under the Missouri rules are the size,
denomination and handling of chips and tokens; the surveillance methods and
computer monitoring of electronic games; accounting and audit methods and
procedures; and approval of an extensive internal control system. The Missouri
rules also require that all of an operator's purchases must be from suppliers
licensed by the Missouri Gaming Commission, or after the effective date of new
legislation, another entity approved by the Commission.
Although the Missouri Gaming Law provides no limit on the amount of
riverboat space that may be used for gaming, the Missouri Gaming Commission is
empowered to impose space limitations through the adoption of rules and
regulations. In addition, the Missouri Gaming Law imposes a $500 loss limit per
cruise and requires licensees to maintain scheduled cruises or excursions with
boarding and de-boarding times, regardless of whether a gaming riverboat
actually cruises the river, or has been granted continuous docking status
pursuant to the Missouri Gaming Law, as described below.
With respect to the availability of dockside gaming, which may be more
profitable than cruise gaming, the Missouri Gaming Commission is empowered to
determine on a city and county-specific basis where this gaming is appropriate
and will be permitted. Dockside gaming in Missouri may differ from dockside
gaming in other states, because the Missouri Gaming Commission has the ability
to require "simulated cruising." This requirement would permit customers to
board dockside riverboats only at specified times and would prohibit boarding
during the period of a simulated cruise, which is expected to last for two to
three hours. However, customers are permitted to leave the facility at any time.
The Missouri Gaming Commission has authorized all eleven licensees to operate
all or a portion of their facilities on a continuously docked basis with a
"simulated cruise" schedule. On February 15, 1996, the Commission granted Aztar
Missouri Gaming Corporation the authority to, if licensed, operate gambling
games on part of its floating facility, previously used for non-gaming
activities, including ticketing, under the continuous docking provision of the
Missouri Gaming Law. On February 15, 1997, the Commission granted Aztar Missouri
Gaming Corporation the authority to permanently dock the excursion gambling
riverboat facility, known as the "City of Caruthersville."
INDIANA.
The ownership and operation of riverboat casinos in specific designated
waters are subject to extensive state regulation under the Indiana Riverboat
Gambling Act (the "Indiana Act") and regulations which the Indiana Gaming
Commission is authorized to adopt under the Indiana Act. The Indiana Act and the
regulations of the Indiana Gaming Commission are significant to Aztar's
prospects for successfully operating its Evansville, Indiana based riverboat
casino and associated developments.
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The Indiana Act extends broad and pervasive regulatory powers and authority
to the Indiana Gaming Commission. The Indiana Gaming Commission took office in
September 1993, and its activities have been predominantly directed toward
establishing a regulatory and administrative infrastructure for licensing of
prospective applicants for the limited number of riverboat owner's licenses
authorized by the Indiana Act (five for operations docking on Lake Michigan, one
on a landlocked lake in Southwestern Indiana and five on the Ohio River,
including Aztar's facility in Evansville, Indiana), and on developing systems
and "rules of the game" for the actual operation of riverboat casinos. The
Indiana Gaming Commission has issued
- the five authorized riverboat owner's licenses on Lake Michigan,
- four riverboat owner's licenses on the Ohio River, including Aztar's
facility, and
- a certificate of suitability to another applicant for a fifth facility,
subject to final licensure, on the Ohio River.
The Indiana Gaming Commission has not considered applicants for the license
on Patoka Lake in Southwestern Indiana, since that site has been determined by
the United States Army Corp of Engineers to be unsuitable for a riverboat casino
project. A licensee may own no more than a 10% interest in any other owner's
license under the Indiana Act. The Indiana Commission has adopted regulations
under the Indiana Act which covers numerous operational matters concerning
riverboat casinos licensed by the Commission, including rules for
- authorized games,
- internal control procedures,
- accounting records,
- security,
- gaming equipment, and
- extensions of credit.
Among regulations adopted is one dealing with riverboat excursions, routes
and public safety. The Indiana Act requires licensed riverboat casinos to be
cruising vessels and the regulations carry out the legislative intent with
appropriate recognition of public safety needs. The Indiana Act and the
regulations explicitly preclude "dockside gambling". Riverboat gaming excursions
are limited to a duration of up to four hours unless expressly approved by the
Indiana Gaming Commission. No gaming may be conducted while the boat is docked
except:
- for 30-minute time periods at the beginning and end of a cruise while the
passengers are embarking and disembarking;
- if the master of the riverboat reasonably determines that specific
weather or water conditions present a danger to the riverboat, its
passengers and crew;
- if either the vessel or the docking facility is undergoing mechanical or
structural repair;
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- if water traffic conditions present a danger to
S the riverboat, riverboat passengers and crew or
S other vessels on the water, or
- if the master has been notified that a condition exists that would cause
a violation of Federal law if the riverboat were to cruise.
However, a riverboat licensee must allow patrons to disembark at anytime
the riverboat remains at the dock and gambling continues.
For Ohio River excursions, including those Aztar is conducting through its
Evansville operation, "full excursions" must be conducted at all times during a
year unless the master determines otherwise, for the above-stated reasons. A
"full excursion" is a cruise on the Ohio River.
Aztar, through an Indiana subsidiary ("Aztar Indiana"), has received from
the Indiana Gaming Commission a riverboat owner's license for the Evansville,
Indiana market. Aztar Indiana completed requirements for formal licensing and
commenced operations in Evansville on December 7, 1995. The Ohio River has
waters in both Indiana and Kentucky in the Evansville vicinity. Because
riverboat casino gambling is illegal in Kentucky, authorities of that state have
raised issues about Indiana-licensed riverboats operating in Kentucky waters.
Aztar's Evansville riverboat cruises from its dock without entering Kentucky
waters, under its currently approved cruising route, thereby avoiding those
issues.
A riverboat owner's license has an initial effective period of five years
but is subject to an annual renewal thereafter. The Indiana Gaming Commission
has broad discretion with respect to the initial issuance of licenses and also
with respect to the renewal, revocation, suspension and control of riverboat
owner's licenses. The Indiana Gaming Commission has adopted a rule which
requires, in the event a riverboat owner's license is terminated, the riverboat
licensee to secure all the assets of the riverboat gambling operation, and the
licensee may not dispose of any of these assets without the written approval of
the Indiana Gaming Commission. The Indiana Act requires a reinvestigation after
three years to ensure the owner continues to be suitable for licensure.
Officers, directors and principal owners of the actual license holder and
employees who are to work on the riverboat are subject to substantial disclosure
requirements as a part of securing and maintaining necessary licenses.
Significant contracts are subject to disclosure. A riverboat owner licensee may
not enter into or perform any contract or transaction in which it transfers or
receives consideration which is not commercially reasonable or which does not
reflect the fair market value of the goods or services rendered or received. All
contracts are subject to disapproval by the Indiana Gaming Commission. Suppliers
of gaming equipment and materials must also be licensed under the Indiana Act.
The present license expires in December 2000.
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The Indiana Act requires licensees to disclose to the Indiana Gaming
Commission the identity of all directors, officers and persons holding direct or
indirect beneficial interests of 1% or greater. The Indiana Gaming Commission
also requires a broad and comprehensive disclosure of financial and operating
information on licensees and their principal officers. Aztar has provided full
information and documentation to the Indiana Gaming Commission, and it must
continue to do so, during the term of the license. The Indiana Act prohibits,
among other things:
- a key person or a person holding an ownership interest in a riverboat
licensee, or an employee of a riverboat licensee, from participating in a
game conducted on a riverboat which is the subject of a license and
- contributions to a candidate for a state, legislative, or local office,
or to a candidate's committee or to a regular party committee by the
holder of a riverboat owner's license or a supplier's license, by an
officer of a licensee, by an officer of a person that holds at least a 1%
interest in the licensee, or by a person holding at least a 1% interest
in the licensee.
The Indiana Gaming Commission has adopted a rule requiring quarterly
reporting by the holder of a riverboat owner's license, including Aztar Indiana,
or a holder of a supplier's license, of the officers of the licensee, officers
of persons that hold at least a 1% interest in the licensee, including Aztar,
and of persons who directly or indirectly own a 1% interest in the licensee,
including beneficial owners of Aztar.
The Indiana Gaming Commission has adopted a rule which prohibits the
distribution by a riverboat licensee, including Aztar Indiana, to its partners,
shareholders, itself, or any affiliated entity, if the distribution would impair
the financial viability of the riverboat gambling operation. The Indiana Gaming
Commission has adopted another rule which requires riverboat licensees,
including Aztar Indiana, to maintain on a quarterly basis a cash reserve in the
amount of the actual payout for three days, and the cash reserve would include
cash in the casino cage, cash in a bank account in Indiana, or cash equivalents
not committed or obligated.
In addition to receiving a license to conduct riverboat casino operations
from the Indiana Gaming Commission, Aztar Indiana has secured permits and
approvals from the United States Army Corps of Engineers to develop the
facilities it is using to conduct operations. Aztar Indiana has received three
alcoholic beverage permits which are subject to annual renewal: one for
riverboat excursions and two for land support facilities. All building permits
and other approvals for the permanent facilities have been received, and the
project is complete.
The Indiana Act prescribes a tax on adjusted gross receipts from gambling
games authorized under the Indiana Act at the rate of 20% on adjusted gross
receipts. For this purpose, adjusted gross receipts means the total of all cash
and property received from gaming operations less cash paid out as winnings and
uncollectible gaming receivables (not to exceed 2%). The Indiana Act also
prescribes an additional tax for admissions, based upon $3 for each person
admitted to a gaming excursion. The admissions tax is paid for each excursion or
part of an excursion for which the person remains on board. Riverboats are
assessed for property tax purposes as real property at rates to be determined by
local taxing authorities. Indiana corporations are also subject to the Indiana
gross income tax, the Indiana adjusted gross income tax and the Indiana
supplemental corporate net income tax. Sales on a riverboat are subject to
applicable use, excise and retail taxes. The Indiana
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Act requires a riverboat owner licensee to directly reimburse the Indiana Gaming
Commission for the costs of inspectors and agents required to be present during
the conduct of gaming operations.
The Indiana Act places special emphasis upon minority and women's business
enterprise participation in the riverboat industry. Any person issued a
riverboat owner's license must establish goals of at least 10% of the total
dollar value of the licensee's contracts for goods and services with minority
business enterprises and 5% of the total dollar value of the licensee's
contracts for goods and services with women's business enterprises. The Indiana
Gaming Commission may suspend, limit or revoke the owner's license or impose a
fine for failure to comply with the statutory requirements.
Minimum and maximum wagers on games on the riverboat are left to the
discretion of the licensee. Wagering may not be conducted with money or other
negotiable currency. No person under the age of 21 is permitted to wager on a
riverboat.
An institutional investor which acquires 5% or more of any class of voting
securities of a holding company of a licensee is required to notify the Indiana
Gaming Commission and to provide additional information, and may be subject to a
finding of suitability. A person who acquires 5% or more of any class of voting
securities of a holding company of a licensee is required to apply to the
Indiana Gaming Commission for a finding of suitability. A riverboat licensee or
an affiliate may not enter into a debt transaction of $1 million or more without
approval of the Indiana Gaming Commission. Aztar received approval from the
Indiana Gaming Commission in March 1998 for a senior secured reducing revolving
credit facility and for a senior secured term loan for a combined total of up to
$350 million. On March 29, 1999, the Indiana Gaming Commission approved the
issuance of the notes, subject to Staff review of the final loan documents. On
April 30, 1999, the Staff completed its review and approved the final loan
documents. A riverboat owner's license is a revocable privilege and is not a
property right under the Indiana Act. A riverboat owner licensee or any other
person may not lease, hypothecate, borrow money against or loan money against a
riverboat owner's license.
The Governor of Indiana has appointed a Gaming Impact Study Commission,
chaired by the Attorney General, to review the impact of all forms of gaming in
Indiana, and to issue a final report by December 31, 1999.
A lawsuit was filed on October 25, 1996, by three individuals in Harrison
County, Indiana, which challenges the constitutionality of the Indiana Act. The
lawsuit alleges that the Indiana Act:
- creates an unequal privilege because supporters of riverboat gambling,
having lost a county-wide referendum, are permitted to resubmit a
proposal to county voters for approval of riverboat gambling, while
opponents, having lost a county-wide referendum, are not allowed to
resubmit a proposal; and
- was enacted as part of a state budget bill allegedly in violation of a
state constitutional requirement that legislation be confined to a single
subject and matters connected to this subject.
The State of Indiana has filed an answer to the complaint. The State of
Indiana, on behalf of the Indiana Commission, has also filed a motion to dismiss
the complaint. The Supreme Court of Indiana has previously upheld the
constitutionality of the Indiana Act,
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although the prior challenge involved different grounds than those alleged in
this recent lawsuit.
ENVIRONMENTAL MATTERS.
Aztar is subject to federal, state and local environmental laws,
regulations and ordinances that (a) govern activities or operations that may
have adverse environmental effects, including discharges to air and water as
well as handling and disposal practices for solid and hazardous wastes, and (b)
impose liability for the costs of cleaning up, and some damages resulting from,
past spills, disposals or other releases of hazardous substances. Aztar uses
some substances and generates some wastes that are regulated or may be deemed
hazardous under applicable environmental laws. From time to time, its operations
have resulted, or may result, in some non-compliance with applicable
requirements under environmental laws. Aztar has also incurred, and in the
future may incur, costs related to cleaning up contamination relating to
historical uses of some of its current or former properties. Specifically, the
riverboat properties have been used for various industrial purposes in the past.
Any noncompliance with applicable requirements or liability under environmental
laws has not had, and is not expected to have, a material adverse effect on
Aztar's results of operations or its financial condition.
OTHER REGULATIONS.
Aztar's businesses are subject to various federal, state and local laws and
regulations in addition to those discussed above. These laws and regulations
include but are not limited to restrictions and conditions concerning employees,
taxation, zoning and building codes, and marketing and advertising. These laws
and regulations could change or could be interpreted differently in the future,
or new laws and regulations could be enacted. Material changes, new laws or
regulations, or material differences in interpretations by courts or
governmental authorities could adversely affect Aztar.
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MANAGEMENT
AZTAR'S BOARD OF DIRECTORS AND EXECUTIVE OFFICERS.
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
---- --- --------------
<S> <C> <C>
Paul E. Rubeli............................ 55 Chairman of the Board, President and
Chief Executive Officer
Robert M. Haddock......................... 54 Executive Vice President, Chief
Financial Officer and Director
Nelson W. Armstrong, Jr. ................. 58 Vice President, Administration and
Secretary
Joe C. Cole............................... 60 Vice President, Corporate Communications
Meridith P. Sipek......................... 53 Controller
Neil A. Ciarfalia......................... 51 Treasurer
John B. Bohle............................. 55 Director
Gordon M. Burns........................... 47 Director
Edward M. Carson.......................... 69 Director
Linda C. Faiss............................ 56 Director
James L. Kunkel........................... 61 Director
Robert S. Rosow........................... 80 Director
Richard Snell............................. 68 Director
Terence W. Thomas......................... 68 Director
</TABLE>
Paul E. Rubeli. Mr. Rubeli joined Ramada Inc. in 1979 as group vice
president, industrial operations. He served as executive vice president, gaming,
of Ramada Inc. from 1982 to December 1989, when he was appointed president and
chief operating officer of Aztar. He was appointed president and chief executive
officer in February 1990 and was appointed chairman of the board in addition to
his other positions in February 1992. His current term as a director expires in
2002.
Robert M. Haddock. Mr. Haddock joined Ramada Inc. in 1980 and held various
positions before becoming executive vice president and chief financial officer
in March 1987, serving in that capacity until 1989, when he assumed the same
position with Aztar. He became our director in 1989. His current term as a
director expires in 2000.
Nelson W. Armstrong, Jr. Mr. Armstrong joined Ramada Inc. in 1973 as an
accounting supervisor and held various positions on the corporate accounting
staff, serving as vice president and controller, of Ramada Inc. In 1989, Mr.
Armstrong became vice president and controller of Aztar until he was appointed
vice president, administration, and secretary of Aztar in March 1990.
Joe C. Cole. Mr. Cole joined Ramada Inc. in March 1988 as vice president,
corporate communications, after having been affiliated with Phoenix Newspapers
Inc. for 26 years as a reporter, columnist and editor. He became vice president,
corporate communications of Aztar in 1989.
Meridith P. Sipek. Mr. Sipek joined Ramada Inc.'s corporate accounting
staff in 1977 as a manager and held various positions in corporate and hotel
accounting, serving as hotel group controller, before being named assistant
corporate controller. Mr. Sipek became Aztar's assistant corporate controller in
1989 and he was appointed controller in March 1990.
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Neil A. Ciarfalia. Mr. Ciarfalia joined Aztar in 1995 as treasurer. Prior
to joining Aztar, Mr. Ciarfalia spent 11 years with the commercial aircraft
division of Saab-Scania AB. During that time, he served Saab as president of the
various divisional finance companies which arranged or provided financing for
the acquisition of Saab aircraft and related products.
John B. Bohle. Mr. Bohle has been senior vice president and partner of Ray
& Berndston, an executive recruiting services firm since 1981. He has served as
our director since 1992. His current term expires in 2002.
Gordon M. Burns. Mr. Burns has been president of Katama Capital, L.L.C., an
investment firm since 1998. Mr. Burns was previously senior managing director of
the United Bank of Switzerland and was a wall street investment banker for 25
years, including 10 years at Solomon Brothers. He has served as our director
since 1998. His current term expires in 2001.
Edward M. Carson. Mr. Carson is retired. He was formerly the chairman of
First Interstate Bancorp from 1990 to 1995 and president of First Interstate
Bancorp from 1985 to 1990. He also serves as a director of Castle & Cooke, Inc.,
a real estate and resort company, Schuff Steel Company, and Terra Industries,
Inc., an agribusiness products company, and Wells Fargo Bank. He has served as
our director since 1975. His current term expires in 2001.
Linda C. Faiss. Mrs. Faiss has been a partner at Faiss Foley Merica LLC, a
public relations and government affairs firm since 1998. From 1989 until 1998,
Ms. Faiss was senior vice president of Dunn Reber Glenn Marz, an advertising and
public relations agency. She has served as our director since 1997. Her current
term expires in 2002.
James L. Kunkel. Since 1997, Mr. Kunkel has been vice president of Pinnacle
West Capital Corporation, a holding company, and president of its Eldorado
Investment Company subsidiary. Mr. Kunkel was previously a partner at Coopers &
Lybrand, where he had served in various capacities for 35 years, including 12
years as managing partner of Coopers & Lybrand's Phoenix office. He has served
as our director since 1998. His current term expires in 2001.
Robert S. Rosow. Mr. Rosow has been an independent Certified Public
Accountant since 1953. He has served as our director since 1969. His current
term expires in 2001.
Richard Snell. Mr. Snell is chairman of Pinnacle West Capital Corporation,
a holding company and chairman of Arizona Public Service Company, an electric
utility, positions he has held since 1990. He is also a director of Pinnacle
West, Arizona Public Service, and Central Newspapers, Inc. Mr. Snell was
previously chairman, president and chief executive officer of Ramada Inc. from
1981 to December 1989, chairman of Aztar from December 1989 to February 1992 and
chairman and chief executive officer of Aztar from December 1989 to February
1990. He first served as our director in 1981. His current term expires in 2001.
Terence W. Thomas. Mr. Thomas has been chairman of the board of Arizona
Wholesale Supply Company and National Brands, Inc., a wholesale distributor of
consumer products, since 1984. He has served as our director since 1978. His
current term expires in 2000.
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PRINCIPAL STOCKHOLDERS
The following table sets forth the name, address (address is provided for
persons listed as beneficial owners of 5% or more of the outstanding Aztar
common stock) and number of shares and percent of the outstanding Aztar common
stock beneficially owned as of May 15, 1999, by each person known to Aztar's
board of directors to be the beneficial owner of 5% or more of the outstanding
shares of our common stock, each director, each named officer and all current
directors and executive officers as a group. Unless otherwise indicated, the
address of each of the listed stockholders is in care of our address in Phoenix,
Arizona.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY APPROXIMATE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED* OF COMMON STOCK
------------------------------------ ------------------ -------------------
<S> <C> <C>
Franklin Resources, Inc.................... 4,030,100 8.9%
777 Mariners Island Boulevard
San Mateo, CA 94404
Gabelli Funds, Inc......................... 6,124,733 13.5%
One Corporate Center
Rye, NY 10580
DIRECTORS
John B. Bohle.............................. 19,000 **
Gordon M. Burns............................ 8,000 **
Edward M. Carson........................... 20,400 **
Linda C. Faiss............................. 14,000 **
Robert M. Haddock.......................... 756,611 1.7%
James L. Kunkel............................ 9,000 **
Robert S. Rosow............................ 40,596 **
Paul E. Rubeli............................. 1,063,688 2.3%
Richard Snell.............................. 60,000 **
Terence W. Thomas.......................... 22,200 **
NAMED EXECUTIVE OFFICERS
Nelson W. Armstrong, Jr. .................. 92,731 **
Neil A. Ciarfalia.......................... 37,666 **
Meridith P. Sipek.......................... 36,000 **
All Directors and Executive Officers as a
group (14 persons)....................... 2,228,870 4.9%
</TABLE>
- -------------------------
* Including, for Mr. Rosow, 400 shares held in an estate of which Mr. Rosow is
the independent executor and in which he disclaims any beneficial interest;
for Messrs. Carson, Rosow, Snell and Thomas 20,000 shares each, for Mr. Bohle
19,000 shares, for Mrs. Faiss 14,000 shares, and for Messrs. Burns and Kunkel
8,000 shares each, which they may acquire by the exercise of stock options
within 60 days; for Messrs. Haddock, Rubeli, Armstrong, Ciarfalia and Sipek,
740,944, 872,610, 83,334, 31,666 and 30,000 shares, respectively, which they
may acquire by the exercise of stock options within 60 days; and for the
directors and executive officers as a group (14 persons), 1,925,054 shares,
which they may acquire by the exercise of options within 60 days.
** Less than 1% of the outstanding shares of Aztar's common stock.
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<PAGE> 92
DESCRIPTION OF SPECIFIC INDEBTEDNESS
BANK CREDIT FACILITY.
Aztar completed a new financing on May 28, 1998 consisting of a $250
million reducing revolving credit facility and a $50 million term loan, as
described below. Aztar used the funds borrowed under the $250 million revolving
line of credit to prepay the balance outstanding and extinguish a prior reducing
revolving credit facility maturing on December 31, 1999. Aztar used the funds
received under the term loan to repay a portion of the new $250 million
revolving credit facility. Effective April 30, 1999, Aztar and the lenders under
the revolving bank credit facility agreed to expand the maximum amount available
under that facility from $250 million to $300 million.
REVOLVING CREDIT FACILITY.
Aztar entered into a $250 million revolving line of credit with a group of
banks for which Bank of America National Trust and Savings Association acts as
administrative agent. The $250 million revolving line of credit matures June 30,
2003. However, the banks may terminate the line of credit upon a "Change in
Control," as defined in the revolving loan agreement. At April 1, 1999, the
revolving credit facility had an outstanding balance of $45 million. The maximum
amount available under the revolving line of credit will be reduced quarterly by
$12 million until maturity commencing on September 30, 2000.
The interest rate under the revolving credit facility is computed on the
outstanding balance based upon, at Aztar's election, (1) a one-, two-, three- or
six-month Eurodollar rate plus a margin ranging from 1% to 2.25%, or (2) the
prime rate plus a margin ranging from zero to 1%. The applicable margin is
dependent upon Aztar's outstanding indebtedness and operating cash flow.
As of April 1, 1999, the margin was at 0.625% less than the highest level.
Interest computed based upon the Eurodollar rate is payable quarterly or on the
last day of the applicable Eurodollar interest period, if earlier. Interest
computed based upon the prime rate is payable quarterly. Aztar incurs a
commitment fee ranging from 0.225% to 0.4375% per annum on the unused portion of
the revolving line of credit depending upon Aztar's outstanding indebtedness and
operating cash flow.
The revolving loan agreement has quarterly financial tests, including a
minimum requirement for operating cash flow, a minimum ratio of fixed charge
coverage and maximum ratios of total debt and senior debt to operating cash
flow. At April 1, 1999, the ratio of total debt to operating cash flow was 3.37
to 1.00 and the maximum allowable ratio was 5.25 to 1.00. The maximum allowable
ratio decreases to 5.00 to 1.00 at June 30, 1999 and continues to decrease
periodically, beginning June 30, 2000 and thereafter. At April 1, 1999, the
ratio of senior debt to operating cash flow was 1.03 to 1.00 and the maximum
ratio allowable was 3.50 to 1.00. The maximum allowable ratio decreases to 3.00
to 1.00 at June 30, 1999 and thereafter.
Aztar's obligations under the revolving loan agreement are guaranteed by
all of its significant subsidiaries, except Adamar of Nevada, and are secured by
all the property of Tropicana Atlantic City, Ramada Express, Inc. and the
riverboat casino operations and, with some exceptions, the stock of its
subsidiaries.
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The revolving loan agreement also imposes various affirmative covenants on
Aztar and its subsidiaries, including among others, covenants to report
financial and business information, maintain insurance, comply with laws,
maintain properties and other covenants customary in commercial bank financings
of this type.
The revolving loan agreement imposes various negative covenants on Aztar
and its subsidiaries including, without limitation, restrictions on:
(1) the payment of subordinated obligations,
(2) disposition of property,
(3) mergers,
(4) hostile acquisitions,
(5) payment of dividends and other distributions,
(6) change in the nature of our business,
(7) the incurrence of additional debt and guaranties of debt,
(8) capital expenditures and capital leases,
(9) investments and acquisitions,
(10) transactions with affiliates,
(11) liens and negative pledges, and
(12) amendments and modifications of subordinated indebtedness.
Events of default under the revolving loan agreement include, among other
things:
(1) failure to make payments when due,
(2) breach of representations or warranties,
(3) events of bankruptcy,
(4) failure to pay any principal payment on other debt for borrowed
money of $10 million or more when due, or other breach or default under
agreements for this other debt allowing the holder or lender to accelerate
its maturity, or require the other debt to be redeemed or repurchased,
(5) final judgment in an amount in excess of $1.0 million which has
not been stayed or satisfied within 30 days,
(6) revocation of the licenses that lasts for three consecutive
calendar days affecting gaming operations accounting for 5% or more of
consolidated gross revenues, and
(7) failure to comply with covenants.
TERM LOAN.
Aztar entered into a $50 million term loan agreement with a group of
lenders for which Bank of America NT&SA acts as administrative agent. The term
loan agreement
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matures June 30, 2005. However, the lenders may terminate the term loan upon a
"change in control," as defined in the term loan agreement.
The term loan agreement calls for quarterly principal payments of $125,000
beginning on September 30, 1999 through June 30, 2004, and $11,875,000 beginning
on September 30, 2004 through maturity. The annual interest rate under the term
loan agreement is determined based upon, at Aztar's election, a one-, two-,
three- or six-month Eurodollar rate plus a margin of 2.5%. Interest is payable
quarterly or on the last day of the applicable Eurodollar interest period, if
earlier.
Aztar's obligations under the term loan agreement are guaranteed by all of
its significant subsidiaries, except Adamar of Nevada, and are secured by all
the property of Tropicana Atlantic City, Ramada Express, Inc. and the riverboat
casino operations and, with some exceptions, the stock of its subsidiaries.
The term loan agreement imposes various affirmative covenants on Aztar and
its subsidiaries, including among others, reporting covenants, covenants to
maintain insurance, comply with laws, maintain properties and other covenants
customary in financings of this type.
The term loan agreement imposes various negative covenants on Aztar and its
subsidiaries including, without limitation, restrictions on:
(1) disposition of property,
(2) mergers,
(3) payments,
(4) the incurrence of additional debt,
(5) liens,
(6) transactions with affiliates,
(7) amendments or modifications of subordinated indebtedness, and
(8) amendments or modifications of the revolving loan agreement.
Events of default under the term loan agreement include, among other
things:
(1) failure to make payments when due,
(2) breach of representations or warranties,
(3) events of bankruptcy,
(4) failure to pay other debt for borrowed money of $25 million or
more, or other breach or default under agreements for this other debt
allowing the holder or lender to accelerate its maturity, or require the
other debt to be redeemed or repurchased,
(5) final judgment in an amount in excess of $1.0 million which has
not been stayed or satisfied within 30 days,
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(6) revocation of the licenses that lasts for three consecutive
calendar days affecting gaming operations accounting for 5% or more of
consolidated gross revenues, and
(7) failure to comply with covenants.
13 3/4% SENIOR SUBORDINATED NOTES.
On October 4, 1994, Aztar issued $180 million aggregate principal amount of
13 3/4% Senior Subordinated Notes due on October 1, 2004. These notes bear
interest at 13 3/4% per year, and interest is payable each April 1 and October
1. The 13 3/4% Notes are redeemable at Aztar's option, in whole or in part, on
or after October 1, 1999, at prices from 106.875% of the principal amount plus
interest declining to 100% plus interest beginning October 1, 2003.
The 13 3/4% Notes are governed by an indenture dated October 1, 1994. The
indenture imposes various covenants limiting the ability of Aztar and its
respective subsidiaries to, among other things:
(1) declare or pay any dividend or make any distribution,
(2) repurchase or redeem stock or indebtedness,
(3) incur or guarantee additional debt,
(4) enter into some transactions with affiliates,
(5) issue preferred stock,
(6) change the control of the business, or
(7) engage in mergers, consolidations or sales of assets.
The indenture also requires Aztar to offer to purchase the 13 3/4% Notes at
par plus accrued interest upon a change of control, as defined in the indenture.
Events of default under the indenture include:
(1) failure to make payments on the 13 3/4% Notes when due,
(2) failure to comply with covenants,
(3) failure to pay other debt of $5 million or more, or default under
this other debt resulting in acceleration of the maturity of the other
debt,
(4) occurrence of some insolvency events,
(5) failure to satisfy or discharge any final judgment in excess of $5
million, and
(6) the revocation, termination or suspension of any gaming license
resulting in the cessation or suspension of operation of any casino
business for a period of 90 days.
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DESCRIPTION OF REGISTERED NOTES
You can find the definitions of some terms used in this description under
the subheading "Definitions." In this description, the word "Aztar" refers only
to Aztar Corporation and not to any of its subsidiaries or affiliates. Sometimes
we refer to the unregistered notes and the registered notes, collectively as the
notes.
Aztar will issue the registered notes under an indenture between itself and
U.S. Bank National Association, as trustee, which is the same indenture that
governs the unregistered notes. The terms of the notes include those stated in
the indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939.
The following description is a summary of the material provisions of the
indenture. It does not restate that agreement in its entirety. We urge you to
read the indenture because it, and not this description, define your rights as
Holders of these notes. The form and terms of the registered notes will be the
same as the form and terms of the unregistered notes, except that the registered
notes will be readily transferable by you except as otherwise provided in this
prospectus. See "The Exchange Offer -- Purpose and Effect". We have made copies
of the indenture and the registration rights agreement available as set forth
under "-- Available Information."
BRIEF DESCRIPTION OF THE NOTES
These notes:
- are general unsecured senior subordinated obligations of Aztar;
- are subordinated in right of payment to all existing and future Senior
Indebtedness of Aztar;
- are effectively subordinated to all secured Indebtedness of Aztar;
- rank equally with Aztar's 13 3/4% Senior Subordinated Notes due 2004;
- are effectively subordinated to all liabilities of Aztar's subsidiaries,
including trade and construction payables; and
- are senior in right of payment to any future Indebtedness of Aztar that
is specifically subordinated to the notes.
As of April 1, 1999, on a pro forma basis after giving effect to our
redemption on April 7, 1999 of $75 million of our 11% Notes, the May 3, 1999
offering of the unregistered notes, and the application of the net proceeds of
our May offering to redeem the remaining $125 million of our 11% Notes and repay
a portion of the outstanding borrowings under our revolving bank credit
facility, we would have had outstanding $71 million of senior indebtedness that
ranked prior to the notes, $180 million of senior subordinated indebtedness that
ranked equally with the notes and our subsidiaries would have had outstanding
$66 million of other liabilities. As indicated above and as discussed in detail
below under the subheading "Subordination," payments on the notes will be
subordinated to the payment of Senior Indebtedness. The indenture permits us to
incur additional Senior Indebtedness.
All of our Subsidiaries are currently "Restricted Subsidiaries." However,
under the circumstances described below, we will be permitted to designate some
of our subsidiaries
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as "Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be subject to
many of the restrictive covenants in the indenture. See the definition of
"Unrestricted Subsidiary" under the caption "Definitions."
PRINCIPAL, MATURITY AND INTEREST
Aztar will issue registered notes in an aggregate principal amount of up to
$235 million, maturing on May 15, 2007. Subject to the covenants described below
and applicable law, Aztar may issue additional notes under the indenture in an
aggregate principal amount of up to $100 million. The unregistered notes, the
registered notes offered by this prospectus and any additional notes
subsequently issued will be treated as a single class for all purposes under the
indenture.
Interest on these registered notes will accrue at the rate of 8 7/8% per
annum and will be payable semi-annually in arrears on May 15 and November 15,
commencing on November 15, 1999. Aztar will make each interest payment to the
Holders of record of these registered notes on the immediately preceding May 1
and November 1.
Interest on these registered notes will accrue from the date of original
issuance of the unregistered notes or, if interest has already been paid, from
the date of the last payment of interest on the unregistered notes, interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES.
If a Holder has given wire transfer instructions to Aztar, Aztar will make
all principal, premium and interest payments on these notes in accordance with
those instructions. All other payments on these notes will be made at the office
or agency of Aztar maintained for that purpose within the City and State of New
York unless Aztar elects to make interest payments by check mailed to the
Holders at their address set forth in the Register of Holders; provided that all
payments with respect to Global notes, and any definitive notes the Holder of
which has given wire instructions to Aztar will be made by wire-transfer. Until
otherwise designated by Aztar, Aztar's office or agency in New York will be the
office of the Trustee maintained for that purpose.
OPTIONAL REDEMPTION
At any time prior to May 15, 2003, the notes will be redeemable at the
election of Aztar, in whole at any time or in part from time to time, on not
less than 30 nor more than 60 days prior notice, mailed by first-class mail to
the Holders' last addresses as they appear in the Register, at a redemption
price, expressed as a percentage of the principal amount, equal to 100% of the
principal amount thereof plus the Applicable Premium as of, plus accrued and
unpaid interest, if any, to the date of redemption (the "Redemption Date").
On or after May 15, 2003, the notes will be redeemable at the election of
Aztar, in whole at any time or in part from time to time, on not less than 30
nor more than 60 days prior notice, mailed by first-class mail to the Holders'
last addresses as they appear in the Register, at the redemption prices,
expressed in percentages of principal amount, specified
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below plus accrued and unpaid interest, if any, to the redemption date, if
redeemed during the 12-month period beginning May 15 of the years indicated
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003........................................ 104.438%
2004........................................ 102.958
2005........................................ 101.479
2006 and thereafter......................... 100.000
</TABLE>
If less than all the notes are to be redeemed, selection of notes for
redemption will be made by the trustee, pro rata or by lot or by any other means
the trustee determines to be fair and appropriate. The indenture provides that
if any note is to be redeemed in part only, the notice of redemption relating to
that note will state the portion of the principal amount in integral multiples
of $1,000 to be redeemed and that, on and after the date fixed for redemption,
upon surrender of that note, a new note or notes in principal amount equal to
the unredeemed portion thereof will be issued in the name of the Holder thereof.
On and after the date set for redemption interest will cease to accrue on notes
or portions of them called for redemption.
SUBORDINATION OF THE REGISTERED NOTES
The payment of the principal of and interest on the notes is subordinated
in right of payment, as set forth in the indenture, to the prior payment in full
of all Senior Indebtedness, whether outstanding on the date of the indenture or
thereafter created, incurred, issued, assumed or guaranteed. Upon any
distribution of the assets of Aztar upon any liquidation, dissolution,
bankruptcy, reorganization or similar proceeding, the holders of Senior
Indebtedness will be entitled to receive payment in full before the Holders of
the notes are entitled to receive any payment. See "Risk
Factors -- Subordination."
In the event of any default in the payment of principal of or interest on
Designated Senior Indebtedness pursuant to which the maturity of that Designated
Senior Indebtedness may be accelerated, no payment may be made on or in respect
of the notes until that default has been cured or waived. During the continuance
of any other event of default with respect to Designated Senior Indebtedness
that permits acceleration of the maturity thereof, no payment may be made on or
in respect of the notes for a period of 180 days (the "Payment Blockage Period")
commencing on the earlier of:
(1) the date the trustee receives written notice of that default from
the Representative with respect to, or from the holders of a majority in
aggregate principal amount of, that Designated Senior Indebtedness then
outstanding; or
(2) if this event of default results from the acceleration of the
notes, the date of the acceleration (unless the Payment Blockage Period is
terminated by written notice to the trustee from the Representative or
those holders).
Not more than one Payment Blockage Period may be commenced with respect to
the notes during any period of 360 consecutive days. In no event will a Payment
Blockage Period extend beyond 179 days from the date the payment on the notes
was due, and there must be 180 days in any 360-day period in which no Payment
Blockage Period is in effect. For all purposes of this paragraph, no default or
event of default which existed or was continuing on the date of the commencement
of any Payment Blockage Period with respect to the Designated Senior
Indebtedness initiating that Payment Blockage Period will
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be, or be made, the basis for the commencement of a subsequent Payment Blockage
Period by the Representative or requisite holders of the Designated Senior
Indebtedness whether or not within a period of 360 consecutive days unless that
default or event of default will have been cured or waived for a period of not
less than 90 consecutive days. The failure to make a payment of the principal of
or interest on the notes because of these restrictions will not be construed as
preventing the occurrence of an Event of Default and the right to accelerate the
maturity of the notes upon the occurrence thereof.
REPURCHASE UPON A CHANGE OF CONTROL
Upon a Change of Control of Aztar each Holder of the notes will have the
right to require that Aztar repurchase each of the Holder's notes at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the date of repurchase, as provided in, and
subject to the terms of, the indenture. Within 30 days following any Change of
Control, Aztar will mail a notice to each Holder stating, among other things:
(1) that the Holder has the right to require Aztar to repurchase the
Holder's notes at a purchase price in cash equal to the principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase
and that all notes tendered to Aztar by the Holder will be accepted for
payment;
(2) the purchase price and the repurchase date which will be no
earlier than 30 days and no later than 60 days from the date the notice is
mailed; and
(3) the instructions determined by Aztar consistent with this covenant
that a Holder must follow in order to have its notes repurchased.
In the event of a Change of Control, each Holder of the notes will have the
right to require Aztar to repurchase that Holder's notes at 101%, plus accrued
interest. Under the terms of some Indebtedness of Aztar, including its current
bank Credit Facility, the Holders thereof may require repayment or its
acceleration upon a Change of Control. In the event that Holders of the notes
exercised the right to require repurchase of the notes upon a Change of Control,
that right would be subordinated to the right of the banks that are party to the
bank Credit Facility to receive payment, if those banks exercise their right to
require repayment upon a Change of Control. The subordination of the notes may
limit the ability of Aztar to repurchase the notes, depending upon the funds
available to Aztar at that time. The Change of Control provision may also have
the effect of deterring or delaying some unsolicited acquisition attempts.
The conveyance, transfer or lease of all or substantially all of Aztar's
assets, among other things, would constitute a Change of Control. Although the
amount of assets that will constitute "all or substantially all" of Aztar's
assets is not readily quantifiable, a determination as to whether a Change of
Control has occurred will depend on the percentage of operating assets and total
assets transferred, among other measurements, and the other facts and
circumstances of the transaction. In any particular transfer, the determination
of whether a Change of Control has occurred will be made by Aztar, and Aztar
will give notice to the Holders of the notes of the occurrence of a Change of
Control.
Aztar will comply with all applicable rules governing tender offers for the
notes, including but not limited to, Section 14(e) of the Securities Exchange
Act of 1934 and the rules promulgated thereunder.
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MANDATORY DISPOSITION OR REDEMPTION PURSUANT TO GAMING LAWS
The New Jersey and Nevada gaming authorities currently have the authority
to require a Holder or beneficial owner of the notes to be licensed or found
qualified or suitable under applicable laws and regulations. Missouri gaming
authorities also have broad authority to require some persons or entities,
including the Holders of notes, to submit license applications and be licensed
or found qualified or suitable. It is possible that gaming authorities in other
jurisdictions could impose similar requirements. If, at any time, a Holder or
beneficial owner of notes is required to be licensed or found qualified or
suitable under any gaming laws or regulations applicable to Aztar and that
Holder or beneficial owner does not become so licensed or is not found qualified
or suitable, Aztar will have the right, at its option to:
(1) require that Holder or beneficial owner to dispose of all or a
portion of that Holder's or beneficial owner's notes within 120 days after
that Holder or beneficial owner receives notice of the finding by the
applicable gaming authorities, or any other different time period as may be
prescribed by those authorities; or
(2) redeem the notes of that Holder upon not less than 30 nor more
than 60 days prior notice by Aztar, or any other different time period as
may be prescribed by those applicable gaming authorities.
If that Holder or beneficial owner fails to dispose of that Holder's or
beneficial owner's notes within the prescribed time period, Aztar will have the
right to redeem that Holder's or beneficial owner's notes on five days notice.
Any redemption by Aztar pursuant to this paragraph will be without premium and
at the lower of:
(1) the Holder's or beneficial owner's original purchase price for the
notes and, if permitted by the gaming authorities or by applicable Gaming
Jurisdiction Law, accrued interest to the redemption date; and
(2) unless some other price or terms are required by the gaming
authorities, the lowest closing sale price of the notes between the date of
the notice given by the applicable gaming authorities and the date ten days
after that date.
Each Holder and beneficial owner by accepting the notes will agree to those
provisions as set forth in the notes and the indenture and will agree to inform
Aztar upon request of the price at which that Holder or beneficial owner
acquired those notes. See "Regulation and Licensing -- Nevada," "Regulation and
Licensing -- New Jersey" and "Regulation and Licensing -- Missouri".
DEFINITIONS
Set forth is a summary of some defined terms used in the indenture.
Reference is made to the indenture for the full definition of all these terms,
as well as any other terms used in this prospectus for which no definition is
provided.
"Affiliate" means, with respect to any Person, a Person:
(1) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, that
Person;
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(2) which beneficially owns or holds 10% or more of any class of the
Voting Stock of that Person (or a 10% or greater equity interest in a
Person which is not a corporation); or
(3) of which 10% or more of any class of the Voting Stock (or in the
case of a Person which is not a corporation, 10% or more of the equity
interest) is beneficially owned or held by that Person or any Subsidiary of
that Person.
The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Applicable Premium" means, with respect to any note on any Redemption
Date, the greater of:
(1) 1.0% of the principal amount of the note; or
(2) the excess of:
(A) the sum of the present values at such Redemption Date of (i)
the redemption price of the Note at May 15, 2003 (such redemption price
being set forth in the table appearing above under the caption
"-- Optional Redemption") and (ii) all required interest payments due on
the note through May 15, 2003 (excluding accrued but unpaid interest),
computed in each case using a discount rate equal to the Treasury Rate
as of such Redemption Date plus 50 basis points; over
(B) the principal amount of the note.
"Asset Sale" means the sale or other disposition, including, without
limitation, dispositions pursuant to Sale and Leaseback Transactions, by Aztar
or one of its Subsidiaries to any Person other than Aztar or one of its
Subsidiaries of:
(1) any of the Capital Stock of any of the Subsidiaries of Aztar; or
(2) any other assets of Aztar or any assets of its Subsidiaries
outside the ordinary course of business of Aztar or that Subsidiary.
"Average Life" means, as of the date of determination, with respect to any
debt security, the quotient obtained by dividing:
(1) the sum of the products of
(A) the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of that debt
security multiplied by
(B) the amount of that principal payment by
(2) the sum of all those principal payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents, however designated, of capital
stock of that Person and any rights (other than debt securities convertible into
capital stock), warrants or options to acquire that capital stock.
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"Capitalized Lease Obligation" means, with respect to any Person, the
obligation of that Person to pay rent or other amounts under a lease of, or
other agreement conveying the right to use, real or personal Property, which
obligation is required to be classified and accounted for as a capital lease
obligation on a balance sheet of that Person under generally accepted accounting
principles. For purposes of the indenture, the amount of that obligation at any
date will be the outstanding amount of that obligation at that date, determined
in accordance with generally accepted accounting principles.
"Change of Control" means any one or more of the following:
(1) Aztar consolidates with or merges into any other corporation or
any other corporation consolidates with or merges into Aztar (in either
case, other than a consolidation or merger with a Wholly Owned Subsidiary
in which all of the Voting Stock of Aztar outstanding immediately prior to
the effectiveness thereof is changed into or exchanged for substantially
the same consideration), in either case pursuant to a transaction in which
substantially all of the Voting Stock of Aztar outstanding immediately
prior to the effectiveness thereof is changed into or exchanged for cash,
securities (other than Voting Stock of Aztar) or other property; provided,
however, that the term "Change of Control" does not include any such
consolidation or merger if, with respect to that consolidation or merger:
(A) substantially all of the Voting Stock of Aztar outstanding
immediately prior to the effectiveness thereof is changed into or
exchanged for Voting Stock of the surviving corporation or the ultimate
parent of the surviving corporation (the "Merger Common Stock");
(B) the Merger Common Stock, immediately following the
effectiveness thereof, is listed for trading on the New York Stock
Exchange or the American Stock Exchange or is quoted on the National
Association of Securities Dealers Automated Quotation System and is
designated as a "national market system security;" and
(C) immediately after the effectiveness thereof, the Persons who
were holders of Voting Stock of Aztar immediately prior to the
effectiveness thereof (excluding Persons who immediately prior to the
effectiveness thereof were Affiliates of the corporation consolidated or
merged with Aztar in that consolidation or merger (other than Persons
who were Affiliates solely as a result of the ownership by Aztar of
Capital Stock in that consolidated or merged corporation)) hold in the
aggregate more than 50% of the then outstanding Voting Stock of the
surviving corporation (or the ultimate parent of the surviving
corporation);
(2) Aztar conveys, transfers or leases all or substantially all its
assets to any Person or Persons (other than to a Wholly Owned Subsidiary);
provided, however, that the term "Change of Control" does not include any
conveyance, transfer or lease of assets:
(A) pursuant to a Sale and Leaseback Transaction; or
(B) if immediately after the effectiveness thereof, the Persons who
were holders of Voting Stock of Aztar immediately prior to the
effectiveness thereof (excluding Persons who immediately prior to the
effectiveness thereof were Affiliates of the transferee of those assets
(other than Persons who were Affiliates
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solely as a result of the ownership by Aztar of Capital Stock in that
transferee)) hold in the aggregate more than 50% of the then outstanding
common stock of that transferee; or
(3) any Person (other than Aztar) or group acquires, directly or
indirectly, beneficial ownership, in the aggregate, of 50% or more of the
outstanding shares of Voting Stock of Aztar or securities representing 50%
or more of the combined Voting Power of Aztar's Voting Stock (the
"Controlling Securities"), in either case outstanding on the date
immediately prior to the date of the last such acquisition by that Person
or group; provided, however, that the term "Change of Control" does not
include any such acquisition that results in Aztar Employee Stock Option
Plan and members of management of Aztar who have been employed in a
management capacity with Aztar for at least eighteen months owning 50% or
more of the Voting Stock of Aztar or 50% or more of the Controlling
Securities.
"Consolidated Amortization Expense" means, for any period, amortization
expense of Aztar and its Restricted Subsidiaries, on a consolidated basis, for
that period, including, without limitation, any amortization or write-offs of
deferred financing costs by Aztar and its Restricted Subsidiaries during that
period.
"Consolidated Depreciation Expense" means, for any period, depreciation
expense of Aztar and its Restricted Subsidiaries, on a consolidated basis, for
that period.
"Consolidated Fixed Charge Coverage Ratio" means, as of any Transaction
Date, the ratio of:
(1) Consolidated Operating Cash Flow for the four consecutive fiscal
quarters for which financial information in respect thereof is available
immediately prior to that Transaction Date to
(2) Consolidated Fixed Charges which will accrue during the then
current fiscal quarter in which that Transaction Date occurs (beginning on
the first day of that quarter) and the three fiscal quarters immediately
subsequent to the end of that current fiscal quarter, provided that, for
the purpose of calculating Consolidated Fixed Charges for the period
described in this clause (2):
(A) the interest rate on any Indebtedness bearing interest at a
rate that is adjustable based on market rate levels will be calculated
based on the assumption that the applicable market rate level in effect
on the Transaction Date will remain constant throughout that period at
the market rate level in effect on the Transaction Date;
(B) adjustments that are reasonably anticipated to occur during
that period to Consolidated Fixed Charges will be included in that
calculation (including those adjustments that result from the scheduled
maturity of Indebtedness of Aztar and its Restricted Subsidiaries); and
(C) Indebtedness will be included in that calculation that is
reasonably anticipated to be created, incurred, assumed or guaranteed
by, or to otherwise become the obligation of, Aztar or any Restricted
Subsidiary;
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provided, however, that, for purposes of calculating the Consolidated Fixed
Charge Coverage Ratio, Consolidated Operating Cash Flow and Consolidated Fixed
Charges will:
(x) include the consolidated operating cash flow and consolidated
fixed charges of any Person to be acquired by Aztar or any of its
Restricted Subsidiaries as a Restricted Subsidiary in connection with the
transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio;
(y) include the consolidated operating cash flow and consolidated
fixed charges of any other Person acquired during the period described in
clause (1) above by Aztar or by any of its Restricted Subsidiaries as a
Restricted Subsidiary; and
(z) exclude the consolidated operating cash flow of any Person
directly attributable to the Property of that Person that was the subject
of an Asset Sale, on a pro forma basis for the four consecutive fiscal
quarters for which financial information in respect thereof is available
immediately prior to that Transaction Date, in the case of calculating
Consolidated Operating Cash Flow, and for the then current fiscal quarter
in which that Transaction Date occurs and the three fiscal quarters
immediately subsequent to the end of that fiscal quarter (on the same basis
as described in clause (2) above), in the case of calculating Consolidated
Fixed Charges.
For purposes of the foregoing proviso, the consolidated operating cash flow
and consolidated fixed charges of any such Person will be determined on the same
basis as those items are determined for Aztar.
For purposes of each pro forma determination of the Consolidated Fixed
Charge Coverage Ratio in connection with the "Limitation on Indebtedness"
covenant, the proposed new Indebtedness will be deemed to be incurred on the
first day of the fiscal quarter in which the relevant Transaction Date occurs.
"Consolidated Fixed Charges" means, for any period, the sum of Consolidated
Interest Expense plus the Tropicana Payments.
"Consolidated Income Tax Expense" means, for any period, the income tax
expense of Aztar and its Restricted Subsidiaries, on a consolidated basis, for
that period, other than income tax expense attributable to Asset Sales.
"Consolidated Interest Expense" means, for any period, without duplication:
(1) the sum of:
(A) the aggregate amount of interest recognized by Aztar and its
Restricted Subsidiaries during that period in respect of Aztar's
Indebtedness and its Restricted Subsidiaries (including, without
limitation, all interest capitalized by Aztar and its Restricted
Subsidiaries during that period and all commissions, discounts and other
fees and charges owed by Aztar and its Restricted Subsidiaries with
respect to letters of credit and bankers' acceptance financing and the
net costs associated with Interest Swap Obligations of Aztar and its
Restricted Subsidiaries);
(B) the aggregate amount of the interest component of rentals in
respect of Capitalized Lease Obligations recognized by Aztar and its
Restricted Subsidiaries during that period;
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(C) to the extent any indebtedness of any Person is guaranteed by
Aztar or any of its Restricted Subsidiaries, the aggregate amount of
interest paid or accrued by that Person during that period attributable
to any such Indebtedness;
(D) one-third of the rent expense incurred under noncancelable
operating leases, excluding the Tropicana Lease, during that period; and
(E) the aggregate amount of Redeemable Dividends recognized by
Aztar and its Restricted Subsidiaries, whether or not declared during
that period, less
(2) any amortization or write-off of deferred financing costs by Aztar
and its Restricted Subsidiaries during that period; in each case after
elimination of intercompany accounts among Aztar and its Restricted
Subsidiaries and as determined in accordance with generally accepted
accounting principles.
"Consolidated Interest Income" means, for any period, interest income from
all sources of Aztar and its Restricted Subsidiaries, on a consolidated basis,
for that period.
"Consolidated Net Income" means, for any period, the aggregate net income
of Aztar and its Subsidiaries for that period on a consolidated basis,
determined in accordance with generally accepted accounting principles, provided
that the following items will be excluded from Consolidated Net Income:
(1) gains and losses from Asset Sales or reserves relating to Asset
Sales;
(2) items classified as extraordinary or nonrecurring;
(3) the income (or loss) of any Unrestricted Subsidiary or Joint
Venture, except to the extent that the aggregate amount of cash dividends
or other distributions actually paid during that period to Aztar or any
Restricted Subsidiary by that Unrestricted Subsidiary or Joint Venture in
respect of its Capital Stock out of funds legally available therefor
exceeds the aggregate amount of new Investments in that Unrestricted
Subsidiary or Joint Venture by Aztar or any Restricted Subsidiary during
that period;
(4) except to the extent includable pursuant to clause (3), the income
(or loss) of any Person accrued or attributable to any period prior to the
date it becomes a Restricted Subsidiary or is merged into or consolidated
with Aztar or any of its Restricted Subsidiaries or that Person's assets
(or a portion thereof) are acquired by Aztar or any of its Restricted
Subsidiaries; and
(5) the income of any Restricted Subsidiary to the extent that the
Restricted Subsidiary is prevented by any legal requirement from paying
that income to Aztar or another Restricted Subsidiary.
Notwithstanding the foregoing, Consolidated Net Income as used in the
"Limitation on Restricted Payments" covenant will include gains (or losses) on
the sale by Aztar or a Restricted Subsidiary of an Unrestricted Subsidiary.
"Consolidated Net Rent" means, for any period, without duplication, an
amount equal to the total of:
(1) the rent expense, net of intercompany rent, incurred by Hotel
Ramada of Nevada pursuant to the Tropicana Lease; plus
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(2) two-thirds of the rent expense incurred under other noncancelable
operating leases.
"Consolidated Net Worth" means, as of any date, with respect to any Person,
the sum of the Capital Stock and additional paid-in capital plus retained
earnings (or minus accumulated deficit) of that Person and its Subsidiaries on a
consolidated basis at that date, each item determined in accordance with
generally accepted accounting principles, less amounts attributable to
Redeemable Stock of that Person and its Subsidiaries.
"Consolidated Operating Cash Flow" means, for any period, without
duplication
(1) Consolidated Net Income, plus
(2) Consolidated Interest Expense, plus
(3) Consolidated Income Tax Expense, plus
(4) Consolidated Depreciation Expense, plus
(5) Consolidated Amortization Expense, plus
(6) Consolidated Net Rent, plus
(7) equity in unconsolidated partnerships' losses, minus
(8) Consolidated Interest Income, plus
(9) other non-cash items reducing that Consolidated Net Income, minus
(10) other non-cash items increasing that Consolidated Net Income, for
that period, all as determined in accordance with generally accepted
accounting principles.
"Credit Facility" means any agreement between Aztar and/or any of its
Restricted Subsidiaries and one or more banks or other financial institutions
providing for the making of term loans or loans on a revolving basis (including,
in either case, construction loans and lines of credit), the issuance of letters
of credit and the creation of bankers' acceptances, as any such agreement may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified, including any agreement extending the maturity, refinancing
or restructuring of all or any portion of the Indebtedness and other obligations
under that agreement or any successor agreement.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreement, option or futures contract or other
similar agreement or arrangement designed to protect that Person or any of its
Subsidiaries against fluctuations in currency values.
"Designated Senior Indebtedness" means each issue of Senior Indebtedness
that:
(1) has an outstanding principal amount of not less than $25,000,000;
and
(2) has been designated as Designated Senior Indebtedness pursuant to
an Officers' Certificate of Aztar received by the trustee.
"Effective Date" means May 3, 1999.
"Gaming Authority" means the United States federal government or any state,
county, municipality or other political subdivision or any agency or other
governmental
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authority thereof that now or hereafter has jurisdiction over all or any portion
of the gaming activities of Aztar or any of its Subsidiaries.
"Gaming Jurisdiction Law" means any law, statute, ordinance, code,
regulation, constitutional provision, rule, order, directive or other
enforceable requirement now or hereafter in existence of any Gaming Authority.
"Governmental Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature, whatsoever of
any governmental or quasi-government unit, whether federal, state, county,
district, city or other political subdivision or otherwise and whether now or
hereafter in existence, or any officer or official of any thereof, including,
without limitation, the New Jersey Casino Control Commission, the New Jersey
Division of Gaming Enforcement, the Nevada Gaming Commission, the Nevada State
Gaming Control Board, the Clark County (Nevada) Liquor and Gaming Licensing
Board, the Missouri Gaming Commission and the Indiana Gaming Commission.
"Holder" means, the Person in whose name a note is registered in the
Register.
"Indebtedness" means, with respect to any Person, without duplication:
(1) any obligation, contingent or otherwise, for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
that Person or only to a portion thereof);
(2) any obligation evidenced by bonds, debentures, notes or other
similar instruments;
(3) any obligation owed for all or any part of the purchase price of
Property, other assets or services or for the cost of Property or other
assets constructed or of improvements thereto (including any obligation
under or in connection with any letter of credit related thereto), other
than accounts payable included in current liabilities and incurred in
respect of Property or services purchased in the ordinary course of
business;
(4) any obligation of that Person under or in connection with any
letter of credit issued for the account of that Person and all drafts drawn
or demands for payment honored thereunder;
(5) any obligation under conditional sale or other title retention
agreements relating to purchased Property;
(6) any obligation issued or assumed as the deferred purchase price of
Property (other than accounts payable incurred in the ordinary course of
business);
(7) any obligation, contingent or otherwise, as set forth in
subclauses (1), (2) and (3) of this definition of any other Person secured
by any Lien in respect of Property of that Person even though that Person
has not assumed or become liable for payment of that obligation;
(8) any Capitalized Lease Obligation or any other obligation pursuant
to any Sale and Leaseback Transaction;
(9) any note payable or draft accepted representing an extension of
credit (other than extensions of credit for Property and services purchased
in the ordinary course of business) whether or not representing an
obligation for borrowed money;
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(10) the maximum fixed repurchase price of any Redeemable Stock;
(11) obligations in respect of Interest Swap Obligations and Currency
Agreements; and
(12) any obligation which is a guarantee with respect to Indebtedness
(of a kind otherwise described in this definition) of another Person.
For purposes of the preceding sentence, the maximum fixed repurchase price
of any Redeemable Stock which does not have a fixed repurchase price will be
calculated in accordance with the terms of that Redeemable Stock as if that
Redeemable Stock were repurchased on any date on which Indebtedness is required
to be determined pursuant to the indenture; provided, however, that if that
Redeemable stock is not then permitted to be repurchased, the repurchase price
will be the book value of that Redeemable Stock. The amount of Indebtedness of
any Person at any date will be the outstanding balance at that date of all
unconditional obligations as described above, the maximum liability of those
contingent obligations at that date and, in the case of clause (7), the lesser
of the fair market value at that date of any asset subject to a Lien securing
the Indebtedness of others and the amount of the Indebtedness secured.
"Interest Swap Obligation" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect that Person or any of its
Subsidiaries against fluctuations in interest rates.
"Investment" means, with respect to any Person (the Person being referred
to in this definition as the "Investor"), any amount paid by the Investor,
directly or indirectly, or any Transfer of Property, directly or indirectly (the
amount to be the fair market value of that Property at the time of transfer as
determined in good faith by the Board of Directors of the Investor, whose
determination will be conclusive) by the Investor to any other Person:
(1) for Capital Stock of, or other equity interest in, or as a capital
contribution to, that other Person; or
(2) as a direct or indirect loan or advance to that other Person,
other than accounts receivable of the Investor arising in the ordinary
course of business.
"Jaffe Partnership Interest" means the general partnership interest in
Tropicana Enterprises held by members of the Jaffe family pursuant to the
Amended and Restated Partnership Agreement dated as of November 1, 1984 between
the Jaffe family and Adamar of Nevada, as amended.
"Joint Venture" means any Person (other than a Subsidiary of Aztar) in
which any Person other than Aztar or any of its Subsidiaries has a joint or
shared equity interest with Aztar or any of its Subsidiaries.
"Lien" means any mortgage, pledge, lien, charge, deed of trust, security
interest, conditional sale or other title retention agreement or any other
similar encumbrance, including any agreement to give any security interest.
