<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1996
REGISTRATION NO. 333-7517
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CASINO AMERICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 41-1659606
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)
(ADDITIONAL REGISTRANTS ARE LISTED ON THE FOLLOWING PAGE)
711 WASHINGTON LOOP
BILOXI, MISSISSIPPI 39530
(601) 436-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES FOR EACH OF THE
REGISTRANTS)
ALLAN B. SOLOMON
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
2200 CORPORATE BOULEVARD, N.W.
BOCA RATON, FLORIDA 33431
(407) 995-6660
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE FOR EACH OF THE REGISTRANTS)
---------------
COPIES TO:
PAUL W. THEISS THEODORE H. LATTY
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET HUGHES HUBBARD & REED LLP
350 SOUTH GRAND AVENUE
CHICAGO, ILLINOIS 60603 LOS ANGELES, CALIFORNIA 90071
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_] .
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_] .
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
I.R.S. EMPLOYER
EXACT NAME OF REGISTRANT AS SPECIFIED STATE OF IDENTIFICATION
IN ITS CHARTER INCORPORATION NUMBER
------------------------------------- ------------- ---------------
<S> <C> <C>
Riverboat Corporation of Mississippi.............. Mississippi 64-0795563
Riverboat Corporation of Mississippi--Vicksburg... Mississippi 42-1400605
Riverboat Services Incorporated................... Iowa 42-1360145
CSNO, Inc......................................... Louisiana 72-1228496
Louisiana Riverboat Gaming Partnership............ Louisiana 72-1235811
St. Charles Gaming Company, Inc................... Louisiana 72-1235262
LRG Hotels, L.L.C................................. Louisiana 72-1243404
Grand Palais Riverboat, Inc....................... Louisiana 72-1235423
LRGP Holdings, Inc................................ Louisiana 64-0863948
P.P.I., Inc....................................... Florida 65-0585198
ASMI Management Inc............................... Florida 65-0605311
Isle of Capri Casino Colorado, Inc................ Colorado 64-0863907
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 31, 1996
PROSPECTUS
$300,000,000
CASINO AMERICA, INC.
% SENIOR SECURED NOTES DUE 2003 LOGO
-----------
Interest on the % Senior Secured Notes due 2003 (the "Notes") of Casino
America, Inc. (the "Company") will be payable semiannually on each and
, commencing , 1997. The Notes will mature on , 2003. Payment
of principal of and interest on the Notes is unconditionally guaranteed on a
senior secured basis by all existing and future Significant Restricted
Subsidiaries (as defined) of the Company (the "Subsidiary Guarantors"). The
Notes are redeemable at the option of the Company, in whole or in part, on or
after , 2000, at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. Upon a Change of Control
(as defined), each holder of the Notes will have the right to require the
Company to repurchase such holder's Notes at % of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase.
In the event the Company consummates a Qualified Public Equity Offering (as
defined) on or before , 1999, the Company may redeem, at its option, up
to $100 million principal amount of the outstanding Notes at % of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of redemption, provided that, after any such redemption, at least $200 million
in principal amount of the Notes remains outstanding.
The Notes will be senior obligations of the Company, and the Subsidiary
Guarantees will be senior obligations of the Subsidiary Guarantors, senior in
right of payment to all existing and future Subordinated Indebtedness (as
defined) of the Company and the Subsidiary Guarantors, respectively. The Notes
and the Guarantees will be secured by a first priority lien on substantially
all assets of the Company and its subsidiaries other than (i) the Isle-Biloxi
Hotel, the Grand Palais riverboat and Pompano Park, as to which junior priority
liens will be granted and (ii) certain Excluded Assets (as defined). The excess
cash flow of the Isle-Bossier City and the Isle-Lake Charles will be subject to
the Cash Sweep (as defined) in the event of an adverse vote on the continuation
of gaming in Bossier and Calcasieu Parishes, respectively. As of June 30, 1996,
after giving effect to the Recent Transactions (as defined) and the offering of
the Notes (the "Offering") and the application of the net proceeds therefrom,
Indebtedness of the Company would have been approximately $375.9 million,
approximately $68.4 million of which would have been secured by a first
priority lien on certain assets as to which a junior priority lien will be
granted to the holders of the Notes.
Concurrently with the consummation of the Offering, the Company intends to
seek to retire or defease all of its outstanding 11 1/2% First Mortgage Notes
due November 15, 2001 (the "First Mortgage Notes") pursuant to the First
Mortgage Notes Retirement (as defined). As of June 30, 1996, $105 million
principal amount of the First Mortgage Notes was outstanding, plus
approximately $1.5 million of accrued and unpaid interest thereon. The Company
expects to use approximately $116.5 million of the net proceeds of the Offering
to effect the First Mortgage Notes Retirement. See "Prospectus Summary--First
Mortgage Notes Retirement."
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS IN EVALUATING AN
INVESTMENT IN THE NOTES.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
NEITHER THE MISSISSIPPI GAMING COMMISSION NOR
THE LOUISIANA GAMING CONTROL BOARD OR GAM-
ING ENFORCEMENT DIVISION HAS PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PRO-
SPECTUS.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
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<S> <C> <C> <C>
Per Note........ % % %
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Total........... $ $ $
</TABLE>
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(1) Plus accrued interest, if any, from , 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $1,655,000.
-----------
The Notes are being offered by the Underwriters, subject to prior sale, when,
as and if issued to and accepted by them, subject to approval of certain legal
matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Notes
will be made in New York, New York on or about , 1996.
-----------
MERRILL LYNCH & CO. SALOMON BROTHERS INC
NOMURA SECURITIES INTERNATIONAL, INC. DEUTSCHE MORGAN GRENFELL
-----------
The date of this Prospectus is , 1996.
<PAGE>
[PICTURES OF EACH OF THE PROPERTIES]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Prospective purchasers should consider
all of the information contained in this Prospectus before making an investment
in the Notes, including, among other things, the matters set forth under "Risk
Factors." Unless indicated or the context otherwise requires, all references
herein to Casino America or the Company refer to Casino America, Inc. and its
consolidated subsidiaries. Unless otherwise indicated, the Prospectus gives
effect to the following transactions consummated by the Company since June
1995, or to be consummated in connection with the Offering (collectively, the
"Recent Transactions"): (i) the issuance of 3,101,637 shares of Common Stock
(as defined) pursuant to the Rights Offering (as defined) consummated in July
1996, (ii) the acquisition of the Grand Palais riverboat (the "Grand Palais")
and the related gaming license (the "Grand Palais Acquisition") in May 1996,
(iii) the acquisition of a 50% interest in St. Charles Gaming Company, Inc.
("SCGC") in May 1996 (the "SCGC Acquisition"), (iv) the Goldstein Family Equity
Purchase (as defined) in March 1996, (v) the acquisition of Pompano Park (as
defined) in June 1995, (vi) the acquisition of the initial 50% interest in SCGC
by the Louisiana Riverboat Gaming Partnership ("LRGP") in June 1995 (at which
time the Company held a 50% interest in LRGP) and, in connection and expected
to occur simultaneously with the consummation of the Offering, (vii) the
acquisition by the Company of the remaining 50% interest in LRGP and LRG
Hotels, L.L.C. ("LRG Hotels" and such acquisition referred to herein as the
"LRGP Acquisition") which owns the 50% interest in SCGC not owned by the
Company and 100% of the Company's Bossier City, Louisiana facility and (viii)
the First Mortgage Notes Retirement. The Recent Transactions are described in
further detail herein.
THE COMPANY
Casino America is a leading developer, owner and operator of dockside and
riverboat casinos and related facilities in the United States. Giving effect to
the Recent Transactions, the Company owns 100% of, and operates, four dockside
or riverboat casino facilities. All of the Company's properties are based on a
tropical island theme and operate under the "Isle of Capri Casino" name. The
Company owns and operates a dockside riverboat casino and hotel in Bossier
City, Louisiana (the "Isle-Bossier City"), two riverboat casinos at a single
facility on a site one mile from Lake Charles, Louisiana (the "Isle-Lake
Charles"), a dockside casino and hotel in Biloxi, Mississippi (the "Isle-
Biloxi") and a dockside casino and recreational vehicle park in Vicksburg,
Mississippi (the "Isle-Vicksburg"). Shreveport/Bossier City is currently the
closest casino gaming market to the Dallas/Ft. Worth, Texas metropolitan area
and Lake Charles is currently the closest casino gaming market to the Houston,
Texas metropolitan area. The Company also owns and operates Pompano Park, a
harness racing track in Pompano Beach, Florida, midway between Miami and West
Palm Beach off of Interstate 95. For the 12 months ended April 30, 1996, as
adjusted to reflect the Recent Transactions, the Company generated total
revenue of $363.5 million and EBITDA of $79.8 million.
The Company's business strategy, which has been implemented in its existing
operations, emphasizes the operation and development of value-oriented gaming
facilities and complementary amenities with a tropical island theme using the
"Isle of Capri Casino" brand name. Management believes that the consistent use
of the Isle of Capri Casino name and associated theme has created a readily
identifiable brand image connoting excitement, quality and value, which the
Company complements by emphasizing customer service and non-gaming
entertainment amenities. The Company seeks to encourage repeat visitors to its
gaming facilities by identifying slot-oriented customers and active casino
patrons through its use of database marketing. Management believes that its
strategy fosters customer loyalty, enhances the Company's ability to compete
effectively in its existing markets, and facilitates the efficient and cost-
effective development of gaming facilities in new markets.
The Company has historically identified and entered new gaming markets which
it believes provide attractive long-term opportunities, sometimes entering
those markets with the assistance of a joint venture partner. The Company is
now consolidating its ownership interests in these facilities and anticipates
that most of its near-term development activities will focus on expanding its
existing facilities. Proceeds from the Offering
3
<PAGE>
are expected to be used to finance the LRGP Acquisition, retire indebtedness to
simplify the Company's capital structure and, together with the net proceeds of
the Rights Offering, fund development of its existing properties. See "Use of
Proceeds."
The Company anticipates adding complementary amenities at its existing
facilities, such as hotels and additional restaurants, in order to compete
effectively in its markets and provide customers with a complete entertainment
and resort experience designed to increase a customer's length of stay at and
use of the Company's facilities. The Company also expects to continue reviewing
gaming opportunities in new markets on the basis of demographic, regulatory,
competitive and other factors. The Company's strategy when entering new markets
has been to develop its projects in phases when appropriate. By reducing the
amount of its initial capital commitment, the Company is able to utilize cash
flow from operations to help fund subsequent phases and increase the funds
available for its other projects. Phased development also allows the Company to
better assess market size, customer preferences and competitive factors and
adapt the nature and scope of new facilities accordingly. The Company's
strategy of making investments through joint ventures, followed by
consolidation of its ownership interests (such as through the LRGP Acquisition
and the SCGC Acquisition), may be implemented in connection with the further
development of its existing properties and the entry into new gaming markets if
the Company believes that such a strategy is appropriate, and if it is able to
identify suitable joint venture partners which provide supplemental expertise
and resources.
CURRENT OPERATIONS
The Isle-Bossier City. The Isle-Bossier City, which commenced operations on
May 20, 1994, is among the highest revenue-producing dockside and riverboat
casino facilities in the United States. The Isle-Bossier City, one of only
three licensed gaming facilities currently operating in the Shreveport/Bossier
City market, is located on a 26-acre site along the Red River approximately 1/4
mile from an exit off Interstate 20. The Isle-Bossier City consists of a 51,000
square-foot dockside riverboat casino containing approximately 30,000 square
feet of gaming space with 942 slot machines and 64 table games on three levels
and an adjacent 72,200 square-foot, land-based entertainment and support
pavilion containing a variety of non-gaming amenities and administrative
offices. The facility offers parking for approximately 1,200 vehicles, of which
940 are accommodated in an attached parking garage. The Company also owns, and
has recently remodeled, the 234-room Isle of Capri Hotel, located approximately
2.5 miles east of the Isle-Bossier City along Interstate 20. Shreveport/Bossier
City is currently the closest casino gaming market to Dallas/Ft. Worth, Texas,
a metropolitan area with a population of approximately 4.5 million located
approximately 180 miles west on Interstate 20. Gaming revenue in the
Shreveport/Bossier City market was $470.8 million for the 12 months ended April
30, 1996. For the 12 months ended April 30, 1996, the Isle-Bossier City
generated total revenue of $154.6 million (including $145.6 million of casino
revenue) and EBITDA of $41.2 million.
The Isle-Lake Charles. The Isle-Lake Charles, which commenced operations with
one riverboat on July 29, 1995, is one of only two riverboat gaming facilities
currently operating in the Lake Charles, Louisiana area. On July 12, 1996, the
Isle-Lake Charles began operating its second riverboat casino, the Grand
Palais, which is the fourth licensed riverboat casino in the Lake Charles
market. A land-based, Indian-owned casino is located approximately 35 miles to
the northeast of the Isle-Lake Charles. The Isle-Lake Charles is located on a
16-acre site along the Calcasieu River adjacent to Interstate 10 in Calcasieu
Parish, one mile from the City of Lake Charles. The Isle-Lake Charles consists
of two riverboats, an approximately 27,500 square-foot riverboat casino
containing approximately 24,700 square feet of gaming space with 891 slot
machines and 43 table games on three levels and the Grand Palais, an
approximately 41,700 square-foot riverboat casino containing approximately
24,200 square feet of gaming space with 880 slot machines and 48 table games on
two levels. The Grand Palais also contains a spacious third level where the
Company may provide a variety of non-gaming and entertainment amenities. The
Isle-Lake Charles recently opened a new 105,000 square-foot land-based pavilion
containing a variety of non-gaming amenities and a four-level attached parking
garage providing, together with its paved lots, parking for more than 2,000
vehicles. Lake Charles is currently the closest casino gaming market to
Houston, Texas, a metropolitan area with a population of approximately 4.2
million located approximately 145 miles west on Interstate 10. The Company's
sole riverboat competitor in the Lake Charles market operates two riverboat
4
<PAGE>
casinos from the same location approximately two miles from the site of the
Isle-Lake Charles. With the addition of the Grand Palais, the Company, like its
riverboat casino competitor, now offers cruising schedules such that one
riverboat casino will be available at dockside for customers while the other
riverboat cruises to comply with cruising requirements. Riverboat gaming
revenue in the Lake Charles market was $228.8 million for the 12 months ended
April 30, 1996; total gaming revenue for the southwestern Louisiana market,
including gaming revenue at the land-based casino (which information is
estimated by the Company, because that casino is not required to publish such
information, based on a market analysis prepared for the Company by Economic
Consulting Services) was $445.5 million for the 12 months ended December 31,
1995. For fiscal 1996, the Isle-Lake Charles (operating for nine months with
one riverboat) had total revenue of $57.3 million (including $56.6 million of
casino revenue) and EBITDA of $6.3 million.
The Isle-Biloxi. The Isle-Biloxi, which commenced operations on August 1,
1992, was the first gaming facility to open in Mississippi. The Isle-Biloxi,
located on an eight-acre site, is the easternmost of four casino facilities
clustered together along U.S. Highway 90 at the eastern end of Biloxi (such
cluster is locally known as "Casino Row"). Casino Row offers the only
concentration of casinos, each offering a distinct theme, within walking
distance from each other along the Mississippi Gulf Coast. The Isle-Biloxi
consists of a 50,000 square-foot dockside casino containing 32,500 square feet
of gaming space with 1,149 slot machines and 42 table games on two levels, an
adjacent land-based pavilion and on-site parking for more than 1,100 vehicles.
In 1995 the Company completed an approximately $50 million capital improvement
program at the Isle-Biloxi (the "Biloxi Improvement Program") that added a 367-
room hotel tower and a 32,000 square-foot entertainment pavilion providing a
variety of non-gaming amenities and enhancements to the casino. The new hotel
is flagged as a Crowne Plaza Resort and is included in the Holiday Inn
worldwide reservation system. Biloxi is currently the closest casino gaming
market to Mobile, Alabama, a metropolitan area with a population of
approximately 525,000 located approximately 45 miles east on Interstate 10, and
to Florida. Gaming revenue in the Mississippi Gulf Coast market was $744.7
million for the 12 months ended April 30, 1996. For the 12 months ended April
30, 1996, the Isle-Biloxi had total revenue of $74.8 million (including $66.3
million of casino revenue) and EBITDA of $17.5 million.
The Isle-Vicksburg. The Isle-Vicksburg, which commenced operations on August
9, 1993, was the first of four gaming facilities to open in Vicksburg,
Mississippi. The Isle-Vicksburg is located on an 18-acre site along the
Mississippi River approximately one mile north of Interstate 20. The Isle-
Vicksburg consists of a 32,000 square-foot dockside casino containing 24,000
square feet of gaming space with 773 slot machines and 47 table games and a
12,000 square-foot, multi-level, land-based entertainment and support pavilion
containing a variety of non-gaming amenities and administrative offices. The
Isle-Vicksburg provides on-site parking for 900 vehicles, and a 13-acre site
located approximately 1/2 mile from the casino provides off-site parking for
200 vehicles and a 67-space recreational vehicle park. Vicksburg is currently
the closest casino gaming market to Jackson, Mississippi, a metropolitan area
with a population of approximately 420,000 located approximately 45 miles east
on Interstate 20. Gaming revenue in the Vicksburg market was $199.4 million for
the 12 months ended April 30, 1996. For the 12 months ended April 30, 1996, the
Isle-Vicksburg had total revenue of $59.6 million (including $57.7 million of
casino revenue) and EBITDA of $16.2 million.
RECENT DEVELOPMENTS
LRGP Acquisition
The Company has agreed to acquire the remaining 50% interest in LRGP held by
Louisiana River Site Development, Inc. ("LRSD"). The consideration for the LRGP
Acquisition will be (i) $85 million in cash payable at closing, (ii) five-year
warrants to purchase 500,000 shares of the Company's common stock (the "Common
Stock") at an exercise price of $10.50 per share delivered at closing and (iii)
$1.5 million per year for seven years, payable monthly beginning on October 1,
1998. The Company escrowed 625,000 shares of Common Stock (for which the
Company has the right to substitute $5 million in cash), some or all of which
will
5
<PAGE>
be forfeited if the Company does not fulfill its obligation to close the
transaction by October 1, 1996, as such date may be extended. The Company has
the right to extend the deadline to December 1, 1996, provided that it pays to
LRSD its 50% share of LRGP's net income for the period from and after October
1, 1996 until closing or termination, plus $166,667 per month. Concurrently
with the closing of the Offering, the Company intends to use a portion of the
net proceeds of the Offering to consummate the LRGP Acquisition. See "Use of
Proceeds" and "Business--Recent Acquisitions--LRGP Acquisition."
Grand Palais Acquisition
On May 3, 1996, the Company purchased all of the outstanding common stock of
Grand Palais Riverboat, Inc. ("GPRI") in a bankruptcy proceeding under Chapter
11 of the United States Bankruptcy Code. GPRI owns the Grand Palais, gaming
equipment, certain other furniture, fixtures and equipment, all necessary
gaming licenses issued by the State of Louisiana and other permits and
authorizations. The aggregate consideration paid by the Company in connection
with the Grand Palais Acquisition was approximately $62.4 million, consisting
of approximately $8.4 million in cash, approximately $37.9 million in
promissory notes and assumed indebtedness and 2,250,000 shares of Common Stock
and five-year warrants to purchase an additional 500,000 shares of Common Stock
at an exercise price of $10.00 per share. See "Business--Recent Acquisitions--
Grand Palais Acquisition" and "Description of Certain Indebtedness--Grand
Palais Notes." On July 12, 1996, the Gaming Board (as defined) authorized the
commencement of gaming on the Grand Palais and, pursuant to such approval, the
Grand Palais opened on such date. See "Risk Factors--Recent Changes in
Louisiana Regulatory Structure." The Company has agreed with the State of
Louisiana to hold the excess cash flow (as defined in such agreement) generated
by GPRI during its first six months of operation in a special escrow account.
SCGC Acquisition
On May 3, 1996, the Company purchased from Crown Casino Corporation ("Crown
Casino") the remaining 50% interest in SCGC (the other 50% of which is owned by
LRGP), in exchange for 1,850,000 shares of Common Stock, a five-year warrant to
purchase an additional 416,667 shares of Common Stock at an exercise price of
$12.00 per share which can be exercised only by exchanging up to $5 million
principal amount of the B Note (as defined) for any such shares and the
restructuring of certain indebtedness owed to Crown Casino. See "Business--
Recent Acquisitions--SCGC Acquisition" and "Description of Certain
Indebtedness--Crown Notes."
Goldstein Family Equity Purchase and Rights Offering
On March 11, 1996, the Company sold an aggregate of 1,020,940 shares of its
Common Stock, at a price of $5.875 per share, to Bernard Goldstein, the
Chairman and Chief Executive Officer of the Company, and three members of his
family (the "Goldstein Family Equity Purchase"). Proceeds from the sale totaled
approximately $6.0 million. A portion of the proceeds was used to retire
approximately $1.6 million in loans payable to Mr. Goldstein and a related
party, which amount includes accrued interest.
In connection with the Goldstein Family Equity Purchase, the Company issued
to its shareholders (other than those shareholders participating in the
Goldstein Family Equity Purchase), and certain other of its security-holders,
rights ("Rights") to purchase up to 4,296,085 shares of Common Stock (pursuant
to a registration statement declared effective by the Securities and Exchange
Commission (the "Commission") on July 2, 1996) at the same price, and in the
same pro rata amount, as shares purchased in the Goldstein Family Equity
Purchase (the "Rights Offering"). The Rights expired on July 26, 1996 (except
with respect to certain Rights exercisable by Crown Casino, as to which the
Company has agreed to an extended exercise period). As of the close of business
on July 29, 1996, 3,101,637 shares of Common Stock were expected to be issued
in connection with the Rights Offering (including 684,786 Rights exercisable by
Crown Casino, as to which Crown Casino has informed the Company of its intent
to exercise such Rights concurrently with the consummation of the Offering),
resulting in net proceeds of approximately $18.1 million.
6
<PAGE>
Hotel Joint Venture
On June 18, 1996, the Company entered into a letter of intent to form a joint
venture (the "Hotel Joint Venture") with H.I. Development Corporation, an
experienced developer of hotel properties, and certain of its affiliates
("HID"). The purpose of the Hotel Joint Venture will be to develop, own and
operate hotel properties adjacent to the Isle-Bossier City and the Isle-Lake
Charles and, in the event the Company elects to develop a casino there, in
Cripple Creek, Colorado. The letter of intent provides that the Company and HID
will each contribute approximately $10 million in assets to the Hotel Joint
Venture. The Company's contribution is expected to consist of cash, certain
land or other property. There can be no assurance that the Company will
consummate the transactions contemplated by the letter of intent with HID. See
"Business--Future Development Opportunities--Hotel Joint Venture."
First Mortgage Notes Retirement
The defeasance provisions of the indenture governing the First Mortgage Notes
(the "First Mortgage Notes Indenture") were amended (the "Amendment") on July
26, 1996 to allow the Company to effect a defeasance or covenant defeasance of
the First Mortgage Notes concurrently with the closing of the Offering by
depositing in trust (with the First Mortgage Notes trustee) proceeds therefrom
sufficient to repay the First Mortgage Notes outstanding, which deposit would
result in a release of the security interest in collateral securing the First
Mortgage Notes. The Amendment became effective on July 26, 1996, but will
become null if the Company has not consummated the First Mortgage Notes
Retirement prior to 5:00 p.m., New York City time, on August 23, 1996. The
Company has entered into agreements for the purchase of the First Mortgage
Notes held by certain holders and may contact other holders of First Mortgage
Notes for the purpose of entering into similar agreements. Concurrently with
the closing of the Offering, the Company intends to consummate each agreement
to purchase First Mortgage Notes and to effect a covenant defeasance of any of
the First Mortgage Notes not so purchased (the "First Mortgage Notes
Retirement"). Completion of the First Mortgage Notes Retirement is subject to
certain conditions, including, but not limited to, consummation of the
Offering. The consummation of the Offering is subject to the consummation of
the First Mortgage Notes Retirement. The total cost to effect the First
Mortgage Notes Retirement is expected to be approximately $116.5 million. See
"Use of Proceeds."
7
<PAGE>
SUMMARY PROPERTY INFORMATION
The following table sets forth, for each of the Company's current operations,
certain information concerning its gaming facilities, non-gaming amenities,
market and relative market position. Data for gaming facilities and non-gaming
amenities for current operations are approximate due to reconfiguration of
casino floor space in the normal course of business.
<TABLE>
<CAPTION>
ISLE-LAKE
ISLE-BOSSIER CITY CHARLES(1) ISLE-BILOXI ISLE-VICKSBURG
----------------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
GAMING FACILITIES:
Casino square footage. 30,000 48,900 32,500 24,000
Slot machines......... 942 1,771 1,149 773
Table games........... 64 91 42 47
Gaming positions(2)... 1,390 2,408 1,443 1,102
NON-GAMING AMENITIES:
Hotel rooms........... 234 0 367 0
Restaurant and bar
seating.............. 610 709 630 302
Parking spaces........ 1,200 2,000 1,100 1,100
RV spaces............. 0 0 0 67
MARKET POPULATION (IN
THOUSANDS)(3):
Within 50 miles....... 550 480 660 530
Within 100 miles...... 1,790 1,560 2,900 1,490
Within 200 miles...... 9,720 10,260 6,410 N/M
MARKET POSITION(4):
% of slot machines.... 32% 32% 8% 27%
% of table games...... 37% 38% 9% 30%
% of gaming
positions(2)......... 33% 34% 8% 27%
% of fiscal 1996
gaming revenues(5)... 31% N/A 9% 29%
% of average market
gaming square
footage.............. 33% 29% 6% 22%
</TABLE>
- --------
(1) Includes the operations of the Grand Palais.
(2) Assumes each slot machine represents one gaming position and each table
game represents seven gaming positions.
(3) Population statistics are based on 1996 estimates derived from demographic
data compiled by Urban Decision Systems, Inc. The Company does not consider
the market population statistic within 200 miles of Vicksburg to be
meaningful because the population base beyond 100 miles of Vicksburg is
more readily served by other gaming markets.
(4) Market position percentages reflect average historical data. The market for
the Isle-Biloxi is considered to be the Coastal Region of Mississippi,
which also includes casinos in Gulfport, Bay St. Louis and Lakeshore. The
market information for the Isle-Lake Charles includes data for, in addition
to Lake Charles, the land-based, Indian-owned casino located in Kinder,
Louisiana, which information has been estimated by the Company, because
that casino is not required to publish such information, based on a market
analysis prepared for the Company by Economic Consulting Services.
(5) The 12-month period ended April 30, 1996.
8
<PAGE>
THE OFFERING
Securities Offered.................... $300 million principal amount of
% Senior Secured Notes due 2003.
Maturity Date......................... , 2003.
Interest Payment Dates................ and , commencing
, 1997.
Optional Redemption................... The Notes will be redeemable, at
the option of the Company, in whole
or in part, on or after
, 2000, at the redemption prices
set forth herein, plus accrued and
unpaid interest, if any, to the
date of redemption. See
"Description of the Notes--
Redemption and Repurchase Offers--
Optional Redemption."
In the event the Company
consummates a Qualified Public
Equity Offering on or before
, 1999, the Company may
redeem, at its option, up to $100
million principal amount of the
outstanding Notes at % of the
principal amount thereof, plus
accrued and unpaid interest, if
any, to the date of redemption,
provided that, after any such
redemption, at least $200 million
in principal amount of the Notes
remains outstanding. See
"Description of the Notes--
Redemption and Repurchase Offers--
Equity Proceeds Redemption."
Excess Louisiana Cash Repurchase In the event of an adverse vote on
Offers................................ the continuation of gaming in
Bossier Parish or Calcasieu Parish,
the Isle-Bossier City Cash Flow (as
defined) and the Isle-Lake Charles
Cash Flow (as defined),
respectively, will be deposited
into a collateral account pursuant
to the Cash Sweep (as defined). At
each such time as the Excess
Louisiana Cash (as defined) in the
collateral account equals $10
million, the Company will be
obligated to make an offer to
purchase, at 100% of the principal
amount of the Notes, plus accrued
and unpaid interest, if any, to the
date of repurchase, an amount of
Notes equal to the Excess Louisiana
Cash less the accrued and unpaid
interest on such Notes. See
"Description of Notes--Collateral
Accounts--Excess Louisiana Cash
Account" and "Description of
Notes--Redemption and Repurchase
Offers--Excess Louisiana Cash
Repurchase Offers."
Regulatory Redemption................. The Notes will be subject to
mandatory disposition and
redemption requirements following
certain determinations by the
Gaming Authorities of any
jurisdiction in which the Company
conducts gaming operations. See
"Description of the Notes--
Redemption and Repurchase Offers--
Gaming Redemption."
9
<PAGE>
Change of Control..................... In the event of a Change of
Control, the Company will be
required to offer to repurchase all
Notes then outstanding at a
redemption price equal to 101% of
the aggregate principal amount of
the Notes, plus accrued and unpaid
interest, if any, to the date of
purchase. There can be no assurance
that the Company will have
sufficient cash to purchase the
Notes in the event that a Change of
Control occurs. See "Description of
the Notes--Redemption and
Repurchase Offers--Change of
Control Repurchase Offer."
Ranking............................... The Notes will rank senior in right
of payment to all existing or
future Subordinated Indebtedness of
the Company and pari passu in right
of payment with any other existing
or future Indebtedness of the
Company.
Guarantees............................ The Company's obligations under the
Notes and the Indenture will be
jointly, severally and
unconditionally guaranteed (the
"Subsidiary Guarantees") on a
senior secured basis by all
existing and future Significant
Restricted Subsidiaries (as
defined) of the Company, subject to
the receipt of the required
approval of any applicable Gaming
Authority. The Subsidiary
Guarantees will rank senior in
right of payment to all existing or
future Subordinated Indebtedness of
the Subsidiary Guarantors and pari
passu in right of payment to all
other existing or future
Indebtedness of the Subsidiary
Guarantors. The obligations of the
Restricted Subsidiaries under the
Subsidiary Guarantees will be
guaranteed by the Company. See
"Description of the Notes--
Subsidiary Guarantees."
Security.............................. The Notes will be secured by a
first priority Lien on
substantially all of the assets of
the Company, and the Subsidiary
Guarantees will be secured by a
first priority Lien on
substantially all of the assets of
the Subsidiary Guarantors, other
than (i) the Isle-Biloxi Hotel, the
Grand Palais and Pompano Park, as
to which junior priority liens will
be granted, and (ii) the Excluded
Assets (which are comprised of
certain assets of the Company not
used in casino operations). See
"Description of the Notes--
Collateral Security."
Certain Covenants..................... The Indenture pursuant to which the
Notes will be issued (the
"Indenture") will contain certain
covenants with respect to, among
others, the following matters: (i)
limitation on indebtedness, (ii)
limitation on liens, (iii)
limitation on restricted payments,
(iv) limitation on dividends and
other payment restrictions
affecting Restricted Subsidiaries,
10
<PAGE>
(v) limitation on asset sales and
events of loss, (vi) limitation on
disposition of stock of Restricted
Subsidiaries, (vii) limitation on
transactions with affiliates and
(viii) restrictions on
consolidations, mergers and
transfers of assets. See
"Description of the Notes--Certain
Covenants."
Use of Proceeds....................... The gross proceeds of the Offering
will be $300 million. The net
proceeds of the Offering are
estimated to be approximately
$289.3 million. The Company will
use approximately $116.5 million to
effect the First Mortgage Notes
Retirement, $85 million to
consummate the LRGP Acquisition,
approximately $80.7 million to
retire other indebtedness and the
balance of approximately $7.1
million for general corporate
purposes. See "Use of Proceeds."
RISK FACTORS
Prospective purchasers of the Notes should consider all of the information
contained in this Prospectus before making an investment in the Notes. In
particular, prospective purchasers should consider the factors set forth herein
under "Risk Factors."
11
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial information has been derived
from the consolidated financial statements of the Company and should be read in
conjunction with such consolidated financial statements, including the notes
thereto, included elsewhere in this Prospectus. The following pro forma
financial information should be read in conjunction with the unaudited pro
forma consolidated financial statements, including the notes thereto, included
elsewhere in this Prospectus.
The Company believes the results of operations for each of the years in the
three-year period ended April 30, 1996 are not readily comparable to each other
because (i) the Isle-Vicksburg commenced operations on August 9, 1993, (ii) the
Isle-Bossier City commenced operations on May 20, 1994, (iii) the Isle-Lake
Charles commenced operations with a single riverboat facility on July 29, 1995
and (iv) the Isle-Biloxi has faced substantially increasing competition since
opening and was substantially expanded in June 1993 and again in July 1995.
The Company also believes that its historical results may not be indicative
of its future results of operations primarily because, in the past, the Company
has reported its interests in the operations of the Isle-Bossier City and the
Isle-Lake Charles using the equity method of accounting. Upon consummation of
the LRGP Acquisition, the Company will consolidate the results of operations of
the Isle-Bossier City and the Isle-Lake Charles. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations." The pro forma
financial information reflects the Company's consolidated results of
operations, giving effect to the LRGP Acquisition and the SCGC Acquisition. The
Company believes, however, that the pro forma income statement is not
necessarily indicative of the Company's future operations because it does not
reflect the impact of opening the Grand Palais, which opened on July 12, 1996.
See "Unaudited Pro Forma Financial Data."
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------------------
ACTUAL PRO FORMA(1)
---------------------------- ------------
1994 1995 1996 1996
-------- -------- -------- ------------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Casino............................ $140,994 $117,613 $123,936 $326,129
Rooms, food, beverage and other... 3,639 5,311 27,719 37,344
Management fees--joint ventures... -- 4,613 6,308 --
-------- -------- -------- --------
Total revenue................... 144,633 127,537 157,963 363,473
Operating expenses:
Casino and gaming taxes........... 59,641 59,963 65,026 155,009
Marketing and administrative...... 26,113 26,895 33,167 78,852
Depreciation and amortization..... 5,450 8,945 12,111 25,697
One-time charge(2)................ -- -- 11,798 11,798
Preopening expenses............... 3,475 483 1,311 5,507
Loss on disposal of equipment..... 22 178 1,217 1,217
Other............................. 10,017 10,877 30,140 49,790
-------- -------- -------- --------
Total operating expenses........ 104,718 107,341 154,770 327,870
-------- -------- -------- --------
Operating income.................... 39,915 20,196 3,193 35,603
Interest expense, net(3)............ (6,119) (10,046) (13,924) (42,568)
Equity in income (loss) of
unconsolidated joint ventures...... (2,241) 19,904 16,434 --
Income (loss) before income taxes... 31,555 30,054 5,703 (6,965)
Net income (loss)................... 20,353 18,069 1,555 (6,965)
OTHER FINANCIAL DATA AND RATIOS:
EBITDA(4)........................... $ 46,621 $ 49,706 $ 46,064 $ 79,822
Capital expenditures(5)............. 59,043 50,999 26,517 75,587
EBITDA to net interest expense...... 7.6x 4.9x 3.3x 1.9x
Total debt to EBITDA................ 2.7x 2.8x 3.0x 4.7x
Ratio of earnings to fixed
charges(6)......................... 3.9x 2.6x 1.2x 1.1x
BALANCE SHEET DATA (AT END OF
PERIOD):
Current assets........................................ $ 27,379 $ 50,701
Total assets.......................................... 226,474 508,496
Long-term debt, including current portion............. 139,778 377,817
Stockholders' equity.................................. 50,270 86,804
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-------------------------
1994 1995 1996
------- -------- --------
(IN THOUSANDS, EXCEPT
DAILY WIN DATA)
<S> <C> <C> <C>
OPERATING STATISTICS:
BOSSIER CITY
Casino revenue........................................ -- $142,265 $145,604
EBITDA(4)............................................. -- 50,156 41,228
Daily win/slot machine................................ -- 291 303
Daily win/table game.................................. -- 2,053 1,887
LAKE CHARLES
Casino revenue........................................ -- -- $ 56,589
EBITDA(4)............................................. -- -- 6,305
Daily win/slot machine................................ -- -- 139
Daily win/table game.................................. -- -- 1,566
BILOXI
Casino revenue........................................ $81,049 $ 54,217 $ 66,270
EBITDA(4)............................................. 27,255 13,256 17,479
Daily win/slot machine................................ 124 93 125
Daily win/table game.................................. 1,523 972 1,291
VICKSBURG
Casino revenue........................................ $59,945 $ 63,396 $ 57,666
EBITDA(4)............................................. 27,721 21,060 16,238
Daily win/slot machine................................ 243 181 163
Daily win/table game.................................. 1,805 937 750
</TABLE>
- --------
(1) Adjusted to give effect to LRGP's purchase of a 50% interest in SCGC in
June 1995, the SCGC Acquisition, the LRGP Acquisition, the Grand Palais
Acquisition (except no pro forma effect of the Grand Palais Acquisition is
reflected in the pro forma income statement, other than interest on the
debt incurred to effect the Grand Palais Acquisition), the Rights Offering
(assuming a full subscription thereto) and the Offering and the application
of the net proceeds therefrom as if such transactions had occurred on May
1, 1995, with respect to the pro forma consolidated income statement data,
and as of April 30, 1996, with respect to the pro forma consolidated
balance sheet data. See "Unaudited Pro Forma Financial Data."
(2) During the third quarter of fiscal 1996, the Company recorded an $11.8
million pre-tax one-time charge. The components of the one-time charge
include (i) $9.3 million related to the write-down of two riverboats, a
barge and certain gaming equipment, all of which were reclassified during
the quarter as being held for sale, (ii) $2.0 million related to costs
associated with the recent change in executive management and (iii) $0.5
million related to costs associated with certain abandoned projects.
(3) Net of interest income.
(4) EBITDA, or "earnings before interest, income taxes, depreciation and
amortization," is a supplemental financial measurement used by the Company
in the evaluation of its gaming business. EBITDA is calculated by adding
net interest expense, income taxes, depreciation and amortization,
preopening expense, one-time charge and loss on disposal of equipment to
net income. However, EBITDA should only be read in conjunction with all of
the Company's financial data summarized above and its Consolidated
Financial Statements, including the Notes thereto, prepared in accordance
with GAAP appearing elsewhere herein, and should not be construed as an
alternative either to income from operations (as determined in accordance
with GAAP) as an indicator of the Company's operating performance or to
cash flows from operating activities (as determined in accordance with
GAAP) as a measure of liquidity.
(5) Includes $13.1 million, $4.4 million, $4.3 million and $4.4 million of
property and equipment acquired by issuing debt for the years ended April
30, 1994, 1995, 1996 and April 30, 1996 on a pro forma basis, respectively.
(6) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of earnings before provision for income taxes plus fixed
charges (excluding capitalized interest). Fixed charges consist of interest
on indebtedness (including capitalized interest) plus that portion of
rental expense which is considered to be interest.
13
<PAGE>
RISK FACTORS
Prospective purchasers should carefully consider the following factors,
together with other information in this Prospectus, in evaluating an
investment in the Notes.
LOCAL OPTION REFERENDUM REGARDING CONTINUATION OF LEGALIZED GAMING IN
LOUISIANA
On April 19, 1996, the Louisiana legislature approved legislation mandating
local option elections on a parish-by-parish basis to determine whether to
prohibit or continue to permit three individual forms of gaming in Louisiana.
The referendum is scheduled to be brought before the Louisiana voters on a
parish-by-parish basis at the time of the 1996 presidential election and will
determine whether each of the following forms of gaming will be prohibited or
permitted: (i) the operation of video draw poker devices in each parish; (ii)
the conduct of riverboat gaming in each parish that is contiguous to a
statutorily designated river or waterway; or (iii) the conduct of land-based
casino gaming operations in Orleans Parish. Accordingly, on November 5, 1996,
it is expected that voters in Bossier Parish (the site of the Isle-Bossier
City) and Calcasieu Parish (the site of the Isle-Lake Charles) will be voting
"yes" or "no" on the following proposition (and in appropriate parishes as to
similar propositions regarding land-based casino gaming and video draw poker
devices): "Within [name of parish], shall riverboat gaming activities be
permitted?"
The legislation requires that a majority of the votes cast on such
proposition be cast in favor of a particular form of gaming in order to
continue that form of gaming in the affected parish. Accordingly, the
continuation of gaming activities at the Isle-Bossier City requires such
approval from a majority of voters in Bossier Parish voting on such
proposition and the continuation of gaming activities at the Isle-Lake Charles
requires such approval from a majority of voters in Calcasieu Parish voting on
such proposition. In the event that the riverboat gaming proposition is
defeated in a parish, the legislation permits a licensee operating therein to
continue operations in that parish through the expiration of its current
license. The current license of the Isle-Bossier City expires in December
1998, and the two licenses of the Isle-Lake Charles expire in March 1999 and
May 2001, respectively. Alternatively, a licensee operating in a parish where
riverboat gaming is defeated may seek permission to relocate its vessel and
license to a parish where the continuation of riverboat gaming has been
approved, if any (excluding certain portions of Lake Ponchartrain). In the
event that voters do not elect to continue riverboat gaming in Bossier Parish
or Calcasieu Parish, the Indenture provides that all excess cash flow
generated by the Isle-Bossier City or the Isle-Lake Charles, as the case may
be, shall be deposited into a special collateral account for the later
repurchase of Notes (the "Cash Sweep"). See "Description of the Notes--
Collateral Accounts--Excess Louisiana Cash Account."
The discontinuation of riverboat gaming in Bossier Parish or Calcasieu
Parish would have a material adverse effect on the Company and may affect the
ability of the Company to make interest payments on the Notes when due or to
repay the principal thereof on the maturity date. In the event that the
continuation of riverboat gaming is not approved in the November 5, 1996
election in either Bossier Parish or Calcasieu Parish, there can be no
assurance that the Company will be able to obtain the necessary approvals to
relocate its riverboat gaming facilities at the Isle-Bossier City or the Isle-
Lake Charles, as the case may be, to parishes where the continuation of
riverboat gaming was approved, or that any such relocation will be cost-
effective for the Company. In addition, to the extent the Cash Sweep is
required, the Company's ability to make necessary capital expenditures in
order for its remaining facilities to compete effectively in their respective
markets would be significantly limited. Moreover, in the event that the
continuation of riverboat gaming is approved in Bossier Parish or Calcasieu
Parish, but not in another parish where riverboat gaming is presently
conducted, licensees presently conducting riverboat gaming in such parishes
may seek to relocate their operations to Bossier Parish or Calcasieu Parish,
leading to increased competition for the Company. See "--Competition."
LEVERAGE AND DEBT SERVICE
Upon consummation of the Offering, the Company will have significant
interest expense and principal repayment obligations in connection with the
Notes and other debt obligations. See "Description of Certain
14
<PAGE>
Indebtedness." As of April 30, 1996, as adjusted to give effect to the Recent
Transactions and the Offering and the application of the net proceeds
therefrom as set forth herein, the Company's total indebtedness and
stockholders' equity would have been $377.8 million and $86.8 million,
respectively. See "Use of Proceeds" and "Capitalization." The Company will be
entirely dependent upon distributions from its operating subsidiaries to meet
its interest expense and principal repayment obligations under the Notes and
its other debt obligations. The Indenture contains numerous restrictions,
including restrictions relating to the incurrence of additional indebtedness,
the distribution of cash to stockholders, the making of certain investments
and restricted payments, mergers and sales of assets and the creation of
liens. See "Description of the Notes--Certain Covenants." In addition,
substantially all of the Company's property is pledged to the trustee under
the Indenture (the "Trustee") for the benefit of the holders of the Notes and,
in certain cases, holders of certain other indebtedness of the Company and its
subsidiaries. See "Description of the Notes--Collateral Security."
The ability of the Company to meet its debt service requirements and to
engage in various significant corporate transactions that may be important to
its business will be dependent upon its future operating performance, which is
subject to financial, economic, competitive, regulatory and other factors
affecting the Company, many of which are beyond the Company's control. While
the Company expects that its cash flow from operations will be sufficient to
cover its expenses, including interest expense, there can be no assurance with
respect thereto. If the Company is unable to generate sufficient cash flow, it
could be required to adopt one or more alternatives, such as reducing or
delaying planned capital expenditures, selling assets, restructuring debt or
obtaining additional capital. There can be no assurance that any of such
alternatives will be feasible on satisfactory terms, and resorting to such
alternatives could impair the Company's competitive position and reduce its
future cash flow. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." In this regard, the Company anticipates
that it will need to make significant capital expenditures with respect to its
current operations in order for those facilities to remain competitive with
existing and expected new competitors in those markets. The Indenture contains
certain restrictions which may limit the Company's ability to incur
indebtedness to make such capital expenditures. See "Description of the
Notes--Certain Covenants." In addition, the highly leveraged position of the
Company may adversely affect its ability to obtain additional financing to
make investments in its current operations or to pursue future gaming
opportunities. See "--Potential Need for Additional Financing."
COMPETITION
General. Competition in the gaming industry is intense in the markets where
the Company operates gaming facilities. As new gaming opportunities arise in
existing gaming jurisdictions, in new gaming jurisdictions and on Indian-owned
lands, new or expanded operations by others can be expected to increase
competition for the Company's existing and future operations and could limit
new opportunities for the Company or result in the saturation of certain
gaming markets. Casino gaming does not have a long operating history in the
jurisdictions where the Company operates gaming facilities and, therefore, the
effects of competition in these jurisdictions cannot be predicted with any
degree of certainty. Many of the Company's competitors have more gaming
industry experience, are larger and have greater financial resources than the
Company. As a result, increased competition could have a material adverse
effect on the Company.
Bossier City Operations. The Isle-Bossier City is one of three comparably
sized gaming facilities currently licensed and operating in the
Shreveport/Bossier City market, all of which opened between April and July
1994 and each of which has comparable amenities. The Isle-Bossier City will
face increased competition from existing competitors to the extent that they
add to or enhance existing amenities. In that regard, Binion's Horseshoe
Casino recently broke ground on a 606-room all suites hotel at its dockside
riverboat casino location in Bossier City. In addition to existing
competition, the granting of additional gaming licenses in the
Shreveport/Bossier City market or the relocation of existing licenses to that
market from elsewhere in the State of Louisiana would increase competition for
the Isle-Bossier City. In that regard, Casino Magic Corp. was recently granted
a license to operate a gaming facility in the Shreveport/Bossier City market,
which facility is to be located less than
15
<PAGE>
1/2 mile from the site of the Isle-Bossier City. In addition, the Company
believes that Binion's Horseshoe Casino will seek approval to obtain a license
to operate an additional dockside riverboat casino at its existing site,
making it likely in management's opinion that at least a fifth dockside
riverboat casino (operated by Binion's Horseshoe Casino or another operator)
eventually will be operating in the Shreveport/Bossier City market, where only
three currently operate. Moreover, the legalization of casino gaming in Texas
would have a material adverse effect on the Isle-Bossier City.
Lake Charles Operations. The Isle-Lake Charles is one of two riverboat
gaming facilities operating in the Lake Charles, Louisiana market. The Isle-
Lake Charles' riverboat competitor, Players International, operates two
riverboats and a 134-room hotel facility from a single location in the City of
Lake Charles approximately two miles from the site of the Isle-Lake Charles.
In addition, a land-based, Indian-owned casino with approximately 68,500
square feet of gaming space is operating in Kinder, Louisiana, approximately
35 miles to the northeast of the Isle-Lake Charles. Riverboats in the Lake
Charles market are subject to cruising requirements, which makes a land-based
casino more desirable to many gaming customers. Players International and the
Company each hold two gaming licenses and operate two riverboats from a single
facility. (Louisiana, unlike certain other jurisdictions, does not permit
license holders to operate a second boat out of the same location without a
gaming license for each boat.) However, because of a limited operating history
at the Isle-Lake Charles with a temporary land-based pavilion and because,
prior to July 12, 1996, only one riverboat operated at the site of the Isle-
Lake Charles, the Company's expectations regarding such operation are not
based on historical operating results. In addition to existing competition,
the granting of additional gaming licenses in the Lake Charles market or the
relocation of existing licenses from elsewhere in the State of Louisiana to
that market would increase competition for the Isle-Lake Charles. Moreover,
the legalization of casino gaming in Texas would have a material adverse
effect on the Isle-Lake Charles. See "--Legislative and Regulatory
Considerations."
Biloxi Operations. Twelve gaming facilities (including the Isle-Biloxi),
with an aggregate of approximately 560,000 square feet of casino floor space,
are located along the Mississippi Gulf Coast. Eight facilities are located in
Biloxi and collectively account for approximately 360,000 square feet of
casino floor space. Two of the other four facilities are located in Gulfport,
approximately 10 miles from Biloxi, and the other two are located in Bay St.
Louis and Lakeshore (the gaming operations of such casino have been
temporarily suspended as of July 16, 1996), each approximately 30 miles from
Biloxi. Because Mississippi law does not limit the number of gaming licenses
that may be granted, there may be increases in the number of gaming facilities
along the Mississippi Gulf Coast and the surrounding areas, which could have a
material adverse effect on the Isle-Biloxi. In addition, the Company believes
that many of its competitors will add to or enhance their existing amenities
and new competitors will enter the Mississippi Gulf Coast market. Mirage
Resorts, Inc. has announced plans and received a gaming license to open a
"Golden Nugget" casino and resort complex in Biloxi, at a site approximately
two miles from the Isle-Biloxi, in late 1997. In addition, an "Imperial
Palace" casino is currently being built and will be located on the Back Bay in
Biloxi, approximately three miles from the Isle-Biloxi. Both such developments
are expected to include substantial hotel facilities. Certain existing and
future competitors have more extensive financial resources than does the
Company. Intense competition on the Mississippi Gulf Coast has contributed to
the closure of two gaming facilities (and the temporary closure of a third) in
that area and two others are operating under bankruptcy protection. In
addition, the legalization of casino gaming in Alabama would increase
competition for, and would have a material adverse effect on, the Isle-Biloxi.
Vicksburg Operations. The Isle-Vicksburg is one of four gaming facilities
currently operating an aggregate of approximately 105,000 square feet of
casino floor space in the Vicksburg area. The Isle-Vicksburg is the second
largest casino in the Vicksburg area. Two competitors have hotels on their
site and the competitor closest to the Isle-Vicksburg has a hotel within 1/2
mile of its casino. (The Isle-Vicksburg does not contain a hotel, but operates
a 67-space recreational vehicle park located 1/2 mile from its facilities.)
Other local casino competition includes one gaming facility in Natchez,
Mississippi (approximately 60 miles south of Vicksburg and 80 miles southwest
of Jackson); two gaming facilities in Greenville, Mississippi, with another
under construction (approximately 80 miles north of Vicksburg and 90 miles
northwest of Jackson); and a land-based, Indian-owned casino near
Philadelphia, Mississippi (approximately 115 miles northeast of Vicksburg and
70 miles northeast of
16
<PAGE>
Jackson). Because Mississippi does not limit the number of gaming licenses
that may be granted, there may be increases in the number of gaming facilities
in Vicksburg and elsewhere in counties bordering the Mississippi River, which
could have a material adverse effect on the Isle-Vicksburg. While the
Mississippi statutes specify that gaming may only be held on the Mississippi
River and on navigable waters within counties bordering the Mississippi River,
several controversies have arisen concerning the exact permissible locations
of casinos within this statutory language. Specifically, there have been
several attempts to expand gaming as far east of the Mississippi River as
possible, including a recent request for the Mississippi Gaming Commission to
consider approving the location of a casino on the eastern border of Warren
County. It is likely that these controversies and efforts to expand gaming
east of the Mississippi River will continue. In the event sites are approved
in the eastern part of Warren County, in which the Isle-Vicksburg is located,
the Isle-Vicksburg could be adversely affected.
LEGISLATIVE AND REGULATORY CONSIDERATIONS
Texas and Alabama Legalization Risks. Casino gaming is currently prohibited
in several jurisdictions adjacent to Louisiana and Mississippi. As a result,
residents of these jurisdictions, principally Texas and Alabama, comprise a
significant portion of the customers of the Isle-Bossier City and the Isle-
Lake Charles (in the case of Texas) and the Isle-Biloxi (in the case of
Alabama).
Although casino gaming is not currently permitted in Texas and the Texas
Attorney General has issued an opinion that gaming in Texas would require an
amendment to the Texas Constitution, the Texas legislature has considered
various proposals to authorize casino gaming. No gaming legislation was
enacted in the most recent legislative session ended May 29, 1995. A
constitutional amendment would require a two-thirds vote of those present and
voting in each house of the Texas legislature and approval by the electorate
in a referendum. The legalization of casino gaming in Texas at or near the
primary market areas of the Isle-Bossier City or the Isle-Lake Charles,
including the Dallas/Ft. Worth and Houston areas, would have a material
adverse effect on the Company.
Casino gaming is currently illegal in Alabama due to a constitutional
prohibition against lotteries. Several attempts have been made to pass a
resolution of the Alabama legislature providing for a statewide referendum on
the repeal of the pertinent section of the Alabama Constitution prohibiting
lotteries (and thereby gaming). This action would require a three-fifths vote
of each house of the legislature, followed by a statewide referendum. Both the
Governor and the Attorney General of Alabama have stated their opposition to
legalized casino gaming, even though pari-mutuel wagering and limited
charitable bingo exist within the state. The legalization of casino gaming in
Alabama would have a material adverse effect on the Isle-Biloxi, both because
the Mobile metropolitan area is a major market for the Isle-Biloxi and because
a substantial portion of the Isle-Biloxi's customers are residents of areas
east of Mobile, including Florida and Georgia, and pass through the Mobile
area when traveling to Biloxi.
Expansion of Louisiana Gaming Activities and Possible Relocation of Existing
Licenses. Current Louisiana law limits to 15 the number of riverboat casino
licenses that may be granted. Four licenses have been allocated to the
Shreveport/Bossier City market (including the license allocated to the Isle-
Bossier City) and four licenses have been allocated to the Lake Charles market
(including the two licenses allocated to the Isle-Lake Charles); the
Shreveport/Bossier City market is comprised of two parishes. Under current
Louisiana law, up to six licenses may be granted to riverboats operating from
any one parish. There can be no assurance that future Louisiana legislation
(or any judicial determination) will not increase the total number of
authorized riverboat casino licenses or the number of licenses permitted in
any parish. In addition, even without a change in Louisiana law increasing the
number of authorized riverboat casino licenses, existing licenses may be
relocated to other markets within Louisiana. Management believes that the
relative success of gaming operations in the Shreveport/Bossier City and Lake
Charles markets, as compared to other Louisiana markets, may increase the
possibility that existing licenses may be awarded in or relocated to these
markets, especially in the event other local parishes do not permit riverboat
gaming to continue in such parishes. See "--Local Option Referendum Regarding
Continuation of Legalized Gaming in Louisiana." However, the relocation of
existing licenses to another parish
17
<PAGE>
or of riverboats within the same parish may be restricted by a constitutional
amendment to be submitted to a vote in Louisiana on September 21, 1996, which
seeks to require, among other things, a local parish-wide election to approve,
by a majority of those voting on the matter, the licensing of any additional
riverboats in a parish with existing licensed riverboats or relocating any
operating riverboat to a different berth in the same parish.
Limitation on New Gaming Venues. The Company intends to continue to pursue
potential gaming opportunities in states and other jurisdictions that have not
yet legalized gaming. The availability of new gaming opportunities is largely
dependent on the legalization of gaming in new jurisdictions; however, gaming
is prohibited throughout most of the United States and the recent trend toward
legalization has slowed and may continue to do so. There can be no assurance
that legislation to legalize gaming will be enacted or that gaming will be
permitted in any other states. No assurance can be given that attractive
opportunities to develop new operations will be available to the Company.
Nevertheless, due to the severe competition for potential new gaming
opportunities it is often necessary to commit resources before there can be
any assurance that gaming will be legalized at all or on terms that will
enable the Company to benefit from its activities and investments.
Accordingly, the Company may need to make investments which do not ultimately
yield a gaming opportunity.
Need to Renew Licenses and Adverse Changes in Laws and Regulations. The
Company must obtain a gaming license for each location at which it operates a
casino facility. Generally, such licenses are for a fixed term and are subject
to renewal periodically. Licenses in Mississippi are issued for two-year terms
and new licenses must be obtained at the end of such terms. Licenses in
Louisiana are issued for an initial five-year term with annual renewals
thereafter. The Company and each of its officers, directors, managers and
principal stockholders are subject to strict scrutiny and approval by the
gaming regulatory bodies of each jurisdiction in which the Company conducts or
seeks to conduct gaming operations. The issuance of a gaming license is
considered a privilege, not a right, and gaming licenses are subject to
suspension, limitation or revocation if regulatory requirements are not met.
In addition to licenses from state gaming regulatory agencies, casino
operations also typically require various local governmental approvals and
riverboats require Federal and state environmental approvals and approvals
relating to operations in navigable waters. The Company's license to operate
the Isle-Bossier City will expire in December 1998; the Company's license to
operate the Isle-Biloxi will expire in April 1998; the Company's license to
operate the Isle-Vicksburg will expire in February 1997; and the Company's
licenses to operate the two riverboats constituting the Isle-Lake Charles will
expire in March 1999 and May 2001. The loss or suspension of any present or
future gaming license held by the Company, the failure to obtain a gaming
license from any state in which the Company plans to open a gaming facility in
the future, or the failure to obtain a new license or the renewal of any
license would have a material adverse effect on the Company's business. In
some circumstances, the loss of a license in one jurisdiction may trigger the
loss of a license or affect eligibility for a license in another jurisdiction.
Recent Changes in Louisiana Regulatory Structure. In May 1996, the
regulatory oversight of riverboat gaming was transferred to the Louisiana
Gaming Control Board (the "Gaming Board"). The Gaming Board oversees all
licensing matters for riverboat casinos, the land-based casino in New Orleans,
video poker, and certain aspects of Indian gaming. The Gaming Board will be
composed of nine voting members appointed by the governor, five of whom have
been appointed. The Gaming Board held its first meeting on July 10, 1996, at
which it adopted a set of emergency rules conferring certain authority to the
Chairman. On July 12, 1996, the Gaming Board (acting through the Chairman)
issued all necessary approvals to operate the Grand Palais and formally
authorized the commencement of gaming on the Grand Palais. Pursuant to that
approval, the Grand Palais opened on July 12, 1996.
LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL
The Notes will be secured, directly or indirectly, by substantially all of
the assets of the Company, the Subsidiary Guarantors and certain other of the
Company's subsidiaries, but not the Excluded Assets. In addition, the lien on
certain significant assets of the Company to be granted in favor of the
holders of the Notes will be
18
<PAGE>
junior to the liens of certain existing indebtedness. If an acceleration were
to occur with respect to the Notes and the Trustee were to foreclose on the
collateral securing the Notes, there can be no assurance that the liquidation
of the collateral would produce proceeds in an amount sufficient to pay the
principal of and accrued interest on the Notes. See "Description of the
Notes--Collateral Security."
In any foreclosure sale, the Trustee's ability to foreclose upon collateral
representing casino assets would be limited because the purchaser or operator
of such facility (or stock of any subsidiary holding such facility) would need
to be licensed under applicable state gaming laws and the regulations
promulgated thereunder in order to operate the facility (or own such stock).
If the Trustee were to acquire collateral representing casino assets in a
foreclosure sale and was unable to, or chose not to, qualify to operate such
assets under such state gaming laws, the Trustee would have to either sell or
lease such assets to an entity licensed under such gaming laws to operate such
assets. In addition, in any foreclosure sale or subsequent resale by the
Trustee, licensing requirements under state gaming laws may limit the number
of potential bidders, delay any sale and adversely affect the sale price of
such collateral.
The ability to take possession and dispose of the collateral securing the
Notes upon acceleration or foreclosure is likely to be significantly impaired
or delayed by applicable bankruptcy law if a bankruptcy proceeding were to be
commenced by or against the Company or the subsidiary owning such collateral.
CERTAIN FRAUDULENT CONVEYANCE AND BANKRUPTCY CONSIDERATIONS
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if a court were to find that the
Company received less than reasonably equivalent value or fair consideration
for incurring the indebtedness represented by the Notes and, at the time of
the incurrence, the Company was (i) insolvent or rendered insolvent by reason
of the issuance of the Notes or (ii) engaged in a business or transaction or
was about to engage in a business or transaction for which the assets of the
Company constituted unreasonably small capital or (iii) intended to incur, or
believed or reasonably should have believed that it would incur, debts beyond
its ability to pay such debts as they mature, such court could, among other
things, (a) void all or a portion of the Company's obligations to the holders
of the Notes or (b) subordinate the Company's obligations to the holders of
the Notes to other existing and future indebtedness of the Company, the effect
of which would be to entitle such other creditors to be paid in full before
any payment could be made on the Notes. In addition, if a court were to find
that any Guarantor received less than reasonably equivalent value or fair
consideration for its guarantee or liens securing such guarantee and, at the
time the guarantee or liens securing such guarantee were issued, the Guarantor
was (i) insolvent or rendered insolvent by reason of the issuance of its
guarantee or the liens securing the guarantee or (ii) engaged in a business or
transaction or was about to engage in a business or transaction for which the
assets of such Guarantor constituted unreasonably small capital or (iii)
intended to incur, or believed or reasonably should have believed that it
would incur, debts beyond its ability to pay such debts as they mature, such
court could, among other things, (a) void all or a portion of the Guarantor's
obligations to the holders of the Notes or (b) subordinate the Guarantor's
obligations to the holders of the Notes to other existing and future
indebtedness of such Guarantor, the effect of which would be to entitle such
other creditors to be paid in full from such Guarantor's assets before any
payment could be made on the Notes.
In the event that a proceeding under federal bankruptcy law were to be
commenced by or against the Company or a Guarantor within 90 days after the
Company or a Guarantor makes a payment on or pledges collateral to secure the
Notes or a person becomes a Guarantor, some or all of the payments received,
or collateral pledged, during such 90-day period may be avoidable as a
preference under the federal bankruptcy law. The Indenture provides that
certain subsidiaries formed or acquired after the issuance of the Notes will
be required to guarantee the Notes and the stock and assets of such Guarantor
must be pledged as security for such guarantee. Such pledge and guarantees may
be avoidable as a preference if a bankruptcy proceeding concerning the Company
or a Guarantor, as applicable, were to be commenced within the applicable
statutory period. Any payment made, or collateral received, which is avoided
as a preference would be required to be returned to the bankruptcy estate of
the Company or such Guarantor.
19
<PAGE>
CONSTRUCTION AND DEVELOPMENT RISKS
Construction and development projects, such as any future hotel developments
or other land-based capital improvement projects that may be undertaken by the
Company, either alone or pursuant to a joint venture, entail significant
risks, including shortages of materials or skilled labor, unforeseen
engineering, environmental and geological problems, work stoppages, weather
interference and unanticipated cost increases. There can be no assurance that
the Company will be able to enter into contracts for the construction of
future projects or that such contracts will be on terms favorable to the
Company. Moreover, the Company believes that the development of hotel
facilities and other capital improvement projects are important to the
economic success of its properties. Unexpected development concessions
required by local, state or federal regulatory authorities could involve
significant additional costs and delay the scheduled opening of any planned
facilities and any other facilities that the Company may seek to develop in
the future.
HOTEL BUSINESS AND JOINT VENTURE RISKS
The Company opened a 367-room hotel facility at the Isle-Biloxi on August 1,
1995. The Company anticipates that additional hotels will need to be developed
at its existing gaming facilities in order to remain competitive in those
markets. The Company intends to develop additional hotels either alone or with
a business partner or partners, such as through the Hotel Joint Venture. The
Company has limited experience in hotel development or operations and
undertaking such development, if any, will be subject to all of the risks
inherent in the establishment of a new enterprise. In addition, numerous
permits and approvals are required for the development of hotel projects, and
no assurance can be given that such permits and approvals can or will be
obtained. Although the Company may enter into management contracts with
experienced hotel management companies with respect to future hotels, there
can be no assurance that such contracts will be entered into or entered into
on terms favorable to the Company. Moreover, to the extent the Company
undertakes to develop hotel facilities at its properties with a business
partner or partners, the Company will be exposed to certain risks inherent in
joint ventures. The Company has expanded its operations in the past into new
venues by entering into joint venture relationships, such as the LRGP and SCGC
joint ventures. In any future joint venture arrangement, the Company may not
have authority to control or make unilateral decisions with respect to the
activities of such joint venture. As a result, any management dispute between
the Company and any joint venture partner, or any financial problems of the
joint venture partner, may have a material adverse effect on any such joint
venture project and, accordingly, on the Company's business.
LOSS OF FACILITIES FROM SERVICE
The Company's profitability is dependent upon the operations of its
riverboat casino and pavilion facilities. A gaming vessel could be lost from
service due to casualty, mechanical failure or extended or extraordinary
maintenance or inspection. Business activity at any location would also be
adversely affected by a flood, hurricane, tornado or other severe weather
conditions. Areas along the Gulf of Mexico (the site of the Isle-Biloxi), the
Mississippi River (the site of the Isle-Vicksburg), the Red River (the site of
the Isle-Bossier City) and the Calcasieu River (the site of the Isle-Lake
Charles) are subject to storms and hurricanes and the Company's facilities
have been closed from time to time as a result. In addition, each riverboat
operated by the Company in Louisiana must hold a Certificate of Documentation
and Inspection issued by the U.S. Coast Guard, the loss of which could
preclude its use as a riverboat casino. A prolonged or total loss of any
gaming vessel would have a material adverse effect on the Company. The Company
maintains limited business interruption insurance, but the proceeds therefrom
may be insufficient to compensate the Company in the event that one or more of
its casinos is lost from service.
EFFECT OF LOCAL ECONOMIC AND WEATHER RELATED FACTORS
The Company's results of operations may be adversely affected by local
economic and weather-related factors. If the local economy in a market in
which the Company operates one or more casinos suffered a downturn, the casino
or casinos located within that market could be adversely affected as the
disposable income
20
<PAGE>
of consumers in that market declined, resulting in a decrease in the number of
patrons at the Company's casino or casinos or a decrease in the amount that
patrons are willing to wager. In addition, storms or hurricanes that destroy a
large amount of personal and real property may result in patrons spending time
and money cleaning up and restoring property and less time and money in the
Company's casinos.
DEPENDENCE ON KEY PERSONNEL
The success of the Company is largely dependent upon the efforts and skills
of a few key executive officers and the experience of its property managers.
The loss of the services of any of such key executive officers or senior-level
property managers could have a material adverse effect on the Company. There
can be no assurance that the Company would be able to attract and hire
suitable replacements in the event of any such loss of services. In this
regard, the Company's Chief Operating Officer and Vice President of Marketing
and the general manager of the Isle-Vicksburg recently resigned from the
Company and have indicated that they intend to seek positions with one of the
Company's competitors. The Company does not maintain "key man" life insurance
on any of its employees.
DIFFICULTY IN ATTRACTING AND RETAINING QUALIFIED EMPLOYEES
The operation of the Company's business requires qualified executives,
managers and skilled employees with gaming industry experience. The Company
believes that a shortage of skilled labor exists in the gaming industry which
will make it increasingly difficult and expensive to attract and retain
qualified employees. Increasing competition in the Company's markets is
expected to lead to higher costs in order to retain and attract qualified
employees. In addition, to the extent the Company enters new markets, the
Company may incur higher labor costs to attract qualified employees from
gaming facilities existing in those markets. While the Company believes that
it will be able to attract and retain qualified employees, there can be no
assurance that the Company will be able to do so.
ABSENCE OF PUBLIC MARKET FOR THE NOTES; LACK OF LIQUIDITY
There is no existing market for the Notes and there can be no assurance as
to the liquidity of any markets that may develop for the Notes, the ability of
holders of the Notes to sell their Notes or the price at which holders would
be able to sell their Notes. Future trading prices of the Notes will depend on
many factors, including, among other things, prevailing interest rates, the
Company's operating results and the market for similar securities. The Company
has been advised by the Underwriters that, subject to applicable laws and
regulations, the Underwriters currently intend to make a market in the Notes
after the consummation of the Offering, although they are not obligated to do
so and may discontinue any market-making activities with respect the Notes at
any time without notice.
POTENTIAL NEED FOR ADDITIONAL FINANCING
The Company believes that it will have sufficient funds to finance its
anticipated capital expenditure requirements. However, the Company is
exploring, and will continue to explore, multiple projects or larger-scale
development activities, either at its existing locations or in new markets,
that may require additional debt or equity financing. The lack of sufficient
financing on acceptable terms to further renovate or expand existing projects
may put such properties or projects at a substantial competitive disadvantage
with their competitors. There can be no assurance that such financing will be
available given the highly leveraged position of the Company or, if available,
that it would be available on terms satisfactory to the Company.
TAXATION
The Company believes that the prospect of significant additional revenue is
one of the primary reasons that jurisdictions have legalized gaming. As a
result, gaming companies are typically subject to significant taxes and fees
in addition to normal federal and state corporate income taxes; such taxes and
fees are subject to increase at any time and are not within the control of the
Company. Any material increase in these taxes or fees could have a material
adverse effect on the Company. See "Regulatory Matters."
21
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements other than statements of historical facts
included in this Prospectus, including without limitation, statements under
"--Leverage and Debt Service," "--Competition," "Business--Current
Operations," "--Future Development Opportunities" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," regarding the Company's financial position, business
strategy, capital resources, and plans and objectives of management of the
Company for future operations are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations
will prove to have been correct. Important factors that could cause actual
results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed under "Risk Factors" and elsewhere in this
Prospectus, including, without limitation, in conjunction with the forward-
looking statements included in this Prospectus. All subsequent written and
oral forward-looking statements attributable to the Company or persons acting
on its behalf are expressly qualified in their entirety by the Cautionary
Statements.
22
<PAGE>
USE OF PROCEEDS
The gross proceeds of the Offering will be $300 million. The net proceeds to
the Company from the Offering are estimated to be $289.3 million. The Company
currently anticipates that the uses of the gross proceeds of the Offering as
of June 30, 1996 will be approximately as follows (in millions):
<TABLE>
<S> <C>
First Mortgage Notes Retirement(1)................................ $116.5
Repayment of other existing debt(2)............................... 80.7
LRGP Acquisition.................................................. 85.0
General corporate purposes........................................ 7.1
Offering expenses................................................. 10.7
------
$300.0
======
</TABLE>
- --------
(1) The First Mortgage Notes bear interest at 11 1/2% and mature on November
15, 2001. See "Prospectus Summary--First Mortgage Notes Retirement."
(2) Represents repayment of (i) $38.4 million of indebtedness, for which LRGP
and SCGC are co-obligors, due July 27, 1996, bearing interest at an
increasing rate (currently 12.75%), with an option for the issuers to
extend maturity up to an additional 12 months (together with an additional
payment of up to $1.7 million relating to the prepayment of such
indebtedness), (ii) $3.6 million of indebtedness of the Company, due
November 1996, bearing interest at 12%, (iii) $13.7 million of
indebtedness of LRGP, due in monthly principal payments of $625,000
through April 1998, bearing interest at prime plus 1% (9.25% at April 30,
1996), (iv) $10.0 million of indebtedness of LRGP, due June 2001, bearing
interest at 11.5%, (v) $8.3 million of indebtedness of GPRI, payable on
consummation of the Offering, bearing interest at prime plus 1% (9.25% at
April 30, 1996) and (vi) $5.0 million of indebtedness of GPRI, payable on
consummation of the Offering, bearing interest at 6%.
CAPITALIZATION
The following table sets forth the actual cash and cash equivalents, short-
term debt and capitalization of the Company as of April 30, 1996, and as
adjusted to give effect to the SCGC Acquisition, the LRGP Acquisition, the
Grand Palais Acquisition, the Rights Offering (assuming a full subscription
thereto) and the sale of the Notes offered hereby and the application of the
net proceeds therefrom. See "Use of Proceeds" and "Unaudited Pro Forma
Financial Data."
<TABLE>
<CAPTION>
APRIL 30, 1996
--------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................. $ 18,585 $ 41,334
======== ========
Short-term debt, including current portion of long-term
debt..................................................... $ 8,884 $ 16,359
======== ========
Long-term debt:
Notes payable........................................... $ 21,835 $ 53,147
Biloxi hotel loan....................................... 14,670 14,670
11 1/2% First Mortgage Notes(1)......................... 103,273 --
Crown Note.............................................. -- 10,000
% Senior Secured Notes................................ -- 300,000
-------- --------
139,778 377,817
Less: current portion................................... 8,884 16,359
-------- --------
Total long-term debt.................................. 130,894 361,458
Stockholders' equity:
Common Stock, par value $.01 per share, 45,000,000
shares
authorized, 16,038,882 shares issued and outstanding
actual, and 23,240,519 as adjusted(2).................. 160 232
Additional paid-in capital.............................. 13,857 61,934
Retained earnings....................................... 36,253 24,638
-------- --------
Total stockholders' equity............................ 50,270 86,804
-------- --------
Total capitalization...................................... $181,164 $448,262
======== ========
</TABLE>
- --------
(1) Excludes unamortized discount of $1,727,000.
(2) Excludes 3,348,778 shares of Common Stock (4,765,445 as adjusted) issuable
upon exercise of options and warrants outstanding as of April 30, 1996.
23
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial
statements are based on the historical financial statements of the Company
adjusted to give effect to LRGP's purchase of a 50% interest in SCGC on June
9, 1995 (the "Initial Acquisition"), the SCGC Acquisition, the LRGP
Acquisition, the Grand Palais Acquisition, the Rights Offering and the
Offering and the application of the net proceeds therefrom. The unaudited pro
forma condensed consolidated balance sheet as of April 30, 1996 gives effect
to the SCGC Acquisition, the LRGP Acquisition, the Grand Palais Acquisition,
the Rights Offering and the Offering and the application of the net proceeds
therefrom as if such transactions had occurred on April 30, 1996. The
unaudited pro forma condensed consolidated statement of income for the year
ended April 30, 1996 gives effect to the Initial Acquisition, the SCGC
Acquisition, the LRGP Acquisition, the Grand Palais Acquisition, to the extent
of interest on debt assumed or issued in connection with the acquisition, the
Rights Offering and the Offering and the application of the net proceeds
therefrom, as if such transactions had occurred on May 1, 1995.
The Initial Acquisition, the SCGC Acquisition, the LRGP Acquisition and the
Grand Palais Acquisition have been or will be accounted for by the Company
using the purchase method of accounting. The pro forma adjustments are based
upon currently available information and certain assumptions that management
believes are reasonable. The actual purchase price adjustments will be
determined based on the fair market value of the assets and liabilities
acquired and may differ significantly from the amounts reflected in the pro
forma adjustments.
The unaudited pro forma condensed consolidated financial statements are not
necessarily indicative of the financial position or results of operation which
would have been achieved had the above mentioned transactions occurred on the
indicated dates, nor are they necessarily indicative of the results of future
operations. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the financial statements and
related notes of the Company, LRGP and SCGC included elsewhere in this
Prospectus.
On May 3, 1996, the Company purchased all of the common stock of GPRI as
reorganized. The pre-bankruptcy business of GPRI consisted entirely of
developing and operating the Grand Palais riverboat casino in New Orleans,
Louisiana. The Grand Palais began gaming operations in New Orleans on March
29, 1995 and, due to poor operating results, ceased operations on June 6,
1995. GPRI was forced into involuntary bankruptcy on July 26, 1995 and was
completely non-operational between the date of the closing of the Grand Palais
on June 6, 1995 and its subsequent reopening at the Isle-Lake Charles on July
11, 1996. Other than interest on debt incurred to effect the Grand Palais
Acquisition, adjustments related to the Grand Palais Acquisition have not been
included in the following unaudited pro forma condensed consolidated statement
of income because GPRI was not operating between June 6, 1995 and July 11,
1996, and because the pre-bankruptcy operations of GPRI were very limited and
substantially different than the post-acquisition operations.
24
<PAGE>
CASINO AMERICA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS REPORTED
---------------------------------
CASINO LRGP AND TOTAL PRO FORMA
ASSETS AMERICA, INC. LRG HOTELS SCGC HISTORICAL ADJUSTMENTS PRO FORMA
------ ------------- ---------- -------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents........... $ 18,585 $ 6,576 $ 4,808 $ 29,969 $ 11,365 (1) $ 41,334
Accounts receivable.... 4,935 678 582 6,195 (3,171)(2) 3,024
Other current assets... 3,859 731 1,753 6,343 -- 6,343
-------- -------- -------- -------- --------- --------
Total current assets. 27,379 7,985 7,143 42,507 8,194 50,701
Property and equipment--
net.................... 129,306 52,968 69,919 252,193 43,000 (3) 295,193
Other assets:
Investment in and ad-
vances to joint
ventures.............. 34,281 61,961 -- 96,242 (96,242)(4) --
Notes
receivable/advances
due from affiliates... 4,700 5,871 -- 10,571 (10,571)(5) --
Unallocated purchase
price................. -- -- -- -- 114,235 (6) 114,235
Other investments...... 2,250 -- -- 2,250 -- 2,250
Property held for de-
velopment or sale..... 15,840 -- -- 15,840 -- 15,840
Other non current
assets................ 12,718 1,177 10,125 24,020 6,257 (7) 30,277
-------- -------- -------- -------- --------- --------
69,789 69,009 10,125 148,923 13,679 162,602
-------- -------- -------- -------- --------- --------
Total assets......... $226,474 $129,962 $ 87,187 $443,623 $ 64,873 $508,496
======== ======== ======== ======== ========= ========
<CAPTION>
LIABILITIES AND
STOCKHOLDERS'
EQUITY/PARTNERS' CAPITAL
- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Current liabilities:
Notes payable and cur-
rent maturities of
long-term debt........ $ 8,884 $ 17,252 $ 79,426 $105,562 $ (89,203)(8) $ 16,359
Accounts payable....... 6,169 3,101 5,235 14,505 (5,340)(2) 9,165
Accrued liabilities.... 23,258 8,803 8,483 40,544 (12,833)(9) 27,711
-------- -------- -------- -------- --------- --------
Total current
liabilities......... 38,311 29,156 93,144 160,611 (107,376) 53,235
Long-term debt.......... 130,894 33,559 637 165,090 196,368 (10) 361,458
Deferred income taxes... 6,999 -- -- 6,999 -- 6,999
Stockholders'
equity/partners' capi-
tal:
Common stock........... 160 -- 5,600 5,760 (5,528)(11) 232
Additional paid-in
capital............... 13,857 -- 13,985 27,842 34,092 (11) 61,934
Retained
earnings/partners'
capital............... 36,253 67,247 (26,179) 77,321 (52,683)(12) 24,638
-------- -------- -------- -------- --------- --------
Total stockholders'
equity/partners'
capital............. 50,270 67,247 (6,594) 110,923 (24,119) 86,804
-------- -------- -------- -------- --------- --------
Total liabilities and
stockholders'
equity/partners'
capital............. $226,474 $129,962 $ 87,187 $443,623 $ 64,873 $508,496
======== ======== ======== ======== ========= ========
</TABLE>
See accompanying notes.
25
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) Represents $1,666,000 of the proceeds of the Notes to be used for
general corporate purposes and $18,099,000 of net proceeds from the Rights
Offering, net of $8,400,000 of cash paid in the Grand Palais Acquisition.
(2) Represents the elimination of miscellaneous intercompany balances due to
the Company from LRGP and SCGC and amounts due to LRGP from SCGC.
(3) Adjustment related to the Grand Palais Acquisition purchase price
allocation. See Note 6.
(4) Represents the elimination of the Company's investment in and advances
to LRGP and LRG Hotels, and the elimination of LRGP's investment in and
advances to SCGC.
(5) Represents the elimination of notes receivable/advances due to the
Company and LRGP from SCGC and LRG Hotels.
(6) Represents the excess of cost over the estimated fair value of the net
assets acquired in the Initial Acquisition, the SCGC Acquisition, the Grand
Palais Acquisition and the LRGP Acquisition. Such excess cost related to the
Initial Acquisition, the SCGC Acquisition and the LRGP Acquisition and totaled
approximately $94,835,000. The Company has tentatively allocated the Grand
Palais Acquisition purchase price as follows:
<TABLE>
<S> <C>
Riverboat and equipment.................................... $ 43,000,000
Unallocated purchase price................................. 19,400,000
Liabilities assumed or contributed as part of the purchase
price..................................................... (37,900,000)
------------
Total cash and equity paid by the Company................ $ 24,500,000
============
</TABLE>
(7) Represents $10,700,000 of issuance costs related to the Notes, less the
write-off of $3,677,000 of unamortized debt issuance costs related to the
First Mortgage Notes and $766,000 of unamortized debt issuance costs related
to other debt which will be retired with proceeds from the Notes. See "Use of
Proceeds".
(8) Represents (i) the retirement of the current portion of certain
indebtedness (see "Use of Proceeds") of the Company, LRGP and SCGC using a
portion of the net proceeds from the Notes, (ii) the elimination of certain
intercompany indebtedness and (iii) the addition of the current portion of the
debt issued or assumed to complete the Grand Palais Acquisition, as follows:
<TABLE>
<S> <C>
Retirement of certain indebtedness of the Company--current
portion.................................................... $ (3,600,000)
Retirement of certain indebtedness of LRGP--current portion. (15,900,000)
Retirement of certain indebtedness of SCGC--current portion. (30,000,000)
Elimination of advances from LRGP to SCGC................... (41,703,000)
Elimination of the note issued by the Company to SCGC....... (4,700,000)
Current portion of debt incurred to effect the Grand Palais
Acquisition................................................ 6,700,000
------------
Total adjustment to current portion of long-term debt..... $(89,203,000)
============
</TABLE>
26
<PAGE>
(9) Adjusted to reflect:
<TABLE>
<S> <C>
Payment of accrued interest on debt assumed to be retired
using the proceeds from the Notes......................... $ (5,634,000)
Tax benefit related to the premium on the First Mortgage
Notes Retirement and retirement of certain other
indebtedness and the write-off of unamortized debt
issuance costs and original issue discount ............... (6,255,000)
Elimination of amounts due to the Company and LRGP from LRG
Hotels.................................................... (944,000)
------------
$(12,833,000)
============
</TABLE>
(10) Adjusted to reflect:
<TABLE>
<S> <C>
Total principal amount of the Notes....................... $ 300,000,000
Long-term portion of debt incurred to effect the Grand
Palais Acquisition....................................... 31,200,000
Present value of the deferred payments to be made in
connection with the LRGP Acquisition..................... 5,300,000
Retirement of the First Mortgage Notes (net of unamortized
discount of $1,727,000).................................. (103,273,000)
Retirement of certain indebtedness of LRGP................ (17,500,000)
Retirement of certain indebtedness of GPRI................ (13,300,000)
Elimination of amounts due to the Company and LRGP from
LRG Hotels............................................... (6,059,000)
-------------
Total adjustment to long-term debt.................... $ 196,368,000
=============
</TABLE>
(11) Adjusted to reflect (i) the elimination of SCGC's common stock and
additional paid in capital, (ii) issuance of 1,850,000 shares of Common Stock,
valued at $12,950,000, in connection with the SCGC Acquisition, (iii) issuance
of 2,250,000 shares of Common Stock and warrants to purchase an additional
500,000 shares of Common Stock at $10.00 per share, all valued at $16,100,000,
in connection with the Grand Palais Acquisition, (iv) the issuance of warrants
to purchase 500,000 shares of Common Stock at an exercise price of $10.50 per
share, valued at $1,000,000, in connection with the LRGP Acquisition and (v)
the issuance of 3,101,637 shares of Common Stock, resulting in net proceeds of
$18,099,000 in connection with the Rights Offering.
(12) Adjusted to reflect:
<TABLE>
<S> <C>
Write-off of unamortized debt issuance costs related
primarily to redemption of the First Mortgage Notes..... $ (4,443,000)
Write-off of the unamortized discount related to the
First Mortgage Notes.................................... (1,727,000)
Premium on the First Mortgage Notes Retirement and the
retirement of certain other indebtedness................ (11,700,000)
Tax benefit related to the above items................... 6,255,000
Elimination of LRGP's, LRG Hotels' and SCGC's retained
earnings/partners' capital.............................. (41,068,000)
------------
$(52,683,000)
============
</TABLE>
27
<PAGE>
CASINO AMERICA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED APRIL 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS REPORTED
--------------------------------
CASINO LRGP AND TOTAL PRO FORMA
AMERICA, INC. LRG HOTELS SCGC HISTORICAL ADJUSTMENTS PRO FORMA
------------- ---------- ------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Casino................. $123,936 $145,604 $56,589 $326,129 $ -- $326,129
Rooms, food, beverage
and other............. 27,719 8,951 674 37,344 -- 37,344
Management fees--joint
ventures.............. 6,308 -- -- 6,308 (6,308)(1) --
-------- -------- ------- -------- -------- --------
Total revenue........ 157,963 154,555 57,263 369,781 (6,308) 363,473
Operating expenses:
Casino and gaming
taxes................. 65,026 66,088 23,895 155,009 -- 155,009
Marketing and
administrative........ 33,167 25,872 19,813 78,852 -- 78,852
Depreciation and
amortization.......... 12,111 5,728 3,289 21,128 4,569 (2) 25,697
One-time charge........ 11,798 -- -- 11,798 -- 11,798
Preopening expenses.... 1,311 -- 4,196 5,507 -- 5,507
Loss on disposal of
equipment............. 1,217 -- -- 1,217 -- 1,217
Other.................. 30,140 18,709 7,249 56,098 (6,308)(1) 49,790
-------- -------- ------- -------- -------- --------
Total operating
expenses............ 154,770 116,397 58,442 329,609 (1,739) 327,870
Operating income (loss). 3,193 38,158 (1,179) 40,172 (4,569) 35,603
Interest expense, net... (13,924) (1,948) (6,210) (22,082) (20,486)(3) (42,568)
Equity in income (loss)
of joint ventures...... 16,434 (2,658) -- 13,776 (13,776)(4) --
Other................... -- -- -- -- -- --
-------- -------- ------- -------- -------- --------
Income (loss) before
income taxes........... 5,703 33,552 (7,389) 31,866 (38,831) (6,965)
Income taxes............ (4,148) -- 1,056 (3,092) 3,092 (5) --
-------- -------- ------- -------- -------- --------
Income (loss) before
extraordinary loss..... $ 1,555 $ 33,552 $(6,333) $ 28,774 $(35,739) $ (6,965)
======== ======== ======= ======== ======== ========
Income (loss) before
extraordinary loss per
common and common
equivalent share....... $ 0.10 $ (0.30)
Weighted average common
and common equivalent
shares................. 15,721 7,202 (6) 22,923
</TABLE>
See accompanying notes.
28
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
(1) Represents elimination of the management fee charged by the Company to
LRGP and SCGC.
(2) Reflects the amortization of the excess of the cost over the fair value
of the net assets acquired in the Initial Acquisition, the SCGC Acquisition,
the LRGP Acquisition and the Grand Palais Acquisition. Amortization has been
calculated using the straight-line method over an estimated useful life of 25
years.
(3) Adjusted to reflect:
<TABLE>
<S> <C>
Interest expense on the Notes............................... $36,750,000
Amortization of issuance costs related to the Notes......... 1,529,000
Incremental interest expense on the 11 1/2% $20 million note
issued by LRGP in connection with the Initial Acquisition.. 249,000
Interest expense on GPRI debt incurred to effect the Grand
Palais Acquisition (net of $13,300,000 of GPRI debt
redeemed using the proceeds from the Notes)................ 2,035,000
Imputed interest on the deferred payments to be made in
connection with the LRGP Acquisition....................... 685,000
Less interest on debt retired with the proceeds from the
Notes...................................................... (19,438,000)
Less amortization of debt issuance costs and original issue
discount related to debt retired with the proceeds from the
Notes...................................................... (1,324,000)
-----------
$20,486,000
===========
</TABLE>
(4) Represents elimination of the Company's equity in the earnings and
losses of LRGP and LRG Hotels, respectively, and elimination of LRGP's equity
in the losses of SCGC.
(5) Reflects the income tax effects of the pro forma adjustments.
(6) Represents the issuance of 1,850,000 shares of Common Stock in
connection with the SCGC Acquisition, the issuance of 2,250,000 shares of
Common Stock in connection with the Grand Palais Acquisition and the issuance
of 3,101,637 shares of Common Stock in connection with the Rights Offering.
29
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following selected historical financial information has been derived
from the consolidated financial statements of the Company. The financial
statements for each of the four years in the period ended April 30, 1996,
included elsewhere in this Prospectus, have been audited by Ernst & Young LLP,
independent auditors. The financial statements for the periods prior to April
30, 1993 have been audited by other independent auditors. The following
information should be read in conjunction with the consolidated financial
statements and notes thereto, and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus.
The Company believes the results of operations for periods prior to May 1,
1992 are not readily comparable to subsequent periods because the business
operations of the Company in prior periods, although related to gaming, were
substantially different from the Company's present casino operations. The
Company believes the results of operations for each of the four fiscal years
in the period ended April 30, 1996 are not readily comparable to each other
because (i) the Isle-Vicksburg commenced operations on August 9, 1993, (ii)
the Isle-Bossier City commenced operations on May 20, 1994, (iii) the Isle-
Lake Charles commenced operations on July 29, 1995 and (iv) the Isle-Biloxi
commenced operations on August 1, 1992 and has faced substantially increasing
competition since opening and was substantially expanded in June 1993 and
again in July 1995. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
FOUR MONTHS
YEAR ENDED ENDED YEAR ENDED APRIL 30,
DECEMBER 31, APRIL 30, -------------------------------------
1991 1992 1993 1994 1995 1996
------------ ----------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA: (IN THOUSANDS, EXCEPT RATIOS)
- ----------------------
Revenue:
Casino................. $ -- $ -- $50,904 $140,994 $117,613 $123,936
Rooms, food, beverage
and other............. 128 10 2,199 3,639 5,311 27,719
Management Fees--Joint
ventures.............. -- -- -- -- 4,613 6,308
Consulting--Related
parties............... 3,115 498 5,561 -- -- --
------ ------ ------- -------- -------- --------
Total revenue......... 3,243 508 58,664 144,633 127,537 157,963
Operating expenses:
Casino and gaming
taxes................. -- -- 19,711 59,641 59,963 65,026
Marketing and
administrative........ 3,739 768 11,024 26,113 26,895 33,167
Depreciation and
amortization.......... -- -- 2,046 5,450 8,945 12,111
One-time charge(1)..... -- -- -- -- -- 11,798
Preopening expenses.... -- -- 2,119 3,475 483 1,311
Loss on disposal of
equipment............. -- -- -- 22 178 1,217
Other.................. -- -- 6,177 10,017 10,877 30,140
------ ------ ------- -------- -------- --------
Total operating
expenses............. 3,739 768 41,077 104,718 107,341 154,770
------ ------ ------- -------- -------- --------
Operating income (loss). (496) (260) 17,587 39,915 20,196 3,193
Interest expense, net
(2).................... 5 -- (2,505) (6,119) (10,046) (13,924)
Equity in income (loss)
of unconsolidated joint
ventures............... -- -- (131) (2,241) 19,904 16,434
Other................... -- -- 500 -- -- --
Income (loss) before
income taxes........... (491) (260) 15,451 31,555 30,054 5,703
Net income (loss)....... (491) (260) 10,042 20,353 18,069 1,555
BALANCE SHEET (AT END OF
PERIOD) AND OTHER DATA:
- ------------------------
Current assets.......... $ 702 $ 879 $10,045 $ 26,960 $ 25,361 $ 27,379
Total assets............ 758 1,133 58,484 176,538 211,899 226,474
Long-term debt,
including current
portion................ -- 200 34,051 126,649 138,857 139,778
Stockholders' equity
(deficit).............. (42) 19 14,945 23,650 42,015 50,270
Ratio of earnings to
fixed charges(3)....... N/A N/A 6.1x 3.9x 2.6x 1.2x
</TABLE>
- --------
(1) During the third quarter of fiscal 1996, the Company recorded an $11.8
million pre-tax one-time charge. The components of the one-time charge
include (i) $9.3 million related to the write-down of two riverboats, a
barge and certain gaming equipment, all of which were reclassified during
the quarter as being held for sale, (ii) $2.0 million related to costs
associated with the recent change in executive management and (iii) $0.5
million related to costs associated with certain abandoned projects.
(2) Net of interest income.
(3) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of earnings before provision for income taxes plus fixed
charges (excluding capitalized interest). Fixed charges consist of
interest on indebtedness (including capitalized interest) plus that
portion of rental expense which is considered to be interest.
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the consolidated financial statements, including
the notes thereto, included elsewhere in this Prospectus.
GENERAL
The Company's results of operations for the fiscal year ended April 30,
1996 reflect the Company's equity in the income of the Isle-Bossier City and
the Isle-Lake Charles, which commenced operations on July 29, 1995. In
addition, the fiscal 1996 results of operations were impacted by the
substantial expansion of the Isle-Biloxi, which included adding a hotel and
enhancements to the land-based pavilion and the casino, completed in August
1995 and the acquisition of Pompano Park in June 1995. The results of
operations for the fiscal year ended April 30, 1995 reflect a full year of
operations for the Isle-Biloxi and the Isle-Vicksburg and the Company's equity
in the income of the Isle-Bossier City, which commenced operations on May 20,
1994. The results of operations for the fiscal year ended April 30, 1994
reflect a full year of operations of the Isle-Biloxi and almost three full
quarters of operations of the Isle-Vicksburg.
The Company believes that the results of operations for the fiscal years
ended April 30, 1996, 1995 and 1994 may not be indicative of the results of
operations for future periods primarily because, in the past, the Company has
reported its interests in the Isle-Bossier City and the Isle-Lake Charles
using the equity method of accounting. Upon consummation of the LRGP
Acquisition, the Company will consolidate the results of operations of the
Isle-Bossier City and the Isle-Lake Charles. In addition, the Company believes
that its historical results may not be comparable to future results of
operations because of the substantial present and expected future increase in
gaming competition for gaming customers in each of the Company's markets as
new casinos open and as existing casinos add to or enhance their facilities.
Furthermore, the historical results of operations reflect the Isle-Lake
Charles as a single riverboat operation, whereas the Isle-Lake Charles
operates two riverboats as of July 12, 1996. In addition, the land-based
pavilion at the Isle-Lake Charles was recently expanded. The Company believes
that seasonality does not have a significant effect on its business.
RESULTS OF OPERATIONS
Fiscal Year Ended April 30, 1996 Compared to Fiscal Year Ended April 30, 1995
Total revenue was $158.0 million for the fiscal year ended April 30, 1996,
as compared to $127.5 million for the fiscal year ended April 30, 1995,
representing an increase of 24%. Casino revenue, in total, increased by 5% to
$123.9 million from $117.6 million compared to the prior year, due mainly to a
$12.1 million increase in casino revenue at the Isle-Biloxi attributable
primarily to increased casino traffic as a result of the opening of a 367-room
hotel on site, partially offset by a $5.7 million decrease in casino revenue
at the Isle-Vicksburg attributable to increased promotional activity by
competitors in that market. The Company has not consolidated the revenue of
the Isle-Bossier City and Isle-Lake Charles, which totaled $150.8 million and
$57.3 million, respectively, for fiscal 1996, compared to $147.0 million for
the Isle-Bossier City in the prior fiscal year (the Isle-Lake Charles was not
in operation during fiscal 1995), but will consolidate that revenue following
the LRGP acquisition.
Revenue for fiscal 1996 includes room revenue of $4.4 million from the new
hotel and entertainment pavilion at the Isle-Biloxi. Room revenue does not
reflect the value of any complementaries.
The Company received management fees of $6.3 million for fiscal 1996,
compared to $4.6 million for fiscal 1995, representing an increase of 37%. In
addition to fees under the Company's management agreement with LRGP with
respect to the Isle-Bossier City, $1.6 million in fees were received under the
Company's management agreement with SCGC with respect to the Isle-Lake Charles
in fiscal 1996. As a result of the LRGP Acquisition and SCGC Acquisition,
future fees from its management agreements will not be reported because such
amounts will be eliminated in consolidation.
31
<PAGE>
Fiscal 1996 revenue includes pari-mutuel commissions, simulcast fees and
admissions of $15.1 million generated by Pompano Park.
Food, beverage and other revenue was $8.2 million for fiscal 1996, compared
to $5.3 million for fiscal 1995, representing an increase of 55%. Food,
beverage and other revenue does not reflect the value of any complementaries.
Of the $2.9 million increase, $1.5 million is attributable to revenue
generated at Pompano Park. The remainder of the increase in food, beverage and
other revenue is attributable to the opening of the new hotel at the Isle-
Biloxi on August 1, 1995.
Casino expenses for fiscal 1996 totaled $49.9 million, as compared to $46.0
million for fiscal 1995. Casino expenses consist primarily of salaries, wages
and benefits, and operating and certain promotional expenses of the casinos.
Casino expenses as a percentage of casino revenues increased from 39% to 40%
in fiscal 1996 due to the cost of complimentaries.
Fiscal 1996 operating expenses also include room expenses of $2.6 million
from the new hotel and entertainment pavilion at the Isle-Biloxi. These
expenses are those directly relating to the cost of providing hotel rooms.
Other costs of the hotel are shared with the casino and are presented in their
respective expense categories.
Gaming taxes paid to the State of Mississippi, cities and counties totaled
$15.1 million for fiscal 1996, as compared to $13.9 million in fiscal 1995,
and are consistent with the aforementioned increase in casino revenue. Gaming
taxes in both years represented 12% of casino revenue as required by
Mississippi law.
Pari-mutuel operating costs of Pompano Park totaled $11.4 million in fiscal
1996. Such costs consist primarily of compensation, benefits, purses,
simulcast fees and other direct costs of track operations.