"Permitted Liens" means, with respect to any Person:
(1) Liens for taxes, assessments, governmental charges or claims which
are not yet due and payable or are being contested in good faith by that
Person by appropriate
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proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as is required in
accordance with generally accepted accounting principles is made by that
Person;
(2) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen, or other like Liens arising
in the ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and for which a reserve or
other appropriate provision, if any, as is required in accordance with
generally accepted accounting principles is made by that Person;
(3) Liens incurred or deposits made by that Person in the ordinary
course of business in connection with worker's compensation, unemployment
insurance, medical insurance and other types of social security and
deposits made by that Person in the ordinary course of business in
connection with other kinds of insurance;
(4) Liens incurred or deposits made by that Person to secure the
performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, government contracts, performance and return-of-money bonds
and other obligations of a like nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money);
(5) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of that Person or any
of its Subsidiaries incurred in the ordinary course of business;
(6) Liens (including extensions and renewals thereof) upon real or
tangible personal property acquired by that Person after the date of the
indenture; provided that
(A) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund,
all costs (including the cost of construction) of the item of Property
subject thereto,
(B) the principal amount of the Indebtedness secured by that Lien
does not exceed 100% of that cost,
(C) that Lien does not extend to or cover any other Property other
than that item of Property and any improvements on that item, and
(D) the incurrence of that Indebtedness is permitted by the
"Limitation on Indebtedness" covenant;
(7) Liens upon specific items of inventory or other goods and proceeds
of that Person securing that Person's obligations in respect of bankers'
acceptances issued or created for the account of that Person in the
ordinary course of business to facilitate the purchase, shipment or storage
of that inventory or other goods;
(8) Liens securing reimbursement obligations with respect to
commercial letters of credit issued for the account of that Person which
encumber documents and other Property relating to those commercial letters
of credit and the products and proceeds thereof;
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(9) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods by that Person;
(10) licenses, leases or subleases granted to others not interfering
in any material adverse respect with the business of that Person or any of
its Subsidiaries;
(11) Liens encumbering Property or assets of that Person under
construction arising from progress or partial payments by a customer of
that Person or one of its Subsidiaries relating to that Property or assets;
(12) Liens encumbering customary initial deposits and margin accounts,
and other Liens incurred in the ordinary course of business and which are
within the general parameters customary in the gaming industry, in each
case securing Interest Swap Obligations or Currency Agreements;
(13) Liens encumbering deposits made to secure obligations arising
from statutory or regulatory requirements of that Person or its
Subsidiaries;
(14) any interest or title of a lessor in the Property subject to any
Capitalized Lease Obligation or operating lease which, in each case, is
permitted under the indenture;
(15) Liens securing obligations to the trustee pursuant to the
compensation and indemnity provisions of the indenture;
(16) purchase money liens securing payables arising from the purchase
by that Person or any of its Subsidiaries of any equipment or goods in the
ordinary course of business, provided that these payables do not constitute
Indebtedness;
(17) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by that Person or any of its Subsidiaries in the
ordinary course of business;
(18) Liens for judgments or orders not giving rise to a Default or
Event of Default; and
(19) Liens not specified in the foregoing and not otherwise permitted
by the covenant on "Limitation on Liens," provided that the aggregate
Indebtedness secured by the Liens under this clause (19) will not exceed
$5,000,000 at any time.
"Person" means any individual, partnership, corporation, venture, joint
venture, unincorporated organization, association, joint-stock company, trust or
Governmental Authority.
"principal" means, with respect to any debt security (including any note),
the principal of that debt security plus the premium, if any, on any such debt
security.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Qualified Capital Stock" means Capital Stock not constituting Redeemable
Stock.
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"Redeemable Dividend" means, for any dividend payable with respect to
Redeemable Stock:
(1) to the extent that dividend is fully deductible for federal income
tax purposes, the amount of that dividend; and
(2) to the extent that dividend may not be deductible, the quotient of
the amount of that dividend divided by the difference between one and the
maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of that Redeemable Stock.
"Redeemable Stock" means, with respect to any Person, any equity security
issued by that Person that by its terms or otherwise is required to be redeemed
(other than a security that is required to be redeemed only in the event that a
holder of that security fails to qualify or to be found suitable or otherwise
eligible under a Gaming Jurisdiction Law to remain as a holder of that security)
or is redeemable at the option of the holder of that security at any time prior
to the maturity of the notes.
"Register" means the register in which Aztar provides for the registration
of notes and the registration for the transfer of notes.
"Representative" means the indenture trustee or other trustee, agent or
representative for an issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of Aztar that:
(1) has not been designated by the Board of Directors of Aztar as an
Unrestricted Subsidiary; or
(2) was an Unrestricted Subsidiary but has been redesignated by the
Board of Directors of Aztar as a Restricted Subsidiary, in each case as
provided under the definition of Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to Aztar or a Subsidiary of Aztar of any Property, whether owned at the
date of the indenture or thereafter acquired, which has been or is to be sold or
transferred by Aztar or that Subsidiary to that Person or to any other Person to
whom funds have been or are to be advanced by that Person on the security of
that Property if, after giving effect to that arrangement, Aztar or a Subsidiary
of Aztar operates the business, if any, located on that Property.
"Senior Indebtedness" means the principal of, interest (including without
limitation, interest at the contract rate subsequent to the commencement of any
bankruptcy, insolvency or similar proceeding with respect to Aztar) on and other
amounts due on or in connection with any Indebtedness of Aztar for money
borrowed from others, whether outstanding on the date of the indenture or
thereafter created, incurred, assumed or guaranteed, which, at the date of the
indenture or at the time of any such creation, incurrence, assumption or
guarantee:
(1) is by its terms expressly senior to and not subordinate or subject
in right of payment to any other Indebtedness of Aztar; or
(2) is secured by a lien on any Property of Aztar or any of its
Subsidiaries; provided, however, that Senior Indebtedness will not include
any such Indebtedness if:
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(A) the value of the collateral securing that Indebtedness at time
of incurrence is less than the amount of that Indebtedness; or
(B) the value of any Property substituted for the collateral
securing that Indebtedness is less than the value of the collateral so
released, in either case as determined by Aztar and set forth in an
Officers' Certificate of Aztar received by the trustee, which
certificate will be conclusive evidence of the correctness of the
matters set forth herein; or
(3) has been designated Senior Indebtedness pursuant to an Officers'
Certificate of Aztar received by the trustee.
Notwithstanding anything herein to the contrary, Senior Indebtedness does
not mean:
(1) Indebtedness of Aztar to a Subsidiary of Aztar for money borrowed
or advances from that Subsidiary;
(2) Indebtedness representing the maximum fixed repurchase price of
any Capital Stock of Aztar which by its terms or otherwise is or may be
required to be redeemed or repurchased prior to the Stated Maturity of the
notes or at the option of the holder thereof;
(3) Indebtedness of Aztar to any officer or director thereof;
(4) obligations owing under judgments arising out of obligations that
are not Indebtedness for borrowed money;
(5) accounts payable or any other Indebtedness to trade creditors
created or assumed by Aztar in the ordinary course of business in
connection with the obtaining of materials or services; and
(6) any liability for federal, state, local or other taxes owed or
owing by Aztar.
Notwithstanding anything in the indenture to the contrary, Senior
Indebtedness does not include the 11% Notes or the 13 3/4% Notes. The indenture
will expressly provide that the notes will be on parity with the 11% Notes and
the 13 3/4% Notes in right of payment.
"Significant Subsidiary" means any Subsidiary of Aztar:
(1) the revenues attributable to which for the then most recently
completed four fiscal quarters constituted 5% or more of the consolidated
revenues of Aztar and its Subsidiaries for that period;
(2) the assets of which as of the end of that period constituted 5% or
more of the consolidated assets of Aztar and its Subsidiaries as of the end
of that period; or
(3) that operates, owns or leases any Property that is material to the
business operations of Aztar or any Restricted Subsidiary.
"Stated Maturity" means, with respect to any note or any installment of
interest thereon, the date specified in that note as the fixed day on which the
principal on that note or that installment of interest is due.
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"Subsidiary" means, with respect to any Person:
(1) a corporation a majority of whose Capital Stock with voting power,
under ordinary circumstances, to elect directors is at the time, directly
or indirectly, owned by that Person, by one or more Subsidiaries of that
Person or by that Person and one or more Subsidiaries thereof; or
(2) any other Person (other than a corporation) in which that Person,
one or more Subsidiaries thereof, or that Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof has at least majority ownership interest and the power to direct
the policies, management and affairs thereof. For purposes of this
definition, any directors' qualifying shares mandated by applicable law
will be disregarded in determining the ownership of a Subsidiary.
"Transaction Date" means the date of the transaction giving rise to the
need to calculate Consolidated Fixed Charge Coverage Ratio or to make any other
determination for purposes of complying with the provisions of the indenture,
provided that if that transaction is related to or in connection with any
acquisition of any Person, the Transaction Date will be the date on which Aztar
or any of its Subsidiaries enters into an agreement with that Person to effect
that acquisition; provided, however, that if subsequent to the entering of that
agreement Aztar or any of its Subsidiaries amend the terms of that acquisition
with respect to the consideration payable by Aztar or any of its Subsidiaries in
connection with that acquisition, the Transaction Date will be the date on which
Aztar or any of its Subsidiaries enters into an agreement with that Person to
effect that amendment. The second proviso above will not be applicable if, as of
the Transaction Date with respect to any acquisition, Aztar could incur at least
$1.00 of additional Indebtedness pursuant to the first paragraph of the
"Limitation on Indebtedness" covenant when the Consolidated Fixed Charge
Coverage Ratio of Aztar is calculated on the basis of the amended terms of that
acquisition and the Indebtedness to be incurred by Aztar and its Restricted
Subsidiaries in connection with that acquisition.
"Treasury Rate" means, as of any Redemption Date, the yield to maturity as
of such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to May 15, 2003; provided,
however, that if the period from the Redemption Date to May 15, 2003 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year will be used.
"Tropicana Enterprises" means Tropicana Enterprises, a Nevada general
partnership.
"Tropicana Lease" means the Amended and Restated Lease (Tropicana Hotel/
Casino) dated November 1, 1984 between Tropicana Enterprises and Hotel Ramada of
Nevada, as amended.
"Tropicana Loan" means the Second Amended and Restated Loan Agreement by
and between Tropicana Enterprises, Hotel Ramada of Nevada and the Lenders named
in that Loan Agreement dated October 4, 1994, as amended through the Effective
Date.
"Tropicana Loan Refinancings" means any refinancings or financings of, or
related to, the Tropicana Loan or any refinancings thereof (including, but not
limited to, any
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Indebtedness owed to Aztar or any Restricted Subsidiary in connection with the
Tropicana Loan or any refinancings thereof), to the extent that the aggregate
amount of that Indebtedness incurred pursuant to those refinancings or
financings or does not exceed the outstanding principal amount under the
Tropicana Loan at the Effective Date.
"Tropicana Payments" means, for any period, that portion of the lease
payments made by Hotel Ramada of Nevada to Tropicana Enterprises pursuant to the
Tropicana Lease that represents the sum of interest expense on Indebtedness of
Tropicana Enterprises payable to Persons other than Aztar plus amounts
distributed in respect of the Jaffe Partnership Interest.
"Tropicana Security Deposit" means the additional security deposit that
Hotel Ramada of Nevada may be required to provide from time to time pursuant to
the Tropicana Lease as in effect on the Effective Date.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of Aztar which at the time of determination is an
Unrestricted Subsidiary (as designated by the Board of Directors of Aztar,
as provided below); and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of Aztar may designate any Subsidiary of Aztar
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary (unless that Subsidiary owns any Capital Stock of or owns or holds
any Lien on any Property of Aztar or any other Subsidiary of Aztar which is not
a Subsidiary of the Subsidiary to be so designated), provided that either
(1) the Subsidiary to be so designated has total assets of $1,000 or
less or
(2) immediately after giving pro forma effect to that designation
Aztar could incur $1.00 of additional Indebtedness pursuant to the first
paragraph of the "Limitation on Indebtedness" covenant; and provided,
further, that a Subsidiary may not be designated as an Unrestricted
Subsidiary if Aztar or a Restricted Subsidiary creates, incurs, issues,
assumes, guarantees or in any other manner becomes liable with respect to
any obligation of that Subsidiary.
The Board of Directors of Aztar may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary, provided that immediately after giving pro forma
effect to that redesignation, Aztar could incur $1.00 of additional Indebtedness
pursuant to the first paragraph of the "Limitation on Indebtedness" covenant.
Any such designation or elimination thereof by the Board of Directors of Aztar
will be evidenced to the trustee by filing with the trustee a certified copy of
the resolution of the Board of Directors of Aztar giving effect to that
designation and an Officers' Certificate certifying that that designation
complies with the foregoing conditions.
"U.S. Government Obligations" are direct noncallable obligations of the
United States of America or guaranteed by the United States of America for the
payment of which the full faith and credit of the United States is pledged.
"Voting Stock" means securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies, entitled
to vote for corporate directors (or Persons performing equivalent functions).
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"Wholly Owned Subsidiary" means any Restricted Subsidiary of Aztar of which
100% of the Capital Stock of, or other ownership interest in, that Restricted
Subsidiary is at the time owned by Aztar or a Wholly Owned Subsidiary.
COVENANTS
The indenture contains covenants including, among others, the following:
Limitation on Indebtedness. The indenture provides that Aztar will not, and
will not permit any Restricted Subsidiary to, create, incur, assume, guarantee
or otherwise become liable with respect to, or become responsible for the
payment of, any Indebtedness unless, after giving effect thereto, the
Consolidated Fixed Charge Coverage Ratio of Aztar is greater than 1.9 to 1. As
of April 1, 1999, calculated on a pro forma basis after giving effect to the
redemption of $75 million of the 11% Notes on April 7, 1999, the May 3, 1999
offering of the unregistered notes and the use of proceeds from that offering to
redeem the remaining $125 million of the 11% Notes and repay a portion of the
outstanding borrowings under our revolving bank credit facility, the
Consolidated Fixed Charge Coverage Ratio would have been 2.5 to 1.
Notwithstanding the foregoing, Aztar and its Restricted Subsidiaries may
incur, create, assume, guarantee, or otherwise become liable with respect to any
or all of the following:
(1) Indebtedness not otherwise permitted pursuant to clauses (2)
through (11) below in an aggregate amount at any time outstanding of up to
$20,000,000;
(2) Indebtedness evidenced by the notes (exclusive of any additional
notes issued under the indenture), the 11% Notes or the 13 3/4% Notes;
(3) Indebtedness of Aztar and its Restricted Subsidiaries remaining
outstanding immediately after the issuance of the notes (exclusive of any
additional notes issued under the indenture) and application of the
proceeds thereof;
(4) Indebtedness to Aztar or to a Restricted Subsidiary;
(5) Indebtedness incurred by Aztar or any Restricted Subsidiary in
connection with:
(A) the construction of any new facility or facilities related to
the gaming business or any related business of Aztar or any Restricted
Subsidiary or in connection with the expansion by Aztar or any
Restricted Subsidiary of any of its existing facilities, provided,
however, that the aggregate principal amount of all that Indebtedness
incurred on and subsequent to the Effective Date will not exceed
$100,000,000;
(B) the maintenance, refurbishment or replacement by Aztar or any
Restricted Subsidiary in the ordinary course of business of assets
related to the gaming business or any related business of Aztar or any
Restricted Subsidiary; or
(C) the acquisition of slot machines, gaming tables or other
similar gaming equipment;
(6) Indebtedness under any Credit Facilities in an aggregate amount of
up to $350,000,000;
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(7) Indebtedness incurred to purchase Tropicana Las Vegas or the Jaffe
Partnership Interest or in connection with any Tropicana Loan Refinancings;
(8) Indebtedness incurred in respect of the Tropicana Security
Deposit;
(9) Indebtedness under Currency Agreements or Interest Swap
Obligations (including any Interest Swap Obligation, the purpose of which
is to alter or replace, or lengthen or shorten the maturity of, any
Interest Swap Obligation previously incurred pursuant to this clause (9)),
provided that these Currency Agreements or Interest Swap Obligations are
related to payment obligations on Indebtedness otherwise permitted under
the indenture;
(10) Indebtedness incurred in respect of performance bonds, bankers'
acceptances, letters of credit and surety bonds provided by Aztar or any
Restricted Subsidiary in the ordinary course of business; and
(11) Indebtedness ("Replacement Indebtedness") the proceeds of which
are used to refinance:
(A) all or a portion of the notes;
(B) any other permitted Indebtedness of Aztar and its Restricted
Subsidiaries; or
(C) permitted successor or replacement Indebtedness;
in each case in a principal amount (or, if that Replacement Indebtedness does
not require cash payments prior to maturity, with an original issue price) not
to exceed an amount equal to the aggregate of the principal amount plus any
prepayment penalties, premiums and accrued and unpaid interest on the
Indebtedness so refinanced and customary fees, expenses and costs related to the
incurrence of that Replacement Indebtedness, provided that, in the case of this
clause (11),
(A) if the notes are refinanced in part, that Replacement
Indebtedness is expressly made pari passu or subordinate in right of
payment to the remaining notes;
(B) if the Indebtedness to be refinanced is subordinate in right of
payment to the notes, that Replacement Indebtedness is subordinate in
right of payment to the notes at least to the extent that the
Indebtedness to be refinanced is subordinate to the notes;
(C) if the Indebtedness to be refinanced is pari passu in right of
payment to the notes, that Replacement Indebtedness is pari passu or
subordinate in right of payment to the notes at least to the extent that
the Indebtedness to be refinanced is pari passu to the notes; and
(D) if the notes are refinanced in part or if the Indebtedness to
be refinanced is subordinate in right of payment to the notes and
scheduled to mature after the maturity date of the notes, that
Replacement Indebtedness determined as of the date of incurrence does
not mature prior to the final scheduled maturity date of the notes and
the Average Life of that Replacement Indebtedness is equal to or greater
than the Average Life of the remaining notes.
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Limitation on Restricted Payments. The indenture provides that Aztar will
not, and will not permit any Restricted Subsidiary to, directly or indirectly:
(1) declare or pay any dividend on or make any distribution or payment
on its Capital Stock or to its stockholders (in their capacity as
stockholders) (other than dividends or distributions payable solely in its
Qualified Capital Stock and, in the case of a Restricted Subsidiary,
dividends or distributions payable to Aztar or a Wholly Owned Subsidiary);
(2) purchase, redeem or otherwise acquire or retire for value, any
shares of Capital Stock of Aztar (except, in the case of a Restricted
Subsidiary, from Aztar) or any Subsidiary of Aztar (other than a Wholly
Owned Subsidiary);
(3) acquire, retire or redeem any Indebtedness of or otherwise make
any Investment in any Affiliate of Aztar (other than a Wholly Owned
Subsidiary); or
(4) purchase, redeem or otherwise acquire or retire for value, prior
to any scheduled maturity, scheduled repayment or scheduled sinking fund or
mandatory redemption payment, Indebtedness of Aztar or of any Affiliate of
Aztar that is subordinated (whether pursuant to its terms or by operation
of law) in right of payment to the notes and which is scheduled to mature
(after giving effect to any and all unconditional (other than as to the
giving of notice) options to extend the maturity thereof) on or after the
maturity date of the notes;
if at the time of any such declaration, distribution, payment, purchase,
redemption, acquisition or retirement (collectively, the "Restricted Payments")
and after giving effect thereto (including, without limitation, in calculating
on a pro forma basis, as if that proposed Restricted Payment had been made, the
Consolidated Fixed Charge Coverage Ratio of Aztar for purposes of clause (B)
below):
(A) any Event of Default has occurred and be continuing; or
(B) Aztar could not incur at least $1.00 of additional Indebtedness
pursuant to the first paragraph of the "Limitation on Indebtedness"
covenant; or
(C) the aggregate amount of Restricted Payments for all those purposes
made subsequent to September 28, 1994 would exceed an amount equal to the
sum of:
(x) 50% of aggregate Consolidated Net Income (or if that aggregate
Consolidated Net Income is a deficit, minus 100% of that deficit)
accrued on a cumulative basis in the period commencing on September 28,
1994 and ending on the last day of the fiscal quarter immediately
preceding the relevant Transaction Date;
(y) the aggregate net proceeds, including cash and the fair market
value of Property other than cash (as determined in good faith by the
Board of Directors of Aztar, whose determination will be conclusive, and
evidenced by a resolution of that Board of Directors filed with the
trustee) received by Aztar from the issuance or sale to any Person
(other than a Subsidiary of Aztar) during the period commencing on
September 28, 1994 and ending on that Transaction Date of Qualified
Capital Stock of Aztar (other than Capital Stock of Aztar issued upon
conversion of or in exchange for securities of Aztar, except to the
extent of any payment to Aztar in addition to the securities of Aztar
surrendered); and
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(z) to the extent not included in (y) above, the aggregate net
proceeds, including cash and the fair market value of Property other
than cash (as determined in good faith by the Board of Directors of
Aztar, whose determination will be conclusive, and evidenced by a
resolution of that Board of Directors filed with the trustee) received
by Aztar from the issuance or sale to any Person (other than a
Subsidiary of Aztar) during the period commencing on September 28, 1994
and ending on that Transaction Date, of any debt securities evidencing
Indebtedness of Aztar or of any Redeemable Stock of Aztar, if, and to
the extent that, as of that Transaction Date those debt securities or
Redeemable Stock, as the case may be, have been converted into,
exchanged for or satisfied by the issuance of Qualified Capital Stock of
Aztar; provided, however, that if Aztar and its Restricted Subsidiaries
have made any Investments during the period commencing on September 28,
1994 and ending on that Transaction Date, the proceeds of which
Investments were used, directly or indirectly, by the recipients thereof
to purchase Qualified Capital Stock of Aztar or other securities that
have been converted into, exchanged for or satisfied by the issuance of
Qualified Capital Stock of Aztar, the aggregate amount determined under
clauses (y) and (z) will be net of the aggregate amount of those
Investments.
The indenture does not prohibit:
(1) Aztar or any Restricted Subsidiary from paying a dividend on its
own Capital Stock within 60 days after the declaration thereof if, on the
date when the dividend was declared, Aztar or that Restricted Subsidiary,
as the case may be, could have paid that dividend in compliance with the
other provisions of this covenant;
(2) Aztar or any Restricted Subsidiary from redeeming or repurchasing
its securities in the event that the holder of those securities has failed
to qualify or to be found suitable or otherwise eligible under a Gaming
Jurisdiction Law to remain as a holder of those securities;
(3) Ramada New Jersey Holdings Corporation from redeeming, or Aztar or
any Restricted Subsidiary from purchasing, for an amount not exceeding
$750,000 in the aggregate, all or a portion of the shares of preferred
stock, Series A, of Ramada New Jersey Holdings Corporation outstanding on
the Effective Date; or
(4) Aztar and its Restricted Subsidiaries from acquiring shares of
Capital Stock of Aztar solely in exchange for other shares of Capital Stock
of Aztar that are not Redeemable Stock and that are not exchangeable for
Redeemable Stock whether upon conversion or otherwise;
provided, however, that the aggregate amount of any payment, dividend,
acquisition, redemption or distribution made by Aztar or any Restricted
Subsidiary pursuant to clauses (1) or (2) is included in any computation
pursuant to the first paragraph of this covenant of the aggregate amount of
Restricted Payments made by Aztar and its Restricted Subsidiaries, and the
aggregate amount of any payment, dividend, acquisition, redemption or
distribution made by Aztar or any Restricted Subsidiary pursuant to clauses (3)
or (4) is not included in any such computation.
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So long as no Event of Default has occurred and is continuing, the
indenture does not prohibit Aztar and its Restricted Subsidiaries from:
(1) acquiring shares of Capital Stock of Aztar
(A) to eliminate fractional shares;
(B) from an employee who has purchased or otherwise acquired shares
of Capital Stock of Aztar under an employee stock option or employee
stock purchase agreement or other plan or agreement reserving to Aztar
the option to repurchase the shares but in no event for a price greater
than the higher of fair market value or the price at which those
securities were sold by Aztar, and
(C) pursuant to a court order,
provided that the aggregate consideration paid by Aztar and its Restricted
Subsidiaries pursuant to subclauses (A) and (B) above will not exceed $250,000
in any fiscal year of Aztar,
(2) declaring or paying any dividend on, or redeeming or repurchasing,
shares of the currently outstanding Series B Preferred Stock;
(3) redeeming or purchasing the Preferred Share Purchase Rights of
Aztar at a price not exceeding $0.01 per right and $2,000,000 in the
aggregate;
(4) acquiring, retiring or redeeming any Indebtedness of, or otherwise
making any Investment in, Tropicana Enterprises in connection with the
Tropicana Security Deposit or the Tropicana Loan, except to the extent that
the aggregate amount of that Investment in Tropicana Enterprises in
connection with the Tropicana Loan exceeds the outstanding principal amount
owed to third parties under the Tropicana Loan at the Effective Date;
(5) purchasing Tropicana Las Vegas or the Jaffe Partnership Interest;
or
(6) making any Restricted Payment not otherwise permitted by the
foregoing limitations in an aggregate amount not to exceed $30,000,000 from
and after the Effective Date;
provided, however, that the aggregate amount of any payment, dividend,
acquisition, redemption or distribution made by Aztar or any Restricted
Subsidiary pursuant to clauses (1), (2), (3) or (6) is included in any
computation pursuant to the first paragraph of this covenant of the aggregate
amount of Restricted Payments made by Aztar and its Restricted Subsidiaries, and
the aggregate amount of any payment, dividend, acquisition, redemption or
distribution made by Aztar or any Restricted Subsidiary pursuant to clauses (4)
or (5) is not included in any such computation.
Limitation on Liens. Aztar will not, directly or indirectly, create, incur,
assume or suffer to exist, or permit any Restricted Subsidiary to create, incur,
assume or suffer to exist, any Lien on or with respect to any of its Property or
Capital Stock, whether now owned or hereafter acquired, or assign, or permit any
Restricted Subsidiary to assign, any right to receive income, other than:
(1) Liens existing as of the date of the indenture or arising
hereafter pursuant to the Credit Facility;
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(2) Liens securing Senior Indebtedness;
(3) Liens in favor of Aztar;
(4) Liens securing Indebtedness (including, without limitation, any
obligation, contingent or otherwise, for borrowed money of any Person
secured by any Lien in respect of Property of Aztar or any Restricted
Subsidiary, even though neither Aztar nor any Restricted Subsidiary has
assumed or become liable for the payment of that obligation) of Aztar
(other than Senior Indebtedness) or any Restricted Subsidiary, provided
that, with respect to any Indebtedness that is pari passu with the notes,
the notes are secured by Liens equal and ratable to those Liens and, with
respect to Indebtedness that is subordinated to the notes, the notes are
secured by Liens that are senior to those Liens; and
(5) Permitted Liens.
Notwithstanding the foregoing, this provision will not be applicable to any
Lien on Capital Stock issued by any Restricted Subsidiary that holds, directly
or indirectly, a license, or is a holding company, under the Nevada Gaming
Control Act. Hotel Ramada of Nevada and Ramada Express, Inc. each hold a license
under the Nevada Gaming Control Act.
Limitation on Payment Restrictions Affecting Restricted Subsidiaries. The
indenture provides that Aztar will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction which by its terms expressly restricts
the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on that Restricted
Subsidiary's Capital Stock or pay any Indebtedness owed to Aztar or any
Restricted Subsidiary except that payment of dividends by Adamar of Nevada
may be suspended if required in connection with the Tropicana Lease;
(2) make any loans or advances to Aztar or any Restricted Subsidiary;
or
(3) transfer any of its Property to Aztar or any Restricted
Subsidiary,
except that:
(A) clauses (2) and (3) will be deemed not to apply to those
encumbrances or restrictions contained in any agreement or instrument
(i) relating to any Indebtedness of Aztar or any Restricted
Subsidiary existing on the Effective Date or to the Credit Facility,
(ii) relating to any Property acquired by Aztar or any Restricted
Subsidiary after the Effective Date, provided that the encumbrance or
restriction relates only to the Property which is acquired,
(iii) relating to:
(x) any industrial revenue or development bonds,
(y) any obligation of Aztar or any Restricted Subsidiary
incurred in the ordinary course of business to pay the purchase
price of Property acquired by Aztar or that Restricted Subsidiary
and
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(z) any lease of Property by Aztar or any Restricted
Subsidiary in the ordinary course of business, provided that the
encumbrance or restriction relates only to the Property which is
the subject of that industrial revenue or development bond, the
Property purchased or the Property leased and any such lease, as
the case may be,
(iv) relating to any Indebtedness of any Restricted Subsidiary at
the date of acquisition of that Restricted Subsidiary by Aztar or any
Restricted Subsidiary, provided that this Indebtedness was not incurred
in connection with or in anticipation of that acquisition, and
(v) replacing or refinancing agreements or instruments referred to
in clauses (i), (ii) and (iii), provided that the provisions relating to
that encumbrance or restriction contained in that replacing or
refinancing agreement or instrument are no more restrictive than the
provisions relating to that encumbrance or restriction contained in the
original agreement or instrument,
(B) clauses (1), (2) and (3) will be deemed not to apply to those
encumbrances or restrictions imposed by the New Jersey Casino Control
Commission, the New Jersey Division of Gaming Enforcement, the Nevada
Gaming Commission, the Nevada State Gaming Control Board or any other
Gaming Authority; and
(C) clause (3) will be deemed not to apply to the transfer of Property
that is used to secure Indebtedness, provided that the Indebtedness is
permitted to be incurred under the indenture.
Restriction on Incurrence of Some Indebtedness. The indenture provides that
Aztar will not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
Senior Indebtedness and senior in any respect in right of payment to the notes.
The indenture also provides that the notes will not be subordinate in right of
payment to any other Indebtedness of Aztar, other than Senior Indebtedness.
Investment Company Act. The indenture provides that Aztar will not, and
Aztar will not permit any of its Subsidiaries to, become an investment company
within the meaning of the Investment Company Act of 1940, unless Aztar or that
Subsidiary is exempt under that Act from any requirement to register as an
"investment company."
Mergers and Consolidations. The indenture provides that Aztar may not
consolidate or merge with or into any Person or transfer, sell, lease or
otherwise dispose of all or substantially all of its assets as an entirety to
any Person unless:
(1) the entity formed by or surviving that consolidation or merger (if
other than Aztar), or to which that sale or conveyance has been made, is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia and unconditionally assumes by a
supplemental indenture all of the obligations of Aztar under the notes and
the indenture and has all gaming licenses required to operate the casino
hotels to be owned by the surviving entity;
(2) immediately before and immediately after giving effect to that
transaction, no Default or Event of Default (as defined below) exists;
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(3) immediately after giving effect to that transaction on a pro
formabasis, the Consolidated Net Worth of the surviving entity (including
Aztar) is at least equal to the Consolidated Net Worth of Aztar immediately
prior to that transaction; and
(4) immediately after giving effect to that transaction involving the
incurrence by Aztar or any Subsidiary, directly or indirectly, of
additional Indebtedness (and treating any Indebtedness not previously an
obligation of Aztar or any of its Subsidiaries incurred in connection with
or as a result of that transaction as having been incurred at the time of
that transaction), Aztar (if it is the continuing corporation) or that
other entity could incur at least $1.00 of additional Indebtedness pursuant
to the first paragraph of the "Limitation on Indebtedness" covenant.
In connection with any consolidation, merger, transfer or lease
contemplated by this provision, Aztar will deliver, or cause to be delivered, to
the trustee, in form and substance reasonably satisfactory to the trustee, an
Officers' Certificate and an Opinion of Counsel stating that the consolidation,
merger, transfer or lease and the supplemental indenture in respect to the
consolidation, merger, transfer or lease, comply with this provision and that
all conditions precedent herein provided for relating to that transaction have
been complied with and an Accountants' Certificate with respect to the
calculation of Consolidated Net Worth and Aztar's ability to incur at least
$1.00 of additional Indebtedness as described in the preceding paragraph.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of Aztar, the successor corporation formed by that
consolidation or into which Aztar is merged or to which that transfer is made,
will succeed to, and be substituted for, and may exercise every right and power
of Aztar under the indenture with the same effect as if that successor
corporation had been named as Aztar in the indenture. When a successor
corporation assumes all of the obligations of Aztar under the notes and the
indenture, the applicable predecessor corporation will be released from the
obligations so assumed.
Limitation on Capital Stock of Restricted Subsidiaries. The indenture
provides that Aztar will not:
(1) permit any of its Restricted Subsidiaries to issue any Capital
Stock to any Person (other than Aztar or any Wholly Owned Subsidiary) that
will entitle the holder of that Capital Stock to a preference in right of
payment in the event of liquidation, dissolution or winding-up of that
Restricted Subsidiary or with respect to dividends of that Restricted
Subsidiary;
(2) permit any Subsidiary that holds a license under the Nevada Gaming
Control Act to issue any such Capital Stock to Aztar or any Wholly Owned
Subsidiary unless and until the covenant contained in clause (3) below has
been approved by the Nevada Gaming Commission, all of the unregistered
notes have been exchanged for registered notes pursuant to the exchange
offer (as such terms are defined below), which has been approved by the
Nevada Gaming Commission pursuant to a Shelf Approval or otherwise, or the
shelf registration statement, which has been approved by the Nevada Gaming
Commission pursuant to a Shelf Approval or otherwise, has been declared
effective under the Securities Act; See "Registration Rights; Liquidated
Damages"; or
(3) permit any Person (other than Aztar or any Wholly Owned
Subsidiary) to hold any such Capital Stock.
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Transactions with Affiliates. The indenture provides that Aztar will not,
and will not permit any of its Restricted Subsidiaries to, enter into any
transaction (including, without limitation, the purchase, sale or exchange of
Property, the making of any Investment, the giving of any guarantee or the
rendering of any service) with any Affiliate of Aztar or any Subsidiary of Aztar
(other than a Restricted Subsidiary) unless:
(1) the Board of Directors of Aztar believes, in its reasonable good
faith judgment, based on full disclosure of all relevant facts and
circumstances, that the transaction is in the best interests of Aztar or
that Restricted Subsidiary; and
(2) that transaction is on terms no less favorable to Aztar or that
Restricted Subsidiary than those that could be obtained in a comparable
arm's length transaction with an entity that is not an Affiliate of Aztar
or that Restricted Subsidiary;
provided, however, that the foregoing limitation will not apply for so long as
Aztar's common stock is listed for trading on the New York Stock Exchange or the
American Stock Exchange or is quoted on the National Association of Securities
Dealers Automated Quotation System and designated as a "national market system
security."
EVENTS OF DEFAULT
The following events are defined in the indenture as "Events of Default":
(1) default in the payment of interest on any note for a period of 30
days after that interest becomes due and payable;
(2) default in the payment of the principal of any note when that
principal becomes due and payable at maturity, upon redemption, repayment
pursuant to the "Change of Control" covenant or otherwise, whether or not
that payment is prohibited by the subordination provisions of the
indenture;
(3) failure to observe, conform or comply with any other covenant
contained in the notes or the indenture that continues for 60 days after
Aztar has received written notice of the default from the trustee or the
Holders of 25% in principal amount of the then outstanding notes;
(4) a default on Indebtedness of Aztar or any of its Restricted
Subsidiaries having an outstanding principal amount of more than $5,000,000
individually or in the aggregate if that Indebtedness has been accelerated
(or has matured);
(5) some events of bankruptcy, insolvency or reorganization affecting
Aztar or any Significant Subsidiary;
(6) judgments in an aggregate amount in excess of $5,000,000 have been
rendered against Aztar or a Restricted Subsidiary and have not been
discharged and either an enforcement proceeding has been commenced by any
creditor upon any such judgment or there has been a period of 90
consecutive days during which a stay of enforcement of those judgments has
not been in effect; or
(7) any gaming license of Aztar or any of its Subsidiaries is revoked,
terminated or suspended or otherwise ceases to be effective, resulting in
the cessation or suspension of operation for a period of more than 90 days
of the casino business of any casino hotel owned, leased or operated
directly or indirectly by Aztar or any of its Subsidiaries (other than any
voluntary relinquishment of a gaming license if that
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relinquishment is, in the judgment of Aztar, both desirable in the conduct
of the business of Aztar and its Subsidiaries, taken as a whole, and not
disadvantageous in any material respect to the Holders).
The indenture provides that the trustee, within 90 days after the
occurrence of any continuing Default or Event of Default that is known to the
trustee, will give notice thereof to the Holders of the notes; provided,
however, that, except in the case of a default in payment of principal of or
interest on the notes, the trustee may withhold that notice as long as it in
good faith determines that the withholding is in the interest of the Holders of
the notes.
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) has occurred and be continuing, the
trustee or the Holders of at least 25% in principal amount of the outstanding
notes, by notice in writing to Aztar, may declare the principal amount of the
notes, plus accrued but unpaid interest, to be due and payable immediately. In
case an Event of Default resulting from bankruptcy, insolvency or reorganization
occurs, that amount will be immediately due and payable without any declaration
or any act on the part of the trustee or the Holders of the notes. That
declaration or acceleration may be rescinded and some past defaults may be
waived (except, unless theretofore cured or waived, a default in payment of
principal of or interest on the notes) by the Holders of a majority in principal
amount of the notes upon conditions provided in the indenture. In the event of a
declaration of acceleration because an Event of Default set forth in clause (4)
above has occurred, and is continuing, that declaration and its consequences
will be automatically rescinded and annulled if:
(1) in the case of Indebtedness that has been accelerated, within 10
days of that declaration, the holders of that Indebtedness have rescinded
that declaration and its consequences or in the case of Indebtedness that
has matured, that Indebtedness has been discharged in full, within 10 days
following maturity;
(2) Aztar has delivered an Officers' Certificate certifying that
rescission or discharge to the trustee; and
(3) no other Event of Default has occurred and is continuing.
Except to enforce the right to receive payment of principal or interest
when due, no Holder of a Note may institute any proceeding with respect to the
indenture or for any remedy thereunder unless that Holder has previously given
to the trustee written notice of a continuing Event of Default, the Holders of
at least 25% in principal amount of the outstanding notes have made written
request of the trustee to institute proceedings in respect of that Event of
Default, those Holders have offered the trustee reasonable indemnity against
loss, liability or expense to be incurred thereby, the trustee has failed so to
act for 60 days after the receipt of that notice and no direction inconsistent
with that written request has been given to the trustee by those Holders during
that 60-day period. Subject to some restrictions, the Holders of a majority in
principal amount of the outstanding notes will have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the trustee or exercising any trust or power conferred on the trustee. The
trustee, however, may refuse to follow any direction that conflicts with law or
the indenture, that is unduly prejudicial to the rights of any Holder of a Note
or that would subject the trustee to personal liability.
Aztar is required to deliver to the trustee, within 90 days after the end
of each fiscal quarter and within 120 days after the end of each fiscal year, an
Officers' Certificate
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indicating whether Aztar has complied with the terms of the indenture and
whether an Event of Default exists. In addition, Aztar will promptly deliver to
the trustee notice of any Default or Event of Default.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
Aztar may terminate its obligations under the indenture at any time by
delivering all outstanding notes to the trustee for cancellation and paying all
other sums payable by Aztar under the indenture. Aztar, at its option:
(1) will be discharged, from any and all obligations with respect to
the notes (except for some obligations of Aztar to register the transfer or
exchange of the notes, replace stolen, lost or mutilated notes, maintain
paying agencies, and hold moneys for payment in trust) on the 123rd day
after the satisfaction of the conditions set forth below; or
(2) need not comply with some restrictive covenants and will not be
subject to some nonpayment defaults in the indenture (including those
described under "Covenants" and "Events of Default"), in each case if Aztar
irrevocably deposits with the trustee, in trust, money or U.S. Government
Obligations which, through the payment of interest thereon and principal
thereof in accordance with their terms, will provide money, or a
combination of money and U.S. Government Obligations, in an amount
sufficient to pay all the principal of and interest on the notes not later
than one day before the dates those payments are due in accordance with the
terms of the notes. To exercise any such option, Aztar is required to
deliver to the trustee:
(A) irrevocable instructions to apply that money or the proceeds of
those U.S. Government Obligations to the payment of principal of and
interest on the notes;
(B) an Officers' Certificate and an Opinion of Counsel to the
effect that all conditions precedent to the discharge or defeasance have
been complied with;
(C) an Officers' Certificate certifying as to whether the notes are
then listed on the New York Stock Exchange;
(D) an Opinion of Counsel to the effect that, among other things,
the deposit and related defeasance would not cause the Holders of the
notes to recognize income, gain or loss for federal income tax purposes
and, in the case of a discharge pursuant to clause (1) above,
accompanied by a revenue or private ruling to that effect received from
or published by the Internal Revenue Service; and
(E) an Opinion of Counsel regarding specific matters, including a
bankruptcy of Aztar and, in the case of a discharge pursuant to clause
(1), the irrevocability of the trust.
REPORTS TO HOLDERS OF THE NOTES
Aztar will file with the trustee copies of the annual reports and of the
information, documents and other reports that Aztar is required to file with the
Securities and Exchange Commission pursuant to Section 13 or 15(d) of the
Exchange Act within five days after those annual reports, information, documents
and other reports are required to
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be filed with the Securities and Exchange Commission. Upon the request of any
Holder, Aztar will promptly mail these annual reports, information, documents
and other reports to the requesting Holder. In the event Aztar is not required
to file any annual reports, information or documents with the Securities and
Exchange Commission pursuant to Section 13 or 15(d) of the Exchange Act, Aztar
will nonetheless file these annual reports, information or documents, with the
Securities and Exchange Commission and the trustee on a timely basis, and upon
the request of any Holder will promptly mail these annual reports, information
or documents to the requesting Holder.
MODIFICATION OF THE INDENTURE
From time to time, Aztar and the trustee, without the consent of the
Holders of the notes, may amend or supplement the indenture or the notes for
specified purposes, including curing ambiguities, defects or inconsistencies and
making changes that do not adversely affect the rights of any Holder. Other
modifications and amendments of the indenture or the notes may be made with the
written consent of the Holders of a majority in principal amount of the
outstanding notes, except that, without the consent of each Holder of notes
affected thereby, no amendment may reduce the amount of notes whose Holders must
consent to an amendment; reduce the rate of or change the time for or manner of,
payment of interest on any Note; reduce the principal, or change the Stated
Maturity for the payment of principal, of any Note, or reduce the Redemption
Price of or change the date of redemption or alter any provision with respect to
redemption of the notes; waive a Default in the payment of the principal of or
interest on or redemption of any Note; make any Note payable in money other than
that stated in the Note; or make any change to provisions of the indenture
regarding the unconditional right of Holders to receive principal and interest
on the notes, waiver of past defaults or these provisions for modification of
the indenture.
THE TRUSTEE
The indenture provides that, except during the continuance of an Event of
Default, the trustee will perform only those duties as are specifically set
forth in the indenture. During the existence of an Event of Default, the trustee
will exercise those rights and powers vested in it under the indenture and use
the same degree of care and skill in their exercise as a prudent Person would
exercise under the circumstances in the conduct of that Person's own affairs.
The indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the trustee, should it
become a creditor of Aztar to obtain payment of claims in particular cases or to
realize on particular property received by it in respect of any such claim as
security or otherwise. The trustee is permitted to engage in other transactions;
provided, however, that if it acquires any conflicting interest (as defined in
the indenture or in the Trust Indenture Act) it must eliminate that conflict or
resign.
BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the registered notes will be issued in fully
registered form without interest coupons. Except as described herein under the
heading "-Certificated Securities," registered notes will initially be
represented by a permanent global registered note in fully registered form
without interest coupons (the "Global Note") and will be
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deposited with the trustee as custodian for DTC and registered in the name of
DTC or its nominee, in each case for credit to an account of a direct or
indirect participant in DTC.
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for notes
in certificated form except in the limited circumstances described below. See
"-- Exchange of Book-Entry Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of Certificated Notes
(as defined below).
In addition, transfers of beneficial interests in the Global Notes will be
subject to the applicable rules and procedures of DTC and its direct or indirect
participants (including, if applicable, those of Euroclear and Cedel), which may
change from time to time.
Initially, the trustee will act as Paying Agent and Registrar. The notes
may be presented for registration of transfer and exchange at the offices of the
Registrar.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC,
Euroclear and Cedel are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time. Aztar
takes no responsibility for these operations and procedures and urges investors
to contact the system or their participants directly to discuss these matters.
DTC has advised Aztar that DTC is a limited-purpose trust company created
to hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between the Participants through electronic book-entry
changes in accounts of its Participants. The Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and some
other organizations. Access to DTC's system is also available to other entities
like banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Participant, either directly or indirectly
(collectively, the "Indirect Participants"). Persons who are not the
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interests
in, and transfers of ownership interests in, each security held by or on behalf
of DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised Aztar that, pursuant to procedures established by it
ownership of those interests in the Global Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to the Participants) or by the Participants and the
Indirect Participants (with respect to other owners of beneficial interest in
the Global Notes).
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
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Payments in respect of the principal of, and premium, if any, and interest
on a Global Note registered in the name of DTC or its nominee will be payable to
DTC in its capacity as the registered Holder under the indenture. Under the
terms of the indenture, Aztar and the trustee will treat the persons in whose
names the notes, including the Global Notes, are registered as the owners
thereof for the purpose of receiving those payments and for any and all other
purposes whatsoever. Consequently, neither Aztar, the trustee nor any agent of
Aztar or the trustee has or will have any responsibility or liability for:
(1) any aspect of DTC's records or any of the Participant's or
Indirect Participant's records relating to or payments made on account of
beneficial ownership interest in the Global Notes, or for maintaining,
supervising or reviewing any of DTC's records or any of the Participant's
or Indirect Participant's records relating to the beneficial ownership
interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or
any of its Participants or Indirect Participants.
DTC has advised Aztar that its current practice, upon receipt of any
payment in respect of securities such as the notes, including principal and
interest, is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in the principal amount of beneficial interest in the relevant security
as shown on the records of DTC unless DTC has reason to believe it will not
receive payment on that payment date. Payments by the Participants and the
Indirect Participants to the beneficial owners of notes will be governed by
standing instructions and customary practices and will be the responsibility of
the Participants or the Indirect Participants and will not be the responsibility
of DTC, the trustee or Aztar. Neither Aztar nor the trustee will be liable for
any delay by DTC or any of its Participants in identifying the beneficial owners
of the notes, and Aztar and the trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants, interest
in the Global Notes are expected to be eligible to trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in those interests will,
therefore, settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its Participants. See "-- Same Day Settlement
and Payment."
Subject to the transfer restrictions set forth under "Notice to Investors,"
transfers between the Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same day funds, and transfers between
participants in Euroclear and Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes described herein, cross-market transfers between the Participants in DTC,
on the one hand, and Euroclear or Cedel participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Cedel, as the case may be, by its respective depositary; however, those cross-
market transactions will require delivery of instructions to Euroclear or Cedel,
as the case may be, by the counterparty in that system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
that system. Euroclear or Cedel, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to
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effect final settlement on its behalf by delivering or receiving interests in
the relevant Global Note in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Euroclear participants and Cedel participants may not deliver instructions
directly to the depositories for Euroclear or Cedel.
DTC has advised Aztar that it will take any action permitted to be taken by
a Holder of notes only at the direction of one or more of the Participants to
whose account DTC has credited the interests in the Global Notes and only in
respect of that portion of the aggregate principal amount of the notes as to
which that Participant or Participants has or have given that direction.
However, if there is an Event of Default under the notes, DTC reserves the right
to exchange the Global Notes for legended notes in certificated form, and to
distribute those notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
to facilitate transfers of interests in the Global Notes among the Participants
in DTC, Euroclear and Cedel, they are under no obligation to perform or to
continue to perform those procedures, and those procedures may be discontinued
at any time. Neither Aztar nor the trustee nor any of their respective agents
will have any responsibility for the performance by DTC, Euroclear or Cedel or
their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive notes in registered
certificated form ("Certificated Notes") if:
(1) DTC
(A) notifies Aztar that it is unwilling or unable to continue as
depositary for the Global Notes or that it has ceased to be a clearing
agency registered under the Exchange Act, and
(B) Aztar does not appoint a successor depositary within 120 days,
or
(2) Aztar, at its option, notifies the trustee in writing that it
elects to cause the issuance of the Certificated Notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon satisfaction of the conditions for that exchange set
forth in the indenture. In all cases, Certificated Notes delivered in exchange
for any Global Note or beneficial interests therein will be registered in the
names, and issued in any approved denominations, requested by or on behalf of
the depositary (in accordance with its customary procedures).
EXCHANGE OF CERTIFICATED NOTES FOR BOOK-ENTRY NOTES
Notes issued in certificated form may not be exchanged for beneficial
interests in any Global Note unless the transferor first delivers to the trustee
a written certificate, in the form provided in the indenture, to the effect that
the transfer will comply with the appropriate transfer restrictions applicable
to the notes.
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SAME DAY SETTLEMENT AND PAYMENT
The indenture will require that payments in respect of the notes
represented by the Global Notes (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Note Holder. With
respect to notes in certificated form, Aztar will make all payments of
principal, premium, if any, and interest by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no
account is specified, by mailing a check to each of the Holder's registered
address. The Notes represented by the Global Notes are expected to be eligible
to trade in the PORTAL market and to trade in the Depositary's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in those
notes will, therefore, be required by the Depositary to be settled in
immediately available funds. Aztar expects that secondary trading in any
certificated notes will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
DTC will be credited, and any of that crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
settlement date of DTC. DTC has advised Aztar that cash received in Euroclear or
Cedel as a result of sales of interests in a Global Note by or through a
Euroclear or Cedel participant to a Participant in DTC will be received with
value on the settlement date of DTC but will be available in the relevant
Euroclear or Cedel cash account only as of the business day for Euroclear or
Cedel following DTC's settlement date.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The following summary of the registration rights provided in the exchange
and registration rights agreement is not complete. You should refer to the
exchange and registration rights agreement for a full description of the
registration rights that apply to the notes.
Aztar and the broker-dealers who participated in the offering of the
unregistered notes as initial purchasers entered into the exchange and
registration rights agreement on May 3, 1999 under the terms of which Aztar
agreed to file with the Commission the registration statement of which this
prospectus forms a part, on the appropriate form under the Securities Act with
respect to the exchange offer described in this prospectus.
If:
(1) we are not
(A) required to file the exchange offer registration statement of
which this prospectus forms a part; or
(B) permitted to consummate the exchange offer because the exchange
offer is not permitted by applicable law or Commission policy; or
(2) any Holder of Transfer Restricted Securities notifies us prior to
the 20th day following consummation of the exchange offer that:
(A) it is prohibited by law or Commission policy from participating
in the exchange offer; or
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(B) it may not resell the registered notes acquired by it in the
exchange offer to the public without delivering a prospectus and this
prospectus is not appropriate or available for these resales; or
(C) it is a broker-dealer and owns unregistered notes acquired
directly from Aztar or an affiliate of Aztar,
we will file with the Commission a shelf registration statement to cover resales
of the notes by the Holders who satisfy conditions relating to the provision of
information in connection with the shelf registration statement. We will use our
best efforts to cause the applicable registration statement to be declared
effective as promptly as practicable by the Commission.
For purposes of the preceding, "Transfer Restricted Securities" means each
unregistered note until:
(1) the date on which that unregistered note has been exchanged by a
person other than a broker-dealer for a registered note in the exchange
offer;
(2) following the exchange by a broker-dealer in the exchange offer of
a unregistered note for a registered note, the date on which that
registered note is sold to a purchaser who receives from the broker-dealer
on or prior to the date of the sale a copy of this prospectus;
(3) the date on which that unregistered note has been effectively
registered under the Securities Act and disposed of in accordance with the
shelf registration statement; or
(4) the date on which that unregistered note is distributed to the
public pursuant to Rule 144 under the Securities Act.
The exchange and registration rights agreement provides that:
(1) we will file the exchange offer registration statement of which
this prospectus forms a part with the Commission by July 2, 1999;
(2) we will use our best efforts to have the exchange offer
registration statement of which this prospectus forms a part declared
effective by the Commission by October 30, 1999;
(3) Unless the exchange offer would not be permitted by applicable law
or Commission policy, we will use our best efforts to commence and complete
the exchange offer promptly, but not later than 45 days after the
registration statement of which this prospectus forms a part has become
effective, and issue registered notes in exchange for all unregistered
notes tendered in the exchange offer; and
(4) if obligated to file the shelf registration statement, we will use
our best efforts to file the shelf registration statement with the
Commission as promptly as practicable after our filing obligation arises
and to cause the shelf registration to be declared effective by the
Commission within 120 days after the filing of our shelf registration
statement.
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If, with respect to the unregistered notes:
(1) We had failed to file the registration statement of which this
prospectus forms a part with the Commission by July 2, 1999;
(2) the registration statement of which this prospectus forms a part
is not declared effective by October 30, 1999 or the shelf registration
statement is not declared effective within 120 days from the date our shelf
registration statement is filed;
(3) we fail to complete the exchange offer within the specified time
frame; or
(4) the registration statement of which this prospectus forms a part
or the shelf registration statement is filed and declared effective but is
thereafter either withdrawn or becomes subject to an effective stop order
suspending the effectiveness (except as specifically permitted in the
registration rights agreement) during the periods specified in the
registration rights agreement without being succeeded immediately by an
additional registration statement which becomes effective (each of these
events referred to in clauses (1) through (4) above a "Registration
Default"),
then we will pay, as liquidated damages for our default, special interest (in
addition to the base interest) to each holder of the unregistered notes.
Special interest will accrue from:
(1) the date specified for such filing, in the case of clause (1)
above,
(2) the date specified for effectiveness in the case of clause (2)
above,
(3) the date specified for completion of the exchange offer, in the
case of clause (3) above or
(4) the date the registration statement of which this prospectus forms
a part or shelf registration statement ceases to be effective, in the case
of clause (3) above (each period referred to in clauses (1) - (4), a
"Registration Default Period"),
with respect to the first 90-day period immediately following the occurrence of
the first Registration Default in an amount equal to $.05 per week per $1,000
principal amount of unregistered notes held by that Holder. The amount of the
liquidated damages will increase by an additional $.05 per week per $1,000
principal amount of unregistered notes with respect to each subsequent 90-day
period until all Registration Defaults have been cured up to a maximum amount of
liquidated damages of $.50 per week per $1,000 principal amount of unregistered
notes. Following the cure of all Registration Defaults, the accrual of special
interest will cease.
Holders of unregistered notes must make representations to us as described
in this prospectus and in the letter of transmittal in order to participate in
the exchange offer or have their unregistered notes included in the shelf
registration statement. Holders must deliver information to be used in
connection with the shelf registration statement and provide comments on the
shelf registration statement within specified time periods in order to have
their unregistered notes included in the shelf registration statement.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives registered notes for its own account in
the exchange offer must acknowledge that it will deliver a prospectus together
with any resale of those registered notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in the resales
of registered notes received in exchange for unregistered notes where those
unregistered notes were acquired as a result of market-making activities or
other trading activities. Aztar has agreed that for a period of up to 180 days
after the consummation of the exchange offer, it will make this prospectus, as
amended or supplemented, available to any broker-dealer that requests it in the
letter of transmittal for use in these resales.
Aztar will not receive any proceeds from any sale of registered notes by
broker-dealers or any other persons. Registered notes received by broker-dealers
for their own account pursuant to the exchange offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the registered notes or a
combination of these methods of resale, at market prices prevailing at the time
of resale, at prices related to these prevailing market prices or negotiated
prices. Any of these resales may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
registered notes. Any broker-dealer that resells registered notes that were
received by it for its own account pursuant to the exchange offer and any broker
or dealer that participates in a distribution of those registered notes may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any resale of registered notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
Aztar has agreed to pay all expenses incident to Aztar's performance of, or
compliance with, the Registration Rights Agreement and will indemnify the
holders of unregistered notes including any broker-dealers, and specified
parties related to holders of unregistered notes, against some types of
liabilities, including liabilities under the Securities Act.
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MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a general discussion of the material federal income tax
consequences expected to result to holders whose unregistered notes are
exchanged for registered notes in the exchange offer. This discussion is based
upon current provisions of the Internal Revenue Code of 1986, as amended,
applicable Treasury regulations, judicial authority and administrative rulings
and practice. There can be no assurance that the Internal Revenue Service will
not take a contrary view, and no ruling from the Internal Revenue Service has
been or will be sought with respect to the exchange offer. Legislative, judicial
or administrative changes or interpretations may be forthcoming that could alter
or modify the statements and conclusions set forth herein. Any of these changes
or interpretations may or may not be retroactive and could affect the tax
consequences to holders. Some holders (including insurance companies, tax-exempt
organizations, financial institutions, broker-dealers, foreign corporations and
persons who are not citizens or residents of the United States) may be subject
to special rules not discussed below. Each holder of unregistered notes should
consult its tax advisor as to the particular tax consequences of exchanging
unregistered notes for registered notes, including the applicability and effect
of any state, local or foreign laws.
The exchange of unregistered notes for registered notes will be treated as
a "non-event" for federal income tax purposes because the registered notes will
not be considered to differ materially in kind or extent from the unregistered
notes. As a result, no material federal income tax consequences will result to
holders exchanging unregistered notes for registered notes.
LEGAL MATTERS
The validity of the registered notes offered by this prospectus will be
passed upon for Aztar Corporation by Latham & Watkins, Los Angeles, California.
EXPERTS
The financial statements for Aztar Corporation and for Tropicana
Enterprises as of December 31, 1998 and as of January 1, 1998 and for each of
the three years in the period ended December 31, 1998 included in this
Prospectus have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accounts, given on the authority of said
firm as experts in auditing and accounting.
128
<PAGE> 135
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Aztar Corporation and Subsidiaries
Consolidated Balance Sheets at April 1, 1999 and December
31, 1998............................................... F-2
Consolidated Statements of Operations for the quarters
ended April 1, 1999 and April 2, 1998.................. F-3
Consolidated Statements of Cash Flows for the quarters
ended April 1, 1999 and April 2, 1998.................. F-4
Consolidated Statements of Shareholders' Equity for the
quarters ended April 1, 1999 and April 2, 1998......... F-5
Notes to Consolidated Financial Statements............... F-6
Report of Independent Accountants........................ F-10
Consolidated Balance Sheets at December 31, 1998 and
January 1, 1998........................................ F-11
Consolidated Statements of Operations for the years ended
December 31, 1998, January 1, 1998 and January 2,
1997................................................... F-12
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, January 1, 1998 and January 2,
1997................................................... F-13
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1998, January 1, 1998 and
January 2, 1997........................................ F-14
Notes to Consolidated Financial Statements............... F-15
2. Tropicana Enterprises
Report of Independent Accountants........................ F-35
Balance Sheets at December 31, 1998 and January 1,
1998................................................... F-36
Statements of Operations for the years ended December 31,
1998, January 1, 1998 and January 2, 1997.............. F-37
Statements of Cash Flows for the years ended December 31,
1998, January 1, 1998 and January 2, 1997.............. F-38
Statements of Partners' Capital for the years ended
December 31, 1998, January 1, 1998 and January 2,
1997................................................... F-39
Notes to Financial Statements............................ F-40
</TABLE>
F-1
<PAGE> 136
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
APRIL 1, DECEMBER 31,
1999 1998
---------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................... $ 40,606 $ 58,600
Accounts receivable, net................................ 28,097 31,496
Inventories............................................. 6,718 6,496
Prepaid expenses........................................ 10,585 9,234
Deferred income taxes, net.............................. 15,957 15,957
---------- ----------
Total current assets................................. 101,963 121,783
Investments in and advances to unconsolidated
partnership............................................. 8,222 8,437
Other investments......................................... 21,762 21,005
Property and equipment:
Buildings, riverboats and equipment, net................ 770,287 778,420
Land.................................................... 99,035 99,035
Construction in progress................................ 4,530 2,153
Leased under capital leases, net........................ 6,890 7,782
---------- ----------
880,742 887,390
Deferred charges and other assets......................... 40,122 39,087
---------- ----------
$1,052,811 $1,077,702
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accruals........................... $ 49,221 $ 52,935
Accrued payroll and employee benefits................... 23,666 26,208
Accrued interest payable................................ 877 12,608
Income taxes payable.................................... 2,248 3,185
Current portion of long-term debt....................... 2,505 2,537
Current portion of other long-term liabilities.......... 2,918 2,921
---------- ----------
Total current liabilities............................ 81,435 100,394
Long-term debt............................................ 478,831 487,543
Other long-term liabilities............................... 22,480 22,882
Deferred income taxes..................................... 6,014 5,635
Contingencies and commitments.............................
Series B ESOP convertible preferred stock (redemption
value $7,252 and $7,147)................................ 7,252 7,147
Shareholders' equity:
Common stock, $.01 par value (45,342,745 and 45,337,834
shares outstanding).................................. 492 492
Paid-in capital......................................... 412,528 412,528
Retained earnings....................................... 60,905 58,207
Less: Treasury stock.................................... (17,126) (17,126)
---------- ----------
Total shareholders' equity........................... 456,799 454,101
---------- ----------
$1,052,811 $1,077,702
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 137
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE PERIODS ENDED APRIL 1, 1999 AND APRIL 2, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRST QUARTER
--------------------
1999 1998
-------- --------
<S> <C> <C>
Revenues
Casino................................................. $154,185 $164,291
Rooms.................................................. 15,565 12,052
Food and beverage...................................... 13,239 13,047
Other.................................................. 7,555 7,435
-------- --------
190,544 196,825
Costs and expenses
Casino................................................. 70,038 76,192
Rooms.................................................. 8,229 7,140
Food and beverage...................................... 13,607 13,089
Other.................................................. 7,171 6,399
Marketing.............................................. 19,616 21,211
General and administrative............................. 17,959 19,521
Utilities.............................................. 3,069 2,883
Repairs and maintenance................................ 6,212 5,985
Provision for doubtful accounts........................ 1,824 2,992
Property taxes and insurance........................... 5,909 6,064
Rent................................................... 3,996 5,439
Depreciation and amortization.......................... 13,244 13,044
-------- --------
170,874 179,959
-------- --------
Operating income......................................... 19,670 16,866
Interest income........................................ 417 416
Interest expense....................................... (14,285) (15,136)
-------- --------
Income before other items and income taxes............... 5,802 2,146
Equity in unconsolidated partnership's loss............ (1,008) (1,125)
-------- --------
Income before income taxes............................... 4,794 1,021
Income taxes........................................... (1,942) (403)
-------- --------
Net income............................................... $ 2,852 $ 618
======== ========
Net income per common share.............................. $ .06 $ .01
Net income per common share assuming dilution............ $ .06 $ .01
Weighted-average common shares applicable to:
Net income per common share............................ 45,340 45,202
Net income per common share assuming dilution.......... 46,467 46,942
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 138
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE PERIODS ENDED APRIL 1, 1999 AND APRIL 2, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
FIRST QUARTER
--------------------
1999 1998
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities
Net income............................................... $ 2,852 $ 618
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization....................... 13,698 13,732
Provision for losses on accounts receivable......... 1,824 2,992
Loss on reinvestment obligation..................... 19 219
Rent expense........................................ (246) (247)
Distribution in excess of equity in income of
partnership....................................... 215 231
Deferred income taxes............................... 379 89
Change in assets and liabilities:
(Increase) decrease in accounts receivable........ 1,940 4,386
(Increase) decrease in inventories and prepaid
expenses....................................... (1,613) 782
Increase (decrease) in accounts payable, accrued
expenses and income taxes payable.............. (19,333) (17,102)
Other items, net.................................. 86 1,017
-------- --------
Net cash provided by (used in) operating activities.... (179) 6,717
-------- --------
Cash Flows from Investing Activities
Payments received on notes receivable.................... 823 722
Purchases of property and equipment...................... (5,812) (3,862)
Additions to other long-term assets...................... (3,191) (3,090)
-------- --------
Net cash provided by (used in) investing activities.... (8,180) (6,230)
-------- --------
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt................. 58,700 84,700
Proceeds from issuance of common stock................... -- 20
Principal payments on long-term debt..................... (67,422) (99,029)
Principal payments on other long-term liabilities........ (325) (325)
Debt issuance costs...................................... (125) --
Preferred stock dividend................................. (312) (329)
Redemption of preferred stock............................ (151) (121)
-------- --------
Net cash provided by (used in) financing activities.... (9,635) (15,084)
-------- --------
Net increase (decrease) in cash and cash equivalents..... (17,994) (14,597)
Cash and cash equivalents at beginning of period......... 58,600 46,129
-------- --------
Cash and cash equivalents at end of period.......... $ 40,606 $ 31,532
======== ========
Supplemental Cash Flow Disclosures
Summary of non-cash investing and financing activities:
Capital lease obligations incurred for property and
equipment........................................... $ 16 $ 2,322
Tax benefit from stock options and preferred stock
dividend............................................ 7 18
Cash flow during the period for the following:
Interest paid, net of amount capitalized............... $ 25,523 $ 27,307
Income taxes paid (refunded)........................... 2,493 --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 139
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE PERIODS ENDED APRIL 1, 1999 AND APRIL 2, 1998
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
<TABLE>
<CAPTION>
FIRST QUARTER
--------------------
1999 1998
-------- --------
<S> <C> <C>
Common stock:
Beginning and ending balance........................... $ 492 $ 491
-------- --------
Paid-in capital:
Beginning balance...................................... 412,528 412,029
Stock options exercised for 3,405 shares in 1998....... -- 20
Tax benefit from stock options exercised............... -- 4
-------- --------
Ending balance...................................... 412,528 412,053
-------- --------
Retained earnings:
Beginning balance...................................... 58,207 48,654
Preferred stock dividend and losses on redemption, net of
income tax benefit of $7 and $14....................... (154) (154)
Net income............................................. 2,852 618
-------- --------
Ending balance...................................... 60,905 49,118
-------- --------
Treasury stock:
Beginning and ending balance........................... (17,126) (17,126)
-------- --------
Unearned compensation:
Beginning balance...................................... -- (10)
Amortization........................................... -- 9
-------- --------
Ending balance...................................... -- (1)
-------- --------
$456,799 $444,535
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 140
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1: GENERAL
The consolidated financial statements reflect all adjustments, such
adjustments being normal recurring accruals, which are necessary, in the opinion
of management, for the fair presentation of the results of the interim periods;
interim results, however, may not be indicative of the results for the full
year.
The notes to the interim consolidated financial statements are presented to
enhance the understanding of the financial statements and do not necessarily
represent complete disclosures required by generally accepted accounting
principles. There was no interest capitalized during the quarters ended 1999 or
1998. Capitalized costs related to various development projects, included in
deferred charges and other assets, were $4,663,000 and $2,630,000 at April 1,
1999 and December 31, 1998, respectively. For additional information regarding
significant accounting policies, Las Vegas Tropicana redevelopment, long-term
debt, lease obligations, and other matters applicable to the Company, reference
should be made to the Company's Annual Report to Shareholders for the year ended
December 31, 1998.
NOTE 2: INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED PARTNERSHIP
Following are summarized operating results for the Company's unconsolidated
partnership, accounted for using the equity method for the periods ended April
1, 1999 and April 2, 1998 (in thousands):
<TABLE>
<CAPTION>
FIRST QUARTER
----------------
1999 1998
------ ------
<S> <C> <C>
Revenues........................................... $4,257 $4,122
Operating expenses................................. (684) (684)
------ ------
Operating income................................... 3,573 3,438
Interest expense................................... (1,037) (1,292)
------ ------
Net income...................................... $2,536 $2,146
====== ======
</TABLE>
The Company's share of the above operating results, after intercompany
eliminations, is as follows (in thousands):
<TABLE>
<CAPTION>
FIRST QUARTER
------------------
1999 1998
------- -------
<S> <C> <C>
Equity in unconsolidated partnership's
loss....................................... $(1,008) $(1,125)
</TABLE>
F-6
<PAGE> 141
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 3: LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
APRIL 1, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
11% Senior Subordinated Notes Due 2002 ("11%
Notes")...................................... $200,000 $200,000
13 3/4% Senior Subordinated Notes Due 2004
("13 3/4% Notes")............................ 178,293 178,243
Reducing revolving credit note ("Revolver");
floating rate, 6.76% at April 1, 1999;
matures June 30, 2003........................ 45,000 53,100
Term loan ("Term Loan"); floating rate, 7.62%
at April 1, 1999; matures June 30, 2005...... 50,000 50,000
Other notes payable; 7% to 14.6%; maturities to
2002......................................... 847 868
Obligations under capital leases............... 7,196 7,869
-------- --------
481,336 490,080
Less current portion........................... (2,505) (2,537)
-------- --------
$478,831 $487,543
======== ========
</TABLE>
NOTE 4: OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
APRIL 1, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
Deferred compensation and retirement plans..... $ 12,037 $ 11,871
Accrued rent expense........................... 10,181 10,427
Obligation to City of Evansville and other
civic and community organizations............ 2,738 3,050
Las Vegas Boulevard beautification
assessment................................... 442 455
-------- --------
25,398 25,803
Less current portion........................... (2,918) (2,921)
-------- --------
$ 22,480 $ 22,882
======== ========
</TABLE>
NOTE 5: INCOME TAXES
The Company is responsible, with certain exceptions, for the taxes of
Ramada Inc. ("Ramada") through December 20, 1989. The Internal Revenue Service
("IRS") has completed its examinations of the income tax returns for the years
1988 through 1991 and has settled for all but one issue. The IRS is examining
the income tax returns for the years 1992 through 1996. The Indiana Department
of Revenue is examining the Indiana income
F-7
<PAGE> 142
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
tax returns for the years 1995 through 1997. Management believes that adequate
provision for income taxes and interest has been made in the financial
statements.
NOTE 6: EARNINGS PER SHARE
Net income per common share excludes dilution and is computed by dividing
income applicable to common shareholders by the weighted-average number of
common shares outstanding. Net income per common share, assuming dilution, is
computed based on the weighted-average number of common shares outstanding after
consideration of the dilutive effect of stock options and the assumed conversion
of the preferred stock at the stated rate.
The computations of net income per common share and net income per common
share, assuming dilution, for the periods ended April 1, 1999 and April 2, 1998,
are as follows:
<TABLE>
<CAPTION>
FIRST QUARTER
-----------------
1999 1998
------- ------
<S> <C> <C>
Net income.......................................... $ 2,852 $ 618
Less: preferred stock dividends and losses on
redemption (net of income tax benefits of $7 and
$14, credited to retained earnings)............... (154) (154)
------- ------
Net income applicable to computations............... $ 2,698 $ 464
======= ======
Weighted-average common shares applicable to net
income per common share........................... 45,340 45,202
Effect of dilutive securities:
Stock option incremental shares................... 299 861
Assumed conversion of preferred stock............. 828 879
------- ------
1,127 1,740
------- ------
Weighted-average common shares applicable to net
income per common share assuming dilution......... 46,467 46,942
======= ======
Net income per common share......................... $ .06 $ .01
======= ======
Net income per common share assuming dilution....... $ .06 $ .01
======= ======
</TABLE>
NOTE 7: CONTINGENCIES AND COMMITMENTS
The Company agreed to indemnify Ramada against all monetary judgments in
lawsuits pending against Ramada and its subsidiaries as of the conclusion of the
restructuring of Ramada (the "Restructuring") on December 20, 1989, as well as
all related attorneys' fees and expenses not paid at that time, except for any
judgments, fees or expenses accrued on the hotel business balance sheet and
except for any unaccrued and unreserved aggregate amount up to $5,000,000 of
judgments, fees or expenses related exclusively to the hotel business. Aztar is
entitled to the benefit of any crossclaims or counterclaims related to such
lawsuits and of any insurance proceeds received. In addition, the Company agreed
to indemnify Ramada for various lease guarantees made by Ramada relating to the
restaurant business. In connection with these matters, the Company has an
F-8
<PAGE> 143
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
accrued liability of $3,892,000 and $3,894,000 at April 1, 1999 and December 31,
1998, respectively.
The Company is a party to various other claims, legal actions and
complaints arising in the ordinary course of business or asserted by way of
defense or counterclaim in actions filed by the Company. Management believes
that its defenses are substantial in each of these matters and that the
Company's legal posture can be successfully defended without material adverse
effect on its consolidated financial statements.
The Tropicana Las Vegas lease agreement contains a provision that requires
the Company to maintain an additional security deposit with the lessor of
$21,000,000 in cash or a letter of credit if the Tropicana Las Vegas operation
fails to meet certain financial tests. The Company has a 50% partnership
interest in the lessor.
The Company has severance agreements with certain of its senior executives.
Severance benefits range from a lump-sum cash payment equal to three times the
sum of the executive's annual base salary and the average of the executive's
annual bonuses awarded in the preceding three years plus payment of the value in
the executive's outstanding stock options and vesting and distribution of any
restricted stock to a lump-sum cash payment equal to the executive's annual base
salary. In certain agreements, the termination must be as a result of a change
in control of the Company. Based upon current salary levels and stock options,
the aggregate commitment under the severance agreements should all these
executives be terminated was approximately $11,000,000 at April 1, 1999.
NOTE 8: SUBSEQUENT EVENTS
On April 7, 1999, the Company redeemed $75,000,000 principal amount of the
11% Notes at 101.571% of the face amount plus accrued interest. The redemption
was paid with proceeds from borrowings under the Revolver.
On May 3, 1999, the Company issued $235,000,000 principal amount of 8 7/8%
Senior Subordinated Notes due May 15, 2007 ("Notes"). Interest is payable on May
15 and November 15, beginning on November 15, 1999. The net proceeds from the
issuance of the Notes, after payment of the fees and expenses of the issuance,
were approximately $228,700,000. A portion of the net proceeds of the Notes will
be used to redeem the remaining $125,000,000 principal amount of the 11% Notes
at 101.571% of the face amount plus accrued interest. The balance of the net
proceeds of the Notes will be used to repay a portion of the outstanding
borrowings under the Revolver.
In connection with the redemptions of the 11% Notes, the Company expects to
expense the redemption premiums and the remaining unamortized deferred financing
charges associated with the 11% Notes in the 1999 second quarter. This expense
will be reflected as an extraordinary loss and shown net of an income tax
benefit. The net expense is currently estimated to be approximately $4,100,000.
F-9
<PAGE> 144
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Aztar Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, cash flows and shareholders'
equity present fairly, in all material respects, the financial position of Aztar
Corporation and Subsidiaries (the "Company") at December 31, 1998 and January 1,
1998, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Phoenix, Arizona
February 3, 1999
F-10
<PAGE> 145
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................... $ 58,600 $ 46,129
Accounts receivable, net................................ 31,496 44,133
Inventories............................................. 6,496 6,779
Prepaid expenses........................................ 9,234 10,374
Deferred income taxes, net.............................. 15,957 11,403
---------- ----------
Total current assets............................ 121,783 118,818
Investments in and advances to unconsolidated
partnership............................................. 8,437 9,375
Other investments......................................... 21,005 22,319
Property and equipment:
Buildings, riverboats and equipment, net................ 778,420 802,230
Land.................................................... 99,035 98,762
Construction in progress................................ 2,153 1,215
Leased under capital leases, net........................ 7,782 672
---------- ----------
887,390 902,879
Deferred income taxes, net................................ -- 331
Other deferred charges and assets......................... 39,087 37,774
---------- ----------
$1,077,702 $1,091,496
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accruals........................... $ 52,935 $ 56,939
Accrued payroll and employee benefits................... 26,208 23,630
Accrued interest payable................................ 12,608 13,167
Income taxes payable.................................... 3,185 896
Current portion of long-term debt....................... 2,537 27,166
Current portion of other long-term liabilities.......... 2,921 2,931
---------- ----------
Total current liabilities....................... 100,394 124,729
Long-term debt............................................ 487,543 491,932
Other long-term liabilities............................... 22,882 24,204
Deferred income taxes..................................... 5,635 --
Contingencies and commitments.............................
Series B ESOP convertible preferred stock (redemption
value $7,147 and $6,857)................................ 7,147 6,593
Shareholders' equity:
Common stock, $.01 par value (45,337,834 and 45,198,889
shares outstanding).................................. 492 491
Paid-in capital......................................... 412,528 412,029
Retained earnings....................................... 58,207 48,654
Less: Treasury stock.................................... (17,126) (17,126)
Unearned compensation............................. -- (10)
---------- ----------
Total shareholders' equity...................... 454,101 444,038
---------- ----------
$1,077,702 $1,091,496
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE> 146
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, JANUARY 1, 1998 AND JANUARY 2, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Revenues
Casino.......................................... $666,360 $645,604 $652,707
Rooms........................................... 56,064 53,126 47,977
Food and beverage............................... 52,671 51,776 51,299
Other........................................... 31,041 31,851 25,489
-------- -------- --------
806,136 782,357 777,472
Costs and expenses
Casino.......................................... 300,625 298,104 314,732
Rooms........................................... 31,912 30,258 27,931
Food and beverage............................... 53,714 54,736 53,249
Other........................................... 26,365 25,378 25,300
Marketing....................................... 86,618 88,360 86,202
General and administrative...................... 76,331 70,215 74,396
Utilities....................................... 13,322 14,249 15,076
Repairs and maintenance......................... 24,399 23,741 24,429
Provision for doubtful accounts................. 14,913 12,944 5,892
Property taxes and insurance.................... 23,425 24,093 23,285
Rent............................................ 19,373 21,379 15,698
Depreciation and amortization................... 53,493 51,508 49,406
Preopening costs................................ -- -- 2,933
-------- -------- --------
724,490 714,965 718,529
-------- -------- --------
Operating income.................................. 81,646 67,392 58,943
Interest income................................. 2,154 2,026 2,367
Interest expense................................ (59,588) (62,543) (58,577)
-------- -------- --------
Income before other items, income taxes and
extraordinary items............................. 24,212 6,875 2,733
Equity in unconsolidated partnership's loss..... (4,336) (4,618) (4,793)
-------- -------- --------
Income (loss) before income taxes and
extraordinary items............................. 19,876 2,257 (2,060)
Income taxes.................................... (8,368) 2,185 22,699
-------- -------- --------
Income before extraordinary items................. 11,508 4,442 20,639
Extraordinary items............................. (1,346) -- --
-------- -------- --------
Net income........................................ $ 10,162 $ 4,442 $ 20,639
======== ======== ========
Earnings per common share:
Income before extraordinary items............... $ .24 $ .08 $ .48
Extraordinary items............................. (.03) -- --
-------- -------- --------
Net income...................................... $ .21 $ .08 $ .48
======== ======== ========
Earnings per common share assuming dilution:
Income before extraordinary items............... $ .23 $ .08 $ .46
Extraordinary items............................. (.03) -- --
-------- -------- --------
Net income...................................... $ .20 $ .08 $ .46
======== ======== ========
Weighted-average common shares applicable to:
Earnings per common share....................... 45,230 45,121 41,121
Earnings per common share assuming dilution..... 46,614 46,687 43,132
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE> 147
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, JANUARY 1, 1998 AND JANUARY 2, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income.................................................. $ 10,162 $ 4,442 $ 20,639
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 55,735 54,216 52,478
Provision for losses on accounts receivable............... 14,913 12,944 5,892
Loss on reinvestment obligation........................... 52 569 729
Rent expense.............................................. (900) (984) (732)
Distribution in excess of equity in income of
partnership............................................ 938 985 1,107
Deferred income taxes..................................... 1,412 (184) (22,451)
Change in assets and liabilities:
(Increase) decrease in accounts receivable............. (387) (15,128) (23,701)
(Increase) decrease in refundable income taxes......... -- 1,201 60
(Increase) decrease in inventories and prepaid
expenses............................................. 847 (1,141) (1,787)
Increase (decrease) in accounts payable, accrued
expenses and income taxes payable.................... 93 (8,324) 8,476
Other items, net....................................... 3,536 893 7,429
--------- --------- ---------
Net cash provided by (used in) operating activities....... 86,401 49,489 48,139
--------- --------- ---------
Cash Flows from Investing Activities
Payments received on notes receivable....................... 1,493 1,310 1,150
Reduction in other investments.............................. 4,057 8,194 2,427
Purchases of property and equipment......................... (25,088) (25,117) (120,426)
Additions to other long-term assets......................... (11,102) (7,714) (7,623)
--------- --------- ---------
Net cash provided by (used in) investing activities....... (30,640) (23,327) (124,472)
--------- --------- ---------
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt.................... 478,400 237,700 220,200
Proceeds from issuance of common stock...................... 402 697 58,051
Principal payments on long-term debt........................ (517,178) (259,419) (177,421)
Principal payments on other long-term liabilities........... (1,527) (1,777) (5,126)
Debt issuance costs......................................... (2,246) (195) (478)
Preferred stock dividend.................................... (649) (689) (726)
Redemption of preferred stock............................... (492) (481) (563)
--------- --------- ---------
Net cash provided by (used in) financing activities....... (43,290) (24,164) 93,937
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents........ 12,471 1,998 17,604
Cash and cash equivalents at beginning of year.............. 46,129 44,131 26,527
--------- --------- ---------
Cash and cash equivalents at end of year.................. $ 58,600 $ 46,129 $ 44,131
========= ========= =========
Supplemental Cash Flow Disclosures
Summary of non-cash investing and financing activities:
Reduction in land and other long-term liabilities......... $ -- $ 2,000 $ --
Capital lease obligations incurred for property and
equipment.............................................. 9,625 552 --
Tax benefit from stock options and preferred stock
dividend............................................... 140 247 916
Issuance of restricted stock.............................. -- -- 136
Forfeiture of restricted stock............................ -- 24 75
Cash flow during the year for the following:
Interest paid, net of amount capitalized.................. $ 57,913 $ 60,041 $ 58,037
Income taxes paid (refunded).............................. 3,803 (3,233) 1,086
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE> 148
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, JANUARY 1, 1998 AND JANUARY 2, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNEARNED
COMMON PAID-IN RETAINED TREASURY COMPEN-
STOCK CAPITAL EARNINGS STOCK SATION TOTAL
------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 28,
1995...................... $422 $352,221 $24,922 $(17,027) $(879) $359,659
Issuance of common stock
in public offering..... 63 55,813 55,876
Stock options exercised... 4 2,171 2,175
Issuance of restricted
stock.................. 136 (136) --
Tax benefit from stock
options exercised...... 817 817
Preferred stock dividend
and losses on
redemption, net of
income tax benefit..... (715) (715)
Forfeiture of restricted
stock.................. (75) 75 --
Amortization of unearned
compensation........... 823 823
Net income................ 20,639 20,639
---- -------- ------- -------- ----- --------
Balance, January 2, 1997.... 489 411,158 44,846 (17,102) (117) 439,274
Stock options exercised... 2 695 697
Tax benefit from stock
options exercised...... 176 176
Preferred stock dividend
and losses on
redemption, net of
income tax benefit..... (634) (634)
Forfeiture of restricted
stock.................. (24) 24 --
Amortization of unearned
compensation........... 83 83
Net income................ 4,442 4,442
---- -------- ------- -------- ----- --------
Balance, January 1, 1998.... 491 412,029 48,654 (17,126) (10) 444,038
Stock options exercised... 1 401 402
Tax benefit from stock
options exercised...... 98 98
Preferred stock dividend
and losses on
redemption, net of
income tax benefit..... (609) (609)
Amortization of unearned
compensation........... 10 10
Net income................ 10,162 10,162
---- -------- ------- -------- ----- --------
Balance, December 31,
1998...................... $492 $412,528 $58,207 $(17,126) $ -- $454,101
==== ======== ======= ======== ===== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE> 149
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidated Statements
Aztar Corporation ("Aztar" or "Company") was incorporated in Delaware in
June 1989 to operate the gaming business of Ramada Inc. ("Ramada") after the
restructuring of Ramada ("Restructuring"). The Restructuring involved the
disposition of Ramada's hotel and restaurant businesses with Ramada's
shareholders retaining their interest in the gaming business. As part of the
Restructuring, the gaming business and certain other assets and liabilities of
Ramada were transferred to Aztar, and a wholly-owned subsidiary of New World
Hotels (U.S.A.), Inc. was merged with Ramada ("Merger"). In the Merger, each
share of Ramada common stock was converted into the right to receive $1.00 and
one share of Aztar common stock.
The Company operates casino hotels in Atlantic City, New Jersey and Las
Vegas, Nevada, under the Tropicana name and in Laughlin, Nevada, as Ramada
Express. The Company operates casino riverboats in Caruthersville, Missouri and
Evansville, Indiana under the Casino Aztar name. A substantial portion of the
Company's consolidated revenues and assets are concentrated at the Atlantic City
Tropicana.
The consolidated financial statements include the accounts of Aztar and all
of its controlled subsidiaries and partnerships. All subsidiary companies are
wholly owned. In consolidating, all material intercompany transactions are
eliminated. The Company uses a 52/53 week fiscal year ending on the Thursday
nearest December 31, which included 52 weeks in 1998 and 1997 and 53 weeks in
1996.
The preparation of 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.
Cash and Cash Equivalents
Highly liquid investments purchased with an original maturity of three
months or less are classified as cash equivalents. These instruments are stated
at cost, which approximates fair value because of their short maturity.
Short-term Investments
Short-term investments purchased with an original maturity of over three
months but less than one year are stated at cost, which approximates fair value
because of their short maturity. There were no short-term investments at
December 31, 1998 or January 1, 1998.
Inventories
Inventories, which consist primarily of food, beverage and operating
supplies, are stated at the lower of cost or market value. Costs are determined
using the first-in, first-out method.
Advertising Costs
Costs for advertising are expensed as incurred, except costs for
direct-response advertising, which are capitalized and amortized over the period
of the related program.
F-15
<PAGE> 150
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Direct-response advertising costs consist primarily of mailing costs associated
with direct-mail programs. Capitalized advertising costs, included in prepaid
expenses, were immaterial at December 31, 1998 and January 1, 1998. Advertising
costs that were expensed during the year were $17,439,000 in 1998, $18,423,000
in 1997 and $19,699,000 in 1996.
Other Investments
The Casino Reinvestment Development Authority ("CRDA") bonds are classified
as held-to-maturity securities and are carried at amortized cost.
Property and Equipment
Property and equipment are stated at cost. During construction, the Company
capitalizes interest and other direct and indirect development costs. Interest
is capitalized monthly by applying the effective interest rate on certain
borrowings to the average balance of expenditures. There was no interest
capitalized during 1998 or 1997. The interest capitalized during 1996 was
$4,503,000.
Depreciation and amortization are computed by the straight-line method
based upon the following useful lives: buildings and improvements, 3-40 years;
riverboats, barge, docking facilities and improvements, 3-25 years; furniture
and equipment, 3-15 years; and leasehold improvements, shorter of lease term or
asset useful life. Accumulated depreciation and amortization on buildings,
riverboats and equipment was $307,541,000 at December 31, 1998 and $262,654,000
at January 1, 1998.
Improvements, renewals and extraordinary repairs that extend the life of
the asset are capitalized; other repairs and maintenance are expensed. The cost
and accumulated depreciation applicable to assets retired are removed from the
accounts and the gain or loss, if any, on disposition is recognized in income as
realized.
Deferred Charges
Debt issuance costs are capitalized as incurred and amortized using the
interest method. Capitalized debt issuance costs, net of accumulated
amortization of $4,916,000 and $7,301,000, were $9,690,000 and $11,447,000 at
December 31, 1998 and January 1, 1998, respectively.
Costs incurred to obtain initial gaming licenses to operate a casino are
capitalized as incurred and amortized evenly over ten years beginning with the
commencement of operations; subsequent renewal costs are amortized evenly over
the renewal period. Deferred licensing costs consist primarily of payments or
obligations to civic and community organizations, legal and consulting fees,
application and selection fees with associated investigative costs and direct
internal salaries and related costs of development personnel. Deferred licensing
costs in connection with initial gaming licenses, net of accumulated
amortization of $8,868,000 and $6,351,000, were $16,567,000 and $17,874,000 at
December 31, 1998 and January 1, 1998, respectively.
Preopening costs directly related to the opening of a gaming operation or
major addition to a gaming operation are capitalized as incurred and expensed in
the period the related facility commences operations. Effective January 1, 1999,
preopening costs are expensed as incurred. Preopening costs consist primarily of
salaries and wages, marketing,
F-16
<PAGE> 151
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
temporary office expenses, professional fees and training costs. There were no
capitalized preopening costs at December 31, 1998 or January 1, 1998.
Development costs associated with pursuing opportunities in gaming
jurisdictions, as well as in jurisdictions in which gaming has not been
approved, are expensed as incurred until a particular opportunity is determined
to be viable, generally when the Company has been selected as the operator of a
new gaming facility, has applied for a gaming license or has obtained rights to
a specific site. Development costs incurred subsequent to these criteria being
met are capitalized. Development costs consist of deferred licensing costs and
site acquisition costs. In jurisdictions in which gaming has not been approved,
only site acquisition costs are capitalized. In the event a project is later
determined not to be viable or the Company is not licensed to operate a facility
at a site, the capitalized costs related to this project or site would be
expensed. At December 31, 1998 and January 1, 1998, the Company had capitalized
development costs of $2,630,000 and $954,000, respectively. It is reasonably
possible that management's estimate of viability with regard to a development
project may change in the near term.
Valuation of Long-Lived Assets
Long-lived assets and certain identifiable intangibles held and used by the
Company are reviewed for impairment whenever events or changes in circumstances
warrant such a review. The carrying value of a long-lived or intangible asset is
considered impaired when the anticipated undiscounted cash flow from such asset
is separately identifiable and is less than its carrying value. In that event, a
loss is recognized based on the amount by which the carrying value exceeds the
fair value of the asset. Fair value is determined primarily using the
anticipated cash flows discounted at a rate commensurate with the risk involved.
Losses on long-lived assets to be disposed of are determined in a similar
manner, except that fair values are reduced for the cost of disposition.
The Company performed such a review at December 31, 1998, in connection
with its riverboat operation in Caruthersville, Missouri. The Company had
approximately $42,932,000 in carrying value of long-lived assets and certain
identifiable intangibles associated with Casino Aztar Caruthersville at December
31, 1998. A number of factors were considered in the evaluation of
recoverability, including, but not limited to, anticipated revenues and the
duration thereof, expected operating costs, the competitive environment and
future legislative and regulatory changes. Although the results of the Company's
analysis did not have an effect on the carrying value for Casino Aztar
Caruthersville at December 31, 1998, it is reasonably possible that management's
evaluation of recoverability could change in the near term.
Equity Instruments
The fair-value-based method of accounting is used for equity instruments
issued to nonemployees for goods or services. The intrinsic-value-based method
of accounting is used for stock-based employee compensation plans.
F-17
<PAGE> 152
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Revenue Recognition
Casino revenue consists of gaming win net of losses. Revenues exclude the
retail value of complimentary food and beverage, accommodations and other goods
and services provided to customers. The estimated costs of providing such
complimentaries have been classified as casino expenses through
interdepartmental allocations as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Rooms............................ $22,172 $22,710 $23,615
Food and beverage................ 49,599 47,755 42,765
Other............................ 3,053 2,957 2,716
------- ------- -------
$74,824 $73,422 $69,096
======= ======= =======
</TABLE>
Income Taxes
Deferred tax assets and liabilities are recognized for the expected future
tax consequences of events that have been included in the financial statements
or income tax returns. Deferred tax assets and liabilities are determined based
on the difference between the financial statement and tax bases of assets and
liabilities using enacted rates expected to apply to taxable income in the years
in which those differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Earnings per Share
Earnings per common share excludes dilution and is computed by dividing
income applicable to common shareholders by the weighted-average number of
common shares outstanding. Earnings per common share, assuming dilution, is
computed based on the weighted-average number of common shares outstanding after
consideration of the dilutive effect of stock options and the assumed conversion
of the preferred stock at the stated rate.
NOTE 2. CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents,
long-term investments and trade accounts receivable. The Company places its cash
and temporary cash investments with high-credit-quality financial institutions.
At times, such investments may be in excess of the FDIC and SIPC insurance
limits.
The Atlantic City Tropicana has a concentration of credit risk in the
northeast region of the U.S. Approximately 63% of the receivables at the Nevada
operations are concentrated in Asian and Latin American customers and the
remainder of their receivables are concentrated in California and the southwest
region of the U.S. As a general policy, the Company does not require collateral
for these receivables. At December 31, 1998 and January 1, 1998, the net
receivables at Tropicana Atlantic City were $16,645,000 and $20,910,000,
respectively, and the net receivables at Tropicana Las Vegas and Ramada Express
combined were $13,441,000 and $21,778,000, respectively.
F-18
<PAGE> 153
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
An allowance for doubtful accounts is maintained at a level considered
adequate to provide for possible future losses. At December 31, 1998 and January
1, 1998, the allowance for doubtful accounts was $25,296,000 and $17,919,000,
respectively.
NOTE 3. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED PARTNERSHIP
The Company's investment in unconsolidated partnership is a noncontrolling
partnership interest of 50% in Tropicana Enterprises, a Nevada general
partnership that owns the real property and certain personal property that the
Company leases in the operation of the Las Vegas Tropicana. The Company uses the
equity method of accounting for this investment and in connection with the lease
expensed rents of $16,540,000 in 1998, $16,554,000 in 1997 and $16,652,000 in
1996, of which 50% was eliminated in consolidation. On February 2, 1998, the
Company acquired an option to purchase the 50% partnership interest that it does
not own. On February 1, 1999, the Company amended this option. The amended
option agreement gives the Company an unconditional right, but not the
obligation, to purchase the partnership interest for $120,000,000 until as late
as February 1, 2002.
Summarized balance sheet information and operating results for the
unconsolidated partnership are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ------------
<S> <C> <C> <C>
Income producing properties......... $52,018 $54,741
Other assets........................ 10,891 11,971
Bank term loan payable.............. 60,228 63,304
Other liabilities................... 938 884
1998 1997 1996
------- ------- -------
Revenues............................ $16,568 $16,591 $16,698
Operating expenses.................. (2,743) (2,743) (2,797)
------- ------- -------
Operating income.................... 13,825 13,848 13,901
Interest expense.................... (4,833) (5,397) (5,693)
------- ------- -------
Net income.......................... $ 8,992 $ 8,451 $ 8,208
======= ======= =======
</TABLE>
The Company's share of the above operating results, after intercompany
eliminations, is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Equity in unconsolidated partnership's
loss....................................... $(4,336) $(4,618) $(4,793)
</TABLE>
NOTE 4. OTHER INVESTMENTS
Other investments consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
CRDA deposits, net of a valuation allowance of
$6,452 and $6,706................................. $16,645 $17,986
CRDA bonds, net of an unamortized discount of $1,912
and $1,920........................................ 4,360 4,333
------- -------
$21,005 $22,319
======= =======
</TABLE>
F-19
<PAGE> 154
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company deposits funds with the CRDA to satisfy a New Jersey assessment
based upon its casino revenues. Deposits with the CRDA bear interest at
two-thirds of market rates resulting in a fair value lower than cost. If not
used for other purposes, the CRDA deposits are used to invest in bonds issued by
the CRDA as they become available that also bear interest at two-thirds of
market rates. The CRDA bonds have various contractual maturities that range from
16 to 49 years. Actual maturities may differ from contractual maturities because
of prepayment rights.
The Company has an agreement with the CRDA for approximately $24,000,000 in
funding in connection with a completed expansion project at the Atlantic City
Tropicana. The Company receives funds from the CRDA based on expenditures made
for the project to the extent that the Company has available funds on deposit
with the CRDA that qualify for this funding. As of December 31, 1998, the
Company has received approximately $15,300,000 in funding from the CRDA under
this agreement. At December 31, 1998 and January 1, 1998, the Company had
approximately $800,000 and $900,000, respectively, in available deposits with
the CRDA that qualified and accordingly reclassified these amounts to accounts
receivable.
NOTE 5. LAS VEGAS TROPICANA REDEVELOPMENT
The Company engaged an investment bank to explore alternatives for a major
redevelopment of the Las Vegas Tropicana. The amount and timing of any future
expenditure, and the extent of any impact on existing operations, will depend on
the nature of the redevelopment ultimately undertaken by the Company.
The net book value of the property and equipment used in the operation of
the Las Vegas Tropicana was $34,144,000 at December 31, 1998. It is reasonably
possible that the carrying value of some or all of these assets may change in
the near term.
NOTE 6. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
11% Senior Subordinated Notes Due 2002; redeemable at
101.571%.................................................. $200,000 $200,000
13 3/4% Senior Subordinated Notes Due 2004 ($180,000
principal amount, 14% effective interest rate); redeemable
beginning October 1, 1999 at 106.875%; net of unamortized
discount.................................................. 178,243 178,061
Reducing revolving credit note; floating rate; matures
December 31, 1999......................................... -- 139,000
Reducing revolving credit note; floating rate, 7.36% at
December 31, 1998; matures June 30, 2003.................. 53,100 --
Term loan; floating rate, 8.04% at December 31, 1998;
matures
June 30, 2005............................................. 50,000 --
Other notes payable; 7% to 14.6%; maturities to 2002........ 868 1,213
Obligations under capital leases............................ 7,869 824
-------- --------
490,080 519,098
Less current portion........................................ (2,537) (27,166)
-------- --------
$487,543 $491,932
======== ========
</TABLE>
F-20
<PAGE> 155
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Maturities of long-term debt for the five years subsequent to December 31,
1998 are as follows (in thousands):
<TABLE>
<S> <C>
1999............................. $ 2,537
2000............................. 3,577
2001............................. 2,598
2002............................. 201,424
2003............................. 53,804
</TABLE>
The 11% Senior Subordinated Notes ("11% Notes") are due on October 1, 2002.
Interest on the 11% Notes is payable semiannually on April 1 and October 1. The
11% Notes are redeemable at the option of the Company, in whole or in part, at
101.571% of the principal amount plus interest declining to 100% of the
principal amount plus interest beginning October 1, 1999.
The 13 3/4% Senior Subordinated Notes ("13 3/4% Notes") are due on October
1, 2004. Interest on the 13 3/4% Notes is payable semiannually on April 1 and
October 1. The 13 3/4% Notes are redeemable at the option of the Company, in
whole or in part, on or after October 1, 1999, at prices from 106.875% of the
principal amount plus interest declining to 100% of the principal amount plus
interest beginning October 1, 2003.
The 11% Notes and 13 3/4% Notes, ranked pari passu, are general unsecured
obligations of the Company and are subordinated in right of payment to all
present and future Senior indebtedness (as defined) of the Company. Upon change
of control of the Company, the holders of the 11% Notes and 13 3/4% Notes would
have the right to require repurchase of the respective notes at par plus accrued
interest. Certain covenants in the 11% Notes and 13 3/4% Notes limit the ability
of the Company to incur indebtedness or engage in mergers, consolidations or
sales of assets.
On May 28, 1998, the Company completed new financing consisting of a
$250,000,000 reducing revolving credit note maturing on June 30, 2003
("Revolver") and a $50,000,000 term loan maturing on June 30, 2005 ("Term
Loan"). The funds borrowed under the Revolver were used to prepay the balance
outstanding and extinguish the prior reducing revolving credit note maturing on
December 31, 1999 ("Original Credit Facility"). The funds received under the
Term Loan were used to repay a portion of the Revolver. The Company's
$25,000,000 supplemental reducing revolving loan agreement maturing on March 15,
1999 ("Supplemental Credit Facility"), was extinguished concurrently with the
Original Credit Facility. There were no borrowings outstanding under the
Supplemental Credit Facility from its inception through the date it was
extinguished.
The maximum amount available under the Revolver will be reduced quarterly
by $10,000,000 commencing on September 30, 2000. Interest is computed on the
outstanding principal balance of the Revolver based upon, at the Company's
option, a one-, two-, three- or six-month Eurodollar rate plus a margin ranging
from 1.00% to 2.25%, or the prime rate plus a margin ranging from zero to 1.00%.
The applicable margin is dependent upon the Company's outstanding indebtedness
and operating cash flow. As of December 31, 1998, the margin was at 0.5% less
than the highest level. Interest computed based upon the Eurodollar rate is
payable quarterly or on the last day of the applicable Eurodollar interest
period, if earlier. Interest computed based upon the prime rate is payable
quarterly. The Company incurs a commitment fee ranging from 0.225% to 0.4375%
per annum on the unused portion of the Revolver.
F-21
<PAGE> 156
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Term Loan calls for quarterly principal payments of $125,000 beginning
on September 30, 1999 through June 30, 2004, and $11,875,000 beginning on
September 30, 2004 through maturity. Interest is computed on the Term Loan based
upon, at the Company's option, a one-, two-, three- or six-month Eurodollar rate
plus a margin of 2.5%. Interest is payable quarterly or on the last day of the
applicable Eurodollar interest period, if earlier.
The collateral securing the Revolver and the Term Loan, shared on a pari
passu basis, consists of all the property of Tropicana Atlantic City, Ramada
Express and the casino riverboat operations and, with certain exceptions, the
stock of the Company's subsidiaries. The Revolver imposes various restrictions
on the Company, including limitations on its ability to incur additional debt,
commit funds to capital expenditures and investments, merge or sell assets. The
Revolver also prohibits dividends on the Company's common stock, other than
those payable in common stock, and repurchases of the Company's common stock in
excess of $30,000,000 with certain limited exceptions. In addition, the Revolver
has certain quarterly financial tests, including a minimum requirement for
operating cash flow, a minimum ratio of debt service coverage and maximum ratios
of total debt and senior debt to operating cash flow. The restrictions imposed
on the Company by the Term Loan are similar to those imposed by the Company's
subordinated debt.
NOTE 7. LEASE OBLIGATIONS
The Company is a lessee under a number of noncancelable lease agreements
involving land, buildings, leasehold improvements and equipment, some of which
provide for contingent rentals based on revenues, the consumer price index
and/or interest rate fluctuations. The leases extend for various periods up to
12 years and generally provide for the payment of executory costs (taxes,
insurance and maintenance) by the Company. Certain of these leases have
provisions for renewal options ranging from 1 to 15 years, primarily under
similar terms, and/or options to purchase at various dates.
Properties leased under capital leases are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
Furniture and equipment..................... $18,714 $ 9,945
Less accumulated amortization............... (10,932) (9,273)
------- -------
$ 7,782 $ 672
======= =======
</TABLE>
Amortization of furniture and equipment leased under capital leases,
computed on a straight-line basis, was $2,357,000 in 1998, $269,000 in 1997 and
$146,000 in 1996.
F-22
<PAGE> 157
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Minimum future lease obligations on long-term, noncancelable leases in
effect at December 31, 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR CAPITAL OPERATING
- ---- ------- ---------
<S> <C> <C>
1999.......................................... $ 2,771 $ 11,879
2000.......................................... 3,294 10,132
2001.......................................... 1,906 9,034
2002.......................................... 781 8,441
2003.......................................... 231 8,250
Thereafter.................................... 159 52,651
------- --------
9,142 $100,387
========
Amount representing interest.................. (1,273)
-------
Net present value............................. 7,869
Less current portion.......................... (2,138)
-------
Long-term portion............................. $ 5,731
=======
</TABLE>
The above net present value is computed based on specific interest rates
determined at the inception of the leases.
Rent expense is detailed as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Minimum rentals...................... $15,968 $18,099 $12,379
Contingent rentals................... 3,405 3,280 3,319
------- ------- -------
$19,373 $21,379 $15,698
======= ======= =======
</TABLE>
NOTE 8. OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
Deferred compensation and retirement
plans..................................... $11,871 $10,776
Accrued rent expense........................ 10,427 11,327
Obligation to City of Evansville and other
civic and community organizations......... 3,050 4,550
Las Vegas Boulevard beautification
assessment................................ 455 482
------- -------
25,803 27,135
Less current portion........................ (2,921) (2,931)
------- -------
$22,882 $24,204
======= =======
</TABLE>
NOTE 9. REDEEMABLE PREFERRED STOCK
A series of preferred stock consisting of 100,000 shares has been
designated Series B ESOP Convertible Preferred Stock ("ESOP Stock") and those
shares were issued on December 20, 1989, to the Company's Employee Stock
Ownership Plan ("ESOP"). The ESOP purchased the shares for $10,000,000 with
funds borrowed from a subsidiary of the Company. These funds are repayable in
even semiannual payments of principal and interest at 13 1/2% per year over a
10-year term. During 1998, 1997 and 1996, respectively, 4,737 shares, 4,555
shares and 4,644 shares were redeemed primarily in connection with employee
terminations. At December 31, 1998, cumulative redemptions totaled 21,259
F-23
<PAGE> 158
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
shares. The ESOP Stock has an annual dividend rate of $8.00 per share per annum
payable semiannually in arrears. These shares have no voting rights except under
certain limited, specified conditions. Shares not allocated to participant
accounts and those shares not vested may be redeemed at $100 per share. Shares
may be converted into common stock at $9.46 per share of common stock and have a
liquidation preference of $100 per share.
The shares that have been allocated to the ESOP participant accounts and
have vested are redeemable at the higher of appraised value, conversion value or
$100 per share, by the participant upon termination. The excess of the
redemption value of the ESOP Stock over the carrying value is charged to
retained earnings upon redemption. In the event of default in the payment of
dividends on the ESOP Stock for six consecutive semiannual periods, each
outstanding share would have one vote per share of common stock into which the
preferred stock is convertible.
NOTE 10. CAPITAL STOCK
The Company is authorized to issue 10,000,000 shares of preferred stock,
par value $.01 per share, issuable in series as the Board of Directors may
designate. Approximately 50,000 shares of preferred stock have been designated
Series A Junior Participating Preferred Stock but none have been issued.
The Company is authorized to issue 100,000,000 shares of common stock with
a par value of $.01 per share. Shares issued were 49,244,268 at December 31,
1998, and 49,120,863 at January 1, 1998. Common stock outstanding was net of
3,906,434 and 3,921,974 treasury shares at December 31, 1998 and January 1,
1998, respectively. One preferred stock purchase right ("Right") is attached to
each share of the Company's common stock. Each Right will entitle the holder,
subject to the occurrence of certain events, to purchase a unit with no par
value ("Unit") consisting of one one-thousandth of a share of Series A Junior
Participating Preferred Stock at a purchase price of $40.00 per Unit subject to
adjustment. The Rights will expire in December 1999 if not earlier redeemed by
the Company at $.01 per Right.
In 1996, the Company issued 6,279,200 shares of common stock in a public
offering. The Company issued shares of restricted common stock in 1995 to
certain executive officers and key employees; however, 3,668 and 11,334 of these
shares were forfeited in 1997 and 1996, respectively. The restrictions on
122,998 of the unforfeited shares lapsed over a three-year period commencing on
the date of issuance. The restrictions on 34,000 of the unforfeited shares
lapsed during 1996 after the common stock price hit a certain performance
target. Compensation expense in connection with this issuance of restricted
common stock was $10,000, $83,000 and $823,000 in 1998, 1997 and 1996,
respectively.
In accordance with the Merger agreement, 666,572 shares of common stock
that had not been claimed by the shareholders of Ramada were returned to the
Company in December 1990 to be held as treasury shares until claimed. During
1998, 1997 and 1996, respectively, 15,540, 24,255 and 25,606 shares were
claimed; the balance of unclaimed shares was 328,047 as of December 31, 1998.
During 1990, the Board of Directors authorized the Company to make
discretionary repurchases of up to 4,000,000 shares of its common stock from
time to time in the open market or otherwise and at December 31, 1998, there
remained 591,900 shares that could
F-24
<PAGE> 159
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
be repurchased under this authority. No shares were repurchased under this
program in 1998, 1997 or 1996. Repurchased and forfeited shares are stated at
cost and held as treasury shares to be used for general corporate purposes.
At December 31, 1998, January 1, 1998 and January 2, 1997, common shares
reserved for future grants of stock options under the Company's stock option
plans were 122,000, 589,000 and 1,036,000, respectively. At December 31, 1998,
common shares reserved for the conversion of the ESOP Stock were 833,000 and
shares of preferred stock reserved for exercise of the Rights were 50,000.
NOTE 11. STOCK OPTIONS
The Company has elected to follow Accounting Principles Board Opinion No.
25 entitled "Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations in accounting for its stock-based employee compensation
arrangements because the alternative fair-value-based method of accounting
provided for under Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 123 entitled "Accounting for Stock-Based Compensation"
("SFAS 123") requires use of option valuation models that were not developed for
use in valuing employee stock options.
Under APB 25, because the exercise price of the Company's stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.
The Company's 1989 Stock Option and Incentive Plan ("1989 Plan") has
authorized the grant of up to 6,000,000 shares of the Company's common stock
pursuant to options, restricted shares and performance shares to officers and
key employees of the Company. Options granted under the 1989 Plan have 10-year
terms and vest and become exercisable at the rate of 1/3 per year on each of the
first three anniversary dates of the grant, subject to continued employment on
those dates. The Company's 1990 Nonemployee Director Stock Option Plan ("1990
Plan") has authorized the grant of up to 250,000 shares of the Company's common
stock pursuant to options granted to nonemployee Directors of the Company.
Options granted under the 1990 Plan have 10-year terms and vest and become
exercisable on the date of grant.
Pro forma information regarding net income and earnings per share is
required by SFAS 123, and has been determined as if the Company had accounted
for its stock option plans under the fair-value-based method of that Statement.
The fair value for these options was estimated at the date of grant or
modification using a Black-Scholes option pricing model with the following
weighted-average assumptions: risk-free interest rate of 5.1% in 1998, 6.5% in
1997 and 6.4% in 1996, no dividend in 1998, 1997 or 1996, volatility factor of
the expected market price of the Company's common stock of .51 in 1998, .29 in
1997 and .42 in 1996, and an expected life of the option of 4.7 years in 1998,
5.2 years in 1997 and 5.3 years in 1996.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting or trading
restrictions and are fully transferable. In addition, option valuation models
require the input of highly subjective assumptions including the expected stock
price volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value
F-25
<PAGE> 160
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The pro forma
information for 1998, 1997 and 1996 follows (in thousands except for earnings
per share information):
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ -------
<S> <C> <C> <C>
Pro forma net income................... $8,342 $3,693 $20,122
Pro forma earnings per share:
Net income per common share.......... $ .17 $ .07 $ .47
Net income per common share assuming
dilution.......................... $ .17 $ .07 $ .45
</TABLE>
During 1998, options to purchase 170,220 shares of the Company's common
stock at an exercise price of $6.16 that were to expire in 1998 were extended to
2000. In addition, options to purchase 555,000 shares of the Company's common
stock at an exercise price of $5.00 that were to expire in 2001 were extended to
2006. In connection with the extension of these option periods, the Company
recorded approximately $483,000 of compensation expense.
A summary of the Company's other stock option activity and related
information for the years ended December 31, 1998, January 1, 1998 and January
2, 1997 follows (in thousands of shares):
<TABLE>
<CAPTION>
1998 1997 1996
------------------ ------------------ ------------------
WEIGHTED- WEIGHTED- WEIGHTED-
SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE
UNDER EXERCISE UNDER EXERCISE UNDER EXERCISE
OPTION PRICE OPTION PRICE OPTION PRICE
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance outstanding... 3,503 $5.29 3,230 $5.00 3,687 $4.96
Granted.................... 527 $7.38 514 $7.00 88 $9.44
Exercised.................. (124) $3.26 (178) $3.92 (441) $4.93
Forfeited.................. (60) $8.75 (63) $8.19 (58) $7.37
Expired.................... -- $ -- -- $ -- (46) $8.15
------ ------ ------
Ending balance outstanding...... 3,846 $5.59 3,503 $5.29 3,230 $5.00
====== ====== ======
Exercisable at end of year...... 3,012 $5.12 2,774 $4.77 2,703 $4.47
====== ====== ======
Weighted-average fair value of
options granted during the
year.......................... $ 3.81 $ 2.39 $ 4.17
</TABLE>
F-26
<PAGE> 161
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes additional information about the Company's
stock options outstanding at December 31, 1998, January 1, 1998 and January 2,
1997 (in thousands of shares):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------- ---------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
SHARES REMAINING AVERAGE SHARES AVERAGE
RANGE OF UNDER CONTRACTUAL EXERCISE UNDER EXERCISE
EXERCISE PRICES OPTION LIFE PRICE OPTION PRICE
--------------- ------- ----------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
1998
$3.19 1,202.. 1.0 year $3.19 1,202 $3.19
$4.06 to $ 5.06............... 650 7.7 years $4.94 610 $5.00
$5.50 to $ 7.75............... 1,843 7.1 years $7.06 1,062 $6.80
$9.13 to $11.00............... 151 6.8 years $9.48 138 $9.43
----- -----
3,846 5.3 years $5.59 3,012 $5.12
===== =====
1997
$3.19 to $ 5.00............... 1,922 2.6 years $3.76 1,922 $3.76
$5.50 to $ 7.75............... 1,390 7.1 years $6.83 739 $6.68
$9.13 to $11.00............... 191 7.9 years $9.51 113 $9.46
----- -----
3,503 4.7 years $5.29 2,774 $4.77
===== =====
1996
$3.19 to $ 5.00............... 2,082 3.6 years $3.75 2,082 $3.75
$5.50 to $ 7.63............... 917 6.7 years $6.73 554 $6.57
$8.50 to $11.00............... 231 8.8 years $9.39 67 $9.36
----- -----
3,230 4.8 years $5.00 2,703 $4.47
===== =====
</TABLE>
NOTE 12. BENEFIT PLANS
The Company has nonqualified defined benefit pension plans and a deferred
compensation plan. These plans are unfunded. The following table shows a
reconciliation of the changes in the plans' benefit obligation for the years
1998 and 1997 and a statement of the funded status as of December 31, 1998 and
January 1, 1998 (in thousands):
<TABLE>
<CAPTION>
DEFINED DEFERRED
BENEFIT PLANS COMPENSATION PLAN
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Projected benefit obligation at beginning
of year................................. $ 6,096 $ 6,050 $ 4,649 $ 4,457
Service cost.............................. -- -- 15 17
Interest cost............................. 509 504 387 370
Actuarial gain............................ (130) (187) (48) (16)
Benefits paid............................. (271) (271) (184) (179)
------- ------- ------- -------
Projected benefit obligation at end of
year.................................... 6,204 6,096 4,819 4,649
------- ------- ------- -------
Plan assets............................... -- -- -- --
------- ------- ------- -------
Funded status............................. (6,204) (6,096) (4,819) (4,649)
Unrecognized actuarial gain............... (533) (384) (622) (588)
Unrecognized prior service cost........... 790 941 -- --
------- ------- ------- -------
Net amount recognized..................... $(5,947) $(5,539) $(5,441) $(5,237)
======= ======= ======= =======
</TABLE>
F-27
<PAGE> 162
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table shows the amounts recognized in the consolidated
balance sheets (in thousands):
<TABLE>
<CAPTION>
DEFINED BENEFIT PLANS DEFERRED COMPENSATION PLAN
-------------------------- --------------------------
DECEMBER 31, JANUARY 1, DECEMBER 31, JANUARY 1,
1998 1998 1998 1998
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Accrued benefit liability.......... $(5,947) $(5,539) $(5,441) $(5,237)
</TABLE>
The components of benefit plan expense are as follows (in thousands):
<TABLE>
<CAPTION>
DEFINED BENEFIT PLANS DEFERRED COMPENSATION PLAN
--------------------- --------------------------
1998 1997 1996 1998 1997 1996
---- ---- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Service cost.................... $ -- $ -- $ -- $ 16 $ 17 $ 19
Interest cost................... 509 504 495 387 370 357
Amortization of prior service
cost.......................... 150 166 198 -- --
Recognized net actuarial (gain)
loss.......................... 19 19 (108) (15) (16) (19)
Cash surrender value increase
net of premium expense........ -- -- -- (219) (201) (180)
---- ---- ----- ----- ----- -----
$678 $689 $ 585 $ 169 $ 170 $ 177
==== ==== ===== ===== ===== =====
</TABLE>
The assumptions used in the measurement of the Company's benefit obligation
are as follows:
<TABLE>
<CAPTION>
DEFINED BENEFIT PLANS DEFERRED COMPENSATION PLAN
----------------------- ---------------------------
1998 1997 1996 1998 1997 1996
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Discount rate..................... 8.5% 8.5% 8.5% 8.5% 8.5% 8.5%
Rate of compensation increase..... 5.0% 5.0% 5.0% N/A N/A N/A
</TABLE>
The Company has a defined contribution savings plan that covers
substantially all employees who are not covered by a collective bargaining unit.
The savings account feature of the plan allows employees, at their discretion,
to make contributions of their before-tax earnings to the plan up to an annual
maximum amount. Effective July 1, 1997, the Company matches 50% of the employee
contributions that are based on up to 4% of an employee's before-tax earnings.
Compensation expense with regard to Company matching contributions was
$1,578,000 and $771,000 in 1998 and 1997, respectively. Additional Company
contributions to the savings plan are discretionary and there were none in 1998,
1997 or 1996. The Company contributed $2,840,000, $2,711,000 and $2,563,000 in
1998, 1997 and 1996, respectively, to trusteed pension plans under various
collective bargaining agreements.
The Company's ESOP covers substantially all nonunion employees. The Company
makes contributions to the ESOP so that, after the dividends are paid on the
Company's ESOP Stock, the ESOP can make its debt service payments to the
Company. Cash dividends and contributions, respectively, paid to the ESOP were
$649,000 and $1,226,000 in 1998, $689,000 and $1,186,000 in 1997 and $726,000
and $1,149,000 in 1996. Compensation expense recognized in 1998, 1997 and 1996,
respectively, was $718,000, $862,000 and $993,000.
F-28
<PAGE> 163
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13. INCOME TAXES
The (provision) benefit for income taxes is comprised of (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................ $(6,057) $ 1,331 $ (860)
State.............................. (899) 670 1,108
------- ------- -------
(6,956) 2,001 248
------- ------- -------
Deferred:
Federal............................ (1,188) 2,151 28,700
State.............................. (224) (1,967) (6,249)
------- ------- -------
(1,412) 184 22,451
------- ------- -------
$(8,368) $ 2,185 $22,699
======= ======= =======
</TABLE>
The Company is responsible, with certain exceptions, for the taxes of
Ramada through December 20, 1989. The Internal Revenue Service ("IRS") has
completed its examinations of the income tax returns for the years 1988 through
1991 and has settled for all but one issue. The effect on the Company of
settling prior years was an income tax benefit of $2,323,000 in 1997, primarily
related to cash received as a result of the settlement, and $21,028,000 in 1996
that included a reduction in the beginning-of-year valuation allowance. The IRS
is examining the income tax returns for the years 1992 through 1996. Management
believes that adequate provision for income taxes and interest has been made in
the financial statements.
General business credits are taken as a reduction of the provision for
income taxes during the year such credits become available. The (provision)
benefit for income taxes differs from the amount computed by applying the U.S.
federal income tax rate (35%) because of the effect of the following items (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------ -------
<S> <C> <C> <C>
Tax (provision) benefit at U.S. federal income tax
rate................................................ $(6,957) $ (790) $ 721
State income taxes, net.......................... (726) (788) 29
Nondeductible business expenses.................. (1,586) (727) (640)
IRS examination.................................. 158 1,498 1,158
General business credits......................... 356 286 237
Change in valuation allowance.................... -- -- 3,641
Ramada tax sharing agreement..................... -- 2,323 17,387
Other, net....................................... 387 383 166
------- ------ -------
$(8,368) $2,185 $22,699
======= ====== =======
</TABLE>
F-29
<PAGE> 164
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The income tax effects of loss carryforwards, tax credit carryforwards and
temporary differences between financial and income tax reporting that give rise
to the deferred income tax assets and liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
Net operating loss carryforward............................ $ 16,440 $ 21,739
Accrued rent expense....................................... 6,007 5,795
Accrued bad debt expense................................... 13,002 9,228
Accrued compensation....................................... 6,420 5,695
Accrued liabilities........................................ 9,712 7,966
General business credit carryforward....................... 14,350 8,161
-------- --------
Gross deferred tax assets.................................. 65,931 58,584
-------- --------
Deferred tax asset valuation allowance..................... (3,343) (4,881)
-------- --------
Other...................................................... (12,881) (5,675)
Partnership investment..................................... (5,075) (5,153)
Depreciation and amortization.............................. (34,310) (31,141)
-------- --------
Gross deferred tax (liabilities)........................... (52,266) (41,969)
-------- --------
Net deferred tax assets (liabilities)...................... $ 10,322 $ 11,734
======== ========
</TABLE>
Gross deferred tax assets are reduced by a valuation allowance. Realization
of the net deferred tax asset at December 31, 1998, is dependent on generating
sufficient taxable income prior to expiration of the net operating loss
carryforward. Although realization is not assured, management believes it is
more likely than not that all of the net deferred tax asset will be realized.
The amount of the deferred tax asset considered realizable, however, could
change in the near future if estimates of future taxable income during the
carryforward period are changed. The beginning-of-year valuation allowance was
reduced during 1998 and 1996, which caused a decrease in income tax expense of
$1,715,000 and $3,641,000, respectively. The beginning-of-year valuation
allowance was increased during 1997, which caused an increase in income tax
expense of $876,000.
At December 31, 1998, tax benefits are available for federal income tax
purposes as follows (in thousands):
<TABLE>
<S> <C>
Net operating losses...................... $35,791
General business credits.................. 4,742
</TABLE>
These tax benefits will expire in the years 2003 through 2018 if not used.
The Company also has alternative minimum tax credit carryforwards of $9,608,000
that can be carried forward indefinitely and offset against the regular federal
income tax liability. In addition, the Company has net operating loss
carryforwards for state income tax purposes that will expire in the following
years if not used (in thousands):
<TABLE>
<S> <C>
1999...................................... $ 3,258
2000...................................... 5,729
2001...................................... 9,684
2002...................................... 480
2003 to 2018.............................. 60,340
</TABLE>
F-30
<PAGE> 165
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14. EXTRAORDINARY ITEMS
During 1998, the Company expensed the remaining unamortized deferred
financing costs in connection with the extinguishment of the Original Credit
Facility and the Supplemental Credit Facility. These items were reflected in the
1998 Consolidated Statement of Operations as an extraordinary loss of
$1,346,000, which was net of an income tax benefit of $725,000.