Food and beverage expenses of $5.4 million in fiscal 1996 reflect a $1.7
million increase, or 46%, over fiscal 1995, consistent with the percentage
increase in food and beverage revenues. Of the $1.7 million increase, $1.2
million was attributable to Pompano Park, while the remainder occurred at the
Isle-Biloxi due to the opening of its hotel.
Marine and facilities expenses totaled $10.8 million in fiscal 1996,
representing an increase of 50% over the $7.2 million reported in fiscal 1995.
Of the $3.6 million increase, $1.8 million relates to facilities and
maintenance costs of Pompano Park, while an additional $1.3 million relates to
the expansion at the Isle-Biloxi and the associated labor, rent expense,
utility and maintenance costs of that expanded facility.
Marketing and administrative expenses totaled $33.2 million for fiscal 1996,
a 23% increase over the $26.9 million for the prior fiscal year. Of the $6.3
million increase, $1.9 million represented additional promotions at the Isle-
Biloxi and the Isle-Vicksburg in response to increased competition in those
markets. The remaining increase of $4.4 million primarily reflects the $1.5
million charge for costs associated with the September 1995 withdrawal of the
Company's registration statement and cancellation of its previously planned
public offering of securities and $2.5 million in administrative and
promotional expenses for Pompano Park.
Depreciation and amortization expense was $12.1 million for fiscal 1996,
representing a 35% increase over depreciation and amortization expense of $8.9
million in the prior fiscal year. The increase was primarily attributable to
the new hotel and entertainment pavilion at the Isle-Biloxi.
Preopening expenses of $1.3 million in fiscal 1996 represent salaries,
benefits, training, marketing and other non-capitalizable costs which were
expensed as incurred in connection with the opening of the new hotel at the
Isle-Biloxi. Fiscal 1995 preopening expenses of $0.5 million relate to the
expansion of facilities at the Isle-Vicksburg.
32
<PAGE>
Interest expense--Other was $15.2 million, net of capitalized interest of
$1.5 million, in fiscal 1996, as compared to $14.0 million, net of capitalized
interest of $1.0 million, in fiscal 1995. This $1.2 million increase was
primarily due to additional debt incurred to finance the new hotel and
pavilion and furniture, fixtures and equipment at the Isle-Biloxi, as well as
additional indebtedness relating to land purchased for new development and the
acquisition of Pompano Park.
Interest income--Unconsolidated joint ventures was $0.7 million in fiscal
1996 as compared to $3.0 million in fiscal 1995. Interest at the rate of 11.5%
was being charged to LRGP with respect to the Company's loan to the joint
venture, which was repaid in full in May 1995.
The Company had net income of $1.6 million for fiscal 1996, as compared to
net income of $18.1 million for fiscal 1995, representing a decrease of 91%.
This decrease was due mainly to an $11.8 million pretax one-time charge which
included $9.3 million related to the write-down of two riverboats, a barge and
certain gaming equipment, all of which were reclassified during the year as
being held for sale, as well as $2.5 million related to abandoned projects and
certain other costs associated with the recent change in executive management.
In addition, the Company incurred a $0.3 million charge in connection with
accounting for deferred taxes related to its investment in SCGC and a $1.2
million pretax loss on disposal of an airplane and other equipment. The
Company's net income for fiscal 1996 includes $16.4 million, representing the
Company's equity in the income of LRGP and SCGC (which includes $1.3 million
for the Company's share of the net losses of SCGC), compared to $19.9 for
fiscal 1995. The Company also incurred a pretax charge of approximately $1.5
million for legal, printing and accounting costs associated with the September
1995 withdrawal of the Company's registration statement and the proposed
transactions relating thereto. The Company's effective income tax rate was 73%
for fiscal 1996 as compared to 40% for fiscal 1995. The increase in the
effective tax rate was due to a $0.7 million fourth quarter adjustment to
prior years' taxes and the exclusion of the Company's share of the net loss of
SCGC in its calculation of income taxes. Earnings per share decreased 91% from
$1.16 in fiscal 1995 to $0.10 in fiscal 1996.
Fiscal Year Ended April 30, 1995 Compared to Fiscal Year Ended April 30, 1994
Total revenue was $127.5 million for the fiscal year ended April 30, 1995,
as compared to $144.6 million for the fiscal year ended April 30, 1994,
representing a decrease of 12%. Casino revenue for fiscal 1995 totaled $117.6
million, a 17% decrease over fiscal 1994 casino revenue of $141.0 million. The
decrease in casino revenue in fiscal 1995 resulted from increased competition
in the Biloxi and Vicksburg markets, as well as ongoing construction of the
367-room Crowne Plaza hotel and entertainment pavilion at the Isle-Biloxi. The
Company does not consolidate the revenue of the Isle-Bossier City, which was
$147.0 million in fiscal 1995, but will consolidate this revenue following the
LRGP Acquisition.
The Company received a management fee of $4.6 million in fiscal 1995 under
its management agreement with LRGP with respect to the Isle-Bossier City, as
opposed to no revenue from management fees in fiscal 1994.
Food, beverage and other revenue totaled $5.3 million in fiscal 1995,
representing a 47% increase over the fiscal 1994 level of $3.6 million.
Revenue does not reflect the value of any complimentaries. The increase was
attributable primarily to the opening of the restaurant at the Isle-Vicksburg
in February 1994.
Casino expenses for fiscal 1995 totaled $46.0 million, as compared to casino
expenses of $42.7 million for fiscal 1994. The expenses are primarily
comprised of salaries, wages and benefits, and operating and promotional
expenses of the casinos. Casino expenses increased in total from fiscal 1994
to fiscal 1995 due primarily to a full year of operations in fiscal 1995 at
the Isle-Vicksburg as well as to the opening of the restaurant in Vicksburg
which increased casino expenses (beyond the increase in food and beverage
expenses) due to the cost of complimentaries. Casino expenses as a percentage
of casino revenue were 39% in fiscal 1995, as compared to 30% in fiscal 1994.
Casino expenses tend to increase as a percentage of revenue when casino
revenue decreases because of the relatively fixed nature of casino expenses.
Preopening expenses totaled $0.5 million in fiscal 1995, as compared to $3.5
million in fiscal 1994. The fiscal 1994 preopening expenses related to the
opening of the Isle-Vicksburg and the expansion and opening of
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the floating pavilion facility at the Isle-Biloxi; the fiscal 1995 amount
related to the opening of the new floating pavilion facility at the Isle-
Vicksburg in May 1994. The fiscal 1995 equity in net income of unconsolidated
joint ventures includes expenses relating to the opening of the Isle-Bossier
City. The Company's share of these preopening expenses was $1.6 million in
fiscal 1995 as compared to $1.8 million in fiscal 1994.
Gaming taxes paid to the State of Mississippi, cities and counties totaled
$13.9 million in fiscal 1995, as compared to $16.9 million in fiscal 1994,
reflecting lower casino revenue in fiscal 1995. Gaming taxes in both years
represented 12% of casino revenue, as required by Mississippi law.
Food and beverage expenses totaled $3.7 million in fiscal 1995 as compared
to $2.3 million in fiscal 1994, an increase of 63%. These expenses consist
primarily of the salaries, wages, benefits and operating expenses of the food
and beverage operations. The increase in these expenses from fiscal 1994 to
fiscal 1995 was primarily due to the fact that the restaurant at the Isle-
Vicksburg was open for only a portion of the 1994 fiscal year, as opposed to
the full 1995 fiscal year. The Company's food and beverage operations are
designed to draw customers to the casinos and are not expected to produce
operating income.
Marine and facilities expenses totaled $7.2 million in fiscal 1995, as
compared to $7.8 million in fiscal 1994. These expenses include the salaries,
wages, benefits and operating expenses of the marine crews for Coast Guard-
certified riverboats, and insurance, housekeeping and general maintenance of
the facilities. The decline in fiscal 1995 was primarily attributable to the
elimination of the marine crew at the Isle-Vicksburg in fiscal 1995.
Marketing and administrative expenses totaled $26.9 million in fiscal 1995
as compared to $26.1 million in fiscal 1994. The increase in these expenses
was primarily attributable to an increase in marketing activities in response
to increased competition in the Company's markets. Administrative expenses,
which include general administrative and office expenses, professional fees,
property taxes, rent and new development projects were also higher due
primarily to one full year of operations at the Isle-Vicksburg and increased
expenses at the corporate level due to increased activity in the new
development area. See "Business--Future Development Opportunities."
Depreciation and amortization expense was $8.9 million in fiscal 1995,
representing an increase of 62% over depreciation and amortization expense of
$5.5 million in fiscal 1994. This increase was primarily attributable to the
Company's growth in depreciable fixed assets from fiscal 1994 to fiscal 1995,
principally relating to the addition of a new floating pavilion casino and
gaming equipment, restaurant and administrative office building at the Isle-
Vicksburg.
Interest expense--Related parties was $1.3 million in fiscal 1994, as
compared to none in fiscal year 1995. This expense primarily represented
interest paid to affiliated companies in connection with capital leases of
certain property and equipment in fiscal 1994, which arrangements were
discontinued prior to the beginning of the 1995 fiscal year.
Interest expense--Other was $14.0 million in fiscal 1995, as compared to
$6.9 million in fiscal 1994, an increase of $7.1 million. The Company's
interest expense increased significantly in fiscal 1995 due primarily to a
full year of interest expense relating to its First Mortgage Notes, which were
outstanding for only a portion of fiscal 1994.
Interest income--Unconsolidated joint ventures was $3.0 million in fiscal
1995, as compared to $1.1 million in fiscal 1994. Interest at the rate of 11
1/2% was being charged to LRGP and LRG Hotels with respect to the Company's
loan to such joint ventures, which had an outstanding principal balance of
$2.3 million at April 30, 1995.
Interest income--Other was $1.0 million in fiscal 1995, essentially
unchanged from fiscal 1994, reflecting slightly lower cash balances during
fiscal 1995, offset by higher interest rates.
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The Company had net income of $18.1 million in fiscal 1995, as compared to
$20.4 million in fiscal 1994, representing a decrease of 11%. This decrease
was due primarily to a decrease in casino revenue and operating income at the
Isle-Biloxi and the Isle-Vicksburg and an increase in interest expense due to
a full year of interest on the First Mortgage Notes. Earnings per share
decreased 9% from $1.28 in fiscal 1994 to $1.16 in fiscal 1995. The Company's
fiscal 1995 net income includes $19.9 million of equity in the income of the
Isle-Bossier City, which opened in May 1994.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1996, the Company had cash and cash equivalents of $18.6
million compared to $19.0 million at April 30, 1995 and approximately $3.5
million available under lines of credit. Fiscal 1996 operating activities
provided $11.8 million of cash flow to the Company as compared to $8.5 million
in fiscal 1995. In addition, in fiscal 1996, the Company received $3.0 million
in distributions and repayments from LRGP, primarily related to the repayment
of a note receivable, as well as $12.2 million borrowed for the construction
of the hotel at the Isle-Biloxi and $2.8 million in proceeds from the sale of
its aircraft and other equipment. The Company invested $34.5 million in
property and equipment in fiscal 1996, primarily to build the new hotel at the
Isle-Biloxi and to acquire Pompano Park and property held for future
development in Colorado.
On March 11, 1996, the Company sold an aggregate of 1,020,940 shares of
Common Stock. Proceeds from the sale totaled approximately $6.0 million. A
portion of the proceeds was used to retire a total of $1.6 million in loans
payable to the Chairman and a related party, including accrued interest. In
addition, the Company issued to certain shareholders Rights to purchase shares
of Common Stock. In the event that the Rights Offering is fully subscribed,
the Company would receive net proceeds of approximately $25.1 million.
On May 3, 1996, the Company purchased all of the common stock of GPRI. The
aggregate consideration paid by the Company in the Grand Palais Acquisition
was approximately $62.4 million, consisting of cash in the amount of
approximately $8.4 million, notes and the assumption of indebtedness of
approximately $37.9 million, 2,250,000 shares of Common Stock and warrants to
purchase an additional 500,000 shares of Common Stock at an exercise price of
$10.00 per share. On the same date, the Company consummated the SCGC
Acquisition for 1,850,000 shares of Common Stock and restructured the terms of
an existing $20.0 million note previously issued to Crown Casino. See
"Description of Certain Indebtedness--Crown Notes."
The Company anticipates that its principal near-term capital requirements
will relate to the consolidation of its Louisiana joint ventures, the
expansion of its operations at the Isle-Lake Charles in connection with the
Grand Palais Acquisition and investments in the Hotel Joint Venture. The
Company also anticipates that capital improvements approximating $20 million
will be made during fiscal 1997 to maintain its existing facilities and remain
competitive in its markets. The Company expects to receive approximately
$289.3 million in net proceeds from the Offering and intends to finance the
LRGP Acquisition and retire approximately $184 million of indebtedness,
including the First Mortgage Notes, with a portion of the net proceeds from
the Offering. See "Use of Proceeds."
Although the Company is not presently committed to making any significant
capital expenditures or investment into a new gaming market, the Offering and
the Rights Offering are intended to provide capital for making improvements
and enhancements to the Company's existing facilities and other general
corporate purposes. The Company believes that it will be necessary to make
certain capital improvements to its land-based facilities at the Isle-Bossier
City and the Isle-Vicksburg and that enhancements to its non-gaming amenities
at all facilities will be important to its operations. The Company may, in the
future, also consider expanding its casino square footage at the Isle-Biloxi.
In addition, the Company may consider making investments in jurisdictions
where gaming is not presently permitted, but in which it believes that gaming
may be legalized in the future.
An important component of the Company's operating strategy will be to
develop, open and operate, either directly, through the Hotel Joint Venture or
otherwise, hotel facilities at its gaming facilities in order to attract
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additional gaming patrons and encourage longer visits to and a greater level
of play at the Company's casinos. The Company has entered into a letter of
intent to form the Hotel Joint Venture. The letter of intent provides that the
Company and HID will each contribute approximately $10 million in assets to
the Hotel Joint Venture. The Company's contribution is expected to consist of
cash, certain land located near the Isle-Bossier City, the Isle-Lake Charles
and, in the event the Company elects to develop a casino there, in Cripple
Creek, Colorado, or other property. No assurance can be made that the Company
will enter into the Hotel Joint Venture, or if it does, that the Company will
not be required to make significant investments of cash into the Hotel Joint
Venture to accomplish its objectives.
The Company expects that available cash, net proceeds from the Rights
Offering and the Offering and cash from future operations will be adequate to
fund the aforementioned transactions, planned capital expenditures, debt
service and working capital requirements. No assurance can be made that the
Company will have sufficient capital resources to expand into new gaming
markets or make significant capital expenditures at its existing properties.
In addition, the Indenture governing the Notes will place certain limits on
the Company's ability to incur additional indebtedness and to make certain
investments. Following the Offering, the Company will be highly leveraged and,
as a result, may be unable to obtain debt or equity financing on terms
acceptable to the Company. Limitations on the Company's capital resources
would likely delay any plans with respect to entry into new markets or
significant capital improvements at its existing properties.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the asset carrying amount. Statement No. 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company will adopt Statement 121 in the first quarter of fiscal 1997 and,
based on current circumstances, does not believe the effect of adoption will
be material.
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BUSINESS
GENERAL
Casino America is a leading developer, owner and operator of dockside and
riverboat casinos and related facilities in the United States. Giving effect
to the Recent Transactions, the Company owns 100% of, and operates, four
dockside or riverboat casino facilities. All of the Company's properties are
based on a tropical island theme and operate under the "Isle of Capri Casino"
name. The Company owns and operates a dockside riverboat casino and hotel in
Bossier City, Louisiana, two riverboat casinos at a single facility on a site
one mile from Lake Charles, Louisiana, a dockside casino and hotel in Biloxi,
Mississippi and a dockside casino and recreational vehicle park in Vicksburg,
Mississippi. The members of the management teams at each of the Company's four
casino locations generally have been at such facility from the time of its
opening. Shreveport/Bossier City is currently the closest casino gaming market
to the Dallas/Ft. Worth, Texas metropolitan area and Lake Charles is currently
the closest casino gaming market to the Houston, Texas metropolitan area. The
Company also owns and operates Pompano Park, a harness racing track in Pompano
Beach, Florida, midway between Miami and West Palm Beach off of Interstate 95.
STRATEGY
The Company's business strategy, which has been implemented in its existing
operations, emphasizes the operation and development of value-oriented gaming
facilities and complementary amenities with a tropical island theme using the
"Isle of Capri Casino" brand name. Management believes that the consistent use
of the Isle of Capri Casino name and associated theme has created a readily
identifiable brand image connoting excitement, quality and value, complemented
by the Company's emphasis on customer service and non-gaming entertainment
amenities. The Company seeks to identify slot-oriented customers and active
casino patrons through its use of database marketing and generate repeat
visitors to the Company's gaming facilities. Management believes that its
strategy fosters customer loyalty, enhances the Company's ability to compete
effectively in its existing markets, and facilitates the efficient and cost-
effective development of gaming facilities in new markets. The Company also
believes that good community relations are fundamental to its success and, as
a result, takes an active role in community activities in each jurisdiction in
which it has gaming facilities.
The Company has historically identified and entered new gaming markets which
it believes provide attractive long-term opportunities, sometimes entering
those markets with the assistance of a joint venture partner. The Company is
now consolidating its ownership interests in these facilities and anticipates
that most of its near-term development activities will focus on expanding its
existing facilities. The Company anticipates adding complementary amenities,
such as hotels and additional restaurants, in order to compete effectively in
its markets and provide customers with a complete entertainment and resort
experience designed to increase a customer's length of stay at and use of the
Company's facilities. The Company also expects to continue reviewing gaming
opportunities in new markets on the basis of demographic, regulatory,
competitive and other factors. The Company's strategy when entering new
markets has been to develop its projects in phases when appropriate. By
reducing the amount of its initial capital commitment, the Company is able to
utilize cash flow from operations to help fund subsequent phases and increase
the funds available for its other projects. Phased development also allows the
Company to better assess market size, customer preferences and competitive
factors and adapt the nature and scope of new facilities accordingly. The
Company's strategy of making investments through joint ventures, followed by
consolidation of its ownership interests (such as through the LRGP Acquisition
and the SCGC Acquisition) may be implemented in connection with the
development of its existing properties and the entry into new gaming markets
if the Company believes that such a strategy is appropriate, and if it is able
to identify suitable joint venture partners which provide supplemental
expertise and resources.
MARKETING
The Company attracts customers to its casinos by designing and implementing
marketing strategies and promotions that emphasize their tropical island theme
and promote repeat visitation and customer loyalty. For example, the Company
offers membership in its Island Gold Players Club to its customers and
"V.I.P." services
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to higher wagering and repeat gaming patrons. The Island Gold Players Club is
a promotional activity in which members accumulate points that can be
exchanged for benefits such as casino cash tokens, prizes and complimentary
services. In addition, Island Gold Players Club members receive tournament
priority and monthly newsletters and a daily "free pull" on a slot machine
offering awards up to $100,000. It is anticipated that (to the extent
permitted by law) Island Gold Players Club membership cards will be usable on
an interchangeable basis at the Company's gaming facilities. Further, the
Company uses the Island Gold Players Club to track patron slot play and
develop a customer database, which the Company utilizes in its marketing
programs. As of April 30, 1996, the Company had enrolled approximately 1.6
million members in the Island Gold Players Club.
To encourage group sales, the Company utilizes bus programs, corporate and
hotel sales programs and golf package programs with hotels and golf courses
located near its casinos. The Company's Biloxi hotel is included in the
Holiday Inn worldwide reservations system which the Company believes provides
the hotel with significant marketing benefits.
The Company has increased its reliance on database marketing in order to
best identify the segments of the population that are most likely to be
attracted to the Company's facilities, and intends to emphasize food and
entertainment amenities to enhance its customer-friendly atmosphere with a
view toward attracting repeat customers. Database marketing helps the Company
to identify those customers and potential customers that are most likely to be
attracted by the Company's emphasis on slot machine play. The Company also
places significant emphasis on attracting local residents and seeks to
maintain a strong local identity in each market in which it operates by
staging and supporting special events. The Company further enhances its
facilities' appeal to local patrons by offering liberal rules on its table
games and by encouraging enrollment in the Island Gold Players Club.
The Company uses television, radio, outdoor and print media to promote its
services and to achieve greater name recognition. To further enhance the Isle
of Capri Casino tropical theme, the Company engaged Geoffrey Holder, a well-
known actor and television personality popularly known as the "Uncola(R)/1/
Man," as a celebrity spokesperson for certain of the Company's television and
print media advertisements.
CURRENT OPERATIONS
The Isle-Bossier City
The Isle-Bossier City, which commenced operations on May 20, 1994, is among
the highest revenue-producing dockside and riverboat casino facilities in the
United States. The Isle-Bossier City, one of only three licensed gaming
facilities currently operating in the Shreveport/Bossier City market, the
closest gaming market to the Dallas/Ft. Worth, Texas metropolitan area, is
located on a 26-acre site along the Red River approximately 1/4 mile from the
Isle of Capri Boulevard exit off Interstate 20. The Isle-Bossier City consists
of a dockside riverboat casino, a land-based entertainment and support
pavilion and parking on-site for 1,200 cars, of which 940 are accommodated in
an attached parking garage. Additional overflow parking is available nearby on
weekends. The Isle-Bossier City features the Company's festive tropical island
theme throughout the facility. The features of the land-based pavilion include
towering palm trees, exotic rock formations and a waterfall. The riverboat
also features a tropical decor, including signage and lighting fixtures. To
enhance the tropical island experience, patrons are served by friendly,
attentive support staff dressed in tropical attire.
The riverboat offers 30,000 square feet of gaming space on three levels with
942 slot machines and 64 table games, including a poker room and video poker
bars. The 72,200 square-foot land-based pavilion offers a variety of non-
gaming amenities, including three restaurants, a gift shop, an entertainment
lounge area, a giant nine-screen television wall featuring live races from
Louisiana Downs and other sporting events, an Island Gold Players Club Booth
and administrative offices. Restaurant offerings include Calypso's, a 348-seat
buffet style restaurant; Coral Reef, a 102-seat casual dining restaurant; and
Tradewinds, a 24-seat delicatessen and fast food outlet. Live entertainment is
featured in the Caribbean Cove, a 136-seat entertainment lounge.
- --------
/1/The Uncola(R) trademark is owned by Dr. Pepper/Seven-Up Companies, Inc.
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The Isle-Bossier City is readily accessible from an exit off Interstate 20
onto Isle of Capri Boulevard, a four-lane road leading directly to the
entrance of the facility. Approaching the Isle-Bossier City, customers enter a
multi-lane porte cochere providing convenient access to free valet parking, an
attached parking garage or surface parking lots.
The Shreveport/Bossier City market is among the leading riverboat gaming
markets in the United States. The Company believes that the Isle-Bossier City
attracts customers from three primary groups: (a) local residents; (b)
residents of northeastern Texas; and (c) residents of the Dallas/Ft. Worth
metropolitan area. Approximately 550,000 and 1.8 million people live within 50
and 100 miles, respectively, of the Isle-Bossier City. The Company believes
that approximately 65% of the Isle-Bossier City's business is derived from
Texas; approximately 30% of the Isle-Bossier City's business comes from
northeastern Texas, including Tyler, Longview and Texarkana, and 26% of the
Isle-Bossier City's business comes from the Dallas/Ft. Worth metropolitan area
with a population of approximately 4.5 million located 180 miles west on
Interstate 20.
The Isle-Bossier City is one of three comparably sized facilities currently
operating in the Shreveport/Bossier City market, all of which opened between
April and July 1994. Overall, there is currently an aggregate of approximately
90,000 square feet of casino floor space in use in the Shreveport/Bossier City
market. See "Risk Factors--Competition" and "Risk Factors--Legislative and
Regulatory Considerations."
The Company owns and operates the 234-room Isle of Capri Hotel, located
approximately 2.5 miles east of the Isle-Bossier City on Interstate 20, from
which the Company offers shuttle service to the Isle-Bossier City. The Company
recently completed a $1.1 million renovation of the Isle of Capri Hotel that
management believes has significantly improved the hotel's appearance and
competitive position in the market.
The Shreveport/Bossier City hotel market consists of approximately 5,350
hotel/motel rooms. Hotel occupancy during 1993, prior to the introduction of
gaming, averaged approximately 43.1%. During 1994, occupancy rates rose to
approximately 70.2% with the heaviest demand during the peak summer months.
During 1995, occupancy increased to 72.5%. Several of the area's hotels have
incorporated cosmetic upgrades to their facilities due to the increasing
demand for quality, overnight accommodations. The Company believes that the
Isle of Capri Hotel is well positioned to take advantage of increasing demand
in the Shreveport/Bossier City hotel market.
The Isle-Lake Charles
The Isle-Lake Charles, which commenced operations on July 29, 1995, is one
of two riverboat gaming facilities (each comprised of two licensed riverboats)
in the Lake Charles, Louisiana market and one of three gaming facilities in
southwest Louisiana (a land-based Indian-owned casino is located in Kinder,
Louisiana 35 miles northeast of Lake Charles). On July 12, 1996, the Isle-Lake
Charles began operating its second riverboat casino, the Grand Palais, which
is the fourth licensed riverboat casino in the Lake Charles market. Lake
Charles is currently the closest casino gaming market to Houston, Texas, a
metropolitan area with a population of approximately 4.2 million located
approximately 145 miles west on Interstate 10. The Isle-Lake Charles is
located on a 16-acre site along the Calcasieu River adjacent to Interstate 10
in Calcasieu Parish, one mile from the City of Lake Charles. The Isle-Lake
Charles commenced operations with an approximately 27,500 square-foot
riverboat casino which presently contains approximately 24,700 square feet of
gaming space with 891 slot machines and 43 table games on three levels. A
fourth level of that riverboat contains approximately 9,000 square feet of
entertainment space. The Grand Palais consists of an approximately 41,700
square foot riverboat casino containing approximately 24,200 square feet of
gaming space with 880 slot machines and 48 table games on two levels. The
Grand Palais offers a large bar and foyer when customers enter the boat and a
spacious third level where the Company may provide a variety of non-gaming and
entertainment amenities.
The Isle-Lake Charles opened a new $30 million, 105,000 square foot land-
based pavilion in May 1996. The new pavilion is based on a tropical theme,
including rock formations, waterfalls, water arches with jets of water
shooting up to 30 feet in the air, ponds with porcelain sea life and flower
beds landscaped in the shape of
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playing card suits. The expansion of the Isle-Lake Charles' land-based non-
gaming amenities is intended to attract Texas patrons previously drawn to
similar amenities at the land-based casino in Kinder. The pavilion provides
panoramic views of the lake and the city of Lake Charles with separate
entrances to each of the riverboats. In addition, the lighted rooftop rotunda
is topped by the Isle of Capri parrot, reaching approximately 145 feet above
the ground and visible from the interstate.
The new pavilion offers a wide variety of non-gaming amenities, including
Calypso's, a 489-seat buffet style restaurant; Tradewinds grill and restaurant
and Caribbean Cove, which share 220 seats in the pavilion and feature a free,
live Caribbean-themed revue entitled "Island Fever"; the Tropics bar; the
Banana Cabana gift shop and the Island Gold Players Club booth. The pavilion
is scheduled to include a 14,000 square foot activity center, built for live
boxing to be broadcast on television and other special events, concerts,
banquet and meeting facilities and administrative offices. The Isle-Lake
Charles provides free valet parking or free self-parking for more than 2,000
vehicles, including approximately 1,400 spaces in an attached parking garage
from which patrons can access the casino by elevator.
The Company believes that the Isle-Lake Charles attracts customers from
three primary groups: (a) residents of southeast Texas, particularly from the
Houston metropolitan area, located 145 miles to the west on Interstate 10, and
the population centers of Beaumont, Galveston, Orange and Port Arthur, Texas;
(b) local area residents; and (c) tourists. Approximately 480,000 and 1.6
million people live within 50 and 100 miles, respectively, of the Isle-Lake
Charles. Like the Isle-Bossier City, a significant portion of the business of
the Isle-Lake Charles is (and will continue to be) derived from residents of
Texas, where casino gaming has not been legalized. See "Regulatory Matters."
The Isle-Lake Charles was the second gaming facility to enter the Lake
Charles, Louisiana market and the third gaming facility to enter the southwest
Louisiana market. Two riverboats, containing an aggregate of approximately
55,000 square feet of casino floor space, are currently operated by Players
International from a single location in the City of Lake Charles approximately
two miles from the site of the Isle-Lake Charles. In addition, a land-based,
Indian-owned casino opened in January 1995 in Kinder, Louisiana, approximately
35 miles northeast of the site of the Isle-Lake Charles. As a new entrant into
the Lake Charles market, the Isle-Lake Charles has faced the additional
challenge of competing for established customers of its competitors.
Management believes that the Isle-Lake Charles has several competitive
advantages in the Lake Charles gaming market. The Isle-Lake Charles, with its
location at the western end of the Lake Charles gaming market, is the first
gaming facility reached by patrons arriving from the west, including Texas.
The Company is attempting to capitalize on its superior location by
advertising with three back-to-back billboards immediately preceding the exit
to the Isle-Lake Charles. Moreover, management believes that its convenient,
free on-site parking facilities further enhance the advantages of the Isle-
Lake Charles' location. The Company believes that adding the Grand Palais to
the site of the Isle-Lake Charles will enable the Company to more effectively
compete with the existing two-boat operation in Lake Charles and the land-
based casino in Kinder. See "Risk Factors--Competition" and "Risk Factors--
Legislative and Regulatory Considerations." In addition, although land-based
casinos are generally preferred by gaming customers to riverboat casinos
(because, among other things, the requirement of cruising), the two-boat
operation at the Isle-Lake Charles will provide at least one boat at dockside
at all times. Moreover, the land-based casino requires a total of
approximately 70 miles more per round trip for patrons from Texas.
The Isle-Biloxi
The Isle-Biloxi, which commenced operations on August 1, 1992, was the first
gaming facility to open in Mississippi. The Isle-Biloxi currently consists of
a 50,000 square-foot dockside casino containing 32,500 square feet of gaming
space with 1,149 slot machines and 42 table games on two levels, an adjacent
land-based pavilion and on-site parking for more than 1,100 vehicles. During
fiscal 1996, the Company completed an approximately $50 million Biloxi
Improvement Program, which began in October 1994 and culminated with a grand
opening of its new facilities in August 1995. The Company implemented the
Biloxi Improvement Program in order to enhance its long-term competitive
position in the Mississippi Gulf Coast market. The major components of the
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Biloxi Improvement Program included the addition of a 367-room, 15-story hotel
tower and a 32,000 square-foot land-based pavilion providing a variety of non-
gaming amenities and enhancements to the casino. The improvements focused on
the transformation of the Isle-Biloxi into a more customer-friendly resort
destination that the Company believes has resulted in a significant increase
in the number of its casino visitors. The enhancement of the island-themed
decor in the casino and the themed amenities are designed to further increase
identification of the Isle of Capri Casino brand name and distinguish the
Isle-Biloxi from its competitors, most of which offer a distinctive theme in
the Mississippi Gulf Coast market.
As an integral part of the Biloxi Improvement Program, the 367-room Isle of
Capri Casino Crowne Plaza hotel facility and the casino are directly
accessible through the pavilion. The Company believes that the hotel fills an
important niche in the Mississippi Gulf Coast market where a lack of quality
hotel rooms has been cited as an impediment to the further development of that
market as a resort destination. The hotel is included in the Crowne Plaza and
Holiday Inn Worldwide reservation system. Recently named Crowne Plaza Resort
of the Year for 1995, the hotel offers spacious rooms, most with balconies
overlooking Point Cadet Marina, and provides amenities including meeting
rooms, full room service, a heated pool and access to exercise facilities
(which include a jacuzzi, dry sauna and massage facility). The Company
reserves a portion of the rooms for selected casino patrons at all times. The
Company directly markets organizations to attract convention and group
traffic, which the Company believes accounted for approximately 5% of the
Isle-Biloxi's casino revenue. The hotel offers more than 15,000 square feet of
meeting space for such events. The Company is party to a management agreement
with a subsidiary of Ocean Hospitalities, Inc. ("Ocean Hospitalities"), an
experienced developer and manager of hotels in the United States, which is
responsible for managing the front desk and housekeeping.
The other major component of the Biloxi Improvement Program is a 32,000
square-foot, 50-foot high atrium-style pavilion offering a wide variety of
non-gaming amenities. The pavilion features three dining facilities:
Calypso's, a 280-seat buffet style restaurant; Coral Reef, a 146-seat fine
dining facility; and Tradewinds Grill, where visitors can enjoy a
"Cheeseburger in Paradise," and Caribbean Cove, which together share 88 seats.
Calypso's and Coral Reef provide panoramic views of the Gulf of Mexico and
Deer Island. The Caribbean Cove is an open-air lounge area located at the
center of the pavilion, surrounded by a dramatic fountain and an entertainment
stage, which offers seating for an additional 116 people. The pavilion's
entertainment area features a Las Vegas-style revue, performances of which are
scheduled several times daily. Musical performances by other groups and
artists are also scheduled throughout the day. The pavilion also features
Banana Cabana, a gift shop, and a lounge area designed to provide a
comfortable waiting area for bus patrons.
The renovated casino provides customers with the impression of a traditional
land-based casino, rather than that of a floating pavilion casino. Guests
approach the facility on a four-lane ramp divided by a series of cascading
waterfalls featuring four sculptured dolphins and enter a four-lane porte
cochere, which serves as the main valet parking and bus drop off area. The
casino is also directly accessible through an entrance which is situated
adjacent to the primary self-parking areas. The refurbished casino is highly
visible and directly accessible from the pavilion and features 40-foot high
ceilings and a dramatic waterfall to enhance the visual experience. Further
enhancing the tropical ambiance, music from the pavilion's entertainment area,
which features steel drums and Caribbean-oriented melodies, is audible
throughout the casino.
The Company believes that the Isle-Biloxi attracts customers from four
primary groups: (a) local area residents; (b) Alabama, Florida and Georgia
residents, primarily from along the Gulf Coast; (c) tourists; and (d)
residents of southeastern Louisiana, including those from the New Orleans and
Baton Rouge metropolitan areas. There are approximately 660,000 and 2.9
million people residing within 50 and 100 miles, respectively, of Biloxi and
the Company believes that this population base has provided a significant
portion of the Isle-Biloxi's business. Biloxi is the easternmost city on the
Mississippi Gulf Coast where casino gaming is presently permitted. As a
result, Biloxi is currently the closest gaming market to Mobile, Alabama,
located approximately 45 miles east of Biloxi on Interstate 10. The Company
believes that approximately 23% of the Isle-Biloxi's customer base is derived
from Alabama, particularly the Mobile metropolitan area. The Mississippi Gulf
Coast,
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with its 26 miles of white sand beaches and approximately 18 golf courses open
to the public, is a major regional tourist destination which attracted
approximately six million visitors in 1995. The tourist season is heaviest
from May to September, which the Company believes contributes to some
seasonality in the Isle-Biloxi's business.
At present, 12 gaming facilities (including the Isle-Biloxi), comprising
approximately 560,000 square feet of casino floor space, are located along the
Mississippi Gulf Coast. Eight facilities are located in Biloxi and
collectively account for approximately 360,000 square feet of casino floor
space. Two other facilities are located in Gulfport, approximately 10 miles
west of Biloxi, and two are located in Bay St. Louis and Lakeshore (the gaming
operations of such casino have been temporarily suspended as of July 16,
1996), each approximately 30 miles west of Biloxi. Management believes that
the location of the Isle-Biloxi affords it several significant competitive
advantages. The Isle-Biloxi is located on Casino Row, a cluster of four
casinos at the eastern end of U.S. Highway 90, affording visitors the
convenience and visual impact of four gaming facilities located within walking
distance. With its location at the eastern end of Biloxi, Casino Row is the
first area reached by visitors from Alabama, Florida and Georgia. The Biloxi
Improvement Program was designed to position the Isle-Biloxi to more fully
realize the benefits of its superior location through the revitalization of
the casino enhanced by its physical, visual and operational integration with
the new hotel, pavilion and related amenities. The Company believes that, as a
result, the Isle-Biloxi offers customers a resort destination, instead of a
day-trip site, where customers can extend their use of the casino.
A number of the Company's competitors in the Mississippi Gulf Coast have
either purchased existing hotels in the area or have announced plans to build
additional hotels. The Mississippi Gulf Coast hotel market consists of
approximately 9,175 hotel/motel rooms, with the greatest concentration located
in Biloxi and Gulfport. More than 5,000 additional hotel/motel rooms have been
proposed or are currently under construction in the Mississippi Gulf Coast
market. Hotel occupancy is generally highest in the peak tourist months
between May and September. In 1995, hotel occupancy rates in the market
averaged approximately 69%. Occupancy at the Isle-Biloxi since the opening of
its hotel in August 1995 has averaged approximately 87%.
The Isle-Vicksburg
The Isle-Vicksburg, which commenced operations on August 9, 1993, was the
first of four gaming facilities to open in the Vicksburg, Mississippi area.
The Isle-Vicksburg is located on a site consisting of approximately 18 acres
along the Mississippi River, approximately one mile north of Interstate 20.
The Isle-Vicksburg originally opened with a riverboat and barge casino
containing 21,000 square feet of gaming space and a temporary land-based
facility. The temporary facilities were subsequently replaced in May 1994 with
a 32,000 square-foot dockside casino, a 12,000 square-foot land-based pavilion
containing a variety of non-gaming amenities and administrative offices. The
Isle-Vicksburg provides on-site parking for 900 vehicles, and a 13-acre site
located approximately 1/2 mile from the casino provides off-site parking for
200 vehicles and a 67-space recreational vehicle park.
The land-based pavilion features Calypso's, a 206-seat buffet-style
restaurant (as well as 36 seats on a patio overlooking the Mississippi River),
and the Tradewinds delicatessen, which includes seating for 60 people and live
entertainment. Other amenities include a reception area, an Island Gold Club
Players booth and a Banana Cabana gift shop. Patrons are provided easy access
to the second level of the floating pavilion casino from the land-based
pavilion by means of either escalator or a wide stairway which offers patrons
panoramic views of the Mississippi River through a wall of windows. The
floating pavilion casino provides a spacious and exciting gaming environment
on two levels containing 773 slot machines and 47 table games, including a
poker room with seven tables. The casino features a tropical island theme and
decor including exotic rock formations, cascading waterfalls, towering palm
trees and tropical-themed slot machine signage and lighting fixtures, the
Caribbean's Sports Bar and the High Roller Hut (with $5, $25 and $100 slots).
The 67-space recreational vehicle park features amenities including a 1,200
square-foot guest services facility, swimming pool and hot tub, shower and
laundry facilities, cable television and telephone capability and a message,
fax and mail center. Recreational vehicle park guests receive a complimentary
breakfast, free shuttle service to the Isle-Vicksburg and a casino coupon
book. The recreational vehicle park is heavily marketed
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through the casino, an outdoor billboard campaign on major interstates and
monthly and annual advertisements in recreational vehicle park publications.
The recreational vehicle park frequently is fully occupied on weekends and
holidays and offers the Isle-Vicksburg a substitute to a hotel facility.
The Company believes that the Isle-Vicksburg attracts customers from three
primary groups: (a) local and area residents, primarily from Vicksburg and
Jackson, Mississippi; (b) northeastern Louisiana residents; and (c) tourists.
Vicksburg is approximately 45 miles west of Jackson, Mississippi, a
metropolitan area with a population of approximately 420,000. The Isle-
Vicksburg is directly accessible from Jackson on Interstate 20, and a
significant portion of the Isle-Vicksburg's business comes from Jackson
residents. Approximately 530,000 and 1.5 million people live within 50 and 100
miles, respectively, of the Isle-Vicksburg. Vicksburg, a river port city best
known as the site of an historic Civil War battle and the home of the
Vicksburg National Military Park and Cemetery, drew approximately 900,000
visitors in 1995.
The Isle-Vicksburg is one of four gaming facilities currently operating an
aggregate of approximately 105,000 square feet of casino floor space in the
Vicksburg area. The Isle-Vicksburg is the second largest casino in the
Vicksburg area. Other regional casino competition includes one dockside gaming
facility in Natchez, Mississippi (approximately 60 miles south of Vicksburg
and 80 miles southwest of Jackson); two dockside gaming facilities in
Greenville, Mississippi, with another under construction (approximately 80
miles north of Vicksburg and 90 miles northwest of Jackson); and a land-based,
Indian-owned casino near Philadelphia, Mississippi (approximately 115 miles
northeast of Vicksburg and 70 miles northeast of Jackson). Management believes
that the Isle-Vicksburg enjoys certain competitive advantages in the Vicksburg
gaming market based on its convenient location. The Isle-Vicksburg is located
approximately one mile from an exit off Interstate 20 which provides easy
access from Jackson and the surrounding areas. Only one other competitor in
Vicksburg is located closer to the Interstate than the Isle-Vicksburg. The
Isle-Vicksburg also offers ample parking on-site and immediately adjacent to
the facility. Management further believes that the gaming and non-gaming
facilities and the distinctive tropical theme provide one of the most exciting
and spacious gaming environments in the Vicksburg market. See "Risk Factors--
Competition" and "--Legislative and Regulatory Considerations."
Pompano Park
On June 30, 1995, the Company acquired Pompano Park, a harness racing track
located in Pompano Beach, Florida, midway between Miami and West Palm Beach.
Pompano Park is the only racetrack licensed to conduct harness racing in
Florida. Pompano Park also broadcasts its racing events through simulcast and
off-track betting facilities. Pompano Park is comprised of approximately 180
acres of owned land used for harness racing operations and 143 acres of leased
land used for training operations. The Company has a four-year option to
purchase the leased land at a cost of $12 million, plus cost of living
adjustments. The Company believes that, because of its size and location,
Pompano Park would be an attractive location for casino gaming if casino
gaming is ever legalized in Florida and the site is available for gaming under
applicable law. Pompano Park competes against numerous other pari-mutuel
facilities, including thoroughbred and dog race tracks and jai alai frontons,
located throughout south Florida. For the 10 months ended April 30, 1996,
total revenue at Pompano Park was approximately $17.3 million, derived
primarily from pari-mutuel wagering of approximately $40.0 million wagered on-
track and approximately $42.4 million wagered at other pari-mutuel facilities
receiving Pompano Park's simulcast transmission. During fiscal 1996, Pompano
Park conducted approximately 200 live racing programs.
In connection with the acquisition of Pompano Park, the Company agreed to
pay to the sellers specified additional consideration if, and for so long as
(i) casino gaming may legally be conducted by the Company at Pompano Park or
(ii) as a result of the purchase of the pari-mutuel license acquired in
connection with the acquisition of Pompano Park, the Company may legally
conduct casino gaming at any other location. The additional consideration
would be an amount equal to $25 million plus 5% of the gaming net win (as
defined), payable monthly. The $25 million portion of such amount would be
payable $10 million at such time as the Company receives all licenses, permits
or approvals necessary to conduct such casino gaming operations and
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$15 million at such time as the Company opens such a casino gaming facility to
the public. The Company's obligation to pay any such additional consideration
will terminate if casino gaming has not been legally permitted in Florida
within six years after the closing of the acquisition of Pompano Park.
Pompano Park can accommodate up to 14,500 customers and parking for up to
4,000 automobiles. The six-story, air-conditioned facility includes a box seat
area, clubhouse and dining room accommodations, a large grandstand area and
food and beverage facilities which range from fast food stands to indoor
dining areas. The grandstand building also contains the Company's executive
and administrative offices. The grounds surrounding the grandstand are
extensively landscaped and the track is easily accessible from surrounding
communities from an extensive freeway system.
In connection with recent changes to Florida law, the Company expects to
operate limited stakes (with a maximum $10 pot) poker rooms at Pompano Park,
beginning January 1, 1997, subject to county approval. Such activities will
not constitute casino gaming or create any obligation for additional
consideration in connection with the acquisition of Pompano Park. Although the
Company believes that Broward County, the county in which Pompano Park is
located, will approve the operation of such poker rooms, no assurance can be
given in that regard.
The Company plans to open and operate a minimum of 50 tables from 5 p.m. to
2 a.m. on each evening that live racing is held at Pompano Park. Pompano Park
has received approval to conduct 183 live evening racing performances during
the 1996-97 racing season and intends to seek approval to increase such
number. The Company expects that it will receive $.25 per player per game plus
$.50 per pot. The Company must distribute at least 50% of the net proceeds
(reflecting its direct costs of operating poker rooms) to supplement its
purses for harness races and breeders' awards. See "Regulatory Matters--
Florida."
Effective July 1, 1996, Pompano Park offers "full card" simulcasting of
harness races from any harness track outside of Florida for wagering at
Pompano Park, even on days in which no races are held at Pompano Park. Florida
recently reduced both its tax rate on retransmission of its simulcast signal
from 3.3% to 2.4% of "handle" (i.e., the aggregate contributions to pari-
mutuel pools) and the surcharge applied to simulcast races from $100 per race
to a fixed fee of $500 per day, regardless of the number of races. Because
Pompano Park typically broadcasts more than five races per day, the reduction
in the surcharge as well as the reduction in the out of state signal tax is
expected to favorably impact operating results at Pompano Park. See
"Regulatory Matters--Florida."
RECENT ACQUISITIONS
The Company has recently completed, or entered agreements contingent on the
Offering to complete, the following acquisitions as part of its overall
strategy to consolidate its ownership interests in its gaming facilities.
LRGP Acquisition
The Company has agreed to acquire the remaining 50% interest in LRGP held by
LRSD. The consideration for the LRGP Acquisition will be (i) $85 million in
cash payable at closing, (ii) five-year warrants to purchase 500,000 shares of
Common Stock at an exercise price of $10.50 per share delivered at closing and
(iii) $1.5 million per year for seven years, payable monthly beginning on
October 1, 1998. The Company has escrowed 625,000 shares of Common Stock (for
which the Company has the right to substitute $5 million in cash), some or all
of which will be forfeited if the Company does not fulfill its obligation to
close the transaction by October 1, 1996, as such date may be extended. The
Company has the right to extend the deadline to December 1, 1996, provided
that it pays to LRSD its 50% share of LRGP's net income for the period from
and after October 1, 1996 until closing or termination, plus $166,667 per
month. The Company intends to use a portion of the net proceeds of the
Offering to consummate the LRGP Acquisition. See "Use of Proceeds."
Grand Palais Acquisition
On May 3, 1996, the Company purchased all of the outstanding common stock of
GPRI in a bankruptcy proceeding under Chapter 11 of the United States
Bankruptcy Code. GPRI owns the Grand Palais, gaming
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equipment, certain other furniture, fixtures and equipment, all necessary
gaming licenses issued by the State of Louisiana, and other permits and
authorizations. The aggregate consideration paid by the Company in connection
with the Grand Palais Acquisition was approximately $62.4 million, consisting
of cash in the amount of approximately $8.4 million, approximately $37.9
million in notes and assumed indebtedness and 2,250,000 shares of Common Stock
and five-year warrants to purchase an additional 500,000 shares of Common
Stock at an exercise price of $10.00 per share. See "Certain Indebtedness--
Grand Palais Notes." In connection with the Grand Palais Acquisition, Bernard
Goldstein, the Chairman of the Company, and three of his sons (including
Robert Goldstein, a director of the Company) pledged certain of their assets
for the issuance of a letter of credit to secure the repayment of a portion of
the principal of certain notes issued to effect the Grand Palais Acquisition.
The Company issued to two of Mr. Goldstein's sons (other than Robert
Goldstein) a five-year warrant to purchase 12,500 shares of Common Stock at an
exercise price of $5.875 per share. On July 12, 1996, the Gaming Board
authorized the commencement of gaming on the Grand Palais and, pursuant to
such approval, the Grand Palais opened on such date. See "Risk Factors--Recent
Changes in Louisiana Regulatory Structure." The Company has agreed with the
State of Louisiana to hold the excess cash flow (as defined in such agreement)
generated by GPRI during its first six months of operation in a special escrow
account.
SCGC Acquisition
On May 3, 1996, the Company purchased from Crown Casino the remaining 50%
interest in SCGC (the other 50% of which is owned by LRGP), in exchange for
1,850,000 shares of Common Stock, a five-year warrant to purchase an
additional 416,667 shares of Common Stock at an exercise price of $12.00 per
share which can be exercised only by exchanging up to $5 million principal
amount of the B Note for any such shares and the restructuring of certain
indebtedness owed to Crown Casino. See "Certain Indebtedness--Crown Notes."
FUTURE DEVELOPMENT OPPORTUNITIES
Although the Company intends to focus primarily on the development of its
existing properties in the near term, the Company also intends to continue to
pursue new development opportunities in jurisdictions where gaming has been
legalized and may be legalized in the future. There can be no assurance if or
when necessary approvals for existing or future development opportunities will
be obtained. In addition, there are significant regulatory, financial,
business and other risks inherent in the development, construction and
operation of any new gaming facility. There can be no assurance that the
Company will be successful in dealing with such matters. The Company believes
that its financial position following the Offering, its operating experience
and its ability to enter new markets quickly will enable it to compete for new
gaming opportunities.
Hotel Joint Venture
On June 18, 1996, the Company entered into a letter of intent to form a
joint venture with HID. The purpose of the Hotel Joint Venture will be to
develop, own and operate hotel properties adjacent to the Isle-Bossier City
and the Isle-Lake Charles and, in the event the Company elects to develop a
casino there, in Cripple Creek, Colorado. Preliminary plans are for the Hotel
Joint Venture to build a 350-room hotel on the site of the Isle-Bossier City,
a 400-room hotel on the site of the Isle-Lake Charles and a 147-room hotel in
Cripple Creek, Colorado, where the Company would lease space from the Hotel
Joint Venture to operate a casino and restaurant. The letter of intent
provides that the Company and HID will each contribute approximately $10
million in assets to the Hotel Joint Venture. The Company's contribution is
expected to consist of cash, certain land or other property. The Hotel Joint
Venture may pursue other similar such projects in addition to or instead of
the aforementioned. HID will be principally responsible for designing and
building the hotels, subject to the Company's approval. The Hotel Joint
Venture will attempt to obtain non-recourse construction and permanent
financing for the hotels without any guarantee by the Company or HID, although
no assurance can be given that it will be able to do so. The Company expects
to agree to rent a portion of the rooms, at favorable rates, at each hotel for
its gaming customers. Formation of the Hotel Joint Venture is subject to
execution of a definitive agreement, obtaining all necessary approvals and
consents and commitments for financing, as to which no assurance can be given.
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Cripple Creek, Colorado
The Company owns 1.6 acres of land and leases an additional 1.3 acres of
land in Cripple Creek, Colorado for use in connection with a possible gaming
development in Cripple Creek. The property is located at the eastern end of
the Cripple Creek gaming market, and would be the first gaming facility
reached by patrons from Colorado Springs and other areas to the east. The
Company intends to contribute its property at Cripple Creek to the Hotel Joint
Venture for the construction of a 147-room hotel. The Company expects to lease
from the Hotel Joint Venture a portion of the hotel built at Cripple Creek to
operate a casino and restaurant. In the event the Hotel Joint Venture does not
pursue the construction of a hotel at Cripple Creek, the Company may build
such a hotel either alone or with another joint venture partner or sell its
interest in such Colorado property.
EMPLOYEES
As of June 30, 1996, the Company employed approximately 5,950 employees. A
marine crew at the Isle-Lake Charles has elected union representation by the
Seafarer's International Union. None of the Company's other employees is
subject to a collective bargaining agreement. The Company believes that its
relationship with its employees is satisfactory.
PROPERTIES
The Company owns the three floating pavilions at the Isle-Biloxi location as
well as the floating pavilion at the Isle-Vicksburg location. LRGP owns the
riverboat casino at the Isle-Bossier City location. SCGC and GPRI,
respectively, own the riverboat casinos at the Isle-Lake Charles. The Company
also owns or leases all of its gaming and non-gaming equipment.
The Company leases its executive offices in Biloxi, Mississippi pursuant to
two leases. The first term of the first lease terminates on July 20, 1997.
Monthly rent is $2,442 plus an annual increase of 4%. The Company has the
option to renew for two additional three-year periods. The first term of the
second lease terminates on May 17, 1997. Monthly rent is $3,333 plus an annual
increase of 4%. The Company has the option to renew for two additional three-
year terms.
The Company leases the Biloxi berth (the "Berth Lease") from the Biloxi Port
Commission at an initial annual rent of the greater of $500,000 (the "Minimum
Rent") or 1% of the gross gaming revenues received from the operations at the
site, net of state and local gaming taxes. The lease terminates on July 1,
1999, but is renewable at the option of the Company for eight additional terms
of five years each. For each of the renewal terms, the amount of the Minimum
Rent is adjusted to reflect any increase in the cost of living index, limited
to 6% for each renewal period.
The Company leases land-based facilities in Biloxi from the City of Biloxi
(the "Casino Lease") at an annual rent of (i) $500,000 per year (the "Base
Rent"), plus (ii) 3% of the gross gaming revenues received from the operations
at the site, net of state and local gaming taxes and fees, in excess of $25
million. The lease terminates on July 1, 1999 but is renewable at the option
of the Company for six additional terms of five years each and a seventh
option renewal term, concluding on January 31, 2034. For each of the renewal
terms, the amount of the Base Rent is adjusted to reflect any increase in the
Consumer Price Index limited to 6% for each renewal period. The Company was
required to make certain parking, landscaping, utilities and other related
improvements, amounting to $1.4 million, the payments for which are being
applied as a rent credit ratably over the initial term of the Casino Lease. In
addition, in order to lease the property subject to the Casino Lease, the
Company acquired the leasehold interest of Coastal Cruise Lines, Inc. and The
Factory, Inc., the original lessee, for consideration of $1,000,000 per year
for ten years resulting in monthly installments of $83,333.
In April 1994, the Company entered an Addendum to the Casino Lease, which
requires the Company to pay 4% of gross non-gaming revenues received from
operations at the Isle-Biloxi, net of sales tax, comps and discounts.
Additional rent will be due to the City of Biloxi for the amount of any
increase from and after January
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1, 2016 in the rent due to the State Institutions of Higher Learning under a
lease between the City of Biloxi and the State Institutions of Higher Learning
(the "IHL Lease") and for any increases in certain tidelands leases between
the City of Biloxi and the State of Mississippi.
In April 1994, in connection with the construction of a hotel, the Company
entered a lease for additional land adjoining the Isle-Biloxi. The Company
first acquired the leasehold interest of Sea Harvest, Inc., the original
lessee, for consideration of $8,000 per month for a period of ten years. The
Company's lease is with the City of Biloxi, Mississippi, for an initial term
of 25 years, with options to renew for six additional terms of 10 years each
and a final option period with a termination date commensurate with the
termination date of the IHL Lease, but in no event later than December 31,
2085. Annual rent (which includes payments to be made pursuant to the purchase
of a related leasehold interest) is $404,000, plus 4% of gross non-gaming
revenue, as defined. The annual rent is adjusted after each five-year period
based on increases in the Consumer Price Index, limited to a 10% increase in
any five-year period. The annual rent will increase 10 years after the
commencement of payments pursuant to a termination of lease and settlement
agreement to an amount equal to the sum of annual rent had it been $500,000
annually plus adjustments thereto based on the Consumer Price Index.
In June 1993, the Company entered into a lease for the exclusive use of
approximately 133 parking spaces and the additional use of 169 spaces in
another parking lot from the hours of 6:00 p.m. to 6:00 a.m. daily on property
adjacent to the Isle-Biloxi. The rent is $50,000 per year and the lease
expires in June 1997. The Company has also entered a joint venture arrangement
to sub-lease property for the construction of a two-level parking garage next
to the Isle-Biloxi. The Company pays 50% of the rent, which is (i) $96,000 per
year until November 2000 to acquire the leasehold interest of the original
lessee of the property, plus (ii) $25,000 per month to the City of Biloxi, the
lessor, plus annual increases attributable to the Consumer Price Index
(limited to 3% per rental year) until the first option renewal period ends on
November 30, 1995 and, thereafter, $25,000 per month, plus annual increases
attributable to the Consumer Price Index (limited to 3% per rental year) until
the second option renewal period ends on November 30, 2000. If the property is
leased to a third party, with the consent of the Company and its joint venture
partner, for use of the property as a gaming site, certain expenses, up to a
maximum of $940,000, will be refunded.
The Company owns approximately 13.1 acres of land in the City of Vicksburg,
Mississippi for use in connection with the Isle-Vicksburg. The Company owns an
additional 13 acres in Vicksburg on which it has off-site parking for 260
vehicles and operates a 67-vehicle recreational vehicle park. The Company
entered a lease for approximately five acres of land adjacent to the Isle-
Vicksburg to be used for additional parking.
LRGP owns approximately 26 acres in Bossier City, Louisiana for use in
connection with the Isle-Bossier City. LRG Hotels owns a 234-room hotel
located on approximately 10.5 acres of land on Interstate 20 in Bossier City,
Louisiana. The hotel is located 2.5 miles east of the Isle-Bossier City and
five miles west of the Louisiana Downs horse racing track.
The Company owns approximately 180 acres, and leases an additional 143
acres, at Pompano Park. The lease ends on July 1, 1999. The annual rent is
$1.00 plus all maintenance and operating expenses of the premises. The Company
has the exclusive option to purchase the premises during the term of the lease
for not less than $12 million.
The Company also owns two additional riverboat casinos and one floating
pavilion that are currently held for sale. The riverboat casinos and the
floating pavilions were previously used by the Company at the Isle-Biloxi and
one of the riverboats and the floating pavilion were previously used by the
Company at the Isle-Vicksburg.
SCGC owns approximately 2.7 acres and leases approximately 10.5 acres of
land in Calcasieu Parish, Louisiana for use in connection with the Isle-Lake
Charles, which it also intends to use in connection with the Grand Palais. The
lease commenced on March 24, 1995 and has an initial term of five years. The
annual rent on the leased property is $750,000 for the first four years and
$900,000 for the fifth year of the initial term. The Company has the option to
renew the lease for seven additional terms of five years each. For the first
renewal
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term, the rent increases each year by 5% or the percentage increase in the
average consumer price index for Calcasieu Parish, Louisiana for the previous
12 month period, whichever is higher. Rent for the second and all subsequent
renewal terms will be no less than the rent for the last year of the preceding
term, subject to market adjustments upward based upon the rent paid by other
riverboat gaming operators in Louisiana and Mississippi for comparable
property usages. The rent for the fourth and all subsequent renewal terms will
not be less than $1.5 million per year. The Company also leases an additional
5.75 acres of land in Calcasieu Parish. The lease commenced on July 17, 1995
and has an initial term of five years. The annual rent on the leased property
is $100,000 for the initial term. The Company has the option to renew the
lease for seven additional terms of five years each. For the first renewal
term, the rent increases each year by 5% or the percentage increase in the
average consumer price index for Calcasieu Parish, Louisiana for the previous
12-month period, which ever is higher. Rent for the second and all subsequent
renewal terms will be no less than the rent for the last year of the preceding
term, subject to market adjustments upward based upon the rent paid by other
riverboat gaming operators in Louisiana and Mississippi for comparable
property usage.
The Company owns 1.6 acres and leases 1.3 acres of land in Cripple Creek,
Colorado. The lease has an initial term of 25 years, with options to renew for
seven additional terms of 10 years each. Annual rent under the lease for the
first year of the lease is $250,000 and increases at the rate of $10,000 per
year to a maximum annual rent of $300,000. The amount of the rent is also
adjusted seven years after the rent commencement date and every two years
thereafter to reflect any increase in the Consumer Price Index (limited to 4%
for each year), applied cumulatively and in the aggregate. The Company has an
option to purchase the leased land at a price, depending on the date of
exercise, of $3.2 million to $5.0 million, or $5.0 million as adjusted by
increases in the Consumer Price Index if exercised after the year 2009.
Substantially all of the Company's property is presently pledged as
collateral for the First Mortgage Notes. See Note 3 of Notes to Consolidated
Financial Statements. The Company intends to make an offer to repurchase all
of the outstanding First Mortgage Notes using a portion of the proceeds of the
Offering. If any First Mortgage Notes remain outstanding after the Offering,
the Company intends to defease the covenants of such First Mortgage Notes,
including the covenants granting a first mortgage lien to the holders of such
First Mortgage Notes. See "Use of Proceeds."
LEGAL PROCEEDINGS
The Company has been named, along with two gaming equipment suppliers, 41 of
the country's largest gaming operators and four gaming distributors (the
"Gaming Industry Defendants") in a consolidated class action lawsuit pending
in Las Vegas, Nevada. The suit alleges that the Gaming Industry Defendants
violated the Racketeer Influenced and Corrupt Organizations Act by engaging in
a course of fraudulent and misleading conduct intended to induce people to
play their gaming machines based upon a false belief concerning how those
gaming machines actually operate, as well as the extent to which there is
actually an opportunity to win on any given play. The suit seeks unspecified
compensatory and punitive damages. The actions are in the early stages of
discovery and preliminary motions. The Company is unable at this time to
determine what effect, if any, the suit would have on its financial position
or results of operations.
The Company is engaged in various matters of litigation and has a number of
unresolved claims pending. While the ultimate liability with respect to such
litigation and claims cannot be determined at this time, it is the opinion of
management that such liability is not likely to be material to the Company's
consolidated financial position or results of operations.
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REGULATORY MATTERS
MISSISSIPPI
In June 1990, Mississippi enacted legislation legalizing dockside casino
gaming for counties along the Mississippi River, which is the western border
for most of the state, and the Gulf Coast, which is the southern border for
most of the state. The legislation gave each of those counties the opportunity
to hold a referendum on whether to allow dockside casino gaming within its
boundaries.
Mississippi law permits gaming licensees to offer unlimited stakes gaming on
a 24-hour basis and to issue house credit for qualifying patrons. The minimum
legal age for gaming is 21. The law does not restrict the amount or percentage
of space on a vessel that may be utilized for gaming.
The legislation also does not limit the number of licenses that the
Mississippi Gaming Commission can grant for a particular area and does not
impose different conditions on different licensees.
The ownership and operation of casino gaming facilities in Mississippi are
subject to extensive state and local regulation. The Company was required to
register as a publicly traded holding company under the Mississippi Act. The
Company's gaming operations are subject to regulatory control by the
Mississippi Gaming Commission, the state tax commission (the "Tax Commission")
and various other local, city and county regulatory agencies (hereinafter
collectively referred to as the "Mississippi Gaming Authorities").
Subsidiaries of the Company (the "Gaming Subsidiaries") have obtained gaming
licenses from the Mississippi Gaming Authorities to operate the Isle-Biloxi
and the Isle-Vicksburg. Effective October 29, 1991, the Mississippi Gaming
Commission adopted gaming regulations applicable to the Company and the Gaming
Subsidiaries.
The licenses held by the Gaming Subsidiaries have terms of two years and are
not transferable. New licenses will need to be obtained at the end of each
two-year period. There can be no assurance that new licenses can be obtained.
The Isle-Biloxi received a second license in April 1996 and the Isle-Vicksburg
obtained a second license in February 1995. The Mississippi Gaming Commission
may at any time revoke, suspend, condition, limit or restrict a license or
approval to own shares of stock in the Gaming Subsidiaries for any cause
deemed reasonable by such agency. Substantial fines for each violation of
gaming laws or regulations may be levied against the Gaming Subsidiaries, the
Company and the persons involved. A violation under the gaming license held by
a Gaming Subsidiary may be deemed a violation of all the other licenses held
by the Company.
A Gaming Subsidiary must submit detailed financial, operating and other
reports to the Mississippi Gaming Commission and/or the Tax Commission
periodically. Numerous transactions, including without limitation,
substantially all loans, leases, sales of securities and similar financing
transactions entered into by a Gaming Subsidiary must be reported to or
approved by the Mississippi Gaming Commission. The Company is also required to
periodically submit detailed financial and operating reports to the
Mississippi Gaming Commission and furnish any other information which the
Mississippi Gaming Commission may require.
The directors, officers and key employees of the Company and its
subsidiaries who are actively and directly engaged in the administration or
supervision of gaming, or who have any other significant involvement with or
influence over the activities of a Gaming Subsidiary, must be found suitable
therefor and may be required to be licensed by the Mississippi Gaming
Commission. The finding of suitability is comparable to licensing, and both
require submission of detailed personal financial information followed by a
thorough investigation. The applicant is required to pay all costs of
investigation. There can be no assurance that such persons will be found
suitable by such commission. An application for a finding of suitability of an
individual may be denied for any cause deemed reasonable by the issuing
agency. Changes in licensed positions must be reported to the issuing agency.
In addition to its authority to deny an application for a finding of
suitability, the Mississippi Gaming Commission has jurisdiction to disapprove
a change in corporate position. If the Mississippi Gaming Commission were to
find a director, officer or key employee unsuitable for licensing or
unsuitable to continue having a relationship with a Gaming Subsidiary, the
Gaming Subsidiary would have to suspend, dismiss and sever all relationships
with such person. The Gaming Subsidiary would have similar obligations with
regard to any person who refuses
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<PAGE>
to file appropriate applications. Each gaming employee must obtain a work
permit which may be revoked upon the occurrence of certain specified events.
Any individual who is found to have a material relationship to, or material
involvement with, the Company may be required to be investigated in order to
be found suitable or be licensed as a business associate of a Gaming
Subsidiary. Key employees, controlling persons or others who exercise
significant influence upon the management or affairs of the Company may also
be deemed to have such a relationship or involvement.
Beneficial owners of more than 5% of the Company's voting securities must be
found suitable by the Mississippi Gaming Commission. Any person who acquires
more than 5% of the voting securities of the Company must report the
acquisition to the Mississippi Gaming Commission. Any beneficial owner of the
Company's voting securities (whether or not a controlling stockholder) may be
required to be found suitable if such commission has reason to believe that
such ownership, without a finding of suitability, would be inconsistent with
the declared policy of the State of Mississippi. If the stockholder who is
required to be found suitable is a corporation, partnership or trust, it must
submit detailed business and financial information including a list of
beneficial owners.
Any stockholder found unsuitable and who holds, directly or indirectly, any
beneficial ownership of shares of Common Stock beyond such period of time as
may be prescribed by the Mississippi Gaming Commission may be guilty of a
misdemeanor. Any person who fails or refuses to apply for a finding of
suitability or a license within 30 days after being ordered to do so by the
Mississippi Gaming Commission may be found unsuitable. The Company is subject
to disciplinary action if, after it receives notice that a person is
unsuitable to be a stockholder of or to have any other relationship with it, a
Gaming Subsidiary or the Company (a) pays the unsuitable person any dividends
or interest upon any securities of the Gaming Subsidiary or any payments or
distribution of any kind whatsoever, (b) recognizes the exercise, directly or
indirectly, of any voting rights in its securities by the unsuitable person,
or (c) pays the unsuitable person any remuneration in any form for services
rendered or otherwise, except in certain limited and specific circumstances.
In addition, if the Mississippi Gaming Commission finds any stockholder
unsuitable, such stockholder must immediately divest himself of all of such
stockholder's securities in the Gaming Subsidiary and/or the Company.
The regulations provide that a change in control of the Company may not
occur without the prior approval of the Mississippi Gaming Commission.
Mississippi law prohibits the Company from making a public offering of its
securities without the approval of the Mississippi Gaming Commission if any
part of the proceeds of the offering is to be used to finance the
construction, acquisition or operation of gaming facilities in Mississippi, or
to retire or extend obligations incurred for one or more such purposes. The
Mississippi Gaming Commission has the authority to grant a continuous approval
of securities offerings and has granted such approval for the Company, subject
to an annual renewal thereof.
Regulations of the Mississippi Gaming Commission prohibit certain
repurchases of securities of publicly traded corporations registered with the
Mississippi Gaming Commission, including holding companies such as the
Company, without prior approval of the Mississippi Gaming Commission.
Transactions covered by these regulations are generally aimed at discouraging
repurchases of securities at a premium over market price from certain holders
of greater than 3% of the outstanding securities of the registered publicly
traded corporation. The regulations of the Mississippi Gaming Commission also
require prior approval for a "plan of recapitalization" as defined in such
regulations.
The Company is required to maintain in the State of Mississippi current
stock ledgers, which may be examined by the Mississippi 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 Mississippi Gaming Authorities. A failure to make such disclosure may
be grounds for finding the record holder unsuitable. The Company also is
required to render maximum assistance in determining the identity of the
beneficial owner.
The Mississippi Act requires that certificates representing shares of Common
Stock bear a legend to the general effect that the securities are subject to
the Mississippi Act and regulations of the Mississippi Gaming
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<PAGE>
Commission. The Mississippi Gaming Commission has the authority to grant a
waiver from the legend requirement, which the Company has obtained. The
Mississippi Gaming Authorities, through the power to regulate licenses, have
the power to impose additional restrictions on the holders of the Company's
securities at any time.
The Mississippi Gaming Commission has enacted regulations requiring that, as
a condition to licensure or subsequent licensure, an applicant provide a plan
to develop infrastructure facilities amounting to 25% of the cost of the
casino and a parking facility capable of accommodating 500 cars.
"Infrastructure facilities" include any of the following: a 250-room hotel,
theme park, golf course, marina, tennis complex, or any other facilities
approved by the Mississippi Gaming Commission, but do not include parking
facilities, roads, sewage and water systems or civic facilities. The
Mississippi Gaming Commission may reduce the number of rooms required in a
hotel, where it is shown to the satisfaction of the Mississippi Gaming
Commission that sufficient rooms are available to accommodate the anticipated
number of visitors.
The Company's future gaming operations outside of Mississippi are also
subject to approval by the Mississippi Gaming Commission.
Gaming taxes aggregating 12% of the gross gaming revenues of the Company
with respect to its Biloxi operations and Vicksburg operations are payable to
the State of Mississippi and the cities of Biloxi and Vicksburg. These taxes
are payable monthly. Additionally, license fees and annual fees based on the
number of games made available for play are payable to the State of
Mississippi and the City of Vicksburg and Biloxi.
The laws and regulations permitting and governing Mississippi casino gaming
were recently adopted. Consequently, the interpretation and application of
such Mississippi laws and regulations will evolve over time. Changes in such
laws or regulations could have a material adverse effect on the Company.
LOUISIANA
In July 1991, the Louisiana legislature adopted legislation permitting
certain types of gaming activity on certain rivers and waterways in Louisiana.
The legislation granted authority to supervise riverboat gaming activities to
the Louisiana Riverboat Gaming Commission and the Riverboat Gaming Enforcement
Division of the Louisiana State Police (the "Louisiana Enforcement Division").
The Louisiana Riverboat Gaming Commission was authorized to hear and determine
all appeals relative to the granting, suspension, revocation, condition or
renewal of all licenses, permits and applications. In addition, the Louisiana
Riverboat Gaming Commission established regulations concerning authorized
routes, duration of excursions, minimum levels of insurance, construction of
riverboats and periodic inspections. The Louisiana Enforcement Division was
authorized to investigate applicants and issue licenses, investigate
violations of the statute and conduct continuing reviews of gaming activities.
However, in May 1996, the regulatory oversight of riverboat gaming was
transferred to the Gaming Board. In a special legislative session held in
March and April of 1996, the Louisiana legislature adopted the Louisiana
Gaming Control Law (the "Gaming Control Law"), which is designed to
consolidate the regulatory oversight of four forms of gaming--riverboat, video
poker, the land-based casino in New Orleans, and Indian gaming--into one
board, this being the Gaming Board. The Gaming Board will now oversee all
licensing matters for riverboat casinos, the land-based casino, video poker,
and certain aspects of Indian gaming other than those limited responsibilities
reserved to the Louisiana State Police (the "Louisiana State Police"). The
Gaming Board will be composed of nine voting members appointed by the
governor, five of whom have been appointed. The Gaming Board held its first
meeting on July 10, 1996, at which it adopted a set of emergency rules
conferring certain authority to the Chairman. On July 12, 1996, the Gaming
Board (acting through the Chairman) issued all necessary approvals to operate
the Grand Palais and formally authorized the commencement of gaming on the
Grand Palais. Pursuant to that approval, the Grand Palais opened on July 12,
1996.
The Gaming Control Law abolished the Louisiana Riverboat Gaming Commission,
effective May 1, 1996. Likewise, the Gaming Control Law removed all riverboat
licensing authority from the Louisiana Enforcement
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Division, reserving to the Louisiana State Police only the authority to
license "non-key gaming employees" and "nongaming vendors." The Gaming Board
will now make all licensing and permitting determinations--whether for
operators, key employees, or manufacturers and suppliers--with regard to
riverboat gaming. However, the Louisiana State Police will continue to be
involved broadly in gaming enforcement, reporting to the Gaming Board. The
Gaming Control Law provides that the Louisiana State Police will continue to
conduct suitability investigations, will continue to audit, investigate, and
enforce compliance with standing regulations, will initiate enforcement and
administrative actions, and will perform "all other duties and functions
necessary for the efficient, efficacious, and thorough regulation and control
of gaming activities and operations under the [Gaming] Board's jurisdiction."
The Gaming Control Law did not abolish the Louisiana Riverboat Economic
Development and Gaming Control Act, which is the 1991 statute that authorized
gaming on certain rivers and waterways in Louisiana (the "Riverboat Act"). The
Gaming Control Law has amended the Riverboat Act to the extent that it has
transferred licensing and regulatory authority to the Gaming Board; otherwise,
the Riverboat Act remains in effect, with the Gaming Board now being
authorized to enforce the Riverboat Act. (For instance, the fifteen licenses
that the Riverboat Act authorizes remain unaffected; the statutory terms of
those licenses remain unaffected; the taxation terms of the Riverboat Act
remain unaffected.) The Gaming Control Law also provides that any rules or
regulations "promulgated by entities whose powers have been transferred to the
[Gaming] Board shall be considered valid and remain in effect until repealed
by the [Gaming] Board...." Accordingly, the rules that the Louisiana Riverboat
Gaming Commission previously adopted still remain in effect. Meantime, the
Louisiana State Police continues to enforce the rules and regulations that the
Louisiana Enforcement Division previously adopted.
The Riverboat Act continues to authorize issuance of up to 15 licenses to
conduct gaming activities on riverboats of new construction in accordance with
applicable law. However, no more than six licenses may be granted to
riverboats operating from any one parish.
In issuing a license, the applicant must be found to be a person of good
character, honesty and integrity and a person whose prior activities, criminal
record, if any, reputation, habits, and associations do not pose a threat to
the public interest of the State of Louisiana or to the effective regulation
and control of gaming, or create or enhance the dangers of unsuitable, unfair
or illegal practices, methods and activities in the conduct of gaming or the
carrying on of business and financial arrangements in connection therewith.
The Gaming Board will not grant a license unless it finds that: (i) the
applicant is capable of conducting gaming operations, which means that the
applicant can demonstrate the capability, either through training, education,
business experience, or a combination of the above, to operate a gaming
casino; (ii) the proposed financing of the riverboat and the gaming operations
is adequate for the nature of the proposed operation and from a source
suitable and acceptable to the Gaming Board; (iii) the applicant demonstrates
a proven ability to operate a vessel of comparable size, capacity and
complexity to a riverboat so as to ensure the safety of its passengers; (iv)
the applicant submits a detailed plan of design of the riverboat in its
application for a license; (v) the applicant designates the docking facilities
to be used by the riverboat; (vi) the applicant shows adequate financial
ability to construct and maintain a riverboat; and (vii) the applicant has a
good faith plan to recruit, train and upgrade minorities in all employment
classifications.
Certain persons affiliated with a riverboat gaming licensee, including
directors and officers of the licensee, directors and officers of any holding
company of the licensee involved in gaming operations, persons holding 5% or
greater interests in the licensee, and persons exercising influence over a
licensee ("Affiliated Gaming Persons"), are subject to the application and
suitability requirements of the Louisiana gaming law.
The Louisiana gaming law specifies certain restrictions relating to the
operation of riverboat gaming, including the following: (i) except in
Shreveport/Bossier City, gaming is not permitted while a riverboat is docked,
other than the 45 minutes between excursions, and during times when dangerous
weather or water conditions exist; (ii) except in Shreveport/Bossier City,
each round-trip riverboat cruise may not be less than three nor more than
eight hours in duration, subject to specific exceptions; (iii) agents of the
Louisiana State
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Police are permitted on board at any time during gaming operations; (iv)
gaming devices, equipment and supplies may only be purchased or leased from
permitted suppliers; (v) gaming may only take place in the designated gaming
area while the riverboat is upon a designated river or waterway; (vi) gaming
equipment may not be possessed, maintained or exhibited by any person on a
riverboat except in the specifically designated gaming area, or a secure area
used for inspection, repair or storage of such equipment; (vii) wagers may be
received only from a person present on a licensed riverboat; (viii) persons
under 21 are not permitted in designated gaming areas; (ix) except for slot
machine play, wagers may be made only with tokens, chips or electronic cards
purchased from the licensee aboard a riverboat; (x) licensees may only use
docking facilities and routes for which they are licensed and may only board
and discharge passengers at the riverboat's licensed berth; (xi) licensees
must have adequate protection and indemnity insurance; (xii) licensees must
have all necessary federal and state licenses, certificates and other
regulatory approvals prior to operating a riverboat; and (xiii) gaming may
only be conducted in accordance with the terms of the license and the rules
and regulations adopted by the Louisiana Enforcement Division.
An initial license to conduct riverboat gaming operations is valid for a
term of five years. LRGP was issued an initial operator's license by the
Louisiana Enforcement Division with respect to the Isle-Bossier City on
December 22, 1993, and SCGC was issued an initial operator's license by the
Gaming Board with respect to the Isle-Lake Charles on March 14, 1995. The
license to operate the Grand Palais was issued to a previous owner and the
Grand Palais ceased operations as a result of the bankruptcy of GPRI. The
Company acquired the Grand Palais and has been advised by the chief counsel to
the Gaming Board that it will treat the running of the five-year license
period as having been suspended from June 6, 1995 until the date gaming
operations commenced on the Grand Palais (July 12, 1996), providing 57 months
remaining on such license. The Louisiana gaming law provides that a renewal
application for the period succeeding the initial five-year term of the
operator's license must be made to the Gaming Board on an annual basis. The
application for renewal consists of a statement under oath of any and all
changes in information, including financial information, provided in the
previous application.
The transfer of a license or permit or an interest in a license or permit is
prohibited. The sale, purchase, assignment, transfer, pledge or other
hypothecation, lease, disposition or acquisition (a "Transfer") by any person
of securities which represents 5% or more of the total outstanding shares
issued by a corporation that holds a license is subject to Gaming Board
approval. A security issued by a corporation that holds a license must
generally disclose these restrictions. Prior Gaming Board approval is required
for the Transfer of any ownership interest of 5% or more in any non-corporate
licensee or for the Transfer of any "economic interest" of 5% or more in any
licensee or Affiliated Gaming Person. An "economic interest" is defined for
purposes of a Transfer as any interest whereby a person receives or is
entitled to receive, by agreement or otherwise, a profit, gain, thing of
value, loan, credit, security interest, ownership interest or other benefit.
Accordingly, approval is being sought with respect to the LRGP Acquisition.
A licensee must notify the Gaming Board of any withdrawals of capital,
loans, advances or distributions in excess of 5% of retained earnings for a
corporate licensee, or of capital accounts for a partnership or limited
liability company licensee, upon completion of any such transaction. No prior
approval of any such withdrawal, loan, advance or distribution is required,
but any such transaction is ineffective if disapproved by the Gaming Board
within 120 days after the required notification. In addition, the Gaming Board
may issue an emergency order for not more than 10 days prohibiting payment of
profits, income or accruals by, or investments in a licensee.
Riverboat gaming licensees and their Affiliated Gaming Persons are required
to notify the Gaming Board within 30 days after the receipt by any such
persons of any loans or extensions of credit. The Gaming Board is required to
investigate the reported loan or extension of credit, and to either approve or
disapprove the transaction. If disapproved, the loan or extension of credit
must be rescinded by the licensee or Affiliated Gaming Person. The Company is
an Affiliated Gaming Person of LRGP and SCGC is therefore required to notify
the Gaming Board of the sale and issuance of the Notes offered hereby.
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Fees for conducting gaming activities on a riverboat include (i) $50,000 per
riverboat for the first year of operation and $100,000 per year per riverboat
thereafter, plus (ii) 18 1/2% of net gaming proceeds.
Proposals to amend or supplement Louisiana's riverboat gaming statute are
frequently introduced in the Louisiana state legislature. No assurance can be
given that changes in Louisiana gaming law will not occur or that such changes
will not have a material adverse effect on the Company's business in
Louisiana. See "Risk Factors--Local Option Referendum Regarding Continuation
of Legalized Gaming in Louisiana" and "Risk Factors--Legislative and
Regulatory Considerations--Expansion of Louisiana Gaming Activities and
Possible Relocation of Existing Licenses."
FLORIDA
On June 15, 1995, the Florida Department of Business and Professional
Regulation, acting through its division of pari-mutuel wagering (the
"Division"), issued its final order (the "Order") approving PPI, Inc. ("PPI"),
a wholly owned subsidiary of the Company, as a pari-mutuel wagering permit
holder with respect to harness and quarter horse racing at Pompano Park.
Pursuant to the Order and the relevant provisions of Chapter 550 of the
Florida Statutes and the applicable rules and regulations thereunder (the
"Florida Statute"), PPI also was granted a license to conduct harness racing
at Pompano Park for the racing season commencing July 1, 1995 and ending June
30, 1996 on a total of 198 evening racing dates. The Division has approved
PPI's license to conduct a total of 183 live evening racing performances for
the season beginning July 1, 1996 to June 30, 1997. PPI intends to seek
approval to increase the number of live evening races. Although PPI does not
presently intend to conduct quarter horse racing operations at Pompano Park,
it may do so in the future, subject to Division approval. The transfer of 10%
or more of stock of a pari-mutuel racing permit holder such as PPI would
require the prior approval of the Division.
The Florida Statute establishes minimum purse requirements for breeders and
owners, license fees and the tax structure on pari-mutuel permit holders. The
Division may revoke or suspend any permit or license upon the willful
violation by the permit holder or licensee of any provision of the Florida
Statute. In lieu of suspending or revoking a permit or license, the Division
may impose various civil penalties against the permit holder or licensee.
Penalties so imposed may not exceed $1,000 for each count or separate offense.
Pursuant to Division order and recent enactments to the Florida Statute, PPI
is also authorized to conduct full-card pari-mutuel wagering at Pompano Park
on simulcast harness races from outside Florida throughout the racing season
and on night thoroughbred races within Florida if the thoroughbred
permitholder has decided to simulcast night races. Pompano Park has been
granted the exclusive right in Florida to conduct full-card simulcasting on
days in which no live racing is held at Pompano Park, although, on such days,
Pompano Park must offer to rebroadcast its simulcast signals to other pari-
mutuel facilities (other than thoroughbred parks). In addition, Pompano Park
may transmit its live races into any dog racing or jai alai facility
throughout Florida, including Dade and Broward counties, for intertrack
wagering. The Florida Statute establishes the percentage split between Pompano
Park and the other facilities receiving such signals. Recent legislation in
Florida provided certain reductions in applicable tax and license fees related
to intertrack wagering on broadcasts of simulcast harness racing and
thoroughbred racing. The Company believes that simulcast rights at Pompano
Park and the recent changes in the Florida Statute are important to the
results of operations of PPI.
Effective January 1, 1997, the Florida Statute permits pari-mutuel
facilities to be licensed by the Division to operate card rooms in those
counties in which a majority vote of the County Commission has been obtained
and a local ordinance has been adopted. Card rooms can only be operated at
pari-mutuel facilities on days that the facility is running live races. The
hours of operation extend from two hours before the post time of the first
live race and continue until two hours after the conclusion of the last live
race at the racing facility. Thoroughbred racing facilities must choose
between operating card rooms or simulcasting night races from outside the
state, but cannot do both (and if electing to simulcast night races, they will
be required to retransmit the night simulcast signal to certain other pari-
mutuel facilities, including Pompano Park).
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The card room operator will be the "house" and will deal the cards. The
house can charge a fee per player or establish a "rake" for each game. The
only card games that have been authorized are "nonbanking" games (i.e., those
in which the house is not allowed to play against the players). The winnings
of any player in a single round, hand or game may not exceed $10.00 and all
card games must be played with tokens or chips.
Card rooms may be operated and managed on behalf of the parimutuel permit
holder by card room management companies, which specifically require a special
license from the Division. Similarly, all employees of the card room
management company or the card room operator need to obtain a specific
occupational license ($50 per license) from the Division before they can work
in the card room. There is no statutory limit on the number of card tables
allowed in a card room, however, the annual license fee for the first card
table is $1,000 and $500 for each table thereafter. The card room's annual
occupational license fee is $250.
Each card room operator is required to pay a tax of 10% of the card room
operator's monthly gross receipts from card room operations. "Gross receipts"
is defined as the total amount of money received by a card room from any
person for participation in authorized games. At least 50% of the monthly "net
proceeds," if any, at Pompano Park must be distributed as follows: 47% to
supplement purses for harness racing, and 3% to supplement breeders' awards
during the next ensuing race meet. "Net proceeds" are the total amount of
gross receipts received by a card room operator from card room operations,
less direct operating expenses as defined in the statute.
The Division is currently promulgating rules to give effect to the foregoing
provisions of the Florida Statute.
NON-GAMING REGULATION
The Company is subject to certain federal, state and local safety and
health, employment and environmental laws, regulations and ordinances that
apply to non-gaming businesses generally, such as the Clean Air Act, Clean
Water Act, Occupational Safety and Health Act, Resource Conservation Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act
and the Oil Pollution Act of 1990. The Company has not made, and does not
anticipate making, material expenditures with respect to such environmental
laws and regulations. However, the coverage and attendant compliance costs
associated with such laws, regulations and ordinances may result in future
additional costs to the Company's operations. For example, in 1990 the U.S.
Congress enacted the Oil Pollution Act of 1990 to consolidate and rationalize
mechanisms under various oil spill response laws. The Department of
Transportation has promulgated regulations requiring owners and operators of
certain vessels to establish through the Coast Guard evidence of financial
responsibility for clean-up of oil pollution. This requirement has been
satisfied by proof of adequate insurance.
The riverboats operated by the Company in Louisiana must comply with U.S.
Coast Guard requirements as to boat design, on-board facilities, equipment,
personnel and safety. The riverboats must hold Certificates of Documentation
and Inspection issued by the U.S. Coast Guard. The U.S. Coast Guard
requirements also set limits on the operation of the riverboats and require
individual licensing of certain personnel involved with the operation of the
riverboats. Loss of a riverboat's Certificate of Documentation and Inspection
could preclude its use as a riverboat casino.
Any permanently moored vessel used for casino operations in Mississippi must
meet the fire safety standards of the Mississippi Fire Prevention Code and the
Life Safety Code and the Standards for the Construction and Fire Protection of
Marine Terminals, Piers and Wharfs of the National Fire Protection
Association. Additionally, any establishment to be constructed for dockside
gaming must meet the Southern Building Code or the local building code, if
such a local building code has been implemented at the casino's site.
While permanently moored vessels, such as the Isle-Biloxi and the Isle-
Vicksburg casino barges, are not required to hold Certificates of Inspection
from the U.S. Coast Guard, the Mississippi Gaming Commission has engaged the
American Bureau of Shipping (the "ABS") to inspect and certify all casino
barges with respect to
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stability and single compartment flooding integrity, in accordance with
Mississippi regulations. All casino barges must be inspected prior to
licensing every two years. Inspections subsequent to initial licensing must be
performed by the ABS or other company approved by the Gaming Commission.
All shipboard employees of the Company, even those who have nothing to do
with its operation as a vessel, such as dealers, waiters and security
personnel, may be subject to the Jones Act which, among other things, exempts
those employees from state limits on workers' compensation awards.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth certain information regarding the directors and
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------- --- -----------------------------------------------
<S> <C> <C>
Bernard Goldstein.... 67 Chairman, Chief Executive Officer and Director
John M. Gallaway..... 58 President, Chief Operating Officer and Director
Allan B. Solomon..... 60 Executive Vice President, Secretary, General
Counsel and Director
Robert S. Goldstein.. 40 Director
Martin Greenberg..... 56 Director
Emanuel Crystal...... 68 Director
Rexford A. Yeisley... 49 Vice President, Chief Financial Officer
Robert Boone......... 46 Vice President
</TABLE>
Bernard Goldstein has been Chairman of the Board of the Company since June
1992 and Chief Executive Officer of the Company since December 1995. From June
1992 until February 1993, Mr. Goldstein was also President and Chief Executive
Officer of the Company. Mr. Goldstein has been active in the development of
the riverboat gaming industry in a number of states. Mr. Goldstein has been
Chairman of the Board of Steamboat Development Corporation and Steamboat
Southeast, Inc., companies involved in the first legalized riverboat gaming
ventures in the United States, since their respective inceptions starting in
April 1991. In addition to his involvement in the riverboat gaming industry,
Mr. Goldstein has been involved in scrap metal recycling since 1951 and barge-
line transportation since 1960. Mr. Goldstein is the father of Robert
Goldstein.
John M. Gallaway has been President of the Company since December 1995 and
Chief Operating Officer since July 1996. From July 1995 to November 1995, Mr.
Gallaway was a professor at the University of Houston. Mr. Gallaway was Deputy
Managing Director, Gaming, of Sun International, a company engaged in owning
and operating casinos and resorts, from September 1992 to August 1994. Prior
to that, from 1984 to 1992, Mr. Gallaway was President and General Manager of
TropWorld Casino Resort in Atlantic City and, from 1981 to 1984, he was
President and General Manager of the Tropicana Casino Hotel in Las Vegas.
Allan B. Solomon has been Secretary and a director of the Company since June
1992, served as the Chief Financial Officer and Treasurer of the Company from
June 1992 to October 6, 1993, and was Chairman of the Executive Committee from
January 1993 to April 1995. Mr. Solomon became General Counsel of the Company
in May 1994 and became Executive Vice President in April 1995. Mr. Solomon is
President of Allan B. Solomon, P.A., which was a partner in the Florida law
firm of Broad and Cassel from 1986 to May 1994.
Robert S. Goldstein has been a director of the Company since February 1993.
Mr. Goldstein is the President of Alter Trading Corporation, a company engaged
in the business of scrap metal recycling, and has been associated with that
company since 1977. Additionally, Mr. Goldstein is a director, officer and
stockholder of the Steamboat Companies and has been an officer of several
affiliated river transportation companies engaged in stevedoring and equipment
leasing since 1980. Mr. Goldstein is the son of Bernard Goldstein.
Martin Greenberg has been a director of the Company since October 1993, and
is currently Chairman of the Board and President of Sterling Commodities
Corporation, a clearing firm for all five New York commodities exchanges. Mr.
Greenberg is the founder of and has been employed by Sterling Commodities
Corporation in various capacities since its inception in 1982. He was Chairman
of the Board of Commodity Exchange, Inc. ("Comex") from 1990 to 1992 and was
also a director of Comex and the National Futures Association. Mr. Greenberg
also serves as a director of the United Nations Development Corporation.
Emanuel Crystal has been a director of the Company since October 1993, and
is currently the Chief Executive Officer of Jackson Iron & Metal Company in
Jackson, Mississippi. He has held that position for over
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five years and has served in various positions with that company since 1949.
Mr. Crystal is on the board of directors of Omni Bank in Jackson, Mississippi
and also serves on the Board of Trustees of Tougaloo College in Mississippi.
Rexford A. Yeisley has been Chief Financial Officer of the Company since
December 1995. Mr. Yeisley was Senior Vice President and Chief Financial
Officer of Six Flags Theme Parks, Inc. from 1991 to 1995, and from 1987 to
1991, Mr. Yeisley was Vice President and Chief Financial Officer of that
company.
Robert Boone has been Vice President in charge of human resources and risk
management since August 1994. From 1991 to 1994, Mr. Boone was the Director,
Human Resources and Administration for Simon MOA Management Company, the
managing general partner at Mall of America, the nation's largest retail and
entertainment complex. From 1986 to 1991, Mr. Boone served as Director of
Human Resources for IDS American Express in Minneapolis, Minnesota.
DESCRIPTION OF CERTAIN INDEBTEDNESS
GRAND PALAIS NOTES
On May 3, 1996, GPRI, a wholly owned subsidiary of the Company, executed
certain credit agreements and promissory notes to consummate the Grand Palais
Acquisition. GPRI executed a $16.5 million promissory note (the "FNBC Note")
payable to First National Bank of Commerce ("FNBC") bearing interest at the
prime rate of Chase Manhattan Bank plus 1%. Interest is payable on a monthly
basis on the aggregate outstanding principal balance until principal becomes
payable, which is to occur at the earlier of (i) November 1, 1996 or (ii) 30
days after gaming operations begin at the Grand Palais. At such time,
principal and interest are payable in 58 equal monthly installments. If not
paid sooner, all outstanding principal and all accrued and unpaid interest is
due and payable 60 months after the date on which principal became payable.
The FNBC Note is secured by a first preferred ship mortgage on the Grand
Palais and the Company executed a guarantee for the obligations of GPRI under
the FNBC Note. In addition, the Company pledged to FNBC a $1.5 million
certificate of deposit issued by FNBC to the Company and all proceeds thereon.
Upon the occurrence of certain events, the FNBC Note is subject to mandatory
prepayment in the amount of the then outstanding principal amount less $8.25
million. Consummation of the Offering will require a mandatory payment to FNBC
of $8.25 million. See "Use of Proceeds."
On May 3, 1996, GPRI executed a $10.0 million promissory note (the
"Unsecured Creditors' Note") to the general unsecured creditors in the GPRI
bankruptcy proceeding. Principal and interest, accruing at a rate of 6% per
annum, are payable on the Unsecured Creditors' Note on a monthly basis, in
arrears, in 35 equal installments (calculated based on a 72-month amortization
schedule), commencing on the earlier of (i) 90 days from the date of the
Unsecured Creditors' Note or (ii) the first day of the month immediately
following the date gaming operations commence on the Grand Palais, with a
balloon payment due and payable at maturity. Within 180 days after receiving
state regulatory approval to operate the Grand Palais, the Company will be
required to make a $1.0 million payment of principal on the Unsecured
Creditors' Note. In addition, the Offering will require a mandatory prepayment
of 50% of the then outstanding principal amount of the Unsecured Creditors'
Note. See "Use of Proceeds." The Unsecured Creditors' Note is secured by a
second priority lien on the Grand Palais. GPRI also executed a separate
promissory note for $750,000 at the same interest rate and principal payment
terms (except that no mandatory repayment is required) to holders of WARN Act
claims allowed in connection with the GPRI bankruptcy proceeding. The Company
executed a guaranty for the obligations of GPRI under the Unsecured Creditor's
Note and the note to holders of the WARN Act claims.
BILOXI HOTEL FINANCING
In March 1995, RCM, a wholly owned subsidiary of the Company which owns and
operates the Isle-Biloxi, executed a loan agreement (the "Biloxi Hotel Loan")
and a $15 million promissory note in favor of The Peoples
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Bank, a Mississippi banking corporation. The $15 million was placed in a
collateral account for disbursement to fund hotel construction costs at the
Isle-Biloxi and upon completion of the hotel, the outstanding principal
balance was converted to a term loan. As of April 30, 1996, approximately
$14.7 million was outstanding on the Biloxi Hotel Loan, bearing interest at
the prime rate of Chase Manhattan Bank ("Chase Prime") plus 2%.
Principal and interest are payable in equal monthly installments based on a
12-year amortization with a balloon payment of all outstanding principal and
interest due on March 1, 2001. The indebtedness may be prepaid without
penalty. RCM's obligations under the Biloxi Hotel Loan are guaranteed by the
Company and secured by a first lien on the hotel at the Isle-Biloxi, RCM's
leasehold interest in the land on which the hotel is constructed and fixtures,
equipment and other personal property acquired by RCM after May 1, 1995 for
use in the hotel.
The Biloxi Hotel Loan restricts the ability of RCM to, among other things,
(i) enter into leases or other agreements affecting use of the hotel and
related parking for extended periods and (ii) incur additional indebtedness.
The Biloxi Hotel Loan also requires RCM and the Company, among other things,
to maintain minimum levels of tangible net worth, minimum debt service
coverage ratios, maximum debt to tangible net worth and minimum cash flow
coverage and contains cross-default provisions with regard to any other
indebtedness of RCM or the Company.
CROWN NOTES
In connection with the SCGC Acquisition, the Company, through LRGP,
restructured $20 million of indebtedness owed to Crown Casino with two notes,
each for $10 million (the "Crown Notes").
The first note (the "A Note") bears interest at a fixed rate of 11.5% per
annum. Interest is payable in arrears on the first business day of each month.
Principal is payable in 17 equal quarterly installments, beginning on June 2,
1997 and continuing on the first business day of each third month thereafter
and ending on June 1, 2001, on which date the remaining balance of principal
and accrued interest is due.
The second note (the "B Note") bears interest at a fixed rate of 11.5% per
annum. Interest is payable on the first business day of each month. The entire
principal amount is due and payable on June 1, 2001. Crown may convert up to
the lesser of (i) the outstanding principal amount of the B Note or (ii) $10
million of principal amount of the B Note into shares of Common Stock at a
conversion rate of $12.00 per share at any time that the B Note is
outstanding.
Both the A Note and B Note are secured by a security interest in and pledge
of 50% of the outstanding stock of SCGC. Upon consummation of the Offering,
the Company intends to repay the A Note and, as a result, the B Note,
according to its terms, will become an unsecured, subordinated obligation of
the Company. See "Use of Proceeds."