NOTE 15. EARNINGS PER SHARE
The computations of earnings per common share and earnings per common
share, assuming dilution, are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Income before extraordinary items...................... $11,508 $ 4,442 $20,639
Less: preferred stock dividends and losses on
redemption (net of income tax benefits of $42, $71
and $99, credited to retained earnings).............. (609) (634) (715)
------- ------- -------
Income before extraordinary items applicable to
computations......................................... 10,899 3,808 19,924
Extraordinary items.................................... (1,346) -- --
------- ------- -------
Net income applicable to computations.................. $ 9,553 $ 3,808 $19,924
======= ======= =======
Weighted-average common shares applicable to earnings
per common share..................................... 45,230 45,121 41,121
Effect of dilutive securities:
Stock option incremental shares...................... 525 657 1,051
Assumed conversion of preferred stock................ 859 909 960
------- ------- -------
1,384 1,566 2,011
------- ------- -------
Weighted-average common shares applicable to earnings
per common share assuming dilution................... 46,614 46,687 43,132
======= ======= =======
Earnings per common share:
Income before extraordinary items.................... $ .24 $ .08 $ .48
Extraordinary items.................................. (.03) -- --
------- ------- -------
Net income........................................... $ .21 $ .08 $ .48
======= ======= =======
Earnings per common share assuming dilution:
Income before extraordinary items.................... $ .23 $ .08 $ .46
Extraordinary items.................................. (.03) -- --
------- ------- -------
Net income........................................... $ .20 $ .08 $ .46
======= ======= =======
</TABLE>
NOTE 16. CONTINGENCIES AND COMMITMENTS
The Company agreed to indemnify Ramada against all monetary judgments in
lawsuits pending against Ramada and its subsidiaries as of the conclusion of the
Restructuring on December 20, 1989, as well as all related attorneys' fees and
expenses not paid at that time, except for any judgments, fees or expenses
accrued on the hotel business balance sheet and except for any unaccrued and
unreserved aggregate amount up to $5,000,000 of judgments, fees or expenses
related exclusively to the hotel business. Aztar is entitled to the benefit of
any crossclaims or counterclaims related to such lawsuits and of any insurance
proceeds received. In addition, the Company agreed to indemnify Ramada for
various lease guarantees made by Ramada relating to the restaurant business. In
F-31
<PAGE> 166
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
connection with these matters, the Company has an accrued liability of
$3,894,000 and $3,905,000 at December 31, 1998 and January 1, 1998,
respectively.
The Company is a party to various other claims, legal actions and
complaints arising in the ordinary course of business or asserted by way of
defense or counterclaim in actions filed by the Company. Management believes
that its defenses are substantial in each of these matters and that the
Company's legal posture can be successfully defended without material adverse
effect on its consolidated financial statements.
The Tropicana Las Vegas lease agreement contains a provision that requires
the Company to maintain an additional security deposit with the lessor of
$21,000,000 in cash or a letter of credit if the Tropicana Las Vegas operation
fails to meet certain financial tests. A determination was made for the period
ended December 31, 1998, that the additional security deposit would be required
by May 15, 1999; however, the lessor has waived the requirement. The Company has
a 50% partnership interest in the lessor.
The Company has severance agreements with certain of its senior executives.
Severance benefits range from a lump-sum cash payment equal to three times the
sum of the executive's annual base salary and the average of the executive's
annual bonuses awarded in the preceding three years plus payment of the value in
the executive's outstanding stock options and vesting and distribution of any
restricted stock to a lump-sum cash payment equal to the executive's annual base
salary. In certain agreements, the termination must be as a result of a change
in control of the Company. Based upon current salary levels and stock options,
the aggregate commitment under the severance agreements should all these
executives be terminated was approximately $11,000,000 at December 31, 1998.
NOTE 17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents (in thousands) the carrying amounts and
estimated fair values of the Company's financial instruments. The fair value of
a financial instrument is the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced or
liquidation sale.
<TABLE>
<CAPTION>
DECEMBER 31, 1998 JANUARY 1, 1998
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Assets
Other investments................... $ 21,005 $ 21,005 $ 22,319 $ 22,319
Liabilities
Current portion of long-term debt... 2,537 2,537 27,166 27,166
Current portion of other long-term
liabilities...................... 1,550 1,482 1,550 1,482
Long-term debt...................... 487,543 512,200 491,932 526,871
Other long-term liabilities......... 1,500 1,321 3,000 2,542
Series B ESOP convertible preferred
stock............................... 7,147 7,147 6,593 6,857
Off-Balance-Sheet
Letters of credit................... -- 5,774 -- 8,368
</TABLE>
The carrying amounts shown in the table are included, if applicable, in the
Consolidated Balance Sheets under the indicated captions. All of the Company's
financial instruments are held or issued for purposes other than trading.
F-32
<PAGE> 167
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following notes summarize the major methods and assumptions used in
estimating the fair values of financial instruments.
Other investments consisted of deposits with the CRDA and CRDA bonds that
bear interest at two-thirds of market rates resulting in a fair value lower than
cost. The carrying amounts of these deposits and bonds are presented net of a
valuation allowance and an unamortized discount that result in an approximation
of fair values.
The fair values of the Company's publicly traded debt were estimated based
on the bid prices in the public bond markets. The carrying amounts of the
Revolver and the Term Loan are reasonable estimates of fair values because this
debt is carried with a floating interest rate.
The amounts reported for other long-term liabilities relate to the
Company's obligation to the City of Evansville and other civic and community
organizations. The fair values were estimated by discounting expected cash flows
using a discount rate commensurate with the risks involved.
The fair value reported for the Series B ESOP convertible preferred stock
represents the latest appraised fair value as determined by an independent
appraisal.
The fair values of the letters of credit were estimated to be the same as
the contract values based on the nature of the fee arrangement with the issuing
financial institution.
NOTE 18. LONG-TERM DEBT REFINANCING
The Company's 11% Notes are callable at a premium and become callable at
par on October 1, 1999. The Company's 13 3/4% Notes become callable at a premium
on October 1, 1999. If credit is available at favorable rates, the Company may
pursue a refinancing of its senior subordinated debt during 1999. If the Company
were successful in refinancing this debt, the unamortized deferred financing
charges and unamortized discount associated with the existing senior
subordinated debt would be written off as an extraordinary charge. At December
31, 1998, these unamortized items totaled $9,500,000. Any premium paid to retire
this debt would also be an extraordinary charge.
F-33
<PAGE> 168
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 19. UNAUDITED QUARTERLY RESULTS/COMMON STOCK PRICES
The following unaudited information shows selected items in thousands,
except per share data, for each quarter in the years ended December 31, 1998 and
January 1, 1998. The Company's common stock is listed on the New York Stock
Exchange.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1998
Revenues................................. $196,825 $203,168 $210,089 $196,054
Operating income......................... 16,866 21,582 25,431 17,767
Income before income taxes and
extraordinary items.................... 1,021 6,146 10,099 2,610
Income taxes............................. (403) (2,427) (4,472) (1,066)
Extraordinary items...................... -- (1,346) -- --
Net income............................... 618 2,373 5,627 1,544
Earnings per common share:
Income before extraordinary items...... .01 .08 .12 .03
Net income............................. .01 .05 .12 .03
Earnings per common share assuming
dilution:
Income before extraordinary items...... .01 .08 .12 .03
Net income............................. .01 .05 .12 .03
1997
Revenues................................. $189,756 $200,387 $201,874 $190,340
Operating income......................... 17,054 21,750 21,311 7,277
Income (loss) before income taxes........ 597 5,355 5,040 (8,735)
Income taxes............................. 2,080 (1,926) (1,797) 3,828
Net income (loss)........................ 2,677 3,429 3,243 (4,907)
Earnings per share:
Net income (loss) per common share..... .06 .07 .07 (.11)
Net income (loss) per common share
assuming dilution................... .05 .07 .07 (.11)
COMMON STOCK PRICES
1998 -- High............................. $ 9.94 $ 8.56 $ 6.88 $ 5.88
-- Low............................. 6.19 6.13 3.69 2.88
1997 -- High............................. 8.50 7.75 7.88 8.00
-- Low............................. 6.63 6.13 6.50 5.88
</TABLE>
F-34
<PAGE> 169
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Tropicana Enterprises
In our opinion, the accompanying balance sheets and the related statements
of operations, cash flows and partners' capital present fairly, in all material
respects, the financial position of Tropicana Enterprises (a Nevada General
Partnership)(the "Partnership") at December 31, 1998 and January 1, 1998, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Phoenix, Arizona
February 3, 1999
F-35
<PAGE> 170
TROPICANA ENTERPRISES
(A NEVADA GENERAL PARTNERSHIP)
BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
Income producing properties............................... $52,018 $54,741
Cash...................................................... 1 1
Other receivable.......................................... 904 943
Other assets.............................................. 9,986 11,027
------- -------
$62,909 $66,712
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Term loan payable......................................... $60,228 $63,304
Unearned rental income.................................... 938 884
------- -------
61,166 64,188
Partners' capital......................................... 1,743 2,524
------- -------
$62,909 $66,712
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE> 171
TROPICANA ENTERPRISES
(A NEVADA GENERAL PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, JANUARY 1, 1998 AND JANUARY 2, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Revenues:
Rent............................................... $16,540 $16,554 $16,652
Interest........................................... 28 37 46
------- ------- -------
16,568 16,591 16,698
------- ------- -------
Costs and expenses:
General and administrative......................... 8 8 9
Interest........................................... 4,833 5,397 5,693
Depreciation and amortization...................... 2,735 2,735 2,788
------- ------- -------
7,576 8,140 8,490
------- ------- -------
Net income........................................... $ 8,992 $ 8,451 $ 8,208
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE> 172
TROPICANA ENTERPRISES
(A NEVADA GENERAL PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, JANUARY 1, 1998 AND JANUARY 2, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 8,992 $ 8,451 $ 8,208
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.............. 2,735 2,735 2,788
Changes in assets and liabilities:
Other receivable........................ 39 15 (122)
Other assets............................ 1,029 1,037 1,110
Unearned rental income.................. 54 (45) 14
-------- -------- --------
Net cash provided by operating activities.... 12,849 12,193 11,998
-------- -------- --------
Cash flows from financing activities:
Repayment of term loan.......................... (3,076) (2,867) (2,674)
Distribution to partners........................ (9,773) (9,326) (9,324)
-------- -------- --------
Net cash (used in) provided by financing
activities................................. (12,849) (12,193) (11,998)
-------- -------- --------
Net change in cash................................ -- -- --
Cash at beginning of year......................... 1 1 1
-------- -------- --------
Cash at end of year.......................... $ 1 $ 1 $ 1
======== ======== ========
Supplemental disclosure of cash flow information:
Interest paid................................ $ 4,863 $ 5,407 $ 5,633
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE> 173
TROPICANA ENTERPRISES
(A NEVADA GENERAL PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, JANUARY 1, 1998 AND JANUARY 2, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
PARTNERS'
ADAMAR JAFFE CAPITAL
------- ------- ---------
<S> <C> <C> <C>
Balance, December 28, 1995........................... $ (551) $ 5,066 $ 4,515
Net income......................................... 4,104 4,104 8,208
Cash withdrawals................................... (4,662) (4,662) (9,324)
------- ------- -------
Balance, January 2, 1997............................. (1,109) 4,508 3,399
Net income......................................... 4,225 4,226 8,451
Cash withdrawals................................... (4,663) (4,663) (9,326)
------- ------- -------
Balance January 1, 1998.............................. (1,547) 4,071 2,524
Net income......................................... 4,496 4,496 8,992
Cash withdrawals................................... (4,886) (4,887) (9,773)
------- ------- -------
Balance, December 31, 1998........................... $(1,937) $ 3,680 $ 1,743
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-39
<PAGE> 174
TROPICANA ENTERPRISES
(A NEVADA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
Basis of Financial Statements
The financial statements include the accounts of Tropicana Enterprises, a
Nevada General Partnership (the "Partnership"). Adamar of Nevada ("Adamar"), a
wholly-owned subsidiary of Aztar Corporation ("Aztar"), and the Jaffe Group
("Jaffe") each hold a 50% partnership interest. On February 2, 1998, Aztar
acquired an option to purchase the Jaffe partnership interest. On February 1,
1999, Aztar amended this option. The amended option agreement gives Aztar an
unconditional right, but not the obligation, to purchase the Jaffe partnership
interest until as late as February 1, 2002. The Partnership uses a 52/53 week
fiscal year ending on the Thursday nearest to December 31, which included 52
weeks in 1998 and 1997, and 53 weeks in 1996.
The Partnership owns and leases real property (the "Tropicana Property") to
Hotel Ramada of Nevada ("HRN") a wholly-owned subsidiary of Aztar. This property
is used in the operation of the Tropicana Resort and Casino in Las Vegas,
Nevada. Aztar has engaged an investment bank to explore alternatives for a major
redevelopment of the Tropicana Property. It is reasonably possible that the
carrying value of some or all of the Partnership's assets may change in the near
term.
Estimates
The preparation of 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.
Properties
Properties are stated at cost. Improvements, renewals, and extraordinary
repairs that extend the life of the asset are capitalized; other routine repairs
and maintenance are expensed. The cost and accumulated depreciation applicable
to assets retired are removed from the accounts and the gain or loss, if any, on
disposition is recognized in income as realized.
Properties are depreciated using the straight line method over 21 to 40
years.
Deferred Lease Costs
Costs directly related to signed lease agreements are capitalized and
amortized over the term of the lease.
Revenue Recognition
Rental revenue is recorded on a straight line basis over the term of the
lease. Accrued rent, recorded in the accompanying balance sheets as other
assets, represents cumulative amounts receivable in excess of cash basis rental
revenue.
F-40
<PAGE> 175
TROPICANA ENTERPRISES
(A NEVADA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Income Taxes
No federal or state income taxes are payable by the Partnership; thus, none
have been provided for in the accompanying financial statements. The partners
are to include their respective share of the Partnership income or loss in their
separate tax returns.
2. CUSTOMER CONCENTRATION:
The Partnership receives all of its income from HRN. Although the
Partnership does not anticipate a default by HRN, failure to receive payments on
the lease would adversely affect the operating results and ability of the
Partnership to service its debt.
3. INCOME PRODUCING PROPERTIES:
The income producing properties consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
Buildings.................................. $ 84,226 $ 84,226
Less accumulated depreciation............ (43,625) (40,902)
-------- --------
40,601 43,324
Land..................................... 11,417 11,417
-------- --------
$ 52,018 $ 54,741
======== ========
</TABLE>
4. OTHER ASSETS:
Other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1998 1998
------------ ----------
<S> <C> <C>
Accrued rent............................... $ 9,867 $ 10,896
Deferred lease costs....................... 119 131
-------- --------
$ 9,986 $ 11,027
======== ========
</TABLE>
5. TERM LOAN PAYABLE:
On October 5, 1994, the Partnership entered into a term loan of $72,523,000
with a group of banks. During 1998, the maturity of the term loan was extended
to June 30, 2003. The term loan was used to refinance a prior loan in the same
amount. The term loan is collateralized by the Tropicana Property and is
serviced through rent payments made by the Tropicana operation. Interest is
computed based upon, at the Partnership's option, a one-, two-, three- or
six-month Eurodollar rate plus a margin ranging from 1.00% to 2.25%, or the
prime rate plus a margin ranging from zero to 1.00%. The applicable margin to be
used in connection with either rate is determined based upon outstanding
indebtedness and operating cash flow of Aztar. Interest based on the Eurodollar
rate is payable quarterly or on the last day of the applicable Eurodollar
interest period, if earlier. Interest based on the prime rate is payable
quarterly. The effective interest rate was 7.8% for the year ended December 31,
1998.
F-41
<PAGE> 176
TROPICANA ENTERPRISES
(A NEVADA GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The carrying amounts of the term loan are reasonable estimates of the fair
values based on the variable interest rate inherent in the loan.
Maturities of the term loan for the five years subsequent to December 31,
1998 are as follows (in thousands):
<TABLE>
<S> <C>
1999.............................. $ 3,297
2000.............................. 3,536
2001.............................. 3,791
2002.............................. 4,101
2003.............................. 45,503
-------
$60,228
=======
</TABLE>
6. LEASE AGREEMENT:
In 1984, the Partnership signed an agreement to lease its operating
facilities at the Tropicana, which expires in January 2011. The lease agreement
provides for contingent rental income based on the consumer price index and/or
interest rate fluctuations in the prime or Eurodollar rates. The lease of the
facility is treated as an operating lease except for the portion related to the
furniture and equipment which was capitalized. The accompanying statements of
operations reflect rent revenue on a straight line basis over the term of the
lease. Included in the accompanying balance sheets under other assets is accrued
rent of $9,867,000 and $10,896,000, as of December 31, 1998 and January 1, 1998,
respectively, which represents future rent payments.
Minimum future rentals on the non-cancelable operating lease as of December
31, 1998, excluding contingent rental income as described above, are as follows
(in thousands):
<TABLE>
<S> <C>
1999............................. $ 14,178
2000............................. 14,178
2001............................. 14,288
2002............................. 14,325
2003............................. 14,325
Thereafter....................... 101,468
--------
$172,762
========
</TABLE>
7. RELATED PARTIES:
The Partnership leases substantially all of the operating facilities at the
Tropicana Property to HRN. The Partnership recognized rental income of
$16,540,000 in 1998, $16,554,000 in 1997 and $16,652,000 in 1996 related to this
lease.
Aztar performs various accounting and administrative services on behalf of
the Partnership. No expense is allocated to the Partnership for these services.
F-42
<PAGE> 177
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AZTAR CORPORATION
OFFER TO EXCHANGE
8 7/8% SENIOR SUBORDINATED NOTES
DUE 2007 WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL
OF ITS OUTSTANDING
8 7/8% SENIOR SUBORDINATED NOTES
DUE 2007
We have not authorized anyone to give you any information or to make any
representations about the transactions we discuss in this prospectus other than
those contained in this prospectus. If you are given any information or
representations about these matters that is not discussed or incorporated in
this prospectus, you must not rely on that information. This prospectus is not
an offer to sell or a solicitation of an offer to buy securities anywhere or to
anyone where or to whom we are not permitted to offer or sell securities under
applicable law. The delivery of this prospectus does not, under any
circumstances, mean that there has not been a change in our affairs since the
date of this prospectus. It also does not mean that the information in this
prospectus or in the documents we incorporate in this prospectus by reference is
correct after this date.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 178
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Aztar is a Delaware corporation. Reference is made to Section 102(b)(7) of
the Delaware General Corporation Law (the "DGCL"), which enables a corporation
in its original certificate of incorporation or an amendment thereto to
eliminate or limit the personal liability of a director for violations of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payments of dividends of unlawful stock purchase or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit.
Reference is also made to Section 145 of the DGCL, which provides that a
corporation may indemnify any person, including an officer or director, who is,
or is threatened to be made, party to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer, director, employee or agent
of such corporation or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such officer,
director, employee or agent acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the corporation's best interest and, for
criminal proceedings, had no reasonable cause to believe that his conduct was
unlawful. A Delaware corporation may indemnify any officer or director in an
action by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses that
such officer or director actually and reasonably incurred.
Aztar's Restated Certificate of Incorporation provides that directors of
Aztar will not be liable to Aztar or its stockholders for monetary damages for
breach of fiduciary duty as a director, except to the extent such exemption from
liability or limitation theories are expressly not permitted under the DGCL, as
amended from time to time.
Aztar's Restated Certificate of Incorporation also provides for
indemnification of each director and officer who was or is a party or is
threatened to be made a party to any action, suit or proceeding by virtue of his
or her position as a director or officer to the fullest extent authorized or
permitted by the DGCL, as amended from time to time. In addition, the Registrant
has indemnification agreements with its directors and executive officers and has
insurance policies that provide liability coverage to directors and officers
while acting in that capacity.
II-1
<PAGE> 179
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
The following exhibits are filed pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
3.1 Restated Certificate of Incorporation, filed as Exhibit 3.1
to Aztar Corporation's Registration Statement No. 33-32009
and incorporated herein by reference.
3.2 Second Amended and Restated By-Laws of Aztar Corporation, as
adopted February 25, 1998, filed as Exhibit 3 to Aztar
Corporation's Form 10-Q for the quarter ended April 2, 1998
and incorporated herein by reference.
4.1 Rights Agreement between Aztar Corporation and First
Interstate Bank of Arizona, N.A. as Rights Agent, filed as
Exhibit 4.1 to Aztar Corporation's Registration Statement
No. 33-51008 and incorporated herein by reference.
4.2 Indenture, dated as of October 8, 1992, between Aztar
Corporation and Bank of America National Trust & Savings
Association, as Trustee, relating to the Senior Subordinated
Notes due 2002 of Aztar Corporation, filed as Exhibit 4.1 to
Aztar Corporation's Form 10-Q for the quarter ended October
1, 1992 and incorporated herein by reference.
4.3 Supplemental Indenture Evidencing Appointment of Successor
Trustee, dated January 12, 1995, between Aztar Corporation
and First Bank National Association, as successor Trustee,
supplementing the Indenture dated as of October 8, 1992,
filed as Exhibit 4.3 to Aztar Corporation's 1994 Form 10-K
and incorporated herein by reference.
4.4 Indenture, dated as of October 1, 1994, between Aztar
Corporation and American Bank National Association, as
Trustee, relating to the 13 3/4% Senior Subordinated Notes
Due 2004 of Aztar Corporation, filed as Exhibit 4 to Aztar
Corporation's Form 10-Q for the quarter ended September 29,
1994 and incorporated herein by reference.
**4.5 Indenture, dated as of May 3, 1999, between Aztar
Corporation and U.S. Bank National Association, as trustee,
relating to the 8 7/8% Senior Subordinated Notes due 2007 of
Aztar Corporation.
**4.6 Specimen Certificate of the 8 7/8% Senior Subordinated Notes
due 2007 (included in Exhibit 4.5 hereto).
**4.7 Exchange and Registration Rights Agreement, dated May 3,
1999, among Aztar Corporation, Goldman, Sachs & Co.,
NationsBanc Montgomery Securities LLC, Credit Suisse First
Boston Corporation, Lehman Brothers Inc., Wasserstein
Perella Securities Corporation and PNC Capital Markets, Inc.
**5.1 Opinion of Latham & Watkins as to the validity of the
registered notes.
10.1 Amended and Restated Lease (Tropicana Hotel/Casino) between
Tropicana Enterprises and Hotel Ramada of Nevada, dated
November 1, 1984, filed as Exhibit 10.20 to Ramada Inc.'s
1984 Form 10-K (Commission File Reference Number 1-5440) and
incorporated herein by reference.
</TABLE>
II-2
<PAGE> 180
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
10.2 Amended and Restated Partnership Agreement by and between
the Jaffe Group and Adamar of Nevada, entered into as of
November 1, 1984, filed as Exhibit 10.22 to Ramada Inc.'s
1984 Form 10-K (Commission File Reference Number 1-5440) and
incorporated herein by reference.
*10.3(a) Severance Agreement, dated July 17, 1995, by and between
Aztar Corporation and Paul E. Rubeli, filed as Exhibit 10.1
to Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
*10.3(b) Amendment to Severance Agreement, dated March 23, 1998, by
and between Aztar Corporation and Paul E. Rubeli, filed as
Exhibit 10.1 to Aztar Corporation's Form 10-Q for the
quarter ended April 2, 1998 and incorporated herein by
reference.
*10.3(c) Severance Agreement, dated July 17, 1995, by and between
Aztar Corporation and Robert M. Haddock, filed as Exhibit
10.2 to Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
*10.3(d) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Robert M. Haddock, filed
as Exhibit 10.2 to Aztar Corporation's Form 10-Q for the
quarter ended April 2, 1998 and incorporated herein by
reference.
*10.3(e) Severance Agreement, dated July 18, 1995, by and between
Aztar Corporation and Nelson W. Armstrong, Jr., filed as
Exhibit 10.3 to Aztar Corporation's Form 10-Q for the
quarter ended September 28, 1995 and incorporated herein by
reference.
*10.3(f) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Nelson W. Armstrong, Jr.,
filed as Exhibit 10.3 to Aztar Corporation's Form 10-Q for
the quarter ended April 2, 1998 and incorporated herein by
reference.
*10.3(g) Severance Agreement, dated July 24, 1995, by and between
Aztar Corporation and Meridith P. Sipek, filed as Exhibit
10.4 to Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
*10.3(h) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Meridith P. Sipek, filed
as Exhibit 10.4 to Aztar Corporation's Form 10-Q for the
quarter ended April 2, 1998 and incorporated herein by
reference.
*10.3(i) Severance Agreement, dated July 25, 1995, by and between
Aztar Corporation and Joe Cole, filed as Exhibit 10.5 to
Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
*10.3(j) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Joe Cole, filed as Exhibit
10.5 to Aztar Corporation's Form 10-Q for the quarter ended
April 2, 1998 and incorporated herein by reference.
*10.3(k) Severance Agreement, dated July 17, 1995, by and between
Aztar Corporation and Neil A. Ciarfalia, filed as Exhibit
10.6 to Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
</TABLE>
II-3
<PAGE> 181
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
*10.3(l) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Neil A. Ciarfalia, filed
as Exhibit 10.6 to Aztar Corporation's Form 10-Q for the
quarter ended April 2, 1998 and incorporated herein by
reference.
10.4(a) Amended and Restated Reducing Revolving Loan Agreement,
dated as of May 28, 1998, among Aztar Corporation and the
lenders therein named; Bankers Trust Company and Societe
Generale, as documentation agents; Bank of Scotland, Credit
Lyonnais Los Angeles Branch and PNC Bank, National
Association, as co-agents; and Bank of America National
Trust and Savings Association, as administrative agent,
filed as Exhibit 10.1 to Aztar Corporation's Form 10-Q for
the quarter ended July 2, 1998 and incorporated herein by
reference.
10.4(b) Amendment No. 1, dated October 8, 1998, to Amended and
Restated Reducing Revolving Loan Agreement, dated as of May
28, 1998, among Aztar Corporation and the lenders therein
named; Bankers Trust Company and Societe Generale, as
documentation agents; Bank of Scotland, Credit Lyonnais Los
Angeles Branch and PNC Bank, National Association, as
co-agents; and Bank of America National Trust and Savings
Association, as administrative agent, filed as Exhibit 10.1
to Aztar Corporation's Form 10-Q for the quarter ended
October 1, 1998 and incorporated herein by reference.
10.4(c) Amendment No. 2, dated March 5, 1999, to Amended and
Restated Reducing Revolving Loan Agreement, dated as of May
28, 1998, among Aztar Corporation and the lenders therein
named; Bankers Trust Company and Societe Generale, as
documentation agents; Bank of Scotland, Credit Lyonnais Los
Angeles Branch and PNC Bank, National Association, as
co-agents; and Bank of America National Trust and Savings
Association, as administrative agent, filed as Exhibit 10.1
to Aztar Corporation's Form 10-Q for the quarter ended April
1, 1999 and incorporated herein by reference.
10.4(d) Term Loan Agreement, dated as of May 28, 1998, among Aztar
Corporation and the lenders therein named; and Bank of
America National Trust and Savings Association, as
administrative agent, filed as Exhibit 10.2 to Aztar
Corporation's Form 10-Q for the quarter ended July 2, 1998
and incorporated herein by reference.
*10.5 Aztar Corporation 1989 Stock Option and Incentive Plan filed
as Exhibit 4 to Aztar Corporation's Registration Statement
No. 33-32399 and incorporated herein by reference.
*10.6(a) Employee Stock Ownership Plan of Aztar Corporation, as
amended and restated effective December 19, 1989, dated
December 12, 1990, filed as Exhibit 10.60(a) to Aztar
Corporation's 1990 Form 10-K and incorporated herein by
reference.
10.6(b) Term Loan Agreement, dated as of December 19, 1989, by and
among State Street Bank and Trust Company, as Trustee,
Adamar Garage Corporation, as lender, and Aztar Corporation,
filed as Exhibit 10.50(b) to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein
by reference.
</TABLE>
II-4
<PAGE> 182
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
10.6(c) Preferred Stock Purchase Agreement, dated as of December 19,
1989, between Ramada Inc. and State Street Bank and Trust
Company, as Trustee, filed as Exhibit 10.50(c) to Aztar
Corporation's Registration Statement No. 33-51008 and
incorporated herein by reference.
10.6(d) Letter Agreement, dated as of December 19, 1989, between
Aztar Corporation and State Street Bank and Trust Company,
as Trustee, relating to the Employee Stock Ownership Plan of
Aztar Corporation, filed as Exhibit 10.50(d) to Aztar
Corporation's Registration Statement No. 33-51008 and
incorporated herein by reference.
10.7(a) Agreement and Plan of Merger, dated as of April 17, 1989,
among New World Hotels (U.S.A.), Inc., RI Acquiring Corp.
and Ramada Inc., as amended and Restated as of October 23,
1989, filed as Exhibit 2.1 to Aztar Corporation's
Registration Statement No. 33-32009 and incorporated herein
by reference.
10.7(b) Letter, dated as of October 23, 1989, from Ramada Inc. to
New World Hotels (U.S.A.), Inc. regarding certain
franchising matters and hotel projects, filed as Exhibit
2.1(b) to Aztar Corporation's Registration Statement No.
33-32009 and incorporated herein by reference.
10.8 Reorganization Agreement, dated as of April 17, 1989,
between Ramada Inc. and Aztar Corporation, as amended and
restated as of October 23, 1989, filed as Exhibit 2.2 to
Aztar Corporation's Registration Statement No. 33-32009 and
incorporated herein by reference.
10.9 Tax Sharing Agreement, dated as of April 17, 1989, among New
World Hotels (U.S.A.), Inc., Ramada Inc. and Aztar
Corporation, as amended and restated as of October 23, 1989,
filed as Exhibit 2.3 to Aztar Corporation's Registration
Statement No. 33-32009 and incorporated herein by reference.
10.10 Guaranty and Acknowledgment Agreement, dated as of April 17,
1989, among New World Development Company Limited, New World
Hotels (Holdings) Limited, New World Hotels (U.S.A.), Inc.
and RI Acquiring Corp., filed as Exhibit 2.4 to Aztar
Corporation's Registration Statement No. 33-29562 and
incorporated herein by reference.
10.11 Master Consent Agreement, dated July 18, 1989, by and among
Ramada Inc., Adamar of Nevada, Hotel Ramada of Nevada,
Adamar of New Jersey, Inc., Aztar Corporation, Tropicana
Enterprises, Trop C.C. and the Jaffe Group, with attached
exhibits, filed as Exhibit 10.50 to Aztar Corporation's
Registration Statement No. 33-29562 and incorporated herein
by reference.
*10.12 Aztar Corporation 1990 Nonemployee Directors Stock Option
Plan, as amended and restated effective March 15, 1991,
filed as Exhibit A to Aztar Corporation's 1991 definitive
Proxy Statement and incorporated herein by reference.
*10.13 Aztar Corporation Nonqualified Retirement Plan for Senior
Executives, dated September 5, 1990, filed as Exhibit 10.2
to Aztar Corporation's Form 10-Q for the quarter ended
September 27, 1990 and incorporated herein by reference.
</TABLE>
II-5
<PAGE> 183
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
10.14 Second Amended and Restated Loan Agreement, dated October 4,
1994, among Tropicana Enterprises, Hotel Ramada of Nevada
and the banks therein named; Societe Generale and Midlantic
Bank, N.A., as lead managers; Bank One, Arizona, NA and
Credit Lyonnais, as co-agents; Bankers Trust Company, as
co-managing agent; and, Bank of America National Trust and
Savings Association, as managing agent, filed as Exhibit
10.14 to Aztar Corporation's 1994 Form 10-K and incorporated
herein by reference.
10.14(a) Amendment No. 1, dated as of May 28, 1998, to Second Amended
and Restated Loan Agreement dated as of October 4, 1994,
among Tropicana Enterprises, Hotel Ramada of Nevada and the
banks therein named; Bankers Trust Company and Societe
Generale, as documentation agents; Bank of Scotland, Credit
Lyonnais Los Angeles Branch and PNC Bank, National
Association, as co-agents; and Bank of America National
Trust and Savings Association, as administrative agent,
filed as Exhibit 10.3 to Aztar Corporation's Form 10-Q for
the quarter ended July 2, 1998 and incorporated herein by
reference.
*10.15 Summary of deferred compensation program for designated
executives of Ramada, dated November 10, 1983, filed as
Exhibit 10(r) to Ramada Inc.'s 1983 Form 10-K (Commission
File Reference Number 1-5440) and incorporated herein by
reference.
*10.16 Deferred Compensation Agreements entered into by and between
Ramada and designated executives (including each Executive
Officer), dated December 1, 1983, 1984 or 1985, filed as
Exhibits 10.60(a) through (w) to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein
by reference.
*10.17 Deferred Compensation Plan for Directors, dated December 1,
1983, filed as Exhibit 10(t) to Ramada Inc.'s 1983 Form 10-K
(Commission File Reference Number 1-5440) and incorporated
herein by reference.
*10.18 Deferred Compensation Agreements entered into by and between
Ramada and certain outside Directors as of December 1, 1983,
filed as Exhibits 10.62(a),(b),(c) and (d) to Aztar
Corporation's Registration Statement No. 33-51008 and
incorporated herein by reference.
10.19 Option Agreement, dated February 2, 1998, among Adamar of
Nevada, parties constituting the Jaffe Group, Aztar
Corporation and Hotel Ramada of Nevada, filed as Exhibit
99.2 to Aztar Corporation's Form 8-K/A, dated February 3,
1998, and incorporated herein by reference.
*10.19(a) First Amendment to Option Agreement, dated January 28, 1999,
to Option Agreement, dated February 2, 1998, by and among
Adamar of Nevada, parties constituting the Jaffe Group,
Aztar Corporation and Hotel Ramada of Nevada, filed as
Exhibit 10.19(a) to Aztar Corporation's Form 10-K for the
year ended December 31, 1998 and incorporated herein by
reference.
*10.20 Aztar Corporation 1999 Employee Stock Option and Incentive
Plan, filed as Exhibit A to Aztar Corporation's 1999
Definitive Proxy Statement and incorporated herein by
reference.
**12.1 Statement regarding computation of ratios.
</TABLE>
II-6
<PAGE> 184
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
**21. Subsidiaries of Aztar Corporation.
**23. Consent of PricewaterhouseCoopers LLP
**23.2 Consent of Latham & Watkins (included in Exhibit 5.1
hereto).
**24.1 Powers of Attorney (included above the signature block to
the Registration Statement).
**25.1 Statement of Eligibility and Qualification (form T-1) under
the Trust Indenture Act of 1939 of State Street Bank and
Trust Company.
**99.1 Letter of Transmittal and related documents to be used in
conjunction with the exchange offer.
</TABLE>
- -------------------------
* Indicates a management contract or compensatory plan or arrangement.
** Filed herewith
II-7
<PAGE> 185
(b) FINANCIAL STATEMENT SCHEDULES.
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Shareholders and Board of Directors
Aztar Corporation
Our report on the consolidated financial statements of Aztar Corporation
and Subsidiaries is included in this registration statement on Form S-4 on page
F-10. In connection with our audits of such consolidated financial statements,
we have also audited the accompanying financial statement schedule titled
Schedule II -- Valuation and Qualifying Accounts, Aztar Corporation and
Subsidiaries.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.
PRICEWATERHOUSECOOPERS LLP
Phoenix, Arizona
February 3, 1999
II-8
<PAGE> 186
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
AZTAR CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1998, JANUARY 1, 1998 AND JANUARY 2, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
BALANCE AT BALANCE AT
BEGINNING END OF
DESCRIPTION OF YEAR ADDITIONS DEDUCTIONS YEAR
----------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts receivable:
1998.............. $17,919 $14,913(a) $ 7,536(b) $25,296
1997.............. 11,261 12,944(a) 6,286(b) 17,919
1996.............. 9,905 5,892(a) 4,536(b) 11,261
Deferred income tax
asset valuation
allowance:
1998.............. $ 4,881 $ 303(a) $ 1,841(c) $ 3,343
1997.............. 4,328 1,206(a) 653(b) 4,881
1996.............. 8,196 718(a) 4,586(c) 4,328
Valuation allowance for
interest differential
on CRDA deposits:
1998.............. $ 6,706 $ 52(a) $ 6(d) $ 6,452
300(e)
1997.............. 6,425 569(a) 288(d) 6,706
1996.............. 5,927 729(a) 231(d) 6,425
</TABLE>
- -------------------------
(a) Charged to costs and expenses.
(b) Related assets charged against the account.
(c) Reflects reductions of $1,715,000 and $3,641,000 in 1998 and 1996,
respectively, with a corresponding decrease in income tax expense. The
remainder of the reductions in 1998 and 1996 represented charges of
deferred tax assets against the valuation allowance account.
(d) Reflects transfer to unamortized discount for the issuance of CRDA bonds.
(e) Reflects reduction with a corresponding decrease in assets in connection
with the purchase of assets with funds deposited with the CRDA.
All other schedules are omitted because the required information is either
presented in the financial statements or notes thereto, or is not present in
amounts sufficient to require submission of the schedules.
II-9
<PAGE> 187
ITEM 22. UNDERTAKINGS.
A. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expense incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted against the registrant by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's Annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's Annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
D. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and Aztar
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
E. The undersigned registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to this
registration statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement (notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement); and (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
II-10
<PAGE> 188
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona
on May 25, 1999.
AZTAR CORPORATION
By: /s/ ROBERT M. HADDOCK
-----------------------------------
Name: Robert M. Haddock
Title: Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul E. Rubeli and Robert M. Haddock, or either
of them singly, to be his true and lawful attorney-in-fact and agent, each
acting alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign this registration
statement and any and all amendments thereto (including post-effective
amendments and any registration statement pursuant to Rule 462(b)), and to file
the same, with all exhibits thereto and all other documents in connection
therewith, with the Securities and Exchange Commission, and every act and thing
necessary or desirable to be done, as fully to all intents and purposes as he
might or could do in person, thereby ratifying and confirming all that said
attorney-in-fact and agent, each acting alone, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on May 25, 1999.
<TABLE>
<S> <C> <C>
/s/ PAUL E. RUBELI Chairman of the May 25, 1999
- --------------------------------------------------- Board, President
Paul E. Rubeli and Chief Executive
Officer
/s/ ROBERT M. HADDOCK Executive Vice May 25, 1999
- --------------------------------------------------- President, Chief
Robert M. Haddock Financial Officer
and Director
/s/ MERIDITH P. SIPEK Controller May 25, 1999
- ---------------------------------------------------
Meridith P. Sipek
/s/ JOHN B. BOHLE Director May 25, 1999
- ---------------------------------------------------
John B. Bohle
</TABLE>
II-11
<PAGE> 189
<TABLE>
<S> <C> <C>
/s/ GORDON M. BURNS Director May 25, 1999
- ---------------------------------------------------
Gordon M. Burns
/s/ EDWARD M. CARSON Director May 25, 1999
- ---------------------------------------------------
Edward M. Carson
/s/ LINDA C. FAISS Director May 25, 1999
- ---------------------------------------------------
Linda C. Faiss
/s/ JAMES L. KUNKEL Director May 25, 1999
- ---------------------------------------------------
James L. Kunkel
/s/ ROBERT S. ROSOW Director May 25, 1999
- ---------------------------------------------------
Robert S. Rosow
/s/ RICHARD SNELL Director May 25, 1999
- ---------------------------------------------------
Richard Snell
/s/ TERENCE W. THOMAS Director May 25, 1999
- ---------------------------------------------------
Terence W. Thomas
</TABLE>
II-12
<PAGE> 190
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
3.1 Restated Certificate of Incorporation, filed as Exhibit 3.1
to Aztar Corporation's Registration Statement No. 33-32009
and incorporated herein by reference.
3.2 Second Amended and Restated By-Laws of Aztar Corporation, as
adopted February 25, 1998, filed as Exhibit 3 to Aztar
Corporation's Form 10-Q for the quarter ended April 2, 1998
and incorporated herein by reference.
4.1 Rights Agreement between Aztar Corporation and First
Interstate Bank of Arizona, N.A. as Rights Agent, filed as
Exhibit 4.1 to Aztar Corporation's Registration Statement
No. 33-51008 and incorporated herein by reference.
4.2 Indenture, dated as of October 8, 1992, between Aztar
Corporation and Bank of America National Trust & Savings
Association, as Trustee, relating to the Senior Subordinated
Notes due 2002 of Aztar Corporation, filed as Exhibit 4.1 to
Aztar Corporation's Form 10-Q for the quarter ended October
1, 1992 and incorporated herein by reference.
4.3 Supplemental Indenture Evidencing Appointment of Successor
Trustee, dated January 12, 1995, between Aztar Corporation
and First Bank National Association, as successor Trustee,
supplementing the Indenture dated as of October 8, 1992,
filed as Exhibit 4.3 to Aztar Corporation's 1994 Form 10-K
and incorporated herein by reference.
4.4 Indenture, dated as of October 1, 1994, between Aztar
Corporation and American Bank National Association, as
Trustee, relating to the 13 3/4% Senior Subordinated Notes
Due 2004 of Aztar Corporation, filed as Exhibit 4 to Aztar
Corporation's Form 10-Q for the quarter ended September 29,
1994 and incorporated herein by reference.
**4.5 Indenture, dated as of May 3, 1999, between Aztar
Corporation and U.S. Bank National Association, as trustee,
relating to the 8 7/8% Senior Subordinated Notes due 2007 of
Aztar Corporation.
**4.6 Specimen Certificate of the 8 7/8 Senior Subordinated Notes
due 2007 (included in Exhibit 4.5 hereto).
**4.7 Exchange and Registration Rights Agreement, dated May 3,
1999, among Aztar Corporation, Goldman, Sachs & Co.,
NationsBanc Montgomery Securities LLC, Credit Suisse First
Boston Corporation, Lehman Brothers Inc., Wasserstein
Perella Securities Corporation and PNC Capital Markets, Inc.
**5.1 Opinion of Latham & Watkins as to the validity of the
registered notes.
10.1 Amended and Restated Lease (Tropicana Hotel/Casino) between
Tropicana Enterprises and Hotel Ramada of Nevada, dated
November 1, 1984, filed as Exhibit 10.20 to Ramada Inc.'s
1984 Form 10-K (Commission File Reference Number 1-5440) and
incorporated herein by reference.
10.2 Amended and Restated Partnership Agreement by and between
the Jaffe Group and Adamar of Nevada, entered into as of
November 1, 1984, filed as Exhibit 10.22 to Ramada Inc.'s
1984 Form 10-K (Commission File Reference Number 1-5440) and
incorporated herein by reference.
*10.3(a) Severance Agreement, dated July 17, 1995, by and between
Aztar Corporation and Paul E. Rubeli, filed as Exhibit 10.1
to Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
</TABLE>
<PAGE> 191
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
*10.3(b) Amendment to Severance Agreement, dated March 23, 1998, by
and between Aztar Corporation and Paul E. Rubeli, filed as
Exhibit 10.1 to Aztar Corporation's Form 10-Q for the
quarter ended April 2, 1998 and incorporated herein by
reference.
*10.3(c) Severance Agreement, dated July 17, 1995, by and between
Aztar Corporation and Robert M. Haddock, filed as Exhibit
10.2 to Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
*10.3(d) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Robert M. Haddock, filed
as Exhibit 10.2 to Aztar Corporation's Form 10-Q for the
quarter ended April 2, 1998 and incorporated herein by
reference.
*10.3(e) Severance Agreement, dated July 18, 1995, by and between
Aztar Corporation and Nelson W. Armstrong, Jr., filed as
Exhibit 10.3 to Aztar Corporation's Form 10-Q for the
quarter ended September 28, 1995 and incorporated herein by
reference.
*10.3(f) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Nelson W. Armstrong, Jr.,
filed as Exhibit 10.3 to Aztar Corporation's Form 10-Q for
the quarter ended April 2, 1998 and incorporated herein by
reference.
*10.3(g) Severance Agreement, dated July 24, 1995, by and between
Aztar Corporation and Meridith P. Sipek, filed as Exhibit
10.4 to Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
*10.3(h) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Meridith P. Sipek, filed
as Exhibit 10.4 to Aztar Corporation's Form 10-Q for the
quarter ended April 2, 1998 and incorporated herein by
reference.
*10.3(i) Severance Agreement, dated July 25, 1995, by and between
Aztar Corporation and Joe Cole, filed as Exhibit 10.5 to
Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
*10.3(j) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Joe Cole, filed as Exhibit
10.5 to Aztar Corporation's Form 10-Q for the quarter ended
April 2, 1998 and incorporated herein by reference.
*10.3(k) Severance Agreement, dated July 17, 1995, by and between
Aztar Corporation and Neil A. Ciarfalia, filed as Exhibit
10.6 to Aztar Corporation's Form 10-Q for the quarter ended
September 28, 1995 and incorporated herein by reference.
*10.3(l) Amendment to Severance Agreement, dated March 24, 1998, by
and between Aztar Corporation and Neil A. Ciarfalia, filed
as Exhibit 10.6 to Aztar Corporation's Form 10-Q for the
quarter ended April 2, 1998 and incorporated herein by
reference.
</TABLE>
<PAGE> 192
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
10.4(a) Amended and Restated Reducing Revolving Loan Agreement,
dated as of May 28, 1998, among Aztar Corporation and the
lenders therein named; Bankers Trust Company and Societe
Generale, as documentation agents; Bank of Scotland, Credit
Lyonnais Los Angeles Branch and PNC Bank, National
Association, as co-agents; and Bank of America National
Trust and Savings Association, as administrative agent,
filed as Exhibit 10.1 to Aztar Corporation's Form 10-Q for
the quarter ended July 2, 1998 and incorporated herein by
reference.
10.4(b) Amendment No. 1, dated October 8, 1998, to Amended and
Restated Reducing Revolving Loan Agreement, dated as of May
28, 1998, among Aztar Corporation and the lenders therein
named; Bankers Trust Company and Societe Generale, as
documentation agents; Bank of Scotland, Credit Lyonnais Los
Angeles Branch and PNC Bank, National Association, as co-
agents; and Bank of America National Trust and Savings
Association, as administrative agent, filed as Exhibit 10.1
to Aztar Corporation's Form 10-Q for the quarter ended
October 1, 1998 and incorporated herein by reference.
10.4(c) Amendment No. 2, dated March 5, 1999, to Amended and
Restated Reducing Revolving Loan Agreement, dated as of May
28, 1998, among Aztar Corporation and the lenders therein
named; Bankers Trust Company and Societe Generale, as
documentation agents; Bank of Scotland, Credit Lyonnais Los
Angeles Branch and PNC Bank, National Association, as co-
agents; and Bank of America National Trust and Savings
Association, as administrative agent, filed as Exhibit 10.1
to Aztar Corporation's Form 10-Q for the quarter ended April
1, 1999 and incorporated herein by reference.
10.4(d) Term Loan Agreement, dated as of May 28, 1998, among Aztar
Corporation and the lenders therein named; and Bank of
America National Trust and Savings Association, as
administrative agent, filed as Exhibit 10.2 to Aztar
Corporation's Form 10-Q for the quarter ended July 2, 1998
and incorporated herein by reference.
*10.5 Aztar Corporation 1989 Stock Option and Incentive Plan filed
as Exhibit 4 to Aztar Corporation's Registration Statement
No. 33-32399 and incorporated herein by reference.
*10.6(a) Employee Stock Ownership Plan of Aztar Corporation, as
amended and restated effective December 19, 1989, dated
December 12, 1990, filed as Exhibit 10.60(a) to Aztar
Corporation's 1990 Form 10-K and incorporated herein by
reference.
10.6(b) Term Loan Agreement, dated as of December 19, 1989, by and
among State Street Bank and Trust Company, as Trustee,
Adamar Garage Corporation, as lender, and Aztar Corporation,
filed as Exhibit 10.50(b) to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein
by reference.
10.6(c) Preferred Stock Purchase Agreement, dated as of December 19,
1989, between Ramada Inc. and State Street Bank and Trust
Company, as Trustee, filed as Exhibit 10.50(c) to Aztar
Corporation's Registration Statement No. 33-51008 and
incorporated herein by reference.
10.6(d) Letter Agreement, dated as of December 19, 1989, between
Aztar Corporation and State Street Bank and Trust Company,
as Trustee, relating to the Employee Stock Ownership Plan of
Aztar Corporation, filed as Exhibit 10.50(d) to Aztar
Corporation's Registration Statement No. 33-51008 and
incorporated herein by reference.
</TABLE>
<PAGE> 193
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
10.7(a) Agreement and Plan of Merger, dated as of April 17, 1989,
among New World Hotels (U.S.A.), Inc., RI Acquiring Corp.
and Ramada Inc., as amended and Restated as of October 23,
1989, filed as Exhibit 2.1 to Aztar Corporation's
Registration Statement No. 33-32009 and incorporated herein
by reference.
10.7(b) Letter, dated as of October 23, 1989, from Ramada Inc. to
New World Hotels (U.S.A.), Inc. regarding certain
franchising matters and hotel projects, filed as Exhibit
2.1(b) to Aztar Corporation's Registration Statement No.
33-32009 and incorporated herein by reference.
10.8 Reorganization Agreement, dated as of April 17, 1989,
between Ramada Inc. and Aztar Corporation, as amended and
restated as of October 23, 1989, filed as Exhibit 2.2 to
Aztar Corporation's Registration Statement No. 33-32009 and
incorporated herein by reference.
10.9 Tax Sharing Agreement, dated as of April 17, 1989, among New
World Hotels (U.S.A.), Inc., Ramada Inc. and Aztar
Corporation, as amended and restated as of October 23, 1989,
filed as Exhibit 2.3 to Aztar Corporation's Registration
Statement No. 33-32009 and incorporated herein by reference.
10.10 Guaranty and Acknowledgment Agreement, dated as of April 17,
1989, among New World Development Company Limited, New World
Hotels (Holdings) Limited, New World Hotels (U.S.A.), Inc.
and RI Acquiring Corp., filed as Exhibit 2.4 to Aztar
Corporation's Registration Statement No. 33-29562 and
incorporated herein by reference.
10.11 Master Consent Agreement, dated July 18, 1989, by and among
Ramada Inc., Adamar of Nevada, Hotel Ramada of Nevada,
Adamar of New Jersey, Inc., Aztar Corporation, Tropicana
Enterprises, Trop C.C. and the Jaffe Group, with attached
exhibits, filed as Exhibit 10.50 to Aztar Corporation's
Registration Statement No. 33-29562 and incorporated herein
by reference.
*10.12 Aztar Corporation 1990 Nonemployee Directors Stock Option
Plan, as amended and restated effective March 15, 1991,
filed as Exhibit A to Aztar Corporation's 1991 definitive
Proxy Statement and incorporated herein by reference.
*10.13 Aztar Corporation Nonqualified Retirement Plan for Senior
Executives, dated September 5, 1990, filed as Exhibit 10.2
to Aztar Corporation's Form 10-Q for the quarter ended
September 27, 1990 and incorporated herein by reference.
10.14 Second Amended and Restated Loan Agreement, dated October 4,
1994, among Tropicana Enterprises, Hotel Ramada of Nevada
and the banks therein named; Societe Generale and Midlantic
Bank, N.A., as lead managers; Bank One, Arizona, N A and
Credit Lyonnais, as co-agents; Bankers Trust Company, as
co-managing agent; and, Bank of America National Trust and
Savings Association, as managing agent, filed as Exhibit
10.14 to Aztar Corporation's 1994 Form 10-K and incorporated
herein by reference.
</TABLE>
<PAGE> 194
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S> <C>
10.14(a) Amendment No. 1, dated as of May 28, 1998, to Second Amended
and Restated Loan Agreement dated as of October 4, 1994,
among Tropicana Enterprises, Hotel Ramada of Nevada and the
banks therein named; Bankers Trust Company and Societe
Generale, as documentation agents; Bank of Scotland, Credit
Lyonnais Los Angeles Branch and PNC Bank, National
Association, as co-agents; and Bank of America National
Trust and Savings Association, as administrative agent,
filed as Exhibit 10.3 to Aztar Corporation's Form 10-Q for
the quarter ended July 2, 1998 and incorporated herein by
reference.
*10.15 Summary of deferred compensation program for designated
executives of Ramada, dated November 10, 1983, filed as
Exhibit 10(r) to Ramada Inc.'s 1983 Form 10-K (Commission
File Reference Number 1-5440) and incorporated herein by
reference.
*10.16 Deferred Compensation Agreements entered into by and between
Ramada and designated executives (including each Executive
Officer), dated December 1, 1983, 1984 or 1985, filed as
Exhibits 10.60(a) through (w) to Aztar Corporation's
Registration Statement No. 33-51008 and incorporated herein
by reference.
*10.17 Deferred Compensation Plan for Directors, dated December 1,
1983, filed as Exhibit 10(t) to Ramada Inc.'s 1983 Form 10-K
(Commission File Reference Number 1-5440) and incorporated
herein by reference.
*10.18 Deferred Compensation Agreements entered into by and between
Ramada and certain outside Directors as of December 1, 1983,
filed as Exhibits 10.62(a),(b),(c) and (d) to Aztar
Corporation's Registration Statement No. 33-51008 and
incorporated herein by reference.
10.19 Option Agreement, dated February 2, 1998, among Adamar of
Nevada, parties constituting the Jaffe Group, Aztar
Corporation and Hotel Ramada of Nevada, filed as Exhibit
99.2 to Aztar Corporation's Form 8-K/A, dated February 3,
1998, and incorporated herein by reference.
*10.19(a) First Amendment to Option Agreement, dated January 28, 1999,
to Option Agreement, dated February 2, 1998, by and among
Adamar of Nevada, parties constituting the Jaffe Group,
Aztar Corporation and Hotel Ramada of Nevada, filed as
Exhibit 10.19(a) to Aztar Corporation's Form 10-K for the
year ended December 31, 1998 and incorporated herein by
reference
*10.20 Aztar Corporation 1999 Employee Stock Option and Incentive
Plan, filed as Exhibit A to Aztar Corporation's 1999
Definitive Proxy Statement and incorporated herein by
reference.
**12.1 Statement regarding computation of ratios.
**21. Subsidiaries of Aztar Corporation.
**23. Consent of PricewaterhouseCoopers LLP
**23.2 Consent of Latham & Watkins (included in Exhibit 5.1
hereto).
**24.1 Powers of Attorney (included above the signature block to
the Registration Statement).
**25.1 Statement of Eligibility and Qualification (form T-1) under
the Trust Indenture Act of 1939 of State Street Bank and
Trust Company.
**99.1 Form of Letter of Transmittal and related documents to be
used in conjunction with the exchange offer.
</TABLE>
- -------------------------
* Indicates a management contract or compensatory plan or arrangement.
** Filed herewith
<PAGE> 1
EXHIBIT 4.5
AZTAR CORPORATION,
as Issuer,
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
INDENTURE
Dated as of May 3, 1999
8-7/8% Senior Subordinated Notes due 2007
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C> <C>
(S) 310(a)(1) 508
(a)(2) 508
(a)(3) Not applicable
(a)(4) Not applicable
(b) 508, 509
(S) 311(a) 512
(b) 512
(c) Not applicable
(S) 312(a) 205
(b) 108
(c) 108
(S) 313(a) 513(a)
(b) 513(b)
(c) 513(b)
(d) 513(c)
(S) 314(a) 713
(a)(2) 714
(b)(1) Not applicable
(b)(2) Not applicable
(c)(1) 103
(c)(2) 103
(c)(3) 103
(d) Not applicable
(e) 103
(S) 315(a) 501(a), (d)
(b) 502
(c) 501(b)
(d) 501(c)
(d)(1) 501(a)
(d)(2) 501(c)(2)
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
(d)(3) 501(c)(3)
(e) 414
(S) 316(a) 402, 412, 413
(a)(1)(A) 402, 412
(a)(1)(B) 413
(a)(2) Not applicable
(b) 408, 602
(S) 317(a)(1) 403
(a)(2) 404
(b) 703
(S) 318(a) 109
</TABLE>
Note: This Cross-Reference Table shall not for any purpose be deemed to be a
part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<S> <C> <C>
SECTION 101. Definitions.............................................................1
SECTION 102. Incorporation by Reference of TIA......................................24
SECTION 103. Compliance Certificates and Opinions...................................25
SECTION 104. Form of Documents Delivered to Trustee.................................25
SECTION 105. Acts of Holders........................................................26
SECTION 106. Notices, etc. to Trustee and the Company...............................27
SECTION 107. Notice to Holders; Waiver..............................................27
SECTION 108. Communication by Holders with Other Holders............................28
SECTION 109. Conflict with TIA......................................................28
SECTION 110. Rules by Trustee and Agents............................................28
SECTION 111. No Recourse Against Others.............................................28
SECTION 112. Execution in Counterparts..............................................28
SECTION 113. Effect of Headings and Table of Contents...............................28
SECTION 114. No Adverse Interpretation of Other Agreements..........................28
SECTION 115. Successors and Assigns.................................................28
SECTION 116. Separability Clause....................................................28
SECTION 117. Benefits of Indenture..................................................29
SECTION 118. Governing Law and Choice of Forum......................................29
SECTION 119. Legal Holidays.........................................................29
SECTION 120. Incorporation of Exhibit...............................................29
ARTICLE TWO THE NOTES
SECTION 201. Form and Dating........................................................29
SECTION 202. Execution and Authentication...........................................30
SECTION 203. Registrar and Paying Agent.............................................31
SECTION 204. Paying Agent to Hold Money in Trust....................................31
SECTION 205. Holder Lists...........................................................31
SECTION 206. Transfer and Exchange..................................................31
SECTION 207. Replacement Notes......................................................45
SECTION 208. Outstanding Notes......................................................45
SECTION 209. Treasury Notes.........................................................46
SECTION 210. Temporary Notes........................................................46
SECTION 211. Cancellation...........................................................46
SECTION 212. Defaulted Interest.....................................................46
SECTION 213. Computation of Interest................................................47
SECTION 214. CUSIP Numbers..........................................................47
ARTICLE THREE SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 301. Satisfaction and Discharge of Indenture; Defeasance....................47
SECTION 302. Application of Trust Money.............................................50
SECTION 303. Repayment to the Company...............................................50
SECTION 304. Reinstatement..........................................................51
</TABLE>
<PAGE> 5
<TABLE>
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<S> <C> <C>
SECTION 305. Indemnity..............................................................51
ARTICLE FOUR DEFAULTS AND REMEDIES
SECTION 401. Events of Default......................................................51
SECTION 402. Acceleration of Maturity; Rescission and Annulment.....................53
SECTION 403. Collection Suits by Trustee............................................54
SECTION 404. Trustee May File Proofs of Claim.......................................55
SECTION 405. Trustee May Enforce Claims Without Possession of Notes.................55
SECTION 406. Application of Money Collected.........................................56
SECTION 407. Limitation on Suits....................................................56
SECTION 408. Unconditional Right of Holders to Receive Principal and Interest.......57
SECTION 409. Restoration of Rights and Remedies.....................................57
SECTION 410. Rights and Remedies Cumulative.........................................57
SECTION 411. Delay or Omission Not Waiver...........................................57
SECTION 412. Control by Holders.....................................................58
SECTION 413. Waiver of Past Defaults................................................58
SECTION 414. Undertaking for Costs..................................................58
SECTION 415. Limitation on Trustee's Security.......................................59
ARTICLE FIVE THE TRUSTEE
SECTION 501. Certain Duties and Responsibilities....................................59
SECTION 502. Notice of Defaults.....................................................60
SECTION 503. Certain Rights of Trustee..............................................61
SECTION 504. Not Responsible for Recitals or Issuance of Notes......................62
SECTION 505. May Hold Notes.........................................................62
SECTION 506. Money Held in Trust....................................................62
SECTION 507. Compensation and Reimbursement.........................................62
SECTION 508. Eligibility; Disqualification..........................................63
SECTION 509. Resignation and Removal; Appointment of Successor......................63
SECTION 510. Acceptance of Appointment by Successor.................................64
SECTION 511. Merger, Conversion, Consolidation or Succession to Business............65
SECTION 512. Preferential Collection of Claims Against the Company..................65
SECTION 513. Reports by Trustee.....................................................66
ARTICLE SIX AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 601. Without Consent of Holders.............................................67
SECTION 602. With Consent...........................................................67
SECTION 603. Compliance with Trust Indenture Act....................................68
SECTION 604. Revocation and Effect of Consents......................................68
SECTION 605. Notation on or Exchange of Notes; Effect of Supplemental Indenture.....69
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 606. Trustee Protected......................................................69
ARTICLE SEVEN COVENANTS
SECTION 701. Payment of Notes.......................................................69
SECTION 702. Maintenance of Office or Agency........................................70
SECTION 703. Money for Note Payments to be Held in Trust............................70
SECTION 704. Limitation on Restricted Payments......................................71
SECTION 705. Limitation on Indebtedness.............................................74
SECTION 706. Limitation on Liens....................................................75
SECTION 707. Limitation on Payment Restrictions Affecting Restricted Subsidiaries...76
SECTION 708. Limitation on Capital Stock of Restricted Subsidiaries.................77
SECTION 709. Transactions with Affiliates...........................................77
SECTION 710. Restriction on Incurrence of Certain Indebtedness......................77
SECTION 711. Change of Control......................................................78
SECTION 712. SEC Reports............................................................79
SECTION 713. Compliance Certificates................................................79
SECTION 714. Continued Existence and Rights.........................................80
SECTION 715. Maintenance of Properties and Other Matters............................80
SECTION 716. Taxes and Claims.......................................................81
SECTION 717. Waiver of Stay, Extension and Usury Laws...............................81
SECTION 718. Investment Company Act.................................................81
ARTICLE EIGHT MERGER, CONSOLIDATION AND SALE OF ASSETS
SECTION 801. When the Company May Merge, etc........................................81
SECTION 802. Successor Corporation Substituted......................................83
ARTICLE NINE REDEMPTION
SECTION 901. Notices to Trustee.....................................................82
SECTION 902. Selection of Notes to Be Redeemed......................................83
SECTION 903. Notice of Redemption...................................................83
SECTION 904. Effect of Notice of Redemption.........................................84
SECTION 905. Deposit of Redemption Price............................................84
SECTION 906. Notes Redeemed in Part.................................................84
SECTION 907. Redemption Pursuant to Gaming Jurisdiction Law.........................85
ARTICLE TEN SUBORDINATION
SECTION 1001. Agreement to Subordinate..............................................86
SECTION 1002. Liquidation; Dissolution; Bankruptcy..................................86
SECTION 1003. Default on Senior Indebtedness........................................87
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 1004. When Distribution Must Be Paid Over...................................88
SECTION 1005. Notice by the Company.................................................88
SECTION 1006. Subrogation...........................................................88
SECTION 1007. Relative Rights.......................................................89
SECTION 1008. Subordination May Not Be Impaired by the Company......................89
SECTION 1009. Distribution or Notice to Representatives.............................89
SECTION 1010. Rights of Trustee and Paying Agent....................................89
SECTION 1011. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice..................................................90
SECTION 1012. Application by Trustee of Monies Deposited With It....................90
SECTION 1013. Trustee's Compensation Not Prejudiced.................................90
SECTION 1014. Officers' Certificate.................................................90
SECTION 1015. Certain Payments......................................................90
SECTION 1016. Names of Representatives..............................................91
SECTION 1017. No Fiduciary Duty Created to Holders of Senior Indebtedness...........91
</TABLE>
<PAGE> 8
INDENTURE, dated as of May 3, 1999, among AZTAR CORPORATION, a
Delaware corporation (the "Company"), and U.S. BANK NATIONAL ASSOCIATION, a
national banking association, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of its 8-7/8% Senior Subordinated
Notes due 2007 (such Notes, whether issued as Initial Notes, Additional Notes or
Exchange Notes in respect of either of the foregoing, are collectively referred
to herein as the "Notes").
All covenants and agreements made by the Company herein are for
the benefit of the Holders of the Notes. All things necessary to make this
Indenture a valid agreement of the Company in accordance with its terms have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions. (a) For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the
meanings assigned to them from time to time in accordance with generally
accepted accounting principles;
(3) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision and all references to Sections refer to
Sections hereof; and
(4) "or" is not exclusive.
(b) As used herein, the following terms shall have the following
meanings:
"Accountants' Certificate" means a written opinion or
verification from a
<PAGE> 9
2
nationally recognized firm of independent certified public accountants.
"Act" shall have the meaning provided in Section 105.
"Adamar of Nevada" means Adamar of Nevada, a Nevada corporation.
"Additional Notes" means up to $100,000,000 aggregate principal
amount of Notes (other than the Initial Notes) issued under this Indenture in
accordance with Sections 202 and 705 hereof, as part of the same series as the
Initial Notes.
"Affiliate" means, with respect to any Person, a Person (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person, (ii) which
beneficially owns or holds 10% or more of any class of the Voting Stock of such
Person (or a 10% or greater equity interest in a Person which is not a
corporation) or (iii) of which 10% or more of any class of the Voting Stock (or
in the case of a Person which is not a corporation, 10% or more of the equity
interest) is beneficially owned or held by such Person or any Subsidiary of such
Person. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Premium" means, with respect to any Note on any
Redemption Date, an amount determined by the Company equal to the greater of:
(1) 1.0% of the principal amount of the Note; or
(2) the excess of:
(A) the sum of the present values at such Redemption Date
of (i) 104.438% of the principal amount of the Note (which is the
redemption price of the Notes on May 15, 2003) and (ii) all
required interest payments due on the Note through May 15, 2003
(excluding accrued but unpaid interest), computed in each case
using a discount rate equal to the Treasury Rate as of such
Redemption Date plus 50 basis points; over
(B) the principal amount of the Note.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
<PAGE> 10
3
"Asset Sale" means the sale or other disposition (including,
without limitation, dispositions pursuant to Sale and Leaseback Transactions) by
the Company or one of its Subsidiaries to any Person other than the Company or
one of its Subsidiaries of (i) any of the Capital Stock of any of the
Subsidiaries of the Company or (ii) any other assets of the Company or any
assets of its Subsidiaries outside the ordinary course of business of the
Company or such Subsidiary.
"Authentication Orders" shall have the meaning provided in
Section 202.
"Authorized Officer" means, with respect to any Person, the chief
executive officer, president, chief financial officer or treasurer of such
Person.
"Average Life" means, as of the date of determination, with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the products of (x) the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such debt security
multiplied by (y) the amount of such principal payment by (ii) the sum of all
such principal payments.
"Bankruptcy Law" shall have the meaning provided in Section
401(5).
"Board of Directors" means, with respect to any Person, the board
of directors of such Person or any authorized committee of such board.
"Broker-Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Business Day" means a day, other than a Saturday or a Sunday, on
which banks in New York City and the City of Los Angeles are open for business
and not required or authorized to close and, with respect to any place of
payment other than New York City, a day, other than a Saturday or a Sunday, on
which banks in New York City and in the place of such payment are open for
business and not required or authorized to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
capital stock of such Person and any rights (other than debt securities
convertible into capital stock), warrants or options to acquire such capital
stock.
"Capitalized Lease Obligation" means, with respect to any Person,
the obligation of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real or personal Property, which
obligation is required to be classified and accounted for as a capital lease
obligation on a balance sheet of such Person under generally accepted accounting
principles. For purposes of this Indenture, the amount of such obligation at
<PAGE> 11
4
any date shall be the outstanding amount thereof at such date, determined in
accordance with generally accepted accounting principles.
"Cedel" means Cedel Bank, SA.
"Change of Control" means any one or more of the following:
(A) the Company shall consolidate with or merge into any other
corporation or any other corporation shall consolidate with or merge into the
Company (in either case, other than a consolidation or merger with a Wholly
Owned Subsidiary in which all of the Voting Stock of the Company outstanding
immediately prior to the effectiveness thereof is changed into or exchanged for
substantially the same consideration), in either case pursuant to a transaction
in which substantially all of the Voting Stock of the Company outstanding
immediately prior to the effectiveness thereof is changed into or exchanged for
cash, securities (other than Voting Stock of the Company) or other property;
provided, however, that the term "Change of Control" shall not
include any such consolidation or merger if, with respect to such consolidation
or merger, (x) substantially all of the Voting Stock of the Company outstanding
immediately prior to the effectiveness thereof is changed into or exchanged for
Voting Stock of the surviving corporation or the ultimate parent of the
surviving corporation (the "Merger Common Stock"), (y) the Merger Common Stock,
immediately following the effectiveness thereof, is listed for trading on the
New York Stock Exchange or the American Stock Exchange or is quoted on the
National Association of Securities Dealers Automated Quotation System and is
designated as a "national market system security" and (z) immediately after the
effectiveness thereof, the Persons who were holders of Voting Stock of the
Company immediately prior to the effectiveness thereof (excluding Persons who
immediately prior to the effectiveness thereof were Affiliates of the
corporation consolidated or merged with the Company in such consolidation or
merger (other than Persons who were such Affiliates solely as a result of the
ownership by the Company of Capital Stock in such consolidated or merged
corporation)) hold in the aggregate more than 50% of the then outstanding Voting
Stock of the surviving corporation (or the ultimate parent of the surviving
corporation);
(B) the Company shall convey, transfer or lease all or
substantially all its assets to any Person or Persons (other than to a Wholly
Owned Subsidiary); provided, however, that the term "Change of Control" shall
not include any such conveyance, transfer or lease of assets (1) pursuant to a
Sale and Leaseback Transaction or (2) if immediately after the effectiveness
thereof, the Persons who were holders of Voting Stock of the Company immediately
prior to the effectiveness thereof (excluding Persons who immediately prior to
the effectiveness thereof were Affiliates of the transferee of such assets
(other than Persons who were such Affiliates solely as a result of the ownership
by the Company of Capital Stock in such transferee)) hold in the aggregate more
than 50% of the then outstanding common stock of such transferee; or
(C) any Person (other than the Company) or group shall acquire,
directly or indirectly, beneficial ownership, in the aggregate, of 50% or more
of the outstanding shares of
<PAGE> 12
5
Voting Stock of the Company or securities representing 50% or more of the
combined Voting Power of the Company's Voting Stock (the "Controlling
Securities"), in either case, outstanding on the date immediately prior to the
date of the last such acquisition by such Person or group; provided, however,
that the term "Change of Control" shall not include any such acquisition that
results in the Company ESOP and members of management of the Company who have
been employed in a management capacity with the Company for at least eighteen
months owning 50% or more of the Voting Stock of the Company or 50% or more of
the Controlling Securities.
"Change of Control Offer" shall have the meaning provided in
Section 711(a).
"Change of Control Payment Date" shall have the meaning provided
in Section 711(b)(2).
"Company" means Aztar Corporation unless and until a successor
replaces it in accordance with the terms of this Indenture and thereafter means
such successor.
"Company ESOP" means the employee stock ownership plan adopted by
the Company.
"Company Request" or "Company Order" means a written request or
order, respectively, signed in the name of the Company by an Authorized Officer
and delivered to the Trustee.
"Consolidated Amortization Expense" means, for any period,
amortization expense of the Company and its Restricted Subsidiaries, on a
consolidated basis, for such period (including, without limitation, any
amortization or write-offs of deferred financing costs by the Company and its
Restricted Subsidiaries during such period).
"Consolidated Depreciation Expense" means, for any period,
depreciation expense of the Company and its Restricted Subsidiaries, on a
consolidated basis, for such period.
"Consolidated Fixed Charge Coverage Ratio" means, as of any
Transaction Date, the ratio of (i) Consolidated Operating Cash Flow for the four
consecutive fiscal quarters for which financial information in respect thereof
is available immediately prior to such Transaction Date to (ii) Consolidated
Fixed Charges which will accrue during the then current fiscal quarter in which
such Transaction Date occurs (beginning on the first day of such quarter) and
the three fiscal quarters immediately subsequent to the end of such current
fiscal quarter, provided that, for the purpose of calculating Consolidated Fixed
Charges for the period described in this clause (ii), (A) the interest rate on
any Indebtedness bearing interest at a rate that is adjustable based on market
rate levels shall be calculated based on the assumption that the applicable
market rate level in effect on the Transaction Date shall remain constant
throughout such period at the market rate level in effect on the Transaction
Date, (B) adjustments that are reasonably anticipated to occur during such
period to Consolidated Fixed Charges shall be
<PAGE> 13
6
included in such calculation (including such adjustments that result from the
scheduled maturity of Indebtedness of the Company and its Restricted
Subsidiaries) and (C) Indebtedness shall be included in such calculation that is
reasonably anticipated to be created, incurred, assumed or guaranteed by, or to
otherwise become the obligation of, the Company or any Restricted Subsidiary;
provided, however, that, for purposes of calculating the Consolidated Fixed
Charge Coverage Ratio, Consolidated Operating Cash Flow and Consolidated Fixed
Charges shall (x) include the consolidated operating cash flow and consolidated
fixed charges of any Person to be acquired by the Company or any of its
Restricted Subsidiaries as a Restricted Subsidiary in connection with the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio, (y) include the consolidated operating cash flow and
consolidated fixed charges of any other Person acquired during the period
described in clause (i) above by the Company or by any of its Restricted
Subsidiaries as a Restricted Subsidiary and (z) exclude the consolidated
operating cash flow of any Person directly attributable to the Property of such
Person that was the subject of an Asset Sale, on a pro forma basis for the four
consecutive fiscal quarters for which financial information in respect thereof
is available immediately prior to such Transaction Date, in the case of
calculating Consolidated Operating Cash Flow, and for the then current fiscal
quarter in which such Transaction Date occurs and the three fiscal quarters
immediately subsequent to the end of such fiscal quarter (on the same basis as
described in clause (ii) above), in the case of calculating Consolidated Fixed
Charges. For purposes of the foregoing proviso, the consolidated operating cash
flow and consolidated fixed charges of any such Person shall be determined on
the same basis as such items are determined for the Company. For purposes of
each pro forma determination of the Consolidated Fixed Charge Coverage Ratio in
connection with Section 705(a), the proposed new Indebtedness shall be deemed to
be incurred on the first day of the fiscal quarter in which the relevant
Transaction Date occurs.
"Consolidated Fixed Charges" means, for any period, the sum of
Consolidated Interest Expense plus the Tropicana Payments.
"Consolidated Income Tax Expense" means, for any period, the
income tax expense of the Company and its Restricted Subsidiaries, on a
consolidated basis, for such period (other than income tax expense attributable
to Asset Sales).
"Consolidated Interest Expense" means, for any period, without
duplication, (A) the sum of (i) the aggregate amount of interest recognized by
the Company and its Restricted Subsidiaries during such period in respect of
Indebtedness of the Company and its Restricted Subsidiaries (including, without
limitation, all interest capitalized by the Company and its Restricted
Subsidiaries during such period and all commissions, discounts and other fees
and charges owed by the Company and its Restricted Subsidiaries with respect to
letters of credit and bankers' acceptance financing and the net costs associated
with Interest Swap Obligations of the Company and its Restricted Subsidiaries),
(ii) the aggregate amount of the interest component of
<PAGE> 14
7
rentals in respect of Capitalized Lease Obligations recognized by the Company
and its Restricted Subsidiaries during such period, (iii) to the extent any
Indebtedness of any Person is guaranteed by the Company or any of its Restricted
Subsidiaries, the aggregate amount of interest paid or accrued by such Person
during such period attributable to any such Indebtedness, (iv) one-third of the
rent expense incurred under noncancelable operating leases (excluding the
Tropicana Lease) during such period and (v) the aggregate amount of Redeemable
Dividends recognized by the Company and its Restricted Subsidiaries, whether or
not declared during such period, less (B) any amortization or write-off of
deferred financing costs by the Company and its Restricted Subsidiaries during
such period; in each case after elimination of intercompany accounts among the
Company and its Restricted Subsidiaries and as determined in accordance with
generally accepted accounting principles.
"Consolidated Interest Income" means, for any period, interest
income from all sources of the Company and its Restricted Subsidiaries, on a
consolidated basis, for such period.
"Consolidated Net Income" means, for any period, the aggregate
net income of the Company and its Subsidiaries for such period on a consolidated
basis, determined in accordance with generally accepted accounting principles,
provided that there shall be excluded therefrom (i) gains and losses from Asset
Sales or reserves relating thereto, (ii) items classified as extraordinary or
nonrecurring, (iii) the income (or loss) of any Unrestricted Subsidiary or Joint
Venture, except to the extent that the aggregate amount of cash dividends or
other distributions actually paid during such period to the Company or any
Restricted Subsidiary by such Unrestricted Subsidiary or Joint Venture in
respect of its Capital Stock out of funds legally available therefor exceeds the
aggregate amount of new Investments in such Unrestricted Subsidiary or Joint
Venture by the Company or any Restricted Subsidiary during such period, (iv)
except to the extent includable pursuant to clause (iii), the income (or loss)
of any Person accrued or attributable to any period prior to the date it becomes
a Restricted Subsidiary or is merged into or consolidated with the Company or
any of its Restricted Subsidiaries or that Person's assets (or a portion
thereof) are acquired by the Company or any of its Restricted Subsidiaries and
(v) the income of any Restricted Subsidiary to the extent that such Restricted
Subsidiary is prevented by any Legal Requirement from paying such income to the
Company or another Restricted Subsidiary. Notwithstanding the foregoing,
Consolidated Net Income as used in Section 704 shall include gains (or losses)
on the sale by the Company or a Restricted Subsidiary of an Unrestricted
Subsidiary.
"Consolidated Net Rent" means, for any period, without
duplication, an amount equal to the total of: (A) the rent expense, net of
intercompany rent, incurred by HRN pursuant to the Tropicana Lease plus (B)
two-thirds of the rent expense incurred under other noncancelable operating
leases.
"Consolidated Net Worth" means, as of any date, with respect to
any Person, the sum of the Capital Stock and additional paid-in capital plus
retained earnings (or minus accumulated deficit) of such Person and its
Subsidiaries on a consolidated basis at such date,
<PAGE> 15
8
each item determined in accordance with generally accepted accounting
principles, less amounts attributable to Redeemable Stock of such Person and its
Subsidiaries.
"Consolidated Operating Cash Flow" means, for any period, without
duplication, Consolidated Net Income plus (i) Consolidated Interest Expense plus
(ii) Consolidated Income Tax Expense plus (iii) Consolidated Depreciation
Expense plus (iv) Consolidated Amortization Expense plus (v) Consolidated Net
Rent plus (vi) equity in unconsolidated partnerships' losses minus (vii)
Consolidated Interest Income plus (viii) other non-cash items reducing such
Consolidated Net Income, minus (ix) other non-cash items increasing such
Consolidated Net Income, for such period, all as determined in accordance with
generally accepted accounting principles.
"Corporate Trust Office" means the office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office as of the date hereof is located at Corporate Trust Division, 180 E.
Fifth Street, St. Paul, Minnesota 55101.
"corporation" means any corporation and any voluntary
association, joint stock company, business trust or similar organization.
"Credit Facility" means any agreement between the Company and/or
any of its Restricted Subsidiaries and one or more banks or other financial
institutions providing for the making of term loans or loans on a revolving
basis (including, in either case, construction loans and lines of credit), the
issuance of letters of credit and the creation of bankers' acceptances, as any
such agreement may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified, including any agreement extending the
maturity, refinancing or restructuring of all or any portion of the Indebtedness
and other obligations under such agreement or any successor agreement.
"Currency Agreement" means, with respect to any Person, any
foreign exchange contract, currency swap agreement, option or futures contract
or other similar agreement or arrangement designed to protect such Person or any
of its Subsidiaries against fluctuations in currency values.
"Custodian" shall have the meaning provided in Section
401(5)(iii).
"Default" means any event or condition which is, or after giving
of notice or passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning provided in Section
209.
"Definitive Note" means a Certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 206 hereof,
substantially in the form of Exhibit A hereto, except that such Note shall not
bear the Global Note Legend and shall not have the
<PAGE> 16
9
"Schedule of Exchanges of Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued
in whole or in part in global form, the Person specified in Section 203 hereof
as the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provisions of this Indenture.
"Designated Senior Indebtedness" means each issue of Senior
Indebtedness that: (1) has an outstanding principal amount of not less than
$25,000,000; and (2) has been designated as Designated Senior Indebtedness
pursuant to an Officers' Certificate of the Company received by the Trustee.
"Discharged" means that the Company shall be deemed to have paid
and discharged the entire Indebtedness represented by, and obligations under,
the Notes and to have satisfied all the obligations under this Indenture
relating to the Notes (and the Trustee, at the request and the expense of the
Company, shall execute proper instruments acknowledging the same) except (a) the
rights of the Holders to receive, from the trust fund described in Section
301(c), payment of the principal of and the interest on such Notes when such
payments are due, (b) the Company's obligations with respect to the Notes under
Sections 206, 207, 208, 302, 509, 510 and 703 so long as any of the Notes are
Outstanding and (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder; provided, however, that notwithstanding the foregoing, the
obligations of the Company under Sections 303, 304, 305 and 507, together with
the definitions in Article One necessary for the interpretation of such
Sections, shall survive.
"Distribution Compliance Period" means the 40-day distribution
compliance period as defined in Regulation S.
"DTC" shall have the meaning provided in Section 203.
"Effective Date" means May 3, 1999.
"11% Notes" means the 11% Senior Subordinated Notes Due 2002 of
the Company.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Event of Default" shall have the meaning provided in Section
401.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 17
10
"Exchange Notes" shall have the meaning provided in Section
206(f).
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set
forth in the Registration Rights Agreement.
"Gaming Authority" means the United States federal government or
any state, county, municipality or other political subdivision or any agency or
other governmental authority thereof that now or hereafter has jurisdiction over
all or any portion of the gaming activities of the Company or any of its
Subsidiaries.
"Gaming Jurisdiction Law" means any law, statute, ordinance,
code, regulation, constitutional provision, rule, order, directive or other
enforcement requirement now or hereafter in existence of any Gaming Authority.
"Gaming License" means any license, franchise or other
authorization on the date of this Indenture or thereafter required to own,
lease, operate or otherwise conduct the gaming business of the Company,
including, without limitation, all licenses granted under the New Jersey Act,
the Nevada Act, the Indiana Act, the Missouri Act, the regulations of the New
Jersey Commission, the New Jersey Division, the Nevada Commission and the Nevada
Control Board, the Indiana Commission, the Missouri Commission and other Legal
Requirements.
"Global Note" means a permanent global note in registered form
deposited with the Trustee, as a custodian for The Depositary Trust Company or
any other designated depositary.
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-government unit, whether federal, state,
county, district, city or other political subdivision or otherwise and whether
now or hereafter in existence, or any officer or official of any thereof,
including, without limitation, the New Jersey Commission, the New Jersey
Division, the Nevada Commission, the Nevada Control Board, the Clark County
(Nevada) Liquor and Gaming License Board, the Missouri Commission and the
Indiana Commission.
"guarantee" means any direct or indirect obligation, contingent
or otherwise, of a Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person in any manner.
"Holder" means the Person in whose name a Note is registered in
the Register.
"Holdings" means Ramada New Jersey Holdings Corporation, a
Delaware
<PAGE> 18
11
corporation.
"HRN" means Hotel Ramada of Nevada, a Nevada corporation.
"IAI Global Note" means the global Note substantially in the form
of Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold to Institutional Accredited
Investors.
"Indebtedness" means, with respect to any Person, without
duplication,
(a) any obligation, contingent or otherwise, for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), (b) any obligation evidenced by bonds,
debentures, notes or other similar instruments, (c) any obligation owed for all
or any part of the purchase price of Property, other assets or services or for
the cost of Property or other assets constructed or of improvements thereto
(including any obligation under or in connection with any letter of credit
related thereto), other than accounts payable included in current liabilities
and incurred in respect of Property or services purchased in the ordinary course
of business, (d) any obligation of such Person under or in connection with any
letter of credit issued for the account of such Person and all drafts drawn or
demands for payment honored thereunder, (e) any obligation under conditional
sale or other title retention agreements relating to purchased Property, (f) any
obligation issued or assumed as the deferred purchase price of Property (other
than accounts payable incurred in the ordinary course of business), (g) any
obligation, contingent or otherwise, as set forth in subclauses (a), (b) and (c)
of this definition, of any other Person secured by any Lien in respect of
Property of such Person even though such Person has not assumed or become liable
for payment of such obligation, (h) any Capitalized Lease Obligation or any
other obligation pursuant to any Sale and Leaseback Transaction, (i) any note
payable or draft accepted representing an extension of credit (other than
extensions of credit for Property and services purchased in the ordinary course
of business), whether or not representing an obligation for borrowed money, (j)
the maximum fixed repurchase price of any Redeemable Stock, (k) obligations in
respect of Interest Swap Obligations and Currency Agreements and (l) any
obligation which is a guarantee with respect to Indebtedness (of a kind
otherwise described in this definition) of another Person. For purposes of the
preceding sentence, the maximum fixed repurchase price of any Redeemable Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Redeemable Stock as if such Redeemable Stock were
repurchased on any date on which Indebtedness shall be required to be determined
pursuant to this Indenture; provided, however, that if such Redeemable Stock is
not then permitted to be repurchased, the repurchase price shall be the book
value of such Redeemable Stock. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described
<PAGE> 19
12
above, the maximum liability of such contingent obligations at such date and, in
the case of clause (g), the lesser of the fair market value at such date of any
asset subject to a Lien securing the Indebtedness of others and the amount of
the Indebtedness secured.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Independent" means a Person who (l) is in fact independent, (2)
does not have any direct financial interest or any material indirect financial
interest in the Company or in any other obligor upon the Notes or in any
Affiliate of the Company or of such other obligor and (3) is not connected with
the Company or such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Indiana Act" means the Indiana Riverboat Gambling Act as
codified at IC4-33, as amended from time to time, or any successor act.
"Indiana Commission" means the Indiana Gaming Commission or any
successor agency.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Notes" means the first $235,000,000 aggregate principal
amount of Notes issued under this Indenture on the date hereof.
"Institutional Accredited Investor" means an institution that is
an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates.
"Investment" means, with respect to any Person (such Person being
referred to in this definition as the "Investor"), any amount paid by the
Investor, directly or indirectly, or any transfer of Property, directly or
indirectly (such amount to be the fair market value of such Property at the time
of transfer as determined in good faith by the Board of Directors of the
<PAGE> 20
13
Investor, whose determination shall be conclusive) by the Investor to any other
Person (i) for Capital Stock of, or other equity interest in, or as a capital
contribution to, such other Person or (ii) as a direct or indirect loan or
advance to such other Person (other than accounts receivable of the Investor
arising in the ordinary course of business).
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Jaffe Partnership Interest" means the general partnership
interest in Tropicana Enterprises held by members of the Jaffe family pursuant
to the Amended and Restated Partnership Agreement dated as of November 1, 1984
between the Jaffe family and Adamar of Nevada, as amended.
"Joint Venture" means any Person (other than a Subsidiary of the
Company) in which any Person other than the Company or any of its Subsidiaries
has a joint or shared equity interest with the Company or any of its
Subsidiaries.
"Legal Holiday" means any day that is not a Business Day.
"Legal Requirements" means all laws, statutes and ordinances
(including building codes and zoning and environmental laws, regulations and
ordinances) and all rules, orders, rulings, regulations, directives, decrees,
injunctions and requirements of all Governmental Authorities, that are now or
may hereafter be in existence, and that may be applicable to the Company or any
Subsidiary or Affiliate thereof, or the Trustee (including, without limitation,
the New Jersey Act, the Nevada Act, the Indiana Act, the Missouri Act and the
regulations and supervisory procedures of the New Jersey Division, the New
Jersey Commission, the Nevada Commission, the Nevada Control Board, the Clark
County (Nevada) Liquor and Gaming License Board, the Indiana Commission, and the
Missouri Commission as modified by any variances, special use permits, waivers,
exceptions or other exemptions which may from time to time be applicable).
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means any mortgage, pledge, lien, charge, deed of trust,
security interest, conditional sale or other title retention agreement or any
other similar encumbrance (including any agreement to give any security
interest).
"Liquidated Damages" means all special interest then owing
pursuant to Section 2(d) of the Registration Rights Agreement.
"Missouri Act" means the Missouri Gaming law as codified under
Section 313.004 and
<PAGE> 21
14
313.800-850, RSMo., as amended from time to time, or any successor provision of
law.
"Missouri Commission" means the Missouri Gaming Commission or any
successor agency.
"Moody's" means Moody's Investors Services, Inc., and its
successors.
"Nevada Act" means the Nevada Gaming Control Act, Nev. Rev. Stat.
Ann. Sections 463.010, et seq., as amended from time to time, or any successor
provision of law.
"Nevada Commission" means the Nevada Gaming Commission or any
successor agency appointed pursuant to the Nevada Act.
"Nevada Control Board" means the Nevada State Gaming Control
Board or any successor agency appointed pursuant to the Nevada Act.
"New Jersey Act" means the New Jersey Casino Control Act, N.J.
Stat. Ann. 5:12-1 et seq., (New Jersey Public Law 1977, L. 110) as amended from
time to time, or any successor provision of law.
"New Jersey Commission" means the New Jersey Casino Control
Commission or any successor agency appointed pursuant to the New Jersey Act.
"New Jersey Division" means the Division of Gaming Enforcement of
the New Jersey Department of Law and Public Safety or any successor division or
agency.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.
"Notes" has the meaning assigned to it in the preamble to this
Indenture. The Initial Notes, any Additional Notes and any Exchange Notes issued
in respect of either Initial Notes or Additional Notes shall be treated as a
single class for all purposes under this Indenture.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by an Authorized Officer (other than the treasurer) and by
the treasurer, an assistant treasurer, the secretary or an assistant secretary
of such Person.
"144A Global Note" means a global note substantially in the form
of Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
<PAGE> 22
15
"Opinion of Counsel" means a written opinion from legal counsel
who is reasonably acceptable to the Trustee. The counsel may be an employee of
or counsel to the Company or the Trustee.
"Outstanding" means, with respect to the Notes, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) the Notes theretofore cancelled by the Trustee or delivered
to the Corporate Trust Office for cancelation;
(ii) the Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited (other than pursuant to
Article III) with the Trustee or any Paying Agent (other than the
Company or an Affiliate thereof), provided that, if such Notes are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made; and
(iii) the Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture except for
the Notes replaced pursuant to Section 207 if the Trustee has received
proof satisfactory to it that the replaced Note is held by a bona fide
purchaser; provided, however, that solely for the purpose of determining
whether the Holders of the requisite principal amount of Outstanding
Notes have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Notes held of record or beneficially owned
by the Company or any other obligor upon the Notes or any Affiliate of
the Company or such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee knows
to be so held or owned shall be so disregarded. Notes so held or owned
which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not
the Company or any other obligor upon the Notes or any Affiliate of the
Company or such other obligor.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"Paying Agent" shall have the meaning provided in Section 203.
"Payment Blockage Period" shall have the meaning provided in
Section 1003.
<PAGE> 23
16
"Permitted Liens" means, with respect to any Person, (i) Liens
for taxes, assessments, governmental charges or claims which are not yet due and
payable or are being contested in good faith by such Person by appropriate
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in accordance with
generally accepted accounting principles shall have been made by such Person;
(ii) statutory Liens of landlords and carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen, or other like Liens arising in the ordinary
course of business and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and for which a reserve or other appropriate provision, if
any, as shall be required in accordance with generally accepted accounting
principles shall have been made by such Person; (iii) Liens incurred or deposits
made by such Person in the ordinary course of business in connection with
worker's compensation, unemployment insurance, medical insurance and other types
of social security and deposits made by such Person in the ordinary course of
business in connection with other kinds of insurance; (iv) Liens incurred or
deposits made by such Person to secure the performance of tenders, bids, leases,
statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money); (v) easements, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of such Person or any of
its Subsidiaries incurred in the ordinary course of business; (vi) Liens
(including extensions and renewals thereof) upon real or tangible personal
property acquired by such Person after the date of this Indenture; provided that
(a) any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, all costs (including
the cost of construction) of the item of Property subject thereto, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such cost, (c) such Lien does not extend to or cover any other Property other
than such item of Property and any improvements on such item and (d) the
incurrence of such Indebtedness is permitted by Section 705; (vii) Liens upon
specific items of inventory or other goods and proceeds of such Person securing
such Person's obligations in respect of bankers' acceptances issued or created
for the account of such Person in the ordinary course of business to facilitate
the purchase, shipment or storage of such inventory or other goods; (viii) Liens
securing reimbursement obligations with respect to commercial letters of credit
issued for the account of such Person which encumber documents and other
Property relating to such commercial letters of credit and the products and
proceeds thereof; (ix) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection with the
importation of goods by such Person; (x) licenses, leases or subleases granted
to others not interfering in any material adverse respect with the business of
such Person or any of its Subsidiaries; (xi) Liens encumbering Property or
assets of such Person under construction arising from progress or partial
payments by a customer of such Person or one of its Subsidiaries relating to
such Property or assets; (xii) Liens encumbering customary initial deposits and
margin accounts, and other Liens incurred in the ordinary course of business and
which are within the general parameters customary in the
<PAGE> 24
17
gaming industry, in each case securing Interest Swap Obligations or Currency
Agreements; (xiii) Liens encumbering deposits made to secure obligations arising
from statutory or regulatory requirements of such Person or its Subsidiaries;
(xiv) any interest or title of a lessor in the Property subject to any
Capitalized Lease obligation or operating lease which, in each case, is
permitted under this Indenture; (xv) Liens securing obligations to the Trustee
pursuant to the compensation and indemnity provisions of this Indenture; (xvi)
purchase money liens securing payables arising from the purchase by such Person
or any of its Subsidiaries of any equipment or goods in the ordinary course of
business, provided that such payables do not constitute Indebtedness; (xvii)
Liens arising out of consignment or similar arrangements for the sale of goods
entered into by such Person or any of its Subsidiaries in the ordinary course of
business; (xviii) Liens for judgments or orders not giving rise to a Default or
Event of Default; and (xix) Liens not specified in the foregoing and not
otherwise permitted by Section 706, provided that the aggregate Indebtedness
secured by the Liens under this clause (xix) shall not exceed $5,000,000 at any
time.
"Person" means any individual, partnership, corporation, venture,
joint venture, unincorporated organization, association, joint-stock company,
trust or Governmental Authority.
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note. For the purposes of this definition, any Note
authenticated and delivered under Section 207 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Preferred Share Purchase Rights" shall have the meaning given to
the term "Rights" in the Rights Agreement dated as of December 20, 1989 between
the Company and First Interstate Bank of Arizona, N.A.
"principal" means, with respect to any debt security (including
any Note), the principal of such debt security plus the premium, if any, on such
debt security.
"Private Placement Legend" means the legend set forth in Section
206(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Qualified Capital Stock" means Capital Stock not constituting
Redeemable
<PAGE> 25
18
Stock.
"Redeemable Dividend" means, for any dividend payable with
respect to Redeemable Stock, (i) to the extent such dividend is fully deductible
for federal income tax purposes, the amount of such dividend and (ii) to the
extent such dividend may not be deductible, the quotient of the amount of such
dividend divided by the difference between one and the maximum statutory federal
income tax rate (expressed as a decimal number between 1 and 0) then applicable
to the issuer of such Redeemable Stock.
"Redeemable Stock" means, with respect to any Person, any equity
security issued by such Person that by its terms or otherwise is required to be
redeemed (other than a security that is required to be redeemed only in the
event that a holder of such security fails to qualify or to be found suitable or
otherwise eligible under a Gaming Jurisdiction Law to remain as a holder of such
security) or is redeemable at the option of the holder of such security at any
time prior to the maturity of the Notes.
"Redemption Date" means, with respect to any Note to be redeemed,
the date fixed for such redemption pursuant to the terms of this Indenture and
the Notes.
"Redemption Price" means, with respect to any Note to be
redeemed, the price fixed for such redemption pursuant to the terms of this
Indenture and the Notes.
"Register" means the register in which the Company provides for
the registration of Securities and the registration for the transfer of
Securities.
"Registrar" shall have the meaning provided in Section 203.
"Registration Rights Agreement" means, with respect to the
Initial Notes, the Exchange and Registration Rights Agreement, dated as of May
3, 1999, by and among the Company and the other parties named on the signature
pages thereof, as such agreement may be amended, modified or supplemented from
time to time and, with respect to any Additional Notes, one or more registration
rights agreements between the Company and other parties thereto, as such
agreement(s) may be amended, modified or supplemented from time to time,
relating to rights given by the Company to the purchasers of Additional Notes to
register such Additional Notes under the Securities Act or exchange such
Additional Notes for Notes registered under the Securities Act.
"Regular Record Date" means, for the interest payable on any
Interest Payment Date in respect of a Note, the date so specified in Paragraph 2
of such Note.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a Global Note bearing the
Private Placement
<PAGE> 26
19
Legend and deposited with or on behalf of the Depositary and registered in the
name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule 903
of Regulation S.
"Replacement Indebtedness" shall have the meaning provided in
Section 705.
"Representative" means the indenture trustee or other trustee,
agent or representative for an issue of Senior Indebtedness.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Payments" shall have the meaning provided in Section
704.
"Restricted Subsidiary" means any Subsidiary of the Company that
(i) has not been designated by the Board of Directors of the Company as an
Unrestricted Subsidiary or (ii) was an Unrestricted Subsidiary but has been
redesignated by the Board of Directors of the Company as a Restricted
Subsidiary, in each case as provided under the definition of Unrestricted
Subsidiary in this Section 101.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of the Company of any Property,
whether owned at the date of this Indenture or thereafter acquired, which has
been or is to be sold or transferred by the Company or such Subsidiary to such
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such Property if, after giving effect to such
arrangement, the Company or a Subsidiary of the Company operates the business,
if any, located on such Property.
"SEC" means the Securities and Exchange Commission.
<PAGE> 27
20
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Senior Indebtedness" means the principal of, interest (including
without limitation, interest at the contract rate subsequent to the commencement
of any bankruptcy, insolvency or similar proceeding with respect to the Company)
on and other amounts due on or in connection with any Indebtedness of the
Company for money borrowed from others, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed, which, at the
date of the Indenture or at the time of any such creation, incurrence,
assumption or guarantee, (i) is by its terms expressly senior to and not
subordinate or subject in right of payment to any other Indebtedness of the
Company, or (ii) is secured by a lien on any Property of the Company or any of
its Subsidiaries; provided, however, that Senior Indebtedness shall not include
any such Indebtedness if (A) the value of the collateral securing such
Indebtedness at time of incurrence is less than the amount of such Indebtedness
or (B) the value of any Property substituted for the collateral securing such
Indebtedness is less than the value of the collateral so released in either case
as determined by the Company and set forth in an Officer's Certificate of the
Company received by the Trustee, which certificate shall be conclusive evidence
of the correctness of the matters set forth herein, or (iii) has been designated
Senior Indebtedness pursuant to an Officers' Certificate of the Company received
by the Trustee. Notwithstanding anything herein to the contrary, Senior
Indebtedness shall not mean (a) Indebtedness of the Company to a Subsidiary of
the Company for money borrowed or advances from such Subsidiary, (b)
Indebtedness representing the maximum fixed repurchase price of any Capital
Stock of the Company which by its terms or otherwise is or may be required to be
redeemed or repurchased prior to the Stated Maturity of the Notes or at the
option of the holder thereof, (c) Indebtedness of the Company to any officer or
director thereof, (d) obligations owing under judgments arising out of
obligations that are not Indebtedness for borrowed money, (e) accounts payable
or any other Indebtedness to trade creditors created or assumed by the Company
in the ordinary course of business in connection with the obtaining of materials
or services and (f) any liability for federal, state, local or other taxes owed
or owing by the Company. Notwithstanding anything herein to the contrary,
"Senior Indebtedness" does not include the 11% Notes or the 13 3/4% Notes. The
Notes shall be on parity with the 11% Notes and the 13 3/4% Notes in right of
payment.
"Series B Preferred Stock" means shares of the Company's
preferred stock, Series B held by the trustee for the Company ESOP.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary of the Company (i)
the revenues attributable to which for the then most recently completed four
fiscal quarters constituted 5% or more of the consolidated revenues of the
Company and its Subsidiaries for such period, (ii) the assets of which as of the
end of such period constituted 5% or more of the consolidated assets of
<PAGE> 28
21
the Company and its Subsidiaries as of the end of such period or (iii) that
operates, owns or leases any Property that is material to the business
operations of the Company or any Restricted Subsidiary.
"Special Record Date" means a date fixed by the Trustee pursuant
to Section 212.
"Stated Maturity" means, with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
day on which the principal on such Note or such installment of interest is due.
"Stock Pledge" means the Stock Pledge Security and Intercreditor
Agreement dated as of December 12, 1989 among the Company, Tropicana
Enterprises, the members of the Jaffe Group (as defined in the Tropicana
Enterprises partnership agreement) and Trop C.C., a Nevada general partnership,
pursuant to which the Company pledged all of the stock of Adamar of Nevada to
secure the Company's obligations under various agreements relating to the
Tropicana, as in effect on the Effective Date.
"Subsidiary" means, with respect to any Person, (i) a corporation
a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries thereof, or such
Person and one or more Subsidiaries thereof, directly or indirectly, at the date
of determination thereof has at least majority ownership interest and the power
to direct the policies, management and affairs thereof. For purposes of this
definition, any directors' qualifying shares mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"13 3/4% Notes" means the 13 3/4% Senior Subordinated Notes Due
2004 of the Company.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-bbbb) as in effect on the date of execution of this Indenture, except as
provided in Section 603.
"Transaction Date" means the date of the transaction giving rise
to the need to calculate the Consolidated Fixed Charge Coverage Ratio or to make
any other determination for purposes of complying with the provisions of this
Indenture, provided that if such transaction is related to or in connection with
any acquisition of any Person, the Transaction Date shall be the date on which
the Company or any of its Subsidiaries enters into an agreement with such Person
to effect such acquisition; provided, however, that if subsequent to the
entering of such agreement the Company or any of its Subsidiaries shall amend
the terms of such acquisition with respect to the consideration payable by the
Company or any of its Subsidiaries in connection with such acquisition, the
Transaction Date shall be the date on which the Company or any of its
<PAGE> 29
22
Subsidiaries enters into an agreement with such Person to effect such amendment.
The second proviso above shall not be applicable if, as of the Transaction Date
with respect to any acquisition, the Company could incur at least $1.00 of
additional Indebtedness under Section 705(a) when the Consolidated Fixed Charge
Coverage Ratio is calculated on the basis of the terms of such acquisition and
the Indebtedness to be incurred by the Company and its Restricted Subsidiaries
in connection therewith.
"Treasury Rate" means, as of any Redemption Date, the yield to
maturity as of such Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to May 15, 2003; provided,
however, that if the period from the Redemption Date to May 15, 2003 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Tropicana" means the Las Vegas Tropicana casino hotel operated
by HRN on the date of this Indenture.
"Tropicana Enterprises" means Tropicana Enterprises, a Nevada
general partnership.
"Tropicana Lease" means the Amended and Restated Lease (Tropicana
Hotel/Casino) dated November 1, 1984 between Tropicana Enterprises and HRN, as
amended.
"Tropicana Loan" means the Second Amended and Restated Loan
Agreement by and among Tropicana Enterprises, HRN and the Lenders named therein,
dated October 4, 1994, as amended through the Effective Date.
"Tropicana Loan Refinancings" means any refinancings or
financings of, or related to, the Tropicana Loan or any refinancings thereof
(including, but not limited to, any Indebtedness owed to the Company or any
Restricted Subsidiary in connection with such Tropicana Loan or any refinancings
thereof), to the extent that the aggregate amount of such Indebtedness incurred
pursuant to such refinancings or financings does not exceed the outstanding
principal amount under the Tropicana Loan at the Effective Date.
"Tropicana Payments" means, for any period, that portion of the
lease payments made by HRN to Tropicana Enterprises pursuant to the Tropicana
Lease that represents the sum of interest expense on Indebtedness of Tropicana
Enterprises payable to Persons other than the Company plus amounts distributed
in respect of the Jaffe Partnership Interest.
<PAGE> 30
23
"Tropicana Security Deposit" means the additional security
deposit that HRN may be required to provide from time to time pursuant to the
Tropicana Lease (as in effect on the Effective Date).
"Trust Officer" means, with respect to the Trustee, the chairman
or vice chairman of the board of directors, the chairman or vice chairman of the
executive committee of the board of directors, the chairman of the trust
committee, the president, any vice president, any assistant vice president, the
secretary, any assistant secretary, the cashier, any assistant cashier, any
trust officer or assistant trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is specifically referred because
of his or her knowledge of and familiarity with the particular subject.
"Trustee" means U.S. Bank National Association, 180 East Fifth
Street, St. Paul, Minnesota 55101, unless and until a successor replaces it in
accordance with the provisions of this Indenture and thereafter means the
successor.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note
substantially in the form of Exhibit A attached hereto that bears the Global
Note Legend and that has the "Schedule of Exchanges of Interests in the Global
Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company
which at the time of determination shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below) and (2)
any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary (unless
such Subsidiary owns any Capital Stock of or owns or holds any Lien on any
Property of the Company or any other Subsidiary of the Company which is not a
Subsidiary of the Subsidiary to be so designated), provided that either (x) the
Subsidiary to be so designated has total assets of $1,000 or less or (y)
immediately after giving pro forma effect to such designation the Company could
incur $1.00 of additional Indebtedness under Section 705(a); and provided,
further, that a Subsidiary shall not be designated as an Unrestricted Subsidiary
if the Company or a Restricted Subsidiary creates, incurs, issues, assumes,
guarantees or in any other manner becomes liable with respect to any obligation
of such Subsidiary. The Board of Directors of the Company may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary, provided that immediately
after giving pro forma effect to such redesignation, the
<PAGE> 31
24
Company could incur $1.00 of additional Indebtedness under Section 705(a). Any
such designation or elimination thereof by the Board of Directors of the Company
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing conditions.
"U.S. Government Obligations" are direct noncallable obligations
of the United States of America or guaranteed by the United States of America
for the payment of which the full faith and credit of the United States is
pledged.
"U.S. Person" means a U.S. person as defined in Rule 902(k) under
the Securities Act.
"Voting Power" means the aggregate number of votes that may be
cast for the election of a corporation's directors (or Persons performing
equivalent functions) by the beneficial owners of all shares of Voting Stock
issued by the Company.
"Voting Stock" means securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for corporate directors (or Persons performing
equivalent functions).
"Wholly Owned Subsidiary" means any Restricted Subsidiary of
which 100% of the Capital Stock of, or other ownership interest in, such
Restricted Subsidiary is at the time owned by the Company or a Wholly Owned
Subsidiary.
SECTION 102. Incorporation by Reference of TIA. Whenever this
Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company.
<PAGE> 32
25
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rules under
the TIA have the meanings assigned to them hereby.
SECTION 103. Compliance Certificates and Opinions. (a) Upon any
request or application by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with;
(2) an Opinion of Counsel stating that in the opinion of such
counsel, all such conditions precedent, if any, have been complied with; and
(3) other than for the initial request by the Company to the
Trustee to authenticate and issue the Notes, an Accountants' Certificate stating
that, in the opinion of such accountant, such action may be taken under the
Indenture without the occurrence of a Default pursuant to Sections 704, 705,
801(a)(4) and 801(a)(5).
In the case of any such application or request as to which the
furnishing of any such documents is specifically required by any provision of
this Indenture relating to such particular application or request, no additional
certificates or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(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 each such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 104. Form of Documents Delivered to Trustee. (a) In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified
<PAGE> 33
26
Person, it is not necessary that all such matters be certified by, or covered by
the opinion of, only one such Person or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in one or
several documents.
(b) Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
to form one instrument.
SECTION 105. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided for
by this Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing. Except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the Act of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 501)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section 105.
(b) The fact and date of the execution by any Person of any
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authorization. The fact and date of the execution of any such instrument
or writing, or the authorization of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
(c) Ownership of Notes shall be proved by the appearance of a
Person's name in the Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued upon the
registration of transfer or in exchange therefor or in lieu thereof, to the same
extent as the original Holder, in respect of anything done, omitted or suffered
to be done by the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
(e) The Trustee may require such additional proof of any matter
referred to in
<PAGE> 34
27
this Section as it shall deem necessary.
SECTION 106. Notices, etc. to Trustee and the Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with:
(1) the Trustee shall be sufficient for every purpose hereunder
if in writing and mailed postage prepaid by first-class, registered or certified
mail, in each case return receipt requested, or delivered personally, to the
Trustee at its Corporate Trust Division, 180 E. Fifth Street, St. Paul,
Minnesota 55101, Attention: Corporate Trust Department, or at any other address
previously furnished in writing to the Company; and
(2) the Company shall be sufficient for every purpose hereunder
if in writing and mailed postage prepaid by first class, registered or certified
mail, in each case return receipt requested, or delivered personally, to the
Company, addressed to it at Aztar Corporation, 2390 E. Camelback Road, Suite
400, Phoenix, Arizona 85016, Attention: Chief Financial Officer or at any other
address previously furnished in writing to the Trustee by the Company with
copies given in one of the foregoing manners to Snell & Wilmer, One Arizona
Center, Phoenix, Arizona 85004-0001, Attention: David Sprentall, Esq. and to
Latham & Watkins, 633 West Fifth Street, Suite 4000, Los Angeles, California
90071, Attention: Brian G. Cartwright, Esq. (provided that any failure to
furnish such copies shall not affect the sufficiency of any such request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document with respect to the Company).
SECTION 107. Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given if in writing and mailed postage prepaid by first-class, registered or
certified mail, in each case return receipt requested, to each Holder affected
by such event, at his address as it appears in the Register, not later than the
latest date and not earlier than the earliest date prescribed for the giving of
such notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any matter, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give such notice by
mail, then such notification may be given by any other reasonable method of
giving such notice and shall be deemed to be sufficient giving of such notice
for every purpose hereunder.
If a notice or communication is delivered or mailed in the manner
provided
<PAGE> 35
28
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 108. Communication by Holders with Other Holders. Holders
may communicate pursuant to TIA Section 312(b) with other Holders with respect
to their rights under this Indenture or the Notes. The Trustee shall comply with
the provisions of TIA Section 312(b). The Company, the Trustee, the Registrar
and any agent of any of them shall have the protection of TIA Section 312(c).
SECTION 109. Conflict with TIA. If any provision hereof limits,
qualifies or conflicts or fails to comply with another provision which is
required to be included in this Indenture by any of the provisions of the TIA,
such required provision shall control.
SECTION 110. Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or a meeting of Holders. Each of the Registrar
and Paying Agent may make reasonable rules and set reasonable requirements for
its functions.
SECTION 111. No Recourse Against Others. The Notes and the
obligations of the Company under this Indenture are solely obligations of the
Company and no officer, director, employee or stockholder, as such, shall be
liable for any failure by the Company to pay amounts on the Notes when due or
perform any such obligation.
SECTION 112. Execution in Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
SECTION 113. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 114. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or a Subsidiary of the Company. No such indenture, loan or debt
agreement may be used to interpret this Indenture.
SECTION 115. Successors and Assigns. All covenants and agreements
in this Indenture by the Company and the Trustee shall bind their respective
successors and assigns, whether so expressed or not.
SECTION 116. Separability Clause. In case any provision in this
Indenture or the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the
<PAGE> 36
29
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 117. Benefits of Indenture. Nothing in this Indenture or
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors and assigns hereunder, any Paying Agent and the
Holders of Notes, any benefits or any legal or equitable right, remedy or claim
under this Indenture, except to the extent provided in Article Ten with respect
to the holders of Senior Indebtedness.
SECTION 118. Governing Law and Choice of Forum. This Indenture
and each Note shall be deemed to be a contract under the laws of the State of
New York and shall be construed in accordance with and governed by the laws of
the State of New York without regard to principles of conflicts of law. If any
action or proceeding shall be brought by the Trustee or a Holder in order to
enforce any right or remedy under this Indenture or the Notes, the Company
hereby consents and will submit to the jurisdiction of the courts of the State
of New York or any federal court sitting in the Borough of Manhattan in The City
of New York, New York. Any action or proceeding brought by the Company to
enforce any right, assert any claim or obtain any relief whatsoever in
connection with this Indenture or the Notes shall be brought by the Company
exclusively in the courts of the State of New York or in any federal court
sitting in the Borough of Manhattan in The City of New York, New York. The
Trustee hereby consents and agrees to submit to the jurisdiction of the courts
of the State of New York or any federal court sitting in the Borough of
Manhattan in The City of New York, New York in respect of any action or
proceeding under this Indenture or the Notes.
SECTION 119. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date or Stated Maturity of any Notes shall not be a
Business Day, then (notwithstanding any other provision of this Indenture)
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date or Redemption Date or at the Stated Maturity and, if
so made, no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may be, until such
Business Day.
SECTION 120. Incorporation of Exhibit. Exhibit A annexed hereto
shall constitute an integral part of this indenture for all purposes.
ARTICLE TWO
THE NOTES
SECTION 201. Form and Dating. (a) General. The Notes and the
Trustee's
<PAGE> 37
30
certificate of authentication shall be substantially in the form of Exhibit A
hereto. The Notes may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof. The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including the Global
Note Legend thereon and the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Notes issued in definitive form shall be substantially
in the form of Exhibit A attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Notes from time to time endorsed
thereon and that the aggregate amount of outstanding Notes represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions. Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 206 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
SECTION 202. Execution and Authentication. An Officer shall sign
the Notes for the Company by manual or facsimile signature. The Company's seal
shall be reproduced on the Notes and may be in facsimile form. If an Officer
whose signature is on a Note no longer holds that office at the time a Note is
authenticated, the Note shall nevertheless be valid. A Note shall not be valid
until authenticated by the manual signature of the Trustee. The signature shall
be conclusive evidence that the Note has been authenticated under this
Indenture. The Trustee shall, upon a written order of the Company signed by an
Officer of the Company (an "Authentication Order"), authenticate Notes for
original issue up to the aggregate principal amount stated in paragraph 4 of the
Notes. The aggregate principal amount of Notes outstanding at any time may not
exceed such amount except as provided in Section 207 hereof. The Trustee may
appoint an authenticating agent acceptable to the Company to authenticate Notes.
An authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in
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31
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the
Company, Holders or an Affiliate of the Company.
SECTION 203. Registrar and Paying Agent. The Company shall
maintain an office or agency where Notes may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where Notes
may be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents. The
term "Registrar" includes any co-registrar and the term "Paying Agent" includes
any additional paying agent. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company shall notify the Trustee in
writing of the name and address of any Agent not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar. The Company initially appoints The Depository
Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The
Company initially appoints the Trustee to act as the Registrar and Paying Agent
and to act as Note Custodian with respect to the Global Notes.
SECTION 204. Paying Agent to Hold Money in Trust. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent will hold in trust for the benefit of Holders or the Trustee
all money held by the Paying Agent for the payment of principal, premium or
Liquidated Damages, if any, or interest on the Notes, and will notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
SECTION 205. Holder 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 all Holders and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least seven Business Days before each Interest Payment Date
and at such other times as the Trustee may request in writing, a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company shall otherwise comply with
TIA Section 312(a).
SECTION 206. Transfer and Exchange. (a) Transfer and Exchange of
Global Notes. A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the
<PAGE> 39
32
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 207 and
210 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 206 or
Section 207 or 210 hereof, shall be authenticated and delivered in the form of,
and shall be, a Global Note. A Global Note may not be exchanged for another Note
other than as provided in this Section 206(a). However, beneficial interests in
a Global Note may be transferred and exchanged as provided in Section 206(b),
(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest
in the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided,
however, that prior to the expiration of the Distribution Compliance
Period, transfers of beneficial interests in the Regulation S Global
Note may not be made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Beneficial interests in
any Unrestricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this
Section 206(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 206(b)(i) above,
the transferor of such beneficial interest must deliver to the Registrar
either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary
<PAGE> 40
33
to credit or cause to be credited a beneficial interest in another
Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with
the Applicable Procedures containing information regarding the
Participant account to be credited with such increase or (B) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note
shall be registered to effect the transfer or exchange referred to in
(1) above. Upon consummation of an Exchange Offer by the Company in
accordance with Section 206(f) hereof, the requirements of this Section
206(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted
Global Notes. Upon satisfaction of all of the requirements for transfer
or exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant
Global Note(s) pursuant to Section 206(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 206(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications and certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest
<PAGE> 41
34
in an Unrestricted Global Note or transferred to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note if the exchange or transfer complies with the requirements
of Section 206(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a Broker-Dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Note, a certificate from such holder
in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder
in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 202 hereof, the Trustee shall
<PAGE> 42
35
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the aggregate principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
<PAGE> 43
36
(F) if such beneficial interest is being transferred to
the Company or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 206(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note
in the appropriate principal amount. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant
to this Section 206(c) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant
to this Section 206(c)(i) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to
a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case
of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
<PAGE> 44
37
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for a Definitive Note that does not
bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Note that does not
bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive Note,
then, upon satisfaction of the conditions set forth in Section
206(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant
to Section 206(h) hereof, and the Company shall execute and the Trustee
shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 206(c)(iii) shall be registered in such name or names and
in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 206(c)(iii)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for
<PAGE> 45
38
a beneficial interest in a Restricted Global Note or to transfer such
Restricted Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in a Restricted Global Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in reliance
on an exemption from the registration requirements of the
Securities Act other than those listed in subparagraphs (B)
through (D) above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement under
the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased
<PAGE> 46
39
the aggregate principal amount of, in the case of clause (A) above, the
appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, in the case of clause (C) above, the Regulation S
Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes
to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder
in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder
in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer
<PAGE> 47
40
required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 206(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note at any time. Upon receipt of a request for such an exchange
or transfer, the Trustee shall cancel the applicable Unrestricted
Definitive Note and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes. If any such
exchange or transfer from a Definitive Note to a beneficial interest is
effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a
time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 202 hereof, the Trustee shall authenticate one
or more Unrestricted Global Notes in an aggregate principal amount equal
to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 206(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
206(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
Any Restricted Definitive Note may be transferred to and registered in
the name of Persons who take delivery thereof in the form of a
Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including
<PAGE> 48
41
the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in
item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who
shall take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
<PAGE> 49
42
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant
to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 202, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
Broker-Dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer (collectively, the
"Exchange Notes"). Concurrently with the issuance of such Notes, the Trustee
shall cause the aggregate principal amount of the applicable Restricted Global
Notes to be reduced accordingly, and the Company shall execute and the Trustee
shall authenticate and deliver to the Persons designated by the Holders of
Definitive Notes so accepted Definitive Notes in the appropriate principal
amount.
(g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend
in substantially the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT: (A) (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE
<PAGE> 50
43
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION
COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND
OTHER JURISDICTIONS."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii),
(e)(ii), (e)(iii) or (f) of this Section 206 (and all Notes
issued in exchange therefor or substitution thereof) shall not
bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE
TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 207 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 206(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 211 OF THE INDENTURE
AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 211 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a
<PAGE> 51
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beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note, such other Global Note shall be increased accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 210, 605, 711 and 906 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at
the opening of business 15 days before the day of mailing of a notice of
redemption of Notes selected for redemption and ending at the close of
business on the day of such mailing, (B) to register the transfer of or
to exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part or (C)
to register the transfer of or to exchange a Note between a record date
and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name any Note is
<PAGE> 52
45
registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and interest on such Note and
for all other purposes, and none of the Trustee, any Agent or the
Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 202 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 206
to effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 207. Replacement Notes. If any mutilated Note is
surrendered to the Trustee or the Company and the Trustee receives evidence to
its satisfaction of the destruction, loss or theft of any Note, the Company
shall issue and the Trustee, upon receipt of an Authentication Order, shall
authenticate a replacement Note if the Trustee's requirements are met. If
required by the Company or the Trustee, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 208. Outstanding Notes. The Notes outstanding at any time
are all the Notes authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set
forth in Section 209 hereof, a Note does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 207 hereof, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 701 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and
<PAGE> 53
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shall cease to accrue interest.
SECTION 209. Treasury Notes. In determining whether the Holders
of the required principal amount of Notes have concurred in any direction,
waiver or consent, Notes owned by the Company, or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company, shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that the Trustee
knows are so owned shall be so disregarded.
SECTION 210. Temporary Notes. Until certificates representing
Notes are ready for delivery, the Company may prepare and the Trustee, upon
receipt of an Authentication Order, shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of certificated Notes but may
have variations that the Company considers appropriate for temporary Notes and
as shall be reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate Definitive Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 211. Cancellation. The Company at any time may deliver
Notes to the Trustee for cancellation. The Registrar and Paying Agent shall
forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel all
Notes surrendered for registration of transfer, exchange, payment, replacement
or cancellation. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation. Subject to
the record retention requirements under the Exchange Act, the Trustee may
destroy cancelled Notes pursuant to a Company Request and furnish a certificate
of such destruction to the Company, unless the Company shall direct by a Company
Order that cancelled Notes be returned to the Company.
SECTION 212. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay the defaulted interest in any
lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in
each case at the rate provided in the Notes. The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Note and the date of the proposed payment. The Company shall fix or cause
to be fixed each such special record date (the "Special Record Date") and
payment date, provided that no such special record date shall be less than 10
days prior to the related payment date for such defaulted interest. At least 15
days before the special record date, the Company (or, upon the written request
of the Company, the Trustee in the name and at the expense of the Company) shall
mail or cause to be mailed to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.
<PAGE> 54
47
SECTION 213. Computation of Interest. Interest on the Notes shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 214. CUSIP Numbers. The Company in issuing the Notes 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 Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE THREE
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 301. Satisfaction and Discharge of Indenture; Defeasance.
(a) The Company, at any time, may terminate its obligations under
this Indenture by delivering all Outstanding Notes to the Trustee for
cancellation and paying all other sums payable hereunder by the Company;
provided, however, that the obligations of the Company under Sections 303, 304,
305 and 507, together with the definitions in Article One necessary for the
interpretation of such Sections, shall survive.
(b) At the Company's option, (i) the Company will be Discharged
on the 123rd day after the satisfaction of the conditions set forth in
paragraphs (c) and (d) below or (ii) the Company need not comply with those
covenants set forth in Sections 704, 705, 706, 707, 708, 709, 710, 711 and 716
and the provisions of Sections 401(3) (but only to the extent that Section
401(3) relates to such enumerated provisions), 801(a)(4) and 801(a)(5) at any
time after the applicable conditions set forth in paragraphs (c) and (d) below
have been satisfied.