POMPANO PARK DEBT
In connection with its operations at Pompano Park, P.P.I., a subsidiary of
the Company, has a $5.0 million loan agreement with Capital Bank. Borrowings
are secured by a first mortgage on Pompano Park, an assignment of leases, a
first lien on all other P.P.I. assets and are guaranteed by the Company. As of
April 30, 1996, $4.9 million was outstanding under such loan. The loan bears
interest at the prime rate plus 1% per year, and is due in monthly
installments with a balloon payment due in June 2000.
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DESCRIPTION OF THE NOTES
The Notes will be issued under an Indenture dated as of , 1996 (the
"Indenture") among the Company, as issuer, and certain of the Company's
Subsidiaries, as Subsidiary Guarantors, and Fleet National Bank, as trustee
(the "Trustee"). A copy of the form of the Indenture will be filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
following summary of certain provisions of the Indenture does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and to all of the provisions of the Indenture, including the definitions of
certain terms therein and those terms made a part of the Indenture by
reference to the Trust Indenture Act, as in effect on the date of the
Indenture. The definitions of certain capitalized terms used in the following
summary are set forth below under "Certain Definitions."
PRINCIPAL, MATURITY AND INTEREST
The Notes will be senior secured obligations of the Company, limited in an
aggregate principal amount to $ million. The Notes will mature on
, 2003. Interest on the Notes will accrue at the rate of % per
annum and will be payable semiannually on each and ,
commencing , 1996, to the holders of record of Notes at the close of
business on each and immediately preceding such
interest payment date. Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
the original date of issuance (the "Issue Date"). Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
The Notes will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. Principal of,
premium, if any, and interest on the Notes will be initially payable, and the
Notes will be initially transferable, at the office or agency of the Company
maintained for such purposes in the City of New York. Until otherwise
designated by the Company, the Company's office or agency in New York will be
the office of the Trustee at , New York, New York.
In addition, interest may be paid by wire transfer or check mailed to the
Person entitled thereto as shown on the register for the Notes. No service
charge will be made for any registration of transfer or exchange of the Notes,
except for any tax or other governmental charge that may be imposed in
connection therewith.
RANKING
The Notes will rank senior in right of payment to all existing or future
Subordinated Indebtedness of the Company and pari passu in right of payment
with any other existing or future Indebtedness of the Company. Under the
Indenture, the Company and its Restricted Subsidiaries may incur additional
Indebtedness, including Indebtedness which is pari passu in right of payment
with the Notes, subject to certain fixed charge coverage tests or certain
other limitations. See "Certain Covenants--Limitation on Indebtedness."
Additional Indebtedness to finance the development, construction and opening
of Preferred Hotel Facilities, permitted FF&E Financing or Capitalized Lease
Obligations and certain other Indebtedness may be secured by certain assets of
the Company or a Restricted Subsidiary, as applicable. See "Certain
Covenants--Limitation on Liens."
SUBSIDIARY GUARANTEES
The Company's obligations under the Notes and the Indenture will be jointly,
severally and unconditionally guaranteed on a senior secured basis by all
existing and future Significant Restricted Subsidiaries of the Company, other
than as set forth below, subject to the receipt of the required approval of
any applicable Gaming Authority, which the Company and its Significant
Restricted Subsidiaries shall use all reasonable efforts to obtain, including
without limitation the payment of any costs, expenses or fees which may be
required therefor. The Subsidiary Guarantees will rank senior in right of
payment to all existing or future Subordinated Indebtedness of the Subsidiary
Guarantors and pari passu in right of payment to all other existing or future
Indebtedness of the Subsidiary Guarantors. The obligations of Subsidiary
Guarantors under their Subsidiary Guarantees will be guaranteed by the Company
under and pursuant to the Company Guarantee.
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The Indenture will provide that, except as otherwise provided therein, the
Company will, and will cause each future Subsidiary of the Company that
becomes a Subsidiary Guarantor to, grant to the Trustee a valid and perfected
first priority security interest in substantially all of its assets to the
extent required by the Collateral Documents, enforceable against all third
parties, and to execute and deliver all documents and to take all action
necessary or desirable to perfect and protect such a security interest in
favor of the Trustee.
Upon the redesignation of any Subsidiary Guarantor as an Unrestricted
Subsidiary in compliance with the Indenture, such Subsidiary Guarantor shall
be deemed automatically and unconditionally released and discharged from all
obligations under its Subsidiary Guarantee, its Collateral Documents (if any)
and the Indenture without any further action required on the part of the
Trustee or any holder.
COLLATERAL SECURITY
Except as provided below, the Notes will be secured by a first priority Lien
on substantially all of the assets of the Company, and the Subsidiary
Guarantees will be secured by a first priority Lien on substantially all of
the assets of the Subsidiary Guarantors, subject in each case to Permitted
Liens. Except as provided below, the Collateral will include, but not be
limited to, (i) all of the Capital Stock of existing and future Restricted
Subsidiaries held by the Company or a Subsidiary Guarantor, (ii) all
intercompany loans made by the Company or a Subsidiary Guarantor to a
Restricted Subsidiary (which shall include all proceeds from the Offering
advanced by the Company to, or applied against obligations of, Restricted
Subsidiaries), (iii) the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier
City and the Isle-Lake Charles, and all other real estate, vessels and related
improvements and personal property held by the Company and the Subsidiary
Guarantors, (iv) all material contracts, including management or similar
agreements, construction agreements and agreements for the purchase of assets
or Capital Stock, and (v) all dividends, distributions, interest and principal
payments made with respect to, and proceeds from, the Collateral.
Notwithstanding the foregoing, the Collateral will not include any Excluded
Assets. "Excluded Assets" means the following: (i) Assets Held for Sale or
Development, (ii) Non-Material Assets acquired after the Issue Date, (iii)
existing equipment subject to financing and any newly acquired or leased
assets financed with FF&E Financing permitted pursuant to clause (e) or (f) of
the covenant described under "Limitation on Indebtedness," in each case which
assets have been pledged as collateral security for the repayment of the
financing and where the terms of such financing prohibit the pledge of such
assets for the benefit of the holders of the Notes, and (iv) any agreements,
permits, licenses or the like that cannot be subjected to a Lien without the
consent of third parties, which consent cannot reasonably be obtained (which
includes all gaming licenses of the Company and its Restricted Subsidiaries),
provided that Excluded Assets will not include the proceeds of the assets
under clause (iii) or (iv). Also, the Hotel Properties, or any portion
thereof, will be released from the Collateral and become Excluded Assets from
and after such time that the Company notifies the Trustee in writing of its
intention, determined in the good faith judgment of the Board of Directors, to
develop a Preferred Hotel Facility thereon or to contribute such Hotel
Properties, or any portion thereof, to any business venture for the purpose of
developing one or more Preferred Hotel Facilities. In addition, the Notes or
Subsidiary Guarantees, as applicable, will be secured by a second priority
Lien only (or a fourth priority Lien only in the case of clause (iii) below)
on (i) existing equipment subject to financing and any newly acquired or
leased assets financed with FF&E Financing permitted pursuant to clause (e) or
(f) of the covenant described under "Limitation on Indebtedness," in each case
which assets have been pledged as collateral security for the repayment of the
financing and where the terms of such financing do not prohibit the pledge of
such assets for the benefit of the holders of the Notes, (ii) the Isle-Biloxi
Hotel, (iii) the Grand Palais and (iv) Pompano Park.
Although the Capital Stock, intercompany notes and other instruments
included in the Collateral will be delivered to and held by the Trustee,
unless and until an Event of Default shall have occurred and be continuing,
the Company shall be entitled to exercise any voting and consensual rights
thereunder and receive and retain interest principal, dividend and other
payments made with respect thereto. Unless and until an Event of Default shall
have occurred and be continuing, the Company will have the right to remain in
possession and retain exclusive control of all other Collateral, to freely
operate such other Collateral and to collect, invest and dispose of any income
thereon to the extent otherwise permitted by the Indenture.
The Company, the Subsidiary Guarantors and their respective Restricted
Subsidiaries will be prohibited, except as permitted pursuant to the covenant
described under "Limitation on Asset Sales and Events of Loss,"
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and the provisions described under "Subsidiary Guarantors", "Restricted and
Unrestricted Subsidiaries" and "Amendments and Waivers" from obtaining the
release of any of the Collateral, or, except as permitted pursuant to the
covenant described under "Limitation on Liens," from granting any additional
Liens on or substituting Collateral without the consent of the holders of the
Notes. The Company and its Restricted Subsidiaries will be required to deliver
to the Trustee, at their expense, one or more insurance policies from title
insurance companies (or reinsured by title insurance companies) of favorable
national reputation with a claims paying ability rating of A- or better from
S&P or A3 or better from Moody's, providing for title insurance for each fee
or leasehold interest in the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier
City and the Isle-Lake Charles (and replacements thereof) pledged to secure
the Notes or the Subsidiary Guarantee, naming the Trustee as an additional
insured on behalf of the holders of the Notes. The coverage provided under
such policies must aggregate at all times not less than the lesser of (i) the
insurable value of such real property and (ii) the original principal amount
of the Notes.
COLLATERAL ACCOUNTS
NET CASH PROCEEDS FROM ASSET SALES AND EVENTS OF LOSS. In the event of any
Asset Sale or Event of Loss, the Company or the relevant Restricted Subsidiary
shall cause the Net Cash Proceeds derived or resulting from any Asset Sale or
any Event of Loss to be deposited in a Collateral Account on or before the
business day following the day on which such Net Cash Proceeds are received by
the Company or such Restricted Subsidiary. Such Net Cash Proceeds shall be
released from the Collateral Account to make a Permitted Related Investment
and/or Excess Sale/Loss Proceeds Offer as permitted or required by the
covenant described under "Limitation on Asset Sales and Events of Loss." In
the event that the Company or the relevant Restricted Subsidiary engages in an
Asset Sale with respect to Collateral which is permitted by the Indenture and
the Collateral Documents (or the Company designates a Subsidiary Guarantor to
be an Unrestricted Subsidiary in accordance with the Indenture), the Trustee
shall execute and deliver such documents as requested by the Company to
evidence the release of the Liens of the Collateral Documents executed by the
Company or otherwise affecting the Company, such Restricted Subsidiary or
Subsidiary Guarantor, as the case may be. Net Cash Proceeds (including any
earnings thereon) may be released from the Collateral Account in order to, and
in only such amount as is required to (a) pay the principal amount of the
Notes tendered pursuant to an Excess Sale/Loss Proceeds Offer or, (b) make an
Investment, or purchase assets or properties to be used, in a Permitted Line
of Business, provided, that upon consummation of such Investment or purchase
the Trustee shall have received a perfected first priority security interest
in the property or assets acquired by the Company or any of its Subsidiaries
in connection therewith.
EXCESS LOUISIANA CASH ACCOUNT. In the event that as the result of an adverse
vote by the residents of Bossier Parish, Louisiana or Calcasieu Parish,
Louisiana on or about November 5, 1996 with respect to the conduct of
riverboat gaming in either such parish the Isle-Bossier City or the Isle-Lake
Charles must terminate their gaming operations (in their present locations) on
or before the expiration of their current gaming licenses for such facilities,
the Company or the relevant Restricted Subsidiary shall cause the Excess
Louisiana Cash generated by the Isle-Bossier City and/or the Isle-Lake
Charles, as applicable, to be deposited monthly commencing February 1, 1997 in
a Collateral Account. Such Excess Louisiana Cash shall be released from the
Collateral Account to purchase Notes tendered pursuant to an Excess Louisiana
Cash Offer required by the covenant described under "Excess Louisiana Cash
Repurchase Offers."
REDEMPTION AND REPURCHASE OFFERS
OPTIONAL REDEMPTION. The Notes are redeemable, in whole or in part, at the
option of the Company, at any time on or after , 2000 at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest to the redemption date, if redeemed
during the 12-month period beginning on of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000.......................... %
2001.......................... %
2002 and thereafter........... 100.00%
</TABLE>
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EQUITY PROCEEDS REDEMPTION. In the event that the Company consummates a
Qualified Public Equity Offering on or before , 1999, the Company
may redeem, at its option, up to $100 million in principal amount of the
outstanding Notes at a redemption price of % of the principal amount of the
Notes so redeemed plus accrued and unpaid interest to the redemption date,
provided that, after any such redemption, at least $200 million in principal
amount of the Notes remains outstanding.
CHANGE OF CONTROL REPURCHASE OFFER. In the event that a Change of Control
shall occur, the Company is obligated to make an offer to purchase all
outstanding Notes at a redemption price of 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the redemption date.
There can be no assurance, however, that the Company will have sufficient
funds to repurchase the Notes. If a Change of Control occurs, the Company is
obligated to notify the holders of Notes in writing of such occurrence and to
make an offer to purchase (the "Change of Control Offer"), on a business day
(the "Change of Control Payment Date") not later than 60 days following the
date of the Change of Control, all Notes then outstanding at a purchase price
equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the Change of Control Payment Date. The Change of Control
Offer is required to remain open for at least 20 business days and until the
close of business on the Change of Control Payment Date. Neither the Board of
Directors nor the Trustee may waive or amend the Company's obligation to so
offer to purchase all outstanding Notes in the event of a Change of Control
without the holders of not less than a majority of the aggregate principal
amount of the outstanding Notes consenting to such waiver or amendment. See
"Amendments and Waivers."
EXCESS LOUISIANA CASH REPURCHASE OFFERS. At such time as the aggregate
amount of Excess Louisiana Cash equals $10 million, the Company will be
obligated to make an offer to purchase (an "Excess Louisiana Cash Offer") from
all holders of the Notes in accordance with the procedures set forth in the
Indenture up to a maximum principal amount (expressed as a multiple of $1,000)
of Notes equal to such Excess Louisiana Cash deposited in the Collateral
Account less the accrued and unpaid interest on such Notes. The offer price
for the Notes will be payable in cash in an amount equal to 100% of the
principal amount of the Notes plus accrued and unpaid interest, if any, to the
date of repurchase. Each Excess Louisiana Cash Offer shall remain open for a
period of at least 20 business days. To the extent an Excess Louisiana Cash
Offer is not fully subscribed to by the holders of the Notes, the Company may
withdraw the excess funds from the Collateral Account and retain the
unutilized portion of the Excess Louisiana Cash relating to such Excess
Louisiana Cash Offer.
GAMING REDEMPTION. Notwithstanding any other provision hereof, if any Gaming
Authority requires that a holder or beneficial owner of Notes must be
licensed, qualified or found suitable under any applicable gaming law and the
holder or beneficial owner fails to apply for a license, qualification or a
finding of suitability within 30 days after being requested to do so by the
Gaming Authority, or if such holder or such beneficial owner is not so
licensed, qualified or found suitable, the Company shall have the right, at
its option, (i) to require such holder or beneficial owner to dispose of such
holder's or beneficial owner's Notes within 30 days of receipt of such notice
of such finding by the applicable Gaming Authority or such earlier date as may
be ordered by such Gaming Authority or (ii) to redeem the Notes of such holder
or beneficial owner at the least of (a) the principal amount thereof, (b) the
price at which such holder or beneficial owner acquired the Notes and (c) the
Current Market Value of such Notes, together with, in either case, accrued and
unpaid interest, if any, to the earlier of the date of redemption or the date
of the finding of unsuitability, if any, by such Gaming Authority, which may
be less than 30 days following the notice of redemption, if so ordered by such
Gaming Authority. The Company shall notify the Trustee in writing of any such
redemption as soon as practicable. The holder or beneficial owner of Notes
applying for a license, qualification or a finding of suitability is obligated
to pay all costs of the licensure or investigation for such qualification or
finding of suitability.
SELECTION AND NOTICE. In the event that less than all of the Notes are to be
redeemed or repurchased at any time, selection of Notes for redemption or
repurchase will be made by the Trustee on a pro rata basis, by lot or by such
other method, if any, as the Trustee shall deem fair and appropriate; provided
that no Notes in a principal amount of $1,000 or less shall be redeemed or
repurchased in part. Unless otherwise specified herein, notice of a redemption
of or an offer to repurchase Notes shall be mailed by first class mail not
less than 30 days nor more than 60 days before the redemption or purchase date
to each holder of Notes at its registered address. If any
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Note is to be redeemed or repurchased in part only, the notice of redemption
or offer to repurchase that relates to such Note shall state the portion of
the principal amount thereof to be redeemed or repurchased. A new Note in a
principal amount equal to the unredeemed or unpurchased portion thereof will
be issued in the name of the holder thereof upon cancellation of the original
Note. On and after the redemption or purchase date, interest will cease to
accrue on Notes or portions thereof redeemed or repurchased or called for
redemption pursuant to the optional and mandatory redemption provisions and
not forwarded for redemption.
The Company will comply with Rule 14e-1 promulgated under the Securities
Exchange Act of 1934, as amended, in making any offer to repurchase Notes
described above.
Certain instruments, agreements or other documents evidencing, governing or
otherwise relating to Indebtedness of the Company and its Subsidiaries may
prohibit any such repurchases or redemptions unless such Indebtedness has been
repaid in full and such instruments, agreements or other documents have been
terminated. In addition, a Change of Control might constitute an event of
default with respect to such Indebtedness permitting the holder (or an agent
or other representative of such holder on its behalf) to accelerate the
maturity thereof. In the event of a Change of Control, the Company will likely
be required to refinance such Indebtedness and may need to incur additional
Indebtedness in order to make payments for Notes to be redeemed or
repurchased. There can be no assurance that the Company will be able to
refinance such Indebtedness or to incur additional Indebtedness in order to
make such payments.
RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Indenture provides that, subject to the exceptions described below, from
and after the Issue Date each of the Company's Subsidiaries in existence on
the Issue Date and any Subsidiary 80% or more of the Capital Stock of which
the Company, directly or indirectly, acquires or becomes the owner of after
the Issue Date will be a Restricted Subsidiary unless the Company designates
such Subsidiary to be an Unrestricted Subsidiary. Except as provided below,
the Company may designate any existing or future Subsidiary of the Company as
an Unrestricted Subsidiary, provided that (i) such Subsidiary does not own any
Indebtedness or Capital Stock or own or hold any Lien on any asset or property
of the Company or any other Restricted Subsidiary, (ii) either the Subsidiary
to be so designated has total assets of $100,000 or less or immediately before
and after giving pro forma effect to such designation, (a) the Company could
incur $1.00 of Indebtedness pursuant to the covenant described under
"Limitation on Indebtedness" (other than under clauses (a) through (i)
thereof), (b) no Default or Event of Default shall have occurred and be
continuing and (c) the Company could make, pursuant to the covenant described
under "Limitation on Restricted Payments," the Restricted Payment arising from
the designation as described in the next sentence and (iii) all transactions
between the Subsidiary to be so designated and its Affiliates remaining in
effect are permitted pursuant to the covenant described under "Limitation on
Transactions with Affiliates." Notwithstanding the foregoing, the Company may
not designate any existing or future Subsidiary that holds, owns or operates,
directly or indirectly, any assets or function directly relating to or
necessary for the conduct of casino gaming at the Isle-Biloxi, the Isle-
Vicksburg, the Isle-Bossier City or the Isle-Lake Charles as an Unrestricted
Subsidiary. Any Investment made by the Company or any Restricted Subsidiary in
a Restricted Subsidiary which is redesignated an Unrestricted Subsidiary shall
thereafter be considered as having been a Restricted Payment (to the extent
not previously included as a Restricted Payment) made on the day such
Subsidiary is designated an Unrestricted Subsidiary in the amount of the
greater of (i) the sum of the Fair Market Value of such Subsidiary on such
date as determined in accordance with GAAP and the amount of any obligation of
such Subsidiary which the Company or any Restricted Subsidiary has guaranteed
or for which it is in any other manner liable and (ii) the amount of the
Investments made by the Company and any of its Restricted Subsidiaries in such
Subsidiary. Any Subsidiary Guarantee entered into by a Restricted Subsidiary
which is subsequently redesignated an Unrestricted Subsidiary shall be
automatically released at such time as the Restricted Subsidiary becomes an
Unrestricted Subsidiary. Unless so designated as an Unrestricted Subsidiary,
any Subsidiary (whether or not a Subsidiary on the Issue Date) 80% or more of
the Capital Stock of which the Company, directly or indirectly, acquires or
becomes the owner of after the Issue Date shall be classified as a Restricted
Subsidiary thereof.
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An Unrestricted Subsidiary 80% or more of the Capital Stock of which is
owned by the Company directly or indirectly may be redesignated a Restricted
Subsidiary. The Company may not, and may not permit any Restricted Subsidiary
to, take any action or enter into any transaction or series of transactions
that would result in a Person becoming a Restricted Subsidiary (whether
through an acquisition, the redesignation of an Unrestricted Subsidiary or
otherwise, but not including through the creation of a new Restricted
Subsidiary) unless, immediately before and after giving pro forma effect to
such action, transaction or series of transactions, (a) the Company could
incur at least $1.00 of Indebtedness pursuant to the covenant described under
"Limitation on Indebtedness" (other than under clauses (a) through (i)
thereof), and (b) no Default or Event of Default shall have occurred and be
continuing. In addition, no Person may become a Restricted Subsidiary (by any
means) unless at least 80% of the Capital Stock of such Person is owned by the
Company, directly or indirectly.
The designation of an Unrestricted Subsidiary or the removal of such
designation is required to be made by the Board of Directors of the Company,
such designation to be evidenced by a Board Resolution stating that the Board
of Directors has made such designation in accordance with the Indenture, and
the Company is required to deliver to the Trustee such Board Resolution
together with an Officers' Certificate certifying that the designation
complies with the Indenture. Such designation will be effective as of the date
specified in the applicable Board Resolution, which may not be before the date
the applicable Officers' Certificate is delivered to the Trustee.
CERTAIN COVENANTS
Set forth below are summaries of certain covenants contained in the
Indenture.
LIMITATION ON INDEBTEDNESS. The Indenture provides that the Company may not,
and may not cause or permit any Restricted Subsidiary to, directly or
indirectly, create, incur, assume, suffer to exist, guarantee or in any manner
become liable for the payment of ("incur") any Indebtedness (including any
Acquired Indebtedness) or any Disqualified Stock unless (i) such Indebtedness
or Disqualified Stock is incurred by the Company or a Subsidiary Guarantor,
(ii) no Default or Event of Default shall have occurred and be continuing at
the time of, or would occur after giving pro forma effect to, such incurrence
of Indebtedness or Disqualified Stock and (iii) on the date of such incurrence
(the "Incurrence Date"), the Consolidated Coverage Ratio of the Company, after
giving pro forma effect to such incurrence of such Indebtedness, would be at
least 2.0 to 1 if the Incurrence Date is on or before July 31, 1998 or at
least 2.25 to 1 if the Incurrence Date is after July 31, 1998, other than the
following:
(a) Indebtedness and Disqualified Stock issued to and held by the Company
or a wholly owned Restricted Subsidiary of the Company, provided that (i)
any subsequent issuance or transfer of any Capital Stock that results in
any such wholly owned Restricted Subsidiary ceasing to be a wholly owned
Restricted Subsidiary or (ii) any transfer of such Indebtedness to a Person
other than the Company or a wholly owned Restricted Subsidiary of the
Company, will be deemed to be the issuance of such Indebtedness or
Disqualified Stock by the issuer thereof;
(b) Indebtedness under the Notes, the Subsidiary Guarantees and the
Indenture;
(c) Indebtedness (i) outstanding on the Issue Date as set forth on
Schedule 1.01 to the Indenture on the Issue Date and (ii) (without
duplication of amounts included in clause (i)) which may be incurred under
one or more revolving bank credit facilities in an aggregate principal
amount not to exceed $15 million;
(d) Non-Recourse Indebtedness incurred by a Subsidiary Guarantor in
respect of Project Costs to develop, construct and open Preferred Hotel
Facilities, provided that (i) the principal amount of such Non-Recourse
Indebtedness (including any Refinancing Indebtedness with respect to such
Non-Recourse Indebtedness) shall not exceed 100% of such Project Costs and
(ii) the Consolidated Coverage Ratio of the Company, without giving pro
forma effect to such incurrence of such Non-Recourse Indebtedness, would be
at least 2.0 to 1;
(e) FF&E Financing and Capitalized Lease Obligations, provided that the
sum of the aggregate principal amount of FF&E Financing and Capitalized
Lease Obligations does not exceed, in the aggregate at any time
outstanding, the sum of (i) the principal amount of FF&E Financing and
Capitalized Lease
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Obligations outstanding on the Issue Date plus (ii) $10 million plus (iii)
the product of $7 million and the number of Casinos acquired or developed
by the Company and its Restricted Subsidiaries after the Issue Date plus
(iv) the product of $5 million and the number of Casino Hotels acquired or
developed by the Company or its Restricted Subsidiaries after the Issue
Date;
(f) Indebtedness in respect of performance bonds, letters of credit,
bankers' acceptances and surety and appeal bonds in the ordinary course of
business, other than such Indebtedness outstanding on the Issue Date (or
refinancings thereof permitted under clause (g) below), in an amount not to
exceed $5 million in the aggregate; Interest Rate and Currency Protection
Obligations entered into in connection with the incurrence of Indebtedness
otherwise permitted under the Indenture; and Indebtedness arising under
agreements providing for indemnification, adjustment of purchase price and
similar obligations in connection with the disposition of property or
assets in the ordinary course of business.
(g) Indebtedness issued in exchange for or to repay, prepay, repurchase,
redeem, defease, retire or refinance ("refinance") any Indebtedness
permitted by clauses (a) through (f) above, provided that (i) if the
principal amount of the Indebtedness so issued shall exceed the sum of the
principal amount of the Indebtedness so exchanged or refinanced plus any
prepayment premium and costs reasonably incurred to effect the exchange or
refinancing, then either (x) such excess shall be permitted only to the
extent that it is otherwise permitted to be incurred under this covenant or
(y) in the case of Indebtedness permitted by clause (e) above, such excess
shall be permitted if the principal amount of Indebtedness so issued does
not exceed the lesser of (A) the original principal amount of the
Indebtedness so exchanged or refinanced and (B) the fair value of the
property that is the subject of such FF&E Financing or Capitalized Lease
Obligations, as applicable; and (ii) the Indebtedness so issued (A) has a
stated maturity not earlier than the stated maturity of the Indebtedness so
exchanged or refinanced, (B) has an average life to stated maturity equal
to or greater than the remaining average life to stated maturity of the
Indebtedness so exchanged or refinanced, and (C) is subordinated to the
Notes to at least the same extent as the Indebtedness so exchanged or
refinanced;
(h) Indebtedness incurred by a Subsidiary Guarantor in respect of Project
Costs to make a Casino Improvement, provided such Indebtedness does not
exceed $5 million in the aggregate;
(i) Indebtedness, other than Indebtedness permitted by clauses (a)
through (h) above, which does not exceed $15 million (less any Indebtedness
incurred pursuant to this clause (i) retired with Net Cash Proceeds from
any Asset Sale or Event of Loss) in the aggregate at any time outstanding;
and
LIMITATION ON LIENS. The Indenture provides that the Company may not, and
may not cause or permit any Restricted Subsidiary, directly or indirectly, to
create, incur, assume or suffer to exist any Lien of any kind upon any of its
property or assets (including, without limitation, any income or profits) now
owned or acquired after the date of the Indenture by it, other than:
(a) Liens existing on the Issue Date and set forth on Schedule 1.02 to
the Indenture on the Issue Date;
(b) Liens securing FF&E Financing or Capitalized Lease Obligations
permitted pursuant to clause (e) of the covenant described under
"Limitation on Indebtedness"; provided that (i) the amount of such
Indebtedness incurred in any individual case secured by such a Lien, at the
time such Indebtedness is incurred, does not exceed the lesser of (A) the
cost and (B) the Fair Market Value of the property or assets acquired in
connection with such FF&E Financing or Capitalized Lease Obligation, (ii)
the Indebtedness secured by such Lien shall have otherwise been permitted
to be incurred under the Indenture, (iii) such Lien shall attach to such
property or assets upon their acquisition; and (iv) such Lien (other than a
Permitted Vessel Lien) shall not encumber or attach to any other assets or
property of the Company or any of its other Restricted Subsidiaries;
(c) Liens securing Non-Recourse Indebtedness incurred by a Subsidiary
Guarantor in respect of Project Costs to develop, construct and open
Preferred Hotel Facilities pursuant to clause (d) of the covenant described
under "Limitation on Indebtedness"; provided that (i) such Lien shall
attach to such Preferred Hotel Facilities upon construction or acquisition
of such property or assets and (ii) such Lien shall not encumber or attach
to any other assets or property of the Company or any of its other
Restricted Subsidiaries other than Permitted Shared Common Facilities;
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(d) Liens securing Indebtedness incurred pursuant to clause (i) of the
covenant described under "Limitation on Indebtedness"; provided that any
such Lien shall not encumber or attach to any assets or property owned by
the Company or any of its Restricted Subsidiaries as of the Issue Date;
(e) Liens that encumber or attach to any of the Excluded Assets but do
not encumber or attach to any other assets or property of the Company or
any of its Restricted Subsidiaries;
(f) the replacement, extension or renewal of any Lien permitted by
clauses (a) through (e) upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in the
principal amount (other than to pay any prepayment premium and costs
reasonably incurred to effect the replacement, extension or renewal or, in
the case of a Lien securing Indebtedness incurred pursuant to clause (e) of
the covenant described under "Limitation on Indebtedness," as permitted by
clause (g) of such covenant) or change in any direct or contingent obligor)
of the Indebtedness secured thereby; and
(g) Permitted Liens.
LIMITATION ON RESTRICTED PAYMENTS. The Indenture provides that the Company
may not make, directly or indirectly, and may not permit any Restricted
Subsidiary to make, directly or indirectly, any Restricted Payment, unless:
(a) no Default or Event of Default shall have occurred and be continuing
at the time of and after giving pro forma effect to such Restricted
Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company could incur at least $1.00 of Indebtedness pursuant to the covenant
described under "Limitation on Indebtedness" (other than under clauses (a)
through (i) thereof); and
(c) the aggregate amount of all Restricted Payments declared or made
after the Issue Date does not exceed the sum of (i) 50% of Consolidated Net
Income (or in the event such Consolidated Net Income shall be a deficit,
minus 100% of such deficit) accrued during the period (treated as one
accounting period) beginning on the first day of the first full fiscal
quarter commencing on or after August 1, 1996 and ending on the last day of
the Company's last fiscal quarter ending before the date of such proposed
Restricted Payment plus (ii) an amount equal to the aggregate Net Cash
Proceeds received by the Company from the issuance or sale (other than to a
Subsidiary) of its Capital Stock (excluding Disqualified Stock, but
including Capital Stock issued upon conversion of convertible Indebtedness
and from the exercise of options, warrants or rights to purchase Capital
Stock (other than Disqualified Stock) of the Company) (A) in the Goldstein
Family Equity Purchase or (B) otherwise on or after the Issue Date;
provided that, if no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Restricted Payment,
the foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of its declaration if, at the date of
declaration, such payment would be permitted by such provisions, (ii) the
redemption or repurchase of any Capital Stock or Indebtedness of the Company,
including the Notes, if required by any Gaming Authority or if determined, in
the good faith judgment of the Board of Directors, to be necessary to prevent
the loss or to secure the grant or reinstatement of any gaming license or
other right to conduct lawful gaming operations, (iii) the repurchase of
Capital Stock from directors, officers and employees (or their respective
estates or beneficiaries) upon death, disability, retirement or termination of
employment up to an amount not to exceed an aggregate of $1 million in any
fiscal year of the Company and (iv) Permitted Investments. The full amount of
any Restricted Payment made pursuant to the foregoing clause (i) or clause
(ii) of the definition of Permitted Investments, however, will be included in
the calculation of the aggregate amount of Restricted Payments available to be
made pursuant to clause (c) above.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Indenture provides that the Company may not, directly or
indirectly, and may not permit any Restricted Subsidiary to, directly or
indirectly, create or otherwise cause or suffer to exist or enter into any
agreement with any Person that would cause any consensual encumbrance or
restriction of any kind on the ability of any Restricted
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Subsidiary to (a) pay dividends, in cash or otherwise, or make any other
distributions on its Capital Stock or any other interest or participation in,
or measured by, its profits owned by, or pay any Indebtedness owed to, the
Company or a Restricted Subsidiary, (b) make any loans or advances to the
Company or any Restricted Subsidiary or (c) transfer any of its properties or
assets to the Company or any Restricted Subsidiary except, in each case, for
(i) restrictions imposed by the Notes, the Indenture the Subsidiary Guarantees
and the Collateral Documents, (ii) customary non-assignment provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with industry practices, (iii) restrictions
imposed by applicable gaming laws or any applicable Gaming Authority, (iv)
restrictions under any agreement relating to any property, assets, or business
acquired by the Company or its Restricted Subsidiary, which restrictions
existed at the time of acquisition, were not put in place in anticipation of
such acquisition and are not applicable to any Person, other than the Person
acquired or to any property, assets or business other than the property,
assets and business of the Person acquired, (v) any such contractual
encumbrance in existence as of the Issue Date or imposed by or in connection
with the incurrence of any Permitted FF&E Financing, Capitalized Lease
Obligations or Non-Recourse Indebtedness permitted pursuant to clause (e) of
the covenant described under "Limitation on Indebtedness," provided such
encumbrance does not have the effect of restricting the payment of dividends
to the Company or any Restricted Subsidiary or the payment of Indebtedness
owed to the Company or any Restricted Subsidiary or reducing the amount of any
such dividends or payments, (vi) any restrictions with respect to Capital
Stock or assets, respectively, of a Restricted Subsidiary of the Company
imposed pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary and (vii) replacements of restrictions imposed pursuant
to clauses (i) through (vi) that are no more restrictive than those being
replaced.
LIMITATION ON ASSET SALES AND EVENTS OF LOSS. The Indenture provides that
the Company may not, directly or indirectly, and may not permit any Restricted
Subsidiary to, directly or indirectly, make any Asset Sale unless (a) at the
time of such Asset Sale the Company or such Restricted Subsidiary, as the case
may be, receives consideration at least equal to the Fair Market Value of the
assets sold or otherwise disposed of, (b) the proceeds therefrom consist of at
least 75% cash or Cash Equivalents and (c) no Default or Event of Default
shall have occurred and be continuing at the time of or after giving pro forma
effect to such Asset Sale.
The Indenture provides that the Company and its Restricted Subsidiaries may,
on or before the 180th day after the date on which the Company or such
Restricted Subsidiary consummates an Asset Sale or suffers an Event of Loss,
apply the Net Cash Proceeds therefrom to make a Permitted Related Investment
(or enter into a binding agreement to make a Permitted Related Investment).
The amount of such Net Cash Proceeds not applied to make a Permitted Related
Investment within such 180-day period will constitute "Excess Sale/Loss
Proceeds." The Indenture provides that, when the aggregate amount of Excess
Sale/Loss Proceeds equals $10 million, the Company is obligated to make an
offer to purchase (a "Excess Sale/Loss Proceeds Offer") from all holders of
the Notes in accordance with the procedures set forth in the Indenture up to a
maximum principal amount (expressed as a multiple of $1,000) of Notes equal to
such Excess Sale/Loss Proceeds, less the accrued and unpaid interest on such
Notes. The offer price for the Notes will be payable in cash in an amount
equal to 100% of the principal amount of the Notes plus accrued and unpaid
interest, if any, to the date of repurchase. Each Excess Sale/Loss Proceeds
Offer shall remain open for a period of at least 20 business days. To the
extent an Excess Sale/Loss Proceeds Offer is not fully subscribed to by the
holders of the Notes, the Company may withdraw the excess funds from the
Collateral Account and retain such unutilized portion of the Excess Sale/Loss
Proceeds.
LIMITATION ON DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES. The Indenture
provides that the Company and its wholly owned Restricted Subsidiaries shall
at all times maintain ownership of not less than 80% of the Capital Stock of
each Restricted Subsidiary of the Company except any Restricted Subsidiary
that shall be disposed of in its entirety or consolidated or merged with or
into the Company or another Restricted Subsidiary, in each case in accordance
with the provisions described under the covenants described under
"Consolidation, Merger, Conveyance, Transfer or Lease" below and "Limitation
on Asset Sales and Events of Loss" above. No Restricted Subsidiary shall issue
any preferred stock or other Capital Stock having a preference as to
dividends,
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upon liquidation or otherwise over the Capital Stock of such Restricted
Subsidiary owned, directly or indirectly, by the Company.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Indenture provides that the
Company may not, and the Company may not permit, cause or suffer any
Restricted Subsidiary to, conduct any business or enter into any transaction
or series of transactions (including, without limitation, the sale, transfer,
disposition, purchase, exchange, lease or use of assets, property or services)
or enter into any contract, agreement, understanding, loan, advance or
guarantee with or for the benefit of any of their respective Affiliates,
including, without limitation, any Unrestricted Subsidiary, but not the
Company or another Restricted Subsidiary, (each an "Affiliate Transaction"),
except (a) such transactions that are set forth in writing and are entered
into in good faith and on terms that are no less favorable to the Company or
such Restricted Subsidiary, as the case may be, than those that could have
been obtained in a comparable transaction on an arm's-length basis from a
Person not an Affiliate of the Company or such Restricted Subsidiary or, if in
the reasonable opinion of a majority of the Independent directors of the
Company, such standard is inapplicable to the subject Affiliate Transaction,
then that such Affiliate Transaction is fair to the Company or the Restricted
Subsidiary, as the case may be (or to the stockholders as a group in the case
of a pro rata dividend or other distribution to stockholders permitted under
"Limitation on Restricted Payments"), from a financial point of view, (b) such
transactions that are existing on the Issue Date and disclosed in this
Prospectus and (c) reasonable and customary compensation and indemnification
of directors, officers and employees. In addition, the Company and its
Restricted Subsidiaries may not enter into any Affiliate Transaction (or
series of related Affiliate Transactions that are similar or part of a common
plan) under clause (a) above involving aggregate payments or other Fair Market
Value (i) in excess of $500,000 unless, prior to the consummation thereof, the
Company has delivered to the Trustee an Officers' Certificate describing such
Affiliate Transaction and certifying that it complies with clause (a) above
and (ii) in excess of $2.5 million unless, prior to the consummation thereof,
the transaction is approved by the Board of Directors of the Company,
including a majority of the Independent directors, such approval to be
evidenced by a Board Resolution, delivered to the Trustee with the Officers'
Certificate required under clause (i), stating that such Board of Directors
has determined that such Affiliate Transaction complies with clause (a) above.
CHANGE IN NATURE OF BUSINESS. The Indenture provides that the Company may
not, and may not permit any of its Restricted Subsidiaries to, own, manage or
conduct any operation other than a Permitted Line of Business.
MAINTENANCE OF INSURANCE. The Indenture provides that, from and at all times
after the Issue Date, the Company and its Subsidiaries are required to have in
effect customary insurance for general liabilities, casualty and property
damage, and other risks, including business interruption coverage where
available on commercially reasonable terms, on terms and in amounts as are
customarily carried by similar businesses conducting gaming in the
jurisdictions of the gaming operations of the Company and its Subsidiaries and
reasonably sufficient to avoid a material adverse change in the financial
condition or results of operation of the Company and its Subsidiaries taken as
a whole. All insurance will name the Trustee as additional insured or loss
payee, as applicable. All such insurance shall be issued by carriers having an
A.M. Best & Company, Inc. rating of A- or higher, or if such carrier is not
rated by A.M. Best & Company, Inc., having the financial stability and size
deemed appropriate by a reputable insurance broker.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE. Neither the Company
nor any Restricted Subsidiary may consolidate with or merge with or into or
sell, assign, convey, lease or transfer all or substantially all of its
properties and assets to any Person or group of affiliated Persons in a single
transaction or through a series of transactions, except that:
(a) the Company may consolidate with or merge with or into or sell,
assign, convey, lease or transfer all or substantially all of its
properties and assets to any Person or group of affiliated Persons in a
single transaction or through a series of transactions if (i) the Company
is the continuing Person or the resulting, surviving or transferee Person
(the "surviving entity") is a corporation organized and existing under the
laws of the United States or any State thereof or the District of Columbia,
(ii) the surviving entity expressly assumes, by a supplemental indenture
(or similar instrument) executed and delivered to the Trustee (or
Collateral Agent), in form and substance reasonably satisfactory to the
Trustee (or Collateral Agent), all of
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the obligations of the Company under the Notes, the Indenture and the
Collateral Documents, (iii) immediately before and immediately after giving
pro forma effect to such transaction, or series of transactions (including,
without limitation, any Indebtedness incurred or anticipated to be incurred
in connection with or in respect of such transaction or series of
transactions), no Default or Event of Default shall have occurred and be
continuing, (iv) the Company or the surviving entity (if the transaction or
series of transactions involves the Company), immediately before and after
giving effect to such transaction or series of transactions (including,
without limitation, any Indebtedness incurred or anticipated to be incurred
in connection with or in respect of the transaction or series of
transactions), has a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction
or series of transactions, (v) immediately after giving effect to such
transaction or series of transactions on a pro forma basis, the Company or
the surviving entity (if the transaction or series of transactions involves
the Company) could incur at least $1.00 of Indebtedness pursuant to the
covenant described under "Limitation on Indebtedness" (other than under
clauses (a) through (i) thereof), (vi) the Company or the surviving entity
has delivered to the Trustee an Officers' Certificate stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction or series of
transactions, such supplemental indenture complies with this covenant and
that all conditions precedent in the Indenture relating to the transaction
or series of transactions have been satisfied; (vii) such transaction will
not result in the loss of any gaming or other license necessary for the
continued operation of any Restricted Subsidiary as conducted immediately
prior to such consolidation, merger, conveyance, transfer or lease and
(viii) if any property of the Company or any Restricted Subsidiary would
thereupon become subject to any Lien, the covenant described under
"Limitation on Liens" is complied with; and
(b) a Restricted Subsidiary may consolidate with or merge into or sell,
assign, convey, lease or transfer all or substantially all of its
properties and assets to the Company or to any Restricted Subsidiary of the
Company if (i) the surviving entity is the Company or a Restricted
Subsidiary of the Company, (ii) the surviving entity expressly assumes, by
a supplemental indenture (or similar instrument) executed and delivered to
the Trustee (or Collateral Agent), in form and substance reasonably
satisfactory to the Trustee (or Collateral Agent), all of the obligations
of such Restricted Subsidiary under the Notes, the Subsidiary Guarantees
(if applicable), the Indenture and the Collateral Documents, and (iii) such
transaction will not result in the loss of any gaming or other license
necessary for the continued operation of any Restricted Subsidiary as
conducted immediately prior to such sale, assignment, conveyance, transfer
or lease.
REPORTS TO HOLDERS OF NOTES. The Indenture provides that, whether or not the
Company is subject to the periodic reporting requirements under the Exchange
Act, it shall file reports with the Securities and Exchange Commission as if
it were subject to such periodic reporting requirements and shall furnish
copies of such reports to the Trustee and the holders of the Notes when filed.
In addition, the Company is required to furnish to the Trustee for the benefit
of the holders of Notes quarterly financial statements. Such financial
statements are required to be in the same form and concern the same matters as
the Company's financial statements filed with the Commission, if any, but are
required to be on a consolidated basis for the Company and its Restricted
Subsidiaries only. Such financial statements are required to be made available
to the holders of Notes upon their request. Such financial information may be
included as supplemental information with the Company's consolidated financial
statements.
EVENTS OF DEFAULT AND REMEDIES
EVENTS OF DEFAULT. The following are Events of Default under the Indenture:
(a) a default in the payment of any interest on the Notes when it becomes
due and payable and the continuance of any such default for a period of 30
days; or
(b) a default in the payment of the principal of or premium, if any, on
the Notes when due at maturity, upon acceleration, optional redemption,
required repurchase or otherwise; or
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(c) the default by the Company or any Subsidiary Guarantor in the
performance, or breach, of any term, covenant or agreement in the Indenture
(other than defaults specified in clause (a) or (b) above or clause (d)
below), and the continuance of such default or breach for a period of 30
days after written notice to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in aggregate principal
amount of the outstanding Notes; or
(d) the default by the Company or any Subsidiary Guarantor in the
performance, or breach, of the covenant described under "Consolidation,
Merger, Conveyance, Transfer or Lease"; the failure of the Company to make
or consummate an Excess Sale/Loss Proceeds Offer in accordance with the
covenant described under "Limitation on Asset Sales and Events of Loss";
the failure of the Company to make or consummate an Excess Louisiana Cash
Repurchase Offer in accordance with the provisions under "Excess Louisiana
Cash Repurchase Offers"; or the failure of the Company to make or
consummate a Change of Control Offer in accordance with the provisions
described under "Change of Control Repurchase Offer"; or
(e) the failure by the Company or any Restricted Subsidiary to make any
payment when due which extends beyond any stated period of grace applicable
thereto with respect to any other Indebtedness, other than Non-Recourse
Indebtedness, in an aggregate principal amount of $7.5 million or more, or
the acceleration of the maturity of other Indebtedness, other than Non-
Recourse Indebtedness, in an aggregate principal amount of $7.5 million or
more for any other reason; or
(f) one or more judgments, orders or decrees for the payment of money not
covered by insurance in excess of $7.5 million, either individually or in
an aggregate amount, shall be entered against the Company or any Restricted
Subsidiary or any of their respective properties and not discharged, and
there shall have been a period of 60 days during which a stay of
enforcement of such judgment or order, by reason of pending appeal or
otherwise, shall not be in effect; or
(g) certain events of bankruptcy, insolvency or reorganization with
respect to the Company or any of its Significant Restricted Subsidiaries
shall have occurred; or
(h) the revocation, termination, suspension or cessation to be effective
of any gaming license or other right to conduct lawful gaming operations at
any Casino in any jurisdiction of the Company or any Subsidiary which shall
continue for more than 90 consecutive days (other than (i) as a result of
an adverse vote on or about November 5, 1996 with respect to the conduct of
riverboat gaming in Bossier Parish, Louisiana or Calcasieu Parish,
Louisiana or (ii) the voluntary relinquishment of any such gaming license
or right if, in the reasonable opinion of the Company (as evidenced by an
Officers' Certificate) such relinquishment (a) is in the best interest of
the Company and its Subsidiaries, taken as a whole, (b) does not adversely
affect the holders of the Notes in any material respect and (c) is not
reasonably expected to have, nor are the reasons therefor reasonably
expected to have, any material adverse effect on the Company's relationship
with any Gaming Authority in Missippippi or Louisiana, or the effectiveness
of any gaming license or similar right, or any right to renewal thereof, or
on the prospective receipt of any such license or right, in each case, in
Mississippi or Louisiana); or
(i) any of (i) a default or material breach by the Company or any
Restricted Subsidiary of its obligations under any Subsidiary Guarantee or
the Collateral Documents which continues for a period of 30 days after
written notice to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate principal amount of the
outstanding Notes, (ii) the repudiation by the Company or any Restricted
Subsidiary of its obligations under the Subsidiary Guarantees or the
Collateral Documents or (iii) a judgment or decree by a court or
governmental agency of competent jurisdiction declaring the
unenforceability of the payment obligations under the Subsidiary Guarantee
or any of the Collateral Documents, subject to a 10-day grace period in the
case of any Collateral Document.
ACCELERATION. If an Event of Default (other than an Event of Default
specified in clause (g) above) occurs, then the Trustee or the holders of at
least 25% in aggregate principal amount of the outstanding Notes may, by
written notice, and the Trustee upon the request of the holders of not less
than 25% in aggregate principal amount
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of the outstanding Notes is obligated to, declare the principal of and accrued
interest on all the Notes to be due and payable immediately. Upon any such
declaration, such amounts are due and payable immediately. If an Event of
Default specified in clause (g) occurs, then the principal of and accrued
interest on all the Notes ipso facto becomes and is immediately due and
payable without any declaration or other act on the part of the Trustee or any
holder.
After a declaration of acceleration, the holders of a majority in aggregate
principal amount of outstanding Notes may, by notice to the Trustee, rescind
such declaration of acceleration if all existing Events of Default have been
cured or waived, other than nonpayment of principal of and accrued interest on
the Notes that has become due solely as a result of such acceleration and if
the rescission of acceleration would not conflict with any judgment or decree.
The holders of a majority in principal amount of the outstanding Notes also
have the right to waive past defaults under the Indenture except a default in
the payment of the principal of or interest on any Note, or in respect of a
covenant or a provision which cannot be modified or amended without the
consent of all holders.
In the event of a declaration of acceleration in respect of the Notes
because an Event of Default specified in clause (e) shall have occurred and be
continuing, such declaration of acceleration shall be automatically annulled
if the Indebtedness that is the subject of such Event of Default has been
discharged or the holders thereof have rescinded their declaration of
acceleration in respect of such Indebtedness, and written notice of such
discharge or rescission, as the case may be, shall have been given to the
Trustee by the Company and countersigned by the holders of such Indebtedness
or a trustee, fiduciary or agent for such holders, within 30 days after such
declaration of acceleration in respect of the Notes, and no other Event of
Default has occurred during such 30-day period which has not been cured or
waived during such period.
No holder of any of the Notes has any right to institute any proceeding with
respect to the Indenture or any remedy thereunder, unless the holders of at
least 25% in principal amount of the outstanding Notes have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as Trustee, the Trustee has failed to institute such proceeding
within 15 days after receipt of such notice and the Trustee has not within
such 15-day period received directions inconsistent with such written request
by holders of a majority in principal amount of the outstanding Notes. Such
limitations do not apply, however, to a suit instituted by a holder of a Note
for the enforcement of the payment of the principal of, premium, if any, or
accrued interest on, such Note on or after the Stated Maturity.
REMEDIES WITH RESPECT TO COLLATERAL
IN GENERAL. Specific rights and remedies of the Trustee under the Collateral
Documents ultimately include the right of the Trustee or another, appropriate
Person under federal or state law to sell the Collateral and to apply the net
proceeds to the Indebtedness evidenced by the Notes in accordance with the
terms of the Indenture and the Collateral Documents. The Collateral Documents
will generally provide for the application of the internal laws of the States
in which the Collateral is located or federal Admiralty law while the
Indenture and the Notes will provide for the application of the internal laws
of the State of New York. However, there is no certainty regarding which
State's law would be applied by any court with respect to the enforcement of
remedies under the Notes, the Indenture or the Collateral Documents.
GAMING LAW RESTRICTIONS. Due to restrictions on the ability to engage in
gaming activities in gaming jurisdictions, the Trustee may incur delays or
possibly frustration in its effort to sell all or a portion of the Collateral.
Operators of gaming facilities are required to be licensed by state
authorities and may be required by such authorities to file applications, to
be investigated and be found suitable as owners or landlords of a gaming
establishment. All the foregoing may effectively limit the number of potential
bidders and may delay such sales, either of which could adversely affect the
sale price of the Collateral. Moreover, the gaming industry could become
subject to different or additional regulations during the term of the Notes,
which could further adversely affect the practical rights and remedies that
the Trustee would have upon the occurrence of an Event of Default.
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OTHER GENERAL RESTRICTIONS. In addition to being subject to gaming law
restrictions, the Trustee's ability to foreclose upon and sell assets of the
Company's gaming establishments, stock of Restricted Subsidiaries, any loans
from the Company to its Restricted Subsidiaries, or other Collateral will be
subject to the procedural and other restrictions of the relevant state's real
estate law or Uniform Commercial Code or, in the case of gaming vessels, the
Federal Ship Mortgage Act. Further, certain limitations exist under the
Merchant Marine Act of 1936 on the ability of non-U.S. citizens to realize
upon collateral consisting of vessels documented under the laws of the United
States. In addition, the Collateral includes stock of Restricted Subsidiaries
that is not publicly traded and may only be sold in compliance with applicable
Federal and state securities laws. This may effectively limit the number of
potential bidders for such stock or other Collateral and may delay such sales,
either of which could adversely affect the sale price of such Collateral. In
addition, certain direct or indirect leasehold interests, contracts and other
assets may not be sold without the consent of certain third parties.
With regard to proceeding against any Subsidiary Guarantor and its assets,
the Trustee may either foreclose upon any intercompany loans outstanding to
such Subsidiary Guarantor or proceed under the Subsidiary Guarantee. If the
Trustee chooses to foreclose upon intercompany loans, the necessity of first
foreclosing on the pledge of such loans might result in delay and increase the
risk that a petition for relief under bankruptcy or insolvency law could be
filed by or against any one or more of the Company and the Subsidiary
Guarantors. If, on the other hand, the Trustee chose to proceed by demand and
foreclosure under the Subsidiary Guarantee, its ability to realize upon the
Collateral could be limited by the invocation of state-law suretyship defenses
and fraudulent transfer law.
BANKRUPTCY. The ability to take possession and dispose of the Collateral
directly or indirectly securing the Notes upon acceleration is also likely to
be significantly impaired or delayed by applicable bankruptcy laws if a
bankruptcy case were to be commenced by or against the Company or the
subsidiary owning the collateral. Under applicable bankruptcy laws, the
trustee and the holders would be prohibited from taking possession or
disposing of the collateral absent bankruptcy court approval. Moreover, the
Company or Subsidiary would be permitted to retain and use the collateral as
long as the trustee and the holders are being provided "adequate protection"
in the form of periodic cash payments or substitute liens or in some other
form approved by the court in its discretion. While this requirement is
generally intended to protect the value of the security, it cannot be
predicted what form of "adequate protection" might be approved by the court in
the particular case. The court has broad discretionary powers in all these
matters, including the valuation of the collateral. In addition, since the
collateral generally does not include cash and cash equivalents derived from
gaming and food and beverage operations, the holders of the Notes would not
have any consent rights with respect to the use of those funds by the Company
or subsidiary during the pendency of the proceedings. In view of these
considerations, it is not possible to predict for how long payments on the
Notes would be delayed following the filing of a bankruptcy case, whether or
when the trustee could take possession of or sell the collateral or to what
extent the holders of the Notes would be compensated for any delay in payment
or loss of value of the collateral.
JUDICIAL FORECLOSURE. Pursuant to the terms of the Collateral Documents, the
Trustee would also have the right to initiate a judicial foreclosure against
all or any portion of the Collateral. In such event, the Trustee would be
required to file a suit in the appropriate local court. If the court found in
favor of the Trustee, a judgment of foreclosure and order of sale would be
entered, and the court would order the sale of the affected Collateral.
INTERCREDITOR AGREEMENTS. The Company and the Restricted Subsidiaries in
certain circumstances have the right to incur pari passu Indebtedness that
would be secured by Liens ranking senior to, or equally in priority with the
Liens securing the Notes. The relative rights of the holders of the Notes and
the holders of such pari passu Indebtedness would be governed by the terms of
an intercreditor agreement the principal provisions of which are attached to
the Indenture. Generally, but subject to certain limitations set forth in such
intercreditor agreement, the holders of not less than a majority of the
aggregate principal amount of the then outstanding pari passu Indebtedness
(including the Notes) will be able to direct the actions of the Trustee with
respect to acceleration of the Notes, foreclosure and the exercise of other
rights and remedies. All proceeds of any enforcement action would be shared
pro rata with the holders of such other pari passu Indebtedness.
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FURTHER ASSURANCES
The Indenture will provide that the Company will (and will cause each of its
Restricted Subsidiaries to) execute, acknowledge, deliver, record, re-record,
file re-file, register and re-register, any and all such further acts, deeds,
conveyances, security agreements, mortgages, assignments, estoppel
certificates, financing statements and continuations thereof, termination
statements, notices of assignments, transfers, certificates, assurances and
other instruments as reasonably may be required from time to time in order (i)
to carry out more effectively the purposes of the Collateral Documents, (ii)
to subject to the Liens created by any of the Collateral Documents any of the
properties, rights or interests required to be encumbered thereby, (iii) to
perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby and (iv) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm
to the Trustee any of the rights granted or now or hereafter intended by the
parties thereto to be granted to the Trustee or the Company under the
Collateral documents or under any other instrument executed in connection
therewith.
DEFEASANCE
The Company may at any time terminate all of its obligations with respect to
the Notes ("defeasance"), except for certain obligations, including those
regarding any trust established for a defeasance and obligations to register
the transfer or exchange of the Notes, to replace mutilated, destroyed, lost
or stolen Notes and to maintain agencies in respect of Notes. The Company may
at any time terminate its obligations under certain covenants set forth in the
Indenture, including all of those described under "Certain Covenants," and any
omission to comply with such obligations will not constitute a Default or an
Event of Default with respect to the Notes issued under the Indenture
("covenant defeasance"). In order to exercise either defeasance or covenant
defeasance, the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the holders of the Notes, money or United States Government
Obligations, or a combination thereof, in such amounts as will be sufficient
to pay the principal of and premium, if any, and interest on the Notes to
redemption or maturity, together with all other sums payable by it under the
Indenture, and comply with certain other conditions, including the delivery of
an opinion as to certain tax matters. Defeasance of the Notes will result in
the termination of the obligations of the Subsidiary Guarantors under their
respective Subsidiary Guarantees and of the Company under the Company
Guarantee.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of
Notes) as to all outstanding Notes when either (a) all such Notes theretofore
authenticated and delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust) have been
delivered to the Trustee for cancellation or (b) (i) all such Notes not
theretofore delivered to the Trustee for cancellation have become due and
payable and the Company has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in the trust for this purpose an amount of
money sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal, premium,
if any, and accrued interest to the date of such deposit, (ii) the Company has
paid all sums payable by it under the Indenture and (iii) the Company has
delivered irrevocable instructions to the Trustee to apply the deposited money
toward the payment of the Notes at maturity or the redemption date, as the
case may be. In addition, the Company must deliver an Officers' Certificate
and an Opinion of Counsel stating that all conditions precedent to
satisfaction and discharge have been complied with.
AMENDMENTS AND WAIVERS
From time to time the Company, when authorized by resolutions of its Board
of Directors, and the Trustee may, without the consent of the holders of the
Notes, amend, waive or supplement the Indenture, the Notes, the Subsidiary
Guarantees or the Collateral Documents for certain specified purposes,
including, among other things,
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curing ambiguities, defects or inconsistencies and making any change that does
not adversely affect the rights of any holder. Other amendments and
modifications of the Indenture, the Notes the Subsidiary Guarantees or the
Collateral Documents may be made by the Company and the Trustee (or Collateral
Agent) with the consent of the holders of not less than a majority of the
aggregate principal amount of the outstanding Notes; provided that no such
modification or amendment may, without the consent of the holder of each
outstanding Note affected thereby (a) reduce the principal amount outstanding
of, change the stated maturity of, or alter the redemption provisions of, the
Notes, (b) change the currency in which any Notes or any premium or the
accrued interest thereon is payable, (c) reduce the percentage in principal
amount outstanding of Notes whose holders must consent to an amendment,
supplement or waiver or consent to take any action under the Indenture or the
Notes, (d) impair the right to institute suit for the enforcement of any
payment on or with respect to the Notes or Subsidiary Guarantees, (e) modify
the ability to waive defaults or specified covenants, except to increase the
percentage of Notes required to effect a waiver, (f) reduce the rate or change
the time for payment of interest on the Notes, (g) subordinate the Notes or
the Guarantees to any other Indebtedness; (h) modify the terms of or release
any of the Subsidiary Guarantees, except as provided under "Subsidiary
Guarantees" and "Restricted and Unrestricted Subsidiaries," unless in each
case the holders of the particular Notes to be affected consent with respect
thereto, or (i) modify the priority or scope of the Lien created by the
Collateral Documents; provided, however, that any such modification arising in
connection with a Permitted Shared Common Facilities Agreement may be effected
with the consent of the holders of not less than a majority of the aggregate
principal amount of the outstanding Notes.
REGARDING THE TRUSTEE
Fleet National Bank will serve as Trustee under the Indenture.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the Indenture.
Reference is made to the Indenture for the full definition of all such terms,
as well as any other capitalized terms used herein for which no definition is
provided.
"Accounts Pledge Agreement" means the Accounts Pledge Agreement, dated the
date of the Indenture, between the Company and the Collateral Agent, securing
the Secured Obligations and substantially in the form attached to the
Indenture as Exhibit C, as may be amended from time to time as permitted by
the Indenture.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Subsidiary of the Company or that is assumed in
connection with an Asset Acquisition by such Person, but not Indebtedness
incurred in connection with, or in anticipation of, such Person becoming a
Subsidiary of the Company or such acquisition.
"Affiliate" of any Person means any other Person that, directly or
indirectly, controls, is controlled by or is under direct or indirect common
control with, such Person and with respect to any natural Person, any other
immediate family member of such natural Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock or other equity interests, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing; provided that, in any event, any Person
that owns directly or indirectly 10% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will
be deemed to control such corporation or other Person.
"Airplane" means the King Air 200 airplane owned by the Company on the Issue
Date.
"Asset Acquisition" means (a) any capital contribution (including, without
limitation, transfers of cash or other property to others or payments for
property or services for the account or use of others, or otherwise), or
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purchase or acquisition of Capital Stock or other similar ownership or profit
interest, by the Company or any of its Subsidiaries in any other Person, in
either case pursuant to which such Person shall become a Subsidiary of the
Company or any of its Subsidiaries or shall be merged with or into the Company
or any of its Subsidiaries or (b) any acquisition by the Company or any of its
Subsidiaries of the assets of any Person which constitute substantially all of
an operating unit or business of such Person.
"Assets Held for Sale or Development" means (i) the FFC Preferred Stock,
(ii) the Airplane, (iii) the Real Estate Options, (iv) the Cripple Creek Land
and (v) the Discontinued Assets.
"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
(other than an operating lease) relating to assets, the fair market value of
which, determined in the good faith judgment of the Board of Directors, does
not exceed $2 million, assignment, issuance or other disposition (including,
without limitation, by means of a sale-leaseback transaction) by the Company
or any Restricted Subsidiary to any Person (other than the Company or a wholly
owned Restricted Subsidiary), in one transaction or a series of related
transactions, of (a) any Capital Stock of any Restricted Subsidiary or other
similar equity interest or (b) any other property or asset of the Company or
any Restricted Subsidiary (other than (s) Assets Held for Sale or Development,
(t) any Non-Material Assets acquired after the Issue Date, (u) any Hotel
Properties, (v) current assets, as defined in accordance with GAAP, in the
ordinary course of business, (w) damaged, worn out or other obsolete property
in the ordinary course of business if no longer necessary for the proper
conduct of such business, (x) property no longer used or useful in the
ordinary course of business or property replaced with similar property of
similar utility in the ordinary course of business, (y) each other disposition
(or series of related dispositions) that results in Net Cash Proceeds of less
than or equal to $1 million and (z) an Investment permitted under the covenant
described under "Certain Covenants--Limitation on Restricted Payments" or a
disposition made in accordance with the covenant described under "Certain
Covenants--Consolidation, Merger, Conveyance, Transfer or Lease").
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company, to have been duly adopted by the
Board of Directors of the Company, or any duly authorized committee thereof
and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all shares,
interests (including partnership and other equity interests), participations,
rights in, or other equivalents (however designated and whether voting or
nonvoting) of, such Person's capital stock, whether outstanding on the Issue
Date or issued after such date, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purpose of the Indenture, the amount of such obligation at any date of
determination shall be the capitalized amount thereof at such date, determined
in accordance with GAAP.
"Cash Equivalents" means any of the following, to the extent owned by the
Company or any of its Restricted Subsidiaries free and clear of all Liens and
having a maturity of not greater than 270 days from the date of acquisition
(a) any evidence of Indebtedness issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of
America is pledged in support thereof), (b) insured certificates of deposit or
acceptances of any commercial bank that is a member of the Federal Reserve
System, that issues (or the parent of which issues) commercial paper rated as
described in clause (c) below and that has combined capital and surplus and
undivided profits of not less than $500 million, (c) commercial paper issued
by a corporation (except an Affiliate of the Company) organized under the laws
of any state of the United States or the District of Columbia and rated at
least A-1 (or the then equivalent grade) by Standard & Poor's Corporation or
at least Prime-1 (or the then equivalent grade) by Moody's Investors Service,
Inc., and (d) repurchase agreements and reverse repurchase
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agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the United States government or any agency or other
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), provided that the terms of
such repurchase and reverse repurchase agreements comply with the guidelines
set forth in the Federal Financial Agreements of Depository Institutions with
Securities Dealers and Others, as adopted by the Comptroller of the Currency.
"Casino" means a gaming establishment owned, directly or indirectly, by the
Company and any building, restaurant, theater, amusement park or other
entertainment facility, parking or recreational vehicle facilities, retail
shops, land, equipment and other property or asset directly ancillary thereto
and used or to be used in connection therewith, other than a Casino Hotel.
"Casino Hotel" means any hotel or similar hospitality facility, including,
without limitation, a recreational vehicle park or marina serving a Casino,
owned, directly or indirectly, by the Company.
"Casino Improvement" means any capital addition, improvement, extension or
repair to the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier City or the
Isle-Lake Charles.
"Change of Control" means after the Issue Date, an event or series of events
by which:
(i) any "person" or "group" (as such terms are used in Section 13(d) and
14(d) of the Exchange Act) (other than the Permitted Equity Holders) is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person or group shall be deemed to have
"beneficial ownership" of all shares that any such person or group has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of securities
representing the greater of (a) that percentage of the combined voting
power of the Company's outstanding Voting Stock held by Permitted Equity
Holders (including shares as to which the Company or a Permitted Equity
Holder holds an effective proxy to vote) or (b) 35% or more of the combined
voting power of the Company's outstanding Voting Stock, but excluding in
each case from the percentage of voting power held by any group, the voting
power of shares owned by the Permitted Equity Holders who are deemed to be
members of the group provided that such Permitted Equity Holders
beneficially own a majority of the voting power of the Voting Stock held by
such group, and at such time the Permitted Equity Holders together shall
fail to beneficially own, directly or indirectly, securities representing
at least the same percentage of voting power of such Voting Stock as the
percentage "beneficially owned" by such person or group;
(ii) during any period of 24 consecutive months, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new or replacement directors whose election by the Board of Directors,
or whose nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the directors then in office; or
(iii) the Company consolidates with or merges with or into any Person or
conveys, transfers or leases all or substantially all of its assets to any
Person, pursuant to a transaction in which the outstanding Voting Stock of
the Company is changed into or exchanged for cash, securities or other
property (other than any such transaction where the outstanding Voting
Stock of the Company is (a) changed only to the extent necessary to reflect
a change in the jurisdiction of incorporation of the Company or (b) is
exchanged for (x) Voting Stock of the surviving corporation which is not
Disqualified Stock or (y) cash, securities and other property (other than
Capital Stock of the surviving corporation) in an amount which could be
paid by the Company as a Restricted Payment as described under the covenant
"Limitation on Restricted Payments" (and such amount shall be treated as a
Restricted Payment) and no person or group, other than Permitted Equity
Holders (including any Permitted Equity Holders who are part of a group
where such Permitted Equity Holders beneficially own a majority of the
voting power of the Voting Stock held by such group), owns immediately
after such transaction, directly or indirectly, more than 35% of the
combined voting power of the outstanding Voting Stock of the surviving
corporation; or
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(iv) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution other than in a transaction which complies with
the provisions described under "Consolidation, Merger, Conveyance, Transfer
or Lease."
"Collateral" means any assets of the Company, the Subsidiary Guarantors or
any of their respective Restricted Subsidiaries defined as Collateral in any
of the Collateral Documents.
"Collateral Agent" means Fleet National Bank, as collateral agent for itself
and the holders under any of the Collateral Documents, or any successor
collateral agent.
"Collateral Account" means one or more deposit accounts in the name of the
Company or a Subsidiary Guarantor, but under the sole dominion and control of
the Collateral Agent, in which the Company or a Subsidiary Guarantor shall
deposit or shall cause to be deposited Net Cash Proceeds from an Asset Sale or
Event of Loss or Excess Louisiana Cash.
"Collateral Documents" means, collectively, the Accounts Pledge Agreement,
the Company Pledge Agreement, the Subsidiary Pledge Agreement, the Company
Security Agreement, the Subsidiary Security Agreement, the Mortgages, the Ship
Mortgages, the Environmental Indemnity Agreement and any other security
document entered into by the Company or any Subsidiary Guarantor to secure the
Secured Obligations, in each case as amended from time to time as permitted by
the Indenture.
"Company Guarantee" means the guarantee of the Company with respect to the
obligations of Restricted Subsidiaries under their respective Subsidiary
Guarantees.
"Company Pledge Agreement" means the Company Pledge Agreement, dated as of
the date of the Indenture, between the Company and the Collateral Agent,
securing the Secured Obligations of the Company and substantially in the form
attached to the Indenture as Exhibit D, as amended from time to time as
permitted by the Indenture.
"Company Security Agreement" means the Company Security Agreement, dated as
of the date of the Indenture, between the Company and the Trustee, securing
the Company's obligations under the Note Documents and substantially in the
form attached to the Indenture as Exhibit F, as amended from time to time as
permitted by the Indenture.
"Consolidated" refers to the consolidation of accounts in accordance with
GAAP.
"Consolidated Cash Flow" means, for any period, the sum of (a) the
Consolidated Net Income of the Company and its Restricted Subsidiaries for
such period plus (b) the sum of the following items (to the extent deducted in
determining Consolidated Net Income and without duplication): (i) all
Consolidated Interest Expense, (ii) Consolidated Non-cash Charges, (iii)
Consolidated Income Tax Expense, and (iv) any pre-opening expenses.
"Consolidated Coverage Ratio" means the ratio of (a) Consolidated Cash Flow
of the Company and its Restricted Subsidiaries for the period (the "Reference
Period") including the four full fiscal quarters for which financial
statements are available that immediately precede the date of the transaction
or other circumstances giving rise to the need to calculate the Consolidated
Coverage Ratio (the "Transaction Date") to (b) the Consolidated Interest
Expense for such Reference Period (based upon the pro forma amount of
Indebtedness of the Company and its Restricted Subsidiaries outstanding on the
Transaction Date and after giving effect to the transaction in question,
unless otherwise provided in the Indenture). For purposes of this definition,
if the Transaction Date occurs before the date on which the Company's
consolidated financial statements for the four full fiscal quarters after the
Issue Date are first available, Consolidated Cash Flow and Consolidated
Interest Expense shall be calculated, in the case of the Company and its
Restricted Subsidiaries, after giving effect on a pro forma basis as if the
Notes outstanding on the Transaction Date were issued on the first day of such
four full fiscal quarter period. In addition, Consolidated Cash Flow and
Consolidated Interest Expense shall be calculated
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after giving effect on a pro forma basis for the period of such calculation to
(i) the incurrence or retirement of any Indebtedness of the Company and its
Restricted Subsidiaries at any time during the Reference Period, including,
without limitation, the incurrence of the Indebtedness giving rise to the need
to make such calculation (unless otherwise provided in the Indenture), as if
such Indebtedness were incurred or retired on the first day of the Reference
Period; provided that if the Company or any of its Restricted Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the above
clause shall give effect to the incurrence of such guaranteed Indebtedness as
if the Company or such Restricted Subsidiary had directly incurred such
guaranteed Indebtedness and (ii) any Asset Sale, Event of Loss or Asset
Acquisition (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of the Company or any of its
Restricted Subsidiaries (including any Person who becomes a Subsidiary as
result of the Asset Acquisition) incurring Acquired Indebtedness) occurring
during the Reference Period and any retirement of Indebtedness in connection
with such Asset Acquisition, as if such Asset Sale, Event of Loss or Asset
Acquisition and/or retirement occurred on the first day of the Reference
Period, but giving effect to any adjustments set forth in the definition of
"Consolidated Net Income." Furthermore, in calculating Consolidated Interest
Expenses for purposes of this "Consolidated Coverage Ratio," interest on
Indebtedness determined on a fluctuating basis shall be deemed to accrue at
the rate in effect on the Transaction Date for such entire period.
"Consolidated Income Tax Expense" means, as applied to any Person for any
period, federal, state, local and foreign income taxes (including franchise
taxes imposed in lieu of or as additional income tax) of such Person and its
Restricted Subsidiaries for such period, determined in accordance with GAAP;
provided, that for purposes hereof, "income taxes" shall specifically exclude
any taxes paid to or imposed by a Gaming Authority.
"Consolidated Interest Expense" means as applied to any Person for any
period the sum of the following items (without duplication) (i) the aggregate
amount of interest recognized by such Person and its Restricted Subsidiaries
in respect of their Consolidated Indebtedness (including all interest
capitalized by such Person and its Restricted Subsidiaries during such period
and all commissions, discounts and other similar fees and charges owed by such
Person or any of its Restricted Subsidiaries for letters of credit and
bankers' acceptance financing and the net costs associated with Interest Rate
and Currency Protection Obligations of such Person and its Restricted
Subsidiaries, but excluding amortization of deferred financing cost and debt
discount or premium, (ii) the aggregate amount of the interest component of
rentals in respect of Capitalized Lease Obligations recognized by such Person
and its Restricted Subsidiaries, (iii) to the extent any Indebtedness of any
other Person is guaranteed by such Person or any of its Restricted
Subsidiaries, the aggregate amount of interest paid or accrued by such other
Person during such period attributable to any such guaranteed Indebtedness,
(iv) the interest portion of any deferred payment obligation, (v) an amount
equal to 1/3 of the base rental expense (i.e., not any rent expense paid as a
percentage of revenues) attributable to such Person and its Restricted
Subsidiaries and (vi) the amount of dividends payable by such Person and its
Restricted Subsidiaries in respect of Disqualified Stock (other than such
dividends payable to such Restricted Subsidiaries).
"Consolidated Net Income" means, for any period, the aggregate of the
consolidated Net Income (or net loss) of the Company and its Restricted
Subsidiaries (determined in accordance with GAAP), less (to the extent
included in such consolidated Net Income) (a) the Net Income (or net loss) of
any Person (the "other Person") (i) other than a Restricted Subsidiary or (ii)
in which the Company or any of its Restricted Subsidiaries has a joint
interest with a third party (which interest does not cause the Net Income (or
net loss) of such other Person to be consolidated into the Net Income (or net
loss) of the Company and its Restricted Subsidiaries in accordance with GAAP),
except in each such case such Net Income shall be included to the extent of
the amount of cash dividends or other cash distributions in respect of Capital
Stock or other interest owned actually paid (out of funds legally available
therefor) to and received by the Company or its Restricted Subsidiaries, (b)
items (other than the tax benefit of the utilization of net operating loss
carry forwards or alternative minimum tax credits) classified as
extraordinary, (c) except to the extent includable in clause (a) above, the
Net Income (or loss) of any other Person (other than SCGC, LRGP and LRGH, the
Net Income of which will be included for the entire period for which
Consolidated Net Income is being determined) accrued or attributable to any
period before the date on which it becomes a Restricted Subsidiary or is
merged into or consolidated with the Company or any of
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its Restricted Subsidiaries or such other Person's property or Capital Stock
(or a portion thereof) is acquired by the Company or any of its Restricted
Subsidiaries and (d) the Net Income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by such Restricted
Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, law, rule or governmental
regulations applicable to that Restricted Subsidiary or its stockholders;
provided, however, at any such time, Consolidated Net Income does not include
the amount attributable to the one-time charge incurred by the Company in its
third quarter of fiscal 1996.
"Consolidated Net Worth" means, at any date of determination, the sum of (i)
the consolidated equity of the common stockholders of such Person and its
Restricted Subsidiaries on such date plus (ii) the respective amounts reported
on such Person's most recent balance sheet with respect to any series of
preferred stock (other than Disqualified Stock) that by its terms is not
entitled to the payment of dividends unless such dividends may be declared and
paid only out of net earnings in respect to the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets
of a going concern business made within 12 months after the acquisition of
such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a Restricted Subsidiary of such Person, (y)
all investments in Persons that are not Restricted Subsidiaries and (z) all
unamortized debt discount and expense and unamortized deferred charges, all of
the foregoing determined in accordance with GAAP.
"Consolidated Non-cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its Restricted Subsidiaries on a Consolidated basis for such period, as
determined in accordance with GAAP (excluding any non-cash charge which
requires an accrual or reserve for cash charges for any future period).
"Cripple Creek Land" means the real estate owned or leased by the Company in
Cripple Creek, Colorado.
"Current Market Value" means, with reference to the Notes, on any date the
arithmetic mean of the Quoted Price of the Notes for the 20 consecutive
trading days commencing 30 days before such date.
"Default" means any Event of Default or an event that would constitute an
Event of Default but for the requirement that notice be given or time elapse
or both.
"Discontinued Assets" means the following assets held for sale by the
Company as of the Issue Date: (i) the Emerald Lady riverboat and the Diamond
Lady riverboat, (ii) the Lucky Seven barge and two other barges (vessel
numbers 524872 and 511360), (iii) the Illinois Merchant tug boat, the Honey
Bear tug boat and the E.F. Barber tug boat and (iv) gaming equipment held for
sale.
"Disqualified Stock" means, with respect to any Person, any Capital Stock or
other similar ownership or profit interest that, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is exchangeable for
Indebtedness, or is redeemable at the option of the holder thereof, in whole
or in part, on or before the Maturity Date of the Notes.
"Environmental Indemnity Agreement" means the Environmental Indemnity
Agreement, dated as of the date of the Indenture, among the Company, the
Subsidiary Guarantors and the Collateral Agent, substantially in the form
attached to the Indenture as Exhibit K.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Loss" means, with respect to any property or asset (tangible or
intangible, real or personal) that has a Fair Market Value of $2 million or
more, any of the following (i) any loss, destruction or damage of such
property or asset; (ii) any institution of any proceedings for the
condemnation or seizure of such property or
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asset or for the exercise of any right of eminent domain or navigational
servitude or (iii) any actual condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, of such property or asset, or
confiscation of such property or asset or the requisition of the use of such
property or asset.
"Excess Louisiana Cash" means the sum of (a) Isle-Bossier City Cash Flow, in
the event of an adverse vote on or about November 5, 1996 with respect to the
conduct of riverboat gaming in Bossier Parish, Louisiana, and (b) Isle-Lake
Charles Cash Flow, in the event of an adverse vote with respect to the conduct
of riverboat gaming in Calcasieu Parish, Louisiana.
"Excess Sale/Loss Proceeds" and "Excess Sale/Loss Proceeds Offer" have the
meanings set forth in the covenant described under "Certain Covenants--
Limitation on Asset Sales and Events of Loss."
"Fair Market Value" or "fair value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither
of whom is under undue pressure or compulsion to complete the transaction.
Unless otherwise specified by the Indenture, Fair Market Value shall be
determined by the Board of Directors of the Company acting in good faith and
shall be evidenced by a Board Resolution delivered to the Trustee.
"FFC Preferred Stock" means the 23,681 shares of preferred stock, $100 par
value, of Freedom Financial Corporation owned by the Company as of the Issue
Date.
"FF&E" means furniture, fixtures and equipment used in the ordinary course
of business in the operation of a Permitted Line of Business.
"FF&E Financing" means Indebtedness, the proceeds of which will be used
solely to finance or refinance the acquisition or lease by the Company or a
Restricted Subsidiary of FF&E.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable from time to
time.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal or foreign government, any state, province or any city or other
political subdivision or otherwise and whether now or hereafter in existence,
or any officer or official thereof; with authority to regulate any gaming
operation (or proposed gaming operation) owned, managed, or operated by the
Company or any of its Subsidiaries.
"Goldstein Family Equity Purchase" means the sale to, and purchase by,
Bernard Goldstein, the Chairman and Chief Executive Officer of the Company,
and three members of his family, on or about March 11, 1996, of an aggregate
of 1,020,940 shares of the Company's common stock at a price of $5.875 per
share.
"GPRI" means Grand Palais Riverboat Inc., a Louisiana corporation.
"Grand Palais" means the Grand Palais riverboat owned on the Issue Date by
GPRI.
"Guarantees" means the Subsidiary Guarantees and the Company Guarantee.
"Hotel Properties" means the following real and personal property: (i)
approximately 6 acres of land owned by the Company as of the Issue Date
adjacent to the Isle-Bossier City, (ii) approximately 9 acres of land owned by
the U.S. Department of Housing and Urban Development as of the Issue Date east
of the Isle-Bossier City, in the event such property is acquired by the
Company, (iii) approximately 7 acres of land leased by the Company as of the
Issue Date adjacent to the Isle-Biloxi, (iv) approximately 2.7 acres of land
owned by the Company as of the Issue Date and approximately 5.75 acres of land
leased by the Company as of the Issue Date located north of the Isle-Lake
Charles and (v) the hotel and approximately 10.5 acres of land owned by LRGH
as of the Issue Date in Bossier City, Louisiana.
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"Indebtedness" of any Person means (a) any liability, contingent or
otherwise, of such Person (i) 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), (ii) evidenced by a note, bond, debenture or similar
instrument, letters of credit, acceptances or other similar facilities (other
than a trade payable or a current liability incurred in the ordinary course of
business) or (iii) for the payment of money relating to a Capitalized Lease
Obligation or other obligation relating to the deferred purchase price of
property or services (including a purchase money obligation but not including
any docking fees payable to Louisiana Downs, Inc. or guarantees thereof), (b)
any liability of others of the kind described in the preceding clause (a)
which such Person has guaranteed or which is otherwise its legal liability,
including, without limitation, (x) to pay or purchase such liability, (y) to
supply funds to or in any other manner invest in the debtor (including an
agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) and (z) to purchase, sell
or lease (as lessee or lessor) property or to purchase or sell services,
primarily for the purpose of enabling a debtor to make a payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (c)
any obligation secured by a Lien to which the property or assets of such
Person are subject, whether or not the obligations secured thereby shall have
been assumed by or shall otherwise be such Person's legal liability, (d) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Capital Stock of or other ownership or
profit interest in such Person or any of its Affiliates or any warrants,
rights or options to acquire such Capital Stock, valued, in the case of
Disqualified Stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (e) all Interest Rate and
Currency Protection Obligations and (f) any and all deferrals, renewals,
extensions and refundings of; or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses.
Notwithstanding the foregoing, Permitted Ancillary Investments shall be deemed
not to constitute Indebtedness.
"Independent", when used with respect to any Person, means such other Person
who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Company or in any
Affiliate of the Company and (c) is not an officer, employee, promoter,
underwriter, trustee, partner or person performing similar functions for the
Company or a spouse, family member or other relative of any such Person.
Whenever it is provided in the Indenture that any Independent Person's opinion
or certificate shall be furnished to the Trustee, such Person shall be
appointed by the Company and reasonably acceptable to the Trustee in the
exercise of reasonable care, and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning thereof.
"Interest Rate and Currency Protection Obligations" means the obligations of
any Person pursuant to any interest rate swap, cap or collar agreement,
interest rate future or option contract, currency swap agreement, currency
future or option contract and other similar agreement designed to hedge
against fluctuations in interest rates or foreign exchange rates.
"Investment" in any Person means any direct or indirect loan, advance,
guarantee or other extension of credit or capital contribution to (including,
without limitation, transfers of cash or other property to others or payments
for property or services for the account or use of others, or otherwise), or
purchase or acquisition of Capital Stock, warrants, rights, options, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by,
such Person or Indebtedness of any other Person secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness. The amount of any
Investment shall be the original cost of such Investment, plus the cost of all
additions thereto, and minus the amount of any portion of such Investment
repaid to the Person making such Investment in cash as a repayment of
principal or a return of capital, as the case may be, but without any other
adjustments for increases or decreases in value, or write-ups, write-downs or
writeoffs with respect to such Investment. In determining the amount of any
Investment involving a transfer of any property other than cash, such property
shall be valued at its fair value at the time of such transfer, as determined
in good faith by the Board of Directors of the person making such transfer,
whose determination will be conclusive absent manifest error.
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"Isle-Biloxi" means the Isle of Capri Casino located in Biloxi, Mississippi.
"Isle-Biloxi Hotel" means the 367 room hotel facility owned and operated by
the Company at the Isle-Biloxi on the Issue Date.
"Isle-Bossier City" means the Isle of Capri Casino located in Bossier City,
Louisiana.
"Isle-Bossier City Cash Flow" means the sum of (a) that portion of
Consolidated Cash Flow of the Company attributable to the Isle-Bossier City
plus (b) the amount of management fees paid by the Isle-Bossier City to
Affiliates of the Company in excess of $2.5 million in any one year minus (c)
federal, state and local taxes attributable to the Isle-Bossier City minus (d)
required principal and interest payments on Indebtedness incurred by the owner
of and to directly benefit the Isle-Bossier City and owed to Persons other
than Affiliates; provided, that each such amount shall be calculated from and
after the period beginning on November 6, 1996.
"Isle-Lake Charles" means the Isle of Capri Casino located in Lake Charles,
Louisiana (including the Grand Palais).
"Isle-Lake Charles Cash Flow" means the sum of (a) that portion of
Consolidated Cash Flow of the Company attributable to the Isle-Lake Charles
plus (b) the amount of management fees paid by the Isle-Lake Charles to
Affiliates of the Company in excess of $2.5 million in any one year minus (c)
federal, state and local taxes attributable to the Isle-Lake Charles minus (d)
required principal and interest payments on Indebtedness incurred by the owner
of and to directly benefit the Isle-Lake Charles and owed to Persons other
than Affiliates; provided, that each such amount shall be calculated from and
after the period beginning on November 6, 1996.
"Isle-Vicksburg" means the Isle of Capri Casino located in Vicksburg,
Mississippi.
"Lien" means any mortgage, lien (statutory or other), pledge, security
interest, encumbrance, claim, hypothecation, assignment for security, deposit
arrangement or preference or other security agreement of any
kind or nature whatsoever. For purposes of the Indenture, a Person shall be
deemed to own subject to a Lien any property which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
Person.
"LRGH" means L.R.G. Hotels, a Louisiana partnership.
"LRGP" means Louisiana Riverboat Gaming Partnership, a Louisiana
partnership.
"Marketable Securities" means Cash Equivalents or any fund investing
primarily in Cash Equivalents.
"Maturity" or "Maturity Date" when used with respect to any note, means the
date specified in such note as the fixed date on which the last installment of
principal of such note is due and payable.
"Mortgages" means mortgages or deeds of trust and related assignments of
rents between the Company or any Subsidiary Guarantor, in each case if it owns
or leases any significant real estate asset (initially the Isle-Biloxi, the
Isle-Biloxi Hotel, the Isle-Vicksburg, the Isle-Bossier City, the Isle-Lake
Charles and Pompano Park) and the Collateral Agent, granting a Lien on such
real estate securing the Secured Obligations of the Company or such Subsidiary
Guarantor, as the case may be, and substantially in the form attached to the
Indenture as Exhibit H, as amended from time to time as permitted by the
Indenture.
"Net Cash Proceeds" means, with respect to any Asset Sale, Event of Loss,
issuance or sale by the Company of its Capital Stock or incurrence of
Indebtedness, as the case may be, the proceeds thereof in the form of cash or
Cash Equivalents received by the Company or any of its Restricted Subsidiaries
(whether as initial consideration, through the payment or disposition of
deferred compensation or the release of reserves), after deducting therefrom
(without duplication) (a) reasonable and customary brokerage commissions,
underwriting fees and discounts, legal fees, finders fees and other similar
fees and expenses incurred in
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connection with such Asset Sale or Event of Loss; (b) provisions for all taxes
payable as a result of such Asset Sale or Event of Loss, (c) payments made to
retire Indebtedness (other than payments on the Notes) secured by the assets
subject to such Asset Sale or Event of Loss to the extent required pursuant to
the terms of such Indebtedness and (d) appropriate amounts to be provided by
the Company or any of its Restricted Subsidiaries, as the case may be, as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale or Event of Loss and retained by the Company or any of its
Restricted Subsidiaries, as the case may be, after such Asset Sale or Event of
Loss, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale or Event
of Loss, in each case to the extent, but only to the extent, that the amounts
so deducted are, at the time of receipt of such cash or Cash Equivalents,
actually paid to a Person that is not an Affiliate of the Company or, in the
case of reserves, are actually established and, in each case, are properly
attributable to such Asset Sale or Event of Loss.
"Net Income" means, with respect to any Person for any period, the net
income (or loss) of such Person determined in accordance with GAAP.
"Non-Material Assets" means assets or a series of related assets (i) not
necessary for or used in the conduct of the Company's gaming business and (ii)
having a fair value of not more than $1 million.
"Non-Recourse Indebtedness" means Indebtedness (a) as to which none of the
Company or any of its Restricted Subsidiaries provides any credit support or
is directly or indirectly liable for the payment of principal or interest
thereof and a default with respect to which would not entitle any party to
cause any other Indebtedness of the Company or a Restricted Subsidiary to be
accelerated or (b) incurred by the Company or a Restricted Subsidiary to
develop, construct and open Preferred Hotel Facilities or to purchase one or
more assets from the lending source, provided that the lender's only remedy
against the obligor in the event of a default with respect to such
Indebtedness, whether as a result of the failure to pay principal or interest
when due or any other reason, is limited to foreclosure on such Preferred
Hotel Facilities or repossession of such assets purchased.
"Permitted Equity Holders" means Bernard Goldstein and his three adult sons.
"Permitted Ancillary Investment" means any agreement, undertaking or other
arrangement to rent or otherwise pay for up to, and including, 40% of the
rooms available to the public for rent at or below the rates normally charged
to the public for such rooms in any Casino Hotel and to obtain a preference
for securing accommodations at such Casino Hotel.
"Permitted Investments" means (i) Investments in Marketable Securities, (ii)
loans or advances to employees in the ordinary course of business not to
exceed $250,000 in any fiscal year of the Company or $1 million in the
aggregate, (iii) Investments in a Permitted Line of Business by the Company or
a Restricted Subsidiary made in one or more persons in an aggregate amount not
to exceed the sum of $10 million plus the net proceeds received from the
Rights Offering and (iv) Permitted Ancillary Investments.
"Permitted Liens" means:
(i) Liens on property acquired by the Company or any Restricted
Subsidiary (including an indirect acquisition of property by way of a
merger of a Person with or into the Company or any Restricted Subsidiary or
the acquisition of a Person), provided that such Liens were in existence
prior to the contemplation of such acquisition, merger or consolidation,
and were not created in connection therewith or in anticipation thereof,
and provided that such Liens do not extend to any additional property or
assets of the Company or any Restricted Subsidiary;
(ii) statutory Liens (other than those arising under ERISA) to secure the
performance of obligations, surety or appeal bonds, performance bonds or
other obligations of a like nature incurred in the ordinary course of
business (exclusive of obligations in respect of the payment of borrowed
money), or for taxes, assessments or governmental charges or claims,
provided that in each case the obligations are not yet
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delinquent or are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and any reserve or other
adequate provision as shall be required in conformity with GAAP shall have
been made therefor;
(iii) leases or subleases granted to others not interfering in any
material respect with the business of the Company or any Restricted
Subsidiary;
(iv) any charter of a vessel, provided that (i) in the good faith
judgment of the Board of Directors of the Company such vessel is not
necessary for the conduct of the business of the Company or any of its
Restricted Subsidiaries as conducted immediately prior thereto; (ii) the
terms of the charter are commercially reasonable and represent the Fair
Market Value of the charter; and (iii) the Person chartering the assets
agrees to maintain the Vessel and evidences such agreement by delivering
such an undertaking to the Trustee;
(v) with respect to the property involved, easements, rights-of-way,
navigational servitudes, restrictions, minor defects or irregularities in
title and other similar charges or encumbrances which do not interfere in
any material respect with the ordinary conduct of business of the Company
and its Subsidiaries as now conducted or as contemplated herein;
(vi) Liens in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other types of social security
(other than those arising under ERISA);
(vii) any interest or title of a lessor in property subject to any
Capitalized Lease Obligation or an operating lease;
(viii) Liens arising from the filing of Uniform Commercial Code financing
statements with respect to leases;
(ix) Liens arising from any final judgment or order not constituting an
Event of Default;
(x) Liens on documents or property under or in connection with letters of
credit in the ordinary course of business, if and to the extent that the
related Indebtedness is permitted under clause ~(f) of "Limitation on
Indebtedness"; and
(xi) Liens arising out of conditional sale, title retention, consignment
or similar arrangements for the sale of goods in the ordinary course of
business.
"Permitted Line of Business" means, with respect to any Person, any casino
gaming business of such Person or any business that is related to, ancillary
or supportive of, connected with or arising out of the gaming business of such
Person (including, without limitation, developing and operating lodging,
dining, amusement, sports or entertainment facilities, transportation services
or other related activities or enterprises and any additions or improvements
thereto).
"Permitted Shared Common Facilities" means real and personal property
serving both a Casino and a Casino Hotel under a Permitted Shared Common
Facilities Agreement.
"Permitted Shared Common Facilities Agreement" means an agreement,
undertaking or arrangement providing for real or personal property to serve
both a Casino and a Casino Hotel substantially similar (with appropriate
changes to reflect the needs of the relevant facilities) to the Declaration of
Shared Facilities Agreement for the Isle of Capri Casino and Hotel, Biloxi,
Mississippi, dated April 26, 1995; provided, however, in no event shall any
such Permitted Shared Common Facilities Agreement grant any party thereto any
rights to foreclose on any Collateral.
"Permitted Related Investment" means the acquisition of property or assets
by a Person to be used in connection with a Permitted Line of Business of such
Person.
"Permitted Vessel Liens" means a Lien on a vessel to secure FF&E Financing
or Capitalized Lease Obligations where the holder or holders (or an agent,
trustee or other representative for such holder or holders) are parties to an
intercreditor agreement with the Trustee substantially similar to that
affecting the Grand Palais
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on the Issue Date under which such holder or holders (or such representative)
(i) agrees to release such Lien upon satisfaction of such FF&E Financing, (ii)
agrees to release such Lien upon payment (or promise of payment) to such
holder or holders (or such representative) of that portion of the proceeds of
the sale of such vessel attributable to the related FF&E and (iii)
acknowledges that such Lien does not create rights on the hull and other
equipment constituting such vessel (other than the related FF&E).
"Person" means an individual, partnership, corporation (including a business
trust), joint stock company, limited liability company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"Plans" means all drawings, plans and specifications prepared by or on
behalf of the Company or any of its Subsidiaries, as the same may be amended
or supplemented from time to time, and, if required by applicable law,
submitted to and approved by the building or other relevant department, that
describe and show a Casino and the labor and materials necessary for
construction thereof.
"Pompano Park" means the real and personal property comprising the Pompano
Park harness racing track and training facilities located in Pompano Beach,
Florida.
"Preferred Hotel Facilities" means new or expanded Casino Hotels located at
or adjacent to the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier City, the
Isle-Lake Charles or located in Cripple Creek, Colorado.
"Project Costs" means, with respect to a Casino Improvement or construction
or development of Preferred Hotel Facilities, the aggregate costs required to
complete such Casino Improvement or construction or development of Preferred
Hotel Facilities as well as the f~urnishing and equipping thereof in
accordance with the Plans therefor and applicable legal requirements as set
forth in a statement submitted to, and receipted for by, the Trustee, setting
forth in reasonable detail all amounts theretofore expended and any
anticipated costs and expenses estimated to be incurred and reserves to be
established in connection with the construction and development of such Casino
Improvement or construction or development of Preferred Hotel Facilities,
including direct costs related thereto such as construction management,
architectural, engineering and interior design fees, site work, utility
installations and hook-up fees, construction permits, certificates and bonds,
land acquisition costs and the cost of furniture, fixtures, furnishings,
machinery and equipment, but excluding the following: principal or interest
payments on any Indebtedness (other than interest that is required to be
capitalized in accordance with GAAP, which shall be included in determining
Project Costs), or costs related to the operation of Preferred Hotel
Facilities including, but not limited to, non-construction supplies and pre-
operating payroll.
"Qualified Public Equity Offering" means a firm commitment underwritten
public offering of Common Stock of the Company for which the Company receives
net proceeds of at least $30 million, and after which the Common Stock is
traded on a national securities exchange or quoted on the Nasdaq National
Market.
"Quoted Price" means, for any day, the last reported sale price regular way
or, if no such reported sale takes place such day, the average of the closing
bid and asked prices regular way for such day, in either case on the principal
national securities exchange on which the Notes are listed or admitted to
trading, or if the Notes are not listed or admitted to trading on any national
securities exchange, but are traded in the over-the-counter market, the
closing sale price of the Notes or, in case no sale is publicly reported, the
average of the closing bid and asked prices, as furnished by two members of
the National Association of Securities Dealers, Inc. selected from time to
time by the Company for that purpose.
"Real Estate Options" means (i) all options held by the Company, directly or
indirectly, at the Issue Date and (ii) all options acquired by the Company,
directly or indirectly, after the Issue Date for an amount, in each case, not
exceeding $1.0 million, to purchase or lease land.
"Restricted Payment" means any of (a) the declaration or payment of any
dividend or any other distribution on Capital Stock of the Company or any
Subsidiary or any payment made to the direct or indirect holders (in
86
<PAGE>
their capacities as such) of Capital Stock of the Company or any Subsidiary
(other than (i) dividends or distributions payable solely in Capital Stock
(other than Disqualified Stock) otherwise permitted by the Indenture and (ii)
in the case of a Subsidiary, dividends or distributions payable to the Company
or to a Restricted Subsidiary of the Company); (b) the purchase, defeasance,
redemption or other acquisition or retirement for value of any Capital Stock
of the Company or any Subsidiary (other than Capital Stock of such Subsidiary
held by the Company or any of its Restricted Subsidiaries); (c) the making of
any principal payment on, or the purchase, defeasance, repurchase, redemption
or other acquisition or retirement for value, before any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of any Indebtedness
which is subordinated in any manner in right of payment to the Notes (other
than Indebtedness acquired in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within
one year of the date of acquisition); and (d) the making of any Investment or
guarantee of any Investment by the Company or any Subsidiary in any Person
other than (x) in a Person that would be, directly or indirectly, a Subsidiary
80% or more of the Capital Stock of which is owned by the Company, directly or
indirectly, immediately after giving effect to such Investment, or (y) under a
plan of reorganization or similar proceeding under applicable bankruptcy law
or in connection with a workout involving creditors of such Person in exchange
for Indebtedness owing by such Person that did not violate the limitations set
forth under "Limitations on Restricted Payments."
"Restricted Subsidiary" means (a) any Subsidiary 80% or more of the Capital
Stock of which is owned by the Company, directly or indirectly, that exists on
the Issue Date and (b) any other Subsidiary, 80% or more of the Capital Stock
of which is owned by the Company, directly or indirectly, that the Company has
not designated as an Unrestricted Subsidiary or has redesignated a Restricted
Subsidiary.
"Rights Offering" means the issuance by the Company to certain of its
stockholders of rights to purchase, at the same price as sold pursuant to the
Goldstein Family Equity Purchase, up to 4,296,085 shares of the Company's
common stock.
"SCGC" means St. Charles Gaming Company, Inc., a Louisiana corporation.
"Secured Obligations" has the meaning specified in the Collateral Documents.
"Ship Mortgages" means the preferred ship mortgages between the Company or
any Restricted Subsidiary Guarantor, in each case if it owns or leases any
Vessel (initially, the Isle-Biloxi, Isle-Vicksburg, Isle-Bossier City and the
Isle-Lake Charles (including the Grand Palais)) and the Collateral Agent,
creating a Lien on such Vessel, securing the Secured Obligations of the
Company or such Subsidiary Guarantor, as the case may be, and substantially in
the form attached to the Indenture as Exhibit I, as amended from time to time
as permitted by the Indenture.
"Significant Restricted Subsidiary" means any Restricted Subsidiary (i) the
assets of which (after intercompany eliminations) exceed 5% of the assets of
the Company and its consolidated Subsidiaries or (ii) the income from
continuing operations of which (before income taxes, extraordinary items and
intercompany management or similar fees payable by such Restricted Subsidiary)
exceeds 5% of such income of the Company and its consolidated Subsidiaries or
(iii) that holds a gaming license to conduct lawful gaming operations at any
Casino in any jurisdiction.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the principal of such security is due
and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof).
"Subordinated Indebtedness" means Indebtedness that is subordinated in right
of payment to the Notes in all respects, matures at a date later than the
maturity date of the Notes and has an average life longer than that applicable
to the Notes.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of (a) the
issued and outstanding Capital Stock having ordinary voting power to elect
87
<PAGE>
a majority of the Board of Directors of such corporation (irrespective of
whether at the time Capital Stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership
or joint venture or (c) the beneficial interest in such trust or estate is at
the time directly or indirectly owned or controlled by such Person.
"Subsidiary Guarantees" means the guarantees of the Subsidiary Guarantors
with respect to the Company's obligations under the Notes and the Indenture,
in the forms attached as Exhibits B-1 and B-2 to the Indenture.
"Subsidiary Guarantors" means each existing and future Significant
Restricted Subsidiary of the Company.
"Subsidiary Pledge Agreement" means the Subsidiary Pledge Agreement, dated
as of the date of the Indenture, among the Subsidiary Guarantors and the
Collateral Agent, securing the Secured Obligations of the Subsidiary
Guarantors and substantially in the form attached to the Indenture as Exhibit
E, as amended from time to time as permitted by the Indenture.
"Subsidiary Security Agreement" means the Subsidiary Security Agreement,
dated as of the date of the Indenture, among the Subsidiary Guarantors and the
Collateral Agent, securing the Secured Obligations of the Subsidiary
Guarantors and substantially in the form attached to the Indenture as Exhibit
G, as amended from time to time as permitted by the Indenture.
"United States Government Obligations" means, securities which are (i)
direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America.
"Unrestricted Subsidiary" means any Subsidiary of the Company that (i) is
not a Wholly Owned Subsidiary, (ii) the Company has designated, pursuant to
provisions described under "Restricted and Unrestricted Subsidiaries," as an
Unrestricted Subsidiary and that has not been redesignated as a Restricted
Subsidiary pursuant to such paragraph, and (iii) is a Subsidiary of an
Unrestricted Subsidiary.
"Vessel" means any riverboat or barge, whether now owned or hereafter
acquired by the Company or any Restricted Subsidiary, useful for gaming,
administrative, entertainment or any other purpose whatsoever.
"Voting Stock" of any Person means~ Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only as
long as no senior class of securities has such voting power by reason of any
contingency.
88
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the purchase agreement (the
"Purchase Agreement"), among the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Brothers Inc, Nomura Securities International,
Inc. and Deutsche Morgan Grenfell/C. J. Lawrence Inc. (the "Underwriters"),
the Company has agreed to sell to the Underwriters, and the Underwriters have
severally agreed to purchase from the Company, the aggregate principal amount
of Notes set forth opposite its name below. The Purchase Agreement provides
that the obligations of the Underwriters are subject to certain conditions
precedent and that the Underwriters will be obligated to purchase all of the
Notes if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT
------------ ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................
Salomon Brothers Inc........................................
Nomura Securities International, Inc........................
Deutsche Morgan Grenfell/C. J. Lawrence Inc.................
------------
Total.................................................. $300,000,000
============
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of % of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of % of the principal amount of the Notes to certain other dealers. After
the initial public offering of the Notes, the public offering price,
concession and discount may be changed. In connection with a prior uncompleted
offering, the Company advanced Salomon Brothers Inc $255,000 for out-of-pocket
expenses, which amount will be credited against and reduce the amount of the
underwriting discount payable to the Underwriters in connection with the
Offering, and reimbursed Salomon Brothers Inc approximately $48,000 for out-
of-pocket expenses incurred on behalf of the Company in connection with
financial advisory services unrelated to the prior uncompleted offering. Until
June 30, 1997, Salomon Brothers Inc has been granted rights to participate as
co-manager in certain offerings of securities by the Company. In addition,
until the expiration of 12 months from the closing of the Offering, Nomura
Securities International, Inc. has been granted rights to participate as a co-
manager in certain offerings of debt securities by the Company.
There is no public market for the Notes and the Company does not intend to
apply for listing of the Notes on any national securities exchange or for
quotation of the Notes on the Nasdaq Stock Market. The Company has been
advised by the Underwriters that they presently intend to make a market in the
Notes after the consummation of the Offering contemplated hereby, although
they are under no obligation to do so and may discontinue any market-making
activities at any time without any notice. No assurance can be given, however,
as to the liquidity of the trading market for the Notes or that an active
public market for the Notes will develop. If an active public market for the
Notes does not develop, the market price and liquidity of the Notes may be
adversely affected.
The Purchase Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or contribute to payments the Underwriters may be required to
make in respect thereof.
In June 1995, an affiliate of Nomura Securities International, Inc. ("NSI")
purchased $38.4 million of increasing rate notes from an affiliate of the
Company in connection with which NSI and such affiliate received customary
compensation. Under the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD"), when more than 10% of the proceeds of a
public offering of debt securities are to be paid to members of the NASD or
affiliates thereof, the yield at which the debt securities are distributed to
the public must be no lower than that recommended by a "qualified independent
underwriter" meeting certain standards
89
<PAGE>
specified by the NASD. The affiliate of NSI will receive more than 10% of the
net proceeds from the Offering as a result of the use of a portion of the net
proceeds of the Offering to repay the outstanding increasing rate notes. See
"Use of Proceeds." Accordingly, Merrill Lynch, Pierce, Fenner & Smith
Incorporated is acting as a qualified independent underwriter in connection
with the Offering and has conducted due diligence in connection with its
responsibilities as a qualified independent underwriter. The yield on the
Notes, when sold at the initial public offering price set forth on the cover
of this Prospectus, is no lower than that recommended by Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
LEGAL MATTERS
The validity of the Notes being offered hereby will be passed upon for the
Company by Mayer, Brown & Platt, Chicago, Illinois. Certain legal matters
relating to the Offering will be passed upon for the Underwriters by Hughes
Hubbard & Reed LLP, Los Angeles, California.
EXPERTS
The consolidated financial statements of the Company and the financial
statements of LRGP at April 30, 1996 and 1995 and for each of the three years
in the period ended April 30, 1996 appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein,
and are included in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
The balance sheets of St. Charles Gaming Company, Inc. as of April 30, 1995
and 1996, the statements of operations, stockholders' equity, and cash flows
for the period from June 25, 1993 (acquisition date) to April 30, 1994 and for
the years ended April 30, 1995 and 1996 included in this prospectus, the
balance sheets of St. Charles Gaming Company, Inc. as of December 31, 1995,
and April 30, 1995, the statements of operations, stockholder's equity, and
cash flows for the eight months ended December 31, 1995 and the year ended
April 30, 1995, the balance sheets of St. Charles Gaming Company, Inc. as of
April 30, 1995 and 1994, and the statements of operations, stockholder's
equity, and cash flows for the year ended April 30, 1995 and the period from
June 25, 1993 (acquisition date) to April 30, 1994, appearing in the Company's
Current Report on Form 8-K/A dated June 4, 1996 and amended on June 28, 1996,
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the reports of Coopers & Lybrand, L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy material and other information concerning the Company can be inspected
and copied at the office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its regional offices, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates.
The Guarantors do not expect that they will be required to file separate
reports with the Commission pursuant to Section 13(a) or 15(d) of the Exchange
Act. In this regard, the Guarantors will not make available separate annual
reports to security holders.
The Company and the Guarantors have filed with the Commission a registration
statement on Form S-3 (together with all amendments and exhibits, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Notes offered hereby. This prospectus
("Prospectus"),
90
<PAGE>
which constitutes a part of the Registration Statement, does not contain all
of the information set forth in the Registration Statement and the exhibits
and schedules thereto, certain items of which are contained in exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. Statements made in this Prospectus as to the content of any
contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to the
Registration Statement, which may be inspected and copied in the manner and at
the sources described above.
INCORPORATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated herein by reference (File No. 0-20030):
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 1996.
(2) The Company's Current Report on Form 8-K, dated May 17, 1996 (as
amended by amendment thereto dated June 4, 1996 and June 28, 1996) (Date of
earliest event reported: May 3, 1996).
(3) The Company's Current Report on Form 8-K, dated July 3, 1996 (Date of
earliest event reported: July 3, 1996).
(4) The Company's Current Report on Form 8-K, dated July 24, 1996 (Date
of earliest event reported: July 12, 1996).
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering made hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein will be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is, or is deemed to be, incorporated by reference herein modifies
or supersedes any such statement. Any such statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of Common Stock, to whom this Prospectus is delivered, on the
request of such person, a copy of any of the foregoing documents incorporated
herein by reference (other than the exhibits to such documents unless such
exhibits are specifically incorporated by reference into such documents).
Written or telephone requests should be directed to Casino America, Inc. at
its principal executive offices, 711 Washington Loop, Biloxi, Mississippi
39530, Attention: Chief Financial Officer (telephone number (601) 436-7000).
91
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CASINO AMERICA, INC.
Report of Independent Auditors........................................... F-1
Consolidated Balance Sheets, April 30, 1995 and 1996..................... F-2
Consolidated Statements of Income, Years ended April 30, 1994, 1995 and
1996.................................................................... F-4
Consolidated Statements of Stockholders' Equity, Years ended April 30,
1994, 1995 and 1996..................................................... F-5
Consolidated Statements of Cash Flows, Years ended April 30, 1994, 1995
and 1996................................................................ F-6
Notes to Consolidated Financial Statements............................... F-7
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
Report of Independent Auditors........................................... F-17
Balance Sheets, April 30, 1995 and 1996.................................. F-18
Statements of Operations, Years ended April 30, 1994, 1995 and 1996...... F-20
Statements of Partners' Capital (Deficit), Years ended April 30, 1994,
1995 and 1996........................................................... F-21
Statements of Cash Flows, Years ended April 30, 1994, 1995 and 1996...... F-22
Notes to Financial Statements............................................ F-23
ST. CHARLES GAMING COMPANY, INC.
Report of Independent Auditors........................................... F-29
Balance Sheets, April 30, 1995 and 1996.................................. F-30
Statements of Operations, Period from June 25, 1993 (acquisition date) to
April 30, 1994, Years ended April 30, 1995 and 1996..................... F-32
Statements of Stockholders' Equity (Deficit), Period from June 25, 1993
(acquisition date) to April 30, 1994, Years ended April 30, 1995 and
1996.................................................................... F-33
Statements of Cash Flows, Period from June 25, 1993 (acquisition date) to
April 30, 1994, Years ended April 30, 1995 and 1996..................... F-34
Notes to Financial Statements............................................ F-35
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Casino America, Inc.
We have audited the accompanying consolidated balance sheets of Casino
America, Inc. as of April 30, 1995 and 1996, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
three years in the period ended April 30, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Casino
America, Inc. at April 30, 1995 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
April 30, 1996, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 3, 1996
F-1
<PAGE>
CASINO AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30
-------------------------
ASSETS 1995 1996
------ ------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 18,997,000 $ 18,585,000
Accounts receivable:
Related parties.................................. 2,409,000 3,171,000
Other............................................ 825,000 1,764,000
Income tax receivable.............................. 1,189,000 --
Deferred income taxes.............................. -- 1,001,000
Prepaid expenses and other assets.................. 1,941,000 2,858,000
------------ ------------
Total current assets........................... 25,361,000 27,379,000
Property and equipment--Net.......................... 133,485,000 129,306,000
Other assets:
Investment in and advances to joint ventures....... 20,861,000 34,281,000
Notes receivable--Related party.................... 4,700,000 4,700,000
Other investments.................................. 2,250,000 2,250,000
Property held for development or sale.............. 1,398,000 15,840,000
Restricted cash.................................... 12,171,000 --
Berthing, concession, and leasehold rights, net of
accumulated
amortization of $896,000 and $1,209,000,
respectively...................................... 5,373,000 5,060,000
Deferred financing costs, net of accumulated
amortization of $682,000 and $1,229,000,
respectively...................................... 4,089,000 4,327,000
Prepaid expenses................................... 955,000 743,000
Deposits and other................................. 1,256,000 2,588,000
------------ ------------
53,053,000 69,789,000
------------ ------------
Total assets................................... $211,899,000 $226,474,000
============ ============
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
CASINO AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30
-------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1996
------------------------------------ ------------ ------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt............... $ 6,793,000 $ 8,884,000
Accounts payable--Trade............................ 8,369,000 6,169,000
Accrued liabilities:
Interest......................................... 5,631,000 5,802,000
Payroll and payroll related...................... 5,670,000 6,333,000
Property and other taxes......................... 1,207,000 6,880,000
Progressive jackpots and slot club awards........ 2,232,000 1,851,000
Deferred income taxes............................ 1,477,000 --
Other............................................ 480,000 2,392,000
------------ ------------
Total current liabilities...................... 31,859,000 38,311,000
Long-term debt, less current maturities.............. 132,064,000 130,894,000
Deferred income taxes................................ 5,961,000 6,999,000
Stockholders' equity:
Preferred stock, $.01 par value; 2,000,000 shares
authorized; none issued........................... -- --
Common stock, $.01 par value; 45,000,000 shares
authorized; shares
issued and outstanding: 14,853,124 and 16,038,882,
respectively...................................... 149,000 160,000
Class B common stock, $.01 par value; 3,000,000
shares authorized; none issued.................... -- --
Additional paid-in capital......................... 7,168,000 13,857,000
Retained earnings.................................. 34,698,000 36,253,000
------------ ------------
Total stockholders' equity..................... 42,015,000 50,270,000
------------ ------------
Total liabilities and stockholders' equity..... $211,899,000 $226,474,000
============ ============
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
CASINO AMERICA, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
----------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Casino............................. $140,994,000 $117,613,000 $123,936,000
Rooms.............................. -- -- 4,422,000
Management fee--Joint ventures..... -- 4,613,000 6,308,000
Pari-mutuel commissions and fees... -- -- 15,063,000
Food, beverage, and other.......... 3,639,000 5,311,000 8,234,000
------------ ------------ ------------
Total revenue.................... 144,633,000 127,537,000 157,963,000
Operating expenses:
Casino............................. 42,726,000 46,039,000 49,910,000
Rooms.............................. -- -- 2,602,000
Gaming taxes....................... 16,915,000 13,924,000 15,116,000
Pari-mutuel........................ -- -- 11,375,000
Food and beverage.................. 2,253,000 3,678,000 5,382,000
Marine and facilities.............. 7,764,000 7,199,000 10,781,000
Marketing and administrative....... 26,113,000 26,895,000 33,167,000
One-time charge.................... -- -- 11,798,000
Preopening expenses................ 3,475,000 483,000 1,311,000
Loss on disposal of equipment...... 22,000 178,000 1,217,000
Depreciation and amortization...... 5,450,000 8,945,000 12,111,000
------------ ------------ ------------
Total operating expenses......... 104,718,000 107,341,000 154,770,000
------------ ------------ ------------
Operating income..................... 39,915,000 20,196,000 3,193,000
Interest expense:
Related parties.................... (1,333,000) -- (56,000)
Other.............................. (6,909,000) (14,029,000) (15,237,000)
Interest income:
Unconsolidated joint ventures...... 1,107,000 2,961,000 747,000
Other.............................. 1,016,000 1,022,000 622,000
Equity in income (loss) of
unconsolidated joint ventures....... (2,241,000) 19,904,000 16,434,000
------------ ------------ ------------
Income before income taxes........... 31,555,000 30,054,000 5,703,000
Income taxes......................... 11,202,000 11,985,000 4,148,000
------------ ------------ ------------
Net income........................... $ 20,353,000 $ 18,069,000 $ 1,555,000
============ ============ ============
Net income per common and common
equivalent share.................... $ 1.28 $ 1.16 $ 0.10
Weighted average common and common
equivalent shares................... 15,886,000 15,604,000 15,721,000
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
CASINO AMERICA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SHARES OF ADDITIONAL TOTAL
COMMON COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK STOCK CAPITAL EARNINGS EQUITY
---------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1993. 15,804,620 $158,000 $4,761,000 $ 10,026,000 $ 14,945,000
Exercise of stock
options.............. 102,869 1,000 301,000 -- 302,000
Purchase and
retirement of common
stock................ (1,125,000) (11,000) (489,000) (13,750,000) (14,250,000)
Issuance of warrants.. -- -- 2,300,000 -- 2,300,000
Net income............ -- -- -- 20,353,000 20,353,000
---------- -------- ----------- ------------ ------------
Balance, April 30, 1994. 14,782,489 148,000 6,873,000 16,629,000 23,650,000
Exercise of stock
options.............. 64,715 1,000 220,000 -- 221,000
Issuance of stock for
services............. 5,920 -- 75,000 -- 75,000
Net income............ -- -- -- 18,069,000 18,069,000
---------- -------- ----------- ------------ ------------
Balance, April 30, 1995. 14,853,124 149,000 7,168,000 34,698,000 42,015,000
Issuance of common
stock................ 1,020,940 10,000 5,988,000 -- 5,998,000
Exercise of stock
options.............. 145,218 1,000 566,000 -- 567,000
Issuance of stock for
compensation......... 18,100 -- 115,000 -- 115,000
Issuance of stock for
services............. 1,500 -- 20,000 -- 20,000
Net income............ -- -- -- 1,555,000 1,555,000
---------- -------- ----------- ------------ ------------
Balance, April 30, 1996. 16,038,882 $160,000 $13,857,000 $ 36,253,000 $ 50,270,000
========== ======== =========== ============ ============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
CASINO AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
----------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.......................... $ 20,353,000 $ 18,069,000 $ 1,555,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization..... 5,450,000 8,945,000 12,111,000
Amortization of bond discount and
deferred financing costs......... 311,000 786,000 705,000
Deferred income taxes............. 1,422,000 5,544,000 (1,440,000)
Equity in (income) loss of
unconsolidated joint ventures.... 2,241,000 (19,904,000) (16,434,000)
Write-down of assets held for
sale............................. -- -- 9,257,000
Other............................. 22,000 308,000 1,346,000
Changes in current assets and
liabilities, net of Pompano Park
acquisition:
Accounts receivable............. 68,000 (3,952,000) 179,000
Prepaid expenses and other
assets......................... 409,000 (932,000) 675,000
Accounts payable and accrued
expenses....................... 14,269,000 (321,000) 3,802,000
------------ ------------ ------------
Net cash provided by operating
activities......................... 44,545,000 8,543,000 11,756,000
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and equipment.. (45,975,000) (46,584,000) (22,201,000)
Purchase of Pompano Park............ -- -- (7,959,000)
Increase in notes receivable and
other investments.................. -- (6,950,000) --
Proceeds from disposals of property
and equipment...................... 105,000 1,408,000 2,767,000
Advances to joint ventures.......... (33,319,000) (10,553,000) --
Repayments and distributions from
joint ventures..................... -- 43,413,000 3,014,000
(Increase) decrease in restricted
cash............................... (11,672,000) (499,000) 12,171,000
Deposits and other.................. 170,000 (986,000) (1,332,000)
------------ ------------ ------------
Net cash used in investing
activities......................... (90,691,000) (20,751,000) (13,540,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from borrowings............ 109,063,000 15,000,000 10,500,000
Principal payments on borrowings.... (37,397,000) (7,941,000) (14,908,000)
Deferred financing costs............ (2,045,000) (1,226,000) (785,000)
Proceeds from sale of stock and
exercise of options................ 243,000 221,000 6,565,000
Purchase and retirement of common
stock.............................. (7,000,000) -- --
------------ ------------ ------------
Net cash provided by financing
activities......................... 62,864,000 6,054,000 1,372,000
------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents................... 16,718,000 (6,154,000) (412,000)
Cash and cash equivalents at
beginning of year.................. 8,433,000 25,151,000 18,997,000
------------ ------------ ------------
Cash and cash equivalents at end of
year............................... $ 25,151,000 $ 18,997,000 $ 18,585,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash payments for:
Interest, net of amounts
capitalized...................... $ 2,284,000 $ 13,259,000 $ 14,417,000
Income taxes--net................. 10,020,000 7,758,000 (341,000)
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Debt issued for:
Land.............................. $ 450,000 $ 2,290,000 $ --
Property and equipment............ 12,618,000 2,125,000 4,316,000
Purchase and retirement of common
stock............................ 7,250,000 -- --
Insurance premiums................ -- -- 855,000
Allocation of deferred financing
costs to unconsolidated joint
venture............................ 1,912,000 -- --
Bond discount recorded to reflect
the issuance of warrants........... 2,300,000 -- --
Underwriting discount on first
mortgage notes..................... 3,412,000 -- --
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Casino
America, Inc. and its wholly owned subsidiaries (the Company). All material
intercompany balances and transactions have been eliminated in consolidation.
The Company's investments in its 50%-owned joint ventures, Louisiana Riverboat
Gaming Partnership (LRGP) and LRG Hotels, LLC and LRGP's 50%-owned joint
venture, St. Charles Gaming Company, Inc. (SCGC) are accounted for using the
equity method of accounting. Certain reclassifications have been made to the
prior-year financial statements to conform to the 1996 presentation.
The Company is engaged in the business of developing, owning, and operating
riverboat and dockside casinos and related facilities. The Company commenced
operations in Biloxi, Mississippi, and Vicksburg, Mississippi, on August 1,
1992 and August 9, 1993, respectively. LRGP and SCGC commenced operations in
Bossier City, Louisiana and Lake Charles, Louisiana on May 20, 1994 and July
29, 1995, respectively.
The preparation of financial statements in conformity with generally
accepted accounting principles necessarily requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as revenues and expenses during the reporting
period. Actual amounts when ultimately realized could differ from those
estimates.
Cash Equivalents and Concentrations of Cash
The Company considers cash and all highly liquid investments with a maturity
at the time of purchase of three months or less to be cash equivalents. Cash
and cash equivalents are placed primarily with one high-credit-quality
financial institution. At April 30, 1996, cash equivalents were invested in a
short-term certificate of deposit and an overnight repurchase agreement. The
carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Leasehold improvements.............................................. 10-31
Buildings and land improvements..................................... 25
Riverboats and floating pavilions................................... 25
Furniture, fixtures, and equipment.................................. 5-10
</TABLE>
Interest capitalized during the years ended April 30, 1994, 1995 and 1996
totaled $773,000, $1,006,000 and $1,525,000, respectively. Depreciation
expense for the years ended April 30, 1994, 1995 and 1996, totaled $5,134,000,
$8,632,000, and $11,788,000, respectively.
Debt Acquisition Costs
The costs of issuing long-term debt have been capitalized and are being
amortized using the bonds outstanding method.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense for the
years ended April 30, 1994, 1995 and 1996 totaled $6,373,000, $5,665,000 and
$7,085,000, respectively.
Berthing, Concession, and Leasehold Rights
Berthing, concession, and leasehold rights are recorded at cost and are
being amortized over approximately 20 years using the straight-line method.
F-7
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Revenue and Promotional Allowances
Casino revenue is the net win from gaming activities which is the difference
between gaming wins and losses. Casino revenues are net of accruals for
anticipated payouts of progressive electronic gaming device jackpots.
Revenue does not include the retail amount of food, beverage, and other
items provided gratuitously to customers, which totaled $10,169,000,
$9,987,000, and $13,797,000 for the years ended April 30, 1994, 1995 and 1996,
respectively. The estimated cost of providing such complimentary services,
which is included in casino expense, was $8,234,000, $7,960,000, and
$11,608,000 for the years ended April 30, 1994, 1995 and 1996, respectively.
Preopening Expenses
Preopening expenses, which consist principally of payroll and marketing
costs, are expensed as incurred.
Net Income per Common Share
Net income per common and common equivalent share is based on the weighted-
average number of common shares outstanding during the period plus, in periods
in which they have a dilutive effect, the effect of common shares contingently
issuable upon the exercise of warrants and stock options.
Stock Based Compensation
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly,
recognizes no compensation expense for the stock option grants.
Impairment of Long-Lived Assets
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement No. 121 also addresses the accounting for long-
lived assets that are expected to be disposed of. The Company will adopt
Statement No. 121 in fiscal 1997 and, based on current circumstances, does not
believe the adoption will have a material effect on the Company's financial
statements.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
APRIL 30
-------------------------
1995 1996
------------ ------------
<S> <C> <C>
Property and equipment:
Land and land improvements................... $ 18,687,000 $ 25,485,000
Leasehold improvements....................... 5,368,000 50,130,000
Buildings and improvements................... 5,203,000 6,099,000
Riverboats and floating pavilions............ 51,020,000 33,591,000
Furniture, fixtures, and equipment........... 35,211,000 35,835,000
Construction in progress..................... 33,082,000 375,000
------------ ------------
148,571,000 151,515,000
Less: Accumulated depreciation............... 15,086,000 22,209,000
------------ ------------
$133,485,000 $129,306,000
============ ============
</TABLE>
F-8
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
APRIL 30
-------------------------
1995 1996
------------ ------------
<S> <C> <C>
11 1/2% first mortgage notes, less unamortized
discount of $1,885,000 and $1,727,000,
respectively, due November 2001.................... $103,115,000 $103,273,000
Variable rate note (10.25% at April 30, 1996), due
in monthly installments of $188,000, including
interest, with the remaining principal and interest
due October 2000................................... 15,000,000 14,670,000
8% note payable, due in monthly installments of
$83,334, including interest, through July 2002..... 5,488,000 4,906,000
12% note payable, principal due in annual
installments of $1,812,500 and $3,625,000 through
November 1996...................................... 5,438,000 3,625,000
9 1/4% note payable to bank, due in monthly
installments of $172,333, including interest,
through February 1997.............................. 3,479,000 1,664,000
8% note payable due in monthly installments of
$11,365, including interest, commencing December
1995 through December 2015......................... 1,470,000 1,347,000
Variable rate note (9.25% at April 30, 1996), due in
monthly installments ranging from $11,458 to
$34,722, including interest, with the remaining
principal and interest due June 2000............... -- 4,861,000
9 1/4% note payable, due in monthly installments
ranging from $46,045 to $97,595, including
interest, through October 1999..................... -- 3,354,000
Other............................................... 4,867,000 2,078,000
------------ ------------
138,857,000 139,778,000
Less: Current maturities............................ 6,793,000 8,884,000
------------ ------------
Long-term debt...................................... $132,064,000 $130,894,000
============ ============
</TABLE>
In November 1993, the Company issued 105,000 units, consisting of $1,000
principal amount of 11 1/2% First Mortgage Notes due 2001 (the "First Mortgage
Notes" ) and 3.263 warrants (the Warrants) to purchase 1.5 shares of common
stock per warrant at an exercise price of $16 per share. The First Mortgage
Notes and the Warrants are separately transferable. Interest on the First
Mortgage Notes is payable semiannually on each May 15 and November 15 through
maturity.
The First Mortgage Notes are redeemable at the option of the Company, in
whole or in part, at any time after November 15, 1997, at the redemption
prices set forth in the indenture, plus accrued interest. The Company is
required to redeem, at par plus accrued interest, 20% of the original
aggregate principal amount of the First Mortgage Notes in November 1999 and
November 2000.
The First Mortgage Notes restrict, among other things: (i) the incurrence of
additional debt, except under certain circumstances including meeting certain
pro forma coverage tests; (ii) the payment of dividends on and redemptions of
capital stock; (iii) the businesses in which the Company may engage; (iv) the
use of proceeds from the sale of assets; (v) transactions with affiliates;
(vi) the creation of liens; and (vii) sale and leaseback transactions. At
April 30, 1995 and 1996, no dividends were permitted to be paid under these
restrictions.
The Company has $3,500,000 available in bank lines of credit. As of April
30, 1996, the Company had no outstanding balances under these lines of credit.
Substantially all of the Company's assets are pledged as collateral for
long-term debt.
F-9
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The aggregate principal payments due on a total long-term debt over the next
five years and thereafter are as follows:
<TABLE>
<S> <C>
Year ending April 30:
1997...................... $ 8,884,000
1998...................... 2,952,000
1999...................... 3,048,000
2000...................... 27,398,000
2001...................... 22,655,000
Thereafter................ 74,841,000
------------
$139,778,000
============
</TABLE>
The fair value of the 11 1/2% First Mortgage Notes, estimated based on
quoted market prices, was approximately $106,265,000 and $106,773,000 as of
April 30, 1995 and 1996, respectively. The carrying value of the Company's
other short- and long-term obligations approximates fair value at April 30,
1996.
4. LEASE COMMITMENTS
The Company has an agreement with the Biloxi Port Commission which provides
the Company with certain docking rights. This agreement expires July 1999,
with eight renewal options of five years each. Annual rentals are the greater
of $500,000 or 1% of gross monthly gaming revenue, as defined. Annual rent
during each renewal term is adjusted for increases in the Consumer Price
Index, limited to 6% for each renewal period.
In addition, the Company leases certain land, buildings, and other
improvements from the City of Biloxi under a lease and concession agreement.
This agreement expires on July 1999, with options to renew for seven
additional terms of five years each. Annual rent is $500,000 plus 3% of gross
gaming revenue, as defined, in excess of $25,000,000. Annual rent during each
renewal term is adjusted for increases in the Consumer Price Index, limited to
6% for each renewal period. This agreement also allows rent credits to be
amortized over the initial term of the lease, for costs and expenses incurred
by the Company for construction of certain improvements to the leased assets.
Such rent credits, net of accumulated amortization, are included in prepaid
expenses in the consolidated balance sheet.
In April 1994, the Company entered an Addendum to the lease with the City of
Biloxi, which requires the Company to pay 4% of gross non-gaming revenues
received as defined, net of sales tax, comps and discounts. Additional rent
will be due to the City of Biloxi for the amount of any increase from and
after January 1, 2016 in the rent due to the State Institutions of Higher
Learning under a lease between the City of Biloxi and the State Institutions
of Higher Learning (the "IHL Lease") and for any increases in certain
tidelands leases between the City of Biloxi and the State of Mississippi.
In April 1994, in connection with the construction of a hotel, the Company
entered a lease for additional land. The Company first acquired the leasehold
interest of Sea Harvest, Inc., the original lessee, for consideration of
$8,000 per month for a period of ten years. The Company's lease is with the
City of Biloxi, Mississippi, for an initial term of 25 years, with options to
renew for six additional terms of 10 years each and a final option period with
a termination date commensurate with the termination date of the IHL Lease,
but in no event later than December 31, 2085. Annual rent (which includes
payments to be made pursuant to the purchase of a related leasehold interest)
is $404,000, plus 4% of gross non-gaming revenue, as defined. The annual rent
is adjusted after each five-year period based on increases in the Consumer
Price Index, limited to a 10% increase in any five-year period. The annual
rent will increase 10 years after the commencement of payments pursuant to a
termination of lease and settlement agreement to an amount equal to the sum of
annual rent had it been $500,000 annually plus adjustments thereto based on
the Consumer Price Index.
F-10
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In February 1995, in conjunction with its planned Colorado operation, the
Company entered into a lease agreement for the use of land. The lease has an
initial term of 25 years, with options to renew for seven additional terms of
10 years each. The base rent is $250,000 per year increased by $10,000 each
year until the annual rent is $300,000. After seven years, and every two years
thereafter, the annual rent is adjusted based on increases in the Consumer
Price Index, limited to a 4% increase in any two-year period.
Minimum rental obligations under all noncancelable operating leases with
terms of one year or more as of April 30, 1996, are as follows:
<TABLE>
<S> <C>
Year ending April 30:
1997....................... $ 2,799,000
1998....................... 2,458,000
1999....................... 2,394,000
2000....................... 1,477,000
2001....................... 895,000
Thereafter................. 14,950,000
-----------
$24,973,000
===========
</TABLE>
Rent expense for operating leases was approximately $3,857,000, $3,085,000,
and $4,076,000 for the years ended April 30, 1994, 1995 and 1996,
respectively. Such amounts include contingent rentals of $1,619,000, $833,000,
and $1,288,000 for the years ended April 30, 1994, 1995 and 1996,
respectively.
5. RELATED PARTY TRANSACTIONS
During November 1993, in connection with two capital lease agreements with
certain related parties, the Company exercised a bargain purchase option and
purchased the equipment for approximately $17,161,000.
During the year ended April 30, 1994, the Company issued $3,000,000 of 10%
promissory notes to several directors of the Company which were repaid with
the proceeds of the First Mortgage Notes.
During the years ended April 30, 1994, 1995 and 1996, the Company incurred
construction costs of approximately $8,093,000, $3,501,000 and $2,391,000,
respectively, which were paid to related parties. As of April 30, 1996, there
were no outstanding amounts owed to related parties for construction services.
During 1995, the Company entered into a lease agreement for a tugboat with a
related party. The agreement provides for monthly rental payments that range
from $3,781 to $7,500. The Company has a purchase option on the vessel which
is exercisable at any time during the 10-year term of the lease, at a price
equal to the unamortized balance of the $450,000 original cost of the vessel
at the time of exercise of the purchase option.
During the year ended April 30, 1996, the Company repaid $1,556,000 in loans
and interest payable to the Chairman and Chief Executive Officer and a related
party.
The Company provides management services to LRGP and SCGC pursuant to
respective management agreements. Management fees for these services are based
upon a percentage of LRGP's and SCGC's revenue and operating income, as
defined in the management agreements. The revenue under the management
agreements is reflected as management fee--joint ventures in the accompanying
consolidated income statements.
The note receivable in the accompanying consolidated balance sheets bears
interest at 11 1/2% and is due from SCGC. The note is due three days after
certain debt of SCGC is repaid.
F-11
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. INCOME TAXES
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal........................... $ 9,548,000 $ 4,501,000 $ 3,976,000
State............................. 232,000 1,940,000 1,612,000
----------- ----------- -----------
9,780,000 6,441,000 5,588,000
Deferred:
Federal........................... 1,422,000 5,599,000 (1,561,000)
State............................. -- (55,000) 121,000
----------- ----------- -----------
1,422,000 5,544,000 (1,440,000)
----------- ----------- -----------
$11,202,000 $11,985,000 $ 4,148,000
=========== =========== ===========
</TABLE>
A reconciliation of income tax expense to the statutory corporate federal tax
rate of 35% is as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
----------------------------------
1994 1995 1996
----------- ----------- ----------
<S> <C> <C> <C>
Statutory tax expense.................. $11,044,000 $10,519,000 $1,996,000
Effects of:
State taxes.......................... 151,000 1,225,000 1,048,000
Adjustment to prior years' taxes..... -- -- 720,000
Other--Net........................... 7,000 241,000 384,000
----------- ----------- ----------
$11,202,000 $11,985,000 $4,148,000
=========== =========== ==========
</TABLE>
Significant components of the Company's net deferred income tax liability are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
------------------------
1995 1996
----------- -----------
<S> <C> <C>
Deferred tax liabilities:
Property and equipment........................ $ 8,143,000 $12,866,000
LRGP.......................................... 2,399,000 940,000
Other......................................... 92,000 59,000
----------- -----------
Total deferred tax liabilities.................. 10,634,000 13,865,000
Deferred tax assets:
Dividends..................................... 920,000 680,000
Write-down of assets held for sale............ -- 3,240,000
Preopening costs.............................. 2,016,000 1,500,000
Accrued expenses.............................. 819,000 1,600,000
Alternative minimum tax credit................ -- 1,186,000
Other......................................... 361,000 341,000
----------- -----------
Total deferred tax assets....................... 4,116,000 8,547,000
Valuation allowance on deferred tax assets...... (920,000) (680,000)
----------- -----------
Net deferred tax asset.......................... 3,196,000 7,867,000
----------- -----------
Net deferred tax liability...................... $ 7,438,000 $ 5,998,000
=========== ===========
</TABLE>
F-12
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At April 30, 1996, the Company's alternative minimum tax credit can be
carried forward indefinitely to reduce future regular tax liabilities.
7. COMMON STOCK
Under the Company's 1992 and 1993 Stock Option Plans, as amended, a maximum
of 958,750 and 875,000 options, respectively, may be granted to directors,
officers, and employees. The plans provide for the issuance of incentive stock
options and nonqualified options which have a maximum term of 10 years and
are, generally, exercisable in yearly installments of 25%, commencing one year
after the date of grant.
Stock options outstanding are as follows:
<TABLE>
<CAPTION>
EXERCISE
OPTIONS PRICE
--------- -----------
<S> <C> <C>
Outstanding options at April 30, 1995............. 1,327,599 $ .89-18.00
Options granted................................... 493,375 5.69- 6.25
Options exercised................................. (145,218) .89-13.33
Options canceled.................................. (157,568) .89-17.75
--------- -----------
Outstanding options at April 30, 1996............. 1,518,188 $ .89-18.00
========= ===========
</TABLE>
At April 30, 1996, 543,251 options are exercisable at prices ranging from
$.89 to $18.00.
In addition, the Company has the following outstanding warrants:
<TABLE>
<CAPTION>
NUMBER OF
---------------- EXERCISE
DATE ISSUED EXPIRATION DATE WARRANTS SHARES PRICE
- ----------- ----------------- -------- ------- --------
<S> <C> <C> <C> <C>
February 1993....................... October 31, 1997 900,000 900,000 $ 5.33
November 1993....................... November 15, 1996 342,615 513,923 16.00
June 1995........................... June 9, 2001 1 416,667 12.00
</TABLE>
On March 11, 1996, the Company sold an aggregate of 1,020,940 shares of its
common stock at a price of $5.875 per share to the Chairman and Chief
Executive Officer of the Company and three members of his family. On March 1,
1996, when the Board adopted resolutions authorizing the Company's officers to
consummate the sale of these shares, the last reported sales price on NASDAQ
was $5.75 per share. Proceeds from the sale totaled $5,998,000.
The Company's board of directors has authorized the offering (the
"Offering"), on a pro rata basis, of rights to purchase shares of the
Company's common stock at a price of $5.875 per share at a ratio of
approximately one share for every four shares owned to its shareholders of
record on March 15, 1996. The primary purpose of the Offering is to ensure
that all shareholders have the same opportunity to purchase shares of the
Company's common stock as has been afforded to the Chairman and Chief
Executive Officer of the Company and his family.
8. ACQUISITION OF POMPANO PARK
On June 30, 1995, the Company acquired 100% of Pompano Park ("Pompano
Park"), a harness racing track located in Pompano, Florida, for approximately
$8,000,000. The acquisition was accounted for as a purchase, and the results
of operations of Pompano Park have been included in the consolidated income
statement from the date of acquisition. Pro forma operating results giving
effect to the Pompano Park acquisition have not been provided because the pro
forma effect of the acquisition was not material to the operating results of
the Company. If casino gaming is legally permitted in Florida at the Pompano
Park site by June 30, 2001, the Company is required to pay additional
consideration to the seller amounting to $25,000,000 plus 5% of net gaming
win, as defined. The probability of the Company paying such additional
consideration is remote; however, if such payments are made in the future,
they would be accounted for as additional purchase price and allocated to
goodwill. Such goodwill will be amortized over a period to be determined at
date of payment not to exceed 40 years.
F-13
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. ONE-TIME CHARGE
During January 1996, the Company recorded an $11,798,000 pretax one-time
charge. The components of the one-time charge include $9,257,000 related to
the write-down of two riverboats, a barge and certain gaming equipment all of
which were reclassified during the quarter as being held for sale, $1,991,000
related to costs associated with the recent change in executive management and
$550,000 related to costs associated with certain abandoned projects. The
write-down relates to two riverboats which are currently not being used in
operations and have been placed for sale. Each riverboat was written down to a
carrying value of approximately $5,000,000 based upon a recent purchase/lease
option agreement on one riverboat and a recent oral purchase offer received by
the Company. The amount of such offer and purchase/lease option range from
$5,000,000 to $6,000,000. The Company currently does not expect to take
further write-downs relating to these riverboats.
10. INVESTMENT IN LRGP
Summarized results of operations of LRGP are as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
--------------------------------------
1994 1995 1996
----------- ------------ ------------
<S> <C> <C> <C>
Total revenue..................... $ -- $147,012,000 $150,846,000
Operating income (loss)........... (3,625,000) 44,097,000 38,381,000
Net income (loss)................. (3,775,000) 40,162,000 34,453,000
</TABLE>
Summarized balance sheet information for LRGP is as follows:
<TABLE>
<CAPTION>
APRIL 30
------------------------
1995 1996
----------- ------------
<S> <C> <C>
Current assets................................... $ 6,549,000 $ 6,950,000
Property and equipment, net...................... 52,727,000 49,204,000
Investment in and advances to affiliates......... 4,289,000 67,832,000
Other assets..................................... 507,000 335,000
----------- ------------
Total assets................................. $64,072,000 $124,321,000
=========== ============
Current liabilities:
Note payable to the Company.................... $ 2,300,000 $ --
Other.......................................... 17,130,000 27,834,000
Long-term debt, less current maturities.......... 8,514,000 27,500,000
Partners' capital................................ 36,128,000 68,987,000
----------- ------------
Total liabilities and partners' capital...... $64,072,000 $124,321,000
=========== ============
</TABLE>
At April 30, 1996, the Company's retained earnings includes approximately
$20,627,000 of undistributed earnings of LRGP. Certain debt covenants restrict
LRGP from making dividend payments to the Company.
On June 9, 1995, LRGP acquired a 50% interest in SCGC, which operates a
riverboat casino in Lake Charles, Louisiana, for $1,000,000 cash and a
$20,000,000 note payable to the seller. The note bears interest at 11 1/2% and
requires equal quarterly principal payments commencing June 1996 through June
2000 with interest payable monthly. Additionally, the Company has issued a
warrant that allows the seller to convert 50% of the outstanding principal
balance of the note payable (up to a maximum of $5,000,000) into 416,667
shares of common stock of the Company at $12 per share. The difference between
the carrying amount of the investment and LRGP's equity in SCGC's net assets
is being amortized on a straight-line basis over 25 years. The purchase
agreement obligates LRGP to provide loans or a financing source to SCGC for
all expenses and development costs of the Lake Charles riverboat casino up to
a maximum of $45,000,000. As of April 30, 1996, advances to SCGC totaled
approximately $41,702,000.
F-14
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Summarized results of operations of SCGC from the date of acquisition to
April 30, 1996 are as follows:
<TABLE>
<S> <C>
Total revenue................................................ $57,263,000
Operating loss............................................... (643,000)
Net loss..................................................... (5,346,000)
</TABLE>
Summarized balance sheet information for SCGC as of April 30, 1995 and 1996
is as follows:
<TABLE>
<CAPTION>
APRIL 30
------------------------
1995 1996
----------- -----------
<S> <C> <C>
Current assets................................. $ 1,125,000 $ 7,142,000
Property and equipment, net.................... 24,399,000 69,919,000
Other assets................................... 9,442,000 10,126,000
----------- -----------
Total assets............................... $34,966,000 $87,187,000
=========== ===========
Current liabilities:
Advances from and notes payable to related
parties..................................... $ 9,856,000 $48,787,000
Other........................................ 26,190,000 44,357,000
Long-term debt, less current maturities........ 2,266,000 637,000
Partners' deficit.............................. (3,346,000) (6,594,000)
----------- -----------
Total liabilities and partners' deficit.... $34,966,000 $87,187,000
=========== ===========
</TABLE>
11. EMPLOYEE BENEFIT PLAN
The Company has a defined-contribution, profit-sharing plan, including
401(k) plan provisions, covering substantially all of its employees. The
Company's contribution expense related to this plan was approximately
$220,000, $203,000, and $328,000 for the years ended April 30, 1994, 1995, and
1996, respectively. The Company's contribution is based on a percentage of
employee contributions and may include an additional discretionary amount.
12. LITIGATION
The Company has been named, along with two gaming equipment suppliers, 41 of
the country's largest gaming operators, and four gaming distributors (the
"Gaming Industry Defendants") in a consolidated class action lawsuit pending
in Las Vegas, Nevada. The suits alleges that the Gaming Industry Defendants
violated the Racketeer Influenced and Corrupt Organizations Act by engaging in
a course of fraudulent and misleading conduct intended to induce people to
play their gaming machines based upon a false belief concerning how those
gaming machines actually operate, as well as the extent to which there is
actually an opportunity to win on any given play. The suit seeks unspecified
compensatory and punitive damages. The actions are in the early stages of
discovery and preliminary motions. The Company is unable at this time to
determine what effect, if any, the suit would have on its financial position
or results of operations.
The Company is engaged in various matters of litigation and has a number of
unresolved claims pending. While the ultimate liability with respect to such
litigation and claims cannot be determined at this time, it is the opinion of
management that such liability is not likely to be material to the Company's
consolidated financial position or results of operations.
F-15
<PAGE>
CASINO AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. SUBSEQUENT EVENTS
Purchase of GPRI and SCGC
On May 3, 1996, the Company purchased all of the outstanding shares of
common stock of Grand Palais Riverboat, Inc. (GPRI) in a bankruptcy
proceeding. Pursuant to the Plan of Reorganization adopted in such bankruptcy
proceeding, the Company purchased 100% of the shares of the reorganized GPRI,
which at the time of closing owned the Grand Palais Riverboat, gaming
equipment, certain other furniture, fixtures and equipment, all necessary
gaming licenses issued by the State of Louisiana, and other permits and
authorizations. The Company intends to operate the Grand Palais vessel as part
of a two-riverboat operation with SCGC. The aggregate consideration paid by
the Company in connection with the GPRI acquisition was approximately $62.4
million, consisting of $8.4 million in cash, approximately $37.9 million in
promissory notes and assumed indebtedness. The Company also issued 2,250,000
shares of its common stock, and five-year warrants to purchase an additional
500,000 shares of common stock at an exercise price of $10 per share, to
GPRI's former secured debt holders.
At the time of the GPRI acquisition, the Company also purchased the
remaining 50% interest in SCGC not already owned by LRGP, in exchange for
1,850,000 shares of the Company's common stock and a five-year warrant. The
warrant allows the seller to convert its note payable to LRGP (up to a maximum
of $5,000,000) to 416,667 shares of common stock of the Company at an exercise
price of $12 per share. The purchase agreement also provides for the
restructuring of certain indebtedness owed to the seller.
14. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
1995
------------------------------------------------
JULY 31 OCTOBER 31 JANUARY 31 APRIL 30
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue....................... $33,616,000 $32,017,000 $30,143,000 $31,761,000
Operating income.............. 6,073,000 4,945,000 5,001,000 4,177,000
Net income.................... 3,908,000 4,685,000 4,772,000 4,704,000
Net income per common and
common equivalent share...... 0.25 0.30 0.31 0.30
<CAPTION>
1996
------------------------------------------------
JULY 31 OCTOBER 31 JANUARY 31 APRIL 30
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue....................... $32,418,000 $35,691,000 $43,418,000 $46,436,000
Operating income (loss)....... 2,367,000 2,128,000 (7,315,000) 6,013,000
Net income (loss)............. 2,334,000 2,044,000 (6,547,000) 3,724,000
Net income (loss) per common
and common equivalent share.. 0.15 0.13 (0.44) 0.23
</TABLE>
The fourth quarter of 1996 was adversely affected by interest expense
totaling $400,000 that had been capitalized in the second quarter of 1996 and
a $720,000 adjustment to prior years' taxes.
F-16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Executive Management Committee
Louisiana Riverboat Gaming Partnership
We have audited the accompanying balance sheets of Louisiana Riverboat
Gaming Partnership (the Partnership) as of April 30, 1995 and 1996, and the
related statements of operations, partners' capital (deficit), and cash flows
for each of the three years in the period ended April 30, 1996. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Louisiana Riverboat Gaming
Partnership at April 30, 1995 and 1996 and the results of its operations and
its cash flows for each of the three years in the period ended April 30, 1996,
in conformity with generally accepted accounting principles.
Ernst & Young LLP
New Orleans, Louisiana
May 22, 1996
F-17
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30
------------------------
ASSETS 1995 1996
------ ----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents........................... $ 5,627,656 $ 6,053,634
Accounts receivable................................. 218,784 226,264
Prepaid expenses.................................... 702,204 670,491
----------- ------------
Total current assets............................ 6,548,644 6,950,389
Property and equipment:
Land................................................ 3,788,742 3,811,845
Pavilion............................................ 23,176,694 23,194,612
Riverboat........................................... 17,391,154 17,534,400
Furniture, fixtures, and equipment.................. 12,338,308 12,805,529
----------- ------------
56,694,898 57,346,386
Less accumulated depreciation....................... 3,967,576 8,142,479
----------- ------------
52,727,322 49,203,907
Investments in and advances to joint venture.......... 2,515,574 61,961,132
Other assets:
Advances to affiliate............................... 1,773,813 5,871,128
Debt acquisition costs.............................. 20,670 6,079
Deposits and other.................................. 486,141 329,141
----------- ------------
2,280,624 6,206,348
----------- ------------
Total assets.................................... $64,072,164 $124,321,776
=========== ============
</TABLE>
See accompanying notes.
F-18
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30
------------------------
LIABILITIES AND PARTNERS' CAPITAL 1995 1996
--------------------------------- ----------- ------------
<S> <C> <C>
Current liabilities:
Revolving line of credit............................ $ 2,000,000 $ --
Current maturities:
Notes payable..................................... 4,497,568 17,252,266
Mortgage note payable to related party............ 2,300,000 --
Accounts payable:
Trade............................................. 2,971,708 2,917,329
Related parties................................... 1,667,158 53,418
Accrued liabilities:
Interest.......................................... 1,000 691,778
Payroll and payroll related....................... 3,056,625 2,751,138
Taxes............................................. 1,516,872 976,093
Progressive jackpots and slot club awards......... 949,565 1,992,549
Other............................................. 469,130 1,199,348
----------- ------------
Total current liabilities....................... 19,429,626 27,833,919
Long-term notes payable, less current maturities...... 8,514,618 27,500,000
Partners' capital..................................... 36,127,920 68,987,857
----------- ------------
Total liabilities and partners' capital......... $64,072,164 $124,321,776
=========== ============
</TABLE>
See accompanying notes.
F-19
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
---------------------------------------
1994 1995 1996
----------- ------------ ------------
<S> <C> <C> <C>
Revenue:
Casino.............................. $ -- $142,265,343 $145,603,545
Food and beverage................... -- 4,524,276 4,882,843
Other............................... -- 222,243 359,798
----------- ------------ ------------
Total revenue..................... -- 147,011,862 150,846,186
Operating expenses:
Casino.............................. -- 30,484,595 32,753,896
Gaming taxes........................ -- 32,097,530 33,334,435
Food and beverage................... -- 3,636,962 4,140,214
Marine and facilities............... -- 5,228,605 5,752,466
Marketing and administrative........ -- 14,036,536 22,716,817
Management fee--related party....... -- 4,613,078 4,708,995
Depreciation and amortization....... 108,710 5,779,627 4,950,683
Other............................... -- 3,834,474 4,107,583
Preopening expenses................. 3,515,904 3,203,641 --
----------- ------------ ------------
Total operating expenses.......... 3,624,614 102,915,048 112,465,089
----------- ------------ ------------
Operating income (loss)............... (3,624,614) 44,096,814 38,381,097
Interest income (expense), net:
Related parties..................... (150,154) (2,686,067) 1,355,432
Other............................... -- (1,248,687) (2,625,469)
----------- ------------ ------------
(150,154) (3,934,754) (1,270,037)
Equity in loss of unconsolidated joint
venture.............................. -- -- (2,657,648)
----------- ------------ ------------
Net income (loss)..................... $(3,774,768) $ 40,162,060 $ 34,453,412
=========== ============ ============
</TABLE>
See accompanying notes.
F-20
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
LOUISIANA
RIVERSITE
DEVELOPMENT,
CSNO, INC. INC. TOTAL
----------- ------------ -----------
<S> <C> <C> <C>
Partners' deficit, April 30, 1993...... $ (129,686) $ (129,686) $ (259,372)
Net loss............................. (1,887,384) (1,887,384) (3,774,768)
----------- ----------- -----------
Partners' deficit, April 30, 1994...... (2,017,070) (2,017,070) (4,034,140)
Net income........................... 20,081,030 20,081,030 40,162,060
----------- ----------- -----------
Partners' capital, April 30, 1995...... 18,063,960 18,063,960 36,127,920
Net income........................... 17,226,706 17,226,706 34,453,412
Distributions........................ (818,475) (775,000) (1,593,475)
----------- ----------- -----------
Partners' capital, April 30, 1996...... $34,472,191 $34,515,666 $68,987,857
=========== =========== ===========
</TABLE>
See accompanying notes.
F-21
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
----------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................... $ (3,774,768) $ 40,162,060 $ 34,453,412
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization...... 108,710 5,779,627 4,950,683
Equity in loss of unconsolidated
joint venture..................... -- -- 2,657,648
Changes in operating assets and
liabilities:
Accounts receivable.............. (3,150) (225,317) (7,480)
Inventories...................... (31,300) (217,034) 27,980
Prepaid expenses................. (262,281) (191,589) 3,733
Deposits and other............... 250,000 (486,141) 157,000
Accounts payable--trade.......... 1,663,530 1,291,541 (54,379)
Accounts payable--related
parties......................... -- 1,667,158 (1,613,740)
Accrued liabilities.............. 1,277,821 4,715,371 1,617,714
------------ ------------ ------------
Net cash provided by (used in)
operating activities................ (771,438) 52,495,676 42,192,571
CASH FLOWS FROM INVESTING ACTIVITIES
Net advances to affiliates........... (360,401) (1,401,729) (4,097,315)
Investment in and net advances to
joint venture....................... -- (2,515,574) (42,864,395)
Purchases of property and equipment.. (29,604,637) (20,528,638) (651,488)
------------ ------------ ------------
Net cash used in investing
activities.......................... (29,965,038) (24,445,941) (47,613,198)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) of
revolving line of credit............ -- 2,000,000 (2,000,000)
Proceeds from notes payable.......... 3,572,000 16,098,930 24,878,688
Payments on notes payable............ (3,572,000) (9,185,674) (13,138,608)
Proceeds from mortgage note payable.. 32,681,060 10,580,000 --
Payments on mortgage note payable.... (1,316,000) (42,514,737) (2,300,000)
Debt acquisition cost................ -- (29,182) --
Partner distributions................ -- -- (1,593,475)
------------ ------------ ------------
Net cash provided by (used in)
financing activities................ 31,365,060 (23,050,663) 5,846,605
------------ ------------ ------------
Net increase in cash and cash
equivalents......................... 628,584 4,999,072 425,978
Cash and cash equivalents:
Beginning of year.................. -- 628,584 5,627,656
------------ ------------ ------------
End of year........................ $ 628,584 $ 5,627,656 $ 6,053,634
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION
Investment in joint venture through
note payable........................ $ -- $ -- $ 20,000,000
============ ============ ============
Purchases of property and equipment
through accounts payable and notes
payable............................. $ 14,438,867 $ -- $ --
============ ============ ============
Debt acquisition costs funded by
mortgage note payable............... $ 1,912,250 $ -- $ --
============ ============ ============
Cash payments for interest, net of
amounts capitalized................. $ -- $ 5,220,775 $ 4,074,402
============ ============ ============
</TABLE>
See accompanying notes.
F-22
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Nature of Business
Louisiana Riverboat Gaming Partnership (the Partnership), a Louisiana
partnership formed January 4, 1993, is 50% owned by Louisiana Riversite
Development, Inc., a wholly owned subsidiary of Louisiana Downs, Inc., and 50%
owned by CSNO, Inc., a wholly owned subsidiary of Casino America, Inc. (Casino
America). The Partnership is engaged in the business of operating dockside
casinos and related facilities. The Partnership commenced gaming operations on
May 20, 1994, operating as the Isle of Capri Casino in Bossier City,
Louisiana. As further discussed in Note 2, in June 1995, the Partnership
purchased a 50% interest in St. Charles Gaming Company, Inc. (SCGC), which
owns and operates the Isle of Capri-Lake Charles in Lake Charles, Louisiana.
This investment is accounted for using the equity method of accounting with
the difference between the carrying amount of the investment and SCGC's equity
in net assets amortized using the straight-line method over 25 years. At April
30, 1996, accumulated amortization was approximately $761,000. The
recoverability of these costs is assessed annually to determine if such costs
should be completely or partially written off or the amortization period
accelerated. This riverboat casino commenced operations in Lake Charles on
July 29, 1995.
The Partnership and SCGC are managed by a wholly owned subsidiary (the
Manager) of Casino America, Inc. 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
Cash and cash equivalents consist of cash on hand and in banks. The
Partnership considers all highly liquid investments with a maturity at the
time of purchase of three months or less to be cash equivalents. The carrying
amounts of cash and cash equivalents approximates fair value. The Partnership
deposits cash in an interest-bearing account with a financial institution. The
account is collateralized by securities issued by the United States Government
and other high-quality credit instruments.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Pavilion......................................................... 25 years
Riverboat........................................................ 25 years
Furniture, fixtures and equipment................................ 5 years
</TABLE>
F-23
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
APRIL 30, 1996
The Partnership capitalized interest related to the construction of its
Bossier City facilities totaling $847,000 during the year ended April 30,
1994. No interest was capitalized during 1995 and 1996.
Debt Acquisition Costs
The Partnership defers debt acquisition costs and amortizes these costs
using the straight-line method over the expected term of the related debt. At
April 30, 1995 and 1996, accumulated amortization was approximately $1,920,761
and $1,935,400, respectively.
Preopening Expenses
Preopening expenses, which consist principally of payroll, marketing and
local licensing fees, are expensed as incurred.
Casino Revenue and Promotional Allowances
Casino revenue is the net win from gaming activities which is the difference
between gaming wins and losses. Casino revenues are net of accruals for
anticipated payouts of progressive electronic gaming device jackpots.
Revenue does not include the retail amount of food, beverage and other items
provided gratuitously to customers, which totaled approximately $8,816,000 in
1995 and $10,149,500 in 1996. The estimated cost of providing such
complimentary services, which is included in casino expense, was approximately
$7,299,000 in 1995 and $8,621,000 in 1996.
Income Taxes
No provision for income taxes has been made in the accompanying financial
statements since any liability is that of the individual partners and not of
the Partnership.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense totaled
$127,416 in 1994, $3,779,297 in 1995, and $4,627,200 in 1996.
Reclassifications
Certain amounts previously reported have been reclassified to conform to the
presentation at April 30, 1996.
Impairment of Long-Lived Assets
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement No. 121 also addresses the accounting for long-
lived assets that are expected to be disposed of. The Partnership will adopt
Statement No. 121 in fiscal 1997 and, based on current circumstances, does not
believe the adoption will have a material effect on the Partnership's
financial statements.
F-24
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
APRIL 30, 1996
2. INVESTMENT IN AND ADVANCES TO JOINT VENTURE
On June 9, 1995, the Partnership acquired a 50% interest in SCGC from Crown
Casino (Crown) for $1,000,000 cash and a $20,000,000 note payable to Crown.
Additionally, Casino America, Inc. has issued a warrant that allows Crown to
convert 50% of the outstanding principal balance of the note payable (up to a
maximum of $5,000,000) to common stock of Casino America, Inc. at $12 per
share. Further, the purchase agreement obligates the Partnership to provide
loans or a financing source to SCGC, for all expenses and development costs of
the Lake Charles riverboat casino up to a maximum of $45,000,000. At April 30,
1996, the Partnership had advanced to SCGC approximately $2,516,000 and
$41,702,000, respectively.
These advances earn interest ranging from 9.75% to 12% and are included,
along with the related accrued interest of approximately $12,000 in 1995 and
$2,169,000 in 1996, in investment in and advances to joint venture in the
accompanying balance sheet. See Note 3 for additional information regarding
financing for SCGC.
Condensed financial information for the joint venture as of April 30, 1996 and
for the period from the date of acquisition is summarized below:
<TABLE>
<S> <C>
Condensed financial information:
Current assets............................................... $ 7,142,000
Noncurrent assets............................................ $80,045,000
Current liabilities.......................................... $93,144,000
Noncurrent liabilities....................................... $ 637,000
Total revenue................................................ $57,263,000
Operating loss............................................... $ 643,000
Net loss..................................................... $ 5,346,000
</TABLE>
On May 3, 1996, Casino America purchased the stock of Grand Palais Riverboat
Inc. (Grand Palais) and intends to operate the Grand Palais vessel as part of
a two-riverboat operation with SCGC. In connection with the Grand Palais
acquisition and pursuant to a stock purchase agreement dated January 19, 1996
between Casino America and Crown, Casino America purchased the remaining 50%
interest in SCGC owned by Crown in exchange for 1,850,000 shares of Casino
America common stock. In addition, Casino America issued another five-year
warrant which allows Crown to convert its note payable to the Partnership (up
to a maximum of $5,000,000) for 416,667 shares of Casino America common stock
at $12 per share. Further the $20,000,000 note payable to Crown was
restructured into two $10,000,000 notes payable.
F-25
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
APRIL 30, 1996
3. NOTES PAYABLE
Long-term notes payable consist of the following:
<TABLE>
<CAPTION>
APRIL 30
----------------------
1995 1996
---------- -----------
<S> <C> <C>
Senior secured increasing rate notes (12.5% at April 30,
1996), interest payable monthly with principal due July
1996................................................... $ -- $ 8,378,687
11.5% note payable to Crown, interest due monthly with
quarterly principal payments of $500,000 commencing
June 1996 with any remaining balance due February 2002,
collateralized by SCGC stock........................... -- 10,000,000
11.5% note payable to Crown, interest payable monthly
commencing May 1996, with principal due May 2001,
collateralized by SCGC stock........................... -- 10,000,000
Note payable to bank, interest at prime plus 1% (9.25%
at April 30, 1996) due in monthly principal payments of
$625,000 commencing May 1996, collateralized by
furniture, fixtures and equipment...................... -- 15,000,000
9.25% note payable, due in monthly installments of
$279,675, including interest, through September 1996,
collateralized by gaming equipment..................... 4,440,757 1,373,579
Note payable............................................ 8,571,429 --
---------- -----------
13,012,186 44,752,266
Less current maturities................................. 4,497,568 17,252,266
---------- -----------
Long-term notes payable................................. $8,514,618 $27,500,000
========== ===========
</TABLE>
In 1995, the Partnership entered into a $15,000,000 credit agreement with a
bank to be repaid in six monthly principal payments of $2,500,000 each
commencing in February 1996. In February 1996, this credit agreement was
amended to provide for the repayment of principal in 24 monthly payments of
$625,000 each commencing in May 1996. This credit agreement contains various
restrictive covenants, including certain financial covenants.
In July 1995, the Partnership and SCGC entered into an agreement to issue
$38,400,000 of senior secured increasing rate notes (0.25% every third month),
due July 1996, primarily to pay for certain development costs and operating
expenses of SCGC and pay certain debt obligations owed by the Partnership. The
Partnership received proceeds of approximately $8,400,000 from the issuance of
these notes to retire the note payable secured by a first preferred ship
mortgage on the Partnership's riverboat. Under the terms of the agreement, the
notes are due July 1996 but can be extended for two six-month periods at the
option of the issuers if the notes are not in default. Additionally, the
agreement provides if either the Partnership or SCGC is unable to pay its
portion of the notes as they become due, the other issuer will pay the
obligation upon demand. The agreement provides for contingent interest,
payable commencing May 1996, based on the consolidated cash flow, as defined,
of the Partnership and SCGC. The notes are collateralized by substantially all
the assets of the Partnership and SCGC and include various restrictive
covenants, including certain financial covenants, for both the Partnership and
SCGC.
In 1995, the Partnership entered into a revolving credit agreement with a
bank, whereby the bank committed to lend the Partnership up to $2,000,000
through October 1996. Amounts outstanding under the revolving line of credit
bear interest, payable monthly, at the prime rate (average rate of 8.69% in
1996) and are secured by a continuing security interest in all funds on
deposit or in certificates of deposit with the bank. Further, the credit
agreement contains certain restrictive covenants, including certain financial
covenants.
F-26
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
APRIL 30, 1996
Maturities of long-term debt after April 30, 1996 are $17,252,266 in 1997,
$9,500,000 in 1998, $2,000,000 in 1999, $2,000,000 in 2000, $12,000,000 in
2001 and $2,000,000 thereafter.
The carrying value of the Partnership's short and long-term obligations
approximates fair value.
4. EMPLOYEE BENEFIT PLAN
Partnership employees who have completed 12 consecutive months of employment
and are at least 21 years of age may participate in the Casino America, Inc.
401(k) Plan (the "Plan"). The Partnership's contribution is based on a
percentage of employee contributions and may include an additional
discretionary amount. The Partnership's contribution expense related to the
Plan was $16,784 in 1994, $188,075 in 1995 and $219,690 in 1996.
5. RELATED PARTY TRANSACTIONS
Management services are provided to the Partnership pursuant to a management
agreement with the Manager. Management fees for these services are based upon
a percentage of revenue and operating income, as defined by the management
agreement. Additionally, the Partnership pays certain expenses, primarily
payroll, of the Manager. The Partnership incurred management fees of
$4,613,078 in 1995 and $4,708,995 in 1996 and other expenses on behalf of the
Manager of approximately $1,217,000 in 1995 and $1,726,000 in 1996. In 1994,
the Partnership paid $250,000 in management fees, classified as preopening
expense, in accordance with the terms of the management agreement.
During 1994 and 1995, the Partnership made advances to LRG Hotels, LLC, a
limited liability corporation owned by the partners for working capital, debt
payments and payments under a noncompete agreement entered into with the
former owner. The advances earn interest at 11.5%. These advances and related
accrued interest are reflected as advances to affiliate in the accompanying
balance sheets.
The Partnership incurred construction costs and construction management
fees, totaling approximately $21,000,000 through April 30, 1995, which were
paid to an affiliated company of Louisiana Riversite Development, Inc. These
expenditures are capitalized as property and equipment.
During 1995, the Partnership advanced approximately $673,000 for expansion
costs related to potential gaming jurisdictions in other states to an
affiliated company of Louisiana Riversite Development, Inc. In 1996, these
advances were recorded as distributions to CSNO, Inc. and Louisiana Riversite
Development, Inc. in the amounts of approximately $343,000 and $300,000
respectively.
F-27
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-28
<PAGE>
To the Stockholders
St. Charles Gaming Company, Inc.:
We have audited the accompanying balance sheets of St. Charles Gaming
Company, Inc. as of April 30, 1995 and 1996, and the related statements of
operations, stockholders' equity (deficit), and cash flows for the period from
June 25, 1993 (acquisition date) to April 30, 1994 and for the years ended
April 30, 1995 and 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of St. Charles Gaming
Company, Inc. as of April 30, 1995 and 1996, and the results of its operations
and its cash flows for the period from June 25, 1993 (acquisition date) to
April 30, 1994 and for the years ended April 30, 1995 and 1996 in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Dallas, Texas
June 14, 1996
F-29
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
BALANCE SHEETS
APRIL 30, 1995 AND 1996
<TABLE>
<CAPTION>
ASSETS 1995 1996
------ ----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 9,522 $ 4,807,940
Accounts receivable:
Gaming, net of allowance for uncollectible
accounts of $92,649 in 1996..................... 496,827
Related parties.................................. 84,907
Inventories........................................ 393,940
Prepaid expenses................................... 769,527 592,370
Debt issuance costs, net of accumulated
amortization...................................... 345,963 766,242
----------- -----------
Total current assets........................... 1,125,012 7,142,226
----------- -----------
Property and equipment:
Building........................................... 248,232
Land and land improvements......................... 2,659,280
Leasehold improvements............................. 14,026,531
Furniture, fixtures and equipment.................. 7,618,268 11,705,940
Construction in progress........................... 1,539,627 26,324,321
Riverboat and barges............................... 15,256,140 17,868,033
----------- -----------
24,414,035 72,832,337
Less accumulated depreciation...................... (14,563) (2,913,496)
----------- -----------
24,399,472 69,918,841
----------- -----------
Other assets:
License costs, net of accumulated amortization..... 9,125,000 8,835,374
Noncompete agreement, net of accumulated
amortization...................................... 316,674 216,678
Other.............................................. 18,171
Deferred tax asset................................. 1,055,968
----------- -----------
9,441,674 10,126,191
----------- -----------
$34,966,158 $87,187,258
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-30
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
BALANCE SHEETS, CONTINUED
APRIL 30, 1995 AND 1996
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT 1995 1996
------------------------------------- ----------- -----------
<S> <C> <C>
Current liabilities:
Progressive and casino liability........................ $ 620,806
Accounts payable:
Related parties....................................... 2,370,284
Trade................................................. $ 738,861 2,864,538
Accrued liabilities..................................... 768,834 7,862,979
Capital lease obligations............................... 2,871,104 2,814,749
Advances from Crown..................................... 3,076,887
Notes payable:
Related parties....................................... 6,779,083 46,416,273
Other................................................. 21,811,603 30,194,608
----------- -----------
Total current liabilities........................... 36,046,372 93,144,237
----------- -----------
Capital lease obligations, less current portion........... 2,265,641 637,107
Commitments and contingencies.............................
Stockholders' deficit:
Common stock, no par value, 100,000 shares authorized,
issued and outstanding................................. 5,600,000 5,600,000
Additional paid-in capital.............................. 10,900,000 13,985,388
Accumulated deficit..................................... (19,845,855) (26,179,474)
----------- -----------
Total stockholders' deficit......................... (3,345,855) (6,594,086)
----------- -----------
$34,966,158 $87,187,258
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-31
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JUNE 25, 1993 (ACQUISITION DATE)
TO APRIL 30, 1994 AND FOR THE
YEARS ENDED APRIL 30, 1995 AND 1996
<TABLE>
<CAPTION>
JUNE 25, 1993 YEAR ENDED
(ACQUISITION -------------------------
DATE) TO APRIL 30, APRIL 30,
APRIL 30, 1994 1995 1996
-------------- ------------ -----------
<S> <C> <C> <C>
Revenues:
Casino............................. $56,588,560
Food, beverage and other........... 674,371
-----------
Total revenue.................... 57,262,931
-----------
Operating expenses:
Pre-opening and development........ $ 1,181,551 $ 7,676,762 4,195,653
Buy out of management contract..... 4,000,000
St. Charles Parish site
abandonment....................... 3,131,359
Casino............................. 10,152,749
Gaming taxes....................... 13,742,267
Food, beverage and other........... 2,423,471
Marine and facilities.............. 3,224,484
Marketing and administrative....... 19,812,648
Management fees to related party... 1,602,482
Depreciation and amortization...... 334,329 111,326 3,288,555
----------- ------------ -----------
Total operating expenses......... 1,515,880 14,919,447 58,442,309
----------- ------------ -----------
Operating loss....................... (1,515,880) (14,919,447) (1,179,378)
Interest expense..................... 171 6,810,357 6,210,209
----------- ------------ -----------
Loss before income taxes............. (1,516,051) (21,729,804) (7,389,587)
Income tax benefit................... (572,517) (2,827,483) (1,055,968)
----------- ------------ -----------
Net loss......................... $ (943,534) $(18,902,321) $(6,333,619)
=========== ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-32
<PAGE>
ST. CHARLES GAMING COMPANY INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JUNE 25, 1993
(ACQUISITION DATE) TO APRIL 30, 1994 AND
FOR THE YEARS ENDED APRIL 30, 1995 AND 1996
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL STOCKHOLDERS'
COMMON PAID-IN ACCUMULATED EQUITY
STOCK CAPITAL DEFICIT (DEFICIT)
---------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Balance at June 25, 1993.... $5,600,000 $ 500,000 $ 6,100,000
Capital contribution........ 3,500,000 3,500,000
Net loss.................... $ (943,534) (943,534)
---------- ----------- ------------ ------------
Balance at April 30, 1994... 5,600,000 4,000,000 (943,534) 8,656,466
Capital contribution........ 6,900,000 6,900,000
Net loss.................... (18,902,321) (18,902,321)
---------- ----------- ------------ ------------
Balance at April 30, 1995... 5,600,000 10,900,000 (19,845,855) (3,345,855)
Capital contribution........ 3,085,388 3,085,388
Net loss.................... (6,333,619) (6,333,619)
---------- ----------- ------------ ------------
Balance at April 30, 1996... $5,600,000 $13,985,388 $(26,179,474) $ (6,594,086)
========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-33
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM JUNE 25, 1993 (ACQUISITION DATE) THROUGH APRIL 30, 1994 AND
FOR THE YEARS ENDED APRIL 30, 1995 AND 1996
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 25, 1993 --------------------------
(ACQUISITION DATE) APRIL 30, APRIL 30,
TO APRIL 30, 1994 1995 1996
----------------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss...................... $ (943,534) $(18,902,321) $ (6,333,619)
Adjustments to reconcile net
loss to net cash (used in)
provided by operating
activities:
Depreciation and
amortization............... 336,564 111,326 3,288,555
Provision for bad debts..... 92,649
Amortization of debt
issuance costs/discount.... 3,376,392 832,680
Write-down of assets........ 3,131,359
Deferred income taxes....... (572,517) (2,827,483) (1,055,968)
(Increase) decrease in:
Accounts receivable......... (674,383)
Inventories................. (393,940)
Prepaid expenses............ (55,962) (838,971) 177,157
Other assets................ (18,171)
(Decrease) increase in:
Accounts payable and accrued
liabilities................ (49,246) 1,416,151 11,590,106
Progressive and casino
liability.................. 620,806
------------ ------------ ------------
Net cash (used in)
provided by operating
activities............... (1,284,695) (14,533,547) 8,125,872
------------ ------------ ------------
Cash flows from investing
activities:
Purchase of property and
equipment.................... (11,196,868) (8,795,064) (48,290,177)
Purchase of assets............ (350,000)
------------ ------------ ------------
Net cash used in investing
activities............... (11,546,868) (8,795,064) (48,290,177)
------------ ------------ ------------
Cash flows from financing
activities:
Capital contributions from
Crown........................ 3,500,000 3,522,655
Advances from Crown........... 9,304,590 8,501
Payments to Crown............. (6,227,703)
Advances from LRGP............ 2,079,083 39,637,190
Issuance of debt.............. 32,700,000 30,194,608
Debt issuance costs........... (1,633,407) (1,252,959)
Payments of debt and capital
lease obligations............ (7,125,522) (23,624,617)
------------ ------------ ------------
Net cash provided by
financing activities..... 12,804,590 23,315,106 44,962,723
------------ ------------ ------------
(Decrease) increase in cash and
cash equivalents............... (26,973) (13,505) 4,798,418
Cash and cash equivalents,
beginning of period............ 50,000 23,027 9,522
------------ ------------ ------------
Cash and cash equivalents, end
of period...................... $ 23,027 $ 9,522 $ 4,807,940
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-34
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF BUSINESS:
St. Charles Gaming Company, Inc., a Louisiana corporation (the "Company"),
was incorporated on January 18, 1993 for the purpose of operating a riverboat
gaming casino to be based in St. Charles Parish, Louisiana (near New Orleans).
In January 1995, the Company changed its riverboat berthing site from St.
Charles Parish to Calcasieu Parish, Louisiana (near Lake Charles).
Effective June 25, 1993, the Company was acquired by Crown Casino
Corporation ("Crown"). Effective June 9, 1995, Crown sold a 50% interest in
the Company to Louisiana Riverboat Gaming Partnership ("LRGP"), a joint
venture owned 50% by Casino America, Inc. ("Casino America") and 50% by
Louisiana Downs, Inc. LRGP owns the Isle of Capri dockside riverboat casino in
Bossier City, Louisiana. Effective May 3, 1996, Crown sold its remaining 50%
interest in the Company to Casino America (see Note 11).
The Company commenced operations effective July 29, 1995. Prior to that
time, the Company's activities were focused on the pursuit of a riverboat
gaming license and other regulatory approvals, the raising of capital, the
construction of the riverboat casino and land based facilities, and the
development of the project in general. In previous financial statements, the
Company reported as a development stage enterprise.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash and Cash Equivalents
The Company considers cash and all highly liquid investments with an
original maturity of three months or less to be cash equivalents.
The Company is required to maintain cash or cash equivalents in sufficient
amount to protect patrons against defaults in gaming debts owed by the
Company. The Company's requirements are computed in accordance with Section
2713 of the regulations of the Louisiana State Police, Riverboat Gaming
Enforcement Division. At April 30, 1996, approximately $4,807,940 of cash and
cash equivalents was available to satisfy this requirement. Additionally, at
April 30, 1996, the Company had cash deposits concentrated primarily in two
financial institutions. The Company believes risk associated with these
concentrations is minimal.
Inventories
Inventories, which consist primarily of food, beverage, and gift shop items,
are stated at the lower of cost (determined by the first-in, first-out method)
or market.
Debt Issuance Costs
In conjunction with the issuance of the "New Notes" in August 1995 and
subsequent amendments to the agreement governing the "New Notes" (see Note 4),
the Company incurred debt issuance costs of approximately $1,500,000. These
costs are being amortized over the term of the New Notes using the effective
interest method.
In connection with the issuance of the "Senior Note" (see Note 4) and
subsequent amendments to the agreement governing the Senior Note, the Company
incurred debt issuance costs of $2,569,717. These costs were amortized over
the term of the Senior Note using the effective interest method and were fully
amortized upon the retirement of the Senior Note.
Property and Equipment
Property and equipment are stated at cost. Expenditures for additions,
renewals and improvements are capitalized. During periods of construction,
interest costs associated with borrowings utilized to fund construction are
capitalized. The capitalized interest is recorded as part of the asset to
which it relates and is depreciated over
F-35
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
the asset's estimated useful life. Interest capitalized during the year ended
April 30, 1995 and 1996 was approximately $10,000 and $2,400,000,
respectively. Costs of repairs and maintenance are expensed as incurred.
Effective July 29, 1995, the Company began depreciating gaming related
equipment and facilities. Included in furniture, fixtures and equipment is
approximately $5,900,000 of equipment acquired under capital leases.
Substantially all equipment acquired under capital leases is gaming related.
In conjunction with the sale of 50% of the Company to LRGP, management
changed the estimated useful lives of certain assets from those previously
reported to match the estimated useful lives used at LRGP's other Louisiana
riverboat casino. As the Company had not commenced operations at the time of
the sale, no depreciation had been recorded on those assets. Accordingly, this
change in estimated useful lives had no significant impact on financial
statement amounts. Depreciation is computed using the straight-line method
over the following estimated useful lives.
<TABLE>
<S> <C>
Leasehold improvements........................................... 25 years
Building......................................................... 25 years
Furniture, fixtures and equipment................................ 5 years
Riverboat and barges............................................. 25 years
</TABLE>
Depreciation expense was $250,991, $11,330 and $2,898,933, respectively, for
the period from June 25, 1993 (acquisition date) to April 30, 1994 and in
fiscal years 1995 and 1996.
Included in leasehold improvements is approximately $3,600,000 of costs
incurred during the year ended April 30, 1996 for upgrades made to improve
access to the riverboat casino location. These costs arose from widening and
paving public roads and installing traffic signals. Such areas are not owned
or leased by the Company. In management's opinion, these costs do, and will
continue to contribute to the operating results of the casino and, as such,
have been capitalized.
Noncompete Agreement
In connection with the acquisition of the Company by Crown, the Company's
former owner agreed with Crown not to compete in the Louisiana market for a
period of five years. The noncompete agreement is stated at the cost allocated
to the agreement by Crown, at the time of its acquisition, net of accumulated
amortization. Amortization is recorded using the straight-line method over a
period of five years. The Company incurred amortization expense of $83,330 for
the period from June 25, 1993 (acquisition date) to April 30, 1994 and $99,996
for the years ended April 30, 1995 and 1996.
License Costs
License costs principally represent the excess purchase price Crown paid in
acquiring the Company's net identifiable assets. In conjunction with the sale
of 50% of the Company to LRGP, management of the Company changed the estimated
useful life of the license, as previously reported, to match the estimated
useful lives utilized on other long-lived gaming related assets. The Company
began amortizing these costs effective July 29, 1995 (commencement of
operations) over a twenty-five-year period using the straight-line method.
Twenty-five years is management's best estimate of the useful life of the
license costs. The Louisiana license was issued on March 29, 1994 and has a
five-year initial term, which is subject to renewal.
Income Taxes
Through June 8, 1995, the Company was included in Crown's consolidated
federal income tax return. As a result of the sale of 50% of SCGC to LRGP, the
Company will file a separate return. The provision for income taxes in the
accompanying financial statements is computed on a separate return basis for
all periods presented.
F-36
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between book bases and tax bases of
assets and liabilities. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Revenue and Promotional Allowances
Casino revenue is the net win from gaming activities which is the difference
between gaming wins and losses. Casino revenues are net of accruals for
anticipated payouts of progressive electronic gaming device jackpots.
Revenue does not include the retail amount of food, beverages, and other
items provided gratuitously to customers. These amounts totaled $3,331,070 for
the year ended April 30, 1996. The cost of sales in providing such
complementary services was approximately $1,220,683 of which approximately
$297,429 has been classified as food, beverage and other and the remainder has
been classified as casino expense.
Casino Pre-Opening and Development Costs
All casino pre-opening and development costs are expensed as incurred. Pre-
opening and development costs consist principally of personnel costs,
advertising, insurance, travel, consulting and professional fees.
Reclassifications
The accompanying financial statements for the period ended April 30, 1995
reflect certain reclassifications made to conform the presentation with
classifications presented as of April 30, 1996.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Other Accounting Issues
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of."
This statement requires that long-lived assets and certain identifiable
intangibles held and used by an entity be reviewed for impairment whenever
circumstances indicate that the carrying amount of an asset may not be
recoverable. The impact of this standard, which the Company will adopt
effective May 1, 1996, has been assessed by management and should not have a
material effect on the Company's financial statements.
3. OPERATING ENVIRONMENT:
The Company operates in a highly regulated and competitive environment which
is currently facing political uncertainty. The Louisiana Riverboat Gaming
Commission and the Enforcement Division oversee virtually every aspect of
riverboat gaming in the State of Louisiana including the issuance and renewal
of riverboat gaming licenses. Management believes the Company's license will
be renewed at the end of the initial term.
F-37
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The gaming industry in the State of Louisiana has recently received national
media attention primarily as a result of the commencement of a federal
investigation of certain legislative members and the recent bankruptcy of a
gaming company in the Louisiana market. In response to these and other
incidents, the Louisiana governor called a special session of the State
legislature to consider the gaming statutes governing riverboat gaming, video-
poker and the New Orleans' land-based casino. The outcome of this session
resulted in a local option vote to be conducted on a parish by parish basis in
November 1996, with separate votes for riverboat gaming, video poker and the
New Orleans land-based casino. Based on recent published polls, management of
the Company believes that the riverboat gaming operations in Calcasieu Parish
will not be negatively impacted.
4. DEBT:
At April 30, 1995 and 1996, the Company had the following debt outstanding:
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Senior Secured Increasing Rate Note, net of unamortized
discount of $118,397 ("Senior Note" $28,000,000)...... $21,811,603
Senior Secured Increasing Rate Notes ("New Notes"
$38,400,000).......................................... $30,021,313
Note payable to LRGP................................... 2,079,083 15,000,000
Note payable to LRGP................................... 26,716,273
Notes payable to Casino America (the "Casino America
Notes")............................................... 4,700,000 4,700,000
Other.................................................. 173,295
----------- -----------
$28,590,686 $76,610,881
=========== ===========
</TABLE>
In June 1994, the Company issued a $28,000,000 Senior Secured Increasing
Rate Note (the "Senior Note") to an institutional investor. The Senior Note
was initially due on June 3, 1995, but was subsequently extended to August 31,
1995 and carried a 12% coupon increasing 67 basis points each quarter up to a
maximum interest rate of 14%. The Senior Note was issued with a warrant to
purchase 508,414 shares of Crown's common stock. The proceeds from the private
placement were allocated between the Senior Note ($26,728,965) and the warrant
($1,271,035) based upon the relative fair value of each of the securities at
the time of issuance. The amount allocated to the warrant was recorded as an
increase to advances from Crown. The resulting original issue discount was
amortized over the life of the Senior Note using the effective interest
method.
On August 7, 1995, the Company and LRGP (collectively, the "Issuers")
jointly issued $38,400,000 of Senior Secured Increasing Rate Notes (the "New
Notes"), the proceeds of which were used to retire the Senior Note
($21,900,000) and certain LRGP obligations ($8,400,000). The balance of the
proceeds were used in the development of the Calcasieu Parish project. The New
Notes initially become due on July 27, 1996, but can be extended up to an
additional twelve months at the option of the Issuers provided no event of
default has occurred and is continuing, carry a 12% coupon which increases 25
basis points each quarter until maturity, and provide for contingent interest
beginning in June 1996 equal to 7.5% of the Issuers' consolidated cash flow,
as defined. The New Notes are collateralized by substantially all the assets
of the Issuers and contain covenants relating to certain business, operational
and financial matters including limitations on (i) incurring additional debt,
(ii) paying dividends, (iii) merging or consolidating with others, (iv)
changes in control, (v) capital expenditures, (vi) investments and joint
ventures, and (vii) the sale of assets, and financial covenants pertaining to
(a) minimum cash flow, (b) minimum fixed charge ratio, (c) maximum leverage
ratio, and (d) minimum net worth.
As of April 30, 1996, the Issuers were not in compliance with certain
financial covenants provided for in the Note Purchase Agreement pertaining to
the New Notes. However, effective May 3, 1996 the Company obtained waivers
from the institutional lender for the lack of compliance. The violations were
waived through the effective date of the waivers. Additionally, in conjunction
with the Company obtaining these waivers, the
F-38
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
New Note Agreement was amended to reflect less stringent financial covenants
going forward and to allow the Company to enter into and modify certain
agreements in conjunction with Casino America's purchase of Crown's remaining
50% interest in the Company and the Grand Palais Riverboat transaction.
Management believes the Company will be able to comply with the terms of the
amended agreement.
In the event the Company fails to comply with these amended covenants, the
Note Purchase Agreement provides that the lender has the right, upon the
giving of notice, to (among other things) cause an acceleration of the
maturity date of all amounts outstanding under the Note Purchase Agreement.
Management believes that the Company will be able to comply with these amended
covenants and as such acceleration of the repayment obligations is not
expected to occur. However, in the event the Company does fail to comply with
the amended and restated Note Purchase Agreement, and such repayment
obligations are accelerated, SCGC and LRGP will need to locate other sources
of capital in order to meet such repayment obligations, and there can be no
assurance that such sources will be available, or be available on terms
acceptable to LRGP and SCGC.
In May 1995, the Company issued a promissory note to LRGP to facilitate
advances of up to $15,000,000. The note bears interest at 11.5% per annum, and
is due three business days after the New Notes are paid in full. The proceeds
from the issuance of the note have been used to develop the Calcasieu Parish
project.
In October 1995, the Company issued a promissory note to LRGP to facilitate
additional advances of up to $25,000,000. The note bears interest at 11.5% per
annum and is due in four equal quarterly installments beginning three months
after retirement of the New Notes. However, the Company shall only be
obligated to make principal and interest payments to the extent the Company
has cash available to make such payments. The proceeds are currently being
utilized to develop the Calcasieu project.
In March 1995, the Company issued promissory notes aggregating $4,700,000 to
Casino America (the "Casino America Notes"). The Casino America Notes bear
interest at 11.5% per annum and are due three business days after the New
Notes are paid in full.
As noted above and in the accompanying balance sheet, the Company has
current debt obligations that significantly exceed its available cash
resources. As stated previously, management does not anticipate future events
of noncompliance and as such, does not believe payment of the New Notes will
be accelerated by the lender. Further, the related party notes payable are
subordinate to the New Notes. Management is currently pursuing a restructuring
of existing debt obligations. While management believes such restructuring can
be completed, there can be no assurance that restructuring options will be
available.
At April 30, 1996, based on the interest rates and the short-term duration
of the notes, management believes the carrying value of all notes payable
approximates the estimated fair value.
5. INCOME TAXES:
The components of the Company's income tax benefit for the period from June
25, 1993 (acquisition date) to April 30, 1994 and for the years ended April
30, 1995 and 1996 are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
--------- ----------- -----------
<S> <C> <C> <C>
Current.............................. $ -- $ -- $ --
Deferred............................. (572,517) (2,827,483) (1,055,968)
--------- ----------- -----------
$(572,517) $(2,827,483) $(1,055,968)
========= =========== ===========
</TABLE>
F-39
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The benefit for income taxes is different from the amount computed by
applying the federal income tax rate to the loss before income taxes for the
period from June 25, 1993 (acquisition date) to April 30, 1994 and for the
years ended April 30, 1995 and 1996 for the following reasons:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate............................... (34)% (34)% (34)%
Valuation allowance.................................. 26 23
State income tax, net of federal benefit............. (3) (5) (5)
Other................................................ (1) 2
--- --- ---
(38)% (13)% (14)%
=== === ===
</TABLE>
Significant components of the Company's deferred tax liabilities and assets
as of April 30, 1995 and 1996 were as follows:
<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Deferred tax liabilities:
License costs................................... $3,442,030 $ 3,436,716
Other........................................... 1,807
---------- -----------
Total deferred tax liabilities................ 3,443,837 3,436,716
---------- -----------
Deferred tax assets:
Pre-opening expenses............................ 6,149,255 6,538,935
Net operating loss carryforwards................ 2,719,000 4,906,000
Other........................................... 272,571 410,782
---------- -----------
Total deferred tax assets..................... 9,140,826 11,855,717
---------- -----------
Less valuation allowance.......................... 5,696,989 7,363,033
---------- -----------
Net deferred tax asset........................ $ -- $ 1,055,968
========== ===========
</TABLE>
At April 30, 1995 and 1996, valuation allowances totaling $5,696,989 and
$7,363,033, respectively, were provided against the Company's deferred tax
assets to reflect the uncertainties surrounding the realization of such
deferred tax assets. Realization of the net deferred tax asset at April 30,
1996 is dependent on the Company generating sufficient future taxable income.
Although realization is not assured, management believes it is more likely
than not that the amount of the deferred tax asset recorded for financial
statement purposes will be realized. The amount of the deferred tax asset
considered realizable, however, could be reduced in the near term if estimates
of future taxable income are reduced. At April 30, 1996 the Company had net
operating loss carryforwards for federal income tax purposes of approximately
$12,483,000 which expire in 2009 through 2011. These operating loss
carryforwards are subject to certain limitations due to the transaction
discussed in Note 11.
6. LEASES:
In March and July 1995, the Company entered into agreements to lease the two
parcels of land that comprise the Calcasieu Parish riverboat casino site. The
leases have an initial term of five years with seven five-year renewal
options. During the initial term, the leases require annual aggregate rental
payments of $850,000 in years one through four, and $1,000,000 in year five,
payable monthly. During the first renewal term, the rent will be increased
annually by the greater of (i) 5%, or (ii) the percentage increase in the
average consumer price index for Calcasieu Parish, Louisiana for the previous
twelve-month period. During the second through seventh renewal terms, the
lessor and the Company will attempt to set the rent equal to 100% of the rent
paid by other
F-40
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
riverboat gaming operators in Louisiana and Mississippi for comparable
property usage, or if no agreement can be made, then the parties will appoint
real estate appraisers to set the rent for such renewal term. However, in no
event shall the annual rent be less than $1,600,000 during the fourth and all
subsequent renewal terms. In addition, the Company will pay all real estate
taxes, except for taxes due on the unimproved value of the property.
In addition to the Calcasieu Parish site leases, the Company has entered
into various operating leases for equipment and office facilities. At April
30, 1996, future minimum lease payments to be made under these lease
agreements are as follows:
<TABLE>
<S> <C>
1997............................................................. $232,797
1998............................................................. 109,409
1999............................................................. 31,926
2000............................................................. 26,605
--------
$400,737
========
</TABLE>
Rent expense for the period from June 25, 1993 (acquisition date) to April
30, 1994 and for the years ended April 30, 1995 and 1996 was $15,483, $61,539
and $991,181, respectively.
The Company has also entered into various capital leases for equipment. As
of April 30, 1996 future minimum lease payments under capital leases were as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
----------- ----------
<S> <C>
1997.......................................................... $3,040,197
1998.......................................................... 613,531
1999.......................................................... 51,587
2000.......................................................... 614
----------
Total minimum lease payments.................................. 3,705,929
Less amount representing interest............................. 254,073
----------
Present value of future minimum lease payments................ 3,451,856
Less current portion.......................................... 2,814,749
----------
Capital lease obligations, less current portion............... $ 637,107
==========
</TABLE>
7. COMMITMENTS AND CONTINGENCIES:
Commitments to Calcasieu Parish
In January 1995, the Company made a commitment to Calcasieu Parish to
provide certain payments to the Parish above and beyond the statutory
admissions tax. The Company committed to a $1,000,000 initial payment, which
was paid upon the opening of the casino, and a $1,000,000 annual payment for
as long as the casino is operating at its site in the Parish, but in no event
less than six years. In June 1995, the Company and the Parish entered into a
definitive development agreement whereby, in consideration for the payments to
be made by the Company to the Parish, the Parish is required to cooperate with
and provide assistance to the Company in obtaining and maintaining necessary
permits and approvals to operate its riverboat gaming casino.
Litigation
On September 21, 1994, an action was filed against Crown and the Company in
the 24th Judicial District Court for the Parish of Jefferson, Louisiana by
Avondale Industries, Inc. ("Avondale"). In this action, Avondale
F-41
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
alleges that Crown was contractually obligated to Avondale for the
construction of the Company's riverboat vessel based upon a letter of intent
(allegedly reaffirming a previous agreement entered into between Avondale and
the Company). Avondale alleges that Crown breached a duty to negotiate in good
faith toward the execution of a definitive vessel construction contract.
Alternatively, Avondale alleges that a separate, oral contract for the
construction of the vessel existed and that Crown committed unspecified unfair
trade practices and made certain misrepresentations. Avondale has specified
damages of approximately $2,500,000. In conjunction with the sale of 50% of
the Company to LRGP, Crown indemnified LRGP against future losses arising from
this litigation, and as such, even though no assurance can be given as to the
ultimate outcome of this litigation, the Company believes this litigation will
not have a material adverse effect on the financial position or results of
operations of the Company.
8. SITE CHANGE AND BUY OUT OF MANAGEMENT CONTRACT:
In January 1995, the Company made the decision to abandon its site in St.
Charles Parish, Louisiana in favor of the site currently occupied in Calcasieu
Parish, Louisiana. As a result of this decision the Company recorded a charge
of approximately $3,100,000 for the year ended April 30, 1995, which
represents the write-off of previously capitalized costs specific to the St.
Charles Parish site.
In March 1995, in connection with Crown's sale of a 50% interest in the
Company's common stock to LRGP, the Company bought out its existing casino
management agreement for $4,000,000.
9. RELATED PARTY TRANSACTIONS:
The Company entered into a management agreement with Riverboat Services,
Inc. ("RSI") a subsidiary of Casino America which has a term of 99 years and
provides for a management fee of (i) 2% of "Revenues," as defined in the
agreement (generally net gaming revenues less gaming and admission taxes plus
all other operating revenues), plus (ii) 10% of "Net Operating Income," as
defined in the agreement, provided however, the total management fee shall not
exceed 4% of "Revenues." Additionally, in accordance with the agreement, key
employees of the riverboat are employees of RSI who pays the salaries of these
employees and is reimbursed by the Company. As of April 30, 1996, the Company
had incurred management fee costs of approximately $1,602,482 and had incurred
salary costs and other charges associated with these key employees of
approximately $1,400,000. No amounts were due or accrued to RSI at April 30,
1995.
Debartolo Properties Management, Inc., a wholly-owned subsidiary of
Debartolo, Inc. which owns 50% of LRGP is the general contractor for the
construction of the riverboat gaming site. For the year ended April 30, 1996,
approximately $300,000 was paid to Debartolo Properties Management, Inc. and
other Debartolo related companies for construction services provided.