(c) In order to exercise either option in paragraph (b) above,
(1) the Company must irrevocably deposit with the Trustee or a
trustee satisfactory to the Company and the Trustee, in trust, specifically
pledged as security for and dedicated solely to the benefit of the Holders (A)
money, (B) U.S. Government Obligations which, through the payment of interest
thereon and principal thereof in accordance with their terms, will provide money
or (C) a combination of money and U.S. Government Obligations, in an amount
sufficient (without consideration of any reinvestment of interest on such funds)
in the opinion (with respect to (B) and (C)) of a nationally recognized firm of
independent public accountants expressed in an Accountants' Certificate
delivered to the Trustee to pay and
<PAGE> 55
48
discharge all the principal of and interest on the Notes not later than one day
before the dates such payments are due in accordance with the terms of the
Notes;
(2) the Company must deliver to the Trustee:
(i) irrevocable instructions to apply such money or the proceeds
of such U.S. Government Obligations to the payment of principal of and
interest on the Notes at maturity or redemption, as the case may be;
(ii) an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided in Sections 301(c) and
301(d) have been complied with;
(iii) an Officers' Certificate certifying as to whether the Notes
are then listed on the New York Stock Exchange;
(iv) if the Notes are then listed on the New York Stock Exchange,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Company's exercise of its option under this Section
would not cause the Notes to be delisted;
(v) an Opinion of Counsel to the effect that the deposit and
related defeasance would not cause the Holders of the Notes to recognize
income, gain, or loss for federal income tax purposes and that the
Holders will be subject to federal income tax on the same amount and in
the same manner and at the same times as would have been the case if the
deposit and related defeasance had not occurred and, in the case of a
Discharge pursuant to paragraph (b)(i) above, accompanied by a revenue
or private letter ruling to such effect received from or published by
the Internal Revenue Service; and
(vi) an Opinion of Counsel to the effect that (A) the trust funds
will not be subject to any rights of holders of Senior Indebtedness,
including, without limitation, those rights arising under Article Ten of
this Indenture; (B) in the case of a Discharge pursuant to paragraph
(b)(1) above and subject to customary exclusions and exceptions
reasonably acceptable to the Trustee, (1) the Company has authorization
to establish an irrevocable trust in favor of the Trustee for the
benefit of the Holders under applicable law and the action in
establishing the irrevocable trust has been duly and properly authorized
by the Company and such authorization has not been revoked, (2) the
Trustee is an Independent trustee with respect to the irrevocable trust,
(3) a valid trust is created at the time of such irrevocable deposit and
(4) the Holders will have the sole beneficial ownership interest under
applicable law in the money so deposited in such trust; and (C) if a
court of competent jurisdiction were to rule under any Bankruptcy Laws
that the trust funds remained property of the Company, (1) the Trustee
will hold, for the benefit of the Holders, a valid and first priority
perfected security interest in such trust funds that, after the
expiration of any applicable preference period (as specified in such
opinion), is not avoidable under the Bankruptcy Laws of any
jurisdiction, (2) the Holders will be entitled to receive adequate
protection of their interests in such trust funds under 11 U.S.C.
<PAGE> 56
49
(S)(S) 361, 362, 363 and 364 and (3) no property, rights in property or
other interests granted to the Trustee for the benefit of the Holders or
to the Holders in exchange for or with respect to any of such trust
funds will be subject to any prior rights of holders of Senior
Indebtedness, including, without limitation, those rights arising under
Article Ten of this Indenture;
For the limited purpose of the Opinion of Counsel referred to in
this paragraph (c)(2)(vi), such opinion may contain (1) either (A) an assumption
that the conclusions contained in a letter by a nationally recognized appraisal
firm that (i) the value of the trust assets is reasonably equivalent to the
amount of Notes then Outstanding, plus accrued and unpaid interest thereon, as
of the date of the deposit and (ii) the Discharge or defeasance pursuant to
paragraph (b) above of the principal amount of the Notes then Outstanding, plus
accrued and unpaid interest thereon, as of the date of the transfer, is fair
consideration for the transfer of the trust assets to the trust, are accurate,
provided that such letter is also addressed and delivered to the Trustee, or (B)
an assumption that the conclusions contained in a customary valuation letter by
a nationally recognized appraisal firm, dated as of the date of the deposit and
taking into account such deposit, or, at counsel's option, a customary
alternative certificate reasonably acceptable to the Trustee, to the effect that
the Company, as a result of the transfer, will not (i) be insolvent (either
because its financial condition is such that the sum of its debts is greater
than all of its assets, at a fair valuation, or because the present fair
saleable value of its assets will be less than the amount required to pay its
probable liability on its debts as they become absolute and matured), (ii) have
unreasonably small capital for the business in which it is or will be engaged or
(iii) have incurred or planned to incur debts beyond its ability to pay as such
debts mature, are accurate, provided that (x) such valuation letter is also
addressed and delivered to the Trustee and (y) the Company delivers to the
Trustee a letter by a nationally recognized appraisal firm to the effect that
the value of the trust assets is reasonably equivalent to the amount of the
Notes then Outstanding, plus accrued and unpaid interest thereon, as of the date
of the deposit; or
(2) a representation that (A) the Notes are the legal, valid,
binding and enforceable obligations of the Company, and the Company's payment
obligations are not avoidable under any Bankruptcy Laws, and (B) the trust funds
are not subject to recapture by or on behalf of the Company under any Bankruptcy
Laws;
(3) no Default or Event of Default (including as a result of such
deposit) shall have occurred and be continuing on the date of such deposit and
such deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company is a party or by which
it is bound, as evidenced to the Trustee in an Officers' Certificate delivered
to the Trustee concurrently with such deposit;
(4) the Company shall have paid or duly provided for payment of
all sums payable by the Company under this Indenture and the Notes; and
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Company's exercise of its option under this
provision will not result in the
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50
Company, the Trustee or the trust to be required to register as an "investment
company" under the Investment Company Act.
(d) It is the intention of the parties hereto that a valid trust
for the benefit of the Holders be created at the time that the Company makes the
deposit pursuant to this Section 301. Solely as protection for the Holders in
the event that a court of competent jurisdiction were to determine in the future
either that (i) such trust had not been validly created or (ii) such trust is
not enforceable, the Company, at the time the Company makes such deposit, will
take any and all acts necessary to create and perfect, in favor of the Holders,
a first-priority security interest in the money so deposited and shall take any
other action and execute and deliver any other documents that may reasonably be
requested by the Trustee to effectuate such security interest, and shall do all
of the above at such appropriate time so that such security interest shall
attach to the deposit at the time such deposit is made.
SECTION 302. Application of Trust Money. All money and U.S.
Government Obligations deposited with the Trustee or such other trustee pursuant
to Section 301 shall be held in trust and applied by the Trustee or such other
trustee, in accordance with the provisions of the Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent),as the Trustee or such other trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payments such money and U.S. Government Obligations have been deposited
with the Trustee or such other trustee. All such money and U.S. Government
Obligations shall be segregated and held in a separate trust. Money, U.S.
Government Obligations and proceeds thereof so held in trust, to the extent
allocated for the payment of the Notes, shall not be subject to the provisions
of Article Ten (other than, in the case of a defeasance pursuant to Section
301(b)(ii), Section 1001).
SECTION 303. Repayment to the Company. Subject to Section 302,
the Trustee and the Paying Agent shall promptly pay to the Company upon request
any excess money or U.S. Government Obligations held by them at any time and
thereupon shall be relieved from all liability with respect to such money. The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal or interest that remains unclaimed for
two years; provided, however, that the Company shall, if requested by the
Trustee or such Paying Agent, give the Trustee or such Paying Agent satisfactory
indemnification against any and all liability which may be incurred by it by
reason of such payment; and provided further, that the Trustee or such Paying
Agent before being required to make any payment shall at the expense of the
Company cause to be published once in a newspaper of general circulation in The
City of New York and mail to each Holder entitled to such money notice that such
money remains unclaimed and that, after a date specified therein, which shall be
at least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be repaid to the Company. After
payment to the Company, Holders entitled to such money must look to the Company
for payment as general creditors unless an applicable law designates another
Person.
<PAGE> 58
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SECTION 304. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 302 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 301 until such time as the Trustee or Paying Agent
is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 302; provided, however, that if the Company has made any
payment of interest on or principal of any Notes because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or U.S. Government Obligations
held by the Trustee or Paying Agent.
SECTION 305. Indemnity. The Company shall indemnify the Trustee
and hold it harmless against any tax, fee or other charge imposed on or assessed
against the money or U.S. Government Obligations deposited with the Trustee
under this Article Three or any interest or other income derived therefrom.
ARTICLE FOUR
DEFAULTS AND REMEDIES
SECTION 401. Events of Default. "Events of Default", wherever
used herein, means any one of the following events:
(1) The Company defaults in the payment of interest on any Note
when the same becomes due and payable and the default continues for a period of
30 days, whether or not such payment is prohibited by Article Ten;
(2) The Company defaults in the payment of the principal of any
Note when the same becomes due and payable at maturity, upon redemption,
repayment pursuant to Section 711 or otherwise, whether or not such payment is
prohibited by Article X;
(3) The Company fails to observe, perform or comply with any of
its other agreements or covenants in or provisions of the Notes or this
Indenture and the failure to observe, perform or comply continues for the period
and after the notice specified below;
(4) A default or defaults occur under any mortgage, indenture,
bond, note, debenture or other instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness of the Company or any
of its Restricted Subsidiaries, whether such Indebtedness now exists or shall be
created hereafter, and such Indebtedness shall have been accelerated (or shall
have matured); provided that the principal amount of Indebtedness
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with respect to which any such default or defaults and acceleration (or
maturity) has occurred and is continuing, together with the principal amount of
all other Indebtedness with respect to which such a default or defaults and
acceleration (or maturity) has occurred and is continuing, aggregates $5,000,000
or more;
(5) The Company or any of its Significant Subsidiaries pursuant
to or within the meaning of Title 11 of the United States Code or any similar
federal or state law for the relief of debtors or affecting creditors' rights
(collectively, "Bankruptcy Law"):
(i) commences a voluntary case or any other action or proceeding,
(ii) consents by answer or otherwise to the commencement against
it of an involuntary case or any other action or proceeding,
(iii) seeks or consents to the appointment of a receiver,
trustee, assignee, liquidator, custodian or similar official
(collectively, a "Custodian") of it or for all or substantially all of
its Property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is unable to pay its debts as the same become due;
(6) A court of competent jurisdiction enters an order or decree
under any Bankruptcy Law or under any law affecting creditors' rights that is
similar to a Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case in bankruptcy or any other action or
proceeding for any other relief,
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of the Property
of the Company or any of its Significant Subsidiaries, or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries, and in each case the order or decree remains
unstayed and in effect for 60 days, or any dismissal, stay, rescission
or termination ceases to remain in effect;
(7) one or more judgments or orders shall have been rendered
against the Company or any of its Restricted Subsidiaries in an aggregate amount
in excess of $5,000,000 and shall not have been discharged and either (x) an
enforcement proceeding shall have been commenced by any creditor upon any such
judgment or (y) there shall be any period of 90 consecutive days during which a
stay of enforcement of such judgments, by reason of a pending appeal or
otherwise, shall not be in effect; or
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(8) Any Gaming License of the Company or any of its Subsidiaries
is revoked, terminated or suspended or otherwise ceases to be effective,
resulting in the cessation or suspension of operation for a period of more than
90 days of the casino business of any casino hotel owned, leased, or operated
directly or indirectly by the Company or any of its Subsidiaries (other than any
voluntary relinquishment of a Gaming License if such relinquishment is, in the
judgment of the Company, both desirable in the conduct of the business of the
Company and its Subsidiaries, taken as a whole, and not disadvantageous in any
material respect to the holders).
A Default under clause (3) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the Outstanding
Notes provide written notification to the Company (and the Trustee, in the case
of Holders giving notice) of the Default and the Company does not cure the
Default within 60 days after receipt of the notice. Any notice of Default must
specify the Default, demand that it be remedied and state that the notice is a
"Notice of Default". Such notice shall be given by the Trustee if so requested
by Holders of at least 25% in principal amount of the then Outstanding Notes.
SECTION 402. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing (other than an Event of Default
as defined in clauses (5) and (6) of Section 401), then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Notes may declare the principal of, and all accrued but unpaid
interest on, all the Notes to be due and payable by a notice, in writing, to the
Company (and the Trustee in the case of a notice given by Holders) and upon any
such declaration such principal and accrued interest shall become due and
payable immediately. In case an Event of Default as defined in clauses (5) and
(6) of Section 401 occurs, the principal of and interest on the Notes shall
become immediately due and payable without any declaration or act on the part of
the Holders or the Trustee.
In the event of a declaration of acceleration because an Event of
Default as defined in clause (4) of Section 401 has occurred, and is continuing,
such declaration and its consequences shall be automatically rescinded and
annulled if (x) in the case of Indebtedness that has been accelerated, the
holders of such Indebtedness shall have rescinded the declaration of
acceleration and the consequences thereof within 10 days of such declaration or,
in the case of Indebtedness that has matured, such Indebtedness has been
discharged in full within 10 days following maturity, (y) the Company shall have
delivered an Officers' Certificate certifying such rescission or discharge to
the Trustee and (z) no other Event of Default shall have occurred and be
continuing.
At any time after the Notes have been accelerated and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article Four provided, the Holders of not less than a
majority in principal amount of the Notes Outstanding, by notice to the Company
and the Trustee, may rescind and annul such acceleration and its consequences
if:
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(1) there has been paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue installments of interest on all Notes,
(B) the principal of any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at the rate borne
by the Notes,
(C) to the extent the payment of such interest is lawful,
interest upon overdue installments of interest at the rate borne by the Notes,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel;
(2) all Defaults and Events of Default, other than the
non-payment of the principal of and interest on the Notes that have become due
solely by such acceleration, have been cured or waived as provided in Section
413;
(3) the rescission would not conflict with any judgment or order
of a court of competent jurisdiction; and
(4) in the event of a cure or waiver of a Default or Event of
Default under clause (4) of Section 401, the Trustee shall have received an
Officers' Certificate of the Company and an Opinion of Counsel that the default
giving rise to such Default or Event of Default has been cured or waived.
No such rescission shall affect any subsequent default or impair
any right consequent thereon.
SECTION 403. Collection Suits by Trustee. If an Event of Default
specified in clause (1) or (2) of Section 401 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or any other obligor on the Notes for the whole amount of
principal and accrued interest remaining unpaid, together with, to the extent
that payment of such interest is lawful, interest on overdue principal and
interest on overdue installments of interest, in each case at the rate per annum
borne by the Notes and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
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
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and non-judicial proceedings as the Trustee shall deem most effectual to protect
and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture, the Notes or in any other agreement or
instrument or in aid of the exercise of any power granted herein or therein, or
to enforce any other proper remedy.
SECTION 404. Trustee May File Proofs of Claim. (a) In the case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Notes or to the
Property of the Company or of such other obligor, the Trustee (irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration of acceleration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company or such other
obligor for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Notes (including post-petition
interest) 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 agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(2) to collect and receive any monies or other Property payable
or deliverable on any such claims and to distribute the same;
and any 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 507.
(b) 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
Notes 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, except that the
Trustee may vote on behalf of the Holders for the appointment of a trustee in
bankruptcy without soliciting or canvassing any Holder for consent or approval.
SECTION 405. Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes 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, and any recovery of judgment shall, after provision
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for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has been recovered.
SECTION 406. Application of Money Collected. Any money collected
by the Trustee pursuant to this Article Four 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 or interest, upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under
Section 507;
Second: To holders of Senior Indebtedness to the extent required
by Article Ten;
Third: To the payment of the amounts then due and unpaid upon the
Notes for principal and interest, 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 Notes for principal
and interest, respectively; and
Fourth: To the Company or any other obligor on the Notes, as
their interests may appear or as a court of competent jurisdiction may direct.
The Trustee may set a record date and payment date for any payment to Holders
pursuant to this Section.
SECTION 407. Limitation on Suits. No Holder shall have any right
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
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default,
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder,
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the losses, expenses and liabilities to be incurred in
compliance with such request,
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding, and
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(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of not less than a
majority in principal amount of the Outstanding Notes,
it being understood and intended that no one or more Holders shall have any
right in any manner by virtue of, or by availing itself 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 ratable benefit of all the Holders.
SECTION 408. Unconditional Right of Holders to Receive Principal
and Interest. Notwithstanding any other provision in this Indenture, the Holder
of any Note shall have the absolute and unconditional right to receive payment
of the principal of and interest on such Note on or after the respective dates
expressed in such Note and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 409. 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 the Holder after
exhaustion of all rights to appeal, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
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.
SECTION 410. Rights and Remedies Cumulative. 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 otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 411. Delay or Omission Not Waiver. No delay or omission
of the Trustee or of any Holder of any Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article 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.
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SECTION 412. Control by Holders. The Holders of not less than a
majority in principal amount of the Outstanding Notes 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 on 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 have the right to decline to follow any
such direction if the Trustee, being advised by counsel, determines that the
action so directed may not lawfully be taken or if the Trustee in good faith
shall, by a Trust Officer or Trust Officers, determine that the proceedings so
directed would involve it in personal liability or be unduly 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 413. Waiver of Past Defaults. The Holders of not less
than a majority in principal amount of the Outstanding Notes may on behalf of
the Holders of all the Notes waive any past Default hereunder and its
consequences, except a Default
(1) in the payment of the principal of or interest on any Note;
or
(2) in respect of a covenant or provision hereof which under
Article Six cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected;
provided, however, that no default in the payment of any amount due to the
Trustee under Section 507 or any other provision hereof may be waived by the
Holders without the Trustee's written consent.
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 any right consequent thereon.
SECTION 414. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note 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 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, 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
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shall not apply to any suit instituted by the Trustee, to any suit instituted by
one or more Holders holding in the aggregate more than 10% in principal amount
of the Outstanding Notes, or to any suit instituted by any Holder pursuant to
Section 408.
SECTION 415. Limitation on Trustee's Security. Notwithstanding
any other provision contained herein, or any right, interest, lien or remedy
created, granted or otherwise provided hereunder, by law or otherwise, for so
long as any of the Notes shall be outstanding, the Trustee shall not have and
shall not, without consent of the Indiana Commission or the Missouri Commission,
as applicable, seek, accept or exercise any security interest or rights of any
kind related to possession or ownership of:
(1) any license issued by either the Indiana Commission or the
Missouri Commission or any interest in a license issued by either
the Indiana Commission or the Missouri Commission,
(2) any ownership interest defined in 11 Missouri Code of State
Regulations ("CSR") 45-10.040, in the Issuer, any Affiliate of
the Issuer or any other obligor or guarantor with respect to the
Notes that is a license of the Commission, or
(3) any slot machine as defined in and subject to the requirements of
11 CSR 45-10.055,
including but not limited to (i) rights as a pledgee, hypothocatee or
transferee, (ii) right to gain title, ownership, possession or control of such
property and assets and (iii) the ability to require such property and assets to
be transferred in any way.
ARTICLE FIVE
THE TRUSTEE
SECTION 501. Certain Duties and Responsibilities. (a) Except
during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
<PAGE> 67
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Indenture; but 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 same to determine whether or not they appear to
conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) The Trustee shall not be liable for any error of judgment
made in good faith, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) The Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the Outstanding
Notes relating to 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, under this Indenture; and
(4) 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 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.
(d) The Trustee shall examine any certificates or other documents
furnished to it pursuant to the provisions of this Indenture to determine
whether or not such certificates or other documents conform to the requirements
of such provisions.
(e) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 501.
SECTION 502. Notice of Defaults. Within 90 days after the
occurrence of any Default hereunder, the Trustee shall transmit to all Holders
notice of such Default hereunder known to the Trustee in the manner provided in
Section 107, unless such Default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the
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principal of or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as the Board of Directors and/or Trust
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders.
SECTION 503. Certain Rights of Trustee. Except as otherwise
provided in Section 501:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company shall be sufficiently
evidenced by a Company Request;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in good faith on its part, rely upon an
Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, 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, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
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(h) nothing in 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 or the exercise of any of its rights or powers
hereunder; and
(i) The Trustee shall have no duty to inquire as to the
performance of the Company's covenants in Article Seven hereof. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event of
Default, except (i) any Default or Event of Default occurring pursuant to
Section 401(1), 401(2) or 701, or (ii) any Default or Event of Default of which
the Trustee shall have received written notification or obtained actual
knowledge.
SECTION 504. Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes (except the Trustee's certificate
of authentication) shall be taken as the statements of the Company and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to validity or sufficiency of this Indenture or the Notes.
The Trustee shall not be accountable for the use or application by the Company
of the proceeds from the issuance of the Notes.
SECTION 505. May Hold Notes. The Trustee, any Paying Agent, any
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and, subject to Sections 508
and 512, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Registrar or such other agent.
SECTION 506. Money Held in Trust. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company. The
Trustee shall apply funds deposited with or transferred to it by or on behalf of
the Company for the purposes so deposited or transferred and in accordance with
the terms of this Indenture.
SECTION 507. Compensation and Reimbursement. The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
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(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The Trustee shall promptly notify the Company of any claim
asserted against the Trustee for which it may seek indemnity.
As security for the performance of the obligations of the Company
under this Section 507, the Trustee shall have a Lien senior and prior to the
Notes upon all Property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of or interest on Notes.
Notwithstanding the satisfaction and discharge of the Indenture,
the obligations of the Company to the Trustee under this Section 507 shall
survive.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in clause (5) or (6) of Section
401, the expenses and the compensation for such services are intended to
constitute expenses of administration under any Bankruptcy Law.
SECTION 508. Eligibility; Disqualification. This Indenture shall
always have a Trustee who satisfies the requirements of TIA (S) 310(a)(1) and
shall always have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition. If the Trustee
has or shall acquire any "conflicting interest" within the meaning of Section
310(b) of the TIA, the Trustee and the Company shall in all respects comply with
the provisions of Section 310(b) of the TIA.
SECTION 509. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article Five shall become effective until the
acceptance of appointment by the successor Trustee under Section 510.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company, the New Jersey Commission, the New Jersey Division, the
Nevada Commission and the Nevada Control Board and any other Gaming Authority at
least 30 days prior to the proposed resignation.
(c) The Trustee may be removed at any time by an Act of the
Holders of a majority in principal amount of the Outstanding Notes, delivered to
the Trustee and to the Company.
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(d) The Company, by action of an Authorized Officer, may remove
the Trustee at any time if:
(1) the Trustee fails to comply with Section 508;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(3) a Custodian or public officer takes charge of the Trustee or
its Property;
(4) the Trustee becomes incapable of acting; or
(5) the Trustee becomes disqualified under any applicable
provision of the New Jersey Act or is found unsuitable under any applicable
provision of the Nevada Act, or the Trustee's relationship with the Company may,
in the Company's discretion, jeopardize any material Gaming License or franchise
or right or approval granted thereto.
(e) If the Trustee fails to comply with Section 508, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
(f) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by action of an Authorized Officer, shall promptly appoint a
successor Trustee. Within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee to replace
the successor Trustee appointed by the Company may be appointed by an Act of the
Holders of a majority in principal amount of the Outstanding Notes delivered to
the Company and the retiring Trustee. If, within 30 days after the retiring
Trustee resigns or is removed, no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner provided in
Section 510, the retiring Trustee, the Company or the Holders of at least 10% in
aggregate principal amount of the then Outstanding Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(g) The Company shall give notice to all Holders in accordance
with Section 107 of each resignation and each removal of the Trustee and each
appointment of a successor Trustee. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
SECTION 510. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and the successor Trustee and the Company shall enter into a
supplemental indenture, pursuant to Section 601 hereof, evidencing
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the appointment of the successor Trustee. Thereupon, the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee. On request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee. The retiring
Trustee shall promptly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder, subject to the
Lien, if any, provided for in Section 507. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article Five and under the TIA.
Notwithstanding the replacement of the Trustee pursuant to this
Section 510, the Company's obligations under Section 507 hereof shall continue
for the benefit of the retiring Trustee in connection with its rights and duties
hereunder prior to such replacement.
SECTION 511. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article Five, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
Trustee by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated such Notes.
SECTION 512. Preferential Collection of Claims Against the
Company. (a) The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
(b) For the purposes of interpreting TIA (S) 311 under this
Section 512 only:
(1) The term "cash transaction" means any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other orders
drawn upon banks or bankers and payable upon demand; and
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(2) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or incurred
by the Company for the purpose of financing the purchase, processing,
manufacturing, shipment, storage or sales of goods, wares or merchandise and
which is secured by documents evidencing title to, possession of, or a Lien
upon, the goods, wares or merchandise or the receivables or proceeds arising
from the sale of the goods, wares or merchandise previously constituting the
security, provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with the Company arising from the
making, drawing, negotiation or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 513. Reports by Trustee. (a) Within 60 days after May 15
of each year, the Trustee shall transmit by mail to all Holders of Notes, as
provided in Subsection (c) of this Section, a brief report dated as of such May
15 if and to the extent required under TIA (S) 313(a).
(b) The Trustee shall also comply with TIA (S) 313(b) and (c).
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Notes are listed, and with the SEC and the Company. The Company will
notify the Trustee when the Notes are listed on any stock exchange.
(d) The Trustee shall report the names of all Holders to the New
Jersey Division, the New Jersey Commission, the Nevada Control Board, the Nevada
Commission and, if requested in writing by the Company, each other Gaming
Authority so requested by the Company promptly after the initial issuance of the
Notes. The Trustee shall provide to the New Jersey Division, the New Jersey
Commission, the Nevada Control Board, the Nevada Commission and, if requested in
writing by the Company, each other Gaming Authority so requested by the Company
copies of all written communications from the Trustee to all Holders, notice of
any Default, notice of any transfer or assignment of the Trustee's rights under
this Indenture within five Business Days thereof, a copy of any amendment to
this Indenture or the Notes and notice of any rescission, annulment or waiver in
respect of an Event of Default under this Indenture.
(e) The Trustee shall cooperate with the Company in providing
information relating to the Notes or the Holders to any Governmental Authority
pursuant to any Legal Requirement.
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ARTICLE SIX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
67
SECTION 601. Without Consent of Holders. The Company, when duly
authorized by resolutions of its Board of Directors, and the Trustee, may amend
or supplement this Indenture or the Notes for the benefit of the Holders without
notice to or consent of any Holder:
(1) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the Company
contained herein and in the Notes;
(2) to evidence the succession of another Trustee, and the
assumption by any such successor Trustee of the obligations of the
Trustee hereunder;
(3) to add to the covenants of the Company, for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company;
(4) to cure any ambiguity, to correct or supplement any
provision herein or in the Notes which may be inconsistent with any
other provision herein or to make any other provisions with respect to
matters or questions arising under this Indenture or the Notes which
shall not be inconsistent with the provisions of this Indenture or the
Notes;
(5) to provide for uncertificated Notes in addition to or in
place of certificated Notes; or
(6) to comply with any requirement of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA, as
contemplated by Section 109.
Notwithstanding the above, the Trustee and the Company may not make any change
that adversely affects the legal rights of any Holder hereunder or under the
Notes.
SECTION 602. With Consent. Subject to Section 408, the Company,
when duly authorized by resolution of its Board of Directors, and the Trustee
may amend this Indenture or the Notes with the written consent of the Holders of
at least a majority in principal amount of the then Outstanding Notes.
Notwithstanding the provisions of this Section 602, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 413, may not:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or change the time for or the manner of,
payment of interest, including Defaulted Interest, on any Note;
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(3) reduce the principal, or change the Stated Maturity for the
payment of principal, of any Note, or reduce the Redemption Price of or
change the date on which any Note may be subject to redemption or alter
any other provision with respect to redemption pursuant to the terms of
the Notes;
(4) waive a Default in the payment of the principal of or
interest on or redemption of any Note;
(5) make any Note payable in money other than that stated in the
Note; or
(6) make any change in Section 408, 413 or this Section 602.
It shall not be necessary under this Section 602 for the consent
of the Holders to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
An amendment under Section 601 or 602 may not make any change
that adversely affects the rights under Article Ten of any holder of an issue of
Senior Indebtedness unless the holders of such issue pursuant to its terms
consent to the change or the change is otherwise permissible.
After an amendment under this Section 602 becomes effective, the
Company shall mail to Holders a notice briefly describing the amendment.
SECTION 603. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Notes shall be set forth in a supplemental
indenture that complies with the TIA as then in effect.
SECTION 604. Revocation and Effect of Consents. (a) Until an
amendment or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by the Holder and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder's Note,
even if notation of the consent is not made on any Note. However, any such
Holder or subsequent Holder may revoke the consent as to his Note or portion of
a Note if the Trustee receives written notice of revocation before the date on
which the Trustee receives an Officers' Certificate from the Company certifying
that the Holders of the requisite principal amount of Notes have consented to
such amendment or waiver. An amendment or waiver becomes effective upon receipt
by the Trustee of such Officers' Certificate and the written consents from the
Holders of the requisite percentage in principal amount of Notes.
(b) The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment or waiver. If a record date is fixed, then notwithstanding the second
and third sentence of paragraph (a) of this
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Section 604, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to
such amendment or waiver or 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 120 days after such record date.
(c) After an amendment or waiver becomes effective, it shall
bind every Holder.
SECTION 605. Notation on or Exchange of Notes; Effect of
Supplemental Indenture. If an amendment, supplement or waiver changes the terms
of the Notes, the Trustee may require the Holders to deliver the Notes to the
Trustee. The Trustee may place an appropriate notation on the Notes concerning
such changed terms and return them to the Holders and the Trustee may place an
appropriate notation on any Note thereafter authenticated. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Notes
shall issue and the Trustee shall authenticate new Notes that reflect such
changed terms.
Upon the execution of any supplemental indenture under this
Article Six, this Indenture and, to the extent applicable, the Notes, shall be
modified thereby, and every Holder of any Note authenticated and delivered
hereunder, whether before or after the execution of such supplemental indenture,
shall be bound by this Indenture, as so amended, modified or supplemented.
SECTION 606. Trustee Protected. The Trustee shall sign all
supplemental indentures, except that the Trustee need not sign any supplemental
indenture that adversely affects its rights. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive
and, subject to Section 501, shall be fully protected in relying upon, an
Officers' Certificate of the Company and an Opinion of Counsel as conclusive
evidence that such amendment or supplemental indenture is authorized or
permitted by this Indenture, that it is not inconsistent herewith, that all
conditions precedent to the execution thereof have been met, that it will be
valid and binding upon the Company in accordance with its terms and that, after
the execution thereof, the Company will not be in Default and no Event of
Default will have occurred and be continuing.
ARTICLE SEVEN
COVENANTS
SECTION 701. Payment of Notes. The Company shall pay the
principal of and interest on the Notes on the dates and in the manner provided
in the Notes. An installment of principal or interest shall be considered paid
on the date due if the Trustee or Paying Agent holds
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on that date money designated for and sufficient to pay such installment and is
not prohibited from paying such money to the Holders pursuant to the terms of
this Indenture.
The Company shall pay interest on overdue principal at the rate
borne by the Notes; it shall pay interest on overdue installments of interest at
the same rate, to the extent lawful.
SECTION 702. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for presentation for payment, registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will 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 Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations or surrenders may be made or served
at the Corporate Trust Office in the City of St. Paul as the office of the
Company for purposes of this paragraph. The Company may also from time to time
designate one or more other offices or agencies where the Notes 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 Company of its obligation to maintain an office
or agency in the Borough of Manhattan, The City of New York where Notes may be
surrendered for presentation for payment, for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company will 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.
SECTION 703. Money for Note Payments to be Held in Trust. If the
Company (or any other obligor on the Notes) or any Affiliate of the Company (or
any such other obligor) shall at any time act as the Company's Paying Agent, it
will, on or before each due date of the principal of or interest on any of the
Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of or interest on any Notes,
appoint a lead Paying Agent and deposit with such lead Paying Agent a sum
sufficient to pay the principal or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal or interest,
and (unless such lead Paying Agent is the Trustee) the Company will promptly
notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
will agree with the Trustee,
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subject to the provisions of this Section 703, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of
or interest on the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Notes including the Company) in the making of any
payment in respect of principal or interest; and
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
For the purpose of obtaining the satisfaction and discharge of
this Indenture pursuant to Article Three or for any other purpose, the Company
may at any time pay, or by a Company Request direct any Paying Agent to pay, to
the Trustee all sums held in trust by the Company or such Paying Agent,
respectively. Such sums are to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent. Upon
any such payment, the Company and any such Paying Agent shall be released from
all further liability with respect to such money.
SECTION 704. Limitation on Restricted Payments. (a) The Company
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, (i) declare or pay any dividend on or make any distribution or
payment on its Capital Stock or to its stockholders (in their capacity as
stockholders) (other than dividends or distributions payable solely in its
Qualified Capital Stock and, in the case of a Restricted Subsidiary, dividends
or distributions payable to the Company or a Wholly Owned Subsidiary), (ii)
purchase, redeem or otherwise acquire or retire for value, any shares of Capital
Stock of the Company (except, in the case of a Restricted Subsidiary, from the
Company) or any Subsidiary of the Company (other than a Wholly Owned
Subsidiary), (iii) acquire, retire or redeem any Indebtedness of or otherwise
make any Investment in any Affiliate of the Company (other than a Wholly Owned
Subsidiary) or (iv) purchase, redeem or otherwise acquire or retire for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking fund
or mandatory redemption payment, Indebtedness of the Company or of any Affiliate
of the Company that is subordinated (whether pursuant to its terms or by
operation of law) in right of payment to the Notes and which is scheduled to
mature (after giving effect to any and all unconditional (other than as to the
giving of notice) options to extend the maturity thereof) on or after the
maturity date of the Notes, if at the time of any such declaration,
distribution, payment, purchase, redemption, acquisition or retirement
(collectively, the "Restricted Payments") and after giving effect thereto
(including, without limitation, in calculating on a pro forma basis, as if such
proposed Restricted Payment had been made, the Consolidated Fixed Charge
Coverage Ratio of the Company for purposes of clause (y) below):
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(x) any Event of Default shall have occurred and be continuing;
or
(y) the Company could not incur at least $1.00 of additional
Indebtedness pursuant to Section 705(a); or
(z) the aggregate amount of Restricted Payments for all such
purposes made subsequent to September 28, 1994 would exceed an amount
equal to the sum of (i) 50% of aggregate Consolidated Net Income (or if
such aggregate Consolidated Net Income shall be a deficit, minus 100% of
such deficit) accrued on a cumulative basis in the period commencing on
September 28, 1994 and ending on the last day of the fiscal quarter
immediately preceding the relevant Transaction Date, (ii) the aggregate
net proceeds, including cash and the fair market value of Property other
than cash (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive, and evidenced by a
resolution of such Board of Directors filed with the Trustee) received
by the Company from the issuance or sale to any Person (other than a
Subsidiary of the Company) during the period commencing on September 28,
1994 and ending on such Transaction Date of Qualified Capital Stock of
the Company (other than Capital Stock of the Company issued upon
conversion of or in exchange for securities of the Company, except to
the extent of any payment to the Company in addition to the securities
of the Company surrendered) and (iii) to the extent not included in (ii)
above, the aggregate net proceeds, including cash and the fair market
value of Property other than cash (as determined in good faith by the
Board of Directors of the Company, whose determination shall be
conclusive, and evidenced by a resolution of such Board of Directors
filed with the Trustee) received by the Company from the issuance or
sale to any Person (other than a Subsidiary of the Company) during the
period commencing on September 28, 1994 and ending on such Transaction
Date, of any debt securities evidencing Indebtedness of the Company or
of any Redeemable Stock of the Company, if, and to the extent that, as
of such Transaction Date such debt securities or Redeemable Stock, as
the case may be, have been converted into, exchanged for or satisfied by
the issuance of Qualified Capital Stock of the Company; provided,
however, that, if the Company and its Restricted Subsidiaries have made
any Investments during the period commencing on September 28, 1994 and
ending on such Transaction Date, the proceeds of which Investments were
used, directly or indirectly, by the recipients thereof to purchase
Qualified Capital Stock of the Company or other securities that have
been converted into, exchanged for or satisfied by the issuance of
Qualified Capital Stock of the Company, the aggregate amount determined
under clauses (ii) and (iii) shall be net of the aggregate amount of
such Investments.
(b) The provisions of this Section 704 shall not prohibit:
(i) the Company or any Restricted Subsidiary from paying a
dividend on its own Capital Stock within 60 days after the declaration
thereof if, on the date when the dividend was declared, the Company or
such Restricted Subsidiary, as the case may be,
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could have paid such dividend in compliance with the other provisions of
this Section 704;
(ii) the Company or any Restricted Subsidiary from redeeming or
repurchasing its securities in the event that the holder of such
securities has failed to qualify or to be found suitable or otherwise
eligible under a Gaming Jurisdiction Law to remain as a holder of such
securities;
(iii) Holdings from redeeming, or the Company or any Restricted
Subsidiary from purchasing, for an amount not exceeding $750,000 in the
aggregate, all or a portion of the shares of preferred stock, Series A,
of Holdings outstanding on the Effective Date; or
(iv) the Company and its Restricted Subsidiaries from acquiring shares
of Capital Stock of the Company solely in exchange for other shares of
Capital Stock of the Company that is not Redeemable Stock and that is
not exchangeable for Redeemable Stock whether upon conversion or
otherwise;
provided, however, that the aggregate amount of any payment, dividend,
acquisition, redemption or distribution made by the Company or any Restricted
Subsidiary pursuant to subsection (b)(i) or (ii) shall be included in any
computation under Section 704(a) of the aggregate amount of Restricted Payments
made by the Company and its Restricted Subsidiaries, and the aggregate amount of
any payment, dividend, acquisition, redemption or distribution made by the
Company or any Restricted Subsidiary pursuant to subsection (b)(iii) or (iv)
shall not be included in any such computation.
(c) So long as no Event of Default shall have occurred and be
continuing, the provisions of this Section 704 shall not prohibit the Company
and its Restricted Subsidiaries from:
(i) acquiring shares of Capital Stock of the Company (A) to
eliminate fractional shares, (B) from an employee who has purchased or
otherwise acquired shares of Capital Stock of the Company under an
employee stock option or employee stock purchase agreement or other plan
or agreement reserving to the Company the option to repurchase the
shares but in no event for a price greater than the higher of fair
market value or the price at which such securities were sold by the
Company and (C) pursuant to a court order, provided that the aggregate
consideration paid by the Company and its Restricted Subsidiaries
pursuant to subclauses (A) and (B) above shall not exceed $250,000 in
any fiscal year of the Company;
(ii) declaring or paying any dividend on, or redeeming or
repurchasing, shares of the Series B Preferred Stock outstanding on the
Effective Date;
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(iii) redeeming or purchasing the Preferred Share Purchase
Rights at a price not exceeding $0.01 per right and $2,000,000 in the
aggregate;
(iv) acquiring, retiring or redeeming any Indebtedness of, or
otherwise making any Investment in, Tropicana Enterprises in connection
with the Tropicana Security Deposit or the Tropicana Loan, except to the
extent that the aggregate amount of any such Investment in Tropicana
Enterprises in connection with the Tropicana Loan exceeds the
outstanding principal amount owed to third parties under the Tropicana
Loan at the Effective Date;
(v) purchasing the Tropicana or the Jaffe Partnership Interest;
or
(vi) making any Restricted Payment not otherwise permitted by
this Section 704, provided that the aggregate amount of Restricted
Payments made pursuant to this clause (vi) from and after the Effective
Date shall not exceed $30,000,000;
provided, however, that the aggregate amount of any payment, dividend,
acquisition, redemption or distribution made by the Company or any Restricted
Subsidiary pursuant to subsection (c)(i), (ii), (iii) or (vi) shall be included
in any computation under Section 704(a) of the aggregate amount of Restricted
Payments made by the Company and its Restricted Subsidiaries, and the aggregate
amount of any payment, dividend, acquisition, redemption or distribution made by
the Company or any Restricted Subsidiary pursuant to subsection (c)(iv) or (v)
shall not be included in any such computation.
SECTION 705. Limitation on Indebtedness. (a) The Company will
not, and will not permit any Restricted Subsidiary to, create, incur, assume,
guarantee or otherwise become liable with respect to, or become responsible for
the payment of, any Indebtedness unless, after giving effect thereto, the
Consolidated Fixed Charge Coverage Ratio of the Company is greater than 1.9 to
1.
(b) Notwithstanding the foregoing, the Company and its
Restricted Subsidiaries may incur, create, assume, guarantee or otherwise become
liable with respect to any or all of the following: (i) Indebtedness not
otherwise permitted pursuant to clauses (ii) through (xi) below in an aggregate
amount at any time outstanding of up to $20,000,000; (ii) Indebtedness evidenced
by the Initial Notes (and any Exchange Notes issued in respect thereof), the 11%
Notes or the 13 3/4% Notes; (iii) Indebtedness of the Company and its Restricted
Subsidiaries remaining outstanding immediately after the issuance of the Initial
Notes and application of the proceeds thereof; (iv) Indebtedness to the Company
or to a Restricted Subsidiary; (v) Indebtedness incurred by the Company or any
Restricted Subsidiary in connection with (a) the construction of any new
facility or facilities related to the gaming business or any related business of
the Company or any Restricted Subsidiary or in connection with the expansion by
the Company or any Restricted Subsidiary of any of its existing facilities;
provided, however, that the aggregate
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principal amount of all such Indebtedness incurred on and subsequent to the
Effective Date shall not exceed $100,000,000, (b) the maintenance, refurbishment
or replacement by the Company or any Restricted Subsidiary in the ordinary
course of business of assets related to the gaming business or any related
business of the Company or any Restricted Subsidiary or (c) the acquisition of
slot machines, gaming tables or other similar gaming equipment; (vi)
Indebtedness under any Credit Facilities in an aggregate amount of up to
$350,000,000; (vii) Indebtedness incurred to purchase the Tropicana or the Jaffe
Partnership Interest or in connection with any Tropicana Loan Refinancings;
(viii) Indebtedness incurred in respect of the Tropicana Security Deposit; (ix)
Indebtedness under Currency Agreements or Interest Swap Obligations (including
any Interest Swap Obligation, the purpose of which is to alter or replace, or
lengthen or shorten the maturity of, any Interest Swap Obligation previously
incurred pursuant to this clause (ix)), provided that such Currency Agreements
or Interest Swap Obligations are related to payment obligations on Indebtedness
otherwise permitted by this Section 705; (x) Indebtedness incurred in respect of
performance bonds, bankers' acceptances, letters of credit and surety bonds
provided by the Company or any Restricted Subsidiary in the ordinary course of
business; and (xi) Indebtedness ("Replacement Indebtedness") the proceeds of
which are used to refinance (a) all or a portion of the Initial Notes (and any
Exchange Notes issued in respect thereof), (b) any other permitted Indebtedness
of the Company and its Restricted Subsidiaries or (c) permitted successor or
replacement Indebtedness, in each case in a principal amount (or, if such
Replacement Indebtedness does not require cash payments prior to maturity, with
an original issue price) not to exceed an amount equal to the aggregate of the
principal amount plus any prepayment penalties, premiums and accrued and unpaid
interest on the Indebtedness so refinanced and customary fees, expenses and
costs related to the incurrence of such Replacement Indebtedness, provided that,
in the case of this clause (xi), (1) if the Notes are refinanced in part, such
Replacement Indebtedness is expressly made pari passu or subordinate in right of
payment to the remaining Notes, (2) if the Indebtedness to be refinanced is
subordinate in right of payment to the Notes, such Replacement Indebtedness is
subordinate in right of payment to the Notes at least to the extent that the
Indebtedness to be refinanced is subordinate to the Notes, (3) if the
Indebtedness to be refinanced is pari passu in right of payment to the Notes,
such Replacement Indebtedness is pari passu or subordinate in right of payment
to the Notes at least to the extent that the Indebtedness to be refinanced is
pari passu to the Notes and (4) if the Notes are refinanced in part or if the
Indebtedness to be refinanced is subordinate in right of payment to the Notes
and scheduled to mature after the maturity date of the Notes, such Replacement
Indebtedness determined as of the date of incurrence does not mature prior to
the final scheduled maturity date of the Notes and the Average Life of such
Replacement Indebtedness is equal to or greater than the Average Life of the
remaining Notes.
SECTION 706. Limitation on Liens. The Company will not, directly
or indirectly, create, incur, assume or suffer to exist, or permit any
Restricted Subsidiary to create, incur, assume or suffer to exist, any Lien on
or with respect to any of its Property or Capital Stock, whether now owned or
hereafter acquired, or assign, or permit any Restricted Subsidiary
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to assign, any right to receive income, other than: (i) Liens existing as of the
date of this Indenture or arising hereafter pursuant to the Credit Facility;
(ii) Liens securing Senior Indebtedness; (iii) Liens in favor of the Company;
(iv) Liens securing Indebtedness (including, without limitation, any obligation,
contingent or otherwise, for borrowed money of any Person secured by any Lien in
respect of Property of the Company or any Restricted Subsidiary, even though
neither the Company nor any Restricted Subsidiary has assumed or become liable
for payment of such obligation) of the Company (other than Senior Indebtedness)
or any Restricted Subsidiary, provided that, with respect to any Indebtedness
that is pari passu with the Notes, the Notes are secured by Liens equal and
ratable to such Liens and, with respect to Indebtedness that is subordinated to
the Notes, the Notes are secured by Liens that are senior to such Liens; and (v)
Permitted Liens. Notwithstanding the foregoing, this provision shall not be
applicable to any Lien on Capital Stock issued by any Restricted Subsidiary that
holds, directly or indirectly, a license, or is a holding company, under the
Nevada Act.
SECTION 707. Limitation on Payment Restrictions Affecting
Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction which by its terms expressly
restricts the ability of any Restricted Subsidiary to (i) pay dividends or make
any other distributions on such Restricted Subsidiary's Capital Stock or pay any
Indebtedness owed to the Company or any Restricted Subsidiary (except that
payment of dividends by Adamar of Nevada may be suspended if required by Section
6.A. of the Stock Pledge), (ii) make any loans or advances to the Company or any
Restricted Subsidiary or (iii) transfer any of its Property to the Company or
any Restricted Subsidiary, except that (A) clauses (ii) and (iii) shall be
deemed not to apply to any such encumbrances or restrictions contained in any
agreement or instrument (a) relating to any Indebtedness of the Company or any
Restricted Subsidiary existing on the Effective Date or to the Credit Facility;
(b) relating to any Property acquired by the Company or any Restricted
Subsidiary after the Effective Date, provided that such encumbrance or
restriction relates only to the Property which is acquired; (c) relating to (x)
any industrial revenue or development bonds, (y) any obligation of the Company
or any Restricted Subsidiary incurred in the ordinary course of business to pay
the purchase price of Property acquired by the Company or such Restricted
Subsidiary and (z) any lease of Property by the Company or any Restricted
Subsidiary in the ordinary course of business, provided that such encumbrance or
restriction relates only to the Property which is the subject of such industrial
revenue or development bond, such Property purchased or such Property leased and
any such lease, as the case may be; (d) relating to any Indebtedness of any
Restricted Subsidiary at the date of acquisition of such Restricted Subsidiary
by the Company or any Restricted Subsidiary, provided that such Indebtedness was
not incurred in connection with or in anticipation of such acquisition; and (e)
replacing or refinancing agreements or instruments referred to in clauses (a),
(b) and (c), provided that the provisions relating to such encumbrance or
restriction contained in such replacing or refinancing agreement or instrument
are no more restrictive than the provisions relating to such encumbrance or
restriction contained in the original agreement or instrument, (B) clauses (i),
(ii) and (iii) shall be deemed not to apply to any such encumbrances or
restrictions imposed by the New Jersey Commission, the New Jersey
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Division, the Nevada Commission, the Nevada Control Board or any other Gaming
Authority and (C) clause (iii) shall be deemed not to apply to the transfer of
Property that is used to secure Indebtedness, provided that such Indebtedness is
permitted to be incurred under the Indenture.
SECTION 708. Limitation on Capital Stock of Restricted
Subsidiaries. The Company will not (i) permit any of its Restricted Subsidiaries
to issue any Capital Stock to any Person (other than the Company or any Wholly
Owned Subsidiary) that shall entitle the holder of such Capital Stock to a
preference in right of payment in the event of liquidation, dissolution or
winding-up of such Restricted Subsidiary or with respect to dividends of such
Restricted Subsidiary, (ii) permit any Subsidiary that holds a license under the
Nevada Gaming Control Act to issue any such Capital Stock to the Company or any
Wholly Owned Subsidiary unless and until the covenant contained in clause (iii)
of this Section 708 has been approved by the Nevada Commission, all of the
Securities have been exchanged for Exchange Notes pursuant to an Exchange Offer
which has been approved by the Nevada Commission pursuant to a "shelf approval"
or otherwise, or the Shelf Registration Statement, which has been approved by
the Nevada Commission pursuant to a "shelf approval" or otherwise, has been
declared effective under the Securities Act or (iii) permit any Person (other
than the Company or any Wholly Owned Subsidiary) to hold any such Capital Stock.
SECTION 709. Transactions with Affiliates. The Company will not,
and will not permit any of its Restricted Subsidiaries to, enter into any
transaction (including, without limitation, the purchase, sale or exchange of
Property, the making of any Investment, the giving of any guarantee or the
rendering of any service) with any Affiliate of the Company or any Subsidiary of
the Company (other than a Restricted Subsidiary) unless (i) the Board of
Directors of the Company believes, in its reasonable good faith judgment, based
on full disclosure of all relevant facts and circumstances, that such
transaction is in the best interests of the Company or such Restricted
Subsidiary and (ii) such transaction is on terms no less favorable to the
Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm's length transaction with an entity that is not an Affiliate of
the Company or such Restricted Subsidiary, provided that this Section 709 shall
not be applicable for so long as the Company's common stock is listed for
trading on the New York Stock Exchange or the American Stock Exchange or is
quoted on the National Association of Securities Dealers Automated Quotation
System and designated as a "national market system security."
SECTION 710. Restriction on Incurrence of Certain Indebtedness.
The Company will not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
Senior Indebtedness and senior in any respect in right of payment to the Notes.
The Company agrees that the Notes will not be subordinate in right of payment to
any other Indebtedness of the Company, other than Senior Indebtedness.
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SECTION 711. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
repurchase each such Holder's Notes pursuant to the offer described in
paragraphs (b) and (c) below (the "Change of Control Offer") at a purchase price
in cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of repurchase.
(b) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder and to the Trustee stating:
(1) that the Change of Control Offer is being made pursuant to
this Section 711, that such Holder has the right to require the Company to
repurchase such Holder's Notes at a purchase price in cash equal to the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase and that all Notes tendered will be accepted for payment;
(2) the purchase price and the purchase date (which shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making repurchase
payments, any Note accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to
the Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day prior to the Change of Control Payment
Date; provided, however that in the case of Notes registered in the name of the
Depository Trust Company or its nominee, a Note will be deemed surrendered at
the time that it is transferred by DTC to the account of the Paying Agent by
book-entry credit if such Note is physically transferred to the Paying Agent
within five Business Days after such transfer by book-entry credit in accordance
with DTC's normal procedures;
(6) that Holders whose Notes are purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; and
(7) the CUSIP number, if any, relating to the Notes to be
repurchased.
The notice to Holders shall contain all instructions and
materials necessary to enable such Holders to tender Notes.
(c) On the Change of Control Payment Date, the Company shall (i)
accept for
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payment Notes or portions thereof tendered pursuant to the Change of Control
Offer, (ii) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so tendered and (iii) deliver or cause to
be delivered to the Trustee Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof tendered to the Company. The
Paying Agent shall promptly mail to the Holder of Notes so accepted payment in
an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date. For purposes of this Section 711, only
the Trustee or its agent shall act as the Paying Agent.
SECTION 712. SEC Reports. The Company shall file with the
Trustee copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) that the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act or otherwise within five
days after such annual reports, information, documents and other reports are
required to be filed with the SEC and, upon request of any Holder, shall
promptly mail such annual reports, information, documents and other reports to
such Holder; provided, however, that if the Company is not subject to Section 13
or 15(d) of the Exchange Act, the Company shall nonetheless file with the SEC
and the Trustee on a timely basis, and, upon request of any Holder, promptly
mail to such Holder, the annual reports, information, documents and other
reports that the Company would be required to file if the Company were subject
to the requirements of Section 13 or 15(d) of the Exchange Act. The Company
shall comply with the provisions of TIA (S) 314(a).
SECTION 713. Compliance Certificates. The Company will deliver
to the Trustee, within 90 days after the end of each fiscal quarter and within
120 days after the end of each fiscal year, which is currently the 52 or 53
weeks ended on the Thursday nearest December 31, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture and
further stating, as to each such officer signing such certificate, that to the
best of his knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture applicable to it and is not
in default in the performance or observance of any of the terms, provisions and
conditions hereof applicable to it (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he may
have knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest on the Notes are prohibited.
The Company will deliver to the Trustee forthwith upon becoming
aware of any Default, Event of Default or default in the performance of any
covenant, agreement or condition contained in this Indenture, an Officers'
Certificate specifying such Default, Event of Default or
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default.
SECTION 714. Continued Existence and Rights. Subject to Article
Eight, the Company will, and the Company will cause each of its Restricted
Subsidiaries and Significant Subsidiaries to, do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as a
corporation and its rights and franchises; provided, however, that nothing in
this Section 714 shall prevent the loss of the corporate existence of any such
Subsidiary or any such right or franchise if such loss is, in the judgment of
the Company both desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and not disadvantageous in any material respect
to the Holders.
SECTION 715. Maintenance of Properties and Other Matters. The
Company will, and will cause each of its Subsidiaries to, maintain its
Properties in good working order and condition and make all necessary repairs,
renewals and replacements; provided, however, that, subject to Article Eight,
nothing in this Section 715 shall prevent the Company or any of its Subsidiaries
from discontinuing the operation and maintenance of any of its Properties, if
such discontinuance is, in the judgment of the Company or the Subsidiary, as the
case may be, both desirable in the conduct of its respective business and not
disadvantageous in any material respect to the Holders.
The Company will insure and keep insured, and will cause each
Subsidiary to insure and keep insured, with financially sound and reputable
insurers, so much of their respective Properties and in such amounts as is
usually and customarily insured by companies engaged in a similar business with
respect to Properties of a similar character against loss by fire and the
extended coverage perils. None of the Company or any of its Subsidiaries will
maintain a system of self insurance in lieu of or in combination with the
foregoing, provided that deductibles under the insurance policy or policies of
the Company and its Subsidiaries shall not be considered to be self insurance as
long as such deductibles accord with financially sound and approved practices of
companies owning or operating Properties of a similar character and maintaining
similar insurance coverage. The Trustee shall not be required to see that such
insurance is effected or maintained.
The Company will keep, and will cause each of its Subsidiaries
to keep, proper books and records of accounts in which full and correct entries
will be made of all its business transactions in accordance with generally
accepted accounting principles. The Company shall cause the books and records of
accounts of the Company and its Subsidiaries to be examined, either on a
consolidated or on an individual basis, by one or more firms of independent
public accountants not less frequently than annually. The Company shall, and
shall cause each of its Subsidiaries to, prepare its financial statements in
accordance with generally accepted accounting principles.
The Company will, and will cause each of its Subsidiaries to,
comply with all Legal Requirements and to obtain any licenses, permits,
franchises or other governmental
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authorizations necessary to the ownership or operation of its Properties or to
the conduct of its business including, without limitation, all Gaming Licenses.
Notwithstanding the foregoing provisions in this Section 715,
failure by the Company or any of its Subsidiaries to comply with such provisions
shall not be deemed to be a breach of such provisions to the extent that such
failure would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.
SECTION 716. Taxes and Claims. The Company will, and will cause
each of its Subsidiaries to, pay (or, if appropriate, withhold and pay over)
prior to delinquency:
(1) all taxes, assessments and governmental charges or levies
imposed upon it or its Property (or that it is required to withhold and pay
over) and
(2) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons which if unpaid might result in
the creation of a Lien upon its Properties;
provided, however, that the foregoing need not be paid while being contested in
good faith (and by appropriate proceedings in the opinion of the Company's
independent counsel in any case involving more than $500,000) if (1) adequate
provision for the foregoing has been made and (2) the failure to make such
payments is not adverse in any material respect to the Holders.
SECTION 717. Waiver of Stay, Extension and Usury Laws. The
Company 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, and will actively resist any attempts to claim the
benefit of, any stay or extension law or any usury or other law that would
prohibit or forgive the Company from paying all or any portion of the principal
of or interest on the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or that may affect the covenants or the performance
of this Indenture; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will 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 718. Investment Company Act. The Company shall not, and
the Company shall not permit any Subsidiary of the Company to, become an
investment company within the meaning of the Investment Company Act as such
statute and the regulations thereunder and any successor statute or regulations
thereto may from time to time be in effect, unless the Company or such
Subsidiary is exempted under the Investment Company Act from any requirement to
register as an "investment company".
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ARTICLE EIGHT
MERGER, CONSOLIDATION AND SALE OF ASSETS
SECTION 801. When the Company May Merge, etc. (a) The Company
shall not consolidate or merge with or into any Person, or transfer, sell, lease
or otherwise dispose of all or substantially all of its assets as an entirety to
any Person unless:
(1) the entity formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale or transfer shall have
been made, is a corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia;
(2) (x) the corporation formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale or
transfer shall have been made, unconditionally assumes by supplemental indenture
all the obligations of the Company under the Notes and this Indenture and (y)
such corporation has all Gaming Licenses required to operate the casino hotels
to be owned by the surviving entity;
(3) immediately before and immediately after giving effect to
such transaction, no Default or Event of Default exists;
(4) immediately after giving effect to such transaction on a pro
forma basis, as if such transaction had occurred, the Consolidated Net Worth of
the surviving entity (including the Company) would be at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction; and
(5) immediately after giving effect to such transaction
involving the incurrence by the Company or any Subsidiary, directly or
indirectly, of additional Indebtedness (and treating any Indebtedness not
previously an obligation of the Company or any of its Subsidiaries incurred in
connection with or as a result of such transaction as having been incurred at
the time of such transaction), the Company (if it is the continuing corporation)
or such other entity could incur at least $1.00 of additional Indebtedness
pursuant to Section 705(a).
(b) In connection with any consolidation, merger, transfer or
lease contemplated by this provision, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate of the Company and Opinion of Counsel stating
that such consolidation, merger, transfer or lease and the supplemental
indenture in respect thereto comply with this section and that all conditions
precedent herein provided for relating to such transaction have been complied
with and an Accountants' Certificate with respect to compliance with clauses (4)
and (5) of Section 801(a).
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SECTION 802. Successor Corporation Substituted. Upon any
consolidation or merger or any transfer of all or substantially all of the
assets of the Company in accordance with Section 801, the successor corporation
formed by such consolidation or into which the Company is merged or to which
such transfer is made, shall succeed to, and be substituted for, and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor corporation had been named as the Company herein.
When a successor corporation assumes all of the obligations of the Company under
the Notes and this Indenture pursuant to this Article Eight, the applicable
predecessor corporation shall be released from the obligations so assumed.
ARTICLE NINE
REDEMPTION
SECTION 901. Notices to Trustee. If the Company desires to
redeem Notes in whole or in part in accordance with the terms hereof or thereof,
it shall notify the Trustee in writing of the Redemption Date and the principal
amount of Notes to be so redeemed.
If the Company desires to credit Notes it has not previously
delivered to the Trustee for cancellation against the principal amount of Notes
to be redeemed, it shall so notify the Trustee and it shall deliver the Notes
with the notice.
Except as provided below, the Company shall give each notice
provided for in this Section 901 by a Company Order at least 45 days before the
Redemption Date (except for the notice provided in the event of a Change of
Control pursuant to Section 711 or unless a shorter notice period shall be
satisfactory to the Trustee).
SECTION 902. Selection of Notes to Be Redeemed. If less than all
of the Notes are to be redeemed, the Trustee shall select the Notes to be
redeemed pro rata or by lot or by any other means that the Trustee determines to
be fair and appropriate. The Trustee shall make the selection from the Notes
Outstanding and not previously called for redemption. Notes 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
amount of Notes that have denominations larger than $1,000. Provisions of this
Indenture that apply to Notes called for redemption in whole also apply to Notes
called for redemption in part.
SECTION 903. Notice of Redemption. At least 30 days but not more
than 60 days before a Redemption Date, the Company shall give notice of
redemption, mailed by first-class mail, to each Holder whose Notes are to be
redeemed at such Holders' last address as it appears upon the Register.
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The notice shall identify the Notes to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(5) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the Redemption Date and the only remaining right of the Holders is to receive
payment of the Redemption Price, together with accrued interest to the
Redemption Date, upon surrender to the Trustee of the Notes;
(6) if any Note is being redeemed in part, the portion of the
principal amount (in integral multiples of $1,000) of such Note to be redeemed
and that, on and after the Redemption Date, upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed Portion thereof will
be issued in the name of the Holder thereof;
(7) the provision of the Notes or this Indenture pursuant to
which Notes are being redeemed; and
(8) the CUSIP number, if any, relating to the Notes to be
redeemed.
Pursuant to a Company Request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense.