The Company had net advances from Crown of $3,076,887 as of April 30, 1995.
Advances from Crown were used to fund the construction of the riverboat and
support pre-opening and development activities. Included in net advances from
Crown at April 30, 1995 is $1,500,000 relating to Crown common stock issued as
payment for expenses of the Company. In June 1995, in connection with Crown's
sale of a 50% interest in the Company's common stock to LRGP, Crown
contributed the balance in its advance account ($3,085,388) to the Company.
F-42
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
10. SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental cash flow disclosures for the period from June 25, 1993
(acquisition date) to April 30, 1994 and for the years ended April 30, 1995
and 1996 are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---------- ----------
<S> <C> <C> <C>
Interest paid, net of amounts capitalized..... $171 $6,115,878 $2,461,299
Noncash financing and investing activities:
Capital contribution from Crown............. 3,377,345 3,085,388
Equipment acquired under capital leases..... 5,762,267 128,175
</TABLE>
11. SUBSEQUENT EVENTS:
In May 1996, Crown sold its remaining 50% interest in the Company to Casino
America.
Also in May 1996, Casino America obtained all necessary approvals for the
acquisition and relocation of Grand Palais Riverboat, Inc. ("GPRI") from
bankruptcy. The relocation of the riverboat to the Company's current site in
Calcasieu Parish occurred in June 1996. The Company anticipates the GPRI
riverboat to be operational by July 1996. In conjunction with this relocation
of GPRI to Calcasieu Parish, the Company and GPRI entered into a joint
operating agreement whereby GPRI will pay to the Company a monthly docking fee
of $250,000 for the use of the existing facilities. Additionally, the Company
and GPRI will share certain administrative services and the taxable
income/loss will be allocated to the respective entities based on the terms of
the agreement.
F-43
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS OR
ANY DEALER OR AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, ANY OF THE NOTES IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 14
Use of Proceeds........................................................... 23
Capitalization............................................................ 23
Unaudited Pro Forma Financial Data........................................ 24
Selected Historical Consolidated Financial Information.................... 30
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 31
Business.................................................................. 37
Regulatory Matters........................................................ 49
Management................................................................ 57
Description of Certain Indebtedness....................................... 58
Description of the Notes.................................................. 60
Underwriting.............................................................. 89
Legal Matters............................................................. 90
Experts................................................................... 90
Available Information..................................................... 90
Incorporation by Reference................................................ 91
Index to Financial Statements............................................. F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOGO
$300,000,000
CASINO AMERICA, INC.
% SENIOR SECURED
NOTES DUE 2003
--------------
PROSPECTUS
--------------
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
NOMURA SECURITIES INTERNATIONAL, INC.
DEUTSCHE MORGAN GRENFELL
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses in connection with the distribution
of the securities being registered:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee........... $ 103,448
NASD Filing Fee............................................... 30,500
Printing and Engraving Expenses............................... 250,000
Accounting Fees and Expenses.................................. 450,000
Attorneys' Fees and Expenses.................................. 700,000
Rating Agency Fees............................................ 50,000
Trustee's Fees................................................ 10,000
Blue Sky Fees and Expenses (including attorneys' fees)........ 10,000
Miscellaneous................................................. 51,052
----------
Total..................................................... $1,655,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) The Delaware General Corporation Law ("GCL") (Section 145) gives
Delaware corporations broad powers to indemnify their present and former
directors and officers and those of affiliated corporations against expenses
incurred in the defense of any lawsuit to which they are made parties by
reason of being or having been such directors or officers, subject to
specified conditions and exclusions, gives a director or officer who
successfully defends an action the right to be so indemnified, and authorizes
the Company to buy directors' and officers' liability insurance. Such
indemnification is not exclusive of any other rights to which those
indemnified may be entitled under any by-laws, agreement, vote of stockholders
or otherwise.
(b) Article 8 of the Certificate of Incorporation of the Company provides
for indemnification of directors and officers to the fullest extent permitted
by law.
(c) Reference is made to Section 6 of the Purchase Agreement (the form of
which is included as Exhibit 1.1 to this Registration Statement) for
provisions regarding the indemnification under certain circumstances of the
Company, its directors and certain of its officers by the Underwriters.
(d) In accordance with Section 102(b)(7) of the Delaware GCL, the Company's
Certificate of Incorporation provides that directors shall not be personally
liable for monetary damages for breaches of their fiduciary duty as directors
except for (1) breaches of their duty of loyalty to the Company or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law, (3) under Section 174 of
the Delaware GCL (unlawful payment of dividends) or (4) transactions from
which a director derives an improper personal benefit.
ITEM 16. EXHIBITS
A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index which immediately precedes such exhibits.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this 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.
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 referred to in Item 14, 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 in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and this Offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
Casino America, Inc.
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
/s/ Robert S. Goldstein Director
___________________________________________
Robert S. Goldstein
/s/ Martin Greenberg Director
___________________________________________
Martin Greenberg
/s/ Emanuel Crystal Director
___________________________________________
Emanuel Crystal
</TABLE>
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
Riverboat Corporation of Mississippi
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
Riverboat Corporation of
Mississippi-- Vicksburg
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
Riverboat Services Incorporated
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
CSNO, Inc.
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
Louisiana Riverboat Gaming
Partnership
By: CSNO, Inc., its General Partner
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Member of the Executive Committee
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Member of the Executive Committee
___________________________________________
Bernard Goldstein
/s/ Allan B. Solomon Member of the Executive Committee
___________________________________________
Allan B. Solomon
/s/ Gerald Wiemann Member of the Executive Committee
___________________________________________
Gerald Wiemann
</TABLE>
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
St. Charles Gaming Company
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
Grand Palais Riverboat, Inc.
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
LRG Hotels, L.L.C.
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
LRGP Holdings, Inc.
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
P.P.I., Inc.
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
ASMI Management Inc.
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BILOXI AND STATE OF MISSISSIPPI ON THE 30TH DAY OF JULY, 1996.
Isle of Capri Casino Colorado, Inc.
/s/ Allan B. Solomon
By __________________________________
Allan B. Solomon
Executive Vice President,
Secretary and
General Counsel
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John Gallaway, Rexford Yeisley and Allan B. Solomon and each of them, the true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their 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, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 30TH DAY OF JULY, 1996.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Bernard Goldstein Chairman of the Board, Chief Executive
___________________________________________ Officer and Director
Bernard Goldstein
/s/ John Gallaway President and Director
___________________________________________
John Gallaway
/s/ Rexford Yeisley Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Rexford Yeisley
/s/ Allan B. Solomon Executive Vice President, Secretary,
___________________________________________ General Counsel and Director
Allan B. Solomon
</TABLE>
II-15
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ------------------------------------------------------- ----------
<C> <S> <C>
1.1 Form of Senior Secured Notes Purchase Agreement........
4.1 Certificate of Incorporation of Casino America, Inc.,
as amended (Incorporated by reference to the Company's
Registration Statement on Form S-1 filed September 3,
1993, as amended (File No. 33-68434))
4.2 Bylaws of Casino America, Inc., as amended
(Incorporated by reference to the Company's
Registration Statement on Form S-1 filed September 3,
1993, as amended (File No. 33-68434))
4.3 Indenture dated November 1, 1993 between the Company
and Shawmut Bank Connecticut, National Association, as
Trustee (Incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended
April 30, 1994 (File No. 0-20538))
4.4 First Supplemental Indenture dated as of April 29, 1994
between the Company and Shawmut Bank Connecticut,
National Association, as Trustee (Incorporated by
reference to the Company's Annual Report on Form 10-K
for the fiscal year ended April 30, 1994 (File No. 0-
20538))
4.5 Second Supplemental Indenture dated as of March 8, 1995
between the Company and Shawmut Bank Connecticut,
National Association, as Trustee (Incorporated by
reference to the Company's Annual Report on Form 10-K
for the fiscal year ended April 30, 1995 (File No. 0-
20538))
4.6 Third Supplemental Indenture dated as of May 8, 1996
between the Company and Fleet National Bank (successor
to Shawmut Bank Connecticut, National Association) as
Trustee (Incorporated by reference to Amendment No. 2
to the Company's Registration Statement on Form S-3
filed June 28, 1996 (File No. 333-2610))
4.7 Fourth Supplemental Indenture dated July 26, 1996
between the Company and Fleet National Bank (successor
to Shawmut Bank Connecticut, National Association) as
Trustee................................................
4.8 Promissory Note, dated June 9, 1995, made by LRGP in
favor of Crown Casino Corporation (Incorporated by
reference to the Company's Annual Report on Form 10-K
for the fiscal year ended April 30, 1995 (File No. 0-
20538))
4.9 Form of Senior Secured Notes Indenture.................
4.10 Form of Senior Secured Note............................
4.11 Form of Senior Secured Notes Subsidiary Guarantee......
4.12 Casino America, Inc. hereby agrees to furnish to the
Securities and Exchange Commission, upon its request,
the instruments defining the rights of holders of long-
term debt where the total amount of securities
authorized thereunder does not exceed 10% of Casino
America, Inc.'s total consolidated assets
5.1 Opinion of Mayer, Brown & Platt........................
10.1 Purchase Agreement, dated July 2, 1996, by and between
CSNO Inc., LRGP Holdings, Inc. and Louisiana River Site
Development, Inc. (Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal
year ended April 30, 1996 (File No. 0-20538))
10.2 Form of Accounts Pledge Agreement......................
10.3 Form of Company Security Agreement.....................
10.4 Form of Subsidiary Security Agreement..................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ------------------------------------------------------- ----------
<C> <S> <C>
10.5 Form of Company Pledge Agreement.......................
10.6 Form of Subsidiary Guarantor Pledge Agreement..........
10.7 Form of Mortgage (Louisiana)...........................
10.8 Form of Deed of Trust (Mississippi)....................
10.9 Form of Mortgage (Florida).............................
10.10 Form of Ship/Fleet Mortgage............................
12.1 Computation of Ratio of Earnings to Fixed Charges
(Incorporated by reference to Amendment No. 1 to the
Company's Registration Statement on Form S-3 (File No.
333-7517))
23.1 Consent of Ernst & Young LLP...........................
23.2 Consent of Coopers & Lybrand L.L.P.....................
23.3 Consent of Fred J. Bastie & Associates, P.C............
23.4 Consent of Mayer, Brown & Platt (contained in Exhibit
5.1)...................................................
24.1 Power of Attorney (contained on the signature page to
the initial registration statement)
25.1 Statement of Eligibility of Trustee....................
</TABLE>
2
<PAGE>
EXHIBIT 1.1
CASINO AMERICA, INC.
(a Delaware corporation)
$300,000,000
__ % Senior Secured Notes Due 2003
PURCHASE AGREEMENT
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Brothers Inc
Nomura Securities International, Inc.
Deutsche Morgan Grenfell
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower, World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Casino America, Inc., a Delaware corporation (the "COMPANY"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MERRILL LYNCH") and each of the other Underwriters named in
Schedule A hereto (collectively, the "UNDERWRITERS," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof) with respect to the issue and sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of the respective principal
amounts set forth in said Schedule A of $300,000,000 aggregate principal amount
of the Company's __% Senior Secured Notes Due 2003 (the "SECURITIES"). The
Securities are to be issued pursuant to an indenture dated as of August __,
1996 (the "INDENTURE") between the Company, the Subsidiary Guarantors (as
defined below) and Fleet National Bank, as trustee (the "TRUSTEE").
The payment of principal, premium (if any), interest and other amounts
payable on the Securities will be guaranteed by the guarantees (each, a
"SUBSIDIARY GUARANTEE" and, collectively, the "SUBSIDIARY GUARANTEES") set forth
in the Indenture and endorsed on the Securities by the subsidiaries of the
Company that are signatories to this Agreement (each a "SUBSIDIARY GUARANTOR"
and, collectively, the "SUBSIDIARY GUARANTORS"). The obligations of the
Subsidiary Guarantors under the Subsidiary Guarantees will be guaranteed by the
guarantee of the Company (the "COMPANY GUARANTEE") set forth in the Indenture.
The Securities and the Subsidiary Guarantees will be secured by Collateral
(as defined in the Indenture) of the Company and the Subsidiary Guarantors to
the extent provided for in the Collateral Documents listed on Schedule D of this
Agreement (the "COLLATERAL DOCUMENTS"). In order to create the security
interests in the Collateral and to determine the rights therein of the
-1-
<PAGE>
holders of the Securities and the Subsidiary Guarantees, the Company and the
Subsidiary Guarantors (as appropriate) will execute and deliver the Collateral
Documents.
The Company and the Subsidiary Guarantors understand that the Underwriters
propose to make a public offering of the Securities as soon as the Underwriters
deem advisable after this Agreement has been executed and delivered and the
Indenture has been qualified under the Trust Indenture Act of 1939, as amended
(the "1939 ACT").
The Company and the Subsidiary Guarantors have filed with the Securities
and Exchange Commission (the "COMMISSION") a registration statement on Form S-3
(No. 333-07517) covering the registration of the Securities under the Securities
Act of 1933, as amended (the "1933 ACT"), including the related preliminary
prospectus or prospectuses. Promptly after execution and delivery of this
Agreement, the Company and the Subsidiary Guarantors will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("RULE 430A")
of the rules and regulations of the Commission under the 1933 Act (THE "1933 ACT
REGULATIONS") and paragraph (b) of Rule 424 ("RULE 424(B)") of the 1933 Act
Regulations or (ii) if the Company and the Subsidiary Guarantors have elected to
rely upon Rule 434 ("RULE 434") of the 1933 Act Regulations, prepare and file a
term sheet (a "TERM SHEET") in accordance with the provisions of Rule 434 and
Rule 424(b). The information included in such prospectus or Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective (a) pursuant to paragraph (b) of Rule 430A is
referred to as "RULE 430A INFORMATION" or (b) pursuant to paragraph (d) of Rule
434 is referred to AS "RULE 434 INFORMATION." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "PRELIMINARY PROSPECTUS." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"REGISTRATION STATEMENT." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "RULE 462(B)
REGISTRATION STATEMENT," and after such filing the term "REGISTRATION STATEMENT"
shall include the Rule 462(b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"PROSPECTUS." If Rule 434 is relied on, the term "PROSPECTUS" shall refer to the
preliminary prospectus dated July 18, 1996 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR").
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All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the "1934
ACT"), which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY AND THE SUBSIDIARY
GUARANTORS. The Company and the Subsidiary Guarantors jointly and severally
represent and warrant to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(b) hereof, and agree with each
Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company and the
Subsidiary Guarantors meet the requirements for use of Form S-3 under the
1933 Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act and
no proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company and the Subsidiary Guarantors, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules
and regulations of the Commission under the 1939 Act (the "1939 ACT
REGULATIONS"), and did not 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.
Neither the Prospectus nor any amendments or supplements thereto, at the
time the Prospectus or any such amendment or supplement was issued and at
the Closing Time, included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If Rule 434 is used, the
Company and the Subsidiary Guarantors will comply with the requirements of
Rule 434. The representations and warranties in this subsection shall not
apply to (i) that part of the Registration Statement which shall constitute
the
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Statement of Eligibility and Qualification (Form T-1) of the Trustee
under the 1939 Act ("FORM T-1") or (ii) statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company or any Subsidiary
Guarantor in writing by any Underwriter through Merrill Lynch expressly for
use in the Registration Statement or Prospectus.
Each preliminary prospectus and the Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424(b) under the 1933 Act, complied when
so filed in all material respects with the 1933 Act Regulations and, if
applicable, each preliminary prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectus, when they became effective or at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations or the 1934 Act and the rules and regulations of the Commission
thereunder (the "1934 ACT REGULATIONS"), as applicable, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time, did not 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.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The financial statements included in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries, Louisiana Riverboat Gaming Partnership,
a Louisiana corporation ("LRGP"), or St. Charles Gaming Company, Inc., a
Louisiana corporation ("SCGC"), as the case may be, at the dates indicated
and the respective statement of operations, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries, LRGP or SCGC, as
the case may be, for the periods specified; said financial statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved.
The supporting schedules, if any, included in the Registration Statement
present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and the summary financial
information included in the Prospectus under the captions "Selected
Historical Consolidated Financial Information" and "Summary Consolidated
Financial Information"
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present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in
the Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been prepared
in accordance with the Commission's rules and guidelines with respect to
pro forma financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "MATERIAL ADVERSE EFFECT"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, that are
material with respect to the Company and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Each of the Subsidiary
Guarantors and the Company's other direct and indirect subsidiaries (each a
"SUBSIDIARY" and, collectively, the "SUBSIDIARIES") has been duly organized
and is validly existing as a corporation, partnership or limited liability
company in good standing under the laws of the jurisdiction of its
organization, has full power and authority, corporate or otherwise, to own,
lease and operate its properties and to conduct its business as described
in the Prospectus and is duly qualified as a foreign corporation,
partnership or limited liability company to transact business and is in
good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect. All of the issued and
outstanding shares of capital stock, partnership interests or limited
liability company interests of each such Subsidiary have been duly
authorized and validly issued, are fully paid and, except for the
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general partnership interests in LRGP, non-assessable. Except for a 50%
general partnership interest in LRGP, which will be acquired by the Company
through a wholly owned Subsidiary pursuant to the LRGP Acquisition (as
defined in the Prospectus) concurrently with the Closing Time, and except
as set forth in the Prospectus, all of the outstanding shares of capital
stock, partnership interests or limited liability company interests are
owned by the Company, directly or through Subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity. None of the outstanding shares of capital stock, partnership
interests or limited liability company interests of any Subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only Subsidiaries of the Company are
(a) the Subsidiaries listed on Schedule C-1 hereto and (b) the other
subsidiaries listed on Schedule C-2 hereto which, considered in the
aggregate as a single subsidiary, do not constitute a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or options
referred to in the Prospectus). The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued
and are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the Company.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company and each of the
Subsidiary Guarantors and constitutes a valid and binding agreement of the
Company and each of the Subsidiary Guarantors, enforceable against each of
them in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law)
and except to the extent that rights to indemnification or contribution
under this Agreement may be limited or unenforceable under certain
circumstances under law or court decisions with respect to a liability
where indemnification or contribution is contrary to public policy.
(x) AUTHORIZATION OF THE INDENTURE. The Indenture has been duly
authorized by the Company and each Subsidiary Guarantor and duly qualified
under the 1939 Act and, when duly executed and delivered by the Company,
the Subsidiary Guarantors and the Trustee, will constitute a valid and
binding agreement of the Company and the Subsidiary Guarantors, enforceable
against each of them in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as
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enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(xi) AUTHORIZATION OF THE SECURITIES, THE SUBSIDIARY GUARANTEES AND
THE COMPANY GUARANTEE. The Securities (including the offering, issuance
and sale thereof) have been duly authorized by the Company and, at the
Closing Time, will have been duly executed by the Company and, when
authenticated, issued and delivered in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor as
provided in this Agreement, will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture. The Subsidiary Guarantees set forth in the Indenture and
endorsed on the Securities have been duly authorized by each Subsidiary
Guarantor and, at the Closing Time, will have been duly executed by each
Subsidiary Guarantor, and when authenticated and delivered in accordance
with the provisions of the Indenture, will constitute the legal, valid and
binding obligation of each Subsidiary Guarantor enforceable against each of
them in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law),
and will be in the form contemplated by, and entitled to the benefits of,
the Indenture. The Company Guarantee set forth in the Indenture and
endorsed on the Securities has been duly authorized by the Company and, at
the Closing time, will have been duly executed by the Company and, when
authenticated and delivered in the manner provided for in the Indenture,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and will be in the form contemplated by,
and entitled to the benefits of, the Indenture. At the Closing Time and
after giving effect to the application of proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds," the Securities will rank senior in right of payment to all
outstanding Subordinated Indebtedness (as defined in the Indenture) of the
Company and pari passu in right of payment with any other outstanding
Indebtedness (as defined in the Indenture) of the Company and the
Subsidiary Guarantee of each Subsidiary Guarantor will rank senior in right
of payment to all outstanding Subordinated Indebtedness of such
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Subsidiary Guarantor and pari passu in right of payment to all other
outstanding Indebtedness of such Subsidiary Guarantor.
(xii) AUTHORIZATION OF THE COLLATERAL DOCUMENTS. Each of the
Collateral Documents has been duly authorized by the Company and each
Subsidiary Guarantor party to such Collateral Document and, when duly
executed and delivered by the Company, the Subsidiary Guarantors and the
Trustee, as the case may be, will constitute a valid and binding agreement
of the Company and the Subsidiary Guarantors, enforceable against each of
them in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(xiii) DESCRIPTION OF THE SECURITIES AND THE INDENTURE. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Prospectus and will
be in substantially the respective forms filed or incorporated by
reference, as the case may be, as exhibits to the Registration Statement.
(xiv) AUTHORIZATION OF USE OF PROCEEDS. The use of the proceeds from
the sale of the Securities for the purposes described in the Prospectus
under the caption "Use of Proceeds" has been duly authorized by the
Company.
(xv) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any
Subsidiary is in violation of its charter or by-laws, partnership agreement
or limited liability company operating agreement, as the case may be, or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any Subsidiary is a party or by which it
or any of them may be bound, or to which any of the property or assets of
the Company or any Subsidiary is subject (collectively, "AGREEMENTS AND
INSTRUMENTS"), except for such defaults that would not result in a Material
Adverse Effect. The execution, delivery and performance of this Agreement,
the Indenture, the Securities, the Subsidiary Guarantees, the Company
Guarantee and the Collateral Documents and the consummation of the
transactions contemplated herein and in the Registration Statement
(including the issuance, offering and sale of the Securities, the LRGP
Acquisition and the repurchase (or defeasance) of outstanding indebtedness
as described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company and the Subsidiary Guarantors with their
respective obligations hereunder and under the Indenture and the
Securities, Subsidiary Guarantees, the Company Guarantee or the Collateral
Documents, as the case may be, do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge
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or encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws, partnership
agreement or limited liability company operating agreement, as the case may
be, of the Company or any Subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their assets, properties or operations.
As used herein, a "REPAYMENT EVENT" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any Subsidiary.
(xvi) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees
of the Company or any Subsidiary exists or, to the knowledge of the Company
and the Subsidiary Guarantors, is imminent, and neither the Company nor any
Subsidiary Guarantor is aware of any existing or imminent labor disturbance
by the employees of any of its or any Subsidiary's principal suppliers,
manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xvii) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company and the Subsidiary Guarantors, threatened, against or affecting
the Company or any Subsidiary, which (a) is required to be disclosed in the
Registration Statement (other than as disclosed therein), (b) might
reasonably be expected to result in a Material Adverse Effect, or (c) might
reasonably be expected to materially and adversely affect the consummation
of the transactions contemplated in this Agreement and in the Registration
Statement (including the issuance, offering and sale of the Securities, the
LRGP Acquisition or the repurchase (or defeasance) of outstanding
indebtedness) or the performance by the Company or the Subsidiary
Guarantors of their respective obligations hereunder or under the
Indenture, the Securities, the Subsidiary Guarantees, the Company Guarantee
or the Collateral Documents; the aggregate of all pending legal or
governmental proceedings to which the Company or any Subsidiary is a party
or of which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xviii) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
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(XIX) POSSESSION OF INTELLECTUAL PROPERTY. The Company and the
Subsidiary Guarantors own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "INTELLECTUAL PROPERTY") necessary to carry on the business
now operated by each of the Company and the Subsidiary Guarantors, and
neither the Company nor any Subsidiary has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any Subsidiary
Guarantor therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect. The
Intellectual Property is free and clear of all Liens (as defined in the
Indenture), except for any Liens securing the repayment of indebtedness of
the Company or the Subsidiary to be repaid out of the proceeds of the sale
of the Securities as described in the Prospectus under the caption "Use of
Proceeds," which liens or encumbrances shall be extinguished at the time of
repayment of such indebtedness and Liens which, individually or in the
aggregate, are not material and which, if remaining in effect following the
Closing Time, would not violate the provisions of the Indenture. Except in
connection with transactions entered into in the ordinary course of
business, neither the Company nor any of the Subsidiaries has granted any
licenses or other rights or has any obligations to grant licenses or any
other rights to any Intellectual Property. Neither Company nor any of the
Subsidiaries has made any material claim of violation or infringement by
others of rights to, or in connection with, the Intellectual Property, and
neither the Company nor any Subsidiary knows of any basis for making any
such claim. There are no interferences or other contested proceedings,
either pending or, to the knowledge of the Company or any Subsidiary,
threatened, in the United States Copyright Office, the United States Patent
and Trademark Office or any federal, state or local court or before any
other government agency or tribunal, relating to any pending application
with respect to the Intellectual Property.
(XX) ACQUISITION OF LRGP. The Company has consummated the LRGP
Acquisition.
(XXI) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
under any federal, state or local law or regulation (including any laws or
regulations governing any aspect of legalized gaming in any federal, state
or local jurisdiction (collectively, "GAMING LAWS")), or approval,
authorization, consent or waiver of any class of securityholders of the
Company is necessary or required in connection with the offering, issuance
or sale by the Company and the Subsidiary Guarantors of the Securities, the
due execution, delivery or performance by the Company and the Subsidiary
Guarantors of this Agreement, the Indenture, the Securities, the Subsidiary
Guarantees, the Company Guarantee or the
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Collateral Documents, or the consummation of the LRGP Acquisition and the
repurchase (or defeasance) of existing indebtedness as described in the
Prospectus under the caption "Use of Proceeds," except (i) such as have
been already obtained under the 1933 Act, the 1933 Act Regulations, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") and
the relevant Gaming Laws and (ii) such as may be required under the 1933
Act or the 1933 Act Regulations or state securities laws and except for the
qualification of the Indenture under the 1939 Act. The Company has complied
in all material respects with the requirements of the HSR Act in connection
with the LRGP Acquisition. The waiting period under the HSR Act has expired
or been granted early termination by the Federal Trade Commission and the
Antitrust Division of the Department of Justice.
(XXII) POSSESSION OF LICENSES AND PERMITS. Except as disclosed in
the Registration Statement and Prospectus, each of the Company and the
Subsidiaries possess such permits, licenses, approvals, consents and other
authorizations, including those pursuant to relevant Gaming Laws
(collectively, "GOVERNMENTAL LICENSES"), issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
its businesses as now being conducted and as proposed to be conducted as
described in the Registration Statement and Prospectus; the Company and the
Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of the
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(XXIII) TITLE TO PROPERTY. The Company and each of the Subsidiaries
has (A) good and valid title to each of the items of personal property and
good and insurable fee title to all real property reflected in its
financial statements referred to in Section 1(a)(iv) or referred to in the
Registration Statement and the Prospectus as being owned by it and (B)
valid and enforceable leasehold interests in each of the items of real and
personal property which are referred to in the Registration Statement and
the Prospectus as being leased by it, in each case free and clear of all
Liens, other than Liens permitted under the Indenture. Other than with
respect to Liens permitted under the Indenture, no financing statement
under the Uniform Commercial Code or notice of judgment lien, materialmen's
lien, mechanic's lien, attachment lien or similar notice with respect to
any assets of the Company or the Subsidiaries has been filed in any
jurisdiction, and neither the Company nor any of the Subsidiary has signed
any such financing statement or notice or any security agreement
authorizing any secured party thereunder to file any such financing
statement or notice. All real property of the Company and the Subsidiaries
reflected in the financial statements referred in Section 1(a)(iv) or
referred to in the Registration Statement and the Prospectus as being
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owned by the Company or the Subsidiaries is in good condition and conforms
in all material respects with all applicable building, zoning, land use and
other laws, ordinances, codes, orders and regulations (other than
environmental laws, which are addressed in Section 1(a)(xxiii)) and the use
of such real property conforms in all material respects with such laws,
ordinances, codes, orders and regulations, and all necessary occupancy,
certificates and permits for the present lawful use and occupancy thereof
and the equipment thereof have been issued and are currently in full force
and effect. All notices of violations of law, ordinances, codes, orders or
regulations issued by any governmental authority having jurisdiction over
or affecting any such real property have been complied with by the Company
or the Subsidiaries, as applicable. The Collateral Documents, upon the
execution, delivery and recordation thereof, will create a first priority
(except as otherwise provided in the Indenture) perfected security
interests, with in the Collateral for the benefit of the Secured Parties.
(xxiv) COMPLIANCE WITH CUBA ACT. The Company and the Subsidiary
Guarantors have complied with, and are and will be in compliance with, the
provisions of that certain Florida act relating to disclosure of doing
business with Cuba, codified as Section 517.075 of the Florida statutes,
and the rules and regulations thereunder (collectively, the "CUBA ACT") or
is exempt therefrom.
(xxv) INVESTMENT COMPANY ACT. Neither the Company nor any
Subsidiary Guarantor is, and upon the issuance and sale of the Securities
as herein contemplated and the application of the net proceeds therefrom as
described in the Prospectus will be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 ACT").
(xxvi) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of the
Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "HAZARDOUS MATERIALS") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"ENVIRONMENTAL LAWS"), (B) the Company and the Subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of the Subsidiaries and (D)
there are no events or circumstances that might reasonably be
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expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of the Subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(xxvii) RETIREMENT OF FIRST MORTGAGE NOTES. The Company is privately
negotiating to purchase for cash any and all of its outstanding 11 1/2%
First Mortgage Notes due November 15, 2001 (the "FIRST MORTGAGE NOTES") and
has solicited consents from the holders of such First Mortgage Notes to
amend certain terms of the indenture governing the First Mortgage Notes
with respect to the defeasance of the First Mortgage Notes not so purchased
(the "DEFEASANCE AMENDMENTS"). The Company has duly and validly received
and accepted consents from holders of a sufficient principal amount of the
First Mortgage Notes outstanding to effect, and, at the Closing Time, the
Company and the Trustee have effected, the Defeasance Amendments, such that
at the Closing Time, the Company will be permitted to defease, and shall
defease, all of the First Mortgage Notes then outstanding without the
consent, waiver or approval of any other party.
(xxviii) TAX RETURNS. All United States federal tax returns required
to be filed by or on behalf of the Company or any of the Subsidiaries have
been filed and all taxes shown by such returns or otherwise assessed which
are due and payable have been paid, except assessments against which
appeals have been or will be promptly taken and as to which adequate
reserves have been provided. All other tax returns required to be filed by
or on behalf of the Company or any of the Subsidiaries pursuant to
applicable foreign, state, local or other law have been filed, except
insofar as the failure to file such returns would not have a material
adverse effect on the condition (financial or otherwise), earnings or
business affairs of the Company and the Subsidiaries, considered as a
single enterprise, and all taxes shown by such returns or otherwise
assessed which are due and payable have been paid, except assessments
against which appeals have been or will be promptly taken and as to which
adequate reserves have been provided. The charges, accruals and reserves on
the books of the Company and its Subsidiaries in respect of any income and
corporation tax liability (or for any payments to be made in respect of any
tax sharing agreements or arrangements) for any years not finally
determined are adequate to meet any assessments or reassessments for
additional income tax for any such years, except to the extent of any
inadequacy that would not have a material adverse effect on the condition
(financial or otherwise), earnings or business affairs of the Company and
the Subsidiaries, considered as a single enterprise.
(xxix) FOREIGN CORRUPT PRACTICES ACT. None of the Company, any
Subsidiary or any officer, director, general partner or managing member
purporting to act on behalf of the Company or any Subsidiary has during the
past five years (A) made any contributions to any candidate for political
office, or failed to disclose fully any such contributions, in violation of
law; (B) made any payment to any federal, state, local or foreign
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or allowed by
applicable law; (C) made
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any payment in violation of any law to any purchasing or selling agent or
person charged with similar duties of any entity to which the Company or
such Subsidiary as applicable, sells (or has in past sold) or from which
the Company or such Subsidiary, as applicable, buys (or has in the past
bought) products for the purpose of influencing such agent or person to buy
products from or sell products to the Company or such Subsidiary, as
applicable; or (D) engaged in any transaction, maintained any bank account
or used any corporate funds except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books
and records of the Company or such Subsidiary, as applicable.
(XXX) INSURANCE. Each of the Company and the Subsidiaries has
adequate liability and other insurance policies insuring it against the
risks of loss arising out of or related to its businesses, as described in
the Registration Statement and Prospectus, issued by insurers of recognized
financial responsibility.
(XXXI) INTERNAL ACCOUNTING CONTROLS. The Company and each of the
Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is (or was) taken with respect to any differences.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer, general
partner or managing member of the Company or any Subsidiary Guarantor delivered
to Merrill Lynch or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company or such Subsidiary Guarantor, as the
case may be, to each Underwriter as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) SECURITIES. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price set forth in Schedule B, the aggregate principal amount of Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional principal amount of Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) PAYMENT AND DELIVERY. Payment of the purchase price for, and delivery
of certificates for, the Securities shall be made at the offices of Merrill
Lynch, North Tower, World Financial Center, New York, New York 10281-1209, or at
such other place as shall be agreed upon by the Underwriters and the Company, at
10:00 A.M. (Eastern time) on the third (fourth, if
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the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day
after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten (10) business days after such
date as shall be agreed upon by the Underwriters and the Company (such time and
date of payment and delivery being herein called "CLOSING TIME").
Payment by the several Underwriters shall be made to the Company by wire
transfer of immediately available funds to a bank account designated by the
Company, against delivery to the respective Underwriters of certificates for the
Securities to be purchased by them. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Time, but such
payment shall not relieve such Underwriter from its obligations hereunder.
Certificates for the Securities shall be in such denominations ($1,000 or
integral multiples thereof) and registered in such names as the Underwriters may
request in writing at least one full business day before the Closing Time. The
Securities, which may be in temporary form, will be made available for
examination and packaging by the Underwriters in The City of New York not later
than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time.
Should the Underwriters and the Company agree in writing, the delivery of
and payment for the Securities shall occur as provided in the next sentence
instead of as provided above. At the Closing Time, (i) Merrill Lynch, on behalf
of itself and the other Underwriters, shall deliver to the Company by wire
transfer to an account designated by the Company in writing at least two
business days prior to such Closing Time next day funds representing the
purchase price of the Securities, and (ii) the Company shall notify the transfer
agent and registrar to transfer the Securities, by book-entry in the name of
Cede & Co., as nominee for the Depository Trust Company, on behalf of the
Underwriters.
(c) ENGAGEMENT OF QUALIFIED INDEPENDENT UNDERWRITER. The Company and the
Subsidiary Guarantors hereby confirm their engagement of Merrill Lynch as, and
Merrill Lynch hereby confirms its agreements with the Company to render services
as, a "qualified independent underwriter" within the meaning of Rule 2720(b)(15)
of the Rules of the National Association of Securities Dealers, Inc. ("NASD")
with respect to the offering and sale of the Securities. Merrill Lynch, solely
in its capacity as qualified independent underwriter and not otherwise, is
referred to herein as the "INDEPENDENT UNDERWRITER."
SECTION 3. COVENANTS OF THE COMPANY. The Company and the Subsidiary
Guarantors covenant with each Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company and the Subsidiary Guarantors, subject to Section 3(b), will comply with
the requirements of Rule 430A or Rule 434, as applicable, and will notify the
Underwriters immediately, and confirm the notice in writing, (i) when any post-
effective amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration
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Statement or any amendment or supplement to the Prospectus or for additional
information, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company and the Subsidiary Guarantors will promptly effect
the filings necessary pursuant to Rule 424(b) and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 424(b) was received for filing by the Commission and, in
the event that it was not, it will promptly file such prospectus. The Company
and the Subsidiary Guarantors will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company and the Subsidiary Guarantors will
give the Underwriters notice of their intention to file or prepare any amendment
to the Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus included
in the Registration Statement at the time it became effective or to the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, and
will furnish the Underwriters with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which Underwriters or counsel for the
Underwriters shall object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company and the Subsidiary
Guarantors have furnished or will deliver to the Underwriters and counsel for
the Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the Underwriters,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
Underwriters. If applicable, the copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company and the Subsidiary Guarantors
have delivered to each Underwriter, without charge, as many copies of each
preliminary prospectus as such Underwriter reasonably requested, and the Company
and the Subsidiary Guarantors hereby consent to the use of such copies for
purposes permitted by the 1933 Act. The Company and the Subsidiary Guarantors
will furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. If applicable, the Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
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(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company and the
Subsidiary Guarantors will comply with the 1933 Act and the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and the
1939 Act Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. If at any
time when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Company and the Subsidiary Guarantors, to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of any
such counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company and the Subsidiary Guarantors will
promptly prepare and file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company and the Subsidiary Guarantors will furnish to
the Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company and the Subsidiary Guarantors
will use their best efforts, in cooperation with the Underwriters, to qualify
the Securities for offering and sale under the applicable securities laws of
such states and other jurisdictions as the Underwriters may designate and to
maintain such qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that neither the Company nor
any Subsidiary Guarantor shall be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company and the Subsidiary Guarantors will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not less than one year
from the effective date of the Registration Statement and any Rule 462(b)
Registration Statement. The Company and the Subsidiary Guarantors will also
supply the Underwriters with such information as is necessary for the
determination of the legality of the Securities for investment under the laws of
such jurisdictions as the Underwriters may request.
(g) RULE 158. The Company and the Subsidiary Guarantors will timely file
such reports pursuant to the 1934 Act as are necessary in order to make
generally available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by, the
last paragraphs of Section 11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company and the Subsidiary Guarantors will use
the proceeds received by it from the sale of the Securities in the manner
described in the Prospectus under the caption "Use of Proceeds."
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(i) REPORTING REQUIREMENTS. The Company and the Subsidiary Guarantors,
during the period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by the 1934
Act and the 1934 Act Regulations.
SECTION 4. PAYMENT OF EXPENSES.
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(a) EXPENSES. The Company and the Subsidiary Guarantors will pay all
expenses incident to the performance of their obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters, the Indenture
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheet and of the Prospectus and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (viii) the fees and expenses of the Trustee,
including the fees and disbursements of counsel for the Trustee in connection
with the Indenture and the Securities, (ix) any fees payable in connection with
the rating of the Securities, and (x) the filing fees incident to the review by
the NASD of the terms of the sale of the Securities.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company and the Subsidiary Guarantors shall reimburse the
Underwriters for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Subsidiary Guarantors
contained in Section 1 hereof or in certificates of any officer of the Company
or any Subsidiary Guarantor delivered pursuant to the provisions hereof, to the
performance by the Company and the Subsidiary Guarantors of their respective
covenants and other obligations hereunder, and to the following further
conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A
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Information shall have been filed with the Commission in accordance with Rule
424(b) (or a post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rule 430A)
or, if the Company has elected to rely upon Rule 434, a Term Sheet shall have
been filed with the Commission in accordance with Rule 424(b).
(B) OPINIONS OF COUNSEL FOR COMPANY AND THE SUBSIDIARY GUARANTORS. At
Closing Time, Underwriters shall have received the favorable opinion, dated as
of Closing Time and in form and substance satisfactory to counsel for the
Underwriters, of Mayer, Brown & Platt, counsel for the Company and the
Subsidiary Guarantors, to the effect set forth in Exhibit A-1 hereto and to such
further effect as counsel to the Underwriters may reasonably request. In giving
such opinion such counsel may rely on the opinion of other counsel satisfactory
to the Underwriters.
(C) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the Underwriters
shall have received the favorable opinion, dated as of Closing Time, of Hughes
Hubbard & Reed LLP, counsel for the Underwriters, to the effect set forth in
Exhibit A-2 attached hereto. In giving such opinion such counsel may rely, as
to all matters governed by the laws of jurisdictions other than the law of the
States of New York and Florida, and the federal law of the United States, upon
the opinions of counsel satisfactory to the Underwriters. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company and
the Subsidiaries and certificates of public officials.
(D) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriters shall have
received a certificate of the Company and the Subsidiary Guarantors, signed by
the president or vice president and the principal financial or accounting
officer, general partner, or managing member (as appropriate) of the Company and
the Subsidiary Guarantors, dated as of the Closing Time, to the effect that (i)
there has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) it has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement or the Form T-1 has been issued and
no proceedings for that purpose have been instituted or are pending or, to the
Company's and the Subsidiary Guarantor's knowledge, are contemplated by the
Commission.
(E) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Underwriters shall have received from Ernst & Young LLP a letter
dated such date, in form and substance satisfactory to the Underwriters, to the
effect set forth in Exhibit B and containing statements and information of the
type ordinarily included in accountants' "comfort letters" to
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underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus that were
prepared by such accountants.
(F) BRING-DOWN COMFORT LETTER. At Closing Time, the Underwriters shall
have received from Ernst & Young LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to paragraph (e) of this Section 5, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(G) MAINTENANCE RATING. At Closing Time, the Securities shall be rated at
least ________ by Moody's Investor's Service Inc. and ____________________ by
Standard & Poor's Corporation, and the Company shall have delivered to the
Underwriters a letter dated the Closing Time, from each such rating agency, or
other evidence satisfactory to the Underwriters confirming that the Securities
have such ratings; and since the date of this Agreement, there shall not have
occurred a downgrading in the rating assigned to the Securities or any of the
Company's other debt securities by any nationally recognized securities rating
agency, and no such securities rating agency shall have publicly announced that
it has under surveillance or review its rating of the Securities or any of the
Company's other debt securities.
(H) NO OBJECTION. The NASD shall not have raised any objection with
respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(I) INDENTURE. At Closing Time, the Company and the Subsidiary Guarantors
shall have entered into the Indenture.
(J) COLLATERAL DOCUMENTS. At Closing Time, the Company and the Subsidiary
Guarantors shall have entered into the Collateral Documents, shall have
executed, delivered, filed and recorded all instruments and documents, and have
done all such acts and other things as are necessary to subject the Collateral
to the security interests intended to be created by the Collateral Documents and
as are necessary or advisable to perfect the security interests intended to be
created thereby, and shall have complied in all material respects with all
agreements and satisfied all conditions on their part to be performed or
satisfied or prior to the Closing Time.
(K) RETIREMENT OF FIRST MORTGAGE NOTES. The Company shall have duly and
validly received and accepted consents from holders of a sufficient principal
amount of the First Mortgage Notes outstanding to effect, and the Company and
the Trustee shall have effected, the Defeasance Amendments, and at Closing Time,
the Company shall have repurchased or defeased all of First Mortgage Notes.
(L) ACQUISITION OF LRGP. At the Closing Time the Company shall have
consummated the LRGP Acquisition.
(M) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may require
for the purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy of any
of the representations or warranties, or the fulfillment of
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any of the conditions, herein contained; and all proceedings taken by the
Company and the Subsidiary Guarantors in connection with the issuance and sale
of the Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
(N) TERMINATION OF AGREEMENT. If any condition specified in this Section 5
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Underwriters by notice to the Company at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. INDEMNIFICATION.
(A) INDEMNIFICATION OF UNDERWRITERS. The Company and each Subsidiary
Guarantor, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company and the Subsidiary Guarantors; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
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provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(B) INDEMNIFICATION OF QUALIFIED INDEPENDENT UNDERWRITER. The Company and
each Subsidiary Guarantor also agree, jointly and severally, to indemnify and
hold harmless the Independent Underwriter and each person, if any, who controls
the Independent Underwriter within the meaning of either Section 15 of the 1933
Act or Section 20 of the 1934 Act, from and against any and all losses, claims,
damages, liabilities and judgments incurred as a result of the Independent
Underwriter's participation as a "qualified independent underwriter" within the
meaning of Rule 2720(b)(15) of the Rules of the NASD in connection with the
offering of the Securities, except for any losses, claims, damages, liabilities
and judgments resulting from the Independent Underwriter's or such controlling
person's willful misconduct or gross negligence.
(C) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each Underwriter
severally agrees to indemnify and hold harmless the Company, the Subsidiary
Guarantors, each of their directors, each of their officers who signed the
Registration Statement, and each person, if any, who controls the Company or the
Subsidiary Guarantor within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) or (b) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through Merrill
Lynch expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(D) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) or (b)
above, counsel to the indemnified parties shall be selected by Merrill Lynch,
and, in the case of parties indemnified pursuant to Section 6(c) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any
-22-
<PAGE>
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances;
provided, that, if indemnity is sought pursuant to Section 6(b), then, in
addition to such counsel for the indemnified parties, the indemnifying party
shall be liable for the reasonable fees and expenses of not more than one
separate counsel (in addition to any necessary local counsel) for the
Independent Underwriter in its capacity as a "qualified independent underwriter"
and all persons, if any, who control the Independent Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act if, in the
reasonable judgment of the Independent Underwriter there may exist a conflict of
interest between the Independent Underwriter and the other indemnified parties.
In the case of any such separate counsel for the Independent Underwriter and
such control persons of the Independent Underwriter, such counsel shall be
designated in writing by the Independent Underwriter.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding 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.
(E) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
Subsidiary Guarantors and the Underwriters from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Subsidiary Guarantors and the Underwriters in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
-23-
<PAGE>
Relative benefits received in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the Subsidiary Guarantors and the total underwriting discount
received by the Underwriters, in each case as set forth on the cover of the
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Securities as
set forth on such cover. The Company, each Subsidiary Guarantor and the
Underwriter's agree that Merrill Lynch will not receive any additional benefits
hereunder for serving as the Independent Underwriter in connection with the
offering and sale of the Securities.
Relative fault shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Subsidiary Guarantors or by the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company, the Subsidiary Guarantors and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters 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 above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the 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 any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company or a Subsidiary Guarantor, each officer of the
Company or a Subsidiary Guarantor who signed the Registration Statement, and
each person, if any, who controls the Company or a Subsidiary Guarantor within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company or a Subsidiary Guarantor.
The Underwriters' respective
-24-
<PAGE>
obligations to contribute pursuant to this Section 7 are several in proportion
to the principal amount of Securities set forth opposite their respective names
in Schedule A hereto and not joint.
Each Underwriter agrees that Merrill Lynch shall have no additional
liability to any Underwriter pursuant to any provision of the Agreement Among
Underwriters (the "AAU") as a result of its serving as a "qualified independent
underwriter" within the meaning of Rule 2720(b)(15) of the Rules of the NASD in
connection with the offering of the Securities. In addition, each Underwriter
agrees to pay its proportionate share, based upon the respective underwriting
obligations of the Underwriters, of any liability of the type referred to in any
provision of the AAU incurred by Merrill Lynch in its capacity as Independent
Underwriter.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers, general partners or managing members of the Company or
any Subsidiary Guarantor submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or controlling person, or by or on behalf of the Company or
any Subsidiary Guarantor, and shall survive delivery of the Securities to the
Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(A) TERMINATION; GENERAL. The Underwriters may terminate this Agreement,
by notice to the Company, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and the Subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Underwriters, impracticable to market the Securities or to enforce contracts for
the sale of the Securities, or (iii) if trading in any securities of the Company
has been suspended or limited by the Commission or the Nasdaq National Market,
or if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the Nasdaq National Market has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (iv)
if a banking moratorium has been declared by either Federal or New York
authorities.
(B) LIABILITIES. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6
and 7 shall survive such termination and remain in full force and effect.
-25-
<PAGE>
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of
the Underwriters shall fail at Closing Time to purchase the Securities which it
or they are obligated to purchase under this Agreement (the "DEFAULTED
SECURITIES"), the remaining Underwriters shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Underwriters shall not have completed
such arrangements within such 24-hour period, then this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Underwriters or the Company shall have the right to
postpone Closing Time for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "UNDERWRITER" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Merrill Lynch at North Tower, World
Financial Center, New York, New York 10281-1201, attention of _________________;
and notices to the Company and the Subsidiary Guarantors shall be directed to
the Company at 711 Washington Loop, Second Floor, Biloxi, Mississippi 39530,
attention of __________________.
SECTION 12. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the parties hereto and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters, Company and
the Subsidiary Guarantors and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Company and the Subsidiary
Guarantors and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
-26-
<PAGE>
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters, the Company and the Subsidiary Guarantors in accordance with
its terms.
Very truly yours,
CASINO AMERICA, INC.
By
----------------------------------------------
Bernard Goldstein, Chief Executive Officer
RIVERBOAT CORPORATION OF MISSISSIPPI, INC.
By
----------------------------------------------
John Gallaway, President
RIVERBOAT CORPORATION OF MISSISSIPPI, INC.-
VICKSBURG
By
----------------------------------------------
John Gallaway, President
RIVERBOAT SERVICES INCORPORATED
By
----------------------------------------------
John Gallaway, President
-27-
<PAGE>
CSNO, INC.
By
----------------------------------------------
John Gallaway, President
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
By: CSNO, INC., General Partner
By
-----------------------------------------
John Gallaway, President
ST. CHARLES GAMING COMPANY, INC.
By
----------------------------------------------
John Gallaway, President
LRGP HOLDINGS, INC.
By
----------------------------------------------
John Gallaway, President
LRG HOTELS, L.L.C.
By: CSNO, INC., Managing Member
By
-----------------------------------------
John Gallaway, President
-28-
<PAGE>
GRAND PALAIS RIVERBOAT, INC.
By
----------------------------------------------
John Gallaway, President
ASMI MANAGEMENT, INC.
By
----------------------------------------------
John Gallaway, President
P.P.I., INC.
By
----------------------------------------------
John Gallaway, President
ISLE OF CAPRI CASINOS COLORADO, INC.
By
----------------------------------------------
John Gallaway, President
-29-
<PAGE>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SALOMON BROTHERS INC.
NOMURA SECURITIES INTERNATIONAL INC.
DEUTSCHE MORGAN GRENFELL
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
---------------------------------------
Authorized Signatory
[For itself and the other Underwriters named in Schedule A herein.]
-30-
<PAGE>
SCHEDULE A
to
PURCHASE AGREEMENT
UNDERWRITERS
------------
<TABLE>
<CAPTION>
Principal
Amount of
Name Securities
- ---- ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated $
Salomon Brothers Inc
Nomura Securities International, Inc.
Deutsche Morgan Grenfell
Total $300,000,000
</TABLE>
<PAGE>
SCHEDULE B
to
PURCHASE AGREEMENT
CASINO AMERICA, INC.
$300,000,000 __% Senior Secured Notes Due 2003
1. The initial public offering price of the Securities shall be ___% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the Securities
shall be ____% of the principal amount thereof.
3. The interest rate on the Securities shall be ___% per annum.
4. (a) The Securities are redeemable, in whole or in part, at the option
the Company, at any time on or after August __, 2000 at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest to the redemption date, if redeemed during the 12-month period
beginning on August __ of the years indicated below:
Year Percentage
---- ----------
2000 %
2001 %
2002 and thereafter 100.00%
(b) The Securities are also redeemable, up to $100 million in
principal amount of the then outstanding Securities, at the option the Company,
upon the consummation by the Company of a Qualified Public Entity Offering on or
before August __, 1999, at a redemption price of __% of the principal amount of
the Securities so redeemed, plus accrued and unpaid interest to the redemption
date, provided that after any such optional redemption, at least $200 million in
principal amount of the Securities remains outstanding; and
(c) Notwithstanding any other provision of the Indenture, the
Securities are also subject to redemption at the option of the Company in the
event that a Gaming Authority requires that a particular holder or beneficial
owner of Securities be licensed, qualified or found suitable under any
applicable gaming law, and such holder or beneficial either (i) fails to apply
for such license, qualification or finding within 30 days after being so
requested or (ii) is not so licensed, qualified or found suitable.
5. The Securities are also subject to mandatory repurchase offers as
follows:
B-1
<PAGE>
(a) Upon the occurrence of a Change of Control, the Company is
obligated to make an offer to repurchase all outstanding Securities at a
redemption price of 101% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date;
(b) At such time as the amount of Excess Louisiana Cash aggregates $10
million, the Company is obligated to make an offer to repurchase outstanding
Securities up to a maximum principal amount (expressed as a multiple of $1,000)
equal to such Excess Louisiana Cash, less the accrued and unpaid interest to the
redemption date on such Securities. The offer price shall be payable in cash in
an amount equal to of 100% of the principal amount thereof, plus accrued and
unpaid interest to the date of repurchase; and
(c) At each such time as the amount of Excess Sale/Loss Proceeds
aggregates $10 million, the Company is obligated to make an offer to repurchase
outstanding Securities up to a maximum principal amount (expressed as a multiple
of $1,000) equal to such Excess Sale/Loss Proceeds, less the accrued and unpaid
interest on such Notes. The offer price shall be payable in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of the repurchase.
B-2
<PAGE>
SCHEDULE C-I
to
PURCHASE AGREEMENT
Significant Subsidiaries
------------------------
Riverboat Corporation of Mississippi
Riverboat Corporation of Mississippi--Vicksburg
Riverboat Services Incorporated
CSNO, Inc.
Louisiana Riverboat Gaming Partnership
St. Charles Gaming Company, Inc.
LRG Hotels, L.L.C.
Grand Palais Riverboat, Inc.
LRGP Holdings, Inc.
P.P.I., Inc.
ASMI Management Inc.
Isle of Capri Casino Colorado, Inc.
<PAGE>
SCHEDULE C-II
to
PURCHASE AGREEMENT
Non-Significant Subsidiaries
----------------------------
<PAGE>
SCHEDULE D
Collateral Documents
--------------------
(1) Accounts Pledge Agreement
(2) Company Pledge Agreement
(3) Company Security Agreement
(4) Subsidiary Pledge Agreement
(5) Subsidiary Security Agreement
(6) Isle-Biloxi Mortgage
(7) Isle-Bossier City Deeds of Trust
(8) Isle-Lake Charles Deed of Trust
(9) Isle-Vicksburg Mortgage
(10) Pompano Park Mortgage
(11) Isle-Biloxi Fleet Mortgage
(12) Isle-Bossier City Ship Mortgage
(13) Isle-Lake Charles Ship Mortgage
(14) Grand Palais Ship Mortgage
(15) Isle-Vicksburg Ship Mortgage
<PAGE>
EXHIBIT 4.7
- --------------------------------------------------------------------------------
CASINO AMERICA, INC.
TO
FLEET NATIONAL BANK,
Trustee
--------------------------
FOURTH SUPPLEMENTAL INDENTURE
Dated as of July 26, 1996
--------------------------
$105,000,000
11 1/2% First Mortgage Notes
Due 2001
- --------------------------------------------------------------------------------
<PAGE>
FOURTH SUPPLEMENTAL INDENTURE, dated as of July 26, 1996 (the "Fourth
Supplement") between Casino America, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company"),
having its principal office at 711 Washington Loop, Second Floor, Biloxi,
Mississippi 39530, and Fleet National Bank (formerly known as Shawmut Bank
Connecticut, National Association), as Trustee (herein called the "Trustee"),
for the Company's 11 1/2% First Mortgage Notes due 2001 (the "Securities").
RECITALS
The Company has heretofore executed and delivered to the Trustee an
Indenture, dated as of November 1, 1993, as supplemented by the First
Supplemental Indenture, dated as of April 29, 1994, the Second Supplemental
Indenture, dated as of March 8, 1995 and the Third Supplemental Indenture, dated
as of May 3, 1996 (the "Indenture"), under which the Securities in the aggregate
principal amount of $105,000,000 were issued and are outstanding.
In accordance with Section 902 of the Indenture, the Company has obtained
the written consent of the Holders of a majority in principal amount of the
Securities to certain amendments to the Indenture, which consents the Company
and its counsel have determined are sufficient under Section 902 to authorize
this Fourth Supplement. The Company is authorized to enter into this Fourth
Supplement by a Board Resolution and simultaneously herewith the Trustee has
received an Opinion of Counsel and an Officers' Certificate stating that the
execution of this Fourth Supplement is authorized or permitted by the Indenture.
NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
SECTION 101. Section 1303 of the Indenture is amended by inserting into
the first sentence of Section 1303 after "Sections 1007 through Sections 1028"
and before the words "with respect to the Outstanding Securities" the following:
and, notwithstanding any provision in any of the Security Documents,
the Company shall be immediately released (and the Trustee shall
execute all documentation, including, without limitation, amendments
to any of the Security Documents as may be required to effect such
release) from any and all of its obligations under Sections 1201
through 1207
<PAGE>
SECTION 102. Section 1303 of the Indenture is amended by inserting the
following as the second sentence of such Section:
The Trustee shall thereupon release its Lien, in its entirety, in the
Collateral.
SECTION 103. Section 1304 of the Indenture is amended by deleting the
following words in the first sentence of subsection (1) following after the
words "as trust funds" and before the words "in trust for the purpose of making
the following payments,":
, for a period of at least 123 days prior to the date of such
defeasance,
SECTION 104. Section 1304, subsection (2), is deleted in its entirety and
replaced with the following:
No Default or Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit.
SECTION 105. Section 401 of the Indenture is amended by deleting the
following words in subsection (1)(b) following (i), (ii) and (iii) of such
subsection and following the words "deposited with the Trustee as trust funds,"
and before the words "in trust for the purpose an amount":
, for a period of at least 123 days prior to the date of such
discharge,
ARTICLE TWO
SECTION 201. Effective Date of This Fourth Supplement.
This Fourth Supplement will be effective upon the date first written above;
provided, however, that if the Company has not purchased and retired and/or
effected a defeasance pursuant to Section 1302 or a covenant defeasance pursuant
to Section 1303 relating to all Outstanding Securities prior to 5:00 p.m., New
York City time, on August 23, 1996, then this Fourth Supplement shall be
nullified and no longer effective.
SECTION 202. Indenture Ratified.
Except as hereby otherwise expressly provided, the Indenture is in all
respects ratified and confirmed, and all the terms, provisions and conditions
thereof shall be and remain in full force and effect.
-2-
<PAGE>
SECTION 203. Counterparts.
This Fourth Supplement 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 204. Trustee Not Responsible.
The recitals contained herein shall be taken as the statements of the
Company and the Trustee assumes no responsibility for their correctness. The
Trustee enters into this Supplemental Indenture in reliance on an Opinion of
Counsel, as provided for in Section 903 of the Indenture.
SECTION 205. Definitions and Terms.
Unless otherwise defined herein, all initially capitalized terms used
herein shall have the meanings assigned to such terms in the Indenture.
SECTION 206. Governing Law.
This Fourth Supplement shall be governed by and construed in accordance
with the law of the State of New York.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplement
to be duly executed as of the day and year first above written.
CASINO AMERICA, INC.
By:/s/ Allan B. Solomon
----------------------------
Name: Allan B. Solomon
Title: Executive Vice President and
General Counsel
Attest: /s/ Rexford A. Yeisley
------------------------------
Name: Rexford A. Yeisley
Title: Vice President and Chief Financial Officer
FLEET NATIONAL BANK,
as Trustee
By: /s/ Steve Cimalore
---------------------------
Name: Steve Cimalore
Title: Vice President
-4-
<PAGE>
EXHIBIT 4.9
================================================================================
CASINO AMERICA, INC.
ISSUER
RIVERBOAT CORPORATION OF MISSISSIPPI
RIVERBOAT CORPORATION OF MISSISSIPPI-VICKSBURG
RIVERBOAT SERVICES INCORPORATED
CSNO, INC.
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
ST. CHARLES GAMING COMPANY, INC.
LRG HOTELS, L.L.C.
GRAND PALAIS RIVERBOAT, INC.
LRGP HOLDINGS, INC.
P.P.I., INC.
ASMI MANAGEMENT INC.
ISLE OF CAPRI CASINO COLORADO, INC.
SUBSIDIARY GUARANTORS
TO
FLEET NATIONAL BANK
TRUSTEE
----------------------------------------
INDENTURE
DATED AS OF AUGUST ___, 1996
----------------------------------------
$300,000,000
_____% SENIOR SECURED NOTES DUE 2003
================================================================================
<PAGE>
Casino America, Inc.
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture dated as of August __, 1996
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- ------------------------ -----------------------
<S> <C>
(S) 310(a)(1) ............................ 607
(S) 310(a)(2) ............................ 607
(S) 310(b) ............................ 608
(S) 311 ............................ 604; 611
(S) 312(a) ............................ 703
(S) 312(b) ............................ 704
(S) 312(c) ............................ 705
(S) 313 ............................ 704
(S) 314(a) ............................ 705
(S) 314(a)(4) ............................ 1008(a)
(S) 314(b) ............................ 1202
(S) 314(c)(1) ............................ 102
(S) 314(c)(2) ............................ 102
(S) 314(e) ............................ 102
(S) 315(a) ............................ 602
(S) 315(b) ............................ 601
(S) 315(c) ............................ 602
(S) 315(d) ............................ 602
(S) 316(a)(last sentence) ............................ 101 ("Outstanding")
(S) 316(a)(1)(A) ............................ 502, 512
(S) 316(a)(1)(B) ............................ 513
(S) 316(b) ............................ 508
(S) 316(c) ............................ 104(d)
(S) 317(a)(1) ............................ 503
(S) 317(a)(2) ............................ 504
(S) 317(b) ............................ 1003
(S) 318(a) ............................ 111
</TABLE>
- ----------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
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PARTIES...................................................................... 1
RECITALS..................................................................... 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION......... 2
SECTION 101. Definitions..................................................... 2
SECTION 102. Compliance Certificates and Opinions............................24
SECTION 103. Form of Documents Delivered to Trustee..........................25
SECTION 104. Acts of Holders.................................................25
SECTION 105. Notices, etc. to Trustee and Company............................27
SECTION 106. Notice to Holders; Waiver.......................................27
SECTION 107. Effect of Headings and Table of Contents........................27
SECTION 108. Successors and Assigns..........................................28
SECTION 109. Separability Clause.............................................28
SECTION 110. Benefits of Indenture...........................................28
SECTION 111. Governing Law...................................................28
SECTION 112. Legal Holidays..................................................28
ARTICLE TWO NOTE FORMS......................................................28
SECTION 201. Forms Generally.................................................28
SECTION 202. Temporary Notes.................................................29
ARTICLE THREE THE NOTES.....................................................29
SECTION 301. Title and Terms.................................................29
SECTION 302. Denominations...................................................30
SECTION 303. Execution, Authentication, Delivery and Dating..................30
SECTION 304. Registration, Registration of Transfer and Exchange.............31
SECTION 305. Mutilated, Destroyed, Lost and Stolen Notes.....................32
SECTION 306. Payment of Interest; Interest Rights Preserved..................33
SECTION 307. Persons Deemed Owners...........................................34
SECTION 308. Cancellation....................................................34
SECTION 309. Computation of Interest.........................................34
ARTICLE FOUR SATISFACTION AND DISCHARGE.....................................34
SECTION 401. Satisfaction and Discharge of Indenture.........................34
SECTION 402. Application Of Trust Money......................................35
ARTICLE FIVE REMEDIES.......................................................36
SECTION 501. Events of Default...............................................36
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SECTION 502. Acceleration of Maturity; Rescission and Annulment..............38
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.39
SECTION 504. Trustee May File Proofs of Claim................................40
SECTION 505. Trustee May Enforce Claims Without Possession of Notes..........40
SECTION 506. Application Of Money Collected..................................40
SECTION 507. Limitation on Suits.............................................41
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest................................................................42
SECTION 509. Restoration of Rights and Remedies..............................42
SECTION 510. Rights and Remedies Cumulative..................................42
SECTION 511. Delay or Omission Not Waiver....................................42
SECTION 512. Control by Holders..............................................42
SECTION 513. Waiver of Past Defaults.........................................43
SECTION 514. Waiver of Stay or Extension Laws................................43
ARTICLE SIX THE TRUSTEE......................................................43
SECTION 601. Notice of Defaults..............................................43
SECTION 602. Certain Rights of Trustee.......................................44
SECTION 603. Trustee Not Responsible for Recitals or Issuance of Notes.......45
SECTION 604. May Hold Notes..................................................45
SECTION 605. Money Held in Trust.............................................45
SECTION 606. Compensation and Reimbursement..................................46
SECTION 607. Corporate Trustee Required; Eligibility.........................46
SECTION 608. Resignation and Removal; Appointment of Successor...............46
SECTION 609. Acceptance of Appointment by Successor..........................48
SECTION 610. Merger or Conversion, Consolidation or Succession to Business...48
SECTION 611. Preferential Collection of Claims Against Company...............49
SECTION 612. Paying Agent; Registrar.........................................49
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY..............49
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.......49
SECTION 702. Preservation of Information; Communications to Holders..........50
SECTION 703. Disclosure of Names and Addresses of Holders....................51
SECTION 704. Reports by Trustee..............................................51
SECTION 705. Reports by Company..............................................52
ARTICLE EIGHT CONSOLIDATION, MERGER OR CONVEYANCE............................52
SECTION 801. Company and Restricted Subsidiaries May Consolidate, Merge or
Convey Only on Certain Terms............................................52
SECTION 802. Successor Substituted...........................................54
ARTICLE NINE SUPPLEMENTAL INDENTURES AND AMENDMENTS TO COLLATERAL DOCUMENTS..54
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SECTION 901. Supplemental Indentures and Amendment to Collateral
Documents Without Consent of Holders.................................... 54
SECTION 902. Supplemental Indentures and Amendments to Collateral
Documents with Consent of Holders....................................... 55
SECTION 903. Execution of Supplemental Indentures and Amendments
to the Collateral Documents............................................. 57
SECTION 904. Effect of Supplemental Indenture............................... 57
SECTION 905. Conformity with Trust Indenture Act............................ 57
SECTION 906. Reference in Notes to Supplemental Indentures.................. 57
SECTION 907. Notice of Supplemental Indentures and Amendments
to Collateral Documents................................................. 58
ARTICLE TEN CERTAIN COVENANTS................................................ 58
SECTION 1001. Payment of Principal, Premium, Any, and Interest............... 58
SECTION 1002. Maintenance of Office or Agency................................ 58
SECTION 1003. Agency for Note Payments to Be Held in Trust................... 59
SECTION 1004. Corporate Existence............................................ 60
SECTION 1005. Payment of Taxes and Other Claims.............................. 60
SECTION 1006. Maintenance of Properties...................................... 60
SECTION 1007. Maintenance of Insurance....................................... 61
SECTION 1008. Statement by Officers as to Default............................ 61
SECTION 1009. Filing and Provision of Exchange Act Reports................... 61
SECTION 1010. Limitation on Indebtedness..................................... 61
SECTION 1011. Limitation on Liens............................................ 63
SECTION 1012. Limitation on Restricted Payments.............................. 64
SECTION 1013. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries....................................... 65
SECTION 1014. Limitation on Asset Sales and Events of Loss................... 66
SECTION 1015. Ownership of Stock of Restricted Subsidiaries.................. 67
SECTION 1016. Limitation on Transactions with Affiliates..................... 67
SECTION 1017. Change in Nature of Business................................... 68
SECTION 1018. Additional Collateral.......................................... 68
SECTION 1019. Restricted and Unrestricted Subsidiaries; Subsidiary
Guarantors............................................................... 72
SECTION 1020. Excess Louisiana Cash Account.................................. 74
SECTION 1021. Collateral Documents........................................... 74
SECTION 1022. Validity of Liens on Collateral................................ 74
SECTION 1023. Stay, Extension and Usury Laws................................. 74
ARTICLE ELEVEN REDEMPTION OF AND REPURCHASE OF SECURITIES.................... 75
SECTION 1101. Right of Redemption............................................ 75
SECTION 1102. Applicability of Article....................................... 76
SECTION 1103. Election to Redeem; Notice to Trustee.......................... 76
SECTION 1104. Selection by Trustee of Notes to Be Redeemed or
Repurchased............................................................. 76
SECTION 1105. Notice of Redemption........................................... 76
SECTION 1106. Deposit of Redemption Price.................................... 77
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SECTION 1107. Notes Payable on Redemption Date............................... 77
SECTION 1108. Notes Redeemed in Part......................................... 78
SECTION 1109. Change of Control Repurchase Offer............................. 78
SECTION 1110. Asset Sale/Loss Proceeds Repurchase Offer...................... 78
SECTION 1111. Excess Louisiana Cash Repurchase Offer......................... 78
SECTION 1112. Procedures for Offers to Repurchase Notes...................... 79
SECTION 1113. Effect of Repurchase Notice.................................... 81
SECTION 1114. Deposit of Repurchase Price.................................... 81
SECTION 1115. Covenant to Comply with Securities Laws Upon Repurchase
of Notes................................................................ 82
SECTION 1116. Repayment to the Company....................................... 82
ARTICLE TWELVE CERTAIN COLLATERAL MATTERS.................................... 82
SECTION 1201. Approval of Collateral Documents and Other
Note Documents.......................................................... 82
SECTION 1202. Evidence of Perfection of Liens; Required Collateral;
Further Assurances...................................................... 82
SECTION 1203. Amendment to the Collateral Documents Without
Consent of Holders...................................................... 86
SECTION 1204. Amendment to the Collateral Documents With
Consent of Holders...................................................... 86
SECTION 1205. Release of Collateral under Certain Circumstances.............. 87
SECTION 1206. Release and Substitution of Collateral--Trust
Indenture Act Compliance................................................ 87
SECTION 1207. Release Upon Termination of the Company's Obligations.......... 88
SECTION 1208. Collateral Agent's Duties...................................... 88
ARTICLE THIRTEEN GUARANTEES.................................................. 89
SECTION 1301. Subsidiary Guarantees.......................................... 89
SECTION 1302. Nature of Subsidiary Guarantees................................ 89
SECTION 1303. Authorization.................................................. 90
SECTION 1304. Certain Waivers................................................ 91
SECTION 1305. No Subrogation; Certain Agreements............................. 92
SECTION 1306. Bankruptcy No Discharge........................................ 92
SECTION 1307. Severability of Void Obligations under Subsidiary
Guarantees.............................................................. 93
SECTION 1308. Right of Contribution.......................................... 93
SECTION 1309. Additional Subsidiary Guarantors............................... 94
SECTION 1310. Company Guarantee.............................................. 94
ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE.......................... 94
SECTION 1401. Company's Option to Effect Defeasance or
Covenant Defeasance..................................................... 94
SECTION 1402. Defeasance and Discharge....................................... 94
SECTION 1403. Covenant Defeasance............................................ 95
SECTION 1404. Conditions to Defeasance or Covenant Defeasance................ 95
SECTION 1405. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions..................... 96
SECTION 1406. Reinstatement.................................................. 97
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INDENTURE, dated as of August ___, 1996, by and among:
(1) Casino America, Inc., a Delaware corporation (the "COMPANY"),
(2) Riverboat Corporation of Mississippi, a Mississippi corporation,
Riverboat Corporation of Mississippi-Vicksburg, a Mississippi corporation,
Riverboat Services Incorporated, an Iowa corporation, CSNO, Inc., a Louisiana
corporation, Louisiana Riverboat Gaming Partnership, a Louisiana corporation,
St. Charles Gaming Company, Inc., a Louisiana corporation, LRG Hotels, L.L.C., a
Louisiana corporation, Grand Palais Riverboat, Inc., a Louisiana corporation,
LRGP Holdings, Inc., a Louisiana corporation, P.P.I., Inc., a Florida
corporation, ASMI Management Inc., a Florida corporation, and Isle of Capri
Casino Colorado, Inc., a Colorado corporation,
(3) any person that may from time to time become a party hereto as a
Subsidiary Guarantor (as defined below) by executing and delivering to the
Trustee an Addendum to Subsidiary Guarantee (as defined below), and
(4) Fleet National Bank, as trustee (the "TRUSTEE").
RECITALS OF THE COMPANY AND THE SUBSIDIARY GUARANTORS
A. The Company has duly authorized the creation of an issue of ___%
Senior Secured Notes Due 2003 (the "NOTES"), of substantially the tenor and
amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
B. Each of the Subsidiary Guarantors listed in clause (2) above has duly
authorized its guarantee of the Notes and certain other obligations of the
Company as set forth in Article Thirteen hereof and endorsed on the Notes
(together with any Addendum to Subsidiary Guarantees collectively, the
"SUBSIDIARY GUARANTEES"), and to provide therefor, has duly authorized the
execution and delivery of this Indenture.
C. This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, that are required to be part of this Indenture and shall,
to the extent applicable, be governed by such provisions.
D. All things necessary have been done to make the Notes, when executed
by the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and to make this Indenture a valid
agreement of the Company, in accordance with their and its terms.
E. All things necessary have been done to make the Subsidiary Guarantees,
when executed by the Subsidiary Guarantors and endorsed on the Notes
authenticated and delivered
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hereunder and duly issued by the Company, the valid obligations of the
Subsidiary Guarantors and to make this Indenture a valid agreement of the
Subsidiary Guarantors, in accordance with their and its terms.
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.
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For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and "self-liquidating
paper," as used in TIA Section 311, shall have the meanings assigned to them in
the rules of the Commission adopted under the Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP, and, except as otherwise
herein expressly provided, any computation required or permitted hereunder shall
be made in accordance with GAAP; and
(d) 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.
"ACCOUNTS PLEDGE AGREEMENT" means the Accounts Pledge Agreement, dated the
date of this Indenture, between the Company and the Collateral Agent, securing
the Secured Obligations and substantially in the form attached to this Indenture
as Exhibit C, as may be amended from time to time as permitted by this
Indenture.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person existing at the time
such Person becomes a Subsidiary of the Company or that is assumed in connection
with an Asset Acquisition by such Person, but not Indebtedness incurred in
connection with, or in anticipation of, such Person becoming a Subsidiary of the
Company or such acquisition.
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"ACT" when used with respect to any Holder, has the meaning specified in
Section 104.
"ADDITIONAL CAPITAL STOCK COLLATERAL" has the meaning specified in Section
1018.
"AGENT" means any Registrar, Paying Agent, co-registrar, co-paying agent or
other agent appointed pursuant to Section 1002.
"AFFILIATE" of any Person means any other Person that, directly or
indirectly, controls, is controlled by or is under direct or indirect common
control with, such Person and with respect to any natural Person, any other
immediate family member of such natural Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock or other equity interests, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing; provided that, in any event, any Person
that owns directly or indirectly 10% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.
"AFFILIATE TRANSACTION" has the meaning specified in Section 1016.
"AIRPLANE" means the King Air 200 airplane owned by the Company on the
Issue Date.
"ASSET ACQUISITION" means (a) any capital contribution (including, without
limitation, transfers of cash or other property to others or payments for
property or services for the account or use of others, or otherwise), or
purchase or acquisition of Capital Stock or other similar ownership or profit
interest, by the Company or any of its Subsidiaries in any other Person, in
either case pursuant to which such Person shall become a Subsidiary of the
Company or any of its Subsidiaries or shall be merged with or into the Company
or any of its Subsidiaries or (b) any acquisition by the Company or any of its
Subsidiaries of the assets of any Person which constitute substantially all of
an operating unit or business of such Person.
"ASSETS HELD FOR SALE OR DEVELOPMENT" means (i) the FFC Preferred Stock,
(ii) the Airplane, (iii) the Real Estate Options, (iv) the Cripple Creek Land
and (v) the Discontinued Assets.
"ASSET SALE" means any direct or indirect sale, conveyance, transfer, lease
(other than an operating lease) relating to assets, the fair market value of
which, determined in the good faith judgment of the Board of Directors, does not
exceed $2 million, assignment, issuance or other disposition (including, without
limitation, by means of a sale-leaseback transaction) by the Company or any
Restricted Subsidiary to any Person (other than the Company or a wholly owned
Restricted Subsidiary), in one transaction or a series of related transactions,
of (a) any Capital Stock of any Restricted Subsidiary or other similar equity
interest or (b) any other property or asset of the Company or any Restricted
Subsidiary (other than (s) Assets Held for Sale or Development, (t) any Non-
Material Assets acquired after the Issue Date, (u) any Hotel Properties (v)
current assets, as defined in accordance with GAAP, in the ordinary course of
business, (w) damaged, worn out or other obsolete property in the ordinary
course of business if
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no longer necessary for the proper conduct of such business, (x) property no
longer used or useful in the ordinary course of business or property replaced
with similar property of similar utility in the ordinary course of business, (y)
each other disposition (or series of related dispositions) that results in Net
Cash Proceeds of less than or equal to $1 million and (z) an Investment
permitted under Section 1012 or a disposition made in accordance with Section
801.
"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 product of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such debt security multiplied by the
amount of such principal payment by (ii) the sum of all such principal payments.
"BENEFICIARIES" means the Holders, the Trustee and the Collateral Agent.
"BOARD RESOLUTION" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company, to have been duly adopted by the Board
of Directors of the Company, or any duly authorized committee thereof, and to be
in full force and effect on the date of such certification, and delivered to the
Trustee.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests (including partnership and other equity interests), participations,
rights in, or other equivalents (however designated and whether voting or
nonvoting) of, such Person's capital stock, whether outstanding on the Issue
Date or issued after such date, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock.
"CAPITALIZED LEASE OBLIGATION" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for the purpose of
the Indenture, the amount of such obligation at any date of determination shall
be the capitalized amount thereof at such date, determined in accordance with
GAAP.
"CASH EQUIVALENTS" means any of the following, to the extent owned by the
Company or any of its Restricted Subsidiaries free and clear of all Liens and
having a maturity of not greater than 270 days from the date of acquisition (a)
any evidence of Indebtedness issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof), (b) insured certificates of deposit or acceptances
of any commercial bank that is a member of the Federal Reserve System, that
issues (or the parent of which issues) commercial paper rated as described in
clause (c) below and that has combined capital and surplus and undivided profits
of not less than $500 million, (c) commercial paper issued by a corporation
(except an Affiliate of the Company) organized under the laws of any state of
the United States
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or the District of Columbia and rated at least A-1 (or the then equivalent
grade) by Standard & Poor's Corporation or at least Prime-1 (or the then
equivalent grade) by Moody's Investors Service, Inc., and (d) repurchase
agreements and reverse repurchase agreements relating to marketable direct
obligations issued or unconditionally guaranteed by the United States government
or any agency or other instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof), provided
that the terms of such repurchase and reverse repurchase agreements comply with
the guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency.
"CASINO" means a gaming establishment owned, directly or indirectly, by the
Company and any building, restaurant, theater, amusement park or other
entertainment facility, parking or recreational vehicle facilities, retail
shops, land, equipment and other property or asset directly ancillary thereto
and used or to be used in connection therewith, other than a Casino Hotel.
"CASINO HOTEL" means any hotel or similar hospitality facility, including,
without limitation, a recreational vehicle park or marina serving a Casino,
owned, directly or indirectly, by the Company.
"CASINO IMPROVEMENT" means any capital addition, improvement, extension or
repair to the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier City or the
Isle-Lake Charles.
"CHANGE OF CONTROL" means after the Issue Date, an event or series of
events by which:
(i) any "person" or "group" (as such terms are used in Section 13(d)
and 14(d) of the Exchange Act) (other than the Permitted Equity Holders) is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person or group shall be deemed to have
"beneficial ownership" of all shares that any such person or group has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of securities representing the
greater of (a) that percentage of the combined voting power of the Company's
outstanding Voting Stock held by Permitted Equity Holders (including shares as
to which the Company or a Permitted Equity Holder holds an effective proxy to
vote) or (b) 35% or more of the combined voting power of the Company's
outstanding Voting Stock, but excluding in each case from the percentage of
voting power held by any group, the voting power of shares owned by the
Permitted Equity Holders who are deemed to be members of the group provided
that such Permitted Equity Holders beneficially own a majority of the voting
power of the Voting Stock held by such group, and at such time the Permitted
Equity Holders together shall fail to beneficially own, directly or
indirectly, securities representing at least the same percentage of voting
power of such Voting Stock as the percentage "beneficially owned" by such
person or group;
(ii) during any period of 24 consecutive months, individuals who at
the beginning of such period constituted the Board of Directors (together with
any new or replacement directors whose election by the Board of Directors, or
whose nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then
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still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the directors then in office; or
(iii) the Company consolidates with or merges with or into any Person
or conveys, transfers or leases all or substantially all of its assets to any
Person, pursuant to a transaction in which the outstanding Voting Stock of the
Company is changed into or exchanged for cash, securities or other property
(other than any such transaction where the outstanding Voting Stock of the
Company is (a) changed only to the extent necessary to reflect a change in the
jurisdiction of incorporation of the Company or (b) is exchanged for (x) Voting
Stock of the surviving corporation which is not Disqualified Stock or (y) cash,
securities and other property (other than Capital Stock of the surviving
corporation) in an amount which could be paid by the Company as a Restricted
Payment under Section 1012 (and such amount shall be treated as a Restricted
Payment) and no person or group, other than Permitted Equity Holders (including
any Permitted Equity Holders who are part of a group where such Permitted Equity
Holders beneficially own a majority of the voting power of the Voting Stock held
by such group), owns immediately after such transaction, directly or indirectly,
more than 35% of the combined voting power of the outstanding Voting Stock of
the surviving corporation; or
(iv) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution other than in a transaction which complies with the
provisions described under Section 801.
"CHANGE OF CONTROL OFFER" has the meaning specified in Section 1109.
"COLLATERAL" means any assets of the Company or the Subsidiary Guarantors
defined as Collateral in any of the Collateral Documents.
"COLLATERAL ACCOUNT" means one or more deposit accounts in the name of the
Company or a Subsidiary Guarantor, but under the sole dominion and control of
the Collateral Agent, in which the Company or a Subsidiary Guarantor shall
deposit or shall cause to be deposited Net Cash Proceeds from an Asset Sale or
Event of Loss or Excess Louisiana Cash.
"COLLATERAL AGENT" means Fleet National Bank, as collateral agent for
itself and the Holders under any of the Collateral Documents, or any successor
collateral agent.
"COLLATERAL DOCUMENTS" means, collectively, the Accounts Pledge Agreement,
the Company Pledge Agreement, the Subsidiary Pledge Agreement, the Company
Security Agreement, the Subsidiary Security Agreement, the Mortgages, the Ship
Mortgages, the Environmental Indemnity Agreement and any other security document
entered into by the Company or any Subsidiary Guarantor to secure the Secured
Obligations, in each case as amended from time to time as permitted by this
Indenture.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the
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execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"COMMON STOCK" means, with respect to any Person, any and all shares,
interests, participations and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the date of this Indenture, and includes, without limitation, all
series and classes of such common stock.
"COMPANY" means the Person named as the "Company" in the first paragraph of
this Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"COMPANY GUARANTEE" means the guarantee of the Company with respect to the
obligations of the Subsidiary Guarantors under their respective Subsidiary
Guarantees.
"COMPANY OBLIGATIONS" has the meaning set forth in Section 1301.
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement, dated as of
the date of this Indenture, between the Company and the Collateral Agent,
securing the Secured Obligations of the Company and substantially in the form
attached to this Indenture as Exhibit D, as amended from time to time as
permitted by this Indenture.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by its chairman, its president, any vice
president, its treasurer or an assistant treasurer, and delivered to the
Trustee.
"COMPANY SECURITY AGREEMENT" means the Company Security Agreement, dated as
of the date of this Indenture, between the Company and the Collateral Agent,
securing the Secured Obligations of the Company and substantially in the form
attached to this Indenture as Exhibit F, as amended from time to time as
permitted by this Indenture.
"CONSOLIDATED" refers to the consolidation of accounts in accordance with
GAAP.
"CONSOLIDATED CASH FLOW" means, for any period, the sum of (a) the
Consolidated Net Income of the Company and its Restricted Subsidiaries for such
period plus (b) the sum of the following items (to the extent deducted in
determining Consolidated Net Income and without duplication): (i) all
Consolidated Interest Expense, (ii) Consolidated Non-cash Charges, (iii)
Consolidated Income Tax Expense, and (iv) any pre-opening expenses.
"CONSOLIDATED COVERAGE RATIO" means the ratio of (a) Consolidated Cash Flow
of the Company and its Restricted Subsidiaries for the period (the "REFERENCE
PERIOD") including the four full fiscal quarters for which financial statements
are available that immediately precede the date of the transaction or other
circumstances giving rise to the need to calculate the Consolidated Coverage
Ratio (the "TRANSACTION DATE") to (b) the Consolidated Interest Expense for such
Reference Period (based upon the pro forma amount of Indebtedness of the Company
and its Restricted Subsidiaries outstanding on the Transaction Date and after
giving effect to the
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transaction in question, unless otherwise provided in the Indenture). For
purposes of this definition, if the Transaction Date occurs before the date on
which the Company's consolidated financial statements for the four full fiscal
quarters after the Issue Date are first available, Consolidated Cash Flow and
Consolidated Interest Expense shall be calculated, in the case of the Company
and its Restricted Subsidiaries, after giving effect on a pro forma basis as if
the Notes outstanding on the Transaction Date were issued on the first day of
such four full fiscal quarter period. In addition, Consolidated Cash Flow and
Consolidated Interest Expense shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
retirement of any Indebtedness of the Company and its Restricted Subsidiaries at
any time during the Reference Period, including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make such calculation
(unless otherwise provided in this Indenture), as if such Indebtedness were
incurred or retired on the first day of the Reference Period; provided that if
the Company or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the above clause shall give effect to
the incurrence of such guaranteed Indebtedness as if the Company or such
Restricted Subsidiary had directly incurred such guaranteed Indebtedness and
(ii) any Asset Sale, Event of Loss or Asset Acquisition (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company or any of its Restricted Subsidiaries
(including any Person who becomes a Subsidiary as result of the Asset
Acquisition) incurring Acquired Indebtedness) occurring during the Reference
Period and any retirement of Indebtedness in connection with such Asset
Acquisition, as if such Asset Sale, Event of Loss or Asset Acquisition and/or
retirement occurred on the first day of the Reference Period, but giving effect
to any adjustments set forth in the definition of "Consolidated Net Income."
Furthermore, in calculating Consolidated Interest Expenses for purposes of this
"Consolidated Coverage Ratio," interest on Indebtedness determined on a
fluctuating basis shall be deemed to accrue at the rate in effect on the
Transaction Date for such entire period.
"CONSOLIDATED INCOME TAX EXPENSE" means, as applied to any Person for any
period, federal, state, local and foreign income taxes (including franchise
taxes imposed in lieu of or as additional income tax) of such Person and its
Restricted Subsidiaries for such period, determined in accordance with GAAP;
provided, that for purposes hereof, "income taxes" shall specifically exclude
any taxes paid to or imposed by a Gaming Authority.
"CONSOLIDATED INTEREST EXPENSE" means as applied to any Person for any
period the sum of the following items (without duplication): (i) the aggregate
amount of interest recognized by such Person and its Restricted Subsidiaries in
respect of their Consolidated Indebtedness (including all interest capitalized
by such Person and its Restricted Subsidiaries during such period and all
commissions, discounts and other similar fees and charges owed by such Person or
any of its Restricted Subsidiaries for letters of credit and bankers' acceptance
financing and the net costs associated with Interest Rate and Currency
Protection Obligations of such Person and its Restricted Subsidiaries, but
excluding amortization of deferred financing cost and debt discount or premium,
(ii) the aggregate amount of the interest component of rentals in respect of
Capitalized Lease Obligations recognized by such Person and its Restricted
Subsidiaries, (iii) to the extent any Indebtedness of any other Person is
guaranteed by such Person or any of its Restricted Subsidiaries, the aggregate
amount of interest paid or accrued by such other Person
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during such period attributable to any such guaranteed Indebtedness, (iv) the
interest portion of any deferred payment obligation, (v) an amount equal to 1/3
of the base rental expense (i.e., not any rent expense paid as a percentage of
revenues) attributable to such Person and its Restricted Subsidiaries and (vi)
the amount of dividends payable by such Person and its Restricted Subsidiaries
in respect of Disqualified Stock (other than such dividends payable to such
Restricted Subsidiaries).
"CONSOLIDATED NET INCOME" means, for any period, the aggregate of the
consolidated Net Income (or net loss) of the Company and its Restricted
Subsidiaries (determined in accordance with GAAP), less (to the extent included
in such consolidated Net Income) (a) the Net Income (or net loss) of any Person
(the "other Person") (i) other than a Restricted Subsidiary or (ii) in which the
Company or any of its Restricted Subsidiaries has a joint interest with a third
party (which interest does not cause the Net Income (or net loss) of such other
Person to be consolidated into the Net Income (or net loss) of the Company and
its Restricted Subsidiaries in accordance with GAAP), except in each such case
such Net Income shall be included to the extent of the amount of cash dividends
or other cash distributions in respect of Capital Stock or other interest owned
actually paid (out of funds legally available therefor) to and received by the
Company or its Restricted Subsidiaries, (b) items (other than the tax benefit of
the utilization of net operating loss carry forwards or alternative minimum tax
credits) classified as extraordinary, (c) except to the extent includable in
clause (a) above, the Net Income (or loss) of any other Person (other than SCGC,
LRGP and LRGH, the Net Income of which will be included for the entire period
for which Consolidated Net Income is being determined) accrued or attributable
to any period before the date on which it becomes a Restricted Subsidiary or is
merged into or consolidated with the Company or any of its Restricted
Subsidiaries or such other Person's property or Capital Stock (or a portion
thereof) is acquired by the Company or any of its Restricted Subsidiaries and
(d) the Net Income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by such Restricted Subsidiary
of that income is not at the time permitted, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, law, rule or governmental regulations applicable to that
Restricted Subsidiary or its stockholders; provided, however, at any such time,
Consolidated Net Income does not include the amount attributable to the one-time
charge incurred by the Company in its third quarter of fiscal 1996.
"CONSOLIDATED NET WORTH" means, at any date of determination, the sum of
(i) the consolidated equity of the common stockholders of such Person and its
Restricted Subsidiaries on such date plus (ii) the respective amounts reported
on such Person's most recent balance sheet with respect to any series of
preferred stock (other than Disqualified Stock) that by its terms is not
entitled to the payment of dividends unless such dividends may be declared and
paid only out of net earnings in respect to the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of the Indenture in the book value of any asset
owned by such Person or a Restricted Subsidiary of such Person, (y) all
investments in Persons that are not Restricted
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Subsidiaries and (z) all unamortized debt discount and expense and unamortized
deferred charges, all of the foregoing determined in accordance with GAAP.
"CONSOLIDATED NON-CASH CHARGES" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its Restricted Subsidiaries on a Consolidated basis for such period, as
determined in accordance with GAAP (excluding any non-cash charge which requires
an accrual or reserve for cash charges for any future period).
"CORPORATE TRUST OFFICE" means the principal corporate trust office of the
Trustee, at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Indenture is located
at _____________________, except that with respect to presentation of Notes for
payment or for registration of transfer or exchange, such term shall mean the
office or agency of the Trustee at _____________________, New York, New York.
"CRIPPLE CREEK LAND" means the real estate owned or leased by the Company
in Cripple Creek, Colorado.
"CURRENT MARKET VALUE" means, with reference to the Notes, on any date the
arithmetic mean of the Quoted Price of the Notes for the 20 consecutive trading
days commencing 30 days before such date.
"DEFAULT" means any Event of Default or an event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"DEFAULTED INTEREST" has the meaning specified in Section 306.
"DEFEASANCE" and "COVENANT DEFEASANCE" have the meanings specified in
Section 1402.
"DISCONTINUED ASSETS" means the following assets held for sale by the
Company as of the Issue Date: (i) the Emerald Lady riverboat and the Diamond
Lady riverboat, (ii) the Lucky Seven barge and two other barges (vessel numbers
524872 and 511360), (iii) the Illinois Merchant tug boat, the Honey Bear tug
boat and the E.F. Barber tug boat and (iv) gaming equipment held for sale.
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock
or other similar ownership or profit interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
exchangeable for Indebtedness, or is redeemable at the option of the holder
thereof, in whole or in part, on or before the Maturity Date of the Notes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ENVIRONMENTAL INDEMNITY AGREEMENT" means the Environmental Indemnity
Agreement, dated as of the date of this Indenture, among the Grantors and the
Collateral Agent, substantially in the form attached to this Indenture as
Exhibit K.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EVENT OF LOSS" means, with respect to any property or asset (tangible or
intangible, real or personal) of the Company or any Permitted Subsidiary that
has a Fair Market Value of $2 million or more, any of the following (i) any
loss, destruction or damage of such property or asset; (ii) any institution of
any proceedings for the condemnation or seizure of such property or asset or for
the exercise of any right of eminent domain or navigational servitude or (iii)
any actual condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such property or asset, or confiscation of such property
or asset or the requisition of the use of such property or asset.
"EXCESS LOUISIANA CASH" means the sum of (a) Isle-Bossier City Cash Flow,
in the event of an adverse vote on or about November 5, 1996 with respect to the
conduct of riverboat gaming in Bossier Parish, Louisiana, and (b) Isle-Lake
Charles Cash Flow, in the event of an adverse vote on or about November 5, 1996
with respect to the conduct of riverboat gaming in Calcasieu Parish, Louisiana.
"EXCESS LOUISIANA CASH ACCOUNT," "EXCESS LOUISIANA CASH ACCOUNT COLLATERAL"
and "EXCESS LOUISIANA CASH OFFER" have the meanings set forth in Section 1018
and Section 1111, respectively.
"EXCESS SALE/LOSS PROCEEDS" and "EXCESS SALE/LOSS PROCEEDS OFFER" have the
meanings set forth in Section 1014 and Section 1110, respectively.
"EXCLUDED ASSETS" means the following: (i) Assets Held for Sale or
Development, (ii) Non-Material Assets acquired after the Issue Date, (iii) FF&E
held on the Issue Date subject to financing and any assets acquired or leased
after the Issue Date and financed with FF&E Financing permitted pursuant to
clause (5) or (6) of Section 1010, in each case which assets have been pledged
as collateral security for the repayment of the financing and where the terms of
such financing prohibit the pledge of such assets for the benefit of the Holders
of the Notes, and (iv) any agreements, permits, licenses or the like that cannot
be subjected to a Lien without the consent of third parties, which consent
cannot reasonably be obtained (which includes all gaming licenses of the Company
and the Subsidiary Guarantors), provided that Excluded Assets will not include
the proceeds of the assets under clause (iii) or (iv). Also the Hotel
Properties, or any portion thereof, will be released from the Collateral and
become Excluded Assets from and after such time that the Company notifies the
Trustee in writing of its intention, determined in the good faith judgment of
the Board of Directors, to develop a Preferred Hotel Facility thereon or to
contribute such Hotel Properties, or any portion thereof, to any business
venture for the purpose of developing one or more Preferred Hotel Facilities.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"FAIR MARKET VALUE" or "fair value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Unless
otherwise specified by the Indenture, Fair Market Value shall be determined by
the Board of Directors of the Company acting in good faith and shall be
evidenced by a Board Resolution delivered to the Trustee.
"FEDERAL BANKRUPTCY CODE" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.
"FF&E" means furniture, fixtures and equipment used in the ordinary course
of business in the operation of a Permitted Line of Business.
"FFC PREFERRED STOCK" means the 23,681 shares of preferred stock, $100 par
value, of Freedom Financial Corporation owned by the Company as of the Issue
Date.
"FF&E FINANCING" means Indebtedness, the proceeds of which will be used
solely to finance or refinance the acquisition or lease by the Company or a
Restricted Subsidiary of FF&E.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable from time to time.
"GAMING AUTHORITY" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal or foreign government, any state, province or any city or other
political subdivision or otherwise and whether now or hereafter in existence, or
any officer or official thereof, with authority to regulate any gaming operation
(or proposed gaming operation) owned, managed, or operated by the Company or any
of its Subsidiaries.
"GAMING LAWS" means each gaming law, as may be amended from time to time,
of the State of Mississippi or Louisiana or any other jurisdiction in which the
Company engages or proposes to engage in gaming, and the regulations promulgated
and rulings issued thereunder applicable to the Company or any of its
Subsidiaries or any of their officers, directors or securityholders.
"GOLDSTEIN FAMILY EQUITY PURCHASE" means the sale to, and purchase by,
Bernard Goldstein, the Chairman and Chief Executive Officer of the Company, and
three members of his family, on or about March 11, 1996, of an aggregate of
1,020,940 shares of the Company's common stock at a price of $5.875 per share.
"GOVERNMENTAL AUTHORITY" means any government (federal, state or local),
any governmental agency, bureau or board or any governmental office, officer or
official (including environmental) having jurisdiction over the Company or any
of its Subsidiaries.
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"GRANTOR" means any grantor, mortgagor or any other Person that grants,
pursuant to a Collateral Document, a security interest in its assets in favor of
the Collateral Agent for its benefit and the benefit of the Holders.
"GPRI" means Grand Palais Riverboat Inc., a Louisiana corporation.
"GRAND PALAIS" means the Grand Palais riverboat owned on the Issue Date by
GPRI.
"GUARANTEES" means the Subsidiary Guarantees and the Company Guarantee.
"HOLDER" means a Person in whose name a Note is registered in the Note
Register.
"HOTEL PROPERTIES" means the following real and personal property: (i)
approximately 6 acres of land owned by the Company as of the Issue Date adjacent
to the Isle-Bossier City, (ii) approximately 9 acres of land owned by the U.S.
Department of Housing and Urban Development as of the Issue Date east of the
Isle-Bossier City, in the event such property is acquired by the Company, (iii)
approximately 7 acres of land leased by the Company as of the Issue Date
adjacent to the Isle-Biloxi, (iv) approximately 2.7 acres of land owned by the
Company as of the Issue Date and approximately 5.75 acres of land leased by the
Company as of the Issue Date located north of the Isle-Lake Charles and (v) the
hotel and approximately 10.5 acres of land owned by LRGH as of the Issue Date in
Bossier City, Louisiana.
"INDEBTEDNESS" of any Person means (a) any liability, contingent or
otherwise, of such Person (i) 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), (ii) evidenced by a note, bond, debenture or similar instrument,
letters of credit, acceptances or other similar facilities (other than a trade
payable or a current liability incurred in the ordinary course of business) or
(iii) for the payment of money relating to a Capitalized Lease Obligation or
other obligation relating to the deferred purchase price of property or services
(including a purchase money obligation but not including any docking fees
payable to Louisiana Downs, Inc. or guarantees thereof), (b) any liability of
others of the kind described in the preceding clause (a) which such Person has
guaranteed or which is otherwise its legal liability, including, without
limitation, (x) to pay or purchase such liability, (y) to supply funds to or in
any other manner invest in the debtor (including an agreement to pay for
property or services irrespective of whether such property is received or such
services are rendered) and (z) to purchase, sell or lease (as lessee or lessor)
property or to purchase or sell services, primarily for the purpose of enabling
a debtor to make a payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (c) any obligation secured by a Lien to which the
property or assets of such Person are subject, whether or not the obligations
secured thereby shall have been assumed by or shall otherwise be such Person's
legal liability, (d) all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Capital Stock of or
other ownership or profit interest in such Person or any of its Affiliates or
any warrants, rights or options to acquire such Capital Stock, valued, in the
case of Disqualified Stock, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends, (e) all Interest Rate
and Currency Protection Obligations and (f) any and all deferrals, renewals,
extensions and refundings of; or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding
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clauses. Notwithstanding the foregoing, Permitted Ancillary Investments shall be
deemed not to constitute Indebtedness.
"INDENTURE" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof. All references
to this Indenture shall include the Subsidiary Guarantees as set forth in
Article Thirteen.
"INDEPENDENT", when used with respect to any Person, means such other
Person who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Company or in any
Affiliate of the Company and (c) is not an officer, employee, promoter,
underwriter, trustee, partner or person performing similar functions for the
Company or a spouse, family member or other relative of any such Person.
Whenever it is provided in the Indenture that any Independent Person's opinion
or certificate shall be furnished to the Trustee, such Person shall be appointed
by the Company and reasonably acceptable to the Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read this definition and that the signer is Independent within the meaning
thereof.
"INTEREST PAYMENT DATE" means February __, 1997 and each August ___ and
February __ thereafter.
"INTEREST RATE AND CURRENCY PROTECTION OBLIGATIONS" means the obligations
of any Person pursuant to any interest rate swap, cap or collar agreement,
interest rate future or option contract, currency swap agreement, currency
future or option contract and other similar agreement designed to hedge against
fluctuations in interest rates or foreign exchange rates.
"INVESTMENT" in any Person means any direct or indirect loan, advance,
guarantee or other extension of credit or capital contribution to (including,
without limitation, transfers of cash or other property to others or payments
for property or services for the account or use of others, or otherwise), or
purchase or acquisition of Capital Stock, warrants, rights, options, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by,
such Person or Indebtedness of any other Person secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness. The amount of any Investment shall
be the original cost of such Investment, plus the cost of all additions thereto,
and minus the amount of any portion of such Investment repaid to the Person
making such Investment in cash as a repayment of principal or a return of
capital, as the case may be, but without any other adjustments for increases or
decreases in value, or write-ups, write-downs or writeoffs with respect to such
Investment. In determining the amount of any Investment involving a transfer of
any property other than cash, such property shall be valued at its fair value at
the time of such transfer, as determined in good faith by the Board of Directors
of the person making such transfer, whose determination will be conclusive
absent manifest error.
"ISLE-BILOXI" means the Isle of Capri Casino located in Biloxi,
Mississippi.
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"ISLE-BILOXI HOTEL" means the 367-room hotel facility owned and operated by
the Company at the Isle-Biloxi on the Issue Date.
"ISLE-BOSSIER CITY" means the Isle of Capri Casino located in Bossier City,
Louisiana.
"ISLE-BOSSIER CITY CASH FLOW" means the sum of (a) that portion of
Consolidated Cash Flow of the Company attributable to the Isle-Bossier City plus
(b) the amount of management fees paid by the Isle-Bossier City to Affiliates of
the Company in excess of $2.5 million in any one year minus (c) federal, state
and local taxes attributable to the Isle-Bossier City minus (d) required
principal and interest payments on Indebtedness incurred by the owner of and to
directly benefit the Isle-Bossier City and owed to Persons other than
Affiliates; provided, that each such amount shall be calculated from and after
the period beginning on November 6, 1996.
"ISLE-LAKE CHARLES" means the Isle of Capri Casino located in Lake Charles,
Louisiana (including the Grand Palais).
"ISLE-LAKE CHARLES CASH FLOW" means the sum of (a) that portion of
Consolidated Cash Flow of the Company attributable to the Isle-Lake Charles plus
(b) the amount of management fees paid by the Isle-Lake Charles to Affiliates of
the Company in excess of $2.5 million in any one year minus (c) federal, state
and local taxes attributable to the Isle-Lake Charles minus (d) required
principal and interest payments on Indebtedness incurred by the owner of and to
directly benefit the Isle-Lake Charles and owed to Persons other than
Affiliates; provided, that each such amount shall be calculated from and after
the period beginning on November 6, 1996.
"ISLE-VICKSBURG" means the Isle of Capri Casino located in Vicksburg,
Mississippi.
"ISSUE DATE" means the date of original issuance of the Notes.
"LIEN" means any mortgage, lien (statutory or other), pledge, security
interest, encumbrance, claim, hypothecation, assignment for security, deposit
arrangement or preference or other security agreement of any kind or nature
whatsoever. For purposes of the Indenture, a Person shall be deemed to own
subject to a Lien any property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Person.
"LRGH" means L.R.G. Hotels, a Louisiana partnership.
"LRGP" means Louisiana Riverboat Gaming Partnership, a Louisiana
partnership.
"MARKETABLE SECURITIES" means Cash Equivalents or any fund investing
primarily in Cash Equivalents.
"MATURITY" or "MATURITY DATE" when used with respect to any Note, means the
date on which the principal of such Note or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, notice of redemption, required purchase or
otherwise.
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"MORTGAGES" means the mortgages or deeds of trust and related assignments
of rents between the Company or any Subsidiary Guarantor, in each case if it
owns or leases any significant real estate asset (initially, the Isle-Biloxi,
the Isle-Biloxi Hotel, the Isle-Vicksburg, the Isle-Bossier City, the Isle-Lake
Charles and Pompano Park), and the Collateral Agent, granting a Lien on such
real estate, securing the Secured Obligations of the Company or such Subsidiary
Guarantor, as the case may be, and substantially in the form attached to this
Indenture as Exhibit H, as amended from time to time as permitted by this
Indenture.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, Event of Loss,
issuance or sale by the Company of its Capital Stock or incurrence of
Indebtedness, as the case may be, the proceeds thereof in the form of cash or
Cash Equivalents received by the Company or any of its Restricted Subsidiaries
(whether as initial consideration, through the payment or disposition of
deferred compensation or the release of reserves), after deducting therefrom
(without duplication) (a) reasonable and customary brokerage commissions,
underwriting fees and discounts, legal fees, finders fees and other similar fees
and expenses incurred in connection with such Asset Sale or Event of Loss; (b)
provisions for all taxes payable as a result of such Asset Sale or Event of
Loss, (c) payments made to retire Indebtedness (other than payments on the
Notes) secured by the assets subject to such Asset Sale or Event of Loss to the
extent required pursuant to the terms of such Indebtedness and (d) appropriate
amounts to be provided by the Company or any of its Restricted Subsidiaries, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale or Event of Loss and retained by the Company or
any of its Restricted Subsidiaries, as the case may be, after such Asset Sale or
Event of Loss, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale or Event of Loss, in each case to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash or Cash
Equivalents, actually paid to a Person that is not an Affiliate of the Company
or, in the case of reserves, are actually established and, in each case, are
properly attributable to such Asset Sale or Event of Loss.
"NET CASH PROCEEDS ACCOUNT" and "NET CASH PROCEEDS ACCOUNT COLLATERAL" have
the meanings specified in Section 1018.
"NET INCOME" means, with respect to any Person for any period, the net
income (or loss) of such Person determined in accordance with GAAP.
"NET WORTH" and "MAXIMUM NET WORTH ACCOUNT" have the meanings specified in
Section 1308.
"NON-MATERIAL ASSETS" means assets or a series of related assets (i) not
necessary for or used in the conduct of the Company's gaming business and (ii)
having a fair value of not more than $1 million.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness (a) as to which none of the
Company or any of its Restricted Subsidiaries provides any credit support or is
directly or indirectly liable for the payment of principal or interest thereof
and a default with respect to which would not entitle any party to cause any
other Indebtedness of the Company or a Restricted Subsidiary to be
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accelerated or (b) incurred by the Company or a Restricted Subsidiary to
develop, construct and open Preferred Hotel Facilities or to purchase one or
more assets from the lending source, provided that the lender's only remedy
against the obligor in the event of a default with respect to such Indebtedness,
whether as a result of the failure to pay principal or interest when due or any
other reason, is limited to foreclosure on such Preferred Hotel Facilities or
repossession of such assets purchased.
"NOTES" has the meaning stated in the first recital of this Indenture and
more particularly means any Notes authenticated and delivered under this
Indenture.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings specified
in Section 304.
"NOTICE OF DEFAULT" has the meaning specified in Section 501.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel
for the Company, including an employee of the Company, and who shall be
acceptable to the Trustee.
"OUTSTANDING," when used with respect to Notes, means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except: (i) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; (ii) Notes, or portions thereof, for whose payment
or redemption money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; 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; (iii)
Notes, except to the extent provided in Sections 1402 and 1403, with respect to
which the Company has effected defeasance and/or covenant defeasance as provided
in Article Fourteen; and (iv) Notes which have been paid pursuant to Section 305
or in exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture, other than any such Notes in respect of
which there shall have been presented to the Trustee proof satisfactory to it
that such Notes are held by a bona fide purchaser in whose hands the Notes are
valid obligations of the Company; provided, however, that in determining whether
the Holders of the requisite principal amount of Outstanding Notes have given
any request, demand, authorization, direction, consent, notice or waiver
hereunder, and for the purpose of making the calculations required by TIA
Section 313, Notes 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 making such calculation or in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
which a Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
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satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company any other obligor upon the Notes
or any Affiliate of the Company or such other obligor.
"PAYING AGENT" means any Person (including the Company acting as Paying Agent)
authorized by the Company to pay the principal of (and premium, if any, on) or
interest on any Notes on behalf of the Company.
"PERMITTED EQUITY HOLDERS" means Bernard Goldstein and his three adult sons.
"PERMITTED ANCILLARY INVESTMENT" means any agreement, undertaking or other
arrangement to rent or otherwise pay for up to, and including, 40% of the rooms
available to the public for rent at or below the rates normally charged to the
public for such rooms in any Casino Hotel and to obtain a preference for
securing accommodations at such Casino Hotel.
"PERMITTED INVESTMENTS" means (i) Investments in Marketable Securities, (ii)
loans or advances to employees in the ordinary course of business not to exceed
$250,000 in any fiscal year of the Company or $1 million in the aggregate, (iii)
Investments in a Permitted Line of Business by the Company or a Restricted
Subsidiary made in one or more persons in an aggregate amount not to exceed the
sum of $10 million plus the net proceeds received from the Rights Offering and
(iv) Permitted Ancillary Investments.
"PERMITTED LIENS" means:
(i) Liens on property acquired by the Company or any Restricted Subsidiary
(including an indirect acquisition of property by way of a merger of a Person
with or into the Company or any Restricted Subsidiary or the acquisition of a
Person), provided that such Liens were in existence prior to the contemplation
of such acquisition, merger or consolidation, and were not created in
connection therewith or in anticipation thereof, and provided that such Liens
do not extend to any additional property or assets of the Company or any
Restricted Subsidiary;
(ii) statutory Liens (other than those arising under ERISA) to secure the
performance of obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations in respect of the payment of borrowed money), or for
taxes, assessments or governmental charges or claims, provided that in each
case the obligations are not yet delinquent or are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted
and any reserve or other adequate provision as shall be required in conformity
with GAAP shall have been made therefor;
(iii) leases or subleases granted to others not interfering in any material
respect with the business of the Company or any Restricted Subsidiary;
(iv) any charter of a vessel, provided that (i) in the good faith judgment
of the Board of Directors of the Company such vessel is not necessary for the
conduct of the business of the
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Company or any of its Restricted Subsidiaries as conducted immediately prior
thereto; (ii) the terms of the charter are commercially reasonable and
represent the Fair Market Value of the charter; and (iii) the Person
chartering the assets agrees to maintain the Vessel and evidences such
agreement by delivering such an undertaking to the Trustee;
(v) with respect to the property involved, easements, rights-of-way,
navigational servitudes, restrictions, minor defects or irregularities in
title and other similar charges or encumbrances which do not interfere in any
material respect with the ordinary conduct of business of the Company and its
Subsidiaries as now conducted or as contemplated herein;
(vi) Liens in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other types of social security (other
than those arising under ERISA);
(vii) any interest or title of a lessor in property subject to any
Capitalized Lease Obligation or an operating lease;
(viii) Liens arising from the filing of Uniform Commercial Code financing
statements with respect to leases;
(ix) Liens arising from any final judgment or order not constituting an
Event of Default;
(x) Liens on documents or property under or in connection with letters of
credit in the ordinary course of business, if and to the extent that the
related Indebtedness is permitted under Section 1010(6); and
(xi) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods in the ordinary course of business.
"PERMITTED LINE OF BUSINESS" means, with respect to any Person, any casino
gaming business of such Person or any business that is related to, ancillary or
supportive of; connected with or arising out of the gaming business of such
Person (including, without limitation, developing and operating lodging, dining,
amusement, sports or entertainment facilities, transportation services or other
related activities or enterprises and any additions or improvements thereto).
"PERMITTED SHARED COMMON FACILITIES" means real and personal property serving
both a Casino and a Casino Hotel under a Permitted Shared Common Facilities
Agreement.
"PERMITTED SHARED COMMON FACILITIES AGREEMENT" means an agreement, undertaking
or arrangement providing for real or personal property to serve both a Casino
and a Casino Hotel substantially similar (with appropriate changes to reflect
the needs of the relevant facilities) to the Declaration of Shared Facilities
Agreement for the Isle of Capri Casino and Hotel, Biloxi, Mississippi, dated
April 26, 1995; provided, however, in no event shall any such Permitted Shared
Common Facilities Agreement grant any party thereto any rights to foreclose on
any Collateral.
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"PERMITTED RELATED INVESTMENT" means the acquisition of property or assets by
a Person to be used in connection with a Permitted Line of Business of such
Person.
"PERMITTED VESSEL LIENS" means a Lien on a vessel to secure FF&E Financing or
Capitalized Lease Obligations where the holder or holders (or an agent, trustee
or other representative for such holder or holders) are parties to an
intercreditor agreement with the Trustee substantially similar to that affecting
the Grand Palais on the Issue Date under which such holder or holders (or such
representative) (i) agrees to release such Lien upon satisfaction of such FF&E
Financing, (ii) agrees to release such Lien upon payment (or promise of payment)
to such holder or holders (or such representative) of that portion of the
proceeds of the sale of such vessel attributable to the related FF&E and (iii)
acknowledges that such Lien does not create rights on the hull and other
equipment constituting such vessel (other than the related FF&E).
"PERSON" means an individual, partnership, corporation (including a business
trust), joint stock company, limited liability company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"PLANS" means all drawings, plans and specifications prepared by or on behalf
of the Company or any of its Subsidiaries, as the same may be amended or
supplemented from time to time, and, if required by applicable law, submitted to
and approved by the building or other relevant department, that describe and
show a Casino and the labor and materials necessary for construction thereof.
"POMPANO PARK" means the real and personal property comprising the Pompano
Park harness racing track and training facilities located in Pompano Beach,
Florida.
"PREDECESSOR NOTE" of any particular Note means every previous Note evidencing
all or a portion of the same debt as that evidenced by such particular Note;
and, for the purposes of this definition, any Note authenticated and delivered
under Section 305 in exchange for a mutilated security or in lieu of a lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PREFERRED HOTEL FACILITIES" means new or expanded Casino Hotels located at or
adjacent to the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier City, the
Isle-Lake Charles or located in Cripple Creek, Colorado.
"PREFERRED STOCK," as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends on or to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"PROJECT COSTS" means, with respect to a Casino Improvement or construction or
development of Preferred Hotel Facilities, the aggregate costs required to
complete such Casino Improvement or construction or development of Preferred
Hotel Facilities as well as the furnishing and equipping thereof in accordance
with the Plans therefor and applicable legal
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requirements as set forth in a statement submitted to, and receipted for by, the
Trustee, setting forth in reasonable detail all amounts theretofore expended and
any anticipated costs and expenses estimated to be incurred and reserves to be
established in connection with the construction and development of such Casino
Improvement or construction or development of Preferred Hotel Facilities,
including direct costs related thereto such as construction management,
architectural, engineering and interior design fees, site work, utility
installations and hook-up fees, construction permits, certificates and bonds,
land acquisition costs and the cost of furniture, fixtures, furnishings,
machinery and equipment, but excluding the following: principal or interest
payments on any Indebtedness (other than interest that is required to be
capitalized in accordance with GAAP, which shall be included in determining
Project Costs), or costs related to the operation of Preferred Hotel Facilities
including, but not limited to, non-construction supplies and pre-operating
payroll.
"QUALIFIED PUBLIC EQUITY OFFERING" means a firm commitment underwritten public
offering of Common Stock of the Company for which the Company receives net
proceeds of at least $30 million, and after which the Common Stock is traded on
a national securities exchange or quoted on the Nasdaq National Market.
"QUOTED PRICE" means, for any day, the last reported sale price regular way
or, if no such reported sale takes place such day, the average of the closing
bid and asked prices regular way for such day, in either case on the principal
national securities exchange on which the Notes are listed or admitted to
trading, or if the Notes are not listed or admitted to trading on any national
securities exchange, but are traded in the over-the-counter market, the closing
sale price of the Notes or, in case no sale is publicly reported, the average of
the closing bid and asked prices, as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
Company for that purpose.
"REAL ESTATE OPTIONS" means (i) all options held by the Company, directly or
indirectly, at the Issue Date and (ii) all options acquired by the Company,
directly or indirectly, after the Issue Date for an amount, in each case, not
exceeding $1.0 million, to purchase or lease land.
"REDEMPTION DATE," when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"REDEMPTION PRICE," when used with respect to any Note to be redeemed, means
the price at which it is to be redeemed pursuant to this Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment Date
means the ______ or _______ (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date.
"REPURCHASE DATE" has the meaning set forth in Section 1112.
"REPURCHASE NOTICE" has the meaning set forth in Section 1112.
"REPURCHASE OFFER" has the meaning set forth in Section 1112.
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"RESPONSIBLE OFFICER," when used with respect to the Trustee, means any
officer in the Trustee's "Corporate Trust Administration Department" 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
referred because of his knowledge of and familiarity with the particular
subject.
"RESTRICTED PAYMENT" means any of (a) the declaration or payment of any
dividend or any other distribution on Capital Stock of the Company or any
Subsidiary or any payment made to the direct or indirect holders (in their
capacities as such) of Capital Stock of the Company or any Subsidiary (other
than (i) dividends or distributions payable solely in Capital Stock (other than
Disqualified Stock) otherwise permitted by the Indenture and (ii) in the case of
a Subsidiary, dividends or distributions payable to the Company or to a
Restricted Subsidiary of the Company); (b) the purchase, defeasance, redemption
or other acquisition or retirement for value of any Capital Stock of the Company
or any Subsidiary (other than Capital Stock of such Subsidiary held by the
Company or any of its Restricted Subsidiaries); (c) the making of any principal
payment on, or the purchase, defeasance, repurchase, redemption or other
acquisition or retirement for value, before any scheduled maturity, scheduled
repayment or scheduled sinking fund payment, of any Indebtedness which is
subordinated in any manner in right of payment to the Notes (other than
Indebtedness acquired in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the
date of acquisition); and (d) the making of any Investment or guarantee of any
Investment by the Company or any Subsidiary in any Person other than (x) in a
Person that would be, directly or indirectly, a Subsidiary 80% or more of the
Capital Stock of which is owned by the Company, directly or indirectly,
immediately after giving effect to such Investment, or (y) under a plan of
reorganization or similar proceeding under applicable bankruptcy law or in
connection with a workout involving creditors of such Person in exchange for
Indebtedness owing by such Person that did not violate the limitations set forth
under Section 1012.
"RESTRICTED SUBSIDIARY" means (a) any Subsidiary 80% or more of the Capital
Stock of which is owned by the Company, directly or indirectly, that exists on
the Issue Date and (b) any other Subsidiary of which 80% or more of the Capital
Stock of which is owned by the Company, directly or indirectly, that the Company
has not designated as an Unrestricted Subsidiary or has redesignated a
Restricted Subsidiary.
"RIGHTS OFFERING" means the issuance by the Company to certain of its
stockholders of rights to purchase, at the same price as sold pursuant to the
Goldstein Family Equity Purchase, up to 4,296,085 shares of the Company's Common
Stock.
"SCGC" means St. Charles Gaming Company, Inc., a Louisiana corporation.
"SECURED OBLIGATIONS" has the meaning specified in the Collateral Documents.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SHIP MORTGAGES" means preferred ship (or fleet) mortgages between the
Company or any Subsidiary Guarantor, in each case if it owns or leases any
Vessel (initially, the Isle-Biloxi, Isle-Vicksburg, Isle-Bossier City and the
Isle-Lake Charles (including the Grand Palais)), and the Collateral Agent,
creating a Lien on such Vessel, securing the Secured Obligations of the Company
or such Subsidiary Guarantor, as the case may be, and substantially in the form
attached to the Indenture as Exhibit I, as amended from time to time as
permitted by this Indenture.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means any Restricted Subsidiary (i) the
assets of which (after intercompany eliminations) exceed 5% of the assets of the
Company and its consolidated Subsidiaries or (ii) the income from continuing
operations of which (before income taxes, extraordinary items and intercompany
management or similar fees payable by such Restricted Subsidiary) exceeds 5% of
such income of the Company and its Consolidated Subsidiaries or (iii) that holds
a gaming license to conduct lawful gaming operations at any Casino in any
jurisdiction.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 306.
"STATED MATURITY" means, with respect to any security, the date specified
in such security as the fixed date on which the principal of such security is
due and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof).
"SUBORDINATED INDEBTEDNESS" means Indebtedness that is subordinated in
right of payment to the Notes in all respects, matures at a date later than the
Maturity Date of the Notes and has an Average Life longer than that applicable
to the Notes.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of (a) the issued
and outstanding Capital Stock having ordinary voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time Capital Stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency), (b) the
interest in the capital or profits of such partnership or joint venture or (c)
the beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person.
"SUBSIDIARY GUARANTEES" means the guarantees of the Subsidiary Guarantors
with respect to the Company Obligations set forth in Article 13 and in the forms
attached as Exhibit B-1 (with respect to Subsidiary Guarantors on the Issue
Date) and Exhibit B-2 (with respect to Subsidiary Guarantors added after the
Issue Date).
"SUBSIDIARY GUARANTORS" means each existing and future Significant
Restricted Subsidiary of the Company.
"SUBSIDIARY PLEDGE AGREEMENT" means the Subsidiary Pledge Agreement, dated
as of the date of the Indenture, among the Subsidiary Guarantors and the
Collateral Agent, securing the
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Secured Obligations of the Subsidiary Guarantors and substantially in the form
attached to this Indenture as Exhibit E, as amended from time to time as
permitted by this Indenture.
"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security Agreement,
dated as of the date of the Indenture, among the Subsidiary Guarantors and the
Collateral Agent, securing the Secured Obligations of the Subsidiary Guarantors
and substantially in the form attached to this Indenture as Exhibit G, as
amended from time to time as permitted by this Indenture.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939, as
amended.
"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"UNITED STATES GOVERNMENT OBLIGATIONS" means, securities which are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that (i) is
not a Wholly Owned Subsidiary, (ii) the Company has designated, pursuant to
provisions described under Section 1019 as an Unrestricted Subsidiary and that
has not been redesignated as a Restricted Subsidiary pursuant to such Section
and (iii) is a Subsidiary of an Unrestricted Subsidiary.
"VESSEL" means any riverboat or barge, whether now owned or hereafter
acquired by the Company or any Restricted Subsidiary, useful for gaming,
administrative, entertainment or any other purpose whatsoever.
"VOTING STOCK" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only as long as no
senior class of securities has such voting power by reason of any contingency.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
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Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 1008(a))
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 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified 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.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or with the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
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 and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided 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 agents duly
appointed in writing; and, except as therein otherwise expressly
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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 conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a 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 authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same may also be proved in
any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, shall be proved by the Note Register.
(d) If the Company shall solicit from the Holders of Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for that purpose the Outstanding Notes shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of 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 thereof or in exchange therefor or in lieu thereof 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.
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SECTION 105. NOTICES, ETC. TO TRUSTEE AND 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 by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the first
paragraph of this Indenture, or at any other address previously furnished in
writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice of any event to Holders by the
Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Note 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. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice. Where this Indenture provides for notice in any manner,
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 the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
SECTION 107. 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.
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SECTION 108. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not. All covenants and
agreements in the Collateral Documents by each Grantor shall bind its successors
and assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto, any Paying Agent, any Notes
Registrar and their successors hereunder, and the Holders, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW.
This Indenture and the Notes shall be governed by and construed in
accordance with the law of the State of New York. This Indenture is subject to
the provisions of the Trust Indenture Act of 1939, as amended, that are required
to be part of this Indenture and shall, to the extent applicable, be governed by
such provisions.
SECTION 112. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date, Repurchase
Date or Stated Maturity or Maturity of any Note shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the Notes)
payment of interest or principal (and premium, if any) 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, Redemption Date, Repurchase
Date, or at the Stated Maturity or Maturity; provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date, Repurchase Date, Stated Maturity or Maturity, as the case may be.
ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Notes, including the Trustee's certificate of authentication, shall be
in substantially the form set forth in Exhibit A, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters,
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numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes. Each Note shall include
provisions relating to the Subsidiary Guarantees in substantially the form set
forth in Exhibit B. Any portion of the text of any Note may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the Note.
The definitive Notes shall be printed, lithographed or engraved on steel-
engraved borders or may be produced by any combination of these methods or in
any other manner, all as determined by the officers of the Company executing
such Notes, as evidenced by their execution of such Notes.
SECTION 202. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary Notes
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as conclusively evidenced by their execution
of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes to
be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 1002, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
a like principal amount of definitive Notes of authorized denominations. Until
so exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
ARTICLE THREE
THE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $300 million except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes.
The Notes shall be known and designated as the "___% Senior Secured Notes
due 2003" of the Company. Their Stated Maturity shall be August __, 2003, and
they shall bear interest at the rate of ___% per annum from August __, 1996, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, payable on February __, 1997 and
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semiannually thereafter on August __, and February __ in each year and at said
Stated Maturity, until the principal thereof is paid or duly provided for.
The principal of (and premium, if any, on) and interest on the Notes shall
be payable at the office or agency of the Company maintained for such purpose in
The City of New York, or at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the option of the
Company, interest may be paid by check mailed to addresses of the Persons
entitled thereto as such addresses shall appear on the Note Register. As used
herein with respect to the payment of interest, from a specified date shall not
include such specified date and to a specified date shall include such specified
date.
The Notes shall be redeemable as provided in Article Eleven.
SECTION 302. DENOMINATIONS.
The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its Chairman, its
President or a Vice President, under its corporate seal reproduced thereon and
attested by its Secretary or an Assistant Secretary. The signature of any of
these officers on the Notes may be manual or facsimile signatures of the present
or any future such authorized officer and may be imprinted or otherwise
reproduced on the Notes.
Notes bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes executed by the Company to the Trustee
for authentication, together with a Company Order for the authentication and
delivery of such Notes, and the Trustee in accordance with such Company Order
shall authenticate and deliver such Notes.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized officer, and such certificate
upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.
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If the Company or any Subsidiary Guarantor, pursuant to Article Eight,
shall be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially
as an entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company or Subsidiary
Guarantor shall have been merged, or the Person which shall have received a
conveyance, transfer, lease or other disposition as aforesaid, shall have
executed an indenture supplemental hereto with the Trustee pursuant to Article
Eight, any of the Notes authenticated or delivered prior to such consolidation,
merger, conveyance, transfer, lease or other disposition may, from time to time,
at the request of the successor Person, be exchanged for other Notes executed in
the name of the successor Person and all other obligors thereon with such
changes in phraseology and form as may be appropriate, but otherwise in
substance of like tenor as the Notes surrendered for such exchange and of like
principal amount; and the Trustee, upon Company Request of the successor Person,
shall authenticate and deliver Notes as specified in such request for the
purpose of such exchange. If Notes shall at any time be authenticated and
delivered in any new name of a successor Person pursuant to this Section in
exchange or substitution for or upon registration of transfer of any Notes, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Notes at the time Outstanding for Notes
authenticated and delivered in such new name.
SECTION 304. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "NOTE REGISTER") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Note Register shall be in written form
or any other form capable of being converted into written form within a
reasonable time. At all reasonable times, the Note Register shall be open to
inspection by the Trustee. The Trustee is hereby initially appointed as security
registrar (the "NOTE REGISTRAR") for the purpose of registering Notes and
transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at the office or
agency of the Company designated pursuant to Section 1002, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes which the Holder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer exchange.
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Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Note Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 202, 906, 1108, 1109, 1110 or 1111 not involving
any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the mailing of a notice of redemption or Repurchase Offer and ending at
the close of business on the day of such mailing, (ii) to register the transfer
of or exchange any Note so selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part, or (iii) to register
the transfer of or exchange any Note in respect of which a Repurchase Notice has
been given to any Paying Agent until the earlier of the withdrawal of such
Repurchase Notice or the Repurchase Date.
SECTION 305. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If (i) any mutilated Note is surrendered to the Trustee or (ii) the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, and there is delivered to the Company and the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Company or the Trustee that such Note has
been acquired by a bona fide purchaser, the Company shall execute and upon
Company Order the Trustee shall authenticate and deliver, in exchange for any
such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new
Note of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 306. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 1002; provided,
however, that each installment of interest may at the Company's option be paid
by (i) mailing a check for such interest, payable to or upon the written order
of the Person entitled thereto pursuant to Section 308, to the address of such
Person as it appears in the Note Register or (ii) transfer to an account
maintained by the payee located in the United States.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the Regular Record Date by virtue of having been such
Holder, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Notes (such defaulted interest and
interest thereon herein collectively called "DEFAULTED INTEREST") shall be paid
by the Company to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee in immediately available funds an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit in immediately
available funds prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon, the Trustee shall fix
a Special Record Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date, and in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be given in the manner provided for in
Section 106, not less than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so given, such Defaulted Interest shall be paid to the
Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on such Special Record Date.
Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon registration of transfer of or in exchange or in lieu
of any other Note shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.
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SECTION 307. PERSONS DEEMED OWNERS.
Prior to the due presentment of a Note for registration of transfer, the
Company, the Subsidiary Guarantors, the Trustee and any agent of the Company or
the Trustee may treat the Person in whose name such Note is registered as the
owner of such Note for the purpose of receiving payment of principal of (and
premium, if any, on) and (subject to Sections 304 and 306) interest on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Company, the Subsidiary Guarantors, the Trustee or any agent of the
Company or the Trustee shall be affected by notice to the contrary.
SECTION 308. CANCELLATION.
All Notes surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold, and all Notes so delivered
shall be promptly canceled by the Trustee. If the Company shall so acquire any
of the Notes, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be disposed of by the Trustee in accordance with
its customary procedures and certification of their disposal delivered to the
Company.
SECTION 309. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of Notes herein expressly
provided for) and the Trustee, upon Company Request, and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture when
(1) either
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(a) all Notes theretofore authenticated and delivered (other than (i)
Notes which have been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 306 and (ii) Notes for whose payment money has
theretofore been deposited in trust with the Trustee or any Paying Agent or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 1003) have been delivered
to the Trustee for cancellation; or
(b) all such Notes not theretofore delivered to the Trustee for
cancellation (i) have become due and payable, or (ii) will become due and
payable at their Stated Maturity within one year, or (iii) are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Company, and the Company or the Subsidiary Guarantors, in the
case of clauses (i),(ii) or (iii), have irrevocably deposited or caused to be
deposited with the Trustee as trust funds, in trust (and subject to a first
priority Lien in favor of the Trustee and the Holders) for such purpose, United
States Dollars in an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest to the date of
such deposit (in the case of Notes which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company, including, without limitation, all sums due to the
Trustee; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 and, if money shall
have been deposited with the Trustee pursuant to clause (1)(b)of this Section,
the obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, 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 may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
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ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"EVENT OF DEFAULT," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest on any Note when it becomes
due and payable, and continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Note at its Maturity; or
(3) default in the performance, or breach, of any covenant, agreement
or warranty of the Company or any Subsidiary Guarantor in this Indenture (other
than a default in the performance, or breach, of a covenant, agreement or
warranty which is specifically dealt with elsewhere in this Section), and
continuance of such default or breach for a period of 30 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Notes a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "NOTICE OF
DEFAULT" hereunder; or
(4) the default by the Company or any Subsidiary Guarantee in the
performance, or breach, of the covenant described under Section 801; the failure
of the Company to make or consummate a Change of Control Offer in accordance
with Section 1109; the failure of the Company to make or consummate an Excess
Sale/Loss Proceeds Offer in accordance with Section 1110; or the failure of the
Company to make or consummate an Excess Louisiana Cash Repurchase Offer in
accordance with Section 1111; or
(5) (a) one or more defaults by the Company or any Restricted
Subsidiary in the payment of the principal of or (premium, if any, on) or
interest on Indebtedness, other than Non-Recourse Indebtedness, aggregating $7.5
million or more, when the same becomes due and payable, and such default or
defaults shall have continued after any applicable grace period and shall not
have been cured or waived or (b) Indebtedness, other than Non-Recourse
Indebtedness, of the Company or any Restricted Subsidiary aggregating $7.5
million or more shall have been accelerated or otherwise declared due and
payable, or required to be prepaid or repurchased (other than by regularly
scheduled required prepayment), prior to the Stated Maturity thereof; or
(6) one or more judgments, orders or decrees are rendered against the
Company or any Restricted Subsidiary or any of their respective properties which
require the payment of money not covered by insurance in excess of $7.5 million,
either individually or in an aggregate amount, and such judgment, order or
decree shall not be discharged, waived or
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enforcement thereof stayed, by reason of pending appeal or otherwise, for a
period of 60 consecutive days; or
(7) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company or any Significant Restricted Subsidiary a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company or any Significant Restricted Subsidiary under the Federal Bankruptcy
Code or any other applicable federal or state law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Company or any Significant Restricted Subsidiary or of any substantial part of
its property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
90 consecutive days; or
(8) the institution by the Company or any Restricted Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief
under the Federal Bankruptcy Code or any other applicable federal or state law,
or the consent by it to the filing of any such petition or to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Significant Restricted Subsidiary or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due; or
(9) the revocation, termination, suspension or cessation to be
effective of any gaming license or other right to conduct lawful gaming
operations at any Casino in any jurisdiction of the Company or any Subsidiary
which shall continue for more than 90 consecutive days (other than (i) as a
result of an adverse vote on or about November 5, 1996 with respect to the
conduct of riverboat gaming in Bossier Parish, Louisiana or Calcasieu Parish,
Louisiana or (ii) the voluntary relinquishment of any such gaming license or
right if, in the reasonable opinion of the Company (as evidenced by an Officers'
Certificate) such relinquishment (a) is in the best interest of the Company and
its Subsidiaries, taken as a whole, (b) does not adversely affect the holders of
the Notes in any material respect and (c) is not reasonably expected to have,
nor are the reasons therefor reasonably expected to have, any material adverse
effect on the Company's relationship with any Gaming Authority in Mississippi or
Louisiana, or the effectiveness of any gaming license or similar right, or any
right to renewal thereof, or on the prospective receipt of any such license or
right, in each case, in Mississippi or Louisiana); or
(10) any of (i) a default or material breach by the Company or any
Restricted Subsidiary of its obligations under any Subsidiary Guarantee or the
Collateral Documents which continues for a period of 30 days after written
notice to the Company by the Trustee or to the Company and the Trustee by
Holders of at least 25% in aggregate principal amount of the Outstanding Notes,
(ii) the repudiation by the Company or any Restricted Subsidiary of its
obligations under the Subsidiary Guarantees or the Collateral Documents or (iii)
a judgment or decree by a court or governmental agency of competent jurisdiction
declaring the
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unenforceability of the payment obligations under the Subsidiary Guarantees or
any of the Collateral Documents, subject to a 10-day grace period in the case of
any Collateral Document.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in clause
(7) or (8) of Section 501) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the Notes
Outstanding may declare the principal amount of all the Notes to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal amount shall
become immediately due and payable. If an Event of Default specified in clause
(7) or (8) of Section 501 occurs and is continuing, then the principal amount of
all the Notes shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article provided, the Holders of a majority in principal
amount of the Notes Outstanding, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay,
(A) all overdue interest on all Outstanding Notes,
(B) all unpaid principal of (and premium, if any, on) any
Outstanding Notes which has become due otherwise than by such declaration of
acceleration, and interest on such unpaid principal at the rate borne by the
Notes,
(C) to the extent that payment of such interest is lawful,
interest on overdue 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,
its agents and counsel; and
(2) all Events of Default, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on Notes which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the preceding paragraph, in the event of a declaration of
acceleration in respect of the Notes because of an Event of Default specified in
clause (5) of Section 501 shall
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have occurred and be continuing, such declaration of acceleration shall be
automatically annulled if the Indebtedness that is the subject of such Event of
Default has been discharged or the holders thereof have rescinded their
declaration of acceleration in respect of such Indebtedness, and written notice
of such discharge or rescission, as the case may be, shall have been given to
the Trustee by the Company and countersigned by the holders of such Indebtedness
or a trustee, fiduciary or agent for such holders, within 30 days after such
declaration of acceleration in respect of the Notes, and no other Event of
Default has occurred during such 30-day period which has not been cured or
waived during such period.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Note at its Maturity,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Notes, the whole amount then due and payable on such
Notes for principal (and premium, if any) and interest, and interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of interest,
at the rate borne by the Notes, and, in addition thereto, 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 the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in the Collateral
Documents or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
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SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes 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 moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
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 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 606.
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.
SECTION 505. 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 and as
trustee of an express trust, and any recovery of judgment shall, after provision
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 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such
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money on account of principal (or premium, if any) 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 606;
SECOND: To the payment of all amounts due the Collateral Agent under the
Collateral Documents;
THIRD: To the payment of the amounts then due and unpaid for principal of
(and premium, if any, on,) and interest on the Notes 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 premium, if any) and interest, respectively; and
FOURTH: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Notes 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 shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 30-day period by the Holders of a majority or more 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 whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
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SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Thirteen) and in
such Note of the principal of (and premium, if any, on) and (subject to Section
307) interest on, such Note on the respective Stated Maturities expressed in
such Note (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Subsidiary Guarantors, the Trustee and the
Holders shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 306,
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 511. 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.
SECTION 512. 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
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Indenture, (2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction and (3) the Trustee need
not take any action which might involve it in personal liability or be unjustly
prejudicial to the Holders not consenting.
SECTION 513. 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 respect of the
payment of the principal of (or premium, if any, on) or interest on any Note or
(2) in respect of a covenant or provision hereof which under Article Nine cannot
be modified or amended without the consent of the Holder of each Outstanding
Note affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 514. WAIVER OF STAY OR EXTENSION LAWS.
Each of the Company and the Subsidiary Guarantors covenants (to the extent
that each may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and 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.
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS.
Within 45 days after the occurrence of any Default hereunder, the Trustee
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice of such Default hereunder known to the Trustee, unless such Default shall
have been cured or waived; provided, however, that, except in the case of a
Default in the payment of the principal of (or premium, if any, on) or interest
on any Note, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders; and
provided further that in the case of any Default of the character specified in
clause (5) of Section 501 no such notice to Holders shall be given until at
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least 30 days after the occurrence thereof. The provisions of Section 315(b) of
the Trust Indenture Act are hereby excluded from this Indenture.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) 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,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(3) 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 the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) 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;
(5) 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;
(6) 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,
note, other evidence of indebtedness 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;
(7) 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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(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; and
(9) the Trustee shall not be personally liable, in case of entry by it
upon any property subject to the liens of the Collateral Documents, for debts
contracted or liabilities or damages incurred in the management or operation
thereof.
The Trustee shall not be required 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.
SECTION 603. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained in this Indenture and in the Notes, except for the
Trustee's certificates 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 the validity or sufficiency of this
Indenture or of the Notes, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and
perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification of Form T-1 supplied to the Company
are true and accurate, subject to the qualifications set forth therein. The
Trustee shall not be accountable for the use or application by the Company of
Notes or the proceeds thereof.
The Trustee makes no representations with respect to the effectiveness or
adequacy of any Collateral Document, or the validity, perfection or priority, if
any, of liens granted to it under this Indenture or the Collateral Documents.
The Trustee shall not be responsible for ascertaining or maintaining such
validity, Perfection or priority, if any, and shall be fully protected in
relying upon certificates and opinions delivered to it in accordance with the
terms of this Indenture or the Collateral Documents.
SECTION 604. MAY HOLD NOTES.
The Trustee, any Paying Agent, any Note Registrar or any other agent of the
Company or of the Trustee, in its individual or any other capacity, may become
the owner or pledgee of Notes and, subject to TIA Sections 310(b) and 311, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Note Registrar or such other agent.
SECTION 605. 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.
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SECTION 606. 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 and under the Collateral Documents as
shall be agreed by the Company and the Trustee (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) 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 or the Collateral Documents
(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
(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 and its duties hereunder and under the Collateral Documents, 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 and the Collateral Documents.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim 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 (and premium, if any, on) or
interest on particular Notes.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be eligible to
act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least $50 million. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article Six.
SECTION 608. 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 Six shall become effective until the
acceptance of
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appointment by the successor Trustee in accordance with the applicable
requirements of Section 609.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 609 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the Outstanding Notes, delivered
to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b), or
(2) the Trustee shall cease to be eligible under Section 607 and
shall fail to resign after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Note for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) 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 a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Notes delivered to
the Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
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(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to the Holders of
Notes in the manner provided for in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
(g) All references in this Section shall be deemed to include the
Trustee's duties under the Collateral Documents, including in its capacity as
Collateral Agent.
SECTION 609. 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 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; but, 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 and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder. 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 Six. Both the retiring Trustee and the successor Trustee shall be
entitled to receive an Opinion of Counsel stating that all conditions precedent
have been complied with and that the appointment of such successor Trustee is
enforceable against the Company, subject to bankruptcy, insolvency,
reorganization, moratorium, arrangement or other similar laws relating to
creditors' rights generally, and general principles of equity (regardless
whether considered in a proceeding at law or in equity), including concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or other equitable relief.
SECTION 610. MERGER OR 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 that such corporation shall be otherwise qualified and eligible under
this Article, 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
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; and in case at
that time any of the Notes shall not have been authenticated, any successor
Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee and in all such
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cases such certificates shall have the full force which it is anywhere in the
Notes or in this Indenture provided that the certificate of the Trustee shall
have; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate Notes in the name
of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 611. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
SECTION 612. PAYING AGENT; REGISTRAR.
(a) Each Paying Agent or Registrar (other than the Company) shall be a
corporation organized and doing business under the laws of the United States of
America or of any State and having a combined capital and surplus of at least
$500 million.
(b) Each Agent may resign at any time by giving written notice thereof
to the Company. The Company, by a Board Resolution and upon giving written
notice thereof to the Agent, may remove each Agent at any time.
(c) If any Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of any Agent for any case, the
Company, by a Board Resolution, shall promptly appoint a successor Agent.
(d) The Company shall given notice of each resignation and each
removal of any Agent and each appointment of a successor Agent by mailing
written notice of such event by first-class mail, postage prepaid, to the
Trustee. Each notice shall include the name and address of the successor Agent.
(e) The Trustee is hereby appointed Paying Agent and Registrar, unless
and until a successor Agent is appointed pursuant to the provisions of this
Indenture.
(f) The Company shall enter into an appropriate written agency
agreement with any Agent not a party to this Indenture, which agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee in writing of the name and address of any such
Agent.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
(a) The Company will furnish or cause to be furnished to the Trustee
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(i) semiannually, not more than five Business Days after
each Regular Record Date pertaining to the Notes, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders of
Notes as of such Regular Record Date, and
(ii) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
provided, however, that if and so long as the Trustee shall be the Registrar, no
such list need be furnished.
(b) If and whenever the Company or any Affiliate of the Company
acquires any Notes, the Company shall within 10 Business Days after such
acquisition by the Company and within 10 Business Days after the date on which
it obtains knowledge of any such acquisition by an Affiliate, provide the
Trustee with written notice of such acquisition, the aggregate principal amount
acquired (to the extent known by the Company), the Holder from whom such Note
was acquired and the date of such acquisition.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Registrar.
The Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
(b) If three or more Holders (referred to as "APPLICANTS" in this
paragraph) apply in writing to the Trustee and furnish to the Trustee reasonable
proof that each such applicant has owned a Note for a period of at least six
months preceding the date of such application, and such application states that
the applicants desire to communicate with other Holders with respect to their
rights under this Indenture or under the Notes and is accompanied by a copy of
the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, at its election, either: (i) afford to such applicants access
to the information preserved at the time by the Trustee in accordance with the
provisions of paragraph (a) of this Section; or (ii) inform such applicants as
to the approximate number of Holders whose names and addresses appear in the
information preserved at the time by the Trustee, in accordance with the
provisions of paragraph (a) of this Section, and as to the approximate cost of
mailing to such Holders the form of proxy or other communication if any,
specified in such application.
(c) If the Trustee shall elect not to afford to such applicants
access to such information the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of paragraph (a) of this Section, a copy of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment,
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of the reasonable expenses of mailing, unless within five Business Days after
such tender the Trustee shall mail to such applicants and file with the
Commission, together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would
be contrary to the best interests of the Holders of Notes or would be in
violation of applicable law. Such written statement shall specify the basis of
such opinion. If the Commission, after opportunity for a hearing upon the
objection specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of any order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met, and shall enter an order so declaring, the Trustee shall mail copies
of such material to all such Holders with reasonable promptness after the entry
of such order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
SECTION 703. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Notes, by receiving and holding the same, agrees with the
Company and the Trustee that none of the Company or the Trustee or any agent of
either of them shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with TIA
Section 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under TIA Section 312(b).
SECTION 704. REPORTS BY TRUSTEE.
(a) If required by TIA Section 313(a), within 60 days after
February __ of each year commencing February __, 1997, the Trustee shall
transmit to the Holders, in the manner and to the extent provided in TIA Section
313(c), a brief report dated as of the preceding February __. The Trustee shall
also comply with TIA Section 313(b).
(b) The Trustee shall transmit to the Holders within the times
hereinafter specified a brief report with respect to the following:
(1) the release, or release and substitution, of property
subject to any Lien of this Indenture or the Collateral Documents (and the
consideration therefor, if any) unless the fair value of such property, as set
forth in the Officers' Certificate or Opinion of Counsel required by TIA Section
314(d), is less than 10% of the aggregate principal amount of the Notes
Outstanding at the time of such release, or such release and substitution, such
report to be so transmitted within 90 days after such time; and
(2) the character and amount of any advances made by it as
such since the date of the last report transmitted pursuant to the provisions of
TIA Section 313(a) (or if no such report has yet been so transmitted, since the
date of execution of the Indenture), the reimbursement for which it claims or
may claim a Lien or charge, prior to that of the Indenture Notes, on the trust
estate or on property or funds held or collected by it as such Trustee, and
which it has not previously reported pursuant to this clause (2), if such
advances remaining
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unpaid at any time aggregate more than 10% of the aggregate principal amount of
the Notes Outstanding at such time, such report to be so transmitted within 90
days after such time.
(c) A copy of each such report shall, at the time of such
transmission to the Holders, be filed with each stock exchange, if any, upon
which the Notes are listed, and also with the Commission.
SECTION 705. REPORTS BY COMPANY.
The Company shall:
(1) file with the Trustee copies of all Exchange Act reports as
required under Section 1009;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, in the manner and to the
extent provided in TIA Section 313(c), within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to this Section as may be required
by rules and regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER OR CONVEYANCE
SECTION 801. COMPANY AND RESTRICTED SUBSIDIARIES MAY CONSOLIDATE, MERGE OR
CONVEY ONLY ON CERTAIN TERMS.
Neither the Company nor any Restricted Subsidiary shall consolidate with or
merge with or into or sell, assign, convey, lease or transfer all or
substantially all of its properties and assets to any Person or group of
affiliated Persons in a single transaction or through a series of transactions,
except that:
(1) the Company may consolidate with or merge with or into or
sell, assign, convey, lease or transfer all or substantially all of its
properties and assets to any Person or group of affiliated Persons in a single
transaction or through a series of transactions if (a) the Company shall be the
continuing Person or the resulting, surviving or transferee Person (the
"SURVIVING ENTITY") shall be a corporation organized and existing under the laws
of the United States or any State thereof or the District of Columbia; (b) the
surviving entity shall expressly assume, by a supplemental indenture executed
and delivered to the Trustee, in form and substance reasonably
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satisfactory to the Trustee, all of the obligations of the Company under the
Notes, the Indenture and the Collateral Documents, and the Company shall have
taken all steps necessary or desirable to perfect and protect the security
interests granted or purported to be granted by the Collateral Documents and the
Company has delivered to the Trustee an Opinion of Counsel that all such steps
have been taken; (c) immediately before and immediately after giving effect to
such transaction, or series of transactions (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), no Default or Event of
Default shall have occurred and be continuing; (d) the Company or the surviving
entity (if the transaction or series of transactions involves the Company) shall
immediately before and after giving effect to such transaction or series of
transactions (including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of the transaction
or series of transactions) have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of the Company immediately prior to such
transaction or series of transactions; (e) immediately after giving effect to
such transaction or series of transactions on a pro forma basis, the Company or
the surviving entity (if the transaction or series of transactions involves the
Company) could incur at least $1.00 of additional Indebtedness pursuant to
Section 1010 (other than under clauses (1) through (9) thereof); (f) the Company
or the surviving entity shall have delivered to the Trustee an Officers'
Certificate stating that such consolidation, merger, conveyance, transfer or
lease and, if a supplemental indenture is required in connection with such
transaction or series of transactions, such supplemental indenture complies with
this covenant and that all conditions precedent in the Indenture and the
Collateral Documents relating to the transaction or series of transactions have
been satisfied; (g) such transaction will not result in the loss of any gaming
or other license necessary for the continued operation of the business of any
Restricted Subsidiary as conducted immediately prior to such consolidation,
merger, conveyance, transfer or lease; and (h) if any property of the Company or
any Restricted Subsidiary would thereupon become subject to any Lien, the
provisions of Section 1011 are complied with; and
(2) a Restricted Subsidiary may consolidate with or merge into or
sell, assign, convey, lease or transfer all or substantially all of its
properties and assets to the Company or to any Restricted Subsidiary of the
Company if (a) the surviving entity shall be the Company or a Restricted
Subsidiary of the Company; (b) the surviving entity shall expressly assume, by a
supplemental indenture (or similar instrument) executed and delivered to the
Trustee (or, as applicable, the Collateral Agent), in form and substance
reasonably satisfactory to the Trustee (or, as applicable, the Collateral
Agent), all of the obligations of such Restricted Subsidiary under this
Indenture the Notes and the Collateral Documents, and such Restricted
Subsidiaries shall have taken all steps necessary or desirable to perfect and
protect the security interests granted or purported to be granted by the
Collateral Documents and the Company has delivered to the Trustee an Opinion of
Counsel that all such steps have been taken; and (c) such transaction will not
result in the loss of any gaming or other license necessary for the continued
operation of any Restricted Subsidiary as conducted immediately prior to such
sale, assignment, conveyance, transfer or lease;
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provided, that in each such case the Company has delivered to the Trustee an
Opinion of Counsel that all conditions precedent in this Indenture relating to
any such consolidation, merger, sale, assignment, transfer, conveyance or lease
have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED.
(a) Upon any consolidation of the Company with or merger of the Company
with or into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety to any Person
in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture, the Notes
and the Collateral Documents with the same effect as if such successor Person
had been named as the Company herein and therein, and in the event of any such
conveyance or transfer, the Company (which term shall for this purpose mean the
Person named as the "COMPANY" in the first paragraph of this Indenture or any
successor Person which shall theretofore become such in the manner described in
Section 801), except in the case of a lease, shall be discharged of all
obligations and covenants under this Indenture, the Notes and the Collateral
Documents and may be dissolved and liquidated.
(b) Upon any consolidation of a Restricted Subsidiary that is a Grantor
with or merger of a Restricted Subsidiary that is a Grantor with or into any
other corporation or any conveyance, transfer or lease of the properties and
assets of a Restricted Subsidiary that is a Grantor substantially as an entirety
to any Person in accordance with Section 801, the successor Person formed by
such consolidation or into which such Restricted Subsidiary is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, such Restricted
Subsidiary under this Indenture, the Notes and the Collateral Documents with the
same effect as if such successor Person had been named as such Restricted
Subsidiary therein, and in the event of any such conveyance or transfer, such
Restricted Subsidiary, except in the case of a lease, shall be discharged of all
obligations and covenants under this Indenture, the Notes and the Collateral
Documents and may be dissolved and liquidated.
ARTICLE NINE
SUPPLEMENTAL INDENTURES AND AMENDMENTS TO COLLATERAL
DOCUMENTS
SECTION 901. SUPPLEMENTAL INDENTURES AND AMENDMENT TO COLLATERAL
DOCUMENTS WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the Subsidiary
Guarantors, when authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental hereto
(which term shall include any Addendum to
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Subsidiary Guarantees) or amendments to the Collateral Documents, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
or a Subsidiary Guarantor and the assumption by any such successor of the
covenants of the Company or Subsidiary Guarantor contained herein, in the Notes
and in the Collateral Documents; or
(2) to add to the covenants of the Company or a Subsidiary
Guarantor for the benefit of the Holders or to surrender any right or power
herein conferred upon the Company or a Subsidiary Guarantor; or
(3) to add any additional Events of Default; or
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Section 609; or
(5) to cure any ambiguity, to correct or supplement any provision
herein or in the Collateral Documents which may be inconsistent with any other
provision herein or therein, or to make any other provisions with respect to
matters or questions arising under this Indenture or under the Collateral
Documents; provided that such action shall not adversely affect the interests of
the Holders in any material respect; or
(6) to establish or maintain the existence and priority of the
Lien of this Indenture and the Collateral Documents or to correct or amplify the
description of any Collateral subject to the Lien of this Indenture and the
Collateral Documents, or to subject additional property to the Lien of this
Indenture and the Collateral Documents; or
(7) to add or release a Subsidiary Guarantor to or from the
Subsidiary Guarantees as permitted by this Indenture;
(8) to comply with any requirement of the Commission or state
securities regulators in connection with the qualification of the Indenture
under the TIA or any registration or qualification of the Notes (including the
Subsidiary Guarantees) under the Securities Act or state securities laws.
(9) to make any other change that does not adversely affect the
rights of any Holder.
SECTION 902. SUPPLEMENTAL INDENTURES AND AMENDMENTS TO COLLATERAL
DOCUMENTS WITH CONSENT OF HOLDERS.
(a) Except as otherwise provided in paragraph (b) of this
Section, with the consent of the Holders of not less than a majority in
principal amount of the Outstanding Notes, by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures
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supplemental hereto or amendments to the Collateral Documents for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or the Collateral Documents or of modifying in any
manner the rights of the Holders hereunder or thereunder; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Note affected thereby,
(1) extend the Stated Maturity of the principal of, or the
Interest Payment Date for any installment of interest on, any Note, or reduce
the principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change the coin or currency in which any
Note or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment after the Stated Maturity
or Interest Payment Date thereof (or, in the case of redemption or repurchase,
on or after the Redemption Date or Purchase Date, respectively), or affect the
ranking (in terms of right or time of payment) of the Notes or Subsidiary
Guarantees, or
(2) reduce the percentage in principal amount of the Outstanding
Notes, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of Section 513 or this Section,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Note affected thereby, or
(4) except as provided in Sections 1011 and 1205 or in the
Collateral Documents, expressly and directly release any Collateral, permit the
creation of any Lien on the Collateral or any part thereof, terminate the Lien
of this Indenture or the Collateral Documents, deprive the holders of the
security of the Collateral or amend Section 1011, 1014, 1018, 1019, 1202, 1204
or 1205, or
(5) modify or waive any provision of Article Eleven or the
definitions used therein for the purpose or having the effect of reducing
eliminating any obligation to redeem, offer to repurchase or repurchase Notes,
or the amount or extending the date of any payment required in connection with
such redemption or repurchase, or
(6) release any Subsidiary Guarantor from its Subsidiary
Guarantee or amend Article Thirteen, except as provided by Article Eight or
Section 901.
(b) It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture or
amendment to the Collateral Documents, but it shall be sufficient if such Act
shall approve the substance thereof.
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SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES AND AMENDMENTS TO THE
COLLATERAL DOCUMENTS.
In executing, or accepting the additional trusts created by, any
supplemental indenture or amendment to the Collateral Documents permitted by
this Article Nine or the modifications thereby of the trusts created by this
Indenture or the Collateral Documents, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture or amendment to the Collateral
Documents is authorized or permitted by this Indenture and that this Indenture,
as amended by any such Supplemental Indenture, constitutes the legal, valid and
binding obligation of each of the Company and the Subsidiary Guarantors
enforceable against each of them in accordance with its terms. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture or
amendment to the Collateral Documents which affects the Trustee's own rights,
duties or immunities under this Indenture or under the Collateral Documents or
otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURE.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to the Article shall conform
to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.
Without limitation of Section 904, (1) in the case of any Addendum to Subsidiary
Guarantees, whether or not any or all new Notes are so executed, authenticated
and exchanged for previously Outstanding Notes, the Subsidiary Guarantor added
by such Addendum shall be obligated with respect to its Subsidiary Guarantees as
if all Outstanding Notes had been exchanged for Notes executed by such New
Subsidiary Guarantor, or (2) in the case of the release of a Subsidiary
Guarantor pursuant to the terms hereof, whether or not any or all new Notes are
so executed, authenticated and exchanged for previously Outstanding Notes, such
Subsidiary Guarantor shall be released from its Subsidiary Guarantee as if all
Outstanding Notes had been exchanged for Notes not executed by such Subsidiary
Guarantor.
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SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES AND AMENDMENTS TO COLLATERAL
DOCUMENTS.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture or amendment to the Collateral Documents pursuant to the
provisions of Section 902, the Company shall give notice thereof to the Holders
of each Outstanding Note affected, in the manner provided for in Section 106,
setting forth in general terms the substance of such supplemental indenture or
amendment to the Collateral Documents.
ARTICLE TEN
CERTAIN COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, ANY, AND INTEREST.
The Company covenants and agrees for the benefit of the Holders that it
will duly and punctually pay the principal of (and premium, if any, on) any
interest on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in The City of New York, an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered 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. Fleet National Bank, ______________, New York, New York shall be such
office or agency of the Company, unless the Company shall designate and maintain
some other office or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of any change in the location of any
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, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; 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 City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such other office or agency.
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SECTION 1003. AGENCY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of (and premium, if any, on) 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 (and premium, if
any) 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 for the Notes, it
will, on or before each due date of the principal of (and premium, if any, on),
or interest on, any Notes, deposit with a Paying Agent in immediately available
funds a sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of such action or
any 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
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any, on) or interest on 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) in the making of any payment of principal (and
premium, if any) 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.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums 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; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any,
on) or interest on any Note and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all
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liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in a newspaper published in the English language, customarily published on
each Business Day and of general circulation in the Borough of Manhattan, The
City of New York, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory) and franchises of the Company and each
Subsidiary; provided, however, that the Company shall not be required to
preserve any such right or franchise if the Board of Directors shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent and in accordance with the applicable
provisions of the Collateral Documents, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and (2)
all lawful claims for labor, materials and supplies, which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all properties owned by the Company or any
Subsidiary or used or held for use in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order (reasonable wear and tear excepted) and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as required by the
Collateral Documents and as otherwise in the judgment of the Company may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Holders.
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SECTION 1007. MAINTENANCE OF INSURANCE.
The Company will, and will cause its Subsidiaries to, maintain customary
insurance for general liabilities, casualty and property damage, and other
risks, including business interruption coverage where available on commercially
reasonable terms, on terms and in amounts as are customarily carried by similar
business conducting gaming in the jurisdictions of the gaming operations of the
Company and its Subsidiaries and reasonably sufficient to avoid a material
adverse change in the financial condition or results of operation of the Company
and its Subsidiaries taken as a whole. All insurance shall name the Trustee as
additional insured or loss payee, as applicable. All such insurance shall be
issued by carriers having an A.M. Best & Company, Inc. rating of A- or higher,
or if such carrier is not rated by A.M. Best & Company, Inc., having the
financial stability and size deemed appropriate by a reputable insurance broker.
SECTION 1008. STATEMENT BY OFFICERS AS TO DEFAULT.
(a) The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year, a certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the compliance by the Company and the Subsidiary Guarantors with
all conditions and covenants under this Indenture, the Notes and each of the
Collateral Documents. For purposes of this paragraph, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture or the Collateral Documents.
(b) When any Default has occurred and is continuing under this
Indenture, or if the trustee for or the holder of any other evidence of
Indebtedness of the Company or any Subsidiary gives any notice or takes any
other action with respect to a claimed default, the Company shall deliver to the
Trustee by registered or certified mail or by telegram, telex or facsimile
transmission an Officers' Certificate specifying such event, notice or other
action within five Business Days of its occurrence.
SECTION 1009. FILING AND PROVISION OF EXCHANGE ACT REPORTS.
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Commission, on or before the date it is or would have been required to be filed
with the Commission, and shall deliver to the Trustee and to each Holder, within
15 days after it is or would have been required to so file with the Commission,
all annual, quarterly and periodic reports required to be filed with the
Commission by issuers subject to the requirements of Sections 13 or 15(d) of the
Exchange Act.
SECTION 1010. LIMITATION ON INDEBTEDNESS.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume, suffer to exist,
guarantee or in any manner become liable for the payment of ("INCUR"), any
Indebtedness (including any Acquired Indebtedness) or any Disqualified Stock
unless (1) such Indebtedness or Disqualified Stock is incurred by the Company or
a Subsidiary Guarantor, (2) no Default or Event of Default shall have occurred
and
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be continuing at the time of, or would occur after giving pro forma effect to,
such incurrence of Indebtedness or Disqualified Stock and (3) on the date of
such incurrence (the "INCURRENCE DATE"), the Consolidated Coverage Ratio of the
Company, after giving pro forma effect to such incurrence of such Indebtedness,
would be at least 2.0 to 1 if the Incurrence Date is on or before July 31, 1998
or at least 2.25 to 1 if the Incurrence Date is after July 31, 1998, other than
the following:
(1) Indebtedness and Disqualified Stock issued to and held by the
Company or a wholly owned Restricted Subsidiary of the Company, provided that
(a) any subsequent issuance or transfer of any Capital Stock that results in any
such wholly owned Restricted Subsidiary ceasing to be a wholly owned Restricted
Subsidiary or (b) any transfer of such Indebtedness to a Person other than the
Company or a wholly owned Restricted Subsidiary of the Company, will be deemed
to be the issuance of such Indebtedness or Disqualified Stock by the issuer
thereof;
(2) Indebtedness under the Notes, the Subsidiary Guarantees and this
Indenture;
(3) Indebtedness (a) outstanding on the Issue Date as set forth on
Schedule 1010 to the Indenture on the Issue Date and (b) (without duplication of
amounts included in clause (a) which may be incurred under one or more
revolving bank credit facilities in an aggregate principal amount not to exceed
$15 million;
(4) Non-Recourse Indebtedness incurred by a Subsidiary Guarantor in
respect of Project Costs to develop, construct and open Preferred Hotel
Facilities, provided that (i) the principal amount of such Non-Recourse
Indebtedness (including any Refinancing Indebtedness with respect to such Non-
Recourse Indebtedness) shall not exceed 100% of such Project Costs and (ii) the
Consolidated Coverage Ratio of the Company, without giving pro forma effect to
such incurrence of such Non-Recourse Indebtedness, would be at least 2.0 to 1;
(5) FF&E Financing and Capitalized Lease Obligations, provided that
the sum of the aggregate principal amount of FF&E Financing and Capitalized
Lease Obligations does not exceed, in the aggregate at any time outstanding, the
sum of (a) the principal amount of FF&E Financing and Capitalized Lease
Obligations outstanding on the Issue Date plus (b) $10 million plus (c) the
product of $7 million and the number of Casinos acquired or developed by the
Company and its Restricted Subsidiaries after the Issue Date plus (d) the
product of $5 million and the number of Casino Hotels acquired or developed by
the Company or its Restricted Subsidiaries after the Issue Date;
(6) Indebtedness in respect of performance bonds, letters of credit,
bankers' acceptances and surety and appeal bonds in the ordinary course of
business, other than such Indebtedness outstanding on the Issue Date (or
refinancings thereof permitted under clause (7) of this Section), in an amount
not to exceed $5 million in the aggregate; Interest Rate and Currency Protection
Obligations entered into in connection with the incurrence of Indebtedness
otherwise permitted under the Indenture; and Indebtedness arising under
agreements providing for
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indemnification, adjustment of purchase price and similar obligations in
connection with the disposition of property or assets in the ordinary course of
business.
(7) Indebtedness issued in exchange for or to repay, prepay,
repurchase, redeem, defease, retire or refinance ("REFINANCE") any Indebtedness
permitted by clauses (1) through (6) of this Section, provided that (a) if the
principal amount of the Indebtedness so issued shall exceed the sum of the
principal amount of the Indebtedness so exchanged or refinanced plus any
prepayment premium and costs reasonably incurred to effect the exchange or
refinancing, then either (i) such excess shall be permitted only to the extent
that it is otherwise permitted to be incurred under this covenant or (ii) in the
case of Indebtedness permitted by clause (5) above, such excess shall be
permitted if the principal amount of Indebtedness so issued does not exceed the
lesser of (A) the original principal amount of the Indebtedness so exchanged or
refinanced and (B) the fair value of the property that is the subject of such
FF&E Financing or Capitalized Lease Obligations, as applicable; and (b) the
Indebtedness so issued (i) has a Stated Maturity not earlier than the Stated
Maturity of the Indebtedness so exchanged or refinanced, (ii) has an Average
Life equal to or greater than the remaining Average Life of the Indebtedness so
exchanged or refinanced, and (iii) is subordinated to the Notes to at least the
same extent as the Indebtedness so exchanged or refinanced;
(8) Indebtedness incurred by a Subsidiary Guarantor in respect of
Project Costs to make a Casino Improvement, provided that such Indebtedness does
not exceed $5 million in the aggregate; and
(9) Indebtedness, other than Indebtedness permitted by clauses (1)
through (8) of this Section, which does not exceed $15 million (less any
Indebtedness incurred pursuant to this clause retired with Net Cash Proceeds
from any Asset Sale or Event of Loss) in the aggregate at any time outstanding.
SECTION 1011. LIMITATION ON LIENS.
The Company shall not and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien of any kind upon any of its property or assets (including, without
limitation, any income or profits) now owned or hereafter acquired by it, other
than:
(1) Liens existing on the Issue Date and set forth on Schedule 1011
hereto on the Issue Date;
(2) Liens securing FF&E Financing or Capitalized Lease Obligations
permitted pursuant to clause (5) of Section 1010; provided that (a) the amount
of such Indebtedness incurred in any individual case secured by such a Lien, at
the time such Indebtedness is incurred, does not exceed the lesser of (i) the
cost and (ii) the Fair Market Value of the property or assets acquired in
connection with such FF&E Financing or Capitalized Lease Obligation, (b) the
Indebtedness secured by such Lien shall have otherwise been permitted to be
incurred under the Indenture, (c) such Lien shall attach to such property or
assets upon their
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acquisition; and (d) such Lien (other than a Permitted Vessel Lien) shall not
encumber or attach to any other assets or property of the Company or any of its
other Restricted Subsidiaries;
(3) Liens securing Non-Recourse Indebtedness incurred by a Subsidiary
Guarantor in respect of Project Costs to develop, construct and open Preferred
Hotel Facilities pursuant to clause (4) of Section 1010, provided that (a) such
Lien shall attach to such Preferred Hotel Facilities upon construction or
acquisition of such property or assets and (b) such Lien shall not encumber or
attach to any other assets or property of the Company or any of its other
Restricted Subsidiaries other than Permitted Shared Common Facilities;
(4) Liens securing Indebtedness incurred pursuant to clause (9) of
Section 1010, provided that any such Lien shall not encumber or attach to any
assets or property owned by the Company or any of its Restricted Subsidiaries as
of the Issue Date;
(5) Liens that encumber or attach to any of the Excluded Assets but do
not encumber or attach to any other assets or property of the Company or any of
its Restricted Subsidiaries;
(6) the replacement, extension or renewal of any Lien permitted by
clauses (1) through (5) of this Section upon or in the same property theretofore
subject thereto or the replacement, extension or renewal (without increase in
the principal amount (other than to pay any prepayment premium and costs
reasonably incurred to effect the replacement, extension or renewal or, in the
case of a Lien securing Indebtedness incurred pursuant to clause (5) of Section
1010, as permitted by clause (7) of Section 1010) or change in any direct or
contingent obligor) of the Indebtedness secured thereby; and
(7) Permitted Liens.
SECTION 1012. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not make, directly or indirectly, and shall not permit
any Restricted Subsidiary to make, directly or indirectly, any Restricted
Payment, unless:
(1) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Restricted Payment;
(2) immediately after giving effect to such Restricted Payment, the
Company could incur at least $1.00 of Indebtedness pursuant to Section 1010
(other than under clauses (1) through (9) thereof); and
(3) the aggregate of all Restricted Payments declared or made after
the Issue Date does not exceed the sum of (a) 50% of Consolidated Net Income (or
in the event such Consolidated Net Income shall be a deficit, minus 100% of such
deficit) accrued during the period (treated as one accounting period) beginning
on the first day of the first full fiscal quarter of the Company commencing
after August 1, 1996 and ending on the last day of the Company's last fiscal
quarter ending before the date of such proposed Restricted Payment plus (b) an
amount
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equal to the aggregate Net Cash Proceeds received by the Company from the
issuance or sale (other than to a Subsidiary) of its Capital Stock (excluding
Disqualified Stock, but including Capital Stock issued upon conversion of
convertible Indebtedness and from the exercise of options, warrants or rights to
purchase Capital Stock (other than Disqualified Stock) of the Company) (i) in
the Goldstein Family Equity Purchase or (ii) otherwise on or after the Issue
Date;
provided, however, that the foregoing provisions will not prevent, provided that
no Default or Event of Default shall have occurred and be continuing at the time
of and after giving effect to such Restricted Payment, (a) the payment of any
dividend within 60 days after the date of its declaration if, at the date of
declaration, such payment would be permitted by such provisions; (b) the
redemption or repurchase of any Capital Stock or Indebtedness of the Company,
including the Notes, if required by any Gaming Authority or if determined, in
the good faith judgment of the Board of Directors, to be necessary to prevent
the loss or to secure the grant or reinstatement of any gaming license or other
right to conduct lawful gaming operations, (c) the repurchase of Capital Stock
from directors, officers and employees (or their respective estates or
beneficiaries) upon death, disability, retirement or termination of employment
up to an amount not to exceed an aggregate of $1 million in any fiscal year of
the Company and (d) Permitted Investments. The full amount of any Restricted
Payment made pursuant to the foregoing clause (a) or pursuant to clause (ii) of
the definition of Permitted Investments, however, will be included in the
calculation of the aggregate amount of Restricted Payments available to be made
pursuant to clause (3) of this Section.
SECTION 1013. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or enter
into any agreement with any Person that would cause any consensual encumbrance
or restriction of any kind on the ability of any Restricted Subsidiary to (1)
pay dividends, in cash or otherwise, or make any other distributions on its
Capital Stock or any other interest or participation in, or measured by, its
profits owned by, or pay any Indebtedness owed to, the Company or a Restricted
Subsidiary, (2) make any loans or advances to the Company or any Restricted
Subsidiary or (3) transfer any of its properties or assets to the Company
except, in each case, for (a) such encumbrances or restrictions existing under
or contemplated by or by reason of the Notes, this Indenture and the Collateral
Documents, (b) customary non-assignment provisions restricting subletting or
assignment of any lease entered into in the ordinary course of business,
consistent with industry practices, (c) restrictions imposed by applicable
Gaming Laws or any applicable Gaming Authority, (d) restrictions under any
agreement relating to any property, assets, or business acquired by the Company
or its Restricted Subsidiary, which restrictions existed at the time of
acquisition, were not put in place in anticipation of such acquisition and are
not applicable to any Person, other than the Person acquired or to any property,
assets or business other than the property, assets and business of the Person
acquired, (e) any such contractual encumbrance in existence as of the Issue Date
or imposed by or in connection with the incurrence of any Permitted FF&E
Financing, Capitalized Lease Obligations or Non-Recourse Indebtedness
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permitted pursuant to clause (5) of Section 1010 provided such encumbrance does
not have the effect of restricting the payment of dividends to the Company or
any Restricted Subsidiary or the payment of Indebtedness owed to the Company or
any Restricted Subsidiary or reducing the amount of any such dividends or
payments, (f) any restrictions with respect to Capital Stock or assets,
respectively, of a Restricted Subsidiary of the Company imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary
and (g) replacement of restrictions imposed pursuant to clauses (a) through (f)
that are no more restrictions than those being replaced.
SECTION 1014. LIMITATION ON ASSET SALES AND EVENTS OF LOSS.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make any Asset Sale unless (1) at the
time of such Asset Sale the Company or such Restricted Subsidiary, as the case
may be, receives consideration at least equal to the Fair Market Value of the
assets sold or otherwise disposed of, (2) the proceeds therefrom consist of at
least 75% cash or Cash Equivalents and (3) no Default or Event of Default shall
have occurred and be continuing at the time of or after giving effect to such
Asset Sale.
(b) In the event of an Asset Sale or Event of Loss, the Company or the
relevant Restricted Subsidiary shall cause the Net Cash Proceeds derived or
resulting from such Asset Sale or Event of Loss, as the case may be, to be
deposited and held in a Collateral Account (established pursuant to Section
1018) on or before the Business Day following the day on which such Net Cash
Proceeds (including any earnings thereon) are received by the Company or such
Restricted Subsidiary. Such Net Cash Proceeds shall be released from the
Collateral Account to make a Permitted Related Investment pursuant to paragraph
(c) of this Section (provided that, upon consummation of such Permitted Related
Investment or repurchase of Notes, the Trustee shall have received a perfected
first priority security interest in the property or assets acquired by the
Company or any of its Subsidiaries in connection therewith) or to repurchase
Notes tendered pursuant to an Excess Sale/Loss Proceeds Offer.
(c) The Company and any Restricted Subsidiary may, on or before the
180th day after the date on which the Company or such Restricted Subsidiary
consummates an Asset Sale or suffers an Event of Loss, apply the Net Cash
Proceeds therefrom (including any earnings thereon) to make a Permitted Related
Investment (or enter into a binding agreement to make a Permitted Related
Investment), provided that upon consummation thereof the Trustee shall have
received a first priority fully perfected security interest in the property or
assets acquired by the Company or such Restricted Subsidiary in connection
therewith and the Company has delivered to the Trustee an Opinion of Counsel
with respect to the validity and perfection of such security interest. The
amount of such Net Cash Proceeds not applied to make a Permitted Related
Investment within such 180-day period will constitute "EXCESS SALE/LOSS
PROCEEDS" for purposes of the Repurchase Offer required by Section 1110 (until
used to pay for Notes being repurchased pursuant to such Repurchase Offer or
released and retained by the Company pursuant to Section 1110).
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(d) In case of any Asset Sale of all the Capital Stock of a Subsidiary
Guarantor which sale is otherwise permissible hereunder, the Subsidiary
Guarantor shall be automatically released from its Subsidiary Guarantee upon
receipt by the Trustee of a Board Resolution and an Officers' Certificate to the
effect that such Asset Sale complies with the provisions of this Section and
that, pursuant to this Section, the Subsidiary Guarantor is released from the
Subsidiary Guarantee. If requested by the Subsidiary Guarantor, the Trustee
shall execute and deliver such confirmations of such release as the Company may
reasonably request.
SECTION 1015. OWNERSHIP OF STOCK OF RESTRICTED SUBSIDIARIES.
The Company and its wholly owned Restricted Subsidiaries shall at all times
maintain ownership of at least 80% of each class of Capital Stock in each
Restricted Subsidiary of the Company, except any Restricted Subsidiary that
shall be disposed of in its entirety or consolidated or merged with or into the
Company or another wholly owned Restricted Subsidiary, in each case in
accordance with Section 801 and Section 1014. The Company shall not permit any
Restricted Subsidiary to issue any Preferred Stock or other Capital Stock having
a preference as to dividends, upon liquidation or otherwise over the Capital
Stock of such Restricted Subsidiary owned, directly or indirectly by the
Company.
SECTION 1016. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company shall not, and the Company shall not permit, cause or suffer
any Restricted Subsidiary to, conduct any business or enter into any transaction
or series of transactions (including, without limitation, the sale, transfer,
disposition, purchase, exchange, lease or use of assets, property or services)
or enter into any contract, agreement, understanding, loan, advance or guarantee
with or for the benefit of any of their respective Affiliates, including,
without limitation, any Unrestricted Subsidiary but not the Company or another
Restricted Subsidiary (each, an "AFFILIATE TRANSACTION"), except (1) such
transactions that are set forth in writing and are entered into in good faith
and on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could have been obtained in a
comparable transaction on an arm's-length basis from a Person not an Affiliate
of the Company or such Restricted Subsidiary or, if in the reasonable opinion of
a majority of the Independent directors of the Company, such standard is
inapplicable to the subject Affiliate Transaction, then that such Affiliate
Transaction is fair to the Company or the Restricted Subsidiary, as the case may
be (or to the stockholders as a group in the case of a pro rata dividend or
other distribution to stockholders permitted pursuant to Section 1012), from a
financial point of view, (2) such transactions that are existing on the Issue
Date and disclosed on Schedule 1016 hereto, and (3) reasonable and customary
compensation and indemnification of directors, officers and employees. In
addition, the Company and its Restricted Subsidiaries may not enter into any
Affiliate Transaction (or series of related Affiliate Transactions that are
similar or part of a common plan) under clause (1) above involving aggregate
payments or other Fair Market Value (a) in excess of $500,000 unless, prior to
the consummation thereof, the Company has delivered to the Trustee an Officers'
Certificate describing such Affiliate Transaction and certifying that it
complies with clause (1) above and (b) in excess of $2.5 million unless, prior
to the consummation thereof, the transaction is approved by the Board of
Directors of the Company,
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including a majority of the Independent directors, such approval to be evidenced
by a Board Resolution, delivered to the Trustee with the Officers' Certificate
required under clause (a) of this sentence, stating that such Board of Directors
has determined that such Affiliate Transaction complies with clause (1) above.
The Company and the Subsidiary Guarantors may only sell, transfer, convey, lease
or assign Collateral to the Company or a Restricted Subsidiary if the Trustee
has or receives a first priority security interest in such Collateral upon such
sale, transfer, conveyance, lease or assignment and the Company has delivered to
the Trustee an Opinion of Counsel with respect to the validity and perfection of
such security interest and, if to a Restricted Subsidiary, the Restricted
Subsidiary has entered into a Subsidiary Guarantee on behalf of the Trustee and
the Holders.
SECTION 1017. CHANGE IN NATURE OF BUSINESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, own, manage or conduct any operation other than a Permitted
Line of Business.
SECTION 1018. ADDITIONAL COLLATERAL.
Without limitation of Section 1202,
(1) In the event of an Asset Sale or Event of Loss,
(a) the Company shall notify the Collateral Agent no later than
three Business Days prior to the closing of such Asset Sale (or, in the case of
an Event of Loss, within three Business Days thereafter), that the Company is
required to deposit or cause the deposit of the Net Cash Proceeds therefrom in a
Collateral Account (the "NET CASH PROCEEDS ACCOUNT"), instructing the Collateral
Agent to open the Net Cash Proceeds Account in the name of the Company, unless
previously opened, in which such Net Cash Proceeds are to be deposited pursuant
to the provisions of Section 1014;
(b) the Collateral Agent, within one Business Day after receipt of
the notice under clause (a), shall provide the Company with appropriate wire
instructions for the deposit of such Net Cash Proceeds into the Net Cash
Proceeds Account;
(c) the Company shall cause such Net Cash Proceeds to be paid to
the Collateral Agent for deposit into the Net Cash Proceeds Account and deliver
to the Collateral Agent, as soon as possible, but no later than three Business
Days after deposit of such Net Cash Proceeds into such Net Cash Proceeds
Account, all of the following;
(i) an Accounts Pledge Agreement securing the Secured
Obligations of the Company with a first priority Lien in the Net Cash Proceeds
Account, the Net Cash Proceeds deposited therein, and all proceeds thereof
(including all Cash Equivalents in which such Net Cash Proceeds or proceeds may
from time to time be invested) (collectively, the "NET CASH PROCEEDS ACCOUNT
COLLATERAL");
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(ii) such financing statements, notices of security interest
and other instruments or documents as may be necessary to create or maintain the
Lien on such Net Cash Proceeds Account Collateral required hereby, or so that
the Collateral Agent receives all interest, dividends and distributions from
time to time paid with respect to, and all other proceeds of all such Net Cash
Proceeds Account Collateral; and
(iii) an Opinion of Counsel to the effect that (1) the
Accounts Pledge Agreement and each other Collateral Document required by this
Section is the legal, valid and binding obligation of the Company thereunder and
creates a perfected security interest in the Asset Sale Account Collateral and
(2) the Company has taken all steps required to be taken under Sections 1014 and
1202(c) and this Section.
(2) In the event of an adverse vote in Bossier Parish or Calcasieu
Parish requiring the deposit of Excess Louisiana Cash into a Collateral Account
under Section 1020,
(a) the Company shall notify the Collateral Agent no later than
November 12, 1996 that certain Subsidiary Guarantor(s), as the case may be, are
required to deposit their Excess Louisiana Cash in a Collateral Account (the
"EXCESS LOUISIANA CASH ACCOUNT"), instructing the Collateral Agent to open the
Excess Louisiana Cash Account in the name of the Company, in which such Excess
Louisiana Cash is to be deposited pursuant to the provisions of Section 1020;
(b) the Collateral Agent, within seven Business Days after receipt
of the notice under clause (a), shall provide the Company with appropriate wire
instructions for the periodic deposit of such Excess Louisiana Cash into the
Excess Louisiana Cash Account;
(c) the Company shall cause such Excess Louisiana Cash to be paid
to the Collateral Agent for deposit into the Excess Louisiana Cash Account and
deliver to the Collateral Agent, as soon as possible, but no later than seven
Business Days prior to the initial deposit of such Excess Louisiana Cash into
such account, all of the following;
(i) an Accounts Pledge Agreement securing the Secured
Obligations of the Company with a first priority Lien in the Excess Louisiana
Cash Account, the Excess Louisiana Cash deposited therein, and all proceeds
thereof (including all Cash Equivalents in which such Excess Louisiana Cash or
proceeds may from time to time be invested) (collectively, the "EXCESS LOUISIANA
CASH ACCOUNT COLLATERAL");
(ii) such financing statements, notices of security interest
and other instruments or documents as may be necessary to create or maintain the
Lien on such Excess Louisiana Cash Account Collateral required hereby, or so
that the Collateral Agent receives all interest, dividends and distributions
from time to time paid with respect to, and all other proceeds of all such
Excess Louisiana Cash Account Collateral; and
(iii) an Opinion of Counsel to the effect that (1) the
Accounts Pledge Agreement and each other Collateral Document required by this
Section is the legal, valid and binding obligation of the Company thereunder and
creates a perfected security interest in the
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Excess Louisiana Cash Account Collateral, and (2) the Company has taken all
steps required to be taken under Sections 1020 and 1202(c) and this Section.
(3) If, pursuant to Section 1202 or otherwise, the Company is required
to pledge Capital Stock of any present or future Restricted Subsidiary
(including the proceeds thereof, the "ADDITIONAL CAPITAL STOCK COLLATERAL"), the
Company
(a) shall notify the Collateral Agent at least three Business Days
prior to the date on which such Lien is required to be in place of the nature
and identify of the Additional Capital Stock Collateral;
(b) shall deliver to the Collateral Agent or file or record with
the appropriate Governmental Authority, as applicable, no later than the
Business Day immediately prior to the date on which such Lien is required to be
in place, all of the following:
(i) amendments to the relevant Schedules of the Company
Pledge Agreement and the related financing statements (if any) adding the
Additional Capital Stock Collateral to the Collateral listed therein;
(ii) in the case of Additional Capital Stock Collateral in
the form of partnership and limited liability company interests, (1) amendments
to the Company Pledge Agreement incorporating therein appropriate
representations, covenants and other provisions and (2) to the extent obtainable
by the exercise of reasonable best efforts, a consent and acknowledgment
substantially in the form contemplated by the Company Pledge Agreement, executed
by all partners or members of the issuer of such Collateral; and
(iii) an Opinion of Counsel to the effect that (1) the
Collateral Documents required by Section 1202 and this Section (other than the
consent and acknowledgment referred to in clause (ii)) are legal, valid and
binding obligations of all parties thereto (other than the Collateral Agent or
the Trustee), (2) the Collateral Documents required hereby create valid and
perfected Liens in all Additional Capital Stock Collateral, to the extent
required by Section 1202, and (3) the Company has taken all steps required to be
taken under the terms of this Indenture in connection with the foregoing.
(4) If, pursuant to Section 1202 or otherwise, (i) any Person that
becomes a Subsidiary Guarantor is required to grant a Lien on substantially all
its assets other than Excluded Assets or (ii) any present or future Subsidiary
Guarantor or other Restricted Subsidiary is required to grant a Lien on any
newly acquired assets and the Collateral Documents previously executed and
delivered by such Subsidiary do not create such Liens on such assets (such
assets, including the proceeds thereof, being the "ADDITIONAL COLLATERAL"), such
Subsidiary Guarantor,
(a) shall notify the Collateral Agent at least seven Business Days
prior to the date on which such Lien is required to be in place of the nature
and identity of the Additional Collateral;
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(b) shall deliver to the Collateral Agent, file or record with the
appropriate Governmental Authority and take other actions required by Section
1202, as applicable, no later than the Business Day immediately prior to the
date on which such Lien is required to be in place, all of the following:
(i) such amendments to the Subsidiary Security Agreement or
Subsidiary Pledge Agreement and such Mortgages, Ship Mortgages, financing
statements, notices of security interest, assignments or other Collateral
Documents executed by such Subsidiary Guarantor, as may be reasonably required
to create first priority Liens in favor of the Collateral Agent on behalf of the
Beneficiaries on all Additional Collateral, securing the Secured Obligations of
such Subsidiary Guarantor;
(ii) in the case of Additional Collateral in the form of
partnership and limited liability company interests, to the extent obtainable by
the exercise of reasonable best efforts, a consent and acknowledgment
substantially in the form contemplated by the Subsidiary Pledge Agreement,
executed by all partners or members of the issuer of such Collateral;
(iii) an Opinion of Counsel to the effect that (1) the
Addendum to Subsidiary Guarantee and Collateral Documents required by Section
1202 or this Section are legal, valid and binding obligations of all parties
thereto (other than the Collateral Agent or the Trustee), (2) the Collateral
Documents required hereby create valid and perfected Liens in all Additional
Collateral and (3) the Subsidiary Guarantor has taken all steps required to be
taken under the terms of this Indenture in connection with the foregoing;
(iv) in the case of Additional Collateral constituting real
estate that is being acquired upon reinvestment of Net Cash Proceeds from an
Asset Sale or Event of Loss relating to the Isle-Biloxi, the Isle-Vicksburg, the
Isle-Bossier City or the Isle-Lake Charles, title insurance complying with
Section 1202(e); and
(5) If, pursuant to Section 1014, 1202 or otherwise, the Company is
required to grant first priority Liens on any Additional Collateral in the form
of newly acquired assets (other than Additional Capital Stock Collateral) and
the Collateral Documents previously executed and delivered by the Company do not
create such Liens in such assets, the Company.
(a) shall notify the Collateral Agent at least three Business Days
prior to the date on which such Lien is required to be in place of the nature
and identity of the Additional Collateral;
(b) shall deliver to the Collateral Agent, file or record with the
appropriate Governmental Authority and take other actions required by Section
1202, as applicable, no later than the Business Day immediately prior to the
date on which such Lien is required to be in place, all of the following:
(i) such amendments to existing Collateral Documents and
additional Mortgages, Ship Mortgages or other Collateral Documents, executed by
the Company,
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as may be reasonably required to create first priority Liens in favor
of the Collateral Agent on behalf of the Beneficiaries on all Additional
Collateral, securing the Secured Obligations;
(ii) an Opinion of Counsel to the effect that (1) the Collateral
Documents required by Section 1202 or this Section are legal, valid and binding
obligations of all parties thereto (other than the Collateral Agent or the
Trustee), (2) the Collateral Documents required hereby create valid and
perfected Liens in all Additional Collateral, to the extent required by Section
1202, and (3) the Company has taken all steps required to be taken under the
terms of this Indenture in connection with the foregoing;
(iii) in the case of Additional Collateral constituting real
estate that is being acquired upon reinvestment of Net Cash Proceeds from an
Asset Sale or Event of Loss relating to the Isle-Biloxi, the Isle-Vicksburg, the
Isle-Bossier City or the Isle-Lake Charles, title insurance complying with
Section 1202(e); and
(6) In the case of any Additional Collateral in the form of a
leasehold interest on real property, the documents required by clauses (3)(b)(i)
and (4)(b)(i) of this Section shall include a Lessor's Consent and Estoppel and
Lease Modification Agreement substantially in the form attached hereto as
Exhibit J, to the extent obtainable by the exercise of reasonable best efforts.
(7) Upon completion of the steps required to be taken by the Company
and its Restricted Subsidiaries under any of the clauses (1) through (6) of this
Section, the Company or the relevant Restricted Subsidiary, as applicable, shall
deliver to the Collateral Agent an Officers' Certificate to the effect that all
representations and warranties set forth in the Collateral Documents to which
such Persons are parties are true and correct as of the date of such
certificate.
SECTION 1019. RESTRICTED AND UNRESTRICTED SUBSIDIARIES; SUBSIDIARY
GUARANTORS.
(a) Subject to the exceptions described below, from and after the
Issue Date, each of the Company's Subsidiaries in existence on the Issue Date
and any Subsidiary 80% or more of the Capital Stock of which the Company,
directly or indirectly, acquires or becomes the owner of after the Issue Date
shall be a Restricted Subsidiary unless the Company designates such Subsidiary
to be an Unrestricted Subsidiary. Except as provided below, the Company may
designate any existing or future Subsidiary of the Company as an Unrestricted
Subsidiary, provided that (i) such Subsidiary does not own any Indebtedness or
Capital Stock or own or hold any Lien on any asset or property of the Company or
any other Restricted Subsidiary, (ii) either the Subsidiary to be so designated
has total assets of $100,000 or less or immediately before and after giving pro
forma effect to such designation, (a) the Company could incur $1.00 of
Indebtedness pursuant to Section 1010 (other than under clauses (1) through (9)
thereof), (b) no Default or Event of Default shall have occurred and be
continuing and (c) the Company could make, pursuant to the covenant described
under Section 1012, the Restricted Payment arising from the designation as
described in this paragraph below and (iii) all transactions between the
Subsidiary to be so designated and its Affiliates remaining in effect are
permitted pursuant to Section 1016. Notwithstanding the foregoing, the Company
may not designate any existing or
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future Subsidiary that holds, owns or operates, directly or indirectly, any
assets or function directly relating to or necessary for the conduct of casino
gaming at the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier City or the
Isle-Lake Charles as an Unrestricted Subsidiary. Any Investment made by the
Company or any Restricted Subsidiary in a Restricted Subsidiary which is
redesignated an Unrestricted Subsidiary shall thereafter be considered as having
been a Restricted Payment (to the extent not previously included as a Restricted
Payment) made on the day such Subsidiary is designated an Unrestricted
Subsidiary in the amount of the greater of (i) the sum of the Fair Market Value
of such Subsidiary on such date as determined in accordance with GAAP and the
amount of any obligation of such Subsidiary which the Company or any Restricted
Subsidiary has guaranteed or for which it is in any other manner liable and (ii)
the amount of the Investments made by the Company and any of its Restricted
Subsidiaries in such Subsidiary. Any Subsidiary Guarantee entered into by a
Restricted Subsidiary which is subsequently redesignated an Unrestricted
Subsidiary shall be automatically released at such time as the Restricted
Subsidiary becomes an Unrestricted Subsidiary without any further action
required on the part of the Trustee or any Holder. Unless so designated as an
Unrestricted Subsidiary, any Subsidiary (whether or not a Subsidiary on the
Issue Date) 80% or more of the Capital Stock of which the Company, directly or
indirectly, acquires or becomes the owner of after the Issue Date shall be
classified as a Restricted Subsidiary thereof.
(b) An Unrestricted Subsidiary 80% or more of the Capital Stock of
which is owned by the Company directly or indirectly may be redesignated a
Restricted Subsidiary. The Company may not, and may not permit any Restricted
Subsidiary to take any action or enter into any transaction or series of
transactions that would result in a Person becoming a Restricted Subsidiary
(whether through an acquisition, the redesignation of an Unrestricted Subsidiary
or otherwise, but not including through the creation of a new Restricted
Subsidiary) unless, immediately before and after giving pro forma effect to such
action, transaction or series of transactions, (a) the Company could incur at
least $1.00 of Indebtedness pursuant to Section 1010 (other than under clauses
(1) through (9) thereof), and (b) no Default or Event of Default shall have
occurred and be continuing. In addition, no Person may become a Restricted
Subsidiary (by any means) unless at least 80% of the Capital Stock of such
Person is owned by the Company, directly or indirectly.
(c) The designation of an Unrestricted Subsidiary or the removal of
such designation is required to be made by the Board of Directors of the
Company, such designation to be evidenced by a Board Resolution stating that the
Board of Directors has made such designation in accordance with the Indenture,
and the Company is required to deliver to the Trustee such Board Resolution
together with an Officers' Certificate certifying that the designation complies
with the Indenture. Such designation will be effective as of the date specified
in the applicable Board Resolution, which may not be before the date the
applicable Officers' Certificate is delivered to the Trustee.
(d) On the Issue Date, the Subsidiary Guarantors include the Persons
listed as parties to this Indenture in clause (2) preceding the recitals herein.
In addition, each Person which becomes a Significant Restricted Subsidiary of
the Company after the Issue Date shall be a Subsidiary Guarantor and the Company
shall cause such Person to promptly execute an
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Addendum to Subsidiary Guarantees to evidence its Subsidiary Guarantee. Each
Person which is a Subsidiary Guarantor on the Issue Date or which later becomes
a Subsidiary Guarantor shall remain bound by its Subsidiary Guarantor until
released as set forth in paragraph (a) above or in paragraph (d) of Section
1014.
SECTION 1020. EXCESS LOUISIANA CASH ACCOUNT.
In the event that as the result of an adverse vote by the residents of
Bossier Parish, Louisiana or Calcasieu Parish, Louisiana on or about November 5,
1996 with respect to the conduct of riverboat gaming in either such parish the
Isle-Bossier City or the Isle-Lake Charles must terminate their gaming
operations (in locations on the Issue Date) on or before the expiration of their
then-current gaming licenses for such facilities, the Company or the relevant
Restricted Subsidiary shall cause the Excess Louisiana Cash generated by the
Isle-Bossier City and the Isle-Lake Charles, as applicable, to be deposited
monthly commencing February 1, 1997 in a Collateral Account established pursuant
to Section 1018. Such Excess Louisiana Cash shall be released from the
Collateral Account to repurchase Notes tendered pursuant to an Excess Louisiana
Cash Offer required by Section 1111.
SECTION 1021. COLLATERAL DOCUMENTS.
Simultaneously herewith, the Company and the Subsidiary Guarantors shall
execute the Collateral Documents, as appropriate, securing the obligations of
the Company and the Subsidiary Guarantors, respectively, under this Indenture,
the Notes and the Collateral Documents. Each Holder, by accepting a Note, agrees
to all terms and provisions of the Collateral Documents as the same may be
amended or supplemented from time to time pursuant to the provisions hereof and
thereof. The terms of the release of the Collateral and the rights of the
Holders with respect thereto shall be governed by the Collateral Documents and
this Indenture, provided, however, that, in the event of a conflict between the
terms of the Indenture and the terms of any Collateral Documents, the terms of
this Indenture shall govern.
SECTION 1022. VALIDITY OF LIENS ON COLLATERAL.
The Company represents and warrants that it has, and covenants that it
shall continue to have, full power and lawful authority to grant, release,
convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create the
Liens on the Collateral referred to in Article Twelve; and the Company shall
warrant, preserve and defend the interest of the Trustee and the Holders in and
to the Collateral or any asset that should constitute Collateral but for the
fact that the Company or its Subsidiaries failed to comply with the provisions
of the Indenture or the Collateral Documents against the claims of all persons,
and will maintain and preserve the Liens on the Collateral contemplated by
Article Twelve.