SECTION 904. Effect of Notice of Redemption. Once notice of
redemption is given, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender to the Paying Agent,
such Notes shall be paid at the Redemption Price plus accrued interest to the
Redemption Date.
SECTION 905. Deposit of Redemption Price. Prior to the
Redemption Date, the Company shall deposit with the Paying Agent money
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be redeemed on the Redemption Date other than Notes or portions thereof called
for redemption on the Redemption Date that have been delivered by the Company to
the Trustee for cancellation.
SECTION 906. Notes Redeemed in Part. Upon surrender of a Note
that is
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redeemed in part, the Trustee shall authenticate for the Holder a new Note equal
in principal amount to the unredeemed portion of the Note surrendered.
SECTION 907. Redemption Pursuant to Gaming Jurisdiction Law. (a)
Notwithstanding the other provisions of this Article Nine, if the New Jersey
Commission does not waive the requirement that a Holder or beneficial owner of
Notes must be licensed or found qualified or suitable to hold or own the Notes
under the New Jersey Act, and if such Holder or such beneficial owner does not
become so licensed or is not found qualified or suitable within any time period
specified by the New Jersey Commission or the New Jersey Act, or if the Nevada
Commission finds a Holder or beneficial owner to be unsuitable under the Nevada
Act or regulations of the Nevada Commission, or if any other Gaming Authority
requires that Holders or beneficial owners of Notes be licensed or found
qualified or suitable and such Gaming Authority fails to waive such requirement
or any beneficial owner or Holder of Notes does not become so licensed or is not
found qualified or suitable within the applicable time period, the Company shall
have the right, at its option, (i) to require such Holder or beneficial owner to
dispose of all or a portion of such Holder's or beneficial owner's Notes within
120 days after receipt of notice by such Holder or beneficial owner of such
finding by the New Jersey Commission, the Nevada Commission or such other Gaming
Authority, as the case may be (or such different period as may be prescribed by
the New Jersey Commission or the Nevada Commission or such other Gaming
Authority), or (ii) to call for redemption the Notes of such Holder or
beneficial owner, on not less than 30 nor more than 60 days' notice (or such
different period as may be prescribed by the applicable Gaming Authority).
(b) If such Holder or beneficial owner, having been given the
opportunity by the Company to dispose of such Holder's or beneficial owner's
Notes, shall have failed to do so within the prescribed time period, the Company
shall have the right to redeem such Holder's or beneficial owner's Notes on five
days' notice.
(c) On any redemption of Notes pursuant to this Section 907, the
Redemption Price shall be without premium and the lower of (i) the price at
which such Holder or beneficial owner acquired the Notes, together with (if
permitted by the New Jersey Act or the Nevada Act or other applicable Gaming
Jurisdiction Law, or by the orders of the New Jersey Commission or the Nevada
Commission or other relevant Gaming Authority, as the case may be) accrued
interest to the Redemption Date, and (ii) the lowest closing sale price of the
Notes between the date of the notice given by the New Jersey Commission or the
Nevada Commission or such other Gaming Authority and the date 10 days after such
date, unless a Redemption Price or other payment, remuneration or related terms
or restrictions are required by the New Jersey Commission or the Nevada
Commission or such other Gaming Authority, as the case may be, in which event
such price, terms and restrictions shall be the Redemption Price and terms of
redemption. Each Holder and beneficial owner by accepting a Note agrees to the
provisions of this Section 907 and of Paragraph 7 of the Notes and agrees to
inform the Company upon request made pursuant to this Section 907 of the price
at which such Holder or beneficial owner acquired such Holder's or beneficial
owner's Notes.
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(d) Any redemption notice given by the Company under this
Section 907 shall also be provided to the Trustee at the same time and shall
state (i) that the Notes are being called for redemption as a result of the
Holder's or beneficial owner's status under the New Jersey Act or with the New
Jersey Commission, or under the Nevada Act or with the Nevada Commission, or
under another Gaming Jurisdiction Law or with the relevant Gaming Authority, as
the case may be, (ii) whether accrued interest is payable to the Holder under
the New Jersey Act or the Nevada Act or such other Gaming Jurisdiction Law and,
if so, the information required by paragraph (5) of Section 903 hereof and (iii)
the information required by paragraphs (1), (2), (3), (4), (7) and (8) of
Section 903.
(e) The Trustee shall have no duty to verify a Holder's or
beneficial owner's status under the New Jersey Act or Nevada Act or any other
applicable Gaming Jurisdiction Law or to verify the price at which a Holder or
beneficial owner acquired Notes.
ARTICLE TEN
SUBORDINATION
SECTION 1001. Agreement to Subordinate. The Company agrees, and
each Holder by accepting a Note agrees, that the Indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article Ten, to the prior payment in full of all Senior
Indebtedness and that the subordination is for the benefit of the holders of
Senior Indebtedness, and authorizes and directs the Trustee to take such action
as may be necessary or appropriate to acknowledge or effectuate the
subordination as provided in this Article Ten and appoints the Trustee as
attorney-in-fact for any and all such purposes.
This Article Ten shall remain in full force and effect as long
as any Senior Indebtedness is outstanding.
SECTION 1002. Liquidation; Dissolution; Bankruptcy. Upon any
payment or distribution, whether of cash, securities or other Property, to
creditors of the Company in a liquidation (total or partial), reorganization or
dissolution of the Company, whether voluntary or involuntary, or in a
bankruptcy, reorganization, insolvency, receivership, assignment for the benefit
of creditors, marshalling of assets or similar proceeding relating to the
Company or its Property:
(1) holders of Senior Indebtedness shall be entitled to receive
payment in full, in cash or cash equivalents, of such Senior Indebtedness before
Holders shall be entitled to receive any payment of principal of, or interest
on, or any other distribution with respect to, the Notes; and
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(2) until all Senior Indebtedness is paid in full in cash or
cash equivalents as provided in Section 1002(1), any distribution to which
Holders would be entitled but for this Article Ten shall be made to the holders
of Senior Indebtedness as their interests may appear;
in each case except that Holders may receive securities that are subordinated to
Senior Indebtedness to at least the same extent and pursuant to the same or more
stringent terms as are the Notes.
Upon any distribution of assets of the Company referred to in
this Section 1002, the Trustee and the Holders shall be entitled to rely upon
any order or decree of a court of competent jurisdiction in which such
bankruptcy, reorganization, insolvency, receivership, assignment for the benefit
of creditors, marshalling of assets or similar proceeding is pending for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 1002, and the Trustee and the Holders shall
be entitled to rely upon a certificate of the liquidating trustee or agent or
other such 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 Senior Indebtedness, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 1002. The Trustee shall be entitled to rely
on the delivery to it of a written notice by a Person representing himself to be
a Representative or a holder of Senior Indebtedness, as the case may be, to
establish that such notice has been given by a Representative or a holder of
Senior Indebtedness, as the case may be. In the event that the Trustee
determines, in good faith, that further evidence is required with respect to the
right of any Person, as a holder of Senior Indebtedness, to participate in any
payment or distribution pursuant to this Section 1002, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, as to the extent to
which such Person is entitled to participate in such payment or distribution and
as to other facts pertinent to the rights of such Person under this Section
1002, and, if such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 1003. Default on Senior Indebtedness. No direct or
indirect payment by or on behalf of the Company of principal of or interest on
the Notes, whether pursuant to the terms of the Notes or upon acceleration or
otherwise, shall be made if at the time of such payment there exists a default
in the payment of all or any portion of principal of or interest on Designated
Senior Indebtedness pursuant to which the maturity of such Designated Senior
Indebtedness may be accelerated (and the Trustee has received written notice
thereof) and such default shall not have been cured or waived or the benefits of
this sentence waived by or on behalf of the holders of such Designated Senior
Indebtedness (and the Trustee has received written notice thereof). In addition,
during the continuance of any other event of default with respect to Designated
Senior Indebtedness pursuant to which the maturity of such Designated
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Senior Indebtedness may be accelerated, upon the occurrence of (a) receipt by
the Trustee of written notice from the Representative with respect to, or from
the holders of at least a majority in aggregate principal amount of, such
Designated Senior Indebtedness then outstanding or (b) if such event of default
results from the acceleration of the Notes, such acceleration, no such payment
may be made by the Company upon or in respect of the Notes for a period (a
"Payment Blockage Period") commencing on the earlier of the date of receipt of
such notice by the Trustee or the date of such acceleration and ending 179 days
thereafter (unless such Payment Blockage Period shall be terminated by written
notice to the Trustee from such Representative or such holders). Not more than
one Payment Blockage Period may be commenced with respect to the Notes during
any period of 360 consecutive days; in no event will a Payment Blockage Period
extend beyond 179 days from the date the payment on the Notes was due; and there
must be 180 days in any 360 day period in which no Payment Blockage Period is in
effect. For all purposes of this Section 1003, no default or event of default
which existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis for the
commencement of a subsequent Payment Blockage Period by the Representative or
requisite holders of such Designated Senior Indebtedness whether or not within a
period of 360 consecutive days unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 1004. When Distribution Must Be Paid Over. In the event
that the Company shall make any payment to the Trustee on account of the
principal of or interest on the Notes at a time when such payment is prohibited
by Section 1002 or 1003, such payment shall be held by the Trustee, in trust for
the benefit of, and shall be paid forthwith over and delivered to, the holders
of Senior Indebtedness (pro rata as to each of such holders on the basis of the
respective amounts of Senior Indebtedness held by them) or their
Representatives, as their respective interests may appear, for application to
the payment of all Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
If a distribution is made to Holders that because of this
Article Ten should not have been made to them, the Holders who receive the
distribution shall hold it in trust for holders of Senior Indebtedness and pay
it over to them as their interests may appear.
SECTION 1005. Notice by the Company. The Company shall promptly
notify the Trustee and any Paying Agent by an appropriate Officers' Certificate
of the Company delivered to a Trust Officer and the Paying Agent of any facts
known to the Company that would cause a payment of principal of or interest on
the Notes to violate this Article Ten, but failure to give such notice shall not
affect the subordination of the Notes to the Senior Indebtedness provided in
this Article Ten.
SECTION 1006. Subrogation. After all Senior Indebtedness is paid
in cash or
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cash equivalents in full and until the Notes are paid in full, Holders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to Holders have been applied to payment of Senior
Indebtedness. A distribution made under this Article Ten to holders of Senior
Indebtedness which otherwise would have been made to Holders is not, as between
the Company and the Holders, a payment by the Company on Senior Indebtedness.
SECTION 1007. Relative Rights. This Article Ten defines the
relative rights of Holders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the
Company other than such creditors as are holders of Senior Indebtedness;
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders of Senior Indebtedness to receive distributions otherwise payable to
Holders; or
(4) create or imply the existence of any commitment on the part
of the holders of Senior Indebtedness to extend credit to the Company, other
than as set forth in the terms governing such Senior Indebtedness.
SECTION 1008. Subordination May Not Be Impaired by the Company.
No right of any present or future holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or anyone in custody of its assets or
property or by its failure to comply with this Indenture.
SECTION 1009. Distribution or Notice to Representatives.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representatives, if any.
SECTION 1010. Rights of Trustee and Paying Agent. The Trustee or
any Paying Agent may continue to make payments on the Notes unless, in the case
of the Trustee, a Trust Officer or, in the case of a Paying Agent other than the
Trustee, an officer of such Paying Agent, shall have received, at least three
Business Days prior to the date such payments are due and payable, written
notice of facts that would cause a payment of principal of or interest on the
Notes to violate this Article Ten. Only the Company or a Representative with
respect to or holders of at least a majority in principal amount of an issue of
Designated Senior Indebtedness may give such notice. Nothing contained in this
Section 1010 shall limit the right of any holder
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of Senior Indebtedness to recover payments as contemplated by Section 1004.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
SECTION 1011. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice. Notwithstanding any of the provisions of this Article Ten
or any other provision of this Indenture, unless a Trust Officer has received a
written notice pursuant to Section 1010, 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.
SECTION 1012. Application by Trustee of Monies Deposited With
It. Nothing contained in this Article Ten or elsewhere in this Indenture, or in
the Notes, shall (i) affect the obligation of the Company to make, or prevent
the Company from making, at any time except as specified in Section 1002 or 1003
to the extent provided therein, payments at any time with respect to the Notes,
(ii) prevent the application by the Trustee or any Paying Agent of any monies
held by the Trustee or such Paying Agent in trust for the benefit of the Holders
of Notes as to which notice of redemption shall have been mailed or published,
to the payment of or on account of the principal of or interest on the Notes if,
at the time of such mailing or publishing, such payment would not have been
prohibited by the foregoing provisions of this Article Ten or (iii) prevent the
application by the Trustee or any Paying Agent of any monies deposited with it
hereunder to the payment of or on account of the Notes if, at the time of such
deposit, such payment would not have been prohibited by the foregoing provisions
of this Article Ten and, if such monies have been deposited by the Company, the
Trustee shall not have received with respect to such monies the written notice
provided for in Section 1010.
SECTION 1013. Trustee's Compensation Not Prejudiced. Nothing in
this Article Ten shall apply to claims of, or payments to, the Trustee pursuant
to Section 507.
SECTION 1014. Officers' Certificate. If there occurs an event
referred to in Section 1002, the Company shall promptly give to the Trustee an
Officers' Certificate (on which the Trustee may conclusively rely) identifying
all holders of Senior Indebtedness and the principal amount of Senior
Indebtedness then outstanding held by each such holder and stating the reasons
why such Officers' Certificate is being delivered to the Trustee.
SECTION 1015. Certain Payments. Nothing in this Article Ten
shall prevent or delay (i) the Company or any of its Subsidiaries from or in
purchasing or redeeming any of the Notes pursuant to any Legal Requirement
relating to the Company's gaming business or (ii) the receipt by the Holders of
payments of principal of and interest on the Notes as provided in Section 302.
<PAGE> 98
91
SECTION 1016. Names of Representatives. The Company shall, upon
request of the Trustee, provide to the Trustee an Officers' Certificate setting
forth the name and address of each Representative of all outstanding Senior
Indebtedness.
SECTION 1017. No Fiduciary Duty Created to Holders of Senior
Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and, subject to the
provisions of Article Five, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall mistakenly pay over or deliver to Holders, the
Company or any other Person, monies or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article Ten or otherwise.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed and attested, all as of the date first written
above.
AZTAR CORPORATION
By: /s/ Neil A. Ciarfalia
------------------------
Name: Neil A. Ciarfalia
Title: Treasurer
U.S. BANK NATIONAL
ASSOCIATION
By: /s/ JoAnn M. Schalk
------------------------
Name: JoAnn M. Schalk
Title: Vice President
<PAGE> 99
EXHIBIT A
(Face of Note)
CUSIP
ISIN
No. $
AZTAR CORPORATION
Incorporated under the laws of
the State of Delaware
8-7/8% Senior Subordinated Note due 2007
AZTAR CORPORATION promises to pay to CEDE & CO., or registered
assigns, the principal sum of $_______ Dollars on May 15, 2007 and to pay
interest thereon semiannually in arrears at the rate of 8-7/8% per annum on May
15 and November 15 of each year, commencing November 15, 1999, until the
principal hereof is paid or made available for payment. Payment of principal and
interest shall be made in the manner and subject to the terms set forth in
provisions appearing on the reverse hereof, which provisions, in their entirety,
shall for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, AZTAR CORPORATION has caused this instrument
to be duly executed in its corporate name under its corporate seal.
AZTAR CORPORATION
By:
Attest:
(SEAL)
<PAGE> 100
(FORM OF TRUSTEE'S CERTIFICATE
OF AUTHENTICATION)
This is one of the 8-7/8% Senior Subordinated Notes due 2007
issued under the within-mentioned Indenture.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Signature
<PAGE> 101
(Back of Note)
AZTAR CORPORATION
8-7/8% Senior Subordinated Note due 2007
[Insert Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert Private Placement Legend, if applicable pursuant to the provisions of
the Indenture]
1. Interest. AZTAR CORPORATION (the "Company"), a Delaware
corporation, promises to pay interest on the principal amount of this Note at
the rate per annum shown above and shall pay the Liquidated Damages payable
pursuant to Section 2 of the Registration Rights Agreement. The Company will pay
interest semiannually in arrears on May 15 and November 15 of each year,
commencing November 15, 1999. Interest on this Note will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from May 3, 1999. The Company will pay interest on overdue principal and
premium, if any, and, to the extent lawful, on overdue installments of interest
at the rate per annum borne by this Note shown above. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on this Note
(except Defaulted Interest) and Liquidated Damages to the Person who is the
registered Holder of this Note at the close of business on the Regular Record
Date, which shall be the May 1 and November 1, as the case may be, next
preceding the Interest Payment Date even though this Note is cancelled after the
Regular Record Date and on or before the Interest Payment Date, except as
provided in Section 212 of the Indenture with respect to Defaulted Interest.
This Note will be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained for such
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders;
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent prior to
the relevant Record Date. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
3. Paying Agent and Registrar. Initially, U.S. Bank National
Association (the "Trustee") will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
<PAGE> 102
4. Indenture. The Company has issued the Notes under an
indenture dated as of May 3, 1999 (the "Indenture") between the Company and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Section 77aaa-bbbb) as in effect on the date of the Indenture. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Notes are unsecured senior
subordinated obligations of the Company limited to $335,000,000 in aggregate
principal amount. Unless otherwise defined herein, all capitalized terms shall
have the meanings assigned to them in the Indenture.
5. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples thereof. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before the mailing of the notice of redemption of Notes to be
redeemed or during the period between a record date and the corresponding
interest payment date.
6. Optional Redemption. At any time prior to May 15, 2003, the
Notes will be redeemable at the election of the Company, in whole at any time or
in part from time to time, on not less than 30 nor more than 60 days prior
notice, mailed by first-class mail to the Holders' last addresses as they appear
in the Register, at a redemption price (expressed as a percentage of the
principal amount) equal to 100% of the principal amount thereof plus the
Applicable Premium, plus accrued and unpaid interest, if any, to the date of
redemption (the "Redemption Date").
On or after May 15, 2003, the Notes will be redeemable at the
election of the Company, in whole at any time or in part from time to time, on
not less than 30 nor more than 60 days prior notice, mailed by first-class mail
to the Holders' last addresses as they appear in the Register, at the redemption
prices (expressed in percentages of principal amount) specified below plus
accrued and unpaid interest, if any, to the redemption date, if redeemed during
the 12-month period beginning May 15 of the years indicated below:
<TABLE>
<CAPTION>
<S> <C>
Year .................................................... Percentage
2003 .................................................... 104.438%
2004 .................................................... 102.958%
2005 .................................................... 101.479%
2006 and thereafter ..................................... 100.000%
</TABLE>
If less than all the Notes are to be redeemed, selection of
Notes for redemption will be made by the Trustee, pro rata or by lot or by any
other means the Trustee determines to be fair and appropriate. If any Note is to
be redeemed in part only, the notice of redemption relating to that Note will
state the portion of the principal amount (in integral multiples of
<PAGE> 103
$1,000) to be redeemed and that, on and after the date fixed for redemption,
upon surrender of that Note, a new Note or Notes in principal amount equal to
the unredeemed portion thereof will be issued in the name of the Holder thereof.
On and after the date set for redemption interest will cease to accrue on Notes
or portions of them called for redemption.
7. Redemption Pursuant to Gaming Jurisdiction Law. The Company
is subject to the New Jersey Casino Control Act (the "New Jersey Act") and the
Nevada Gaming Control Act (the "Nevada Act") and may become subject to
applicable gaming laws, statutes, ordinances, codes, regulations, constitutional
provisions, rule, orders, directives or other enforcement requirements in other
jurisdictions in which it from time to time operates (any such jurisdiction,
including New Jersey and Nevada, a "Gaming Jurisdiction" and any such provision,
including the New Jersey Act and the Nevada Act, a "Gaming Jurisdiction Law").
If the New Jersey Casino Control Commission (the "New Jersey Commission") does
not waive the requirement that a Holder or beneficial owner of the Notes must be
licensed or found qualified or suitable to hold or own the Notes under the New
Jersey Act, and if such Holder or such beneficial owner does not become so
licensed or is not found qualified or suitable within any time period specified
by the New Jersey Commission or the New Jersey Act, or if the Nevada Gaming
Commission (the "Nevada Commission") finds a Holder or beneficial owner to be
unsuitable under the Nevada Act or regulations of the Nevada Commission, or if
any other gaming authority of any other Gaming Jurisdiction (a "Gaming
Authority") requires that Holders or beneficial owners of the Notes be licensed
or found qualified or suitable and such Gaming Authority fails to waive such
requirement or such Holder or beneficial owner does not become so licensed or is
not found qualified or suitable within the applicable time period, the Company
shall have the right, at its option, (i) to require such Holder or beneficial
owner to dispose of all or a portion of such Holder's or beneficial owner's
Notes within 120 days after receipt of notice by such Holder or beneficial owner
of such finding by the New Jersey Commission or the Nevada Commission or such
other Gaming Authority, as the case may be (or such different period as may be
prescribed by the New Jersey Commission or the Nevada Commission or such other
Gaming Authority), or (ii) to call for redemption the Notes of such Holder or
beneficial owner, on not less than 30 nor more than 60 days' notice (or such
different period as may be prescribed by the applicable Gaming Authority). If
such Holder or beneficial owner, having been given the opportunity by the
Company to dispose of such Holder's or beneficial owner's Notes, shall have
failed to do so within the prescribed time period, the Company shall have the
right to redeem such Holder's or beneficial owner's Notes on five days' notice.
On any redemption of Notes pursuant to this provision, the Redemption Price
shall be without premium and the lower of (i) the price at which such Holder or
beneficial owner acquired the Notes, together with (if permitted by the New
Jersey Act or the Nevada Act or other applicable Gaming Jurisdiction Law, or by
the orders of the New Jersey Commission or the Nevada Commission or the relevant
Gaming Authority, as the case may be) accrued interest to the Redemption Date,
and (ii) the lowest closing sale price of the Notes between the date of the
notice given by the New Jersey Commission or the Nevada Commission or such other
Gaming Authority and the date 10 days after such date, unless a Redemption Price
or other payment, remuneration or related terms or restrictions are required by
the New Jersey Commission or the Nevada Commission or such other Gaming
Authority, as the case may be, in which event such price, terms and restrictions
shall be the Redemption Price and terms of redemption. Each Holder and
beneficial owner by accepting this Note agrees to the provisions set forth in
this Paragraph and in the Indenture and agrees to inform the Company upon
request of the price at which such Holder or beneficial owner acquired this
Note.
<PAGE> 104
8. Persons Deemed Owners. The registered Holder of this Note may
be treated as its owner for all purposes.
9. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the then Outstanding Notes. Without the
consent of any Holder, the Indenture or the Notes may be amended to cure any
ambiguity, defect or inconsistency, to provide for assumption of the Company's
obligations to Holders, to provide for uncertificated Notes or to make any
change that does not adversely affect the rights of any Holder.
10. Defaults and Remedies. An Event of Default, as defined in
the Indenture, is: (i) default for 30 days in payment of interest on the Notes;
(ii) default in payment of principal of, or premium on, the Notes; (iii) failure
by the Company for 60 days after notice to comply with any of its other
agreements or covenants in the Indenture or the Notes; (iv) default under any
mortgage, indenture or other instrument under which there may be secured or
evidenced any other Indebtedness of the Company or any of its Restricted
Subsidiaries and such Indebtedness shall have been accelerated (or shall have
matured), provided that the principal amount of all such Indebtedness with
respect to which such events of default have occurred and are continuing
aggregates $5,000,000 or more; (v) judgments in an aggregate amount in excess of
$5,000,000 have been rendered against the Company or a Restricted Subsidiary and
either an enforcement proceeding shall have been commenced by any creditor upon
any judgment or there shall be a period of 90 consecutive days during which a
stay of enforcement of any such judgment shall not be in effect; (vi) certain
events of bankruptcy, insolvency or reorganization; and (vii) any revocation,
suspension or loss (with certain exceptions) of any Gaming License which results
in the cessation or suspension of operation for a period of more than 90 days of
the casino business of any casino hotel owned, leased or operated directly or
indirectly by the Company or any of its Subsidiaries. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then Outstanding Notes may declare all the Notes to be
due and payable immediately, except that in the case of an Event of Default
arising from certain events of bankruptcy, insolvency or reorganization, all
Outstanding Notes shall become due and payable immediately without further
action or notice. In the event of a declaration of acceleration because an Event
of Default as defined in clause (iv) above has occurred, and is continuing, such
declaration and its consequences shall be automatically rescinded and annulled
if (a) in the case of Indebtedness that has been accelerated, the holders of
such Indebtedness shall have rescinded the declaration of acceleration and the
consequences thereof within 10 days of such declaration or, in the case of
Indebtedness that has matured, such Indebtedness has been discharged in full
within 10 days following maturity, (b) the Company shall have delivered a notice
of such rescission or discharge to the Trustee and (c) no other Event of Default
shall have occurred and be continuing. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount of the then
Outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders notice of any continuing default (except a
default in payment of principal or interest) if it determines that withholding
notice is in their interest. The Company must furnish annual compliance
certificates to the Trustee.
11. Discharge or Defeasance Prior to Redemption or Maturity.
Subject to certain conditions, including delivery of an Opinion of Counsel
regarding certain tax matters, if
<PAGE> 105
the Company deposits with the Trustee money or U.S. Government Obligations
sufficient to pay principal of, premium, if applicable, and accrued interest on
the Notes to redemption or maturity, the Company will be Discharged (to the
extent provided in the Indenture) from the Notes and the Indenture or the
Company need not comply with certain terms of the Indenture.
12. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, pay dividends, create or incur Indebtedness, create Liens, merge or
consolidate with any other Person or sell, lease or otherwise transfer any of
their properties or assets.
13. Successor Corporation. When a successor Person or other
entity assumes all the obligations of its predecessor under the Notes and the
Indenture, the predecessor Person will be released from those obligations.
14. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or any of its Subsidiaries or Affiliates, and
may otherwise deal with the Company or its Subsidiaries or Affiliates, as if it
were not the Trustee.
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Notes.
16. Unclaimed Money. If money for the payment of principal of or
interest on any Note remains unclaimed for two years after the date on which
such payment shall have come due, the Trustee or Paying Agent will pay the money
back to the Company at the Company's written request. After that, Holders
entitled to this money must look to the Company for payment, unless applicable
law designates another Person.
17. Discharge Upon Redemption or Maturity. Subject to the terms
of the Indenture, the Indenture will be discharged and cancelled upon the
payment of all Notes.
18. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
19. Governing Law. This Note shall be construed in accordance
with and governed by the laws of the State of New York without regard to
principles of conflict of law.
20. Abbreviations. Customary abbreviations may be used in the
name of a Holder 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 UNIF GIFT
MIN ACT (= Uniform Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation promulgated by
the
<PAGE> 106
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and the Registration Rights Agreement.
Requests may be made to Aztar Corporation, 2390 E. Camelback Road, Suite 400,
Phoenix, Arizona 85016, Attn: Corporate Secretary.
ASSIGNMENT FORM
To assign this Note, fill in the form below: I or we assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint agent to transfer this Note on the books of the Company.
The agent may substitute another to act for him.
Date: Your signature:
(Sign exactly as your name appears on the other side of
this security)
Signature Guaranteed(1)
- --------
(1) Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
<PAGE> 107
By:
<PAGE> 108
OPTION OF HOLDER TO ELECT REPURCHASE
The undersigned hereby irrevocably requests and instructs the
Company to repay this Note pursuant to its terms at a price equal to 101% of the
principal amount hereof, together with accrued and unpaid interest to the Change
of Control Payment Date, to the undersigned at
(Please print or type name and address of the undersigned)
For this Note to be repaid, the Company must receive this Note
with this "Option of Holder to Elect Repurchase" form duly completed at an
office or agency of the Company maintained for that purpose in the Borough of
Manhattan in The City of New York within the time periods for such repurchase
set forth in the Indenture.
If less than the entire principal of the within Note is to be
repaid, specify the portion thereof (which shall be $1,000 or an integral
multiple of $1,000) which the Holder elects to have repaid:
Dated: Signature Guaranteed(2)
By:
Note: The signature must correspond with the name as written upon the face of
the Note in every particular without alteration or enlargement.
- --------
(2) Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
<PAGE> 109
SCHEDULE OF EXCHANGES OF INTEREST IN THE GLOBAL NOTE
The initial principal amount at maturity of this Global Note is
$[ ],000,000. The following increases or decreases in this Global Note have been
made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease in Amount of increase in Principal amount at Signature of authorized
Exchange Principal Amount of this Principal Amount at maturity maturity of this signatory of Trustee or
Global Note of this Global Note Global Note following Notes Custodian
such decrease or increase
</TABLE>
<PAGE> 110
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Aztar Corporation
2390 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
U.S. Bank National Association
101 E. Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: 8-7/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of May 3, 1999 (the
"Indenture"), between Aztar Corporation, as issuer (the "Company"), and U.S.
Bank National Association, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
[Insert name of transferor], (the "Transferor") owns and proposes to
transfer the Note(s) or interest in such Note(s) specified in Annex A hereto, in
the principal amount of $[ ] in such Note(s) or interests (the "Transfer"), to
[Insert name of transferee] (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
CHECK ALL THAT APPLY
[ ] 1. Check if Transferee will take delivery of a beneficial interest
in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the
<PAGE> 111
restrictions on transfer enumerated in the Private Placement Legend printed on
the 144A Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.
[ ] 2. Check if Transferee will take delivery of a beneficial interest
in the Regulation S Global Note or a Definitive Note pursuant to Regulation S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Distribution Compliance Period, the transfer is not being made
to a U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
[ ] 3. Check and complete if Transferee will take delivery of a
beneficial interest in the IAI Global Note or a Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
[ ] (a) such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
[ ] (b) such Transfer is being effected to the Company or a subsidiary
thereof;
or
[ ] (c) such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
<PAGE> 112
or
[ ] (d) such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2) an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI Global
Note and/or the Definitive Notes and in the Indenture and the Securities Act.
[ ] 4. Check if Transferee will take delivery of a beneficial interest
in an Unrestricted Global Note or of an Unrestricted Definitive Note.
[ ] (a) Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
[ ] (b) Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
[ ] (c) Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions
<PAGE> 113
contained in the Indenture and any applicable blue sky securities laws of any
State of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will not be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
Insert Name of Transferor
By:_______________________
Name:
Title:
Dated:
<PAGE> 114
ANNEX A
TO
CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
CHECK ONE OF (a) OR (b)
[ ] (a) a beneficial interest in the:
(i) 144A Global Note (CUSIP ________), or
(ii) Regulation S Global Note (CUSIP ______), or
(iii) IAI Global Note (CUSIP __________); or
[ ] (b) a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
CHECK ONE
[ ] (a) a beneficial interest in the:
(i) 144A Global Note (CUSIP _______), or
(ii) Regulation S Global Note (CUSIP ________), or
(iii) IAI Global Note (CUSIP ________); or
(iv) Unrestricted Global Note (CUSIP _______); or
[ ] (b) a Restricted Definitive Note; or
[ ] (c) an Unrestricted Definitive Note, in accordance with the
terms of the Indenture.
<PAGE> 115
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Aztar Corporation
2390 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
U.S. Bank National Association
101 E. Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: 8-7/8% Senior Subordinated Notes due 2007 (CUSIPS: 144A-05802AC7
Reg S - US055511AA5)
Reference is hereby made to the Indenture, dated as of April [ ], 1999
(the "Indenture"), between Aztar Corporation, as issuer (the "Company"), and
U.S. Bank National Association, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
_____________, (the "Owner") owns and proposes to exchange the Note(s)
or interest in such Note(s) specified herein, in the principal amount of $[ ] in
such Note(s) or interests (the "Exchange"). In connection with the Exchange,
the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note.
[ ] (a) Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
[ ] (b) Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive
<PAGE> 116
Note is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
[ ] (c) Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
[ ] (d) Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes.
[ ] (a) Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
[ ] (b) Check if Exchange is from Restricted Definitive Note to
beneficial interest in a
<PAGE> 117
Restricted Global Note. In connection with the Exchange of the Owner's
Restricted Definitive Note for a beneficial interest in the CHECK ONE
[ ] 144A Global Note,
[ ] Regulation S Global Note,
[ ] IAI Global Note
with an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
Insert Name of Transferor
By:_________________________
Name:
Title:
Dated:
<PAGE> 118
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Aztar Corporation
2390 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
U.S. Bank National Association
101 E. Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: 8-7/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of May 3, 1999 (the
"Indenture"), between Aztar Corporation, as issuer (the "Company"), and U.S.
Bank National Association, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $[ ] aggregate principal
amount of:
(a) a beneficial interest in a Global Note, or
(b) a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are
<PAGE> 119
acting as hereinafter stated, that if we should sell the Notes or any interest
therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Insert Name of Accredited Investor
By:_________________________
Name:
Title:
Dated:
<PAGE> 1
EXHIBIT 4.7
AZTAR CORPORATION
8-7/8% SENIOR SUBORDINATED NOTES DUE 2007
---------------
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
MAY 3, 1999
Goldman, Sachs & Co.
NationsBanc Montgomery Securities LLC
Credit Suisse First Boston Corporation
Lehman Brothers Inc.
Wasserstein Perella Securities, Inc.
SG Cowen Securities Corporation
PNC Capital Markets, Inc.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Aztar Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to the Purchasers (as defined herein) upon the terms set forth in
the Purchase Agreement (as defined herein) its 8-7/8% Senior Subordinated Notes
due 2007. As an inducement to the Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the
Purchasers thereunder, the Company agrees with the Purchasers for the benefit of
holders (as defined herein) from time to time of the Transfer Restricted
Securities (as defined herein) as follows:
1. Certain Definitions. For purposes of this Exchange and
Registration Rights Agreement, the following terms shall have the following
respective meanings:
"Base Interest" shall mean the interest that would otherwise
accrue on the Securities
<PAGE> 2
under the terms thereof and the Indenture, without giving effect to the
provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer
registered with the Commission under the Exchange Act.
"Closing Date" shall mean the date on which the Securities are
initially issued pursuant to the Purchase Agreement.
"Commission" shall mean the United States Securities and
Exchange Commission, or any other federal agency at the time
administering the Exchange Act or the Securities Act, whichever is the
relevant statute for the particular purpose.
"Effective Time," in the case of (i) an Exchange Registration,
shall mean the time and date as of which the Commission declares the
Exchange Registration Statement effective or as of which the Exchange
Registration Statement otherwise becomes effective and (ii) a Shelf
Registration, shall mean the time and date as of which the Commission
declares the Shelf Registration Statement effective or as of which the
Shelf Registration Statement otherwise becomes effective.
"Electing Holder" shall mean any holder of Transfer Restricted
Securities that has timely returned a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(d)(ii) or
3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
or any successor thereto, as the same shall be amended from time to
time.
"Exchange Offer" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto
in Section 3(c) hereof.
"Exchange Registration Statement" shall have the meaning
assigned thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
The term "holder" shall mean each of the Purchasers and other
persons who acquire Transfer Restricted Securities from time to time
(including any successors or assigns), in each case for so long as such
person owns any Transfer Restricted Securities.
2
<PAGE> 3
Exchange and Registration Rights Agreement
"Indenture" shall mean the Indenture, dated as of the date
hereof, between the Company and U.S. Bank National Association, as
Trustee, as the same shall be amended from time to time.
"Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire substantially in the
form of Exhibit A hereto.
The term "person" shall mean a corporation, association, limited
liability company, partnership, organization, business, individual,
government or political subdivision thereof or governmental agency.
"Purchase Agreement" shall mean the Purchase Agreement, dated as
of April 27, 1999, between the Purchasers and the Company relating to
the Securities.
"Purchasers" shall mean the Purchasers named in Schedule I to
the Purchase Agreement.
"Transfer Restricted Securities" shall mean the Securities;
provided, however, that a Security shall cease to be a Transfer
Restricted Security when (i) in the circumstances contemplated by
Section 2(a) hereof, the Security has been exchanged for an Exchange
Security in an Exchange Offer as contemplated in Section 2(a) hereof
(provided that any Exchange Security that, pursuant to the last two
sentences of Section 2(a), is included in a prospectus for use in
connection with resales by broker-dealers shall be deemed to be a
Transfer Restricted Security with respect to Sections 5, 6 and 9 until
resale of such Transfer Restricted Security has been effected within the
180-day period referred to in Section 2(a)); (ii) in the circumstances
contemplated by Section 2(b) hereof, a Shelf Registration Statement
registering such Security under the Securities Act has been declared or
becomes effective and such Security has been sold or otherwise
transferred by the holder thereof in accordance with the Shelf
Registration Statement; (iii) such Security is distributed to the public
pursuant to Rule 144 under the Securities Act; or (iv) such Security
shall cease to be outstanding.
"Registration Default" shall have the meaning assigned thereto
in Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto
in Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate
of the Company within the meaning of Rule 405, (ii) a holder who
acquires Exchange Securities outside the ordinary course of such
holder's business, (iii) a holder who has arrangements or understandings
with any person to participate in the Exchange Offer for the purpose of
distributing Exchange Securities and (iv) a holder that is a
broker-dealer, but only with respect to Exchange Securities received by
such broker-dealer pursuant to an Exchange Offer in exchange for
Transfer Restricted Securities
3
<PAGE> 4
Exchange and Registration Rights Agreement
acquired by the broker-dealer directly from the Company.
"Rule 144," "Rule 405" and "Rule 415" shall mean, in each case,
such rule promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.
"Securities" shall mean, collectively, the 8 7/8% Senior
Subordinated Notes due 2007 of the Company to be issued and sold to the
Purchasers, and securities issued in exchange therefor or in lieu
thereof pursuant to the Indenture provided that the Securities not
include the Exchange Securities.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned
thereto in Section 2(b) hereof.
"Special Interest" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939, or any successor thereto, and the rules, regulations and forms
promulgated thereunder, all as the same shall be amended from time to
time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company
agrees to file under the Securities Act no later than 60 days after the
Closing Date, a registration statement relating to an offer to exchange
(such registration statement, the "Exchange Registration Statement", and
such offer, the "Exchange Offer") any and all of the Securities for a
like aggregate principal amount of debt securities issued by the
Company, which debt securities are substantially identical to the
Securities (and are entitled to the benefits of a trust indenture which
is substantially identical to the Indenture or is the Indenture and
which has been qualified under the Trust Indenture Act), except that
they have been registered pursuant to an effective registration
statement under the
4
<PAGE> 5
Exchange and Registration Rights Agreement
Securities Act and do not contain provisions for the additional interest
contemplated in Section 2(d) below (such new debt securities hereinafter
called "Exchange Securities"). The Company agrees to use its best
efforts to cause the Exchange Registration Statement to become effective
under the Securities Act no later than 180 days after the Closing Date.
The Exchange Offer will be registered under the Securities Act on the
appropriate form and will comply with all applicable tender offer rules
and regulations under the Exchange Act. The Company further agrees to,
unless the Exchange Offer would not be permitted by law or Commission
policy, use its best efforts to commence and complete the Exchange Offer
promptly, but no later than 45 days after such registration statement
has become effective, hold the Exchange Offer open for at least 30 days
and exchange Exchange Securities for all Transfer Restricted Securities
that have been properly tendered and not withdrawn on or prior to the
expiration of the Exchange Offer. The Exchange Offer will be deemed to
have been "completed" only if the debt securities received by holders
other than Restricted Holders in the Exchange Offer for Transfer
Restricted Securities are, upon receipt, transferable by each such
holder without restriction under Section 5 of the Securities Act. The
Exchange Offer shall be deemed to have been completed upon the earlier
to occur of (i) the Company having exchanged the Exchange Securities for
all outstanding Transfer Restricted Securities pursuant to the Exchange
Offer and (ii) the Company having exchanged, pursuant to the Exchange
Offer, Exchange Securities for all Transfer Restricted Securities that
have been properly tendered and not withdrawn before the expiration of
the Exchange Offer, which shall be on a date that is at least 30 days
following the commencement of the Exchange Offer. The Company shall
indicate in a "Underwriting" section contained in the prospectus
contained in the Exchange Registration Statement that any broker-dealer
who holds Securities that are Transfer Restricted Securities and that
were acquired for its own account as a result of market-making
activities or other trading activities (other than Transfer Restricted
Securities acquired directly from the Company), may exchange such
Securities pursuant to the Exchange Offer. Such "Underwriting" section
shall also contain all other information with respect to such sales by
such broker-dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Underwriting" shall not name any
such broker-dealer or disclose the amount of Securities held by any such
broker-dealer, except to the extent required by the Commission. See
Shearman & Sterling no-action letter (available July 2, 1993). The
Company shall use its reasonable best efforts to keep the Exchange
Registration Statement continuously effective, supplemented and amended
as required by the provisions of Section 6(d) below to the extent
necessary to ensure that it is available for resales of Securities
acquired by broker-dealers for their own accounts as a result of
market-making activities or other trading activities (other than
Transfer Restricted Securities acquired directly from the Company), and
to ensure that it conforms with the requirements of this Agreement, the
Securities Act and the policies, rules and regulations of the Commission
as announced from time to time, for the lesser of (i) a period of 180
days from the date on which the Exchange Registration Statement is
declared effective or (ii) such period of time as such broker-dealer
must comply with the prospectus delivery requirements of the Securities
Act in order to resell the Exchange Securities
5
<PAGE> 6
Exchange and Registration Rights Agreement
received in exchange for Securities acquired for their own account as a
result of such market-making or other trading activities (the "Resale
Period"); subject in the case of either clause (i) or (ii), to any
suspension of the availability of the Exchange Registration Statement
(or the prospectus contained therein) and extension of the Resale Period
pursuant to Section 2(c) hereof.
(b) If (i) the Company is not (1) required to file the
Exchange Offer registration statement; or (2) permitted to consummate
the Exchange Offer because the Exchange Offer is not permitted by
applicable law or Commission policy; or (ii) any Holder of Transfer
Restricted Securities notifies us prior to the 20th Day following
consummation of the Exchange Offer that: (1) it is prohibited by law or
Commission policy from participating in the Exchange Offer; or (2) it
may not resell the Exchange Notes acquired by it in the Exchange Offer
to the public without delivering a prospectus and the prospectus
contained in the Exchange Offer registration statement is not
appropriate or available for such resales; or (3) it is a broker-dealer
and owns Notes acquired directly from the Company or an affiliate of the
Company, the Company shall, in lieu of (or, in the case of clause (iii),
in addition to) conducting the Exchange Offer contemplated by Section
2(a), file under the Securities Act as soon as practicable after the
time such obligation to file arises, a "shelf" registration statement
providing for the registration of, and the sale on a continuous or
delayed basis by the holders of, all of the Transfer Restricted
Securities, pursuant to Rule 415 or any similar rule that may be adopted
by the Commission (such filing, the "Shelf Registration" and such
registration statement, the "Shelf Registration Statement"). The Company
agrees to use its best efforts (x) to cause the Shelf Registration
Statement to become or be declared effective no later than 120 days
after such Shelf Registration Statement is filed, and to keep such Shelf
Registration Statement continuously effective for a period ending on the
earlier of the second anniversary of the Effective Time or such time as
there are no longer any Transfer Restricted Securities outstanding,
provided, however, that no holder shall be entitled to be named as a
selling securityholder in the Shelf Registration Statement or to use the
prospectus forming a part thereof for resales of Transfer Restricted
Securities unless such holder is an Electing Holder, and (y) after the
Effective Time of the Shelf Registration Statement, promptly upon the
request of any holder of Transfer Restricted Securities that is not then
an Electing Holder and was not a holder at the Effective Time of the
Shelf Registration Statement, to take any action reasonably necessary to
enable such holder to use the prospectus forming a part thereof for
resales of Transfer Restricted Securities, including, without
limitation, any action necessary to identify such holder as a selling
securityholder in the Shelf Registration Statement, provided, however,
that nothing in this Clause (y) shall relieve any such holder of the
obligation to return a completed and signed Notice and Questionnaire to
the Company in accordance with Section 3(d)(iii) hereof. The Company
further agrees to supplement or make amendments to the Shelf
Registration Statement, as and when required by the rules, regulations
or instructions applicable to the registration form used by the Company
for such Shelf Registration Statement or by the Securities Act or rules
and regulations thereunder for shelf registration. Upon the filing of
6
<PAGE> 7
Exchange and Registration Rights Agreement
the Shelf Registration Statement in accordance with this Section 2(b),
the Company shall have no further obligation to register Transfer
Restricted Securities in an Exchange Offer pursuant to Section 2(a) of
this Agreement; provided that the other provisions of this Agreement
shall continue to apply as set forth in such provisions.
(c) Notwithstanding the provisions of (1) the last two
sentences of Section 2(a) and (2) Section 2(b), the Company may suspend
the availability of the Exchange Registration Statement during the
Resale Period or the Shelf Registration Statement and the related
prospectus if (x) the board of directors of the Company determines in
good faith that it is in the best interests of the Company not to
disclose the existence of or facts surrounding any proposed or pending
material corporate transaction involving the Company, and the Company
mails notification to the Electing Holders within five business days
after the Board of Directors makes such determination, or (y) the
Prospectus contained in the Exchange Registration Statement or the Shelf
Registration Statement, as the case may be, contains an untrue statement
of material fact or omits 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; provided that (1) the Resale Period or
(2) the periods during which the Shelf Registration Statement is
required to be available, as applicable, shall be extended by the number
of days during which such Registration Statement was not available
pursuant to the foregoing provisions (which such extension shall be the
holder's sole remedy hereunder);
(d) In the event that (i) the Company has not filed the
Exchange Registration Statement or Shelf Registration Statement on or
before the date on which such registration statement is required to be
filed pursuant to Section 2(a) or 2(b), respectively, or (ii) such
Exchange Registration Statement or Shelf Registration Statement has not
become effective or been declared effective by the Commission on or
before the date on which such registration statement is required to
become or be declared effective pursuant to Section 2(a) or 2(b),
respectively, or (iii) the Exchange Offer has not been completed within
45 days after the initial effective date of the Exchange Registration
Statement relating to the Exchange Offer (if the Exchange Offer is then
required to be made) or (iv) any Exchange Registration Statement or
Shelf Registration Statement required by Section 2(a) or 2(b) hereof is
filed and declared effective but shall thereafter either be withdrawn by
the Company or shall become subject to an effective stop order issued
pursuant to Section 8(d) of the Securities Act suspending the
effectiveness of such registration statement (except as specifically
permitted herein) without being succeeded immediately by an additional
registration statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default" and
each period during which a Registration Default has occurred and is
continuing, a "Registration Default Period"), then, as liquidated
damages for such Registration Default, subject to the provisions of
Section 9(b), special interest ("Special Interest"), in addition to the
Base Interest, shall accrue on all Securities at a per week rate of
.005% for the first 90 days of the Registration Default Period,
7
<PAGE> 8
Exchange and Registration Rights Agreement
increasing by an additional .005% per week with respect to each
subsequent 90-day period until all Registration Defaults have been cured
up to a maximum of .05% per week. Following the cure of all Registration
Defaults, the accrual of Special Interest will cease. The applicable
Registration Default will be deemed cured (1) upon the filing of the
required Registration Statement in the case of clause (i) above, (2)
upon the effectiveness of such required Registration Statement in the
case of clause (ii) above, (3) upon the completion of the Exchange Offer
in the case of clause (iii) above and (4) in the case of clause (iv),
upon the applicable Registration Statement once again becoming effective
and usable or a new Registration Statement becoming effective and usable
with respect to the Transfer Restricted Securities covered by the
Registration Statement that ceased to be effective or usable. No person
shall have any other remedy under this Agreement or otherwise as a
result of any Registration Default so long as the Company makes timely
payments of all such Special Interest required by this paragraph.
(e) The Company shall take all actions necessary or
advisable to be taken by it to ensure that the transactions contemplated
herein are effected as so contemplated.
(f) Any reference herein to a registration statement as of
any time shall be deemed to include any document incorporated, or deemed
to be incorporated, therein by reference as of such time and any
reference herein to any post-effective amendment to a registration
statement as of any time shall be deemed to include any document
incorporated, or deemed to be incorporated, therein by reference as of
such time.
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or
the Shelf Registration, as the case may be, the Company shall qualify
the Indenture under the Trust Indenture Act of 1939.
(b) In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall
appoint a new trustee thereunder pursuant to the applicable provisions
of the Indenture.
(c) In connection with the Company's obligations with
respect to the registration of Exchange Securities as contemplated by
Section 2(a) (the "Exchange Registration"), if applicable, the Company
shall:
(i) prepare and file with the Commission no later
than 60 days after the
8
<PAGE> 9
Closing Date, an Exchange Registration Statement on any form
which may be utilized by the Company and which shall permit the
Exchange Offer and resales of Exchange Securities by
broker-dealers during the Resale Period to be effected as
contemplated by Section 2(a), and use its best efforts to cause
such Exchange Registration Statement to become effective no
later than 180 days after the Closing Date;
(ii) promptly prepare and file with the Commission
such amendments and supplements to such Exchange Registration
Statement and the prospectus included therein as may be
necessary to effect and maintain the effectiveness of such
Exchange Registration Statement for the periods and purposes
contemplated in Section 2(a) hereof and as may be required by
the applicable rules and regulations of the Commission and the
instructions applicable to the form of such Exchange
Registration Statement, and promptly provide each broker-dealer
holding Exchange Securities with such number of copies of the
prospectus included therein (as then amended or supplemented),
in conformity in all material respects with the requirements of
the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, as such broker-dealer
reasonably may request prior to the expiration of the Resale
Period, for use in connection with resales of Exchange
Securities;
(iii) promptly notify each broker-dealer that has
requested or received copies of the prospectus included in such
registration statement and confirm such advice in writing (A)
when such Exchange Registration Statement or the prospectus
included therein or any prospectus amendment or supplement or
post-effective amendment has been filed, and, with respect to
such Exchange Registration Statement or any post-effective
amendment, when the same has become effective, (B) of any
request by the Commission for amendments or supplements to such
Exchange Registration Statement or prospectus or for additional
information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of such Exchange Registration
Statement or the initiation or threatening of any proceedings
for that purpose, (D) if at any time the representations and
warranties of the Company contemplated by Section 5 cease to be
true and correct in all material respects, (E) of the receipt by
the Company of any notification with respect to the suspension
of the qualification of the Exchange Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purpose, or (F) at any time during the Resale Period
when a prospectus is required to be delivered under the
Securities Act, that such Exchange Registration Statement,
prospectus, prospectus amendment or supplement or post-effective
amendment does not conform in all material respects to the
applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading
9
<PAGE> 10
Exchange and Registration Rights Agreement
in light of the circumstances then existing;
(iv) in the event that the Company would be required,
pursuant to Section 3(e)(iii)(F) above, to notify any
broker-dealers holding Exchange Securities, promptly prepare and
furnish to each such holder a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter
delivered to purchasers of such Exchange Securities during the
Resale Period, such prospectus shall conform in all material
respects to the applicable requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and shall not contain an untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(v) use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
Exchange Registration Statement or any post-effective amendment
thereto at the earliest practicable date;
(vi) use its reasonable best efforts to (A) register
or qualify the Exchange Securities under the securities laws or
blue sky laws of such jurisdictions as are contemplated by
Section 2(a) no later than the commencement of the Exchange
Offer, (B) keep such registrations or qualifications in effect
and comply with such laws so as to permit the continuance of
offers, sales and dealings therein in such jurisdictions until
the expiration of the Resale Period and (C) take any and all
other actions as may be reason ably necessary to enable each
broker-dealer holding Exchange Securities to consummate the
disposition thereof in such jurisdictions; provided, however,
that the Company shall not be required for any such purpose to
(1) qualify as a foreign corporation in any jurisdiction wherein
it would not otherwise be required to qualify but for the
requirements of this Section 3(c)(vi), (2) consent to general
service of process or taxation in any such jurisdiction or (3)
make any changes to its certificate of incorporation or by-laws
or any agreement between it and its stockholders;
(vii) use its reasonable best efforts to obtain the
consent or approval of each governmental agency or authority,
whether federal, state or local, which may be required to effect
the Exchange Registration, the Exchange Offer and the offering
and sale of Exchange Securities by broker-dealers during the
Resale Period;
(viii) provide a CUSIP number for all Exchange Securities,
not later than the applicable Effective Time;
(ix) comply with all applicable rules and regulations of
the Commission, and
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<PAGE> 11
Exchange and Registration Rights Agreement
make generally available to its securityholders no later than
eighteen months after the effective date of such Exchange
Registration Statement, an earning statement (which is not
required to be audited) of the Company and its subsidiaries
complying with Section 11(a) of the Securities Act (including,
at the option of the Company, Rule 158 thereunder).
(d) In connection with the Company's obligations with respect to
the Shelf Registration, if applicable, the Company shall:
(i) prepare and file with the Commission within the
time periods specified in Section 2(b), a Shelf Registration
Statement on any form which may be utilized by the Company and
which shall register all of the Transfer Restricted Securities
for resale by the holders thereof in accordance with such method
or methods of disposition as may be specified in writing by such
of the holders as, from time to time, may be Electing Holders
and use its best efforts to cause such Shelf Registration
Statement to become effective within the time periods specified
in Section 2(b);
(ii) not less than 20 calendar days prior to the
Effective Time of the Shelf Registration Statement, mail the
Notice and Questionnaire to the holders of Transfer Restricted
Securities; no holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement as of the
Effective Time, and no holder shall be entitled to use the
prospectus forming a part thereof for resales of Transfer
Restricted Securities at any time, unless such holder has
returned a completed and signed Notice and Questionnaire to the
Company by the deadline for response set forth and such Notice
and Questionnaire is reasonably acceptable to the Company;
provided, however, holders of Transfer Restricted Securities
shall have at least 20 calendar days from the date on which the
Notice and Questionnaire is first mailed to such holders to
return a completed and signed Notice and Questionnaire to the
Company;
(iii) after the Effective Time of the Shelf
Registration Statement, upon the request of any holder of
Transfer Restricted Securities that is not then an Electing
Holder, promptly send a Notice and Questionnaire to such holder;
provided that the Company shall not be required to take any
action to name such holder as a selling securityholder in the
Shelf Registration Statement or to enable such holder to use the
prospectus forming a part thereof for resales of Transfer
Restricted Securities until such holder has returned a completed
and signed Notice and Questionnaire to the Company and such
Notice and Questionnaire is reasonably acceptable to the
Company;
(iv) promptly prepare and file with the Commission
such amendments and supplements to such Shelf Registration
Statement and the prospectus included therein as
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<PAGE> 12
Exchange and Registration Rights Agreement
may be necessary to effect and maintain the effectiveness of
such Shelf Registration Statement for the period specified in
Section 2(b) hereof and as may be required by the applicable
rules and regulations of the Commission and the instructions
applicable to the form of such Shelf Registration Statement, and
furnish to the Electing Holders copies of any such supplement or
amendment concurrently with or promptly following its being used
or filed with the Commission;
(v) comply with the provisions of the Securities Act
with respect to the disposition of all of the Transfer
Restricted Securities covered by such Shelf Registration
Statement in accordance with the intended methods of disposition
by the Electing Holders provided for in such Shelf Registration
Statement;
(vi) provide (A) the Electing Holders, (B) the
underwriters (which term, for purposes of this Exchange and
Registration Rights Agreement, shall include a person deemed to
be an underwriter within the meaning of Section 2(a)(11) of the
Securities Act), if any, thereof, (C) any sales or placement
agent therefor, (D) counsel for any such underwriter or agent
and (E) not more than one counsel for all the Electing Holders
the reasonable opportunity to participate at such person's
expense in the preparation of such Shelf Registration Statement,
each prospectus included therein or filed with the Commission
and each amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of
such Shelf Registration Statement, and throughout the period
specified in Section 2(b), make available at reasonable times
following a request at the Company's principal place of business
or such other reasonable place for inspection by the persons
referred to in Section 3(d)(vi) who shall certify to the Company
in writing that they have a current intention to sell the
Transfer Restricted Securities pursuant to the Shelf
Registration such financial and other information and books and
records of the Company, and cause the officers and employees,
counsel and independent certified public accountants of the
Company to respond to such inquiries, as shall be reasonably
necessary, to conduct a reasonable investigation within the
meaning of Section 11 of the Securities Act; provided, however,
that the inspection described in this paragraph (vii) shall be
performed by a single law firm selected by a majority in
principal amount of the Electing Holders and all persons having
access to such information shall be required to maintain in
confidence and not to disclose to any other person any
information or records reasonably designated by the Company as
being confidential, until such time as (A) such information
becomes a matter of public record (whether by virtue of its
inclusion in such registration statement or otherwise), or (B)
such person shall be required so to disclose such information
pursuant to a subpoena or order of any court or other
governmental agency or body having jurisdiction over the matter
(subject to the requirements of such order, and only after such
person shall have given the Company prompt prior written notice
of such
12
<PAGE> 13
Exchange and Registration Rights Agreement
requirement), or (C) such information is required to be set
forth in such Shelf Registration Statement or the prospectus
included therein or in an amendment to such Shelf Registration
Statement or an amendment or supplement to such prospectus in
order that such Shelf Registration Statement, prospectus,
amendment or supplement, as the case may be, complies with
applicable requirements of the federal securities laws and the
rules and regulations of the Commission and does not contain an
untrue statement of a material fact or omit to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances then existing;
(viii) promptly notify each of the Electing Holders,
any sales or placement agent therefor and any underwriter
thereof (which notification may be made through any managing
underwriter that is a representative of such underwriter for
such purpose) and confirm such advice in writing (A) when such
Shelf Registration Statement or the prospectus included therein
or any prospectus amendment or supplement or post-effective
amendment has been filed, and, with respect to such Shelf
Registration Statement or any post-effective amendment, when the
same has become effective, (B) of any request by the Commission
for amendments or supplements to such Shelf Registration
Statement or prospectus or for additional information, (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of such Shelf Registration Statement or the
initiation or threatening of any proceedings for that purpose,
(D) if at any time the representations and warranties of the
Company contemplated by Section 3(d)(xvii) or Section 5 cease to
be true and correct in all material respects, (E) of the receipt
by the Company of any notification with respect to the
suspension of the qualification of the Transfer Restricted
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (F) if at any
time when a prospectus is required to be delivered under the
Securities Act, that such Shelf Registration Statement,
prospectus, prospectus amendment or supplement or post-effective
amendment does not conform in all material respects to the
applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in
light of the circum stances then existing;
(ix) use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
registration statement or any post-effective amendment thereto
at the earliest practicable date;
(x) if requested in writing by any managing
underwriter or underwriters, any placement or sales agent or any
Electing Holder, promptly incorporate in a prospectus
13
<PAGE> 14
Exchange and Registration Rights Agreement
supplement or post-effective amendment such information as is
required by the applicable rules and regulations of the
Commission and as such managing underwriter or underwriters,
such agent or such Electing Holder specifies should be included
therein relating to the terms of the sale of such Transfer
Restricted Securities, including information with respect to the
principal amount of Transfer Restricted Securities being sold by
such Electing Holder or agent or to any underwriters, the name
and description of such Electing Holder, agent or underwriter,
the offering price of such Transfer Restricted Securities and
any discount, commission or other compensation payable in
respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering
of the Transfer Restricted Securities to be sold by such
Electing Holder or agent or to such underwriters; and make all
required filings of such prospectus supplement or post-effective
amendment promptly after notification of the matters to be
incorporated in such prospectus supplement or post-effective
amendment;
(xi) furnish to each Electing Holder, each placement
or sales agent, if any, therefor, each underwriter, if any,
thereof and the respective counsel referred to in Section
3(d)(vi) such number of copies of such Shelf Registration
Statement (excluding exhibits thereto and documents incorporated
by reference therein unless specifically so requested by such
Electing Holder, agent or underwriter, as the case may be) and
of the prospectus included in such Shelf Registration Statement
(including each preliminary prospectus and any summary
prospectus), in conformity in all material respects with the
applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder, and such other documents, as such Electing Holder,
agent, if any, and underwriter, if any, may reasonably request
in order to facilitate the offering and disposition of the
Transfer Restricted Securities owned by such Electing Holder,
offered or sold by such agent or underwritten by such
underwriter and to permit such Electing Holder, agent and
underwriter to satisfy the prospectus delivery requirements of
the Securities Act; and the Company hereby consents to the use
of such prospectus (including such preliminary and summary
prospectus) and any amendment or supplement thereto by each such
Electing Holder and by any such agent and underwriter, in each
case in the form most recently provided to such person by the
Company, in connection with the offering and sale of the
Transfer Restricted Securities covered by the prospectus
(including such preliminary and summary prospectus) or any
supplement or amendment thereto;
(xii) use reasonable best efforts to (A) register or
qualify the Transfer Restricted Securities to be included in
such Shelf Registration Statement under such securities laws or
blue sky laws of such jurisdictions as any Electing Holder and
each placement or sales agent, if any, therefor and underwriter,
if any, thereof shall
14
<PAGE> 15
Exchange and Registration Rights Agreement
reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to
permit the continuance of offers, sales and dealings therein in
such jurisdictions during the period the Shelf Registration is
required to remain effective under Section 2(b) above and for so
long as may be necessary to enable any such Electing Holder,
agent or underwriter to complete its distribution of Securities
pursuant to such Shelf Registration Statement and (C) take any
and all other actions as may be reasonably necessary or
advisable to enable each such Electing Holder, agent, if any,
and underwriter, if any, to consummate the disposition in such
jurisdictions of such Transfer Restricted Securities; provided,
however, that the Company shall not be required for any such
purpose to (1) qualify as a foreign corporation in any
jurisdiction wherein it would not otherwise be required to
qualify but for the requirements of this Section 3(d)(xii), (2)
consent to general service of process or taxation in any such
jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its
stockholders;
(xiii) use its reasonable best efforts to obtain the
consent or approval of each governmental agency or authority,
whether federal, state or local, which may be required to effect
the Shelf Registration or the offering or sale in connection
therewith or to enable the selling holder or holders to offer,
or to consummate the disposition of, their Transfer Restricted
Securities;
(xiv) Unless any Transfer Restricted Securities shall
be in book-entry only form, cooperate with the Electing Holders
and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Transfer
Restricted Securities to be sold, and which certificates shall
not bear any restrictive legends; and, in the case of an
underwritten offering, enable such Transfer Restricted
Securities to be in such denominations and registered in such
names as the managing underwriters may reasonably request at
least seven business days prior to any sale of the Transfer
Restricted Securities; provided, however, that in the case of
Transfer Restricted Securities that are in book-entry only form,
(i) the Company shall prepare a new global note (with a new
CUSIP number) that is identical to the restricted global note
except that the new global note shall be free of restrictive
legends, (ii) the trustee under the Indenture shall authenticate
the new global note in the amount of zero dollars and (iii) as
sales are made pursuant to the Shelf Registration Statement, the
trustee shall, upon receipt of the Notice of Transfer Pursuant
to the Registration Statement (a copy of which is attached
hereto as Exhibit B), make an appropriate credit to the new
global note and a corresponding deduction from the restricted
global note;
(xv) provide a CUSIP number for all Transfer
Restricted Securities, not later than the applicable Effective
Time;
15
<PAGE> 16
Exchange and Registration Rights Agreement
(xvi) enter into one or more customary underwriting
agreements, engagement letters, agency agreements, "best
efforts" underwriting agreements or similar agreements, as
appropriate, including customary provisions relating to
indemnification and contribu tion, and take such other actions
in connection therewith as any Electing Holders aggregating at
least 50% in aggregate principal amount of the Transfer
Restricted Securities at the time outstanding shall request in
order to expedite or facilitate the disposition of such Transfer
Restricted Securities;
(xvii) whether or not an agreement of the type referred
to in Section 3(d)(xvi) hereof is entered into and whether or
not any portion of the offering contemplated by the Shelf
Registration is an underwritten offering or is made through a
placement or sales agent or any other entity, if reasonably
requested by the managing underwriters, if any, or Electing
Holders of at least 50% in aggregate principal amount of the
Transfer Restricted Securities at any time outstanding, (A) make
such representations and warranties to the Electing Holders and
the placement or sales agent, if any, therefor and the
underwriters, if any, thereof in form, substance and scope as
are customarily made in connection with an offering of debt
securities pursuant to any appropriate agreement or to a
registration statement filed on the form applicable to the Shelf
Registration; (B) obtain an opinion of counsel to the Company in
customary form and covering such matters, of the type
customarily covered by such an opinion addressed to such
Electing Holder or Electing Holders and the placement or sales
agent, if any, therefor and the underwriters, if any, thereof
and dated the effective date of such Shelf Registration
Statement (and if such Shelf Registration Statement contemplates
an underwritten offering of a part or all of the Transfer
Restricted Securities, dated the date of the closing under the
underwriting agreement relating thereto) (it being agreed that
the matters to be covered by such opinion shall include to the
extent relevant, the matters covered in the opinions of counsel
delivered pursuant to the Purchase Agreement; (C) to the extent
permitted by Statement of Accounting Standards No. 72 or by a
similar or successor pronouncement of the accounting profession,
obtain a "cold comfort" letter or letters from the independent
certified public accountants of the Company addressed to the
selling Electing Holders, the placement or sales agent, if any,
therefor or the underwriters, if any, thereof, dated (i) the
effective date of such Shelf Registration Statement and (ii) the
effective date of any prospectus supplement to the prospectus
included in such Shelf Registration Statement or post-effective
amendment to such Shelf Registration Statement which includes
unaudited or audited financial statements as of a date or for a
period subsequent to that of the latest such statements included
in such prospectus (and, if such Shelf Registration Statement
contemplates an underwritten offering pursuant to any prospectus
supplement to the prospectus included in such Shelf Registration
Statement or post-effective amendment to such Shelf Registration
16
<PAGE> 17
Exchange and Registration Rights Agreement
Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of
the latest such statements included in such prospectus, dated
the date of the closing under the underwriting agree ment
relating thereto), such letter or letters to be in customary
form and covering such matters of the type customarily covered
by letters of such type; (D) deliver such documents and
certificates, including officers' certificates, as may be
reasonably requested, to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above
or those contained in Section 5(a) hereof and the compliance
with or satisfaction of any agreements or conditions contained
in the underwriting agreement or other agreement entered into by
the Company; and (E) undertake such obligations relating to
expense reimbursement, indemnification and contribution as are
provided in Section 6 hereof;
(xviii) notify in writing each holder of Transfer
Restricted Securities of any proposal by the Company to amend or
waive any provision of this Exchange and Registration Rights
Agreement pursuant to Section 9(h) hereof and of any amendment
or waiver effected pursuant thereto, each of which notices shall
contain the text of the amendment or waiver proposed or
effected, as the case may be;
(xix) in the event that any broker-dealer registered
under the Exchange Act shall underwrite any Transfer Restricted
Securities or participate as a member of an underwriting
syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules (the "Conduct Rules) of
the National Association of Securities Dealers, Inc. ("NASD") or
any successor thereto, as amended from time to time) thereof,
whether as a holder of such Transfer Restricted Securities or as
an underwriter, a placement or sales agent or a broker or dealer
in respect thereof, or otherwise, assist such broker-dealer in
complying with the requirements of such Conduct Rules, including
by (A) if such Conduct Rules shall so require, engaging a
"qualified independent underwriter" (as defined in such Conduct
Rules) to participate in the preparation of the Shelf
Registration Statement relating to such Transfer Restricted
Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated
by such Shelf Registration Statement is an underwritten offering
or is made through a placement or sales agent, to recommend the
yield of such Transfer Restricted Securities, (B) indemnifying
any such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 6 hereof and
(C) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the
requirements of the Conduct Rules; and
(xx) comply with all applicable rules and regulations
of the Commission, and make generally available to its
securityholders not later than eighteen months after the
17
<PAGE> 18
effective date of such Shelf Registration Statement, an earning
statement of the Company and its subsidiaries (which is not
required to be audited) complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule
158 thereunder).