SECTION 1023. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Subsidiary Guarantors covenants (to the
extent permissible under applicable law) that it will not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other
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law, wherever enacted, now or at any time hereafter in force, that would
prohibit or forgive the Company or the Subsidiary Guarantors from paying all or
any portion of the principal of, premium, if any, or interest on the Notes and
amounts from time to time payable under the Subsidiary Guarantees, in each case
as contemplated herein, or that may materially affect the covenants or the
performance of this Indenture or the Collateral Documents in a manner
inconsistent with the provisions of this Indenture or such Collateral Documents.
ARTICLE ELEVEN
REDEMPTION OF AND REPURCHASE OF SECURITIES
SECTION 1101. RIGHT OF REDEMPTION.
(a) The Notes may be redeemed, at the election of the Company, as a
whole or from time to time in part, at any time after August __, 2000, subject
to the conditions and at the Redemption Prices specified in the form of Note,
together with accrued interest to the Redemption Date.
(b) In the event that the Company consummates a Qualified Public
Equity Offering on or before August __, 1999, the Company may redeem, at its
option, up to $100 million in principal amount of the outstanding Notes at a
redemption price of ____% of the principal amount of the Notes so redeemed plus
accrued and unpaid interest to the redemption date, provided that, after any
such redemption, at least $200 million in principal amount of the Notes remains
outstanding.
(c) Notwithstanding any other provision hereof, if any Gaming
Authority requires that a holder or beneficial owner of Notes must be licensed,
qualified or found suitable under any applicable gaming law and the Holder fails
to apply for a license, qualification or a finding of suitability within 30 days
after being requested to do so by the Gaming Authority, or if such Holder is not
so licensed, qualified or found suitable, the Company shall have the right, at
its option, (i) to require such Holder to dispose of such Holder's Notes within
30 days of receipt of such notice of such finding by the applicable Gaming
Authority or such earlier date as may be ordered by such Gaming Authority or
(ii) to redeem the Notes of such Holder at the least of (a) 100% of the
principal amount thereof, (b) the price at which such Holder acquired the Notes
and (c) the Current Market Value of such Notes, together with, in either case,
accrued and unpaid interest, if any, to the earlier of the date of redemption or
the date of the finding of unsuitability, if any, by such Gaming Authority,
which may be less than 30 days following the notice of redemption, if so ordered
by such Gaming Authority. The Company shall notify the Trustee in writing of
any such redemption as soon as practicable. The Holder of Notes applying for a
license, qualification or a finding of suitability is obligated to pay all costs
of the licensure or investigation for such qualification or finding of
suitability.
(d) All references in this Article Eleven to a "HOLDER" shall include
any beneficial owner of Notes.
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SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture shall be made in
accordance with such provision and this Article Eleven.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section 1101
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1104.
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED OR REPURCHASED.
Except as contemplated by paragraph (c) of Section 1101, if less than all
of the Outstanding Notes are to be redeemed or repurchased, the particular Notes
or portions thereof to be redeemed shall be determined on a pro rata basis, by
lot or by such other method determined by the Trustee to be fair and appropriate
(subject to compliance with the requirements of any securities exchange or
trading system on which the Notes are then listed or approved for trading) in
principal amounts of $1,000 or integral multiples thereof from the Outstanding
Notes not previously called for redemption or repurchase.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Notes shall relate, in the case of any
Note redeemed or to be redeemed only in part, to the portion of the principal
amount of such Note which has been or is to be redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided for in Section
106 not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Notes to be redeemed. All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
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(3) if less than all Outstanding Notes are to be redeemed, the
identification (and, in the case of a partial redemption, the principal amounts)
of the particular Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price (together with
accrued interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Note, or the portion thereof,
to be redeemed, and that interest thereon will cease to accrue on and after said
date, and
(5) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the Company
shall be given by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) in immediately
available funds an amount of money sufficient to pay the Redemption Price of,
and accrued interest on, all the Notes which are to be redeemed on that date.
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified (together with accrued interest, if any, to the
Redemption Date or the earlier date provided in paragraph (c) of Section 1101),
and from and after such date (unless the Company shall default in the payment of
the Redemption Price and accrued interest) such Notes shall cease to bear
interest. Upon surrender of any such Note for redemption in accordance with said
notice, such Note shall be paid by the Company at the Redemption Price, together
with accrued interest, if any, to the Redemption Date (or the earlier date
provided in paragraph (c) of Section 1101); provided, however, that installments
of interest whose Interest Payment Date is on or prior to the Redemption Date
shall be payable to the Holders of such Notes, or one or more Predecessor Notes
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Notes.
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SECTION 1108. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at the
office or agency of the Company maintained for such purpose pursuant to Section
1002 (with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Note without service charge, a
new Note or Notes, of any authorized denomination as requested by such Holder,
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Note so surrendered.
SECTION 1109. CHANGE OF CONTROL REPURCHASE OFFER.
If a Change of Control of the Company shall occur, the Company shall offer
to repurchase (a "CHANGE OF CONTROL OFFER") from all Holders of the Notes in
accordance with the procedures set forth in Section 1112, and shall purchase
from Holders accepting such offer, Notes, at a purchase price (payable in cash)
equal to 101% of the aggregate principal amount of the Notes, plus accrued and
unpaid interest to the Repurchase Date (as defined below), subject to
satisfaction by or on behalf of the Holder of the requirements set forth in
paragraph (c) of Section 1112.
SECTION 1110. ASSET SALE/LOSS PROCEEDS REPURCHASE OFFER.
At each such time as the amount of Excess Sale/Loss Proceeds aggregates $10
million, the Company shall offer to repurchase (an "EXCESS SALE/LOSS PROCEEDS
OFFER") from all Holders of the Notes in accordance with the procedures set
forth in Section 1112, and shall purchase from Holders accepting such offer,
Notes up to a maximum principal amount (expressed as a multiple of $1,000) equal
to such Excess Sale/Loss Proceeds, less the accrued and unpaid interest on such
Notes, at a purchase price (payable in cash) equal to 100% of the principal
amount of the Notes plus accrued and unpaid interest, if any, to the date of
Repurchase Date, subject to satisfaction by or on behalf of the Holder of the
requirements set forth in paragraph (c) of Section 1112. To the extent an
Excess Sale/Loss Proceeds Offer is not fully subscribed to by the Holders of the
Notes, the Company may withdraw funds from the Collateral Account in the amount
not subscribed for and retain such unutilized funds. All funds applied to
repurchase Notes tendered pursuant to an Excess Sale/Loss Proceeds Offer or
withdrawn and retained by the Company as permitted herein shall no longer
constitute Excess Sale/Loss Proceeds.
SECTION 1111. EXCESS LOUISIANA CASH REPURCHASE OFFER.
At each such time as the amount of Excess Louisiana Cash aggregates $10
million, the Company shall offer to repurchase (an "EXCESS LOUISIANA CASH
OFFER") from all Holders of the Notes in accordance with the procedures set
forth in Section 1112, and shall purchase from Holders accepting such offer,
Notes up to a maximum principal amount (expressed as a multiple of $1,000) of
Notes equal to such Excess Louisiana Cash less the accrued and unpaid interest
on such Notes, at a purchase price (payable in cash) equal to 100% of the
principal
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amount of the Notes plus accrued and unpaid interest, if any, to the
Repurchase Date, subject to satisfaction by or on behalf of the Holder of the
requirements set forth in paragraph (c) of Section 1112. To the extent an
Excess Louisiana Cash Offer is not fully subscribed to by the Holders of the
Notes, the Company may withdraw funds from the Collateral Account in the amount
not subscribed for and retain such unutilized funds. All funds applied to
repurchase Notes tendered pursuant to an Excess Louisiana Cash Offer or
withdrawn and retained by the Company as permitted herein shall no longer
constitute Excess Louisiana Cash.
SECTION 1112. PROCEDURES FOR OFFERS TO REPURCHASE NOTES.
(a) Within five days after (i) the occurrence of a Change of Control,
(ii) each time the Excess Sale/Loss Proceeds aggregate $10 million or (iii) each
time the Excess Louisiana Cash aggregates $10 million, as the case may be, the
Company shall give written notice thereof to the Trustee. Within 15 days after
the Company shall deliver such written notice to the Trustee, the Company will,
or will cause the Trustee to, send to each Holder of Notes whose Notes have been
selected by the Trustee to be offered to be repurchased by the Company, at its
address appearing in the register, by registered or certified mail, telegraph,
telefax, telex, cable or overnight delivery, a Change of Control Offer, Asset
Sale/Loss Proceeds Offer or Excess Louisiana Cash Offer, as applicable (each, a
"REPURCHASE OFFER"), to repurchase such Notes or a portion thereof determined in
accordance with Section 1104. The Trustee shall be under no obligation to
ascertain the occurrence of any event obligating the Company to make a
Repurchase Offer or to give notice with respect thereto other than as provided
above upon receipt of written notice from the Company.
` (b) Any notice to Holders given pursuant to paragraph (a) of this
Section shall include a form of Purchase Notice (as defined below) and shall
state:
(i) that the Company thereby offers to repurchase at the
applicable purchase price such of the Holder's Notes as shall be
specified therein (or, in the case of a Change of Control Offer, all
Notes of such Holder);
(ii) the event causing the Repurchase Offer to be required and
the date on which such event is deemed to have occurred for purposes of
this Section;
(iii) the date by which the Repurchase Notice must be given;
(iv) the date as of which Notes will be purchased pursuant to
the Purchase Offer (the "REPURCHASE DATE"), which shall be no earlier than
20 Business Days (or, if longer, as required by applicable law) after the
date on which the notice to the Holders is sent pursuant to paragraph (a)
of this Section;
(v) the name and address of the Paying Agent;
(vi) that Notes must be surrendered to the Paying Agent at the
office of the Paying Agent to collect payment;
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(vii) that the repurchase price for any Notes as to which a
Repurchase Notice has been duly given and not withdrawn will be paid on the
later of (A) the Repurchase Date and (B) the first Business Day following
the date of surrender of such Notes as described in clause (vi);
(viii) the procedures the Holder must follow to have its Notes
repurchased pursuant to the Repurchase Offer; and
(ix) the procedures for withdrawing a Repurchase Notice.
If any such notice is given by the Trustee at the Company's request,
the text of such Notice shall be determined by the Company.
(c) A Holder may exercise its rights under Section 1109, 1110 or
1111, as applicable, and this Section by delivering to the Paying Agent at the
office of the Paying Agent a written notice of purchase (a "REPURCHASE NOTICE")
at any time prior to the close of business on the third Business Day prior to
the Purchase Date, stating:
(i) the certificate numbers of the Notes that the Holder will
deliver to be repurchased; and
(ii) the portion of the principal amount of the Notes that the
Holder will deliver to be repurchased, which portion must be $1,000 or an
integral multiple thereof.
The delivery of such Notes (together with all necessary endorsements)
to the Paying Agent at the office of the Paying Agent prior to, on or after the
Repurchase Date shall be a condition to the receipt by the Holder of the
repurchase price therefor; provided that such repurchase price shall be so paid
pursuant to this Section only if the Notes so delivered shall conform in all
respects to the description thereof set forth in the related Repurchase Notice.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent at the office of the Paying Agent the Repurchase Notice
contemplated by this Section shall have the right to withdraw such Repurchase
Notice in accordance with Section 1113.
The Paying Agent shall promptly notify the Company by telecopier of
the receipt by the former of any Repurchase Notice or written notice of
withdrawal thereof.
The Company shall repurchase from the Holder thereof, pursuant to this
Section, all or a portion of a Note if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the repurchase of all of a Note also apply to the repurchase of a
portion of such Note.
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SECTION 1113. EFFECT OF REPURCHASE NOTICE.
Upon receipt by the Company or the Paying Agent of any Repurchase
Notice, the Holder of the Note in respect of which such Repurchase Notice was
given shall (unless such Repurchase Notice is withdrawn as specified in the
following two paragraphs of this Section) thereafter be entitled to receive
solely the applicable Repurchase Price with respect to such Note. Such
Repurchase Price shall be paid to such Holder on the later of (a) the applicable
Repurchase Date with respect to such Note (provided that the conditions of
paragraph (c) of Section 1112 have been satisfied) and (b) the first Business
Day following the date of delivery of such Note to the Paying Agent at the
office of the Paying Agent by the Holder thereof in the manner required by
paragraph (c) of Section 1112.
A Repurchase Notice may be withdrawn before or after delivery by the
Holder to the Paying Agent at the office of the Paying Agent of the Note to
which such Repurchase Notice relates, by means of a written notice of withdrawal
delivered by the Holder to the Paying Agent at the office of the Paying Agent at
any time prior to the close of business on the third Business Day prior to the
Repurchase Date, specifying, as applicable:
(a) the certificate number and series of the Note in respect of which
such notice of withdrawal is being submitted,
(b) the principal amount of the Note with respect to which such notice
of withdrawal is being submitted, and
(c) the principal amount, if any, of such Note that remains subject to
the Original Repurchase Notice, and that has been or will be delivered for
purchase by the Company.
The Paying Agent will promptly return to the respective Holders
thereof any Notes with respect to which a Repurchase Notice has been withdrawn
in compliance with this Indenture.
SECTION 1114. DEPOSIT OF REPURCHASE PRICE.
No later than 10:00 a.m. (local time at the office of the Paying
Agent) on the Business Day immediately preceding the Repurchase Date, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of the Company of them is acting as the
Paying Agent, shall segregate and hold in trust, or cause to be segregated and
held in trust, as provided in Section 1003) an amount of cash sufficient to pay
the aggregate Repurchase Price of all the Notes of portions thereof that are to
be purchased as of the Repurchase Date. Upon such deposit or segregation, all
Notes of portions thereof that are to be purchased shall cease to bear interest
after the Repurchase Date.
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SECTION 1115. COVENANT TO COMPLY WITH SECURITIES LAWS UPON REPURCHASE OF
NOTES.
In connection with any offer to repurchase or repurchase of Notes
under Section 1109, 1110 or 1111, the Company shall comply with all applicable
Federal and state securities laws so as to permit the rights and obligations
under Sections 1109, 1110 and 1111 to be exercised to the greatest extent
practicable in the time and in the manner specified in such Sections.
SECTION 1116. REPAYMENT TO THE COMPANY.
The Trustee and the Paying Agent shall return to the Company upon
written Order any cash that remains unclaimed, together with interest, if any,
accrued thereon, held by them for the payment of the Repurchase Price two years
after the related Repurchase Date.
ARTICLE TWELVE
CERTAIN COLLATERAL MATTERS
SECTION 1201. APPROVAL OF COLLATERAL DOCUMENTS AND OTHER NOTE DOCUMENTS.
(a) Substantially contemporaneously with the initial issuance of the
Notes, the Collateral Agent will enter into or accept the Collateral Documents
listed on Schedule 1201 and accept delivery of the Collateral specified therein.
(b) By acceptance of its Note(s), each Holder agrees to all of the
terms and provisions of such Collateral Documents and all other Collateral
Documents from time to time entered into pursuant to (and as amended from time
to time pursuant to) the provisions of this Indenture.
(c) As among the Holders, the Collateral as now or hereafter
constituted shall be held for the equal and ratable benefit of the Holders
without preference, priority or distinction of any Holder over any other Holder
by reason of differences in time of issuance of the Notes held by such Holders,
sale or otherwise, as security for the Secured Obligations of the Grantors.
SECTION 1202. EVIDENCE OF PERFECTION OF LIENS; REQUIRED COLLATERAL;
FURTHER ASSURANCES.
(a) The Company shall furnish to the Trustee:
(i) on the Issue Date, an Opinion of Counsel stating that, in the
opinion of such counsel, all recordings, filings and other actions contemplated
by such Collateral Documents necessary to make effective or perfect the Lien
have been taken, reciting such actions; and
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(ii) on or prior to each anniversary of the date hereof, an
Opinion of Counsel, dated as of such date, either (A) stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, registering, filing, re-recording, re-registering and re-filing of
the Collateral Documents, or financing statements, continuation statements or
other instruments of further assurance, as is necessary to maintain the Liens of
the Collateral Documents to the extent required hereby, until the next such
anniversary, and reciting the details of such action, or (B) stating that, in
the opinion of such counsel, no such action is necessary to maintain such Liens.
(b) Except as otherwise expressly provided herein and the Collateral
Documents, at all times while any Notes remain Outstanding,
(i) the Secured Obligations of the Company are required to be
secured by a first priority, perfected Lien on all of the following (but not
including any Excluded Assets):
(A) all Capital Stock in present and future Restricted
Subsidiaries held by the Company, substantially on the terms set forth in and
contemplated by the Company Pledge Agreement;
(B) under the circumstances described in Section 1014, all
Net Cash Proceeds derived or resulting from an Asset Sale or Event of Loss,
substantially on the terms set forth in and contemplated by the Accounts Pledge
Agreement;
(C) under the circumstances described in Section 1020 with
respect to the Company, all Excess Louisiana Cash, substantially on the terms
set forth in and contemplated by the Accounts Pledge Agreement;
(D) all Vessels owned or leased by the Company eligible for
registration with the U.S. Coast Guard, substantially on the terms set forth in
and contemplated by any Ship Mortgage; and
(E) substantially all of the Company's present and future
assets not referred to in clauses (A), (B), (C) or (D), including real estate
(including leasehold properties), fixtures and personal property, substantially
on the terms set forth in and contemplated by the Company Security Agreement, a
Mortgage or other relevant Collateral Document covering Collateral of the same
type.
(ii) The Subsidiary Guarantee of each Subsidiary Guarantor shall
be secured by a first priority (except as provided in clause (iii) below),
perfected Lien on all of the following (but not including any Excluded Assets):
(A) all Equity Interests in other present and future
Restricted Subsidiaries held by such Subsidiary Guarantor, substantially on the
terms set forth in and contemplated by the Subsidiary Pledge Agreement;
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(B) under the circumstances described in Section 1020 with
respect to such Subsidiary Guarantor, all Excess Louisiana Cash, substantially
on the terms set forth in and contemplated by the Accounts Pledge Agreement;
(C) under the circumstances described in Section 1024 with
respect to such Subsidiary Guarantor, all Net Cash Proceeds derived or resulting
from an Asset Sale or Event of Loss, substantially on the terms set forth in and
contemplated by the Accounts Pledge Agreement;
(D) all Vessels owned or leased by such Subsidiary Guarantee
eligible for registration with the US Coast Guard, substantially on the terms
set forth in and contemplated by a Ship Mortgage; and
(E) substantially all present and future assets of such
Subsidiary not referred to in clauses (A), (B), (C) or (D), including real
estate (including leasehold properties), fixtures and personal property, in each
case substantially on the terms set forth in and contemplated by the Subsidiary
Security Agreement, Mortgage or other relevant Collateral Documents covering
Collateral of the same type.
(iii) Notwithstanding the foregoing, the Subsidiary Guarantees, as
applicable, will be secured by a second priority Lien only (or a fourth priority
Lien only in the case of clause (c) below) on (a) existing equipment subject to
financing and any newly acquired or leased assets financed with FF&E Financing
permitted pursuant to clause (5) or (6) of Section 1010, in each case which
assets have been pledged as collateral security for the repayment of the
financing and where the terms of such financing do not prohibit the pledge of
such assets for the benefit of the holders of the Notes, (b) the Isle-Biloxi
Hotel, (c) the Grand Palais and (d) Pompano Park.
(c) If, at any time, the Collateral Documents do not create the Liens
required by or otherwise do not comply with this Section, the relevant Grantor
shall as soon as reasonably practicable and from time to time, at its own
expense, (i) execute and deliver, and file and record with each applicable
Governmental Authority, such additional Collateral Documents, (ii) use its best
efforts to obtain any approvals or consents or remove any restrictions or
encumbrances and (iii) take such other steps, as in each case may be necessary
such that all assets (other than Excluded Assets) of the Grantor are at all
times subject to the Liens required by and otherwise comply with this Section.
(d) If, at any time after the Issue Date, pursuant to paragraph (b) of
this Section or otherwise, Liens are required to be created on (i) assets
acquired after the Issue Date (including assets acquired in connection with an
Asset Sale or Event of Loss), (ii) Capital Stock or assets of a Person that was
not previously a Restricted Subsidiary or Significant Restricted Subsidiary, or
(iii) any other assets not previously subject to a Lien securing the Secured
Obligations, the relevant Grantor shall take all necessary steps toward the
creation of such Liens within 10 days after the acquisition of such assets or
such Person first constituted a Restricted Subsidiary or Significant Restricted
Subsidiary, or the date on which such Liens are first required to exist
hereunder, as applicable. With respect to assets referred to in clause
(b)(iii)(a) of this
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Section, if requested by the Company and upon receipt of an Officer's
Certificate from the Company certifying that no Default or Event of Default has
occurred and is continuing, the Collateral Agent will execute and deliver to the
lender under the Permitted FF&E Financing a subordination agreement, in form and
substance satisfactory to the Collateral Agent, subordinating the lien in favor
of the Collateral Agent in such assets, in order of priority, to the lien in
favor of such lender.
(e) The Company and its Restricted Subsidiaries shall deliver to the
Collateral Agent, at their expense, one or more title insurance policies from
title insurance companies (or reinsured by title insurance companies) of
favorable national reputation with a claims paying ability rating of A- or
better from Standard & Poor's Corporation or A3 or better from Moody's Investor
Service, Inc. insuring the Collateral Agent, on behalf of the Holders, that (i)
the Company or the Restricted Subsidiary as provided elsewhere in this
Indenture, has good and marketable fee or leasehold title, as applicable, to,
and (ii) the relevant Mortgage creates a valid, first priority Lien on, the
following:
(i) the Isle-Biloxi; the Isle-Vicksburg, the Lake-Bossier City
and the Isle-Lake Charles; and
(ii) each real property constructed, developed or otherwise
acquired upon reinvestment of Net Cash Proceeds from an Asset Sale or Event of
Loss relating to the Isle-Biloxi; the Isle-Vicksburg, the Lake-Bossier City and
the Isle-Lake Charles.
Each such title policy shall be dated as of the date of recording of
the applicable Mortgage or amendment thereto, as applicable. Each policy shall
be accompanied by such endorsements as the Collateral Agent may request
including, without limitation, the following CLTA Endorsements (or local
equivalents): 100; 103.7; 116; and 116.1. The coverage provided under all such
policies must aggregate not less than the lesser of (i) the insurable value of
such real property and (ii) the original principal amount of the Notes. No
monetary Liens (other than non-delinquent taxes) may be shown as exceptions to
title in such title policy.
(f) The Company and Subsidiary Guarantors will execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register, any and all
such further acts, deeds, conveyances, security agreements, mortgages,
assignments, estoppel certificates, financing statements and continuations
thereof, termination statements, notices of assignment, transfers, certificates,
assurances and other instruments as reasonably may be required from time to time
in order (i) to carry out more effectively the purposes of the Collateral
Documents, (ii) to subject to the Liens created by any of the Collateral
Documents any of the properties, rights or interests required to be encumbered
thereby, (iii) to perfect and maintain the validity, effectiveness and priority
of any of the Collateral Documents and the Liens intended to be created thereby
and (iv) to better assure, convey, grant, assign, transfer, preserve, protect
and confirm to the Collateral Agent any of the rights granted or now or
hereafter intended by the parties thereto to be granted to the Collateral Agent
under the Collateral Documents or under any other instrument executed in
connection therewith.
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SECTION 1203. AMENDMENT TO THE COLLATERAL DOCUMENTS WITHOUT CONSENT OF
HOLDERS.
The Company and the Collateral Agent may amend any Collateral Document
without notice to or the consent of any Holder:
(a) to evidence the succession of another Person to any Grantor, and
the assumption by any such successor of the covenants of the Grantor in such
Collateral Documents:
(b) to add to the covenants, conditions and restrictions of any
Grantor for the benefit of the Holders or to surrender any right or power
conferred upon any Grantor in any such Collateral Document;
(c) to cure any ambiguity, to correct or supplement any provision in
any such Collateral Document that may be defective or inconsistent with any
other provision therein, or to make any other provisions with respect to matters
or questions arising under any such Collateral Document, which shall not be
inconsistent with the provisions of this Indenture and the other Collateral
Documents; provided that, in each case, such provisions shall not adversely
affect the interests of the Holders;
(d) to evidence, and provide for the acceptance of, the appointment of
a successor Collateral Agent;
(e) to comply with any requirement of the Commission in connection
with the qualification of this Indenture under the Trust Indenture Act;
(f) to comply with the Trust Indenture Act in connection with the Lien
granted in any Collateral Document; or
(g) to make amendments required by Section 1018 or 1202.
SECTION 1204. AMENDMENT TO THE COLLATERAL DOCUMENTS WITH CONSENT OF
HOLDERS.
(a) Except as otherwise provided in Section 902 or in the Collateral
Documents, with the written consent of Holders of at least a majority in
principal amount of the Notes, by Act of the Holders delivered to the Trustee,
any Grantor may enter into, when authorized by a Board Resolution, and the
Trustee and Collateral Agent may enter into or consent to, any amendment of any
Collateral Document, without further notice to any Holder.
(b) It shall not be necessary for the Act of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such Act approves the substance thereof.
(c) Notwithstanding any provisions to the contrary in this Section,
prior to the execution of any such amendment, the Trustee shall be entitled to
receive an Opinion of Counsel stating that the conditions precedent to the
execution of such amendment have been complied
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with and that such an amendment is permitted under the terms of the applicable
Collateral Documents.
SECTION 1205. RELEASE OF COLLATERAL UNDER CERTAIN CIRCUMSTANCES.
(a) Notwithstanding the provisions of Section 1204 and Section 902,
each Grantor may without any release or consent by the Trustee, the Collateral
Agent or any Holder sell, lease, transfer, convey or otherwise dispose of any
Collateral, and the Lien of the Collateral Documents shall be deemed released
automatically upon such disposition without any action on the part of the
Trustee or the Collateral Agent, provided (A) Sections 1109 and 1111 and the
other provisions of this Indenture and the relevant Collateral Documents are
complied with, and (B) the Lien of the Collateral Documents shall attach to any
and all proceeds or products of such disposition.
(b) Upon the occurrence of any of the following events and receipt by
the Trustee of a Board Resolution and an Officers' Certificate certifying that
such release complies with this Section, and without any release or consent by
the Trustee, the Collateral Agent or any Holder,
(i) all Liens under the Collateral Documents with respect to the
assets of the relevant Subsidiary Guarantor (in the case of clause (A) below) or
Restricted Subsidiary (in the case of clause (B) or (C) below) shall be
automatically released upon:
(A) the release of any Subsidiary Guarantor from the
Subsidiary Guarantee pursuant to Section 1016 or 1019; or
(B) any re-designation of a Restricted Subsidiary as an
Unrestricted Subsidiary pursuant to Section 1019; and
(ii) all Liens under the Collateral Documents with respect to any
owned or leased asset financed with Permitted FF&E Financing shall be
automatically released upon the acquisition of any such assets if (and only if)
such asset constitutes an Excluded Asset.
(c) The Collateral Agent shall execute and deliver such confirmations
of such releases as the Company may reasonably request.
SECTION 1206. RELEASE AND SUBSTITUTION OF COLLATERAL--TRUST INDENTURE ACT
COMPLIANCE.
At all times after qualification of this Indenture under the Trust
Indenture Act:
(a) To the extent applicable, the Company and Subsidiary Guarantors
shall comply with Section 314 of the Trust Indenture Act relating to the release
of property or securities from the Lien of any Collateral Document.
(b) The release of any Collateral from the Lien of any Collateral
Document or the subordination of any Lien of any Collateral Document shall not
be deemed to impair such
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Lien or the Collateral under the Collateral Documents in contravention of the
provisions of this Indenture or such Collateral Document if and to the extent
the Collateral or Lien is released or subordinated pursuant to, and in
accordance with, this Indenture and such Collateral Document.
SECTION 1207. RELEASE UPON TERMINATION OF THE COMPANY'S OBLIGATIONS.
(a) If (i) the Company and each of the Subsidiary Guarantors delivers
an Officers' Certificate certifying that all of its obligations under this
Indenture have been indefeasibly satisfied and discharged by complying with the
provisions of Article Four or Fourteen (either under Section 1402 or Section
1403) hereof or (ii) all Outstanding Notes issued under this Indenture shall
have been surrendered to the Trustee for cancellation, the Collateral Agent,
subject to compliance by the Company and the Subsidiary Guarantors with Section
1206, shall deliver to the Grantors a certificate stating that the Collateral
Agent, on behalf of the Beneficiaries, disclaims and has given up any and all
rights it has in or to the Collateral, and any rights it has under the
Collateral Documents, and, upon and after the receipt by the Grantors of such
certificate, the Collateral Agent shall no longer be deemed to hold the Lien in
the Collateral for the benefit of the Beneficiaries.
(b) Any release of Collateral made in compliance with this Section
shall not be deemed to impair the Lien under the Collateral Documents or the
Collateral thereunder in contravention of the provisions of this Indenture or
the Collateral Documents.
(c) Nothing in this Section shall impair the first priority Lien and
trust created pursuant to Article Four or Fourteen in any funds or securities
deposited with the Trustee pursuant to such Articles.
SECTION 1208. COLLATERAL AGENT'S DUTIES.
(a) The Collateral Agent shall:
(i) to the extent contemplated by the relevant Collateral
Documents and this Indenture, execute and deliver all Collateral Documents and
hold in its possession all Collateral from time to time delivered to it; and
(ii) take all steps the Collateral Agent is entitled to take
under the relevant Collateral Documents for the protection of the Collateral or
the Lien therein or its priority (including by discharging or paying Liens and
claims the Collateral Agent is entitled to discharge or pay), provided the
Collateral Agent has received notice of facts indicating that such steps are
required for the protection of the Collateral or such Lien or its priority,
whether in the Opinion of Counsel required by paragraph (a) of Section 1202,
pursuant to any requirement of the Collateral Documents to give such notice, or
otherwise.
(b) The Collateral Agent shall have only such duties with respect to
the Collateral as are set forth in this Indenture and the Collateral Documents.
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(c) In the performance of its duties hereunder and the Collateral
Documents, the Collateral Agent shall be fully protected and indemnified to the
full extent of the indemnity provided in Section 607.
ARTICLE THIRTEEN
GUARANTEES
SECTION 1301. SUBSIDIARY GUARANTEES.
The Subsidiary Guarantors unconditionally and jointly and severally
guarantee and promise to pay to each Beneficiary, at any time while an Event of
Default exists, in lawful money of the United States of America, any and all
Company Obligations from time to time owed to the Beneficiaries, provided that
the Holders and the Trustee shall have the same remedies against the Subsidiary
Guarantors under the Subsidiary Guarantees as they have against the Company
under the Notes pursuant to Article Five. The term "COMPANY OBLIGATIONS" means
any and all present and future obligations and liabilities of the Company of
every type and description to the Beneficiaries under this Indenture, the Notes
and the Collateral Documents, whether for principal, premium (if any), interest,
expenses, indemnities or other amounts, in each case whether due or not due,
absolute or contingent, voluntary or involuntary, liquidated or unliquidated,
determined or undetermined, now or hereafter existing, renewed or restructured,
whether or not from time to time decreased or extinguished and later increased,
created or incurred, whether or not arising after the commencement of a
proceeding under the Federal Bankruptcy Code (including post-petition interest)
and whether or not allowed or allowable as a claim in any such proceeding, and
whether or not recovery of any such obligation or liability may be barred by a
statute of limitations or such obligation or liability may otherwise be
unenforceable. All Company Obligations shall be conclusively presumed to have
been created in reliance on the Subsidiary Guarantees. Each Subsidiary Guarantee
is a continuing guaranty of the Company Obligations and, except as otherwise
provided in Section 1019, may not be revoked and shall not otherwise terminate
unless and until any and all Company Obligations have been indefeasibly paid and
performed in full.
SECTION 1302. NATURE OF SUBSIDIARY GUARANTEES.
The liability of each Subsidiary Guarantor under its Subsidiary Guarantee
is independent of and not in consideration of or contingent upon the liability
of the Company or any other Subsidiary Guarantor and a separate action or
actions may be brought and prosecuted against any Subsidiary Guarantor, whether
or not any action is brought or prosecuted against the Company
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or any other Subsidiary Guarantor or whether the Company or any other Subsidiary
Guarantor is joined in any such action or actions. The Subsidiary Guarantee
given by each Subsidiary Guarantor shall be construed as a continuing, absolute
and unconditional guaranty of payment (and not merely of collection) without
regard to (a) the legality, validity or enforceability of the Notes, this
Indenture or the Collateral Documents, any of the Company Obligations, any Lien
or Collateral or the Subsidiary Guarantee given by any other Subsidiary
Guarantor, (b) any defense (other than payment), set-off or counterclaim that
may at any time be available to the Company or any Subsidiary Guarantor against,
and any right of setoff at any time held by, any Beneficiary or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Company
or any Subsidiary Guarantor), whether or not similar to any of the foregoing,
that constitutes, or might be construed to constitute, an equitable or legal
discharge of the Company or any Subsidiary Guarantor, in bankruptcy or in any
other instance. Any payment by any Subsidiary Guarantor or other circumstance
that operates to toll any statute of limitations applicable to such Subsidiary
Guarantor shall also operate to toll the statute of limitations applicable to
each other Subsidiary Guarantor.
SECTION 1303. AUTHORIZATION.
Each Subsidiary Guarantor authorizes each Beneficiary, without notice to or
further assent by such Subsidiary Guarantor, and without affecting any
Subsidiary Guarantor's liability hereunder (regardless of whether any
subrogation or similar right that such Subsidiary Guarantor may have or any
other right or remedy of such Subsidiary Guarantor is extinguished or impaired),
from time to time to do any or all of the following:
(1) permit the Company to increase or create Company Obligations, or
terminate, release, compromise, subordinate, extend, accelerate or otherwise
change the amount or time, manner or place of payment of, or rescind any demand
for payment or acceleration of, the Company Obligations or any part thereof,
consent or enter into supplemental indentures or otherwise amend the terms and
conditions of this Indenture, the Notes and the Collateral Documents or any
provision thereof,
(2) take and hold Collateral from the Company or any other Person,
perfect or refrain from perfecting a Lien on such Collateral, and exchange,
enforce, subordinate, release (whether intentionally or unintentionally), or
take or fail to take any other action in respect of, any such Collateral or Lien
or any part thereof;
(3) exercise in such manner and order as it elects in its sole
discretion, fail to exercise, waive, suspend, terminate or suffer expiration of,
any of the remedies or rights of such Beneficiary against the Company or any
Subsidiary Guarantor in respect of any Company Obligations or any Collateral;
(4) release, add or settle with any Subsidiary Guarantor in respect
of its Subsidiary Guarantee or the Company Obligations;
(5) accept partial payments on the Company Obligations and apply any
and all payments or recoveries from such Grantor or Collateral to such of the
Company Obligations as any Beneficiary may elect in its sole discretion, whether
or not such Company Obligations are secured or guaranteed;
(6) refund at any time, at such Beneficiary's sole discretion, any
payments or recoveries received by such Beneficiary in respect of any Company
Obligations or Collateral; and
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(7) otherwise deal with the Company, any Subsidiary Guarantor and any
Collateral as such Beneficiary may elect in its sole discretion.
SECTION 1304. CERTAIN WAIVERS.
Each Subsidiary Guarantor waives:
(1) the right to require the Beneficiaries to proceed against the
Company or any other Subsidiary Guarantor, to proceed against or exhaust any
Collateral or to pursue any other remedy in any Beneficiary power whatsoever and
the right to have the property of the Company or any other Subsidiary Guarantor
first applied to the discharge of the Company Obligations;
(2) all rights and benefits under applicable law purporting to reduce
a guarantor's obligations in proportion to the obligation of the principal or
providing that the obligation of a surety or guarantor must neither be larger
nor in other respects more burdensome than that of the principal;
(3) the benefit of any statute of limitations affecting the Company
Obligations or any Subsidiary Guarantor's liability hereunder,
(4) any requirement of marshaling or any other principle of election
of remedies;
(5) any right to assert against any Beneficiary any defense (legal or
equitable), set-off, counterclaim and other right that any Subsidiary Guarantor
may now or any time hereafter have against the Company or any other Subsidiary
Guarantor,
(6) presentment, demand for payment or performance (including
diligence in making demands hereunder), notice of dishonor or nonperformance,
protest, acceptance and notice of acceptance of its Subsidiary Guarantee, and,
except to the extent expressly required by this Indenture, the Notes or the
Collateral Documents, all other notice' of any kind, including (a) notice of any
action taken or omitted by the Beneficiaries in reliance hereon, (b) notice of
any default by the Company or any Subsidiary Guarantor, (c) notice that any
portion of the Company Obligations is due, (d) notice of any action against the
Company or any Subsidiary Guarantor, or any enforcement of other action with
respect to any Collateral, or the assertion of any right of any Beneficiary
hereunder;
(7) all defenses that at any time may be available to such Subsidiary
Guarantor by virtue of any valuation, stay, moratorium or other law now or
hereafter in effect; and
(8) all applicable laws of the States of Mississippi, Louisiana, Iowa
and Florida.
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SECTION 1305. NO SUBROGATION; CERTAIN AGREEMENTS.
(a) EACH SUBSIDIARY GUARANTOR WAIVES ANY AND ALL RIGHTS OF
SUBROGATION, INDEMNITY OR REIMBURSEMENT, AND ANY AND ALL BENEFITS OF AND RIGHTS
TO ENFORCE ANY POWER, RIGHT OR REMEDY THAT ANY BENEFICIARY MAY NOW OR HEREAFTER
HAVE IN RESPECT OF THE OBLIGATIONS AGAINST THE COMPANY OR ANY OTHER SUBSIDIARY
GUARANTOR (OTHER THAN RIGHTS OF CONTRIBUTION FROM OTHER SUBSIDIARY GUARANTORS),
ANY AND ALL BENEFITS OF AND RIGHTS TO PARTICIPATE IN ANY COLLATERAL, WHETHER
REAL OR PERSONAL PROPERTY, NOW OR HEREAFTER HELD BY ANY BENEFICIARY, AND ANY AND
ALL OTHER RIGHTS AND CLAIMS (AS DEFINED IN THE FEDERAL BANKRUPTCY CODE) ANY
SUBSIDIARY GUARANTOR MAY HAVE AGAINST THE COMPANY, UNDER APPLICABLE LAW OR
OTHERWISE, AT LAW OR IN EQUITY, BY REASON OF ANY PAYMENT UNDER ITS SUBSIDIARY
GUARANTEE, UNLESS AND UNTIL THE OBLIGATIONS SHALL HAVE BEEN PAID IN FULL.
(b) Each Subsidiary Guarantor assumes the responsibility for being
and keeping itself informed of the financial condition of the Company and each
other Subsidiary Guarantor and of all other circumstances bearing upon the risk
of nonpayment of the Obligations or the Subsidiary Guarantee of any other
Subsidiary Guarantor that diligent inquiry would reveal, and agrees that the
Beneficiaries shall have no duty to advise any Subsidiary Guarantor of
information regarding such condition or any such circumstances.
SECTION 1306. BANKRUPTCY NO DISCHARGE.
(a) Without limiting Section 1302, no Subsidiary Guarantee shall be
discharged or otherwise affected by any bankruptcy, reorganization or similar
proceeding commenced by or against the Company or any Subsidiary Guarantor,
including (i) any discharge of, or bar or stay against collecting, all or any
part of the Obligations in or as a result of any such proceeding, whether or not
assented to by any Beneficiary, (ii) any disallowance of all or any portion of
any Beneficiary's claim for repayment of the Obligations, (iii) any use of cash
or other collateral in any such proceeding, (iv) any agreement or stipulation as
to adequate protection in any such proceeding, (v) any failure by any
Beneficiary to file or enforce a claim against the Company or any other Obligor
or its estate in any bankruptcy or reorganization case, (vi) any amendment,
modification, stay or cure of any Beneficiary's rights that may occur in any
such proceeding, (vii) any election by any Beneficiary under Section 1112(b)(2)
of the Federal Bankruptcy Code, or (viii) any borrowing or grant of a Lien under
Section 364 of the Federal Bankruptcy Code. Each Subsidiary Guarantor
understands and acknowledges that by virtue of its Subsidiary Guarantee, it has
specifically assumed any and all risks of any such proceeding with respect to
the Company and each other Subsidiary Guarantor.
(b) Notwithstanding anything in this Article Thirteen to the
contrary, any Event of Default under clause (7) or (8) of Section 501 of this
Indenture shall render all
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Company Obligations automatically due and payable for purposes of the Subsidiary
Guarantees, without demand on the part of the Trustee or any Holder.
(c) Notwithstanding anything to the contrary herein contained, the
Subsidiary Guarantees (and any Lien on the Collateral securing the Subsidiary
Guarantees or the Obligations) shall continue to be effective or be reinstated,
as the case may be, if at any time any payment, or any part thereof, of any or
all of the Obligations is rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be restored or returned by any Beneficiary
in connection with any bankruptcy, reorganization or similar proceeding
involving the Company, any Subsidiary Guarantor or otherwise, if the proceeds of
any Collateral are required to be returned by such Beneficiary under any such
circumstances, or if any Beneficiary elects to return any such payment or
proceeds or any part thereof in its sole discretion, all as though such payment
had not been made or such proceeds not been received.
SECTION 1307. SEVERABILITY OF VOID OBLIGATIONS UNDER SUBSIDIARY GUARANTEES.
The obligations of any Subsidiary Guarantor hereunder shall be limited
to the maximum amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the Federal Bankruptcy Code or any applicable
provisions of comparable state law.
SECTION 1308. RIGHT OF CONTRIBUTION.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors in connection with the Subsidiary Guarantees, the
Subsidiary Guarantors have agreed among themselves that if any Subsidiary
Guarantor satisfies some or all of the Obligations (a "FUNDING SUBSIDIARY
GUARANTOR"), the Funding Subsidiary Guarantor shall be entitled to contribution
from the other Subsidiary Guarantors that have positive Maximum Net Worth (as
defined below) for all payments made by the Funding Subsidiary Guarantor in
satisfying the Company Obligations, so that each Subsidiary Guarantor that
remains obligated under its Subsidiary Guarantee at the time that a Funding
Subsidiary Guarantor makes such payment (a "REMAINING SUBSIDIARY GUARANTOR") and
has a positive Maximum Net Worth shall bear a portion of such payment equal to
the percentage that such Remaining Subsidiary Guarantor's Maximum Net Worth
bears to the aggregate Maximum Net Worth of all Remaining Subsidiary Guarantors
that have positive Maximum Net Worth.
As used in this Section, "NET WORTH " means, with respect to any
Subsidiary Guarantor, the amount, as of any date of calculation by which the sum
of a Person's assets (including subrogation indemnity, contribution
reimbursement and similar rights that such Subsidiary Guarantor may have),
determined on the basis of a "fair valuation" or their "fair salable value"
(whichever is the applicable test under Section 548 and other relevant
provisions of the Bankruptcy Code and the relevant state fraudulent conveyance
or transfer laws) is greater than the amount that will be required to pay all of
such Person's debts, in each case matured or unmatured, contingent or otherwise,
as of the date of calculation but excluding liabilities arising under the
Subsidiary Guarantee and excluding, to the maximum extent permitted by
Applicable Law with the objective of avoiding rendering such Person insolvent,
liabilities subordinated to
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the Company Obligations arising out of loans or advances made to such Person by
any other Person. "MAXIMUM NET WORTH" means, with respect to any Subsidiary
Guarantor, the greatest of the Net Worths calculated as of the following dates:
(A) the date on which the Subsidiary Guarantor becomes a Subsidiary Guarantor
hereunder, (B) the date on which such Subsidiary Guarantor expressly reaffirms
the Subsidiary Guarantee, (C) the date on which demand for payment is made on
such Subsidiary Guarantor hereunder, (D) the date on which payment is made by
such Subsidiary Guarantor hereunder or (E) the date on which any judgment, order
or decree is entered requiring such Subsidiary Guarantor to make payment
hereunder or in respect hereof. The meaning of the terms "fair valuation" and
"fair salable value" and the calculation of assets and liabilities shall be
determined and made in accordance with the relevant provisions of the Bankruptcy
Code and applicable state fraudulent conveyance or transfer laws.
SECTION 1309. ADDITIONAL SUBSIDIARY GUARANTORS.
Each Subsidiary that executes and delivers to the Trustee from time to
time after the Issue Date a Subsidiary Guarantee in the form attached as Exhibit
B-2 shall be a Subsidiary Guarantor as if such Subsidiary had been a signatory
to this Indenture. Each Subsidiary Guarantor hereby consents to any such
additional Subsidiary Guarantee, whether or not it receives notice thereof.
SECTION 1310. COMPANY GUARANTEE.
The Company unconditionally guarantees and promises to pay to the
Beneficiaries, upon any default by a Subsidiary Guarantor of its Subsidiary
Guarantee, the obligations of such Subsidiary Guarantor under such Subsidiary
Guarantee.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have either Section 1402 or Section 1403 be
applied to all Outstanding Notes upon compliance with the conditions set forth
below in this Article Fourteen.
SECTION 1402. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1401 of the option applicable to
this Section 1402, the Company shall be deemed to have been immediately
discharged from its obligations with respect to all Outstanding Notes, subject
to satisfaction of the conditions set forth in Section 1404 (hereinafter,
"DEFEASANCE"). For this purpose, such defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Notes, which shall thereafter be deemed to be "OUTSTANDING" only for
the purposes of Section 1405 and the other Sections of this Indenture referred
to in clauses (1) and (2) below, and to have satisfied all its other obligations
under such Notes and this Indenture insofar as such
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Notes are concerned (and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged hereunder: (1) the
rights of Holders of Outstanding Notes to receive, solely from the trust fund
described in Section 1404 and as more fully set forth in such Section, payments
in respect of the principal of (and premium, if any, on) and interest on such
Notes when such payments are due, (2) the Company's obligations with respect to
such Notes under Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (4) this Article
Fourteen. Subject to compliance with this Article Fourteen, the Company may
exercise its option under this Section 1402 notwithstanding the prior exercise
of its option under Section 1403 with respect to the Notes.
SECTION 1403. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1401 of the option applicable to
this Section 1403, the Company shall be immediately released from its
obligations under any covenant or obligation contained in Section 801, Sections
1007 through 1024 and Article Twelve with respect to the Outstanding Notes,
subject to the satisfaction of the conditions set forth below (hereinafter,
"COVENANT DEFEASANCE"), and the Notes shall thereafter be deemed not to be
"OUTSTANDING" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with such
covenants or obligation, but shall continue to be deemed "OUTSTANDING" for all
other purposes hereunder. The Trustee shall thereupon release its Lien in the
Collateral in its entirety. For this purpose, such covenant defeasance means
that, with respect to the Outstanding Notes, the Company may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant or obligation, whether directly or indirectly, by
reason of any reference elsewhere this Indenture, the Notes or the Collateral
Documents to any such covenant or obligation or by reason of any reference in
any such covenant or obligation in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
501(3), but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby.
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section 1402
or Section 1403 to the Outstanding Notes:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 607 who shall agree to comply with the provisions of this Article
Fourteen applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Notes, (a) money in an amount, or (b)
United States Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in an
amount, or (c) a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
-95-
<PAGE>
certification thereof delivered to the Trustee, to pay and discharge, and which
shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge, the principal of (and premium, if any, on) and interest on the
Outstanding Notes on the Stated Maturity (or Redemption Date, if applicable) of
such principal (and premium, if any) or Interest Payment Date of such
installment of interest; provided that the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such United States Government
Obligations to said payments of principal (premium, if any) and interest with
respect to the Notes. Before such a deposit, the Company may give to the
Trustee, in accordance with Section 1103 hereof, a notice of its election to
redeem all of the Outstanding Notes at a future date in accordance with Article
Eleven hereof, which notice shall be irrevocable. Such irrevocable redemption
notice, if given, shall be given effect in applying the foregoing.
(2) No Default or Event of Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit.
(3) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company is a party or by
which it is bound.
(4) In the case of an election under Section 1402, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (a) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling or (b) there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the Outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance had not
occurred.
(5) In the case of an election under Section 1403, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had not
occurred.
(6) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Defeasance under Section 1402 or
the Covenant Defeasance under Section 1403 (as the case may be) have been
complied with.
SECTION 1405. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all money
and United States Government Obligations (including the proceeds thereof)
deposited with the Trustee collectively with any other qualifying trustee, for
purposes of this Section 1405, the "TRUSTEE")
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<PAGE>
pursuant to Section 1404 in respect of the Outstanding Notes shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
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 may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Governmental Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Notes.
Anything in this Article Fourteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or United States Government Obligations held by it as provided
in Section 1404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Defeasance or Covenant
Defeasance, as applicable, in accordance with this Article Fourteen.
SECTION 1406. REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1405 by reason of any order or judgment of any court or
Governmental Authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1402 or 1403, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1405; provided, however, that if the Company makes any payment of principal of
(or premium, if any, on) or interest on any Note following 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 held by the Trustee or Paying
Agent.
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<PAGE>
This Indenture may be signed in any number of counterparts each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
CASINO AMERICA, INC.
By
---------------------------------
Title:
Attest:
--------------------
Title:
FLEET NATIONAL BANK, as Trustee and
Collateral Agent
By
---------------------------------
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI
By
---------------------------------
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI-
VICKSBURG
By
---------------------------------
Title:
-98-
<PAGE>
RIVERBOAT SERVICES INCORPORATED
By
----------------------------------
Title:
CSNO, INC.
By
----------------------------------
Title:
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
By
----------------------------------
Title:
ST. CHARLES GAMING COMPANY, INC.
By
----------------------------------
Title:
LRG HOTELS, L.L.C.
By
----------------------------------
Title:
GRAND PALAIS RIVERBOAT, INC.
By
----------------------------------
Title:
-99-
<PAGE>
LRGP HOLDINGS, INC.
By
---------------------------------
Title:
PPI, INC.
By
---------------------------------
Title:
ASMI MANAGEMENT INC.
By
---------------------------------
Title:
ISLE OF CAPRI CASINO COLORADO, INC.
By
---------------------------------
Title:
-100-
<PAGE>
EXHIBIT K TO INDENTURE
ENVIRONMENTAL INDEMNITY AGREEMENT
This Environmental Indemnity Agreement, dated as of August __, 1996
(the "Agreement"), is given by Casino America, Inc., a Delaware corporation
("CAI") and the corporations named as "Subsidiary Indemnitors" on the signature
pages hereof (collectively, the "Subsidiary Indemnitors" and collectively, with
CAI, the "Indemnitors") to Fleet National Bank, as trustee and collateral agent
(including all affiliates, successors and assigns "Fleet," and including any
Person that holds or that may hereafter acquires all or any part of the
Properties (as defined below) or any interest or estate therein by purchasing
the Properties at a foreclosure sale or trustee's sale or by acceptance of a
deed in lieu of foreclosure, "Indemnitee").
R E C I T A L S
- - - - - - - -
A. Pursuant to the Indenture dated as of August __, 1996 (as may be
supplemented and otherwise amended from time to time, the "Indenture"), by and
among CAI, the Subsidiary Indemnitors and Fleet, as trustee, CAI will issue __%
Senior Secured Notes due 2003 in an aggregate principal amount of up to
$300,000,000 (collectively, the "Notes").
B. Pursuant to a guarantee included in the Indenture (as amended from
time to time, the "Subsidiary Guarantee"), the Subsidiary Indemnitors have
Guaranteed the obligations of CAI under the Notes, the Indenture and the other
Note Documents to which CAI is a party.
C. Pursuant to the Indenture, the Notes are required to be secured
by, among other things, certain Mortgages (as defined in the Indenture) with
respect to, among other things, the Properties.
D. Pursuant to the Indenture, the Indemnitors are required to execute
and deliver this Agreement to Fleet.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Indemnitors agrees as follows:
1. Indemnification.
1.1. Subject to Paragraphs 1.2 and 1.3 below, the Indemnitors hereby
indemnify and agree to reimburse, defend, exonerate, pay and hold harmless the
Indemnitee, and each and all of its directors, officers, shareholders,
employees, agents, contractors, consultants, counsel, licensees, affiliates,
lessees, mortgagees, trustees and invitees (collectively and individually, the
"Indemnified Parties"), from and against any and all Environmental Damages
arising from the presence of Hazardous Materials upon, about or beneath the
Properties or migrating to or from any of the Properties, or arising in any
manner whatsoever out of the violation of any Environmental Requirements
pertaining to any of the Properties and the activities thereon, whether
foreseeable or unforeseeable, and, except as set forth in Paragraph 1.2,
<PAGE>
regardless of when such Environmental Damages occurred. The obligations
hereunder shall include, but not be limited to, (i) the burden and expense of
defending all claims, suits and administrative proceedings (with counsel chosen
by the CAI and reasonably approved by the Indemnified Parties), even if such
claims, suits or proceedings are groundless, false or fraudulent, (ii)
conducting all negotiations of any description, and (iii) paying and
discharging, when and as the same become due, any and all judgments, penalties
or other sums due from or rendered against such Indemnified Parties. Any
Indemnified Party shall retain the right to monitor the progress of any claims,
suits and administrative proceedings defended by the Indemnitors hereunder with
counsel of such Indemnified Party's own choice, and the reasonable fees and
disbursements of such counsel shall be paid by such Indemnified Party, provided
that Fleet may elect to conduct its own defense through counsel of its own
choice and at the expense of the Indemnitors, but only in the event that (A)
Fleet determines in good faith that the conduct of its defense by the
Indemnitors could be materially prejudicial to Fleet's interests or that other
reasonable grounds exist which demonstrate a lack of effectiveness or high level
of quality in the conduct of such defense by the Indemnitors, and (B) prior to
retaining its own counsel for such purpose, Fleet shall consult with CAI and
shall attempt in good faith to agree upon counsel to conduct the defense on
behalf of both the Indemnitors and Fleet, provided further that if such mutual
agreement is not reached within a reasonable time on selecting counsel, then
Fleet may exercise its rights under clause (A) above and retain its own counsel
at the Indemnitors' expense.
1.2 Notwithstanding the foregoing, the Indemnitors' obligations
hereunder shall not apply with respect to Environmental Damages caused solely by
a party other than the Indemnitors or their affiliates, employees, agents,
contractors or consultants after the Acquisition Date unless such Environmental
Damages are of a continuous nature and commenced prior to the Acquisition Date.
For purposes of this Agreement, Hazardous Materials found after the Acquisition
Date upon, about or beneath any of the Properties or found after the Acquisition
Date to have migrated to or from any of the Properties shall be presumed to have
been released prior to the Acquisition Date if the Indemnitors or any third
party caused or contributed in any manner to a release prior to the Acquisition
Date upon, about or beneath any of the Properties of Hazardous Materials of the
same kind, unless CAI can demonstrate (i) that the prior release was completely
cleaned up and any and all approvals required by applicable Environmental
Requirements were obtained or (ii) that the physical source of the new release
of Hazardous Materials is completely different from the source of such prior
release.
1.3 No claim for indemnification hereunder shall be made by an
Indemnified Party until on or after the Acquisition Date. Furthermore, the
Indemnitors shall have no obligation under this Agreement for any claims or
damages which as of the Acquisition Date were both: (i) actually known to Fleet
and (ii) readily ascertainable and susceptible of being promptly reduced to a
liquidated sum certain prior to completion of a foreclosure sale.
2. Definitions. Terms with initial capital letters not otherwise
defined herein have the respective meanings set forth in the Indenture. In
addition, the following terms with initial capital letters have the following
meanings:
-2-
<PAGE>
"ACQUISITION DATE" means, with respect to any interest in any of the
Properties other than its interest as a beneficiary under the Mortgages, the
date on which Fleet becomes an owner of such interest in such Properties.
"ENVIRONMENTAL DAMAGES" means all claims, judgments, damages, losses,
penalties, fines, liabilities (including strict liability), encumbrances, liens,
costs and expenses of investigation and defense of any claim, whether or not
such is ultimately defeated, and of any settlement or judgment, of whatever kind
or nature, contingent or otherwise, matured or unmatured, foreseeable or
unforeseeable, including, without limitation, reasonable attorneys' fees and
disbursements and consultants' fees, any of which are actually incurred at any
time as a result of the existence of Hazardous Materials upon, about or beneath
the Properties or migrating or threatening to migrate to or from the Properties,
or the existence of a violation of Environmental Requirements pertaining to the
Properties regardless of whether the existence of such Hazardous Materials or
the violation of Environmental Requirements arose prior to the present ownership
or operation of the Properties, and including, without limitation:
(i) damages for personal injury, or injury to property or
natural resources occurring upon or off of the Properties, foreseeable or
unforeseeable, including, without limitation, lost profits, consequential
damages, the cost of demolition and rebuilding of any improvements on real
property, interest and penalties including, but not limited to, claims brought
by or on behalf of employees of Trustor, with respect to which Trustor waives,
for the benefit of Beneficiary only, any immunity to which it may be entitled
under any industrial or workers' compensation laws;
(ii) reasonable fees actually incurred for the services of
attorneys, consultants, contractors, experts, laboratories and all other costs
incurred in connection with the investigation or remediation of such Hazardous
Materials or violation of Environmental Requirements including, but not limited
to, the preparation of any feasibility studies or reports or the performance of
any cleanup, remedial, removal, abatement, containment, closure, restoration or
monitoring work required by any federal, state or local governmental agency or
political subdivision, or reasonably necessary to make full economic use of the
Properties or any other property or otherwise expended in connection with such
conditions, and including, without limitation, any reasonable attorneys' fees,
costs and expenses actually incurred in enforcing the Mortgages or collecting
any sums due hereunder; and
(iii) liability to any Person to indemnify such Person for actual
costs incurred in good faith in connection with the items referenced in
subparagraph (ii) hereof.
"ENVIRONMENTAL REQUIREMENTS" means all applicable present and future
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises and similar items, of
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the environment, including, without limitation:
-3-
<PAGE>
(i) all requirements, including, but not limited to, those
pertaining to reporting, licensing, permitting, investigation and remediation of
emissions, discharges, releases or threatened releases of Hazardous Materials,
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes whether solid, liquid or gaseous in nature, into the ambient
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of chemical substances, materials or wastes, whether solid, liquid or
gaseous in nature, including without limitation, Hazardous Materials; and
(ii) all requirements pertaining to the protection of the health
and safety of employees or the public with respect to Hazardous Materials.
"GUARANTOR" has the meaning set forth in Paragraph 16.
"HAZARDOUS MATERIALS" Any chemical, material or substance:
(i) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance, order, action
or policy; or
(ii) which is or becomes defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste" or "toxic substances" or words of
similar import under any applicable local, state or federal law or under
regulations adopted or publications promulgated pursuant thereto, including, but
not limited to, any such laws or regulations promulgated by Governmental
Authorities of the State of Nevada; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601, et seq.;
the Hazardous Materials Transportation Act, as amended, 49 U.S.C. (S) 1801, et
seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. (S)
6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
(S) 1251, et seq.; the Toxic Substances Control Act, 15 U.S.C. (S) 2601, et
seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 201, et seq.; the Clean Air
Act, 42 U.S.C. ~ 7401, et seq.; the Transportation Safety Act of 1974, 49 U.S.C.
(S) 1801, et seq.; or
(iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is
or becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, any state of
the United States, or any political subdivision thereof; or
(iv) the presence of which on the Properties causes or threatens
to pose a hazard to the Properties or to the health or safety of Persons on or
about the Properties; or
(v) without limitation, which contains gasoline, diesel fuel or
other petroleum hydrocarbons; or
(vi) without limitation, which contains polychlorinated biphenyls
(PCBs) or asbestos or urea formaldehyde foam insulation or radon gas.
"INDEMNIFIED PARTIES" has the meaning set forth in Paragraph 1.1.
-4-
<PAGE>
"PRINCIPAL INDEMNITOR" has the meaning set forth in Paragraph 16.1.
"PROPERTIES" means the real properties identified in Exhibit A hereto.
3. Survivability. The obligations hereunder shall be continuing. No
assignment or transfer of the Properties by the Indemnitors shall operate to
release the liability hereunder except with the express prior written consent of
Fleet in its sole and absolute discretion.
4. Unsecured Obligation. The Indemnitors and Fleet intend and
irrevocably agree that the obligations of the Indemnitors hereunder are and
shall be, and shall be deemed to be for all purposes, unsecured and shall not
constitute obligations secured by the Subsidiary Mortgages. The Subsidiary
Mortgages contain certain covenants, indemnities and obligations of certain of
the Subsidiary Indemnitors regarding Environmental Damages and Hazardous
Materials which covenants, indemnities and obligations are secured, but which by
their terms are not intended to survive a foreclosure or trustee's sale under
the Subsidiary Mortgages or deed in lieu of foreclosure, and therefore are not
intended to apply on or after the Acquisition Date. Any sums payable or
recovered hereunder are not intended to be, and shall not be or be deemed to
constitute, a deficiency after foreclosure or trustee's sale under the
Subsidiary Mortgages.
5. Severability. If any provision of this Agreement or right
hereunder shall be held to be invalid, illegal or unenforceable under Applicable
Law in any jurisdiction, such provision or right shall be ineffective only to
the extent of such invalidity, illegality or unenforceability, which shall not
affect any other provisions herein or right granted hereby or the validity,
legality or enforceability of such provision or right in any other jurisdiction.
6. Notices. All notices and other communications under this Agreement
shall be in writing and shall be personally delivered or sent by prepaid
courier, by overnight, registered or certified mail (postage prepaid) or by
prepaid telex, telecopy or telegram, and shall be deemed given when received by
the intended recipient thereof. Unless otherwise specified in a notice given in
accordance with the foregoing provisions of this Paragraph 6, notices and other
communications shall be given to the parties hereto at their respective
addresses (or to their respective telex or telecopier numbers) as provided in
Schedule 105 to the Indenture.
7. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
8. Headings. The Paragraph headings used in this Agreement are for
convenience of reference only and shall not affect the construction hereof.
9. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
-5-
<PAGE>
10. Amendments and Other Modifications. No amendment of any provision
of this Agreement (including a waiver thereof or consent relating thereto) shall
be effective unless the same shall be in writing and signed by Fleet. Any waiver
or consent relating to any provision of this Agreement shall be effective only
in the specific instance and for the specific purpose for which given. No notice
or demand on the Indemnitors or any one of them in any case shall entitle the
Indemnitors to any other or further notice or demand in similar or other
circumstances.
11. Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, and "including" is not
limiting. The words "hereof," "herein," "hereby," "hereunder" and similar terms
in this Agreement refer to this Agreement as a whole (including the Preamble,
the Recitals and all Schedules and Exhibits, but subject to Paragraph 8) and not
to any particular provision of this Agreement. Paragraph, subparagraph, exhibit,
recital, preamble and schedule references in this Agreement are to this
Agreement unless otherwise specified. References in this Agreement to any
agreement, other document or law "as amended" or "as may be amended from time to
time," or to amendments of any document or law, shall include any amendments.
supplements, replacements, renewals or other modifications.
12. Successive Actions. Separate and successive actions may be
brought hereunder to enforce the provisions hereof from time to time. The
Indemnitors waive any defense they may have regarding the splitting of a cause
of action or based upon the defense of res judicata, and the Indemnitors jointly
and severally covenant not to raise such defenses.
13. Attorneys' Fees. In the event of any action to enforce this
Agreement, whether by judicial or nonjudicial means, the prevailing party shall
be entitled to its attorneys' fees and expenses in connection therewith.
14. Joint and Several Liability. The obligations of the Indemnitors
under this Agreement shall be joint and several.
15. No Waiver. Nothing contained herein shall constitute or be
construed as a waiver of any statutory or judicial federal, state or local law
which may provide other rights or remedies to the Indemnified Parties against
the Indemnitors in the event of Environmental Damages or the breach of
Environmental Requirements.
16. Guarantor Waivers. If and to the extent that CAI or any one or
more of the Subsidiary Indemnitors (for the purposes of Paragraphs 16 and 17,
being individually and collectively referred to herein as "Guarantor") would be
deemed or construed to be a guarantor or surety under applicable law with
respect to its obligations hereunder, Guarantor hereby agrees as follows:
16.1 Guarantor expressly agrees that until each and every term,
covenant and condition of this Agreement is fully performed, Guarantor shall not
be released by any act or event which, except for this provision of this
Agreement might be deemed a legal or equitable discharge or exoneration of a
surety, or because of any waiver, extension, modification, forbearance or delay
or other act or omission of Fleet or its failure to proceed promptly or
-6-
<PAGE>
otherwise as against CAI or any of the Subsidiary Indemnitors, as the case may
be (individually and collectively, in its or their capacity as the entity or
entities the obligations of which are guaranteed hereunder by Guarantor, the
"Principal Indemnitor") or Guarantor, or because of any action taken or omitted
or circumstance which might vary the risk or affect the rights or remedies of
Guarantor as against the Principal Indemnitor, or because of any further
dealings between the Principal Indemnitor and Fleet, whether relating to this
Agreement or otherwise. Guarantor hereby expressly waives and surrenders any
defense to Guarantor's liability under this Agreement based upon any of the
foregoing acts, omissions, things, agreements, waivers or any of them. It is the
purpose and intent of this Agreement that the obligations of Guarantor under it
shall be absolute and unconditional under any and all circumstances, subject to
and in accordance with the terms and conditions of this Agreement.
16.2 Each Guarantor waives:
16.2.1 all statutes of limitations as a defense to any
action or proceeding brought against Guarantor by Fleet, to the fullest extent
permitted by law;
16.2.2 any right it may have to require Fleet to proceed
against the Principal Indemnitor or pursue any other remedy in Fleet's power to
pursue, it being acknowledged and agreed that the obligations of Guarantor
hereunder are independent of the obligations of the Principal Indemnitor
hereunder, and Fleet shall not be required to make any demand upon, exercise any
right to declare a default by, or proceed against, the Principal Indemnitor
prior to proceeding against Guarantor to the full extent of Guarantor's
obligations hereunder;
16.2.3 any defense based on any legal disability of the
Principal Indemnitor and any discharge, release or limitation of the liability
of the Principal Indemnitor to Fleet, whether consensual or arising by
operation of law or any bankruptcy, reorganization, receivership, insolvency, or
debtor-relief proceeding, or from any other cause, or any claim that Guarantor's
obligations exceed or are more burdensome than those of the Principal
Indemnitor;
16.2.4 all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Agreement and of the existence, creation, or incurring of new
or additional indebtedness, and demands and notices of every kind;
16.2.5 any defense based on or arising out of any defense
that the Principal Indemnitor may have to the payment or performance of any
obligation set forth in this Agreement;
16.2.6 until all obligations under this Agreement have been
paid and performed in full, all rights of subrogation and all rights to enforce
any remedy that Guarantor may have against the Principal Indemnitor, all
regardless of whether Guarantor may have made any payments to Fleet; and
-7-
<PAGE>
16.2.7 in the event that notwithstanding the provisions of
paragraph 4 hereof, the obligations of the Principal Indemnitor, hereunder are
held or deemed to be secured, any right of Guarantor to have the Collateral of
the Principal Indemnitor first applied to the discharge of the Secured
Obligations, and Guarantor expressly recognizes that any such Collateral is
security for the Principal Indemnitor's obligations hereunder but not for
Guarantor's obligations hereunder.
16.3 Guarantor assumes full responsibility for keeping informed
of the financial condition and business operations of the Principal Indemnitor
and all other circumstances affecting the Principal Indemnitor's ability to pay
for and perform its obligations to the Indemnitees, and agrees that Fleet shall
have no duty to disclose to Guarantor any information which Fleet may receive
about the Principal Indemnitor's financial condition, business operations, or
any other circumstances bearing on its ability to perform.
17. Joint and Several Liability of Guarantor. Guarantor jointly
and severally agrees to perform and be liable for the obligations of the
Principal Indemnitor hereunder.
IN WITNESS WHEREOF, the Indemnitors have caused this Agreement to
be executed and delivered as of the date first set forth above.
CASINO AMERICA, INC.
By
----------------------------------
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI
By
----------------------------------
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI-
VICKSBURG
By
----------------------------------
Title:
-8-
<PAGE>
RIVERBOAT SERVICES INCORPORATED
By
----------------------------------
Title:
CSNO, INC.
By
----------------------------------
Title:
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
By
----------------------------------
Title:
ST. CHARLES GAMING COMPANY, INC.
By
----------------------------------
Title:
LRG HOTELS, L.L.C.
By
----------------------------------
Title:
-9-
<PAGE>
GRAND PALAIS RIVERBOAT, INC.
By
-------------------------------------
Title:
LRGP HOLDINGS, INC.
By
-------------------------------------
Title:
PPI, INC.
By
-------------------------------------
Title:
ASMI MANAGEMENT INC.
By
-------------------------------------
Title:
ISLE OF CAPRI CASINO COLORADO, INC.
By
-------------------------------------
Title:
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<PAGE>
EXHIBIT K TO INDENTURE
EXHIBIT A
THE PROPERTIES
<PAGE>
EXHIBIT 4.10
EXHIBIT A
FORM OF SENIOR SECURED NOTE
[FACE OF NOTE CERTIFICATE]
__% SENIOR SECURED NOTES DUE 2003
CASINO AMERICA, INC.
_______________________
CUSIP _____________
$300,000,000 PRINCIPAL AMOUNT
No. ___
THIS CERTIFIES THAT _____________________________________________ (the "Holder")
is the owner of Notes in the aggregate principal amount specified above.
This Note Certificate represents the foregoing principal amount of Senior
Secured Notes Due 2002 (the "Notes") of Casino America, Inc. a Delaware
corporation (including any successor under the Indenture hereinafter referred
to, the "Company").
The Company, as obligor, promises to pay to the Holder or registered
assigns, the principal sum of $______________ on August ___, 2003.
Interest Payment Dates: February ___ and August ___ (each an "Interest Payment
Date.).
Record Dates: ______________ and _______________(whether or not a Business
Day)(each a "Regular Record Date").
Reference is hereby made to the further provisions of this Note Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: August ___, 1996
CASINO AMERICA, INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title
Trustee's Certificate of Authentication:
This is one of the Notes referred to in the
within-named Indenture.
Fleet National Bank, as Trustee
By:
----------------------------------------
Authorized Signatory
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<PAGE>
[BACK OF CERTIFICATE]
1. ___% SENIOR SECURED NOTE DUE 2003. This Note is one of a duly
authorized issue of securities of Casino America, Inc. (the "Company")
designated as its ___% Senior Secured Notes due 2003 (herein called the
"Notes"), limited in aggregate principal amount to $300 million, which have been
issued under the Indenture (as defined below). Capitalized terms not defined
herein have the meaning given to them in the Indenture.
2. INTEREST. The Company promises to pay interest on the principal
amount of the Notes represented by this Note Certificate at the rate per annum
shown above. The Company shall pay interest semiannually on each Interest
Payment Date to the holders of record (each a "Holder") of Outstanding Notes on
the immediately preceding Regular Record Date. Interest on the Notes represented
by this Note Certificate will accrue from the most recent date to which interest
has been paid or, if no interest has been paid on such Notes, from the first
date on which the Notes represented by this Note Certificate was originally
issued. Interest will be computed on the basis of a 360-day year of twelve 30-
day months. To the extent lawful, the Company shall pay interest on overdue
installments of interest at the rate borne by the Notes.
3. METHOD OF PAYMENT. The Company shall pay interest on the Notes
(except Defaulted Interest, which shall be payable as specified in the
Indenture) to Holders of Notes at the close of business on the Regular Record
Date for the Interest Payment Date even if Notes are canceled after the Regular
Record Date and on or before the Interest Payment Date. If the Company and a
Holder shall so agree, Holders shall not be required to surrender the Notes to
collect principal payments and premium payments, if any. The Company shall pay
principal, premium or any, and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
4. GUARANTEES. The payment of the Notes represented by this Note
Certificate is guaranteed pursuant to the Subsidiary Guarantees by the
Subsidiary Guarantors. The Subsidiary Guarantees are guaranteed pursuant to the
Company Guarantee by the Company.
5. PAYING AGENT AND REGISTRAR. Payment of the principal of (and
premium, if any, on) and interest on the Notes will be made at the office or
agency of the Company maintained for that purpose in The City of New York, or
at such other office or agency of the Company as may be maintained for such
purpose, 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;
provided, however, that payment of interest may be made at the option of the
Company (i) by check mailed to the address of the Person entitled thereto as
such address shall appear on the Note Register or (ii) by transfer to an
account maintained by the payee located in the United States. The Trustee will
act as Paying Agent and Registrar.
6. INDENTURE. The Company issued the Notes under an Indenture dated
as of December 19, 1995 (the "Indenture"), by and among the Company, as Issuer,
Riverboat Corporation of Mississippi, Riverboat Corporation of Mississippi-
Vicksburg, Riverboat Services Incorporated, CSNO, Inc., Louisiana Riverboat
Gaming Partnership, St. Charles Gaming Company, Inc., LRG Hotels, L.L.C., Grand
Palais Riverboat, Inc., LRGP Holdings, Inc., P.P.I.,
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<PAGE>
Inc., ASMI Management Inc. and Isle of Capri Casino Colorado, Inc., as
Subsidiary Guarantors, and Fleet National Bank, as 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 as in effect on the date of the
Indenture. The Notes are subject to, and qualified by, all such terms, certain
of which are summarized herein, and Holders are referred to the Indenture (and
all indentures supplemental thereto) and such Act for a statement of such terms.
7. OPTIONAL REDEMPTION. The Company may redeem all the Notes at any time
or some of them from time to time after August ___, 2000 at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest to the redemption date, if redeemed during the 12-
month period beginning on August ___ of the years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
------ ----------------
<S> <C>
2000 ............... ______%
2001 ............... ______%
2002 ............... 100.00%
</TABLE>
In the event that the Company consummates a Qualified Public Equity
Offering on or before August __, 1999, the Company may redeem up to $100 million
in principal amount of the Outstanding Notes at a redemption price of ____% of
the principal amount of the Notes so redeemed plus accrued and unpaid interest
to the redemption date, provided that, after any such redemption, at least $200
million in principal amount of the Notes remains Outstanding.
The Company may redeem (a "Regulatory Redemption") the Notes of any
Holder if any Gaming Authority notifies a Holder or a beneficial owner of such
Holder's Notes that it must be licensed, qualified or found suitable under any
applicable Gaming Law and such Person fails to apply for or is denied a license,
qualification or finding of suitability. Such Regulatory Redemption will take
place within 30 days of such Holder's receipt of notice of the Company's
election to redeem the Notes or on such earlier date as may be ordered by such
Gaming Authority at a price of the lesser of (a) 100% of the principal amount
thereof, (b) the price at which such Holder acquired the Notes and (c) the
Current Market Value of the Notes, together with, in each case, plus accrued and
unpaid interest, if any, to the earlier of the redemption date and the date of
denial of such license, qualification or finding of unsuitability.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days (or, in the case of a Regulatory Redemption,
up to 30 days) before the redemption date to each Holder of Notes to be redeemed
at such Holder's registered address. On and after the redemption date (or
possibly earlier in the case of a Regulatory Redemption), interest shall cease
to accrue on the Notes or portions thereof called for redemption.
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<PAGE>
Interest installments whose Interest Payment Date is on or prior to
the redemption date will be payable to the Holders of such Notes, or one or more
Predecessor Notes, of record at the close of business on the relevant Record
Date referred to on the face hereof.
9. REPURCHASE OFFERS. Upon the occurrence of a Change of Control, the
Company shall be obligated to offer to repurchase this Note at a purchase price
(payable in cash) in an amount equal to 101% of the principal amount thereof
plus accrued and unpaid interest.
At each such time as the amount of Excess Sale/Loss Proceeds
aggregates $10 million, the Company shall make an Excess Sale/Loss Proceeds
Offer to repurchase, from all Holders, Notes up to a maximum principal amount
(expressed as a multiple of $1,000) equal to such Excess Sale/Loss Proceeds,
less the accrued and unpaid interest on such Notes, at a purchase price (payable
in cash) in an amount equal to 100% of the principal amount of the Notes plus
accrued and unpaid interest to the repurchase date.
At each such time as the amount of Excess Louisiana Cash aggregates
$10 million, the Company shall make an Excess Louisiana Cash Offer to
repurchase, from all Holders, Notes up to a maximum principal amount (expressed
as a multiple of $1,000) of Notes equal to such Excess Louisiana Cash less the
accrued and unpaid interest on such Notes, at a purchase price (payable in cash)
in an amount equal to 100% of the principal amount of the Notes plus accrued and
unpaid interest to the repurchase date.
10. SELECTIONS OF NOTES REDEEMED OR REPURCHASED IN PART. Except in
the case of a Regulatory Redemption, if less than all of the Outstanding Notes
are to be redeemed or repurchased, the particular Notes or portions thereof to
be redeemed shall be determined on a pro rata basis, by lot or by any other
method determined by the Trustee to be fair and appropriate, subject to
compliance with the requirements of any securities exchange or trading system on
which the Notes are then listed or approved for trading. In the event of
redemption or repurchase of this Note in part only, a new Note or Notes for the
portion not redeemed or repurchased hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
11. 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. As a condition to transfer, the Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not exchange or register the transfer of any Note
or portion of a Note selected for redemption in whole or in part, or with
respect to which a Repurchase Notice has been given. Also, it need not exchange
or register the transfer of any Notes for a period of 15 days before the mailing
of a notice of redemption or Repurchase Offer with respect to such Notes. Prior
to the time of due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.
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<PAGE>
12. PERSONS DEEMED OWNERS. The registered holder of a Note may be
treated as its owner for the purpose of receiving payment and, subject to the
exception set forth under the caption "Method of Payment" above, interest and
for all other purposes.
13. 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 Outstanding Notes, and any existing
default may be waived with the consent of the Holders of a majority in principal
amount of the Outstanding Notes. Without the consent of any Holder of the Notes,
the Indenture or the Notes may be amended to make changes that do not adversely
affect the rights of any Holder, including but not limited to changes to add to
the covenants of the Company and the Subsidiary Guarantors for the benefit of
the Holders or to surrender any right or power conferred upon Company or a
Subsidiary Guarantor, to cure any ambiguity, or inconsistency, to add additional
Events of Default, to appoint a successor Trustee, to establish or maintain the
existence and priority of the Lien on the Collateral or add to such Collateral,
to add a Subsidiary Guarantor and to release a Subsidiary Guarantor under
certain circumstances, or to comply with any requirement to effect the
qualification of the Indenture under the Trust Indenture Act or any registration
or qualification of the Notes under securities laws.
14. DEFAULTS AND REMEDIES. If an Event of Default as set forth in the
Indenture occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the Outstanding Notes may declare the principal of 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 or insolvency, all
Outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnification satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the 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
premium (if any) or interest (or in the payment of any Note repurchase price) if
it determines that withholding notice is in their interests. The Company must
furnish quarterly and annual compliance certificates to the Trustee.
15. DEFEASANCE AND COVENANT DEFEASANCE. The Indenture contains
provisions for the defeasance at any time of (a) the entire indebtedness of the
Company on this Note and (b) certain restrictive covenants and the related
Defaults and Events of Default, upon compliance by the Company with certain
conditions set forth therein, which provisions apply to this Note.
16. TRUSTEE DEALINGS WITH THE COMPANY. The Indenture contains certain
limitations on the rights of the Trustee, should it become a creditor of the
Company, to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or otherwise. The
Trustee will be permitted to engage in other
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<PAGE>
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days or resign.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
stockholder or incorporator, as such, of any Person party to the Indenture, the
Notes, the Subsidiary Guarantees or the Collateral Documents shall not have any
liability for any obligations of such Person under such documents 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 Notes.
16. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of an authorized officer of the Trustee.
17. 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 UIGIMIA (= Uniform Gifts
to Minors Act).
18. COLLATERAL DOCUMENTS AND COLLATERAL. Substantially
contemporaneously with the initial issuance of the Notes, the Trustee, in its
capacity as Collateral Agent, will enter into or accept the Collateral Documents
listed on Schedule 1201 to the Indenture and accept delivery of the Collateral
specified therein. By acceptance of its Notes, each Holder agrees to all terms
and provisions of such Collateral Documents from time to time entered into
pursuant to (and as amended from time to time pursuant to) the provisions of the
Indenture. As among Holders, the Collateral as now or hereafter constituted
shall be held for the equal and ratable benefit of the Holders without
preference, priority or distinction of any Holder over any other Holder by
reason of differences in time of issuance of the Notes held by such Holders,
sale or otherwise, as security for the Secured Obligations of the Company and
the Subsidiary Guarantors.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture, which has in it the text of this Note in
larger type. Requests may be made to:
Casino America, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Attn: [Rexford A. Yeisley]
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
- ---------------------------------------
/ /
- ---------------------------------------
(Insert assignee's social security or tax
identification number.)
_______________________________________
_______________________________________
_______________________________________
_______________________________________
(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 or her.
Date: _________________________________
Signed: _______________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee:
_______________________________________
NOTICE: The signature must be guaranteed
by an eligible guarantor institution
(banks, stockbrokers, savings and loan
associations and credit unions with
membership in an approved signature
guarantee medallion program), pursuant
to Rule 17Ad-15 promulgated under the
Securities Exchange Act of 1934,
as amended.
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<PAGE>
EXHIBIT 4.11
FORM OF SUBSIDIARY GUARANTEES
(ENTERED INTO ON THE ISSUE DATE)
The Subsidiary Guarantors listed below (hereinafter referred to as
"Subsidiary Guarantors," which term includes any successor or assign under the
Indenture dated as of August __, 1996 by and among Casino America, Inc. (the
"Company"), Riverboat Corporation of Mississippi, Riverboat Corporation of
Mississippi-Vicksburg, Riverboat Services Incorporated, CSNO, Inc., Louisiana
Riverboat Gaming Partnership, St. Charles Gaming Company, Inc., LRG Hotels,
L.L.C., Grand Palais Riverboat, Inc., LRGP Holdings, Inc., P.P.I., Inc., ASMI
Management Inc. and Isle of Capri Casino Colorado, Inc. (collectively, the
"Subsidiary Guarantors"), and Fleet National Bank, as Trustee (the
"Indenture")), have irrevocably, unconditionally and jointly and severally
guaranteed (i) the due and punctual payment of the principal of, premium, if
any, and interest on the Company's __% Senior Secured Notes due 2003 in an
aggregate principal amount of $300,000,000 (the "Notes"), whether at stated
maturity, by acceleration or otherwise, the due and punctual payment of interest
on the overdue principal and interest, if any, of the Notes, to the extent
lawful, and the due and punctual performance of all other Obligations of the
Company to the Holders of Notes or the Trustee, all subject to the terms and
limitations set forth in ARTICLE THIRTEEN of the Indenture, (ii) in case of any
extension of time of payment or renewal of any Notes or any such other Secured
Obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise, and (iii) the payment of any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee.
No director, officer, employee, stockholder or incorporator, as such,
past, present or future, of any Subsidiary Guarantor shall have any liability
under its Subsidiary Guarantee herein by reason of his, her or its status as
such director, officer, employee, stockholder or incorporator.
These Subsidiary Guarantees are continuing guarantees and, except as
otherwise provided in Section 1014 or 1019(a) of the Indenture, shall remain in
full force and effect and shall be binding upon the Subsidiary Guarantors and
their successors and assigns until full and final payment of all of the
Company's Obligations and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
These are guarantees of payment and not of collectability.
These Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which these
Subsidiary Guarantees are noted shall have been executed by the Trustee under
the Indenture by the manual signature of an authorized officer.
<PAGE>
THE TERMS OF ARTICLE THIRTEEN OF THE INDENTURE ARE INCORPORATED HEREIN
BY REFERENCE.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Subsidiary Guarantors:
RIVERBOAT CORPORATION OF LOUISIANA RIVERBOAT GAMING
MISSISSIPPI PARTNERSHIP
By:________________________________ By:__________________________________
Name: Name:
Title: Title:
RIVERBOAT CORPORATION OF ST. CHARLES GAMING COMPANY, INC.
MISSISSIPPI-VICKSBURG
By:________________________________ By:___________________________________
Name: Name:
Title: Title:
RIVERBOAT SERVICES INCORPORATED LRG HOTELS, L.L.G.
By:________________________________ By:___________________________________
Name: Name:
Title: Title:
CSNO, INC. P.P.I., INC.
By:________________________________ By:___________________________________
Name: Name:
Title: Title:
ISLE OF CAPRI CASINO COLORADO, INC. ASMI MANAGEMENT INC.
By:________________________________ By:___________________________________
Name: Name:
Title: Title:
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<PAGE>
EXHIBIT B-2
FORM OF SUBSIDIARY GUARANTEE
(ENTERED INTO AFTER THE ISSUE DATE)
Pursuant to Section 1309 of the Indenture dated as of August __, 1996
by and among Casino America, Inc. (the "Company"), Riverboat Corporation of
Mississippi, Riverboat Corporation of Mississippi-Vicksburg, Riverboat Services
Incorporated, CSNO, Inc., Louisiana Riverboat Gaming Partnership, St. Charles
Gaming Company, Inc., LRG Hotels, L.L.C., Grand Palais Riverboat, Inc., LRGP
Holdings, Inc., P.P.I., Inc., ASMI Management Inc. and Isle of Capri Casino
Colorado, Inc. (collectively, the "Subsidiary Guarantors"), and Fleet National
Bank, as Trustee (the "Indenture"), the undersigned hereby agrees, represents
and acknowledges that it is a Subsidiary Guarantor under the Indenture for all
purposes, and jointly and severally with all other Subsidiary Guarantors under
the Indenture as may exist from time to time, as if it had been a signatory to
the Indenture.
The undersigned hereby irrevocably and unconditionally guarantees (i)
the due and punctual payment of the principal of, premium, if any, and interest
on the Company ___% Senior Secured Notes due 2003 in an aggregate principal
amount of $300,000,000 (the "Notes"), whether at stated maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, of the Notes, to the extent lawful, and
the due and punctual performance of all other Obligations of the Company to the
Holders of Notes or the Trustee, all subject to the terms and limitations set
forth in ARTICLE THIRTEEN of the Indenture, (ii) in case of any extension of
time of payment or renewal of any Notes or any such other Obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise, and (iii) the payment of any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing
any rights under this Subsidiary Guarantee.
No director, officer, employee, stockholder or incorporator, as such,
past, present or future, of the undersigned Subsidiary Guarantor shall have any
liability under this Subsidiary Guarantee by reason of his or its status as such
director, officer, employee, stockholder or incorporator.
This Subsidiary Guarantee is a continuing guarantee and, except as
otherwise provided in Section 1014 or 1019(a) of the Indenture, shall remain in
full force and effect and shall be binding upon the undersigned Subsidiary
Guarantor and its successors and assigns until full and final payment of all of
the Company's Obligations and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a guarantee of payment and not of collectability.
<PAGE>
THE TERMS OF ARTICLE THIRTEEN OF THE INDENTURE ARE INCORPORATED HEREIN
BY REFERENCE.
The undersigned Subsidiary Guarantor hereby represents and warrants as
follows:
(i) The undersigned has been duly incorporated or organized and
is validly existing as a corporation, partnership or other entity in
good standing under the laws of the jurisdiction in which it is
chartered or organized. The undersigned is duly qualified and in good
standing as a foreign corporation, partnership or other entity in each
jurisdiction in which the character or location of its assets or
properties (owned, leased or licensed) or the nature of its business
makes such qualification necessary, except for such jurisdictions
where the failure to so qualify would not have a material adverse
effect on the assets or properties, business, results of operations or
financial condition of the Company and its Subsidiaries taken as a
whole. The undersigned has all requisite corporate, partnership or
other power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits
(collectively, "Permits") of and from all governmental or regulatory
bodies or any other person or entity, including any and all licenses,
permits and approvals required under any applicable Gaming Laws, to
(i) own, lease and license its assets and properties and conduct its
businesses as now being conducted and as proposed to be conducted,
(ii) to enter into, deliver and perform its obligations under this
Subsidiary Guarantee, the Indenture and the Collateral Documents to
the extent it is, becomes or is deemed a party thereto. The
undersigned has fulfilled and performed in all material respects all
of its obligations with respect to such Permits, and the undersigned
is not in material violation of any term or provision of any such
Permits, nor has any event occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or which
could result in any material impairment of the rights of the
undersigned. No such Permit contains a materially burdensome
restriction.
(ii) Neither the execution, delivery and performance of its
obligations under this Subsidiary Guarantee, or the Indenture or any
of the Collateral Documents to the extent the undersigned is, becomes
or is deemed to be a party thereto, by the undersigned nor the
consummation of any of the transactions contemplated hereby or thereby
will give rise to a right to terminate or accelerate the due date of
any payment due under, or conflict with or result in the breach of any
term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or any Subsidiary pursuant to the terms of, any
indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company or any Subsidiary is a party or by
which it or any of its properties or businesses is bound, or any
franchise, license, Permit, judgment, decree, order, statute, rule or
regulation applicable to the
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<PAGE>
undersigned or violate any provision of the charter, by-laws,
partnership agreement or other organizational document of the
undersigned, except for such consents or waivers which have already
been obtained and are in full force and effect, or require any
authorization, consent, order, license, certificate or Permit of or
from any governmental or regulatory body under any Federal, state or
local law (including any Applicable Gaming Laws) except for those
which have been obtained.
(iii) All necessary corporate, partnership or other action has
been duly and validly taken by the undersigned to authorize the
execution, delivery and performance of this Subsidiary Guarantee, the
Indenture and each other Collateral Document to which it is, will
become or is or will be deemed a party in connection with the
transaction for which this Subsidiary Guarantee is required under the
terms of the Indenture.
(iv) This Subsidiary Guarantee constitutes the legal, valid and
binding obligation of the undersigned, enforceable against the
undersigned in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles. Each
of the Indenture and the Collateral Documents will constitute the
legal, valid and binding obligation of the undersigned to the extent
it is, becomes or is deemed a party thereto, enforceable against the
undersigned in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Subsidiary Guarantor:
---------------------------------------
By:
-----------------------------------
Name:
Title:
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<PAGE>
EXHIBIT 5.1
July 30, 1996
Casino America, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Ladies and Gentlemen:
We have acted as special counsel to Casino America, Inc., a Delaware
corporation ("Casino America"), and have advised Casino America in connection
with the proposed issuance and sale of up to $300,000,000 principal amount of
Casino America's Senior Secured Notes (the "Securities") and the guarantee by
certain subsidiaries of Casino America (the "Subsidiary Guarantors") of Casino
America's obligations under the Securities (the "Guarantees"). The Securities
and the Guarantees are to be issued under an Indenture (the "Indenture") among
Casino America, the Subsidiary Guarantors and Fleet National Bank, as Trustee
(the "Trustee"), with certain terms of the Securities to be established by
certain officers of Casino America who have been authorized by its Board of
Directors to do so, as part of the corporate action taken and to be taken (the
"Casino America Corporate Proceedings") relating to the issuance of the
Securities. The Guarantees will be issued with certain terms to be established
by certain officers of the Subsidiary Guarantors who have been authorized by
their Board of Directors or Management Committees (in the case of Louisiana
Riverboat Gaming Partnership) to do so, as part of the action taken and to be
taken (the "Subsidiary Guarantor Proceedings") relating to the issuance of the
Guarantees.
We have participated in the preparation and filing of a Registration
Statement on Form S-3 (the "Registration Statement") being filed jointly by
Casino America and the Subsidiary Guarantors pursuant to which the Securities
and the Guarantees are to be registered under the Securities Act of 1933, as
amended. In addition, we have reviewed, examined and are otherwise familiar
with such corporate and other records, instruments, certificates and documents
as we considered necessary to enable us to express this opinion.
Based on the foregoing, it is our opinion that, upon its proper execution
by all required signatories, the Indenture shall be a valid and binding
instrument and that, upon the completion of the Casino America Corporate
Proceedings and the authentication, issuance, sale and delivery
<PAGE>
July 30, 1996
Page 2
of the Securities, the Securities shall be legal, valid and binding obligations
of Casino America, entitled to the benefits of the Indenture, including such
terms as are established pursuant to the Casino America Corporate Proceedings,
in accordance with the respective terms thereof (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affection creditors' rights generally from time to time in effect and
to general principles of equity).
It is also our opinion that, when the Securities have been duly executed,
authenticated, issued, sold and delivered, and upon the completion of the
Subsidiary Guarantor Corporate Proceedings, the Guarantees will be valid and
binding obligations of each Subsidiary Guarantor, enforceable against each
Subsidiary Guarantor in accordance with their terms and entitled to the benefits
of the Indenture, including such terms as are established pursuant to the
Subsidiary Guarantor Corporate Proceedings, in accordance with the respective
terms thereof (subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and the general principles of equity).
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to being named in the prospectus under the caption
"Legal Matters" with respect to the matters stated therein. Further, we hereby
consent to the incorporation by reference of this opinion and consent in any
abbreviated registration statement(s) registering up to an additional 20%
aggregate principal amount of Securities and Guarantees filed subsequent to the
date hereof.
We are admitted to practice law in the State of Illinois and we express no
opinions as to matters under or involving any laws other than the laws of the
State of Illinois, the federal laws of the United States of America and the
General Corporation Law of the State of Delaware.
Very truly yours,
Mayer, Brown & Platt
<PAGE>
EXHIBIT 10.2
EXHIBIT C
TO INDENTURE
FORM OF ACCOUNTS PLEDGE AGREEMENT
---------------------------------
ACCOUNTS PLEDGE AGREEMENT, dated as of August __, 1996 (as may be amended
from time to time, the "AGREEMENT"), by and between Casino America, Inc., a
Delaware corporation (the "COMPANY"), and Fleet National Bank, collateral agent
for the Persons that now or in the future are holders of the Notes (as defined
below) issued under the Indenture as described below (the "HOLDERS") (in such
capacity, Fleet National Bank or any successor in such capacity is referred to
herein as the "COLLATERAL AGENT").
R E C I T A L S
---------------
A. Pursuant to the Indenture dated as of the date hereof (as may be
amended from time to time, the "INDENTURE"), by and among the Company, the
Subsidiary Guarantors and Fleet National Bank, as trustee, the Company will
issue ___% Senior Secured Notes due 2003 in an aggregate principal amount of up
to $300,000,000 (the "NOTES"), the payment of which will be guaranteed by the
Subsidiary Guarantors.
B. Pursuant to the Indenture, (a) the Company must, and must cause its
Restricted Subsidiaries to, deposit into separate Collateral Accounts (i) the
Net Cash Proceeds, if any, derived or resulting from an Asset Sale or Event of
Loss and (ii) the Excess Louisiana Cash, if any, generated by the Isle-Bossier
City and the Isle-Lake Charles and (b) the Company must pledge such Collateral
Accounts, the Net Cash Proceeds or Excess Louisiana Cash deposited therein and
all proceeds thereof as collateral security for the payment of its Secured
Obligations (as defined below).
C. It is a condition precedent to the issuance of the Notes, that the
Company execute and deliver an agreement in the form hereof to effect the
pledges described above.
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration as hereinafter described, the parties hereto do promise,
covenant and agree as follows:
ARTICLE 1
---------
DEFINITIONS AND RELATED MATTERS
SECTION 1.1. CERTAIN CAPITALIZED TERMS. Capitalized terms not otherwise
defined herein (including an "EVENT OF DEFAULT") shall have the respective
meanings specified in the Indenture. In addition, the following capitalized
terms shall have the following meanings:
"ACCOUNTS" means, collectively, the Net Cash Proceeds Account and the
Excess Louisiana Cash Account.
<PAGE>
"CHARGES" means all federal, state, county, city, municipal or other taxes,
levies, assessments or charges that, if not paid when due, may result in a Lien
of any Governmental Authority against Collateral.
"COLLATERAL" has the meaning set forth in Section 3.1.
"DELIVERY," "DELIVER" and "DELIVERED" means and shall have occurred if and
when:
(i) subject to clauses (ii) and (iii), with respect to Cash
Equivalents that are represented or evidenced by physical certificates or
instruments physical delivery to the Collateral Agent of which is
practicable under the circumstances, such Cash Equivalents have been (A)
delivered to the Collateral Agent or its nominee in suitable form for
transfer by delivery or accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the
Collateral Agent, and (B) registered in the name of the Collateral Agent
(if in registered form) or endorsed in the name of the Collateral Agent (if
in bearer form);
(ii) subject to clauses (iii) and (iv), with respect to Cash
Equivalents represented by physical certificates that are in the possession
of a financial intermediary (other than a clearing corporation) and
physical delivery of which is not practicable under the circumstances, or
issued in uncertificated form and registered in the name of a financial
intermediary, the financial intermediary (A) sends the Collateral Agent
confirmation of the purchase of such Cash Equivalents and (B), by book-
entry or otherwise, identifies as belonging to the Collateral Agent such
Cash Equivalents in the possession of or registered in the name of such
financial intermediary;
(iii) subject to clause (iv), with respect to Cash Equivalents either
(1) issued in certificated form, (2) in the custody of a clearing
corporation, a custodian bank or a nominee of either subject to the control
of the clearing corporation and (3) in bearer form or properly endorsed in
blank or registered in the name of such clearing corporation, custodian
bank or nominee, or (1) issued in uncertificated form and (2) registered in
the name of a clearing corporation, custodian bank or nominee of either,
(A) appropriate entries on the books of such clearing corporation are made
(1) decreasing the account of, or maintained on behalf of, the transferor
of such Cash Equivalents to the Collateral Agent and (2) increasing the
account of the Collateral Agent or its designee by the amount of the Cash
Equivalents to be Delivered, and (B), if Delivered through a designee, when
such designee (1) sends the Collateral Agent confirmation of the purchase
of such Cash Equivalents by the Collateral Agent, and (2) by book-entry or
otherwise identifies as belonging to the Collateral Agent or its nominee
such Cash Equivalents;
(iv) with respect to book-entry securities the transfer of which is
governed (or in part governed) by laws or regulations other than the UCC,
(A) proper notification and/or instruction for the transfer of the
securities to the Collateral Agent has been given and, if Delivered through
a designee, such designee (1) sends the Collateral Agent confirmation of
the purchase of such securities by the Collateral Agent and (2) by book-
entry or otherwise identifies such securities as belonging to the
Collateral Agent or (B)
-2-
<PAGE>
the transfer of such securities to the Collateral Agent has been otherwise
effected in such manner that the Collateral Agent is entitled to receive
directly any payments made on or with respect to such securities and the
Collateral Agent has a first priority Security Interest in such securities;
(v) with respect to certificates of deposit, such certificates of
deposit have been transferred to the name of the Collateral Agent together
with physical delivery thereof to the Collateral Agent;
(vi) with respect to cash, such cash has been delivered to the
Collateral Agent.