(e) In the event that the Company would be required,
pursuant to Section 3(d)(viii)(F) above, to notify the Electing Holders,
the placement or sales agent, if any, therefor and the managing
underwriters, if any, thereof, the Company shall without delay prepare
and furnish to each of the Electing Holders, to each placement or sales
agent, if any, and to each such underwriter, if any, a reasonable number
of copies of a prospectus supplemented or amended so that, as thereafter
delivered to purchasers of Transfer Restricted Securities, such
prospectus shall conform in all material respects to the applicable
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and shall not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
Each Electing Holder agrees that upon receipt of any notice from the
Company pursuant to Section 3(d)(viii)(F) hereof, such Electing Holder
shall forthwith discontinue the disposition of Transfer Restricted
Securities pursuant to the Shelf Registration Statement applicable to
such Transfer Restricted Securities until such Electing Holder shall
have received copies of such amended or supplemented prospectus, and if
so directed by the Company, such Electing Holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent file
copies, then in such Electing Holder's possession of the prospectus
covering such Transfer Restricted Securities at the time of receipt of
such notice.
(f) In the event of a Shelf Registration, in addition to the
information required to be provided by each Electing Holder in its
Notice Questionnaire, the Company may require such Electing Holder to
furnish to the Company such additional information regarding such
Electing Holder and such Electing Holder's intended method of
distribution of Transfer Restricted Securities as may be required in
order to comply with the Securities Act. Each such Electing Holder
agrees to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by such
Electing Holder to the Company or of the occurrence of any event in
either case as a result of which any prospectus relating to such Shelf
Registration contains or would contain an untrue statement of a material
fact regarding such Electing Holder or such Electing Holder's intended
method of disposition of such Transfer Restricted Securities or omits to
state any material fact regarding such Electing Holder or such Electing
Holder's intended method of disposition of such Transfer Restricted
Securities required to be stated therein or neces sary to make the
statements therein not misleading in light of the circumstances then
existing, and promptly to furnish to the Company any additional
information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with
respect to such Electing Holder or the disposition of such Transfer
Restricted
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<PAGE> 19
Exchange and Registration Rights Agreement
Securities, an untrue statement of a material fact or omit to state a
material fact required to be stated therein or neces sary to make the
statements therein not misleading in light of the circumstances then
existing.
(g) Until the expiration of two years after the Closing
Date, the Company will not, and will not permit any of its "affiliates"
(as defined in Rule 144) to, resell any of the Securities that have been
reacquired by any of them except pursuant to an effective registration
statement under the Securities Act.
(h) As a condition to its participation in the Exchange
Offer pursuant to the terms of this Agreement, each holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the completion thereof, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not
an affiliate of the Company, (B) it is not engaged in, does not intend
to engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Securities to be issued
in the Exchange Offer and (c) it is acquiring the Exchange Securities in
its ordinary course of business. In addition, all such holders of
Transfer Restricted Securities shall otherwise reasonably cooperate in
the Company's preparation for the Exchange Offer. Each holder of
Transfer Restricted Securities shall be required to acknowledge and
agree that any broker-dealer who acquired Securities directly from the
Company or any affiliate of the Company and any such holder intending to
use the Exchange Offer to participate in a distribution of the
securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters
(including any no-action letter obtained pursuant to clause (1) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and that such a secondary resale transaction should be
covered by an effective Registration Statement containing the selling
security holder information required by Item 507 or 508, as applicable,
of Regulation S-K if the resales are of Exchange Securities obtained by
such holder in exchange for Securities acquired by such holder directly
from the Company.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including fees and
disbursements of counsel for the placement or sales agent or underwriters, but
only in
19
<PAGE> 20
Exchange and Registration Rights Agreement
connection with such NASD registration, filing and review, (b) all fees and
expenses in connection with the qualification of the Securities for offering and
sale under the State securities and blue sky laws referred to in Sec tion
3(d)(xii) hereof and determination of their eligibility for investment under the
laws of such jurisdictions as any managing underwriters or the Electing Holders
may designate, including any fees and disbursements of counsel for the Electing
Holders or underwriters, but only in connection with such state securities and
blue sky law qualification and determination, (c) all expenses relating to the
preparation, printing, production, distribution and reproduction of each
registration statement required to be filed hereunder, each prospectus included
therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the expenses of preparing the Securities for
delivery and the expenses of printing or producing any underwriting agreements,
agreements among underwriters, selling agreements and blue sky or legal
investment memoranda and all other documents in connection with the offering,
sale or delivery of Securities to be disposed of (including certificates
representing the Securities), (d) messenger, telephone and delivery expenses
relating to the offering, sale or delivery of Securities and the preparation of
documents referred in clause (c) above, (e) fees and expenses of the Trustee
under the Indenture, any agent of the Trustee and any counsel for the Trustee
and of any collateral agent or custodian, (f) internal expenses (including all
salaries and expenses of the Company's officers and employees performing legal
or accounting duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the expenses
of any opinions or "cold comfort" letters required by or incident to such
performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(d)(xix)
hereof, (i) reasonable fees, disbursements and expenses of one counsel for the
Electing Holders retained in connection with a Shelf Registration, as selected
by the Electing Holders of at least a majority in aggregate principal amount of
the Transfer Restricted Securities held by Electing Holders (which counsel shall
be reasonably satisfactory to the Company), (j) any fees charged by securities
rating services for rating the Securities, and (k) fees, expenses and
disbursements of any other persons, including special experts, retained by the
Company in connection with such registration (collectively, the "Registration
Expenses"). To the extent that any Registration Expenses are incurred, assumed
or paid by any holder of Transfer Restricted Securities or any placement or
sales agent therefor or underwriter thereof, the Company shall reimburse such
person for the full amount of the Registration Expenses so incurred, assumed or
paid promptly after receipt of a written request therefor, together with
evidence of such Registration Expenses. Notwithstanding the foregoing, the
holders of the Transfer Restricted Securities being registered shall pay all
agency fees and commissions and underwriting discounts and commissions
attributable to the sale of such Transfer Restricted Securities and the fees and
disbursements of any counsel or other advisors or experts retained by such
holders (severally or jointly), other than the counsel and experts specifically
referred to above.
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each Purchaser
and each of the holders from time to time of Transfer Restricted Securities
that:
20
<PAGE> 21
Exchange and Registration Rights Agreement
(a) Each registration statement covering Transfer Restricted
Securities and each prospectus (including any preliminary or summary
prospectus) contained therein or furnished pursuant to Section 3(d) or
Section 3(c) hereof and any further amendments or supplements to any
such registration statement or prospectus, when it becomes effective or
is filed with the Commission, as the case may be, and, in the case of an
underwritten offering of Transfer Restricted Securities, at the time of
the closing under the underwriting agreement relating thereto, will
conform in all material respects to the requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
at all times subsequent to the Effective Time when a prospectus would be
required to be delivered under the Securities Act, other than from (i)
such time as a notice has been given to holders of Transfer Restricted
Securities pursuant to Section 3(d)(viii)(F) or Section 3(c)(iii)(F)
hereof until (ii) such time as the Company furnishes an amended or
supplemented prospectus pursuant to Section 3(e) or Section 3(c)(iv)
hereof, each such registration statement, and each prospectus (including
any summary prospectus) contained therein or furnished pursuant to
Section 3(d) or Section 3(c) hereof, as then amended or supplemented,
will conform in all material respects to the requirements of the
Securities Act and the Trust Indenture Act and the rules and regulations
of the Commission thereunder and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing; provided, however, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by a holder of Transfer Restricted
Securities expressly for use therein.
(b) Any documents incorporated by reference in any
prospectus referred to in Section 5(a) hereof, when they become or
became effective or are or were filed with the Commission, as the case
may be, will conform or conformed in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable,
and none of such documents will contain or contained an untrue statement
of a material fact or will omit or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by a holder of Transfer Restricted Securities expressly for use
therein.
(c) The compliance by the Company with all of the provisions
of this Exchange and Registration Rights Agreement and the consummation
of the transactions herein contemplated will not conflict with or result
in a breach of any of the terms or provisions of, or constitute a
21
<PAGE> 22
Exchange and Registration Rights Agreement
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any subsidiary of
the Company is a party or by which the Company or any subsidiary of the
Company is bound or to which any of the property or assets of the
Company or any subsidiary of the Company is subject, except for such
conflicts, breaches, violations or defaults as would not, individually
or in the aggregate, have a Material Adverse Effect (as defined in the
Purchase Agreement) and would not adversely effect the ability of the
Company to consummate the transactions contemplated by this Agreement
nor will such action result in any violation of the provisions of the
certificate of incorporation, as amended, or the by-laws of the Company
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
subsidiary of the Company or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Exchange and Registration Rights Agreement, except (i) the registration
under the Securities Act of the Securities, (ii) qualification of the
Indenture under the Trust Indenture Act, (iii) such consents, approvals,
authorizations, registrations or qualifications as may be required under
State securities or blue sky laws in connection with the offering and
distribution of the Securities, and (iv) approvals, registrations and
qualifications as may be required by any state gaming authority.
(d) This Exchange and Registration Rights Agreement has been
duly authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company. The Company will
indemnify and hold harmless each of the holders of Transfer Restricted
Securities included in an Exchange Registration Statement, each of the
Electing Holders of Transfer Restricted Securities included in a Shelf
Registration Statement and each person who participates as a placement
or sales agent or as an underwriter in any offering or sale of such
Transfer Restricted Securities against any losses, claims, damages or
liabilities, joint or several, to which such holder, agent or
underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Exchange
Registration Statement or Shelf Registration Statement, as the case may
be, under which such Transfer Restricted Securities were registered
under the Securities Act, or any preliminary, final or summary
prospectus contained therein or furnished by the Company to any such
holder, Electing Holder, agent or underwriter, or any amendment or
supplement thereto, or arise out of or are based upon the omis sion or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse such holder, such Electing Holder, such agent and such
underwriter for any legal or other expenses
22
<PAGE> 23
Exchange and Registration Rights Agreement
reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred;
provided, however, that the Company shall not be liable to any such
person in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, or preliminary, final or summary prospectus, or
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by such person expressly
for use therein.
(b) Indemnification by the Holders and any Agents and
Underwriters. The holders of all Transfer Restricted Securities covered
by any registration statement filed pursuant to Section 2(b) hereof and
each underwriter or sales agent or placement agent, severally and not
jointly, agree to (i) indemnify and hold harmless the Company and all
other holders of Transfer Restricted Securities, against any losses,
claims, damages or liabilities to which the Company or such other
holders of Transfer Restricted Securities may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in such registration statement, or any preliminary, final or
summary prospectus contained therein or furnished by the Company to any
such Electing Holder, agent or underwriter, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Company by such Electing Holder, sales agent, placement
agent or underwriter expressly for use therein, and (ii) reimburse the
Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that no such
Electing Holder shall be required to undertake liability to any person
under this Section 6(b) for any amounts in excess of the dollar amount
of the proceeds to be received by such Electing Holder from the sale of
such Electing Holder's Transfer Restricted Securities pursuant to such
registration.
(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of written notice of
the commencement of any action, such indemnified party shall, if a claim
in respect thereof is to be made against an indemnifying party pursuant
to the indemnification provisions of or contemplated by this Section 6,
notify such indemnifying party in writing of the commencement of such
action; but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party
otherwise than under the indemnification provisions of or contemplated
by Section 6(a) or 6(b) hereof. In case any such action shall be brought
against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying
23
<PAGE> 24
Exchange and Registration Rights Agreement
party shall be entitled to participate therein and, to the extent that
it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, such indemnifying
party shall not be liable to such indemnified party for any legal
expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry
of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified
party. The indemnifying party shell not be required to indemnify the
indemnified party for any amount paid or payable by the indemnified
party in the settlement of any proceeding effected without the written
consent of the indemnifying party which consent is not to be reasonably
withheld.
(d) Contribution. If for any reason the indemnification
provisions contemplated by Section 6(a) or Section 6(b) are unavailable
to or insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such state ment or omission. The parties hereto agree
that it would not be just and equitable if contributions pursuant to
this Section 6(d) were determined by pro rata allocation (even if the
holders or any agents or underwriters or all of them were treated as one
entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in this
Section 6(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal
or other fees or expenses reasonably
24
<PAGE> 25
Exchange and Registration Rights Agreement
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provi sions of
this Section 6(d), no holder shall be required to contribute any amount
in excess of the amount by which the dollar amount of the proceeds
received by such holder from the sale of any Transfer Restricted
Securities (after deducting any fees, discounts and commissions
applicable thereto) exceeds the amount of any damages which such holder
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, and no underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Transfer Restricted Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter 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 holders' and
any underwriters' obligations in this Section 6(d) to contribute shall
be several in proportion to the principal amount of Transfer Restricted
Securities registered or underwritten, as the case may be, by them and
not joint.
(e) The obligations of the Company under this Section 6
shall be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to each
officer, director and partner of each holder, agent and underwriter and
each person, if any, who controls any holder, agent or underwriter
within the meaning of the Securities Act; and the obligations of the
holders and any agents or underwriters contemplated by this Section 6
shall be in addition to any liability which the respective holder, agent
or underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company (including
any person who, with his consent, is named in any registration statement
as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Transfer
Restricted Securities covered by the Shelf Registration are to be sold
pursuant to an underwritten offering, the managing underwriter or
underwriters thereof shall be designated by Electing Holders holding at
least a majority in aggregate principal amount of the Transfer
Restricted Securities to be included in such offering, provided that
such designated managing underwriter or underwriters is or are
reasonably acceptable to the Company.
(b) Participation by Holders. Each holder of Transfer
Restricted Securities hereby agrees with each other such holder that no
such holder may participate in any underwritten offering hereunder
unless such holder (i) agrees to sell such holder's Transfer Restricted
25
<PAGE> 26
Exchange and Registration Rights Agreement
Securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements
and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Transfer Restricted Securities
that to the extent it shall be required to do so under the Exchange Act, the
Company shall timely file the reports required to be filed by it under the
Exchange Act or the Securities Act (including the reports under Section 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted
by the Commission under the Securities Act) and the rules and regulations
adopted by the Commission thereunder, and shall take such further action as any
holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitations of the exemption provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Transfer Restricted Securities in connection with that holder's sale pursuant
to Rule 144, the Company shall deliver to such holder a written statement as to
whether it has complied with such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents,
warrants, covenants and agrees that it has not granted, and shall not
grant, registration rights with respect to Transfer Restricted
Securities or any other securities which would be inconsistent with the
terms contained in this Exchange and Registration Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge
that there would be no adequate remedy at law if the Company fails to
perform any of its obligations hereunder and that the Purchasers and the
holders from time to time of the Transfer Restricted Securities may be
irreparably harmed by any such failure, and accordingly agree that the
Purchasers and such holders, in addition to any other remedy to which
they may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of the Company under this
Exchange and Registration Rights Agreement in accordance with the terms
and conditions of this Exchange and Registration Rights Agreement, in
any court of the United States or any State thereof having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers
and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, if delivered
personally or by courier, or three days after being deposited in the
mail (registered or certified mail, postage prepaid, return receipt
requested) as follows: If to the
26
<PAGE> 27
Exchange and Registration Rights Agreement
Company, to it at Aztar Corporation, 2390 East Camelback Road, Suite
400, Phoenix, Arizona 85016, and if to a holder, to the address of such
holder set forth in the security register or other records of the
Company, or to such other address as the Company or any such holder may
have furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of
this Exchange and Registration Rights Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the parties
hereto and the holders from time to time of the Transfer Restricted
Securities and the respective successors and assigns of the parties
hereto and such holders. In the event that any transferee of any holder
of Transfer Restricted Securities shall acquire Transfer Restricted
Securities, in any manner, whether by gift, bequest, purchase, operation
of law or otherwise, such transferee shall, without any further writing
or action of any kind, be deemed a beneficiary hereof for all purposes
and such Transfer Restricted Securities shall be held subject to all of
the terms of this Exchange and Registration Rights Agreement, and by
taking and holding such Transfer Restricted Securities such transferee
shall be entitled to receive the benefits of, and be conclusively deemed
to have agreed to be bound by all of the applicable terms and provisions
of this Exchange and Registration Rights Agreement. If the Company shall
so request, any such successor, assign or transferee shall agree in
writing to acquire and hold the Transfer Restricted Securities subject
to all of the applicable terms hereof.
(e) Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this
Exchange and Registration Rights Agreement or made pursuant hereto shall
remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any holder
of Transfer Restricted Securities, any director, officer or partner of
such holder, any agent or underwriter or any director, officer or
partner thereof, or any controlling person of any of the foregoing, and
shall survive delivery of and payment for the Transfer Restricted
Securities pursuant to the Purchase Agreement and the transfer and
registration of Transfer Restricted Securities by such holder and the
consummation of an Exchange Offer.
(f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
(g) Headings. The descriptive headings of the several
Sections and paragraphs of this Exchange and Registration Rights
Agreement are inserted for convenience only, do not constitute a part of
this Exchange and Registration Rights Agreement and shall not affect in
any way the meaning or interpretation of this Exchange and Registration
Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and
Registration Rights
27
<PAGE> 28
Agreement and the other writings referred to herein (including the
Indenture and the form of Securities) or delivered pursuant hereto which
form a part hereof contain the entire understanding of the parties with
respect to its subject matter. This Exchange and Registration Rights
Agreement supersedes all prior agreements and understandings between the
parties with respect to its subject matter. This Exchange and
Registration Rights Agreement may be amended and the observance of any
term of this Exchange and Registration Rights Agreement may be waived
(either generally or in a particular instance and either retroactively
or prospectively) only by a written instrument duly executed by the
Company and the holders of at least a majority in aggregate principal
amount of the Transfer Restricted Securities at the time outstanding.
Each holder of any Transfer Restricted Securities at the time or
thereafter outstanding shall be bound by any amendment or waiver
effected pursuant to this Section 9(h), whether or not any notice,
writing or marking indicating such amendment or waiver appears on such
Transfer Restricted Securities or is delivered to such holder.
(i) Inspection. For so long as this Exchange and
Registration Rights Agreement shall be in effect, this Exchange and
Registration Rights Agreement and a complete list of the names and
addresses of all the holders of Transfer Restricted Securities shall be
made available for inspection and copying on any business day by any
holder of Transfer Restricted Securities for proper purposes only (which
shall include any purpose related to the rights of the holders of
Transfer Restricted Securities under the Securities, the Indenture and
this Agreement) at the offices of the Company at the address thereof set
forth in Section 9(c) above and at the office of the Trustee under the
Indenture.
(j) Counterparts. This agreement may be executed by the
parties in counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute
one and the same instrument.
28
<PAGE> 29
Exchange and Registration Rights Agreement
If the foregoing is in accordance with your understanding, please sign
and return to us counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
Aztar Corporation
By: /s/ Neil A. Ciarfalia
------------------------------------
Name: Neil A. Ciarfalia
Title: Treasurer
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
NationsBanc Montgomery Securities LLC
Credit Suisse First Boston Corporation
Lehman Brothers Inc.
Wasserstein Perella Securities, Inc.
SG Cowen Securities Corporation
PNC Capital Markets, Inc.
BY: /s/ Goldman, Sachs & Co.
---------------------------------
(Goldman, Sachs & Co.)
on behalf of each of the Purchasers
29
<PAGE> 30
Exchange and Registration Rights Agreement
EXHIBIT A
AZTAR CORPORATION
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENT -- IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE]*
The Depository Trust Company ("DTC") has identified you as a DTC Participant
through which beneficial interests in the Aztar Corporation (the "Company")
8-7/8% Senior Subordinated Notes due 2007 (the "Securities") are held.
The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of the
enclosed materials as soon as possible as their rights to have the Securities
included in the registration statement depend upon their returning the Notice
and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Aztar Corporation,
2390 East Camelback Road, Suite 400, Phoenix, Arizona 85016, telephone number:
(602) 381-4100.
* Not less than 28 calendar days from date of mailing.
<PAGE> 31
Exchange and Registration Rights Agreement
AZTAR CORPORATION
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement") between Aztar Corporation (the
"Company") and the Purchasers named therein. Pursuant to the Exchange and
Registration Rights Agreement, the Company has filed with the United States
Securities and Exchange Commission (the "Commission") a registration statement
on Form [__] (the "Shelf Registration Statement") for the registration and
resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities
Act"), of the Company's 8-7/8% Senior Subordinated Notes due 2007 (the
"Securities"). A copy of the Exchange and Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights Agreement.
Each beneficial owner of Transfer Restricted Securities (as defined below) is
entitled to have the Transfer Restricted Securities beneficially owned by it
included in the Shelf Registration Statement. In order to have Transfer
Restricted Securities included in the Shelf Registration Statement, this Notice
of Registration Statement and Selling Securityholder Questionnaire ("Notice and
Questionnaire") must be completed, executed and delivered to the Company's
counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR
RESPONSE]. Beneficial owners of Transfer Restricted Securities who do not
complete, execute and return this Notice and Questionnaire by such date (i) will
not be named as selling securityholders in the Shelf Registration Statement and
(ii) may not use the Prospectus forming a part thereof for resales of Transfer
Restricted Securities.
Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Transfer Restricted Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Shelf Registration Statement
and related Prospectus.
The term "Transfer Restricted Securities" is defined in the Exchange and
Registration Rights Agreement.
<PAGE> 32
Exchange and Registration Rights Agreement
ELECTION
The undersigned holder (the "Selling Securityholder") of Transfer Restricted
Securities hereby elects to include in the Shelf Registration Statement the
Transfer Restricted Securities beneficially owned by it and listed below in Item
(3). The undersigned, by signing and returning this Notice and Questionnaire,
agrees to be bound with respect to such Transfer Restricted Securities by the
terms and conditions of this Notice and Questionnaire and the Exchange and
Registration Rights Agreement, including, without limitation, Section 6 of the
Exchange and Registration Rights Agreement, as if the undersigned Selling
Securityholder were an original party thereto.
Upon any sale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, the Selling Securityholder will be required to deliver
to the Company and Trustee the Notice of Transfer set forth in Appendix A to the
Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
<PAGE> 33
Exchange and Registration Rights Agreement
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
(b) Full Legal Name of Registered Holder (if not the same as in (a)
above) of Transfer Restricted Securities Listed in Item (3)
below:
(c) Full Legal Name of DTC Participant (if applicable and if not the
same as (b) above) Through Which Transfer Restricted Securities
Listed in Item (3) below are Held:
(2) Address for Notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
(3) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(a) Principal amount of Transfer Restricted Securities beneficially
owned: CUSIP No(s). of such Transfer Restricted Securities:
(b) Principal amount of Securities other than Transfer Restricted
Securities beneficially owned:
CUSIP No(s). of such other Securities:
<PAGE> 34
Exchange and Registration Rights Agreement
(c) Principal amount of Transfer Restricted Securities which the
undersigned wishes to be included in the Shelf Registration
Statement:
CUSIP No(s). of such Transfer Restricted Securities to be
included in the Shelf Registration Statement:
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other
securities of the Company, other than the Securities listed above in
Item (3).
State any exceptions here:
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any of
its affiliates, officers, directors or principal equity holders (5% or
more) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during
the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder
intends to distribute the Transfer Restricted Securities listed above in
Item (3) only as follows (if at all): Such Transfer Restricted
Securities may be sold from time to time directly by the undersigned
Selling Securityholder or, alternatively, through underwriters,
broker-dealers or agents. Such Transfer Restricted Securities may be
sold in one or more transactions at fixed prices, at prevailing market
prices at the time of sale, at varying prices determined at the time of
sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (i) on
any national securities exchange or quotation service on which the
Registered Securities may be listed or quoted at the time of sale, (ii)
in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or (iv)
through the writing of options. In connection with sales of the Transfer
Restricted Securities or otherwise, the Selling Securityholder may enter
into hedging transactions with broker-dealers, which may in turn engage
in short sales of the Transfer Restricted Securities in the course of
hedging the positions they assume. The Selling
<PAGE> 35
Exchange and Registration Rights Agreement
Securityholder may also sell Transfer Restricted Securities short and
deliver Transfer Restricted Securities to close out such short
positions, or loan or pledge Transfer Restricted Securities to
broker-dealers that in turn may sell such securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.
In the event that the Selling Securityholder transfers all or any portion of the
Transfer Restricted Securities listed in Item (3) above after the date on which
such information is provided to the Company, the Selling Securityholder agrees
to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in connection with the preparation of the
Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Exchange and Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:
(i) To the Company: Aztar Corporation
2390 East Camelback Road, Suite 400
Phoenix, Arizona 85016
Attn: Chief Financial Officer
(ii) With a copy to: Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attn: Brian G. Cartwright, Esq.
<PAGE> 36
Exchange and Registration Rights Agreement
Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the Company and the
Selling Securityholder (with respect to the Transfer Restricted Securities
beneficially owned by such Selling Securityholder and listed in Item (3) above.
This Agreement shall be governed in all respects by the laws of the State of New
York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated:
Selling Securityholder
(Print/type full legal name of beneficial owner of Transfer
Restricted Securities)
By:
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attn: Brian G. Cartwright, Esq.
<PAGE> 37
Exchange and Registration Rights Agreement
EXHIBIT B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
[NAME OF TRUSTEE]
AZTAR CORPORATION
c/o [NAME OF TRUSTEE]
[ADDRESS OF TRUSTEE]
Attention: Trust Officer
Re: Aztar Corporation (the "Company")
8 7/8% Senior Subordinated Notes due 2007
Dear Sirs:
Please be advised that has transferred $
aggregate principal amount of the above-referenced Notes pursuant to an
effective Registration Statement on Form [ ] (File No. 333- ) filed by the
Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated [DATE] or in supplements thereto, and that the aggregate principal amount
of the Notes transferred are the Notes listed in such Prospectus opposite such
owner's name.
Dated:
Very truly yours,
(Name)
By:
-------------------------------------
(Authorized Signature)
<PAGE> 1
EXHIBIT 5.1
[LATHAM & WATKINS LETTERHEAD]
May 26, 1999
Aztar Corporation
2390 East Camelback Road, Suite 400
Phoenix, Arizona 85016
Re: REGISTRATION STATEMENT ON FORM S-4
Ladies and Gentlemen:
In connection with the registration of $235,000,000 aggregate principal
amount of 8 7/8% Senior Subordinated Notes due 2007 (the "New Notes") by Aztar
Corporation, a Delaware corporation (the "Company"), on Form S-4 filed with the
Securities and Exchange Commission (the "Commission") herewith (the
"Registration Statement"), you have requested our opinion with respect to the
matter set forth below. The New Notes will be issued pursuant to an indenture
(the "Indenture"), dated as of May 3, 1999, among the Company and U.S. Bank
National Association, as trustee (the "Trustee"). The New Notes will be issued
in exchange for the Company's outstanding 8 7/8% Senior Subordinated Notes due
2007 (the "Old Notes") on the terms set forth in the prospectus contained in the
Registration Statement and the Letter of Transmittal filed as an exhibit thereto
(the "Exchange Offer").
In our capacity as your special counsel, we have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to our satisfaction of such documents,
corporate records and instruments, as we have deemed necessary or appropriate
for purposes of this opinion.
As to facts material to our opinion, statements and assumptions expressed
herein, we have, with your consent, relied upon certificates and oral or written
statements and representations of officers and other representatives of the
Company and others. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed necessary.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transactions only of
the internal laws of the State of New York and the General Corporation Law of
the State of Delaware and we express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws, or as to any matters
of municipal law or the laws of any local agencies within any state.
Subject to the foregoing and the other matters set forth herein, it is our
opinion that, as of the date hereof the New Notes have been duly authorized by
all necessary corporate action of the Company, and when duly executed,
authenticated and delivered in accordance with the terms of the Exchange Offer
and the Indenture, will constitute legally valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.
<PAGE> 2
The opinion rendered above is subject to the following exceptions,
limitations and qualifications: (i) the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; and (ii) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading "Legal
Matters."
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE> 1
EXHIBIT 12.1
AZTAR CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
PROFORMA
FIRST QUARTER FIRST QUARTER YEAR ENDED
------------- ----------------- ------------------------------------------------
1999 1999 1998 1998 1997 1996 1995 1994
------------- ------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income/(Loss) from continuing operations
before income taxes and extraordinary
items.................................... $ 4,794 $ 4,794 $ 1,021 $19,876 $ 2,257 $(2,060) $(10,181) $18,666
Fixed charges excluding interest expense
capitalized.............................. 15,133 15,945 17,555 68,122 72,307 66,727 58,295 54,976
Amortization of previously capitalized
interest................................. 260 260 262 1,048 1,048 974 960 958
------- ------- ------- ------- ------- ------- -------- -------
Adjusted earnings........................ $20,187 $20,999 $18,838 $89,046 $75,612 $65,641 $ 49,074 $74,600
======= ======= ======= ======= ======= ======= ======== =======
Fixed charges:
Interest expense......................... $13,473 $14,285 $15,136 $59,588 $62,543 $58,577 $ 51,052 $49,711
Interest portion of rent................. 1,660 1,660 2,419 8,534 9,764 8,150 7,243 5,265
------- ------- ------- ------- ------- ------- -------- -------
15,133 15,945 17,555 68,122 72,307 66,727 58,295 54,976
Interest expense capitalized............... -- -- -- -- -- 4,503 5,290 2,664
------- ------- ------- ------- ------- ------- -------- -------
Total fixed charges.................... $15,133 $15,945 $17,555 $68,122 $72,307 $71,230 $ 63,585 $57,640
======= ======= ======= ======= ======= ======= ======== =======
Ratio of earnings to fixed charges 1.33x 1.32x 1.07x 1.31x 1.05x .92x .77x 1.29x
======= ======= ======= ======= ======= ======= ======== =======
Fixed charges in excess of earnings........ $ 5,589 $ 14,511
======= ========
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF AZTAR CORPORATION
Aztar Corporation has no parent corporation. In addition to the
subsidiaries listed below, Aztar Corporation has nine other wholly-owned
subsidiaries. The unnamed subsidiaries, considered in the aggregate, would not
constitute a significant subsidiary.
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
NAME OR ORGANIZATION
---- ---------------
<S> <C>
Adamar Garage Corporation Delaware
Adamar of Nevada Nevada
Adamar of New Jersey, Inc. New Jersey
dba Tropicana Casino and Resort
Atlantic-Deauville, Inc. New Jersey
Aztar Development Corporation Delaware
Aztar Indiana Gaming Corporation Indiana
dba Casino Aztar Evansville
Aztar Missouri Gaming Corporation Missouri
dba Casino Aztar Caruthersville
Hotel Ramada of Nevada Nevada
dba Tropicana Resort and Casino
Ramada Express, Inc. Nevada
dba Ramada Express Hotel and Casino
Ramada New Jersey, Inc. New Jersey
Ramada New Jersey Holdings Corporation Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of
Aztar Corporation of our reports dated February 3, 1999 relating to the
consolidated financial statements and financial statement schedule of Aztar
Corporation and of the financial statements of Tropicana Enterprises, which
appear in such Registration Statement. We also consent to the references to us
under the headings "Experts" in such Registration Statement.
PRICEWATERHOUSECOOPERS LLP
Phoenix, Arizona
May 26, 1999
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0417860
(State of Incorporation) (I.R.S. Employer
Identification No.)
U.S. Bank Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
AZTAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0636534
(State of Incorporation) (I.R.S. Employer
Identification No.)
2390 East Camelback Road
Suite 400
Phoenix, Arizona 85016
(Address of Principal Executive Offices) (Zip Code)
8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
(Title of the Indenture Securities)
<PAGE> 2
GENERAL
1. GENERAL INFORMATION. Furnish the following information as to the Trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS. If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
statement of eligibility and qualification.
1. Copy of Articles of Association.*
2. Copy of Certificate of Authority to Commence Business.*
3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).*
4. Copy of existing By-Laws.*
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the act.
7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or
examining authority is incorporated by reference to File Number
333-56865.
* Incorporated by reference to File Number 333-30939.
<PAGE> 3
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 24th day of May, 1999.
U.S. BANK NATIONAL ASSOCIATION
/s/ Richard H. Prokosch
---------------------------------
Richard H. Prokosch
Assistant Vice President
/s/ Jo Ann M. Schalk
- ---------------------------
Jo Ann M. Schalk
Assistant Secretary
<PAGE> 4
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: May 24, 1999
U.S. BANK NATIONAL ASSOCIATION
/s/ Richard H. Prokosch
---------------------------------
Richard H. Prokosch
Assistant Vice President
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER
UNREGISTERED 8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
AZTAR CORPORATION
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED __________, 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON ___________, 1999 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY THE COMPANY.
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
U.S. BANK NATIONAL ASSOCIATION
DELIVER TO:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Specialized Finance Department
By Facsimile:
(Eligible Institutions Only)
(651) 244-1537
Reference:Aztar Corporation
For Information or
Confirmation by Telephone:
(651) 244-5011
ORIGINALS OF ALL DOCUMENTS SENT BY FACSIMILE SHOULD BE SENT PROMPTLY BY
REGISTERED OR CERTIFIED MAIL, BY HAND OR BY OVERNIGHT DELIVERY SERVICE.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
IF YOU WISH TO EXCHANGE UNREGISTERED 8 7/8% SENIOR SUBORDINATED NOTES
DUE 2007 (THE "OLD NOTES"), FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT OF
REGISTERED 8 7/8% SENIOR SUBORDINATED NOTES DUE 2007 (THE "NEW NOTES"),
PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY TENDER (AND NOT WITHDRAW) OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
SIGNATURES MUST BE PROVIDED.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE
COMPLETING THIS LETTER OF TRANSMITTAL
<PAGE> 2
This Letter of Transmittal is to be completed by holders of Old Notes
either if Old Notes are to be forwarded herewith or if tenders of Old Notes are
to be made by book-entry transfer to an account maintained by U.S. Bank National
Association (the "Exchange Agent") at The Depository Trust Company pursuant to
the procedures set forth in "The Exchange Offer -- Procedures for Tendering" in
the Prospectus (as defined).
Holders of Old Notes whose certificates for such Old Notes are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date or
who cannot complete the procedures for book-entry transfer on a timely basis,
must tender their Old Notes according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery Procedures" in the
Prospectus.
DESCRIPTION OF TENDERED OLD NOTES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE
NAMES(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) CERTIFICATE PRINCIPAL AMOUNT
AS IT APPEARS ON THE 8 7/8% SENIOR SUBORDINATED NOTES DUE 2007 NUMBER(S) OF OLD NOTES
(PLEASE FILL IN, IF BLANK) OF OLD NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
TOTAL PRINCIPAL
AMOUNT OF OLD
NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution____________________________________________
Account Number___________________________________________________________
Transaction Code Number__________________________________________________
[ ] CHECK HERE AND ENCLOSE A COPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)_____________________________________________
Window Ticket Number (if any)____________________________________________
Date of Execution of Notice of Guaranteed Delivery_______________________
Name of Institution which Guaranteed Delivery____________________________
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution____________________________________________
Account Number___________________________________________________________
Transaction Code Number__________________________________________________
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY ACCOUNT
NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR YOUR
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:____________________________________________________________________
Address:_________________________________________________________________
3
<PAGE> 4
LADIES AND GENTLEMEN:
1. The undersigned hereby tenders to Aztar Corporation, a Delaware
corporation (the "Company"), the Old Notes, described above pursuant to the
Company's offer of $1,000 principal amount of the New Notes, in exchange for
each $1,000 principal amount of the Old Notes, upon the terms and subject to the
conditions contained in the Prospectus dated ________, 1999 (the "Prospectus"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which together constitute the "Exchange Offer").
2. The undersigned hereby represents and warrants that it has full
authority to tender the Old Notes described above. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Company to
be necessary or desirable to complete the tender of Old Notes.
3. The undersigned understands that the tender of the Old Notes
pursuant to all of the procedures set forth in the Prospectus will constitute an
agreement between the undersigned and the Company as to the terms and conditions
set forth in the Prospectus.
4. Unless the box under the heading "Special Registration Instructions"
is checked, the undersigned hereby represents and warrants that:
(i) the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the
undersigned, whether or not the undersigned is the holder;
(ii) neither the undersigned nor any such other person is
engaging in or intends to engage in a distribution of such
New Notes;
(iii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate
in the distribution of such New Notes;
(iv) the undersigned acknowledges and agrees that any person who
is a broker-dealer registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or is
participating in the Exchange Offer for the purpose of
distributing the New Notes must comply with the registration
and prospectus
4
<PAGE> 5
delivery requirements of the Securities Act in connection
with a secondary resale transaction of the New Notes or
interests therein acquired by such person and cannot rely on
the position of the staff of the Commission set forth in
certain no-action letters;
(v) the undersigned understands that a secondary resale
transaction described in clause (vi) above and any resales
of New Notes or interests therein obtained by such holder in
exchange for Old Notes or interests therein originally
acquired by such holder directly from the Company should be
covered by an effective registration statement containing
the selling security holder information required by Item 507
or Item 508, as applicable, of Regulation S-K of the
Commission; and
(vi) neither the holder nor any such other person is an
"affiliate," as such term is defined under Rule 405
promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), of the Company.
5. The undersigned may, if and only if unable to make all of the
representations and warranties contained in Item 4 above, elect to have its Old
Notes registered in the shelf registration described in the Exchange and
Registration Rights Agreement, dated as of May 3, 1999, between the Company and
Goldman Sachs & Co., NationsBanc Montgomery Securities LLC, Credit Suisse First
Boston Corporation, Lehman Brothers Inc., Wasserstein Perella Securities, Inc.,
SG Cowen Securities Corporation, and PNC Capital Markets, Inc., as initial
purchasers, in the form filed as an exhibit to the registration statement of
which the Prospectus is a part. Such election may be made by checking the box
under "Special Registration Instructions." By making such election, the
undersigned agrees, as a holder of transfer restricted securities participating
in a shelf registration, (i) to indemnify and hold harmless the Company and all
other holders of transfer restricted securities against any losses, claims,
damages or liabilities (or actions in respect thereof) arising out of or based
upon an untrue statement or alleged untrue statement of any material fact
contained in the shelf registration statement filed with respect to such Old
Notes or the Prospectus or in any amendment thereof or supplement thereto or
arising out of or based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the undersigned expressly for use
therein and (ii) reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred. Any such indemnification
shall be governed by the terms and subject to the conditions set forth in the
Exchange and Registration Rights Agreement, including, without limitation, the
provisions regarding notice, retention of counsel, contribution and payment of
expenses set forth therein. The above summary of the indemnification provision
of the Exchange and Registration Rights Agreement is not intended to be
exhaustive and is qualified in its entirety by reference to the Exchange and
Registration Rights Agreement.
6. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a
5
<PAGE> 6
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus in
connection with any resale of such New Notes, however, by so acknowledging and
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. If the undersigned is
a broker-dealer and Old Notes held for its own account were not acquired as a
result of market-making or other trading activities, such Old Notes cannot be
exchanged pursuant to the Exchange Offer.
7. Any obligation of the undersigned hereunder shall be binding upon
the successors, assigns, executors, administrators, trustees in bankruptcy and
legal and personal representatives of the undersigned.
8. Unless otherwise indicated herein under "Special Delivery
Instructions," the certificates for the New Notes will be issued in the name of
the undersigned.
6
<PAGE> 7
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 1)
To be completed ONLY IF the New Notes are to be issued or sent to
someone other than the undersigned or to the undersigned at an address other
than that provided above.
Mail [ ] Issue [ ] (check appropriate boxes) certificates to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address:________________________________________________________________________
(INCLUDING ZIP CODE)
________________________________________________________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
(See Item 5)
To be completed ONLY IF (i) the undersigned satisfies the conditions set
forth in Item 5 above, (ii) the undersigned elects to register its Old Notes in
the Shelf Registration described in the Exchange and Registration Rights
Agreement and (iii) the undersigned agrees to indemnify certain entities and
individuals as set forth in the Exchange and Registration Rights Agreement and
summarized in Item 5 above.
[ ] By checking this box the undersigned hereby (i) represents that it
is unable to make all of the representations and warranties set forth in Item 4
above, (ii) elects to have its Old Notes registered pursuant to the shelf
registration described in the Exchange and Registration Rights Agreement and
(iii) agrees to indemnify certain entities and individuals identified in, and to
the extent provided in, the Exchange and Registration Rights Agreement and
summarized in Item 5 above.
- --------------------------------------------------------------------------------
7
<PAGE> 8
- --------------------------------------------------------------------------------
SIGNATURE
To be completed by all exchanging noteholders. Must be signed by
registered holder exactly as name appears on Old Notes. If signature is by
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
please set forth full title. See Instruction 3.
X_______________________________________________________________________________
X_______________________________________________________________________________
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATURE
Dated:__________________________________________________________________________
Names(s):_______________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity:_______________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone
No.: ____________________________________________________________
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 1)
Certain Signatures Must be Guaranteed by an Eligible Institution
________________________________________________________________________________
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
________________________________________________________________________________
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER
(INCLUDING AREA CODE) OF FIRM)
________________________________________________________________________________
(AUTHORIZED SIGNATURE)
________________________________________________________________________________
(PRINTED NAME)
________________________________________________________________________________
(TITLE)
Dated:__________________________________________________________________________
- --------------------------------------------------------------------------------
PLEASE READ THE FOLLOWING INSTRUCTIONS,
WHICH FORM A PART OF THIS LETTER OF TRANSMITTAL
8
<PAGE> 9
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal
must be guaranteed by an eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or by an "eligible guarantor
institution" within the meaning of Rule l7Ad-15 promulgated under the Exchange
Act (an "Eligible Institution") unless the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" above has not been completed or
the Old Notes described above are tendered for the account of an Eligible
Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES. The Old Notes,
together with a properly completed and duly executed Letter of Transmittal (or
copy thereof), should be mailed or delivered to the Exchange Agent at the
address set forth above.
Holders who tender their Old Notes using DTC "ATOP" procedures do not
need to submit a written Letter of Transmittal to the Exchange Agent.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY OR ANY OF THE
GUARANTORS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
3. SIGNATURE ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by a person other than a registered holder
of any Old Notes, such Old Notes must be endorsed or accompanied by appropriate
bond powers, signed by such registered holder exactly as such registered
holder's name appears on such Old Notes.
If this Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
4. MISCELLANEOUS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance, and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding on all parties. The Company reserves the absolute
right to reject any or all Old Notes not properly tendered or any Old Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any defects,
irregularities, or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) will be final and
binding. Unless waived, any defects or irregularities in connection with tenders
9
<PAGE> 10
of Old Notes must be cured within such time as the Company shall determine.
Neither the Company, the Exchange Agent, nor any other person shall be under any
duty to give notification of defects in such tenders or shall incur any
liability for failure to give such notification. Tenders of Old Notes will not
he deemed to have been made until such defects or irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holder thereof as
soon as practicable following the Expiration Date.
10
<PAGE> 11
NOTICE OF GUARANTEED DELIVERY
TO TENDER
UNREGISTERED 8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
AZTAR CORPORATION
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED ____________, 1999
As set forth in the Prospectus (as defined), this form or one
substantially equivalent hereto must be used to accept the Exchange Offer (i) if
certificates for unregistered 8 7/8% Senior Subordinated Notes due 2007 (the
"Old Notes") of Aztar Corporation, a Delaware corporation (the "Company"), are
not immediately available, (ii) time will not permit a holder's Old Notes or
other required documents to reach U.S. Bank National Association (the "Exchange
Agent") on or prior to the Expiration Date (as defined) or (iii) the procedure
for book-entry transfer cannot be completed on a timely basis. This form may be
delivered by facsimile transmission, registered or certified mail, by hand or by
overnight delivery service to the Exchange Agent. See "The Exchange
Offer--Procedures for Tendering" in the Prospectus.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON __________, 1999 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY THE COMPANY.
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
U.S. NATIONAL BANK ASSOCIATION
DELIVER TO:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Specialized Finance Department
BY FACSIMILE:
(ELIGIBLE INSTITUTIONS ONLY)
(651) 244-1537
REFERENCE:AZTAR CORPORATION
FOR INFORMATION OR
CONFIRMATION BY TELEPHONE:
(651) 244-5011
Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR TRANSMISSION OF
THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 12
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus dated ____________, 1999
(as the same may be amended or supplemented from time to time, the
"Prospectus"), and the related Letter of Transmittal, receipt of which is hereby
acknowledged, the aggregate principal amount of Old Notes set forth below
pursuant to the guaranteed delivery procedures set forth in the Prospectus under
the caption "The Exchange Offer--Guaranteed Delivery Procedures."
- --------------------------------------------------------------------------------
Name(s) of Registered Holder(s):___________________________________________
Aggregate Principal
Amount Tendered: $_________________________________________________________
Certificate No.(s)
(if available):____________________________________________________________
(Total Principal Amount Represented by
Old Notes Certificate(s)):_________________________________________________
$__________________________________________________________________________
If Old Notes will be tendered by book-entry transfer, provide the following
information;
DTC Account Number:________________________________________________________
Date:______________________________________________________________________
* Must be in denominations of $1,000 and any integral multiple thereof.
- --------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
<PAGE> 13
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X__________________________________ ___________________________________
X__________________________________ ___________________________________
Signature(s) or Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:____________________________________________
Must be signed by the holder(s) of the Old Notes as their name(s)
appear(s) on certificates for Old Notes or on a security position listing,
or by person(s) authorized to become registered holder(s) by endorsement
and documents transmitted with this Notice of Guaranteed Delivery. If
signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title
below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):___________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Capacity:__________________________________________________________________
Address(es):_______________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
- --------------------------------------------------------------------------------
THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED.
<PAGE> 14
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of or participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Signature Program or a
firm or other entity identified in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended, as an "eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker, municipal securities dealer, government securities broker,
government securities dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or learning agency; or (v) a savings
association that is a participant in a Securities Transfer Association
recognized program (each of the foregoing being referred to as an "Eligible
Institution"), hereby guarantees to deliver to the Exchange Agent, at one of its
addresses set forth above, either the Old Notes to the Exchange Agent's account
at The Depositary Trust Company, pursuant to the procedures for book-entry
transfer set forth in the Prospectus, within three New York Stock Exchange, Inc.
trading days after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Old Notes
tendered hereby to the Exchange Agent within the time period set forth above and
that failure to do so could result in a financial loss to the undersigned.
- --------------------------------------------------------------------------------
___________________________________ ___________________________________
Name of Firm Authorized Signature
___________________________________ ___________________________________
Address Title
___________________________________ ___________________________________
Zip Code (Please Type or Print)
Area Code and Telephone Dated:_____________________________
No. ________________________________
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM.
<PAGE> 15
LETTER TO REGISTERED HOLDERS AND DTC PARTICIPANTS
REGARDING THE OFFER TO EXCHANGE
$235,000,000 PRINCIPAL AMOUNT OF 8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OF THE OUTSTANDING
$235,000,000 PRINCIPAL AMOUNT OF 8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
OF
AZTAR CORPORATION
To Registered Holders and The Depository Trust Company Participants:
We are enclosing herewith the materials listed below relating to the
offer by Aztar Corporation (the "Company") to exchange the Company's new
8 7/8% Senior Subordinated Notes due 2007 (the "New Notes"), pursuant to an
offering registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount of the Company's issued and
outstanding 8 7/8% Senior Subordinated Notes due 2007 (the "Old Notes") upon
the terms and subject to the conditions set forth in the Company's Prospectus,
dated ____________, 1999, and the related Letter of Transmittal (which together
constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated ___________, 1999;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder or DTC Participant
from Beneficial Owner; and
5. Letter which may be sent to your clients for whose
account you hold definitive registered notes or book-entry interests
representing Old Notes in your name or in the name of your nominee, to
accompany the instruction form referred to above, for obtaining such
client's instruction with regard to the Exchange Offer.
- --------------------------------------------------------------------------------
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE
EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________,
1999, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
The Exchange Offer is not conditioned upon any minimum number of Old
Notes being tendered.
To participate in the Exchange Offer, a beneficial holder must either
(i) cause to be delivered to U.S. Bank National Association (the "Exchange
Agent"), at the address set forth in the Letter of Transmittal, definitive
registered notes representing Old Notes in proper form for transfer together
with a properly executed Letter of Transmittal or (ii) cause a DTC Participant
to tender such holder's Old Notes to the Exchange Agent's account maintained at
the Depository Trust Company ("DTC") for the benefit of the Exchange Agent
through DTC's Automated Tender Offer Program ("ATOP"), including transmission of
a computer-generated message that acknowledges and agrees to be bound by the
terms of the Letter of Transmittal. By complying with DTC's ATOP procedures with
respect to the Exchange Offer, the DTC Participant confirms on behalf of itself
and the beneficial owners of tendered Old Notes all provisions of the Letter of
Transmittal applicable to it and such beneficial owners as fully as if it
completed, executed and returned the Letter of Transmittal to the Exchange
Agent.
<PAGE> 16
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that: (i) the New Notes or book-entry interests therein
to be acquired by such holder and any beneficial owner(s) of such Old Notes or
interests therein ("Beneficial Owner(s)") in connection with the Exchange Offer
are being acquired by such holder and any Beneficial Owner(s) in the ordinary
course of business of the holder and any Beneficial Owner(s), (ii) the holder
and each Beneficial Owner are not participating, do not intend to participate,
and have no arrangement or understanding with any person to participate, in the
distribution of the New Notes, (iii) the holder and each Beneficial Owner
acknowledge and agree that any person who is a broker-dealer registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or is
participating in the Exchange Offer for the purpose of distributing the New
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction of the New
Notes or interests therein acquired by such person and cannot rely on the
position of the staff of the Commission set forth in certain no-action letters,
(iv) the holder and each Beneficial Owner understand that a secondary resale
transaction described in clause (iii) above and any resales of New Notes or
interests therein obtained by such holder in exchange for Old Notes or interests
therein originally acquired by such holder directly from the Company should be
covered by an effective registration statement containing the selling security
holder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission and (v) neither the holder nor any Beneficial
Owner(s) is an "affiliate," as defined in Rule 405 under the Securities Act, of
the Company. Upon a request by the Company, a holder or beneficial owner will
deliver to the Company a legal opinion confirming its representation made in
clause (v) above. If the tendering holder of Old Notes is a broker-dealer
(whether or not it is also an "affiliate") or any Beneficial Owner(s) that will
receive New Notes for its own or their account pursuant to the Exchange Offer,
the tendering holder will represent on behalf of itself and the Beneficial
Owner(s) that the Old Notes to be exchanged for the New Notes were acquired as a
result of market-making activities or other trading activities, and acknowledge
on its own behalf and on the behalf of such Beneficial Owner(s) that it or they
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, such tendering holder will not be deemed to admit
that it or any Beneficial Owner is an "underwriter" within the meaning of the
Securities Act.
The enclosed "Instruction to Registered Holder or DTC Participant from
Beneficial Owner" form contains an authorization by the beneficial owners of Old
Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer
or to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in the section "The Exchange
Offer--Transfer Taxes" of the enclosed Prospectus.
<PAGE> 17
Additional copies of the enclosed material may be obtained from the
Exchange Agent.
Very truly yours,
AZTAR CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU THE AGENT OF THE COMPANY OR THE EXCHANGE AGENT OR AUTHORIZE YOU TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH THE EXCHANGE
OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE> 18
INSTRUCTION TO REGISTERED HOLDER OR DTC PARTICIPANT
FROM BENEFICIAL OWNER
FOR
8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
OF
AZTAR CORPORATION
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1999 (the "Prospectus"), of Aztar Corporation, a Delaware
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal") that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings assigned to them in the Prospectus and the Letter of Transmittal.
This will instruct you as to the action to be taken by you relating to
the Exchange Offer with respect to the 8 7/8% Senior Subordinated Notes due 2007
(the "Old Notes") held by you for the account of the undersigned.
The principal amount of the Old Notes held by you for the account of
the undersigned is (fill in amount):
$_________ principal amount of Old Notes.
With respect to the Exchange Offer, the undersigned hereby instructs
you (check appropriate box):
[ ] To TENDER the following principal amount of Old Notes held by
you for the account of the undersigned (insert amount of Old
Notes to be tendered, if any):
$_________ principal amount of Old Notes.
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you
for the account of the undersigned, it is understood that you are authorized:
(a) to make, on behalf of the undersigned (and the
undersigned, by its signature below, hereby makes to you), the
representations and warranties contained in the Letter of Transmittal
that are to be made with respect to the undersigned as a beneficial
owner, including but not limited to the representations that (i) the
New Notes or book-entry interests therein to be acquired by the
undersigned (the "Beneficial Owner(s)") in connection with the Exchange
Offer are being acquired by the undersigned in the ordinary course of
business of the undersigned, (ii) the undersigned is not participating,
does not intend to participate, and has no arrangement or understanding
with any person to participate, in the distribution of the New Notes,
(iii) the undersigned acknowledges and agrees that any person
<PAGE> 19
who is a broker-dealer registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or is participating in the
Exchange Offer for the purpose of distributing the New Notes must
comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction of
the New Notes or interests therein acquired by such person and cannot
rely on the position of the staff of the Commission set forth in
certain no-action letters, (iv) the undersigned understands that a
secondary resale transaction described in clause (iii) above and any
resales of New Notes or interests therein obtained by such holder in
exchange for Old Notes or interests therein originally acquired by such
holder directly from the Company should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission and (v) the undersigned is not an
"affiliate," as defined in Rule 405 under the Securities Act, of the
Company. Upon a request by the Company, a holder or beneficial owner
will deliver to the Company a legal opinion confirming its
representation made in clause (v) above. If the undersigned is a
broker-dealer (whether or not it is also an "affiliate") that will
receive New Notes for its own account pursuant to the Exchange Offer,
the undersigned represents that the Old Notes to be exchanged for the
New Notes were acquired by it as a result of market-making activities
or other trading activities, and acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection
with any resale of such New Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned does not and will not be
deemed to admit that is and "underwriter" within the meaning of the
Securities Act;
(b) to agree, on behalf of the undersigned, as set forth in
the Letter of Transmittal; and
(c) to take such other action as necessary under the
Prospectus or the Letter of Transmittal to effect the valid tender of
such Old Notes.
- --------------------------------------------------------------------------------
SIGN HERE
Name of Beneficial Owner(s):____________________________________________________
Signature(s):___________________________________________________________________
Name(s) (please print):_________________________________________________________
Address: __________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Telephone Number:_______________________________________________________________
Taxpayer Identification or Social Security Number:______________________________
Date:___________________________________________________________________________
- --------------------------------------------------------------------------------
2