"EXCESS LOUISIANA CASH ACCOUNT" means an account opened and maintained with
the Collateral Agent as and when required pursuant to Section 1018(2) of the
Indenture, as more particularly described on Schedule 1.1.
"EXCESS LOUISIANA CASH ACCOUNT COLLATERAL" means, collectively, (i) the
Excess Louisiana Cash Account, (ii) all cash, instruments, investments in Cash
Equivalents or other property from time to time transferred or credited to,
contained in or comprising the Excess Louisiana Cash Account, (iii) all
investments in Cash Equivalents that are from time to time made or acquired by,
or delivered or otherwise transferred to, the Collateral Agent pursuant to this
Agreement with respect to the Excess Louisiana Cash Account or acquired out of
the proceeds of any of the foregoing, (iv) all statements, certificates,
passbooks and instruments representing the Excess Louisiana Cash Account or any
of the foregoing and (v) all proceeds and products of any of the foregoing.
"NET CASH PROCEEDS ACCOUNT" means an account opened and maintained with the
Collateral Agent as and when required pursuant to Section 1018(1) of the
Indenture, as more particularly described on Schedule 1.1.
"NET CASH PROCEEDS ACCOUNT COLLATERAL" means, collectively, (i) the Net
Cash Proceeds Account, (ii) all cash, instruments, investments in Cash
Equivalents or other property from time to time transferred or credited to,
contained in or comprising the Net Cash Proceeds Account, (iii) all investments
in Cash Equivalents that are from time to time made or acquired by, or delivered
or otherwise transferred to, the Collateral Agent pursuant to this Agreement
with respect to the Net Cash Proceeds Account or acquired out of the proceeds of
any of the foregoing, (iv) all statements, certificates, passbooks and
instruments representing the Net Cash Proceeds Account or any of the foregoing
and (v) all proceeds and products of any of the foregoing.
"NOTE DOCUMENTS" means the Indenture, the Notes, the Subsidiary Guarantees
and the Collateral Documents.
"PROCEEDS" has the meaning set forth in Section 3.1.
"SECURED OBLIGATIONS" has the meaning set forth in Section 2.1.
-3-
<PAGE>
"SECURED PARTIES" means, collectively, the Collateral Agent, the Trustee
and the Holders of the Notes and any of their respective successors and assigns.
"SECURITY INTEREST" has the meaning set forth in Section 3.1.
"SUPPLEMENTAL DOCUMENTATION" means financing statements, continuation
statements, consents, acknowledgments, assignment of accounts, patents,
trademarks or copyrights, schedules of Collateral and other similar instruments
or documents necessary or requested by the Collateral Agent (i) to create,
perfect and maintain perfected the first priority Security Interest in any
Collateral or (ii) so that the Collateral Agent receives all interest, dividends
and distributions from time to time paid with respect to, and all other Proceeds
of, all Collateral the Collateral Agent is entitled to receive hereunder.
"UCC" means Article 9 (or, with respect to securities, Article 8) of the
Uniform Commercial Code (as amended from time to time) of the State of New York.
SECTION 1.2. INTERPRETATION AND CONSTRUCTION.
-------------------------------
1.2.1. TERMS USED IN THE UCC. Unless the context requires otherwise,
all lower-case terms used in this Agreement that are used or defined in the UCC
shall have the same meanings herein.
1.2.2. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, and "including" is not
limiting. The words "hereof," "herein," "hereby," "hereunder" and similar terms
in this Agreement refer to this Agreement as a whole (including the Preamble,
the Recitals and all Schedules and Exhibits) and not to any particular provision
of this Agreement. Article, section, subsection, exhibit, recital, preamble and
schedule references in this Agreement are to this Agreement unless otherwise
specified. References in this Agreement to any agreement, other document or law
"as amended" or "as may be amended from time to time," or to amendments of any
document or law, shall include any amendments, supplements, replacements,
renewals or other modifications excepting any reference to any agreement,
document or law that specifically limits said agreement, document or law to its
terms or the date hereof.
1.2.3. DETERMINATIONS. Any determination or calculation contemplated
by this Agreement that is made by the Collateral Agent shall be final,
conclusive and binding upon the Company and the Trustee, in the absence of
manifest error. References in this Agreement to "determination" by the
Collateral Agent include good faith estimates (in the case of quantitative
determinations) and good faith beliefs (in the case of qualitative
determinations). All references herein to "discretion" of the Collateral Agent
(or terms of similar import) shall mean "absolute and sole discretion." All
consents and other actions of the Collateral Agent contemplated by this
Agreement may be given, taken, withheld or not taken in the Collateral Agent's
sole and absolute discretion, except as otherwise expressly provided herein.
-4-
<PAGE>
1.2.4. GOVERNING LAW. Except to the extent otherwise required under
applicable law, the UCC shall govern the attachment, perfection, priority and
enforcement of the Security Interest and all other matters to which the UCC
applies pursuant to the terms thereof. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
1.2.5. HEADINGS. The Article and Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction hereof.
1.2.6. SEVERABILITY. If any provision of this Agreement or any Lien or
other right hereunder shall be held to be invalid, illegal or unenforceable
under applicable law in any jurisdiction, such provision, Lien or other right
shall be ineffective only to the extent of such invalidity, illegality or
unenforceability, which shall not affect any other provisions herein or any
other Lien or right granted hereby or the validity, legality or enforceability
of such provision, Lien or right in any other jurisdiction.
1.2.7. EXHIBITS AND SCHEDULES. All of the appendices, exhibits and
schedules attached to this Agreement shall be deemed incorporated herein by
reference.
1.2.8. CONFLICTS. If any provision of this Agreement shall be
determined to be apparently contrary to or conflicting with any other provision
of any other Collateral Document, then the provision of such Collateral Document
shall control. The parties hereto agree that each has contributed to the
drafting of this Agreement and all Note Documents and that the provisions herein
contained shall not be construed against any party hereto as having been the
person or persons responsible for the preparation thereof.
ARTICLE 2
---------
SECURED OBLIGATIONS
SECTION 2.1. SECURED OBLIGATIONS. The Security Interest shall secure the
due and punctual payment and performance of any and all present and future
obligations and liabilities of the Company of every type or description to the
Secured Parties:
2.1.1. arising under or in connection with the Indenture or the Notes,
whether for principal, premium (if any), interest, expenses, indemnities or
other amounts (including attorneys' fees and expenses); or
2.1.2. arising under or in connection with this Agreement or any other
Note Document, including for reimbursement of amounts that may be advanced or
expended by the Collateral Agent (i) to satisfy amounts required to be paid by
the Company under this Agreement or any other Note Document for claims and
Charges, together with interest thereon to the extent provided, or (ii) to
maintain or preserve any Collateral or to create, perfect, continue or protect
the first priority Lien granted hereunder;
-5-
<PAGE>
in each case whether due or not due, direct or indirect, joint and/or several,
absolute or contingent, voluntary or involuntary, liquidated or unliquidated,
determined or undetermined, now or hereafter existing, renewed or restructured,
whether or not from time to time decreased or extinguished and later increased,
created or incurred, whether or not arising after the commencement of a
proceeding under the Federal Bankruptcy Code (including post-petition interest)
and whether or not recovery of any such obligation or liability may be barred by
a statute of limitations or such obligation or liability may otherwise be
unenforceable (all obligations and liabilities of the Company described in this
Section 2.1 are collectively referred to hereinafter as the "SECURED
OBLIGATIONS").
ARTICLE 3
---------
COLLATERAL; GENERAL TERMS
SECTION 3.1. SECURITY INTEREST. To secure the payment and performance of
the Secured Obligations as and when due, the Company hereby grants, conveys,
pledges, assigns and transfers to the Collateral Agent, for the benefit of the
Secured Parties, a security interest (the "SECURITY INTEREST") in, all right,
title, claim and interest of the Company in and to the following property,
whether now owned and existing or hereafter acquired or arising, and wherever
located:
3.1.1. The Accounts;
3.1.2. All cash, instruments, investments in Cash Equivalents or other
property from time to time transferred or credited to, contained in or
comprising the Accounts;
3.1.3. All statements, certificates, passbooks and instruments
representing the Accounts or any of the foregoing; and
3.1.4. All proceeds and products of any of the foregoing, including
all (i) interest, principal, dividends and other amounts or distributions
received with respect to any of the foregoing, and (ii) property received upon
the sale, exchange or other disposition of any of the foregoing ("PROCEEDS" and,
together with the foregoing, the "COLLATERAL").
SECTION 3.2. PERFECTION OF SECURITY INTEREST IN COLLATERAL.
---------------------------------------------
3.2.1. Each of the Net Cash Proceeds Account and the Excess Louisiana
Cash Account shall at all times and irrevocably be a segregated account
maintained in the name of and under the exclusive dominion and control of the
Collateral Agent. The Company agrees (and acknowledges the reliance by the
Secured Parties thereon) that it will not have any dominion, authority or
control over any Collateral or any right or power to withdraw, dispose of or
liquidate any funds in the Accounts or direct any payment from or debit to the
Accounts, except as set forth in Sections 5.4 and 6.4.
3.2.2. All cash and Cash Equivalents from time to time contained in or
comprising the Net Cash Proceeds Account and the Excess Louisiana Cash Account
shall be Delivered to, dealt with and held by the Collateral Agent pursuant to
the terms of this Agreement. The
-6-
<PAGE>
Collateral Agent and the Company will take all required action to ensure the
proper Delivery of all Net Cash Proceeds Account Collateral and Excess Louisiana
Cash Collateral and shall take (or cause to be taken) such other steps as are
required by this Agreement, under the UCC or other Applicable Law, in the
judgment of the Collateral Agent, to maintain and perfect a first priority
Security Interest in the Net Cash Proceeds Account Collateral and Excess
Louisiana Cash Collateral.
3.2.3. All Cash Equivalents shall be registered in the Collateral
Agent's name on the books of the applicable issuer, clearing corporation,
financial intermediary, custodian, nominee or bailee of or for such Collateral
and such other steps shall be taken under applicable law as may be required so
that the Collateral Agent receives all interest, dividends and distributions
from time to time paid with respect to, and all other proceeds of, such
Collateral.
3.2.4. The Company hereby authorizes the Collateral Agent to affix, by
facsimile signature or otherwise, the general or special endorsement of the
Company in such manner as the Collateral Agent shall deem advisable to any
investments in Cash Equivalents if the same has been delivered to or obtained by
the Collateral Agent without appropriate endorsement. In addition, the
Collateral Agent shall have the right at any time in its discretion to exchange
any certificate or instrument representing or evidencing any such Collateral for
certificates or instruments of smaller or larger denominations.
3.2.5. The Collateral Agent confirms that it is a financial
intermediary on whose books the interest of the Company in all "securities"
included in the Net Cash Proceeds Account Collateral or Excess Louisiana Cash
Account Collateral appears or a bailee of all "instruments" included in the Net
Cash Proceeds Account Collateral or Excess Louisiana Cash Account Collateral, as
applicable, in each case within the meaning of Section 8-313(1)(h)(i) or 9-305
of the UCC. This representation shall be deemed remade upon acquisition of each
investment in Cash Equivalents in the form of securities or instruments.
3.2.6. When Cash Equivalents in the form of securities are Delivered
to the Collateral Agent, the Collateral Agent shall by book-entry or otherwise
identify as belonging to the Company, subject to a Security Interest in favor of
Collateral Agent, such investments in Cash Equivalents or an equivalent amount
of securities of their class in the possession of or registered in the name of
the Collateral Agent or shown on the account of the Collateral Agent with
another financial intermediary.
3.2.7. All investments in Cash Equivalents that are held by the
Collateral Agent through other financial intermediaries, depositaries or the
like shall be held in accounts of the Collateral Agent with such entities
containing only assets held by the Collateral Agent in a fiduciary capacity for
customers.
SECTION 3.3. DISTRIBUTIONS HELD IN TRUST. If the Company directly receives
any interest or other distributions or Collateral required to be delivered to
the Collateral Agent under this Agreement, such Collateral shall be held in
trust for the benefit of the Secured Parties, subject to the Security Interest,
and the Company shall cause such Collateral to be delivered to, or in
-7-
<PAGE>
accordance with instructions of, the Collateral Agent as soon as reasonably
practicable after receipt thereof by the Company.
SECTION 3.4. FURTHER ASSURANCES. The Company shall, at its own expense,
promptly perform such acts as may be necessary, or that the Collateral Agent may
reasonably request at any time, to assure the attachment, perfection and first
priority of the Security Interest, to exercise the rights and remedies of the
Secured Parties hereunder or to carry out the intent of this Agreement. Without
limitation, the Company shall execute and deliver (or cause any third party to
execute and deliver) to the Collateral Agent, at any time and from time to time,
all Supplemental Documentation, in form and substance acceptable to the
Collateral Agent.
SECTION 3.5. REASONABLE CARE; EXCULPATION; INDEMNIFICATION
---------------------------------------------
3.5.1. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which such Collateral Agent accords its own property, it being understood that
the Collateral Agent shall not have any responsibility, except as otherwise
provided by applicable law or this Agreement, for (i) ascertaining or taking any
action with respect to the Collateral including, without limitation, any action
with respect to calls, conversions, exchanges, maturities, tenders or similar
matters, whether or not the Collateral Agent may be deemed to have knowledge of
matters affecting the Collateral or its value, (ii) taking any necessary steps
to preserve rights against third parties with respect to the Collateral or (iii)
maximizing interest or other investment returns on any Collateral.
3.5.2. Neither the Collateral Agent nor any of its directors,
officers, agents, attorneys or employees shall be liable to the Company for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, except for its or their own negligence or willful misconduct or
as required by applicable law. The Company acknowledges that the selection of
Fleet National Bank as the Collateral Agent was at the request of and is
acceptable to the Company.
3.5.3. The Company agrees to indemnify the Collateral Agent and its
directors, officers, agents, attorneys or employees against any and all
liabilities, losses, damages, penalties, claims, costs and expenses of any kind
or nature whatsoever (including reasonable fees and disbursements of counsel)
that may be imposed on, incurred by, or asserted against any of them, in any way
relating to or arising out of this Agreement or any action taken or omitted by
them hereunder, except to the extent that they directly resulted from the
negligence or willful misconduct of such Persons. Without limitation, the
Company shall reimburse the Collateral Agent for all brokerage commissions,
other expenses of investing and taxes incurred or payable by it as a result of
this Agreement and the performance of its duties and the exercise of its rights
and remedies hereunder, including any taxes payable upon disposition or
liquidation of any Collateral. The Collateral Agent shall be entitled to charge
any such amounts against the Collateral or any proceeds thereof as and when due.
-8-
<PAGE>
ARTICLE 4
---------
REGARDING THE COLLATERAL AGENT
SECTION 4.1. EXCULPATION; COLLATERAL AGENT'S RELIANCE; ETC. Neither the
Collateral Agent nor any of its respective directors, officers, agents,
attorneys or employees shall be liable to any Secured Party for any action taken
or omitted to be taken by it or them under or in connection with this Agreement
(i) with the consent or at the request of the Company, pursuant to Section
5.2.4, or (ii) in any other circumstances, except in each case for its or their
own negligence or willful misconduct. The Collateral Agent shall not be
responsible to any Secured Party for the value, enforceability, genuineness,
validity or priority of any Net Cash Proceeds Account Collateral or Excess
Louisiana Cash Account Collateral or the Security Interest, except as
contemplated by the immediately preceding sentence. The Collateral Agent shall
be entitled to rely upon any notice, certificate or other writing believed by
them to be genuine and correct and to have been signed or sent by the proper
person or entity. The Collateral Agent shall be entitled to consult with legal
counsel and to act in reliance upon the advice of such counsel concerning its
actions and duties hereunder. Absent written notice to the contrary, the
Collateral Agent may assume that no Event of Default exists.
ARTICLE 5
---------
NET CASH PROCEEDS ACCOUNT
SECTION 5.1. NATURE OF NET CASH PROCEEDS ACCOUNT.
-----------------------------------
5.1.1. The Collateral Agent hereby covenants and agrees that it will
not commingle funds of the Net Cash Proceeds Account with any general funds of
the Collateral Agent. The Collateral Agent further covenants and agrees that
funds of the Net Cash Proceeds Account will consist solely of Net Cash Proceeds
Account Collateral and will at no time include any funds, monies, securities,
deposits or any other assets owned by the Collateral Agent or any other Person.
It is expressly understood, acknowledged and agreed by each of the parties
hereto that at no time will all or any portion of the Net Cash Proceeds Account
consist of or become property, either directly or indirectly, of the Collateral
Agent and shall not be subject to execution, offset or levy by any Person other
than through the foreclosure of the Collateral Documents.
5.1.2. The Collateral Agent shall furnish the Company with monthly
reports in its usual and customary manner and format, setting forth all
transactions effected with respect to the Net Cash Proceeds Account Collateral
and the amount of cash and investments in Cash Equivalents included in the Net
Cash Proceeds Account Collateral.
SECTION 5.2. INVESTMENT OF FUNDS IN THE NET CASH PROCEEDS ACCOUNTS.
-----------------------------------------------------
5.2.1. Subject to Section 3.2, all funds from time to time contained
in the Net Cash Proceeds Account and all proceeds (including proceeds of related
investments in Cash
-9-
<PAGE>
Equivalents) thereof shall be invested and reinvested only in Cash Equivalents
in accordance with the provisions of this Section 5.2.
5.2.2. The Collateral Agent will forward to the Company all notices
and other communications received with respect to Cash Equivalents and, in the
case of proxies, will execute (but not vote) such proxies.
5.2.3. Except as otherwise provided in this Agreement, absent
direction from the Company, the Collateral Agent shall have no duty to exercise
any consensual rights or take any other action with respect to investments in
Cash Equivalents or other Collateral, including the investment or reinvestment
thereof or to make decisions with respect to calls, tenders or voting.
5.2.4. Subject to Section 5.2.5 and the other provisions of this
Agreement, the Company shall have the right to direct the investment and
reinvestment of the Net Cash Proceeds Account Collateral and the exercise of all
other consensual rights with respect to investments in Cash Equivalents in its
discretion, including the right to direct decisions by the Collateral Agent with
respect to calls, conversions, exchanges, maturities, tenders or similar matters
and voting of investments in Cash Equivalents. Any such direction shall be given
by written notice to the Collateral Agent signed by an authorized officer of the
Company, specifying how the Collateral is to be invested or the decision is to
be made, as applicable. The Collateral Agent shall, as soon as possible after
receipt of any such direction, cause the Collateral to be invested in accordance
with such direction or such decision to be implemented; provided, however, that
the Collateral Agent shall be under no obligation to follow any direction not
complying with this or any other provision of this Agreement.
5.2.5. Upon the occurrence of an Event of Default, the Collateral
Agent may cease following directions from the Company with respect to Net Cash
Proceeds Account Collateral and shall be entitled to direct the investment and
reinvestment of and the exercise of all other consensual rights with respect to
any and all Net Cash Proceeds Account Collateral in its discretion, including
the right to direct decisions with respect to calls, tenders and voting of
investments in Cash Equivalents, provided, however, that the Collateral Agent
shall be under no obligation to exercise any such rights.
SECTION 5.3. ADDITION TO, DISPOSITION AND APPLICATION OF NET CASH PROCEEDS
-------------------------------------------------------------
ACCOUNT COLLATERAL.
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5.3.1. As required by Section 1018(1) of the Indenture, in the event
of any Asset Sale or Event of Loss, the Company shall instruct the Collateral
Agent to open the Net Cash Proceeds Account (unless previously opened) and shall
the Company shall deposit (or cause to be deposited) all Net Cash Proceeds of
such Asset Sale or Event of Loss, as the case may be, in the Net Cash Proceeds
Account. All Net Cash Proceeds deposited in the Net Cash Proceeds Account from
time to time shall be considered the property of the Company pledged by it as
Collateral for all purposes. In addition to Net Cash Proceeds, the Company may
from time to time make (or cause to be made) additional deposits into the Net
Cash Proceeds Account. All additional deposits from time to time so deposited
shall be considered Net Cash Proceeds Account Collateral for all purposes.
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5.3.2. All interest, principal and other amounts from time to time
payable in respect of any Net Cash Proceeds Account Collateral or the sale or
other disposition thereof shall be deposited into the Net Cash Proceeds Account
and dealt with and held by the Collateral Agent in accordance with this
Agreement. The Collateral Agent shall use its best efforts to collect all
interest, principal and other amounts from time to time becoming due with
respect to investments in Cash Equivalents or the sale or other disposition
thereof, provided that the Collateral Agent shall not be required to participate
in any legal proceeding to make such collection. Whenever the Collateral Agent
is unable to make any such collection, it shall notify the Company.
SECTION 5.4. RELEASE OF NET CASH PROCEEDS ACCOUNT COLLATERAL.
5.4.1. Subject to Section 5.4.3 and provided no Event of Default has
occurred and is continuing, the Collateral Agent shall permit the withdrawal of
funds from the Net Cash Proceeds Account upon receipt of an Officers'
Certificate from the Company to the effect that such funds will be used to make
a Permitted Related Investment (within not more than seven days from the date of
such Officers' Certificate) in assets that are then pledged to the Collateral
Agent, all as contemplated by Sections 1014 and 1018 of the Indenture.
5.4.2. Subject to Section 5.4.3, the Collateral Agent shall permit the
withdrawal of funds from the Net Cash Proceeds Account to consummate an Excess
Sale/Loss Proceeds Offer pursuant to Section 1110 of the Indenture. Such
withdrawal shall be made in the form of wire transfers to the Holders of the
Notes being purchased in the Excess Sale/Loss Proceeds Offer and shall be
subject to the prior receipt of an Officers' Certificate from the Company to the
effect that such funds are being withdrawn for such purpose. In addition, to
the extent any Excess Sale/Loss Proceeds Offer is not fully subscribed to by the
Holders of the Notes, the Collateral Agent shall permit the Company to withdraw
and retain funds from the Net Cash Proceeds Account in the amount attributable
to the unsubscribed portion of the Excess Sale/Loss Proceeds Offer.
5.4.3. Upon receipt of any request for withdrawal of funds from the
Net Cash Proceeds Account, the Collateral Agent shall liquidate such Cash
Equivalents as the Company may direct in writing, provided that if no such
direction is given, the Collateral Agent shall liquidate such Cash Equivalents
as it may decide in its discretion, to the extent necessary to make the
requested disbursement.
ARTICLE 6
---------
EXCESS LOUISIANA CASH ACCOUNT
SECTION 6.1. NATURE OF EXCESS LOUISIANA CASH ACCOUNT.
6.1.1. The Collateral Agent hereby covenants and agrees that it will
not commingle funds of the Excess Louisiana Cash Account with any general funds
of the Collateral Agent. The Collateral Agent further covenants and agrees that
funds of the Excess Louisiana Cash Account will consist solely of Excess
Louisiana Net Proceeds Account Collateral and will at no time include any funds,
monies, securities, deposits or any other assets owned by the
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<PAGE>
Collateral Agent or any other Person. It is expressly understood, acknowledged
and agreed by each of the parties hereto that at no time will all or any portion
of the Excess Louisiana Net Cash Account consist of or become property, either
directly or indirectly, of the Collateral Agent and shall not be subject to
execution, offset or levy by any Person other than through the foreclosure of
the Note Documents.
6.1.2. The Collateral Agent shall furnish the Company with monthly
reports in its usual and customary manner and format, setting forth all
transactions effected with respect to the Excess Louisiana Cash Account
Collateral and the amount of cash and investments in Cash Equivalents included
in the Excess Louisiana Cash Account Collateral.
SECTION 6.2. INVESTMENT OF FUNDS IN THE EXCESS LOUISIANA CASH ACCOUNT.
6.2.1. Subject to Section 3.2, all funds from time to time contained
in the Excess Louisiana Cash Account and all proceeds (including proceeds of
related investments in Cash Equivalents) thereof shall be invested and
reinvested only in Cash Equivalents in accordance with the provisions of this
Section 6.2.
6.2.2. The Collateral Agent will forward to the Company all notices
and other communications received with respect to Cash Equivalents and, in the
case of proxies, will execute (but not vote) such proxies.
6.2.3. Except as otherwise provided in this Agreement, absent
direction from the Company, the Collateral Agent shall have no duty to exercise
any consensual rights or take any other action with respect to investments in
Cash Equivalents or other Collateral, including the investment or reinvestment
thereof or to make decisions with respect to calls, tenders or voting.
6.2.4. Subject to Section 6.2.5 and the other provisions of this
Agreement, the Company shall have the right to direct the investment and
reinvestment of the Excess Louisiana Cash Account Collateral and the exercise of
all other consensual rights with respect to investments in Cash Equivalents in
its discretion, including the right to direct decisions by the Collateral Agent
with respect to calls, conversions, exchanges, maturities, tenders or similar
matters and voting of investments in Cash Equivalents. Any such direction shall
be given by written notice to the Collateral Agent signed by an authorized
officer of the Company, specifying how the Collateral is to be invested or the
decision is to be made, as applicable. The Collateral Agent shall, as soon as
possible after receipt of any such direction, cause the Collateral to be
invested in accordance with such direction or such decision to be implemented;
provided, however, that the Collateral Agent shall be under no obligation to
follow any direction not complying with this or any other provision of this
Agreement.
6.2.5. Upon the occurrence of an Event of Default, the Collateral
Agent may cease following directions from the Company with respect to Excess
Louisiana Cash Account Collateral and shall be entitled to direct the investment
and reinvestment of and the exercise of all other consensual rights with respect
to any and all Excess Louisiana Cash Account Collateral in its discretion,
including the right to direct decisions with respect to calls, tenders and
voting of
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<PAGE>
investments in Cash Equivalents, provided, however, that the Collateral Agent
shall be under no obligation to exercise any such rights.
SECTION 6.3. ADDITION TO, DISPOSITION AND APPLICATION OF EXCESS LOUISIANA
CASH ACCOUNT COLLATERAL.
6.3.1. As required by Section 1018(2) of the Indenture, in the event
of an adverse vote in Bossier Parish or Calcasieu Parish requiring the deposit
of Excess Louisiana Cash into a Collateral Account, the Company shall instruct
the Collateral Agent to open the Excess Louisiana Cash Account and the Company
shall deposit (or cause to be deposited) all Excess Louisiana Cash in the Excess
Louisiana Cash Account. All Excess Louisiana Cash deposited in the Excess
Louisiana Cash Account from time to time shall be considered the property of the
Company pledged by it as Collateral for all purposes. In addition to Excess
Louisiana Cash , the Company may from time to time make (or cause to be made)
additional deposits into the Excess Louisiana Cash Account. All additional
deposits from time to time so deposited shall be considered Excess Louisiana
Cash Account Collateral for all purposes.
6.3.2. All interest, principal and other amounts from time to time
payable in respect of any Excess Louisiana Cash Account Collateral or the sale
or other disposition thereof shall be deposited into the Excess Louisiana Cash
Account and dealt with and held by the Collateral Agent in accordance with this
Agreement. The Collateral Agent shall use its best efforts to collect all
interest, principal and other amounts from time to time becoming due with
respect to investments in Cash Equivalents or the sale or other disposition
thereof, provided that the Collateral Agent shall not be required to participate
in any legal proceeding to make such collection. Whenever the Collateral Agent
is unable to make any such collection, it shall notify the Company.
SECTION 6.4. RELEASE OF EXCESS LOUISIANA CASH ACCOUNT COLLATERAL.
6.4.1. Subject to Section 6.4.2 and provided no Event of Default has
occurred and is continuing, the Collateral Agent shall permit the withdrawal of
funds from the Excess Louisiana Cash Account to consummate an Excess Louisiana
Cash Offer pursuant to Section 1111 of the Indenture. Such withdrawal shall be
made in the form of wire transfers to the Holders of the Notes being purchased
in the Excess Louisiana Cash Offer and shall be subject to the prior receipt of
an Officers' Certificate from the Company to the effect that such funds are
being withdrawn for such purpose. In addition, to the extent any Excess
Louisiana Cash Offer is not fully subscribed to by the Holders of the Notes, the
Collateral Agent shall permit the Company to withdraw and retain funds from the
Excess Louisiana Cash Account in the amount attributable to the unsubscribed
portion of the Excess Louisiana Cash Offer.
6.4.2. Upon receipt of any request for withdrawal of funds from the
Excess Louisiana Cash Account, the Collateral Agent shall liquidate such Cash
Equivalents as the Company may direct in writing, provided that if no such
direction is given, the Collateral Agent shall liquidate such Cash Equivalents
as it may decide in its discretion, to the extent necessary to make the
requested disbursement.
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ARTICLE 7
---------
POWER OF ATTORNEY
SECTION 7.1. APPOINTMENT OF AGENTS AS COMPANY'S LAWFUL ATTORNEYS-IN-FACT.
The Company hereby irrevocably appoints (the appointment being irrevocable
because the Company's it is coupled with an interest) the Collateral Agent and
its employees and agents as the Company's true and lawful attorneys-in-fact,
with full power of substitution, to do (a) all things required to be done by the
Company under this Agreement or the other Note Documents and (b) to do all
things that the Collateral Agent may deem necessary or advisable to assure the
attachment, perfection and first priority of the Security Interest or otherwise
to exercise the rights and remedies of the Collateral Agent hereunder or carry
out the intent of this Agreement, in each case irrespective of whether a Default
or Event of Default then exists and at the Company's expense. Without
limitation, the Collateral Agent and its officers and agents shall be entitled
to do all of the following, as fully as the Company might:
7.1.1. to sign the name of the Company on any Supplemental
Documentation and to deliver and file such Supplemental Documentation to or with
such Persons as the Collateral Agent, in its discretion, may elect;
7.1.2. to sign any certificate of ownership, registration card,
application therefor, affidavits or documents necessary to transfer title to any
of the Collateral, to receive and receipt for all licenses, registration cards
and certificates of ownership;
7.1.3. to affix, by facsimile signature or otherwise, the general or
special endorsement of the Company, in such manner as the Collateral Agent shall
deem advisable, to any Collateral that has been delivered to or obtained by the
Collateral Agent without appropriate endorsement or assignment; and
7.1.4. to affix, by facsimile signature or otherwise, the general or
special endorsement of the Company, in such manner as the Collateral Agent shall
deem advisable, to any Net Cash Proceeds Account Collateral or Excess Louisiana
Cash Account Collateral that has been delivered to or obtained by the Collateral
Agent without appropriate endorsement or assignment.
ARTICLE 8
---------
REPRESENTATIONS. WARRANTIES AND COVENANTS
SECTION 8.1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants that all representations and warranties made with respect to it, its
assets and its obligations in the Purchase Agreement are true and correct and
makes the following additional representations and warranties, all of which
shall survive until termination of this Agreement pursuant to Section 10.7.
Upon the opening of the Net Cash Proceeds Account or Excess Louisiana Cash
Account and upon each deposit of Net Cash Proceeds or Excess Louisiana Cash
therein, each such
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representation and warranty, other than those contained in the Underwriting
Agreement, shall be deemed repeated by the Company.
8.1.1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
and has all requisite corporate power and authority and the legal right to own
and operate its properties and to carry on its business as heretofore conducted
and proposed to be conducted. The Company has all requisite corporate power and
authority to enter into this Agreement and the other Note Documents to which it
is a party and to carry out the transactions contemplated hereby and thereby.
The Company possesses all Governmental Approvals, in full force and effect, free
from burdensome restrictions, that are necessary for the ownership, maintenance
and operation of its properties and conduct of its business as now conducted,
and is not in violation thereof. The Company is duly qualified and in good
standing as a foreign corporation in each state where the nature of its business
activities conducted or properties owned or leased requires it to be so
qualified except where the failure to do so would not have a material adverse
effect on the business, assets, results of operations or financial condition of
the Company, the ability of the Company to perform its obligations hereunder or
the Collateral or Security Interest.
8.1.2. The execution, delivery and performance by the Company of this
Agreement and each other Note Document to which it is a party have been duly
authorized by all necessary corporate action. This Agreement and each such other
Note Document have been duly executed and delivered by the Company and such
agreements are the legal, valid and binding obligations of the Company,
enforceable against it in accordance with their respective terms, except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally. The execution, delivery and performance by the Company of this
Agreement and each other Note Document to which the Company is a party, and the
consummation of the transactions contemplated hereby or thereby, or the exercise
by the Collateral Agent of any of the voting and other rights or remedies
hereunder, do not and will not (i) violate any provision of the charter or
bylaws of the Company, (ii) conflict with, result in a breach of or constitute
(or, with the giving of notice or lapse of time, or both, constitute) a default
under, or require the approval or consent of any Person pursuant to, any
agreement and other obligation of the Company relating to or included in the
Collateral or violate any provision of applicable law binding on the Company or
(iii) result in the creation or imposition of any Lien (other than any Lien
permitted under Section 1011 of the Indenture) of any nature whatsoever upon any
of the Company's assets except for Liens created under this Agreement and the
other Note Documents. Except for filings and recordings in connection with the
perfection of Liens created by this Agreement and the other Note Documents, no
Governmental Approval is or will be required in connection with the execution,
delivery and performance by the Company of this Agreement or any other Note
Document to which the Company is a party, or the consummation of the
transactions contemplated hereby or thereby, or the exercise by the Collateral
Agent of any of the voting and other rights or remedies hereunder, or to ensure
the legality, validity or enforceability hereof or thereof, except as may be
required in connection with the disposition of Collateral by laws affecting the
offering and sale of securities generally.
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8.1.3. Duly executed financing statements containing a correct
description of the Collateral have been delivered to the Collateral Agent for
filing in every governmental office in every state, county and other
jurisdiction in which the principal or any other place of business or the chief
executive office of the Company, or any portion of the Collateral, is located
and in each jurisdiction in which such action is necessary to establish a valid
and perfected first priority Security Interest in favor of the Collateral Agent
in all Collateral in which a Lien may be perfected by filing, and no further or
subsequent filing, recording or registration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
8.1.4. The addresses of the Company's chief executive office and
principal place of business, all other places of business of the Company and all
other locations at which any tangible Collateral or books and records related to
any Collateral are located are as set forth in Schedule 3.2 of the Company
Security Agreement, and there are no prior or current trade or legal names used
to identify the Company in its business or in the ownership of its properties
other than those set forth on such Schedule.
8.1.5. The Security Interest constitutes a valid and upon filing of
financing statements referred to in Section 8.1.3 with the appropriate
Governmental Authorities, perfected first priority Lien and secures payment and
performance of the Secured Obligations.
8.1.6. The Collateral is free and clear of all Liens other than the
Security Interest and, except for financing statements in favor of the
Collateral Agent, the Company has filed no financing statement covering any
Collateral.
SECTION 8.2. COVENANTS.
8.2.1. Except as contemplated by this Agreement and the Indenture, the
Company shall not sell, lease, transfer or otherwise dispose of, or create or
permit to exist any Lien upon, the Collateral or any part thereof or interest
therein. If any Collateral, or any part thereof, is sold or otherwise disposed
of in violation of these provisions, the Security Interest shall continue in
such Collateral or part notwithstanding such sale or other disposition, the
Person to which such disposition is made shall be bound by this Agreement, and
the Company shall deliver any Proceeds and products thereof to the Collateral
Agent to be held as Collateral hereunder.
8.2.2. The Company shall pay, when due, all charges for maintaining
and administering the Accounts and of investing and reinvesting Collateral as
well as all taxes and license or other fees of any kind or nature relating to or
assessed upon the Collateral.
8.2.3. The Company shall pay (i) all Charges imposed upon any
Collateral, and (ii) all claims (including claims for labor, services and
materials) that have become due and payable and, under applicable law, have or
may become Liens (other than Liens permitted under Section 1011 of the
Indenture) upon any Collateral, in each case before any penalty shall be
incurred with respect thereto; provided that, unless foreclosure, levy or
similar proceedings shall have commenced, the Company need not pay or discharge
any such Charges or claims so long as the validity or amount thereof is being
contested in good faith and by appropriate proceedings
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and so long as adequate reserves therefor have been established in accordance
with GAAP. If the Company fails to pay or obtain the discharge of any Charge,
claim or Lien required to be paid or discharged under this Section 8.2.3 and
asserted against portion of the Collateral, the Collateral Agent may, at any
time and from time to time, in its discretion and without waiving or releasing
any obligation of the Company under this Agreement or the other Note Documents
or waiving any Default or Event of Default, make such payment, obtain such
discharge or take such other action with respect thereto as the Collateral Agent
deems advisable.
8.2.4. The Company shall, at its own cost and expense, take any and
all actions necessary to defend title to the Collateral against all Persons and
against all claims and demands and to preserve, protect and defend the Security
Interest and the priority thereof, against any adverse Liens not permitted under
the Note Documents. The Company will promptly notify the Collateral Agent of any
attachment or other legal process levied against any Collateral.
ARTICLE 9
---------
RIGHTS AND REMEDIES ON DEFAULT
SECTION 9.1. REMEDIES. So long as an Event of Default shall exist, subject
to any applicable Gaming Laws:
9.1.1. In addition to all of its other rights, powers and remedies
under this Agreement and applicable law, the Collateral Agent shall have, and
may exercise, all of the rights, powers and remedies of a secured party under
the UCC, all of which rights, powers and remedies shall be cumulative and not
exclusive, to the extent permitted by applicable law.
9.1.2. The Collateral Agent shall have the right, as it may deem
necessary or advisable at its discretion, to do any of the following:
9.1.2.1. to foreclose the Security Interest by any available
judicial procedure or without judicial process;
9.1.2.2. to set off any portion of the Secured Obligations
against the Collateral;
9.1.2.3. to notify obligors on the Collateral that the Collateral
has been assigned to the Collateral Agent and that all payments thereon are to
be made directly and exclusively to or as instructed by the Collateral Agent;
9.1.2.4. to collect by legal proceedings or otherwise all
dividends, distributions, interest, principal or other sums now or hereafter
payable upon or on account of the Collateral;
9.1.2.5. to enter into any extension or reorganization agreement
or any other agreement relating to or affecting the Collateral and, in
consideration therewith, the
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Collateral Agent may deposit or surrender control of the Collateral or accept
other property in exchange of the Collateral;
9.1.2.6. to make such payments and do such acts as the Collateral
Agent may deem necessary or desirable to perfect or maintain perfected, or to
maintain a first priority Lien on the Collateral, including, without limitation,
(i) paying, purchasing, contesting or compromising any Lien on the Collateral,
or (ii) commencing, appearing or otherwise participating in or controlling any
action or proceeding purporting to affect the Security Interest or ownership of
the Collateral; and
9.1.2.7. to exercise all other rights, powers, privileges and
remedies of an owner of the Collateral.
9.1.3. The Collateral Agent shall have the right to sell or otherwise
dispose of all or any Collateral at public or private sale or sales, with such
notice as may be required by Section 9.3, in lots or in bulk at any exchange,
over the counter or at any of the Collateral Agent's offices or elsewhere, for
cash or on credit, with or without representations or warranties, all as the
Collateral Agent, in its discretion, may deem advisable. Neither the Collateral
Agent nor the Collateral need be present at any such sales. If sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until the sale price
is paid by the purchaser thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. The Collateral Agent shall not be obligated to make any
sale of the Collateral regardless of notice of sale having been given. The
Collateral Agent may purchase all or any part of the Collateral at public or, if
permitted by applicable law, private sale, and in lieu of actual payment of the
purchase price, the Collateral Agent may apply against such purchase price any
amount of the Secured Obligations. The Company agrees that any sale of
Collateral conducted by the Collateral Agent in accordance with the foregoing
provisions of this Section, Section 9.3 and applicable law shall be deemed to be
a commercially reasonable sale under Section 9-504 of the UCC.
SECTION 9.2. APPLICATION OF PROCEEDS.
9.2.1. Any cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon, all or any part of
the Collateral during the existence of an Event of Default may be held by the
Collateral Agent as Collateral and/or then or at any time thereafter applied as
follows:
9.2.1.1. first, to the Collateral Agent to pay all advances,
charges, costs and expenses payable to the Collateral Agent pursuant to Section
10.1; and
9.2.1.2. second, to pay the Secured Obligations in the order set
forth in the Indenture.
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9.2.2. The Company and any other Person then obligated therefor shall
pay to the Collateral Agent on demand any deficiency with regard the Secured
Obligations that may remain after such sale, collection or realization of, from
or upon the Collateral.
9.2.3. Payments received from any third party on account of any
disposition of Collateral shall not reduce the Secured Obligations until paid in
cash to the Collateral Agent. The application of proceeds by the Collateral
Agent shall be without prejudice to the Collateral Agent's rights as against the
Company or other Persons with respect to any Secured Obligations that may then
be or remain unpaid.
9.2.4. If, while an Event of Default exists, the Company receives any
cash, checks, notes or other instruments for the payment of money in respect of
any sale of, collection from, or other realization upon, all or any part of the
Collateral, such collections and proceeds shall be received in trust for the
Secured Parties, and the Company shall keep all such collections and proceeds
separate and apart from all other funds and property so as to be capable of
identification as the property of the Secured Parties and deliver such
collections and proceeds daily to, or as instructed by, the Collateral Agent in
the identical form received (with any appropriate endorsements or assignments).
SECTION 9.3. NOTICE OF SALE. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the
Collateral Agent will send or otherwise make available to the Company reasonable
notice of the time and place of any public sale thereof or of the time on or
after which any private sale thereof is to be made. The Company agrees that any
notice required to be given by the Collateral Agent of a sale, lease or other
disposition of Collateral, or any other intended action by the Collateral Agent,
which is received in accordance with the provisions set forth in Section 10.4
ten (10) days prior to such proposed action, or such longer period as shall be
specified by applicable law, shall constitute commercially reasonable and fair
notice thereof to the Company. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor and such sale may, without further notice, be made at the time and
place to which it was so adjourned. The Company hereby waives any right to
receive notice of any public or private sale of any Collateral or other
security for the Secured Obligations except as expressly provided for in this
Section 9.3.
ARTICLE 10
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GENERAL
-------
SECTION 10.1. COLLATERAL AGENT'S EXPENSES. Regardless of the occurrence of
a Default or Event of Default, the Company agrees to pay to the Collateral Agent
the amount of any and all advances, charges, costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts or agents, that
the Collateral Agent may reasonably incur in connection with (i) the
administration of this Agreement, including any amendment thereto or any workout
or restructuring, (ii) the creation, perfection or continuation of the Security
Interest or the protection of its or the Collateral, including the discharging
of any prior or subsequent Lien or adverse claim against the Collateral or any
part thereof that is not permitted hereby or by the Indenture,
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(iii) the custody, preservation or sale of, collection from, or other
realization upon, any of the Collateral, (iv) the exercise or enforcement of any
of the rights, powers or remedies of the Collateral Agent under this Agreement
or under applicable law (including reasonable attorneys' fees and expenses
incurred by the Collateral Agent in the collection of Collateral deposited with
the Collateral Agent and amounts incurred in connection with the operation,
maintenance or foreclosure of the Security Interest) or any bankruptcy
proceeding or (v) the failure by the Company to perform or observe any of the
provisions hereof. All such amounts and all other amounts payable hereunder
shall be payable on demand, together with interest at the rate borne by the
Notes as such time (including at the Defaulted Interest rate, if applicable).
SECTION 10.2. AMENDMENTS AND OTHER MODIFICATIONS. No amendment, supplement,
waiver or other modification of or to any provision of this Agreement shall be
effective unless the same shall be in writing and signed by the Company and the
Collateral Agent, except that the Company may amend Schedule 1.1 to provide the
information contemplated thereby with respect to the Accounts and the signature
of the Collateral Agent will not be required for such amendment. Any waiver of
or consent relating to any provision of this Agreement shall be effective only
in the specific instance and for the specific purpose for which given. No notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances.
SECTION 10.3. FAILURE OR DELAY; CUMULATIVE REMEDIES. No failure or delay on
the part of any of the Secured Parties in the exercise of any power, right or
remedy under this Agreement shall impair such power, right or remedy or shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude other or further exercise of such or any
other power, right or remedy. The rights and remedies provided for under this
Agreement are cumulative and are not exclusive of any rights and remedies that
may be available to the Secured Parties under applicable law, the Indenture or
the other Note Documents or otherwise.
SECTION 10.4. NOTICES. All notices, and other communications required or
permitted to be given to or made upon any party hereto under this Agreement
shall be in writing and shall be personally delivered or sent be prepaid
courier, by overnight, registered or certified mail (postage prepaid) or by
telecopy or telegram and shall be deemed given on the day that such writing is
received by the intended recipient thereof. Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing provisions of this
Section 10.4, notices, and other communications shall be given to or made upon
the parties hereto at their respective addresses (or to their respective
telecopier numbers) indicated on Schedule 10.4 hereof.
SECTION 10.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and, subject to the next sentence, inure to the benefit of each of the parties
hereto and their respective permitted successors and assigns. The Company shall
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Collateral Agent. The benefits of this Agreement
shall pass automatically with any assignment of the Secured Obligations (or any
portion thereof), to the extent of such assignment.
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SECTION 10.6. PAYMENTS SET ASIDE. Notwithstanding anything to the contrary
contained herein, this Agreement, the Secured Obligations and the Security
Interest shall continue to be effective or be reinstated, as the case may be, if
at any time any payment, or any part thereof, of any or all of the Secured
Obligations is rescinded, invalidated, declared to be fraudulent or preferential
or otherwise required to be restored or returned by any Secured Party in
connection with any bankruptcy, reorganization or similar proceeding involving
the Company, any other party liable with respect to the Secured Obligations or
otherwise, if the proceeds of any Collateral are required to be returned by any
Secured Party under any such circumstances, or if any Secured Party elects to
return any such payment or proceeds or any part thereof in its sole discretion,
all as though such payment had not been made or such proceeds not been received.
Without limiting the generality of the foregoing, if prior to any such
rescission, invalidation, declaration, restoration or return, this Agreement
shall have been canceled or surrendered or the Security Interest or any
Collateral shall have been released or terminated in connection with such
cancellation or surrender, this Agreement and the Security Interest and such
Collateral shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, discharge or otherwise affect the
obligations of the Company in respect of the amount of the affected payment or
application of proceeds, the Security Interest or such Collateral.
SECTION 10.7. CONTINUING SECURITY INTEREST; TERMINATION. This Agreement
shall create a continuing security interest in the Collateral and, except as
provided below, the Security Interest and all agreements, representations and
warranties made herein shall survive until, and this Agreement shall terminate
only upon, indefeasible payment in full of the Secured Obligations. Any
investigation at any time made by or on behalf of the Secured Parties shall not
diminish the right of the Secured Parties to rely on any such agreements,
representations or warranties herein. Notwithstanding anything in this Agreement
or applicable law to the contrary, the agreements of the Company set forth in
Section 3.5.3 and Section 10.1 shall survive the payment of all other Secured
Obligations and the termination of this Agreement.
SECTION 10.8. CHOICE OF FORUM.
---------------
10.8.1. Subject to Section 10.8.2, all actions or proceedings
arising in connection with this Agreement shall be tried and litigated in state
or Federal courts located in the County of New York, State of New York, unless
such actions or proceedings are required to be brought in another court to
obtain subject matter jurisdiction over the matter in controversy. THE COMPANY
WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS, TO
ASSERT THAT IT IS NOT SUBJECT TO THE JURISDICTION OF SUCH COURTS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
10.8.1.
10.8.2. Nothing contained in Section 10.8 shall preclude the
Collateral Agent from bringing any action or proceeding arising out of or
relating to this Agreement in the courts of any place where the Company or any
of its assets may be found or located. TO THE EXTENT PERMITTED BY THE APPLICABLE
LAWS OF ANY SUCH JURISDICTION, THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT
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<PAGE>
OF ANY SUCH ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS
THAT NOW OR HEREAFTER, BY REASON OF SUCH PARTY'S PRESENT OR FUTURE DOMICILE, OR
OTHERWISE, MAY BE AVAILABLE TO IT.
SECTION 10.9. WAIVER AND ESTOPPEL. Except as otherwise provided in this
Agreement, the Company hereby waives: (i)presentment, protest, notice of
dishonor, release, compromise, settlement, extension or renewal and any other
notice of or with respect to the Secured Obligations and hereby ratifies and
confirms whatever the Collateral Agent may do in this regard; (ii) any bond or
security that might be required by any court prior to allowing the Secured
Parties to exercise any of their rights, powers or remedies; (iii) the benefit
of all valuation, appraisement, redemption and exemption laws; (iv) any rights
to require marshaling of the Collateral upon any sale or otherwise to direct the
order in which the Collateral shall be sold; (v) any set-off; and (vi) any
rights to require the Collateral Agent to proceed against any Person, proceed
against or exhaust any Collateral or any other security interests or guaranties
or pursue any other remedy in the Collateral Agent's power, or to pursue any of
such rights in any particular order or manner, and any defenses arising by
reason of any disability or defense of any Person.
SECTION 10.10. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
SECTION 10.11. COMPLETE AGREEMENT. This Agreement, together with the
exhibits and schedules hereto and the other Note Documents, is intended by the
parties as a final expression of their agreement regarding the subject matter
hereof and as a complete and exclusive statement of the terms and conditions of
such agreement.
SECTION 10.12. LIMITATION OF LIABILITY. No claim shall be made by the
Company against the Secured Parties or their Affiliates, directors, officers,
employees or agents for any special, indirect, consequential or punitive damages
in respect of any claim for breach of contract or under any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement or the other Note Documents, or any act, omission or event occurring
in connection therewith; and the Company hereby waives, releases and agrees not
to sue upon any claim for any such damages, whether or not accrued and whether
or not known or suspected to exist in its favor.
SECTION 10.13. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES TO THIS
AGREEMENT WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION UNDER THIS AGREEMENT
OR ANY OTHER NOTE DOCUMENT OR ANY ACTION ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION
OR ACTIONS.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first set forth above.
COMPANY
-------
CASINO AMERICA, INC.,
A DELAWARE CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
COLLATERAL AGENT
----------------
FLEET NATIONAL BANK, AS COLLATERAL AGENT
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
S-1
<PAGE>
PAGE>
SCHEDULE 1.1
TO ACCOUNTS
PLEDGE AGREEMENT
ACCOUNTS
--------
NET CASH PROCEEDS COLLATERAL ACCOUNT
- ------------------------------------
EXCESS LOUISIANA CASH COLLATERAL ACCOUNT
- ----------------------------------------
<PAGE>
SCHEDULE 10.4
TO ACCOUNTS
PLEDGE AGREEMENT
ADDRESSES
---------
Casino America, Inc.
- --------------------
711 Washington Loop
Biloxi, Mississippi 39530
Facsimile: (601) 435-5998
Fleet National Bank
- -------------------
777 Main Street
Hartford, Connecticut 06115
Facsimile: (203) 986-7920
<PAGE>
EXHIBIT F
TO INDENTURE
EXHIBIT 10.3
FORM OF COMPANY SECURITY AGREEMENT
----------------------------------
COMPANY SECURITY AGREEMENT, dated as of August ___, 1996 (as may be
amended from time to time, the "AGREEMENT"), by and between Casino America,
Inc., a Delaware corporation (the "GRANTOR"), and Fleet National Bank ("FLEET"),
as collateral agent for the Trustee (as defined below) and the Persons that now
or in the future are holders of the Notes (as defined below) issued under the
Indenture described below (the "HOLDERS") (in such capacity, Fleet National Bank
or any successor in such capacity is referred to herein as the "COLLATERAL
AGENT").
R E C I T A L S
- - - - - - - -
A. Pursuant to the Indenture dated as of the date hereof (as
supplemented or otherwise amended from time to time, the "Indenture") by and
among the Grantor, the Subsidiary Guarantors and Fleet National Bank, as trustee
(the "Trustee"), the Grantor will issue ___% Senior Secured Notes due 2003 in an
aggregate principal amount of up to $300,000,000 (the "NOTES"), the payment of
which will be guaranteed by the Subsidiary Guarantors.
B. It is a condition precedent to the issuance of the Notes under the
Indenture that a security interest in the Collateral described herein be granted
to the Collateral Agent, for the benefit of itself, the Trustee and the Holders
(together with their respective successors and assigns, collectively, the
"SECURED PARTIES"), as set forth herein.
C. The parties acknowledge that certain provisions of this Agreement
may be subject to the Gaming Laws of certain jurisdictions, including without
limitation, Louisiana and Mississippi.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
---------
DEFINITIONS AND RELATED MATTERS
SECTION 1.1. DEFINITIONS. Capitalized terms not otherwise defined
herein shall have the respective meanings specified in the Indenture. In
addition, the following terms with initial capital letters have the following
meanings:
"ACCOUNTS" has the meaning set forth in Section 2.1.
"ACCOUNT DEBTOR" means any Person who is or who may become obligated
to the Grantor on any Receivable.
<PAGE>
"APPROVALS" has the meaning set forth in Section 2.1.12.3.
"CASH LOADS" has the meaning set forth in Section 2.1.4.
"CHARGES" means all federal, state, county, city, municipal or other
taxes, levies, assessments or charges that, if not paid when due, may result in
a Lien of any Governmental Authority against Collateral.
"CHATTEL PAPER" has the meaning set forth in Section 2.1.3.
"CONTRACTUAL OBLIGATIONS" has the meaning set forth in Section 4.6.1.
"DEPOSIT ACCOUNTS" has the meaning set forth in Section 2.1.5.
"DOCUMENTS" has the meaning set forth in Section 2.1.10.
"EQUIPMENT" has the meaning set forth in Section 2.1.8.
"EVENT OF DEFAULT" has the meaning set forth in Section 5.1.
"EXCLUDED ASSETS" means, collectively, "Excluded Assets" as defined in
the Indenture and "Pledged Collateral" as defined in the Company Pledge
Agreement.
"FIXTURES" has the meaning set forth in Section 2.1.9.
"GAMING EQUIPMENT" has the meaning set forth in Section 2.1.8.3.
"GENERAL INTANGIBLES" has the meaning set forth in Section 2.1.12.
"INVENTORY" has the meaning set forth in Section 2.1.7.
"NOTE DOCUMENTS" means the Indenture, the Notes, the Subsidiary
Guarantees and the Collateral Documents.
"NOTES RECEIVABLE" has the meaning set forth in Section 2.1.2.
"PLEDGED COLLATERAL" has the meaning set forth in Section 4.8.
"PERMITTED SALES" has the meaning set forth in Section 4.7.
"PROCEEDS" has the meaning set forth in Section 2.1.16.
"RECEIVABLES" means Accounts, Notes Receivable, Chattel Paper and
other rights to the payment of money.
"SECURED OBLIGATIONS" has the meaning set forth in Section 2.2.
"SECURED PARTIES" has the meaning set forth in the Recitals.
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<PAGE>
"SECURITIES" has the meaning set forth in Section 2.1.11.
"SECURITY INTEREST" has the meaning set forth in Section 2.1.
"SUPPLEMENTAL DOCUMENTATION" means financing statements, continuation
statements, consents, acknowledgments, assignments, schedules of Collateral and
any other instruments or documents necessary or requested by the Collateral
Agent (i) to create, perfect and maintain perfected the first priority Security
Interest in any Collateral (except as otherwise provided in this Agreement) or
(ii) to enable the Collateral Agent to receive all interest, dividends and
distributions from time to time paid with respect to, and all Proceeds of, all
Collateral which the Collateral Agent is entitled to receive hereunder.
"UCC" means Article 9 (or, with respect to Securities, Article 8) of
the Uniform Commercial Code (as amended from time to time) of the State of New
York.
SECTION 1.2. RELATED MATTERS.
1.2.1. TERMS USED IN THE UCC. Unless the context clearly otherwise
requires, all lower-case terms used and not otherwise defined herein that are
used or defined in the UCC shall have the same meanings herein.
1.2.2. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, and "including" is not
limiting. The words "hereof," "herein," "hereby," "hereunder" and similar terms
in this Agreement refer to this Agreement as a whole (including the Preamble,
the Recitals and all Schedules and Exhibits) and not to any particular provision
of this Agreement. Article, section, subsection, exhibit, recital, preamble and
schedule references in this Agreement are to this Agreement unless otherwise
specified. References in this Agreement to any agreement, other document or law
or to amendments of any document or law or similar language, regardless of
whether such reference includes "as amended," "as may be amended from time to
time" or other similar language, shall include any amendments, supplements,
replacements, renewals or other modifications, excepting any reference to any
agreement, document or law that specifically limits said agreement, document or
law to its terms as of the date hereof.
1.2.3. DETERMINATIONS. Any determination or calculation contemplated
by this Agreement that is made by the Collateral Agent shall be final and
conclusive and binding upon the Grantor, in the absence of manifest error.
References in this Agreement to "determination" by the Collateral Agent include
good faith estimates (in the case of quantitative determinations) and good faith
beliefs (in the case of qualitative determinations). All references herein to
"discretion" of the Collateral Agent (or terms of similar import) shall mean
"absolute and sole discretion. All consents and other actions of the Collateral
Agent contemplated by this Agreement may be given, taken, withheld or not taken
in the Collateral Agent's discretion (whether or not so expressed), except as
otherwise expressly provided herein
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<PAGE>
1.2.4. GOVERNING LAW. Except to the extent otherwise required under
applicable law, the UCC shall govern the attachment, perfection, priority and
enforcement of the Security Interest and all other matters to which the UCC
applies pursuant to the terms thereof. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
1.2.5. HEADINGS. The Article and Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction hereof.
1.2.6. SEVERABILITY. If any provision of this Agreement or any Lien or
other right hereunder shall be held to be invalid, illegal or unenforceable
under applicable law in any jurisdiction, such provision, Lien or other right
shall be ineffective only to the extent of such invalidity, illegality or
unenforceability, which shall not affect any other provisions herein or any
other Lien or right granted hereby or the validity, legality or enforceability
of such provision, Lien or right in any other jurisdiction.
1.2.7. EXHIBITS AND SCHEDULES. All of the appendices, exhibits and
schedules attached to this Agreement shall be deemed incorporated herein by
reference.
ARTICLE 2
---------
THE SECURITY INTEREST; SECURED OBLIGATIONS
SECTION 2.1. SECURITY INTEREST. To secure the payment and performance
of the Secured Obligations as and when due, the Grantor hereby grants, conveys,
pledges, assigns and transfers to the Collateral Agent for the benefit of the
Secured Parties, a security interest (the "SECURITY INTEREST") in, all right,
title, claim, estate and interest of the Grantor in and to all property and
interests in property, other than Excluded Assets, whether now owned and
existing or hereafter acquired or arising, and wherever located (such property
and interests in property, other than Excluded Assets, being, collectively, the
"COLLATERAL"), including the following (except as such constitute Excluded
Assets):
2.1.1. Any and all rights to payment for goods sold or leased or for
services rendered, including any such rights evidenced by Chattel Paper, whether
due or to become due and whether or not earned by performance (excluding any
such rights evidenced by Notes Receivable, the "ACCOUNTS");
2.1.2. Any and all negotiable instruments, promissory notes,
acceptances, drafts, checks, certificates of deposit and other writings that
evidence a right to the payment of money by any other Person, including the
writings listed on Schedule 2.1.2 (the "NOTES RECEIVABLE");
2.1.3. Any and all chattel paper, including writings that evidence
both a monetary obligation and a security interest in or lease of specific goods
(the "CHATTEL PAPER");
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<PAGE>
2.1.4. Any and all monies maintained by the Grantor in slot machines,
vaults, cages and other locations in any Casino for purposes of operating and
reserve cash (the "CASH LOADS").
2.1.5. Any and all present and future accounts maintained by the
Grantor, including all demand, time savings, passbook, certificate of deposit or
like accounts maintained by the Grantor at any bank, savings and loans credit
union or other similar institution (the "DEPOSIT ACCOUNTS").
2.1.6. Any and all rights to payment:
2.1.6.1. to the extent not included in Accounts, Notes Receivable
or Chattel Paper, receivable from any credit card company (such as Visa,
Mastercard, American Express and Diner's Club), whether arising out of or
relating to the sale of lodging, goods and services by the Grantor or otherwise;
2.1.6.2. and payments for hotel room occupancy (and related
reservations, tour and junket proceeds, and deposits for convention and party
reservations); and
2.1.6.3. of money not listed above and any and all rights,
titles, interests, securities, Liens and guaranties evidencing, securing,
guaranteeing payment of or in any way relating to any Receivables;
2.1.7. Any and all goods that may at any time be held for sale or
lease or to be furnished under any contract of service, be so leased or
furnished, or constitute raw materials, work in process, parts, supplies or
materials that are or might be used or consumed in a business or in connection
with the manufacture, selling or leasing of such goods ("INVENTORY");
2.1.8. Any and all equipment and other goods (excluding Inventory),
including the following personal property (together with all related property
described in Section 2.1.12, the "EQUIPMENT"):
2.1.8.1. machinery, machine tools, office machinery (including
computers, typewriters and duplicating machines), motor vehicles, trailers,
rolling stock, motors, pumps, controls, tools, parts, works of art, furniture,
furnishings and trade fixtures, all athletic equipment and supplies, and all
molds, dies, drawings, blueprints, reports catalogs and computer programs
related to any of the above;
2.1.8.2. ships, boats, barges and vessels (whether under
construction or completed) and including any and all masts, bowsprits, boilers,
engines, sails, fittings, anchors, cables, chains, riggings, tackle, apparel,
furniture, capstans, outfits, tools, pumps, gears, appliances, fittings and
spare and replacement parts and all other appurtenances, accessories and
additions, improvements and replacements thereto, whether on board or not on
board, in or to any ship, boat, barge or vessel;
-5-
<PAGE>
2.1.8.3. slot machines, electronic gaming devices and related
equipment, crap tables, blackjack tables, roulette tables, baccarat tables, keno
apparatus, cards, dice, gaming chips and plaques, tokens, chip racks, dealing
shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other
supplies and items used in connection with gaming operations (collectively, the
"GAMING EQUIPMENT"); and
2.1.8.4. stones, wood, steel and other materials used or to be
used in the building, construction, repair, renovation, refurbishment or
otherwise with respect to Improvements (as defined in any mortgage to which the
Grantor is a party) or ships, boats, barges or vessels;
2.1.9. Any and all equipment and fixtures, including machinery,
equipment or appliances for generating, storing or distributing air, water,
heat, electricity, light, fuel or refrigeration, for ventilating or sanitary
purposes, elevators, safes, laundry, kitchen and athletic equipment, trade
fixtures, and telephone, television and other communications equipment (the
"FIXTURES");
2.1.10. Any and all documents, whether or not negotiable, including
bills of lading, warehouse receipts, trust receipts and the like (the
"DOCUMENTS");
2.1.11. Any and all stocks, bonds, general and limited partnership
interests, joint venture interests, limited liability company interests and
other securities, subscription rights, options, warrants, puts, calls and other
rights with respect thereto, and investment and brokerage accounts (the
"SECURITIES"), including those listed on Schedule 2.1.11
2.1.12. Any and all general intangibles and contract rights (together
with any property listed under Section 2.1.4 above, the "GENERAL INTANGIBLES"),
including the following:
2.1.12.1. insurance policies and all rights and claims therein or
thereunder (including prepaid and unearned premiums), including insurance
against casualty (including by fire or earthquake) or liability (including
against environmental cleanup costs), title insurance, business interruption
insurance and builders risk insurance, whether covering personal or real
property;
2.1.12.2. any and all leases of real or personal property,
licensing agreements and other contracts (including the contracts listed on
Schedule 2.1.12.2), including contracts relating to the construction,
management, operation, leasing, sale, maintenance or repair of any expansion,
renovation or repair related to a Casino or a Casino Hotel and all guarantees,
warranties, royalties, license fees and rights under such contracts including
those described on Schedule 2.1.12.2;
2.1.12.3. any and all Governmental Approvals, including permits,
licenses, certificates of use and occupancy (or their equivalents) and zoning
and other approvals, and tax and other refunds, compensation, awards, payments
and relief given or made by any Governmental Authority (including condemnation
awards) (the "APPROVALS");
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<PAGE>
2.1.12.4. deposits, surety and other bonds, choses and things in
action, goodwill, computer programs, computer software (including all source and
object codes, all media of any type or nature on which such source or object
codes are reproduced, copied, stored or maintained), technology processes,
proprietary information, patents, patent applications, copyrights, copyright
applications, trademarks, trademark applications, service marks, trade and other
names, trade secrets and customer lists, including the intellectual property
rights listed on Schedule 2.1.12.4; and
2.1.12.5. any and all architectural and engineering drawings,
plans, specifications, studies, reports and other materials, including Project
Contracts relating to a Casino or Casino Hotel;
2.1.13. Any and all books and records (including ledgers,
correspondence, credit files, computer software, computer storage media and
electronically recorded data) pertaining to the Grantor or any of the foregoing
and all equipment, receptacles, containers and cabinets therefor:
2.1.14. Any and all accessions, appurtenances, components, repairs,
repair parts, spare parts, renewals, improvements, replacements, substitutions
and additions to, of or with respect to any of the foregoing;
2.1.15. Any and all rights, remedies, powers and privileges of
the Grantor with respect to any of the foregoing; and
2.1.16. Any and all proceeds and products of any of the foregoing,
whether now held and existing or hereafter acquired or arising (collectively,
the "PROCEEDS"). Proceeds shall include (i) whatever is now or hereafter
received by the Grantor upon the sale, exchange, collection, other disposition
or operation of any item of Collateral, whether such proceeds constitute
accounts, general intangibles, instruments, securities, documents, letters of
credit, chattel paper, deposit accounts, money, goods or other personal
property, (ii) any items that are now or hereafter acquired by the Grantor with
any Proceeds of Collateral, (iii) any amounts now or hereafter payable under any
insurance policy by reason of any loss of or damage to any Collateral or the
business of the Grantor, (iv) all rights to payment and payments for hotel room
occupancy (and related reservations) and the sale of services or products in
connection therewith and (v) the right to further transfer, including by pledge,
mortgage, license, assignment or sale, any of the foregoing, provided that
Proceeds shall not include any Excluded Assets.
SECTION 2.2. SECURED OBLIGATIONS. The Security Interest shall secure
the due and punctual payment and performance of any and all present and future
obligations and liabilities of the Grantor of every type or description to any
Secured Party:
2.2.1. arising under or in connection with the Indenture or the
Notes, whether for principal, premium (if any), interest, expenses, indemnities
or other amounts (including attorneys' fees and expenses); or
-7-
<PAGE>
2.2.2. arising under or in connection with this Agreement or any
other Note Document, including for reimbursement of amounts that may be advanced
or expended by the Collateral Agent (i) to satisfy amounts required to be paid
by the Grantor under this Agreement or any other Note Document for claims and
Charges, together with interest thereon to the extent provided or (ii) to
maintain or preserve any Collateral or to create, perfect, continue or protect
any Collateral or the Security Interest therein, or its priority;
in each case whether due or not due, direct or indirect, joint and/or several,
absolute or contingent, voluntary or involuntary, liquidated or unliquidated,
determined or undetermined, now or hereafter existing, renewed or restructured,
whether or not from time to time decreased or extinguished and later increased,
created or incurred, whether or not arising after the commencement of a
proceeding under the Federal Bankruptcy Code (including post-petition interest)
and whether or not recovery of any such obligation or liability may be barred by
a statute of limitations or such obligation or liability may otherwise be
unenforceable (all obligations and liabilities described in this Section 2.2 are
collectively referred to as the "SECURED OBLIGATIONS").
ARTICLE 3
---------
WARRANTIES AND REPRESENTATIONS
The Grantor represents and warrants that all representations and
warranties made with respect to it, its assets and its obligations in the
Purchase Agreement are true and correct and makes the following additional
representations and warranties, all of which shall survive until termination of
this Agreement pursuant to Section 6.7.
SECTION 3.1. FILINGS, ETC.
3.1.1. Duly executed financing statements containing a correct
description of the Collateral have been delivered to the Collateral Agent for
filing in every governmental office in every state, county and other
jurisdiction in which the principal or any other place of business or the chief
executive office of the Grantor, or any portion of the Collateral, is located
and in each jurisdiction in which such action is necessary to establish a valid
and perfected Lien in favor of the Collateral Agent in all Collateral in which a
Lien may be perfected by filing, and no further or subsequent filing, recording
or registration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.
3.1.2. All Pledged Collateral has been delivered to the
Collateral Agent to the extent required hereby.
3.1.3. The Grantor has executed and delivered to the Collateral
Agent for filing with the United States Patent and Trademark Office a written
notice in the form of Exhibit A (a "NOTICE OF SECURITY INTEREST IN PATENTS AND
TRADEMARKS"), duly completed and executed, with respect to each patent, patent
application, trademark, servicemark, trademark application and servicemark
application in which the Grantor has an interest.
-8-
<PAGE>
3.1.4. All other Supplemental Documentation necessary to perfect
the Security Interest with respect to all Patents, Trademarks and Copyrights (as
defined in Section 3.5) has been delivered to the Collateral Agent for filing in
the appropriate governmental office.
SECTION 3.2. LOCATIONS OF COLLATERAL; OFFICES AND NAMES. (i) The
Grantor's chief executive office and principal place of business are located at
the addresses set forth on Schedule 3.2, (ii) all other places of business of
the Grantor and all other locations at which any tangible Collateral or books
and records related to any Collateral are (or during the past four months were)
located are set forth on Schedule 3.2, (iii) the Grantor's federal tax
identification number is set forth on Schedule 3.2, and (iv) there are no prior
or current trade or legal names used to identify the Grantor in its business or
in the ownership of its properties other than those set forth on Schedule 3.2.
SECTION 3.3. TITLE TO COLLATERAL: VALIDITY AND PERFECTION OF SECURITY
INTEREST: ABSENCE OF OTHER LIENS.
3.3.1. The Grantor has good and marketable title to, or valid and
subsisting leasehold interests in, all Collateral reflected on its financial
statements as being owned or leased by it and "rights" in all other Collateral
within the meaning of Section 9-203 of the UCC.
3.3.2. The Security Interest constitutes a valid and, upon the
filing of financing statements covering the Collateral and other documents
referred to in Section 3.1 with the appropriate Governmental Authorities or
other Persons referred to in such Section, perfected Lien in all of the
Collateral and secures payment and performance of the Secured Obligations. The
Collateral is free and clear of all Liens other than the Security Interest and
other Liens permitted under Section 1011 of the Indenture.
3.3.3. Except for financing statements in favor of the Collateral
Agent, the Grantor has filed no now-effective financing statement covering the
Collateral.
SECTION 3.4. NOTES RECEIVABLE. Schedule 2.1.2 lists all Notes
Receivable of the Grantor. There are no setoffs or counterclaims or disputes
existing or asserted with respect to any such Notes Receivable.
SECTION 3.5. PATENTS. TRADEMARKS AND COPYRIGHTS. Schedule 2.1.12.4
lists all patents, patent applications, trademarks, trademark applications,
service marks, service mark applications, copyrights and copyright applications
(collectively, "PATENTS, TRADEMARKS AND COPYRIGHTS") in which the Grantor has an
interest. Except as disclosed on Schedule 2.1.12.4, all Patents, Trademarks and
Copyrights are valid and enforceable and the relevant Grantor is the sole and
exclusive owner of each of the Patents, Trademarks and Copyrights, free and
clear of any Liens other than Liens permitted under Section 1011 of the
Indenture (including licenses, shop rights and covenants not to sue listed on
Schedule 2.1.12.4).
SECTION 3.6. NO CONFLICTS OR CONSENTS. Neither the ownership nor the
intended use of the Collateral by Grantor, nor the grant of the security
interest by Grantor to Collateral Agent herein, nor the exercise by Collateral
Agent of its rights or remedies hereunder, will (i)
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conflict with any provision of (a) any domestic or foreign law, statute, rule or
regulation (including without limitation any Gaming Laws), (b) the articles of
incorporation, charter, bylaws, operating agreement or partnership agreement of
Grantor, or (c) any agreement, judgment, license, order or permit applicable to
or binding upon Grantor, or (ii) result in or require the creation of any lien,
charge or encumbrance upon any assets or properties of Grantor except as
expressly contemplated in the Indenture or other Note Documents. Except as
expressly contemplated in the Indenture or other Note Documents and as have been
heretofore duly given or obtained and remain in full force and effect, no
consent, approval, authorization or order of, and no notice to or filing with
any court, Governmental Authority (including without limitation any Gaming
Authority) or third party is required in connection with the grant by Grantor of
the assignment and security interest herein, the execution, delivery and
performance by Grantor of this Agreement, or the exercise by Collateral Agent of
its rights and remedies hereunder.
SECTION 3.7. FARM PRODUCTS. None of the Collateral constitutes, or is
the Proceeds of, farm products.
SECTION 3.8. DEPOSIT ACCOUNTS. Schedule 3.8 hereto contains a true and
complete description of all deposit accounts, maintained on the date hereof by
Grantor, as applicable, setting forth the name and address of each bank, savings
institution or other depositary institution at which each such account is
maintained and stating the title and account number of such account.
SECTION 3.9. CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS. All Chattel
Paper, Documents and instruments included in the Collateral are valid and
genuine. Any Chattel Paper, Document or instrument included in the Collateral
has only one original counterpart which constitutes Chattel Paper within the
meaning of the UCC or the law of any applicable jurisdiction. No Person other
than the Grantor or the Collateral Agent is in actual or constructive possession
of any Chattel Paper, Documents or instruments. The place where Grantor keeps
its Chattel Paper, Documents and instruments (subject to the requirements of
Section 4.1 hereof) is Grantor's chief executive office and chief place of
business identified in Section 3.2 hereof.
SECTION 3.10. ACCOUNTS.
3.10.1. No amount payable to Grantor under or in connection with
any of its Accounts is evidenced by any instrument or Chattel Paper which has
not been delivered to the Collateral Agent.
3.10.2. The place where each Grantor keeps its records concerning
its Accounts is such Grantor's chief executive office and chief place of
business identified in Section 3.2 hereof.
3.10.3. None of the obligors on any Accounts is a Governmental
Authority.
SECTION 3.11. INVENTORY AND EQUIPMENT; FIXTURES. The Inventory and the
Equipment of the Grantor are kept at the locations listed on Schedule 3.2. The
Grantor has exclusive possession and control of its Equipment and Inventory and
none of the Collateral which
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constitutes Equipment or Inventory (i) is intended to be kept by the Grantor at
any location except the location set forth on Schedule 3.2 or (ii) has been
related to, attached to, or used in connection with any real property so as to
constitute a fixture upon such real property, or installed in or affixed to any
vessel or other goods so as to be an accession or appurtenance to such vessel or
other goods unless such real property, vessel or other goods are included in the
Collateral or otherwise subject to a valid and duly perfected Lien in favor of
the Collateral Agent. All Inventory has been produced in compliance with all
requirements of the Fair Labor Standards Act. All Fixtures owned by any Grantor
are located on the real property described on Schedule 3.11 as being owned or
leased by such Grantor.
ARTICLE 4
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COVENANTS AND AGREEMENTS
SECTION 4.1. FURTHER ASSURANCES. The Grantor shall, at its own
expense, perform such acts as may be necessary, or that the Collateral Agent may
request at any time, to assure the attachment, perfection and first priority of
the Security Interest, to exercise the rights and remedies of the Collateral
Agent hereunder or to carry out the intent of this Agreement. Without
limitation, the Grantor shall execute and deliver (or cause any third party to
execute and deliver) to the Collateral Agent, at any time and from time to time,
all Supplemental Documentation, in form and substance acceptable to the
Collateral Agent.
SECTION 4.2. INSPECTION AND VERIFICATION. The Grantor shall keep or
cause to be kept accurate and complete records of the Collateral at the
Grantor's chief executive office. The Collateral Agent and its employees and
agents shall have the right, at all times during the Grantor's usual business
hours upon reasonable notice, to (i) inspect, and verify the quality, quantity,
value and condition of, or any other matter relating to, the Collateral, (ii)
inspect all records relating thereto and to make (or require the Grantor to
provide) copies of such records and (iii) enter upon all premises upon which any
of the Collateral is located. Notwithstanding the foregoing, the Collateral
Agent shall not contact third parties in making such inspection or verification
unless an Event of Default shall then exist.
SECTION 4.3. POWER OF ATTORNEY. The Grantor hereby irrevocably
appoints (the appointment being irrevocable because it is coupled with an
interest) the Collateral Agent and its employees and agents as the Grantor's
true and lawful attorneys-in-fact, with full power of substitution, (i) to do
all things required to be done by the Grantor under this Agreement or the other
Note Documents and (ii) to do all things that the Collateral Agent may deem
necessary or advisable to assure the attachment, perfection and priority of the
Security Interest or otherwise to exercise the rights and remedies of the
Collateral Agent hereunder or carry out the intent of this Agreement, in each
case irrespective of whether a Default or Event of Default then exists (except
as provided in Section 4.3.5 ) and at the Grantor's expense. Without limitation,
the Collateral Agent and its officers and agents shall be entitled to do all of
the following, as fully as the Grantor might:
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4.3.1. to sign the name of the Grantor on any Supplemental
Documentation and to deliver and file such Supplemental Documentation to or with
such Persons as the Collateral Agent, in its discretion, may elect;
4.3.2. to sign any certificate of ownership, registration card,
application therefor, affidavits or documents necessary to transfer title to any
of the Collateral, to receive and receipt for all licenses, registration cards
and certificates of ownership;
4.3.3. to affix, by facsimile signature or otherwise, the general or
special endorsement of the Grantor, in such manner as the Collateral Agent shall
deem advisable, to any Pledged Collateral that has been delivered to or obtained
by the Collateral Agent without appropriate endorsement or assignment; and
4.3.4. if the Grantor at any time fails to obtain or maintain any of
the policies of insurance on the Collateral as required under Section 1007 of
the Indenture, with endorsements as provided therein, or fails to pay any
premium in whole or in part when due under such policies, to obtain and maintain
such policies of insurance and pay such premiums and take such other action with
respect thereto as the Collateral Agent deems advisable.
4.3.5. during the existence of an Event of Default, without notice to
the Grantor and at such time or times as the Collateral Agent in its discretion
may determine, in the Grantor's or in the Collateral Agent's name:
4.3.5.1. collect any and all amounts due to the Grantor from
Account Debtors with respect to Receivables by legal proceedings or otherwise;
4.3.5.2. make, settle and adjust any claims under insurance
policies and make any decisions with respect thereto; and
4.3.5.3. attend and vote at any and all meetings of the holders
of Securities and to execute any and all written consents of such holders with
the same effect as if the Grantor had personally attended and voted at such
meetings or had personally signed such consents.
The Collateral Agent shall be under no obligation whatsoever to take
any of the foregoing actions, and absent bad faith or willful misconduct, the
Collateral Agent and its shareholders, directors, officers, employees and agents
shall have no liability or responsibility for any act taken or omitted with
respect thereto. A copy of this Agreement and, if applicable, a statement by the
Collateral Agent that an Event of Default exists shall be conclusive evidence of
the Collateral Agent's right to act under this Section 4.3 as against all third
parties.
SECTION 4.4. CHANGES OF LOCATIONS OF COLLATERAL, OFFICES, NAME OR
STRUCTURE. The Grantor shall not remove any Collateral, books or records to, or
keep any Collateral, books or records or do business at, a location not set
forth on Schedule 3.2, adopt a trade name or change its name, chief executive
office, principal place of business, identity or corporate structure without
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first giving the Collateral Agent 15 Business Days' prior written notice of such
removal, change or adoption.
SECTION 4.5. PAYMENT OF CHARGES AND CLAIMS. The Grantor shall pay (i)
all Charges imposed upon any Collateral and (ii) all claims (including claims
for labor, services and materials) that have become due and payable and, under
applicable law, have or may become Liens (other than Liens permitted under
Section 1011 of the Indenture) upon any Collateral, in each case before any
penalty shall be incurred with respect thereto; provided that, unless
foreclosure, levy or similar proceedings shall have commenced, the Grantor need
not pay or discharge any such Charges or claims so long as the validity or
amount thereof is being contested in good faith and by appropriate proceedings
and so long as adequate reserves therefor have been established in accordance
with GAAP. If the Grantor fails to pay or obtain the discharge of any Charge,
claim or Lien required to be paid or discharged under this Section 4.5 and
asserted against portion of the Collateral, the Collateral Agent may, at any
time and from time to time, in its discretion and without waiving or releasing
any obligation of the Grantor under this Agreement or the other Note Documents
or waiving any Default or Event of Default, make such payment, obtain such
discharge or take such other action with respect thereto as the Collateral Agent
deems advisable.
SECTION 4.6. CONTINUING OBLIGATIONS OF THE GRANTOR: INDEMNITY.
4.6.1. The Grantor shall remain liable to observe and perform all
agreements and other obligations relating to or included in the Collateral (the
"CONTRACTUAL OBLIGATIONS") in accordance with their respective terms. The
Collateral Agent shall not have any duty, obligation or liability under or with
respect to any such Contractual Obligations, whether by reason or arising out of
this Agreement, the receipt by the Collateral Agent of any payment relating to
any such Contractual Obligation or otherwise, and the Grantor agrees to
indemnify and hold harmless the Collateral Agent from any and all such
obligations and liabilities.
4.6.2. The Collateral Agent shall have no duty of care with
respect to the Collateral, except that the Collateral Agent shall have an
obligation to exercise reasonable care with respect to Collateral in its
possession; provided that (i) the Collateral Agent shall be deemed to have
exercised reasonable care if Collateral in its possession is accorded treatment
substantially comparable to that which such the Collateral Agent accords its own
property, and (ii) the Collateral Agent shall have no obligation to take any
actions to preserve rights against other parties or property with respect to any
Collateral. Without limitation, the Collateral Agent shall (A) bear no risk or
expense with respect to any Collateral and (B) have no duty with respect to
calls, conversions, presentments, maturities, notices or other matters relating
to Pledged Collateral, or to maximize interest or other returns with respect
thereto.
4.6.3. The Collateral Agent may at any time deliver or redeliver
the Collateral or any part thereof to the Grantor and the receipt of any of the
same by the Grantor shall be complete and full acquittance for the Collateral so
delivered, and the Collateral Agent thereafter shall be discharged from any
liability or responsibility therefor.
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4.6.4. The Grantor hereby agrees to indemnify and hold
harmless the Collateral Agent and its directors, officers, employees and agents
against any and all claims, actions, liabilities, costs and expenses of any kind
or nature whatsoever (including fees and disbursements of counsel) that may be
imposed on, incurred by, or asserted against any of them, in any way relating to
or arising out of this Agreement or any action taken or omitted by them
hereunder, except to the extent a court holds in a final and nonappealable
judgment that they resulted from the gross negligence or willful misconduct of
such Persons against and from all such obligations and liabilities.
SECTION 4.7. SALE OF COLLATERAL: FURTHER ENCUMBRANCES. The Grantor
shall not (i) except for dispositions of Inventory in the ordinary course of the
Grantor's business and other dispositions not prohibited by the Indenture or the
other Note Documents (collectively, "PERMITTED SALES") sell, lease or otherwise
dispose of any Collateral, or any interest therein, or (ii) grant or suffer to
exist any Lien in or on any Collateral (except Liens permitted under Section
1011 of the Indenture) or sign or authorize the filing of any financing
statement with respect to any of the Collateral (except with respect to Liens
permitted under Section 1011 of the Indenture). Concurrently with any Permitted
Sale, the Security Interest shall automatically be released from the Collateral
so disposed of; provided, however that the Security Interest shall continue in
the Proceeds thereof. If any Collateral, or any interest therein, is disposed of
in violation of these provisions, the Security Interest shall continue in such
Collateral or interest notwithstanding such disposition, the Person to which the
Collateral or interest is being transferred shall be bound by this Agreement,
and the Grantor shall deliver all Proceeds thereof to the Collateral Agent to be
held as Collateral hereunder.
SECTION 4.8. DELIVERY OF PLEDGED COLLATERAL. The Grantor shall deliver
to the Collateral Agent, together with appropriate endorsements or documentation
of assignment thereof acceptable to the Collateral Agent, any and all Notes
Receivable or Chattel Paper having a face amount, negotiable Documents
evidencing title to any Collateral having a fair market value, and all
certificated Securities having a fair market value, individually or in the
aggregate, equal to or greater than $100,000 (collectively, the "PLEDGED
COLLATERAL").
SECTION 4.9. PROTECTION OF SECURITY: NOTICE OF LEVY. The Grantor
shall, at its own cost and expense, take any and all actions necessary to defend
title to the Collateral against all Persons and against all claims and demands
and to preserve, protect and defend the Security Interest and the priority
thereof, against any adverse Liens not permitted under the Note Documents. The
Grantor will promptly notify the Collateral Agent of any attachment or other
legal process levied against any Collateral.
SECTION 4.10. EQUIPMENT AND FIXTURES.
4.10.1. The Grantor, at its expense, shall cause the Equipment
and Fixtures to be maintained and preserved in the same condition, repair and
working order as when new, ordinary wear and tear excepted.
4.10.2. The Grantor will notify the Collateral Agent in
writing promptly after material loss or damage caused by fire, wind or other
casualty to any Equipment and
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Fixtures. To the extent required by Section 1014 of the Indenture, all Net Cash
Proceeds of any loss, destruction or damage or other Event of Loss (including
insurance proceeds) shall be deposited (Net Cash Proceeds to be so deposited are
referred to herein as "SPECIFIED NET CASH PROCEEDS") into the Net Cash Proceeds
Collateral Account (as defined in the Accounts Pledge Agreement) and shall be
released to such Grantor or applied to the Secured Obligations as set forth in
such Accounts Pledge Agreement.
4.10.3. If the Grantor elects to apply Specified Net Cash Proceeds of
insurance to restoration, the Grantor agrees on or prior to the 180th day after
the date of such Event of Loss (i) to enter into, and deliver to the Collateral
Agent a certified copy of, one or more architect, construction and or other
contracts providing for the restoration, reconstruction or repair of such
Collateral to as good or better condition as existed prior to the Event of Loss
and (ii) to begin to restore, reconstruct or repair such Collateral and,
thereafter, to proceed diligently therewith in accordance with plans,
specifications, architectural standards and design reasonably determined by the
Grantor.
ARTICLE 5
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EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
SECTION 5.1. EVENT OF DEFAULT. The occurrence of one or more "EVENTS
OF DEFAULT" (as defined in the Indenture) shall constitute an "EVENT OF
DEFAULT."
SECTION 5.2. REMEDIES. If an Event of Default occurs, then, subject to
Gaming Laws, whether or not all the Secured Obligations shall have become
immediately due and payable:
5.2.1. In addition to all its other rights, powers and
remedies under this Agreement and applicable law, the Collateral Agent shall
have, and may exercise, any and all of the rights, powers and remedies of a
secured party under the UCC, all of which rights, powers and remedies shall be
cumulative and not exclusive, to the extent permitted by applicable law.
5.2.2. The Collateral Agent shall have the right, at the
Collateral Agent's sole option and as the Collateral Agent in its discretion may
deem necessary or advisable to do any or all of the following:
5.2.2.1. to foreclose the Security Interest by any
available judicial procedure or without judicial process;
5.2.2.2. to enter upon the premises of the Grantor or
any other place or places where Collateral is located through self-help and
without judicial process, without giving the Grantor notice and opportunity for
a hearing on the validity of the Collateral Agent's claim and without any
obligation to pay rent;
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5.2.2.3. to inspect and appraise the Collateral and to
prepare, repair, assemble or process the Collateral for sale, lease or other
disposition;
5.2.2.4. to remove Collateral to the premises of the
Collateral Agent or any other location selected by the Collateral Agent, for
such time as the Collateral Agent may desire, for any purpose not prohibited
hereby;
5.2.2.5. to apply any Collateral or any other assets of
the Grantor in the possession of the Collateral Agent to the Secured
Obligations;
5.2.2.6. to notify Account Debtors and other obligors
on the Collateral that the Collateral has been assigned to the Collateral Agent
and that all payments thereon are to be made directly and exclusively to or as
specified by the Collateral Agent;
5.2.2.7. to collect by legal proceedings or otherwise
all dividends, distributions, interest, principal or other sums now or hereafter
payable upon or on account of the Collateral;
5.2.2.8. to enter into any extension or reorganization
agreement or any other agreement relating to or affecting the Collateral and, in
connection therewith, deposit or surrender control of any Collateral or accept
other property in exchange therefor;
5.2.2.9. to settle, compromise or release, on terms
acceptable to the Collateral Agent, in whole or in part, any amounts owing on
the Collateral or any insurance thereof or relating thereto or any disputes with
respect thereto or such insurance;
5.2.2.10. to receive, open and dispose of all mail
addressed to the Grantor and notify postal authorities to change the address for
delivery thereof to such address as the Collateral Agent may designate, provided
that the Collateral Agent agrees that it will promptly deliver over to the
Grantor any such opened mail as does not relate to the Collateral;
5.2.2.11. to exercise all rights and powers under
Contractual Obligations included in the Collateral, including the Project
Contracts including any right of termination; and
5.2.2.12. to exercise any and all other rights, powers,
privileges and remedies of an owner of the Collateral.
5.2.3. The Grantor shall, at the Collateral Agent's request,
assemble the Collateral and make it available to the Collateral Agent at a place
to be designated by the Collateral Agent. The Grantor shall make available to
the Collateral Agent all computer and other equipment of the Grantor containing
books and records pertaining to the Collateral (and the assistance of the
employees of the Grantor having responsibility for such equipment) and to use
such computer and other equipment at no charge for the purpose of obtaining
information pertaining to the Collateral, including by making copies of computer
and other files and records.
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5.2.4. Until the Collateral Agent is able to effect a sale, lease or
other disposition of Collateral or any part thereof, the Collateral Agent shall
have the right to use, process or operate the Collateral or any part thereof to
the extent that it deems appropriate for the purpose of preserving Collateral or
its value or for any other purpose deemed appropriate by the Collateral Agent.
The Collateral Agent shall have the right, without notice or demand, either in
person or by agent, and without regard to the adequacy of any security for the
Secured Obligations, to take possession of the Collateral or any part thereof
and to collect and receive the rents, issues, profits, income and proceeds
thereof. Taking possession of the Collateral shall not cure, waive or affect an
Event of Default or notice thereof or invalidate any act done pursuant to such
notice.
5.2.5. The Collateral Agent may, if it so elects, as a matter of
strict right and without regard to the then value of the Collateral, seek the
appointment of a receiver or keeper to take possession of Collateral and to
enforce any of the Collateral Agent's remedies with respect to such appointment
without prior notice or hearing. The rights, remedies and powers of any receiver
appointed by a court shall be as ordered by the court.
5.2.6. The Collateral Agent shall have the right to sell, lease, or
otherwise dispose of all or any Collateral in its then existing condition, or
after any further assembly, manufacturing or processing thereof, at public or
private sale or sales, with such notice as may be required by Section 5.4, in
lots or in bulk, for cash or on credit, with or without representations or
warranties, all the Collateral Agent, in its discretion, may deem advisable. The
Collateral Agent shall not be obligated to make any sale of the Collateral
regardless of notice of sale having been given. If sale of all or any part of
the Collateral is made on credit or for future delivery, the Collateral so sold
may be retained by the Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. The Collateral Agent shall have the right to
conduct such sales on the Grantor's premises or elsewhere and shall have the
right to use the Grantor's premises without charge for such sales for such
duration as the Collateral Agent deem necessary or advisable. Neither the
Collateral Agent nor the Collateral need be present at any such sales. To the
extent necessary or desirable, in the judgment of the Collateral Agent, to
enable the Collateral Agent to dispose of Collateral following an Event of
Default, the Collateral Agent is authorized, without any obligation for rent,
license fees or other charge, to use the supplies, equipment, facilities and
space at the Grantor's place of business and is hereby granted a license or
other right to use, without charge, the Patents, Trademarks and Copyrights,
trade secrets, names, trade names, customer lists, labels, advertising matter,
and all property of a similar nature that the Grantor owns or is entitled to
use, as it pertains to any Collateral, in preparing, repairing, assembling,
processing, advertising for sale or lease or otherwise in connection with the
disposition of any Collateral, and the Grantor's rights under all licenses and
all franchise agreements shall to such extent and for such purpose inure to the
Collateral Agent's benefit. The Collateral Agent may purchase all or any part of
the Collateral at public or, if permitted by applicable law, private sale, and
in lieu of actual payment of the purchase price, the Collateral Agent may apply
against such purchase price any amount of the Secured Obligations. The Grantor
agrees that any sale of Collateral conducted by the Collateral Agent in
accordance with the
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foregoing provisions of this Section and Section 5.3 shall be deemed to be a
commercially reasonable sale under Section 9-504 of the UCC.
SECTION 5.3. APPLICATION OF PROCEEDS.
-----------------------
5.3.1. Any cash proceeds received by the Collateral Agent in
respect of any sale of, collection from, or other realization upon, all or any
part of the Collateral following the occurrence of an Event of Default
(including insurance proceeds) may be held by the Collateral Agent as Collateral
and/or then or at any time thereafter applied as follows:
5.3.1.1. first, to the Collateral Agent to pay all
advances, charges, costs and expenses payable to the Collateral Agent pursuant
to Section 6.1; and
5.3.1.2. second, to pay the Secured Obligations in the
order set forth in the Indenture.
5.3.2. The Grantor and any other Person then obligated
therefor shall pay to the Collateral Agent on demand any deficiency with regard
to the Secured Obligations that may remain after such sale, collection or
realization of, from or upon the Collateral.
5.3.3. Payments received from any third party on account of
any Collateral shall not reduce the Secured Obligations until paid in cash to
the Collateral Agent. The application of proceeds by the Collateral Agent shall
be without prejudice to the Collateral Agent's rights as against the Grantor or
other Persons with respect to any Secured Obligations that may then be or remain
unpaid.
5.3.4. If at any time after an Event of Default the Grantor
receives any collections upon or other Proceeds of any Collateral, whether in
the form of cash, Notes Receivable or otherwise, such Proceeds shall be received
in trust for the Collateral Agent and the Grantor shall keep all such Proceeds
separate and apart from all other funds and property so as to be capable of
identification as the property of the Collateral Agent and promptly deliver such
Proceeds to the Collateral Agent in the identical form received.
SECTION 5.4. NOTICE OF SALE. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Collateral Agent will send or otherwise make available to
the Grantor reasonable notice of the time and place of any public sale or of the
time on or after which any private sale of any Collateral is to be made. The
Grantor agrees that any notice required to be given by the Collateral Agent of a
sale or other disposition of Collateral, or any other intended action by the
Collateral Agent, that is received in accordance with the provisions set forth
in Section 6.4 ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Grantor. The Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The Grantor hereby
waives any right to receive notice of any public or private sale of any
Collateral or other security for the Secured Obligations except as
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expressly provided for in this Section 5.4 (with such endorsements or
assignments as are appropriate).
ARTICLE 6
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GENERAL
SECTION 6.1. COLLATERAL AGENT'S EXPENSES, INCLUDING ATTORNEYS' FEES.
Regardless of the occurrence of a Default or Event of Default, the Grantor
agrees to pay to the Collateral Agent any and all advances, charges, costs and
expenses, including the reasonable fees and expenses of counsel and any experts
or agents, that the Collateral Agent may reasonably incur in connection with (i)
the administration of this Agreement, including any amendment thereto or any
workout or restructuring, (ii) the creation, perfection or continuation of the
Security Interest or protection of its priority or the Collateral, including the
discharging of any prior or junior Lien or adverse claim against the Collateral
or any part thereof that is not permitted hereby or by the Indenture, (iii) the
custody, preservation or sale of, collection from, or other realization upon,
any of the Collateral, (iv) the exercise or enforcement of any of the rights,
powers or remedies of the Collateral Agent under this Agreement or under
applicable law (including attorneys' fees and expenses incurred by the
Collateral Agent in the collection of Collateral deposited with the Collateral
Agent and amounts incurred in connection with the operation, maintenance or
foreclosure of the Security Interest) or any bankruptcy proceeding or (v) the
failure by the Grantor to perform or observe any of the provisions hereof. All
such amounts and all other amounts payable hereunder shall be payable on demand,
together with interest at the Default Interest rate, if applicable.
SECTION 6.2. AMENDMENTS AND OTHER MODIFICATIONS. No amendment of any
provision of this Agreement (including a waiver thereof or consent relating
thereto) shall be effective unless the same shall be in writing and signed by
the Grantor and the Collateral Agent. Any waiver or consent relating to any
provision of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given. No notice to or demand on the Grantor
in any case shall entitle the Grantor to any other or further notice or demand
in similar or other circumstances.
SECTION 6.3. CUMULATIVE REMEDIES; FAILURE OR DELAY. The rights and
remedies provided for under this Agreement are cumulative and are not exclusive
of any rights and remedies that may be available to the Collateral Agent under
applicable law, the other Note Documents or otherwise. No failure or delay on
the part of any of the Secured Parties in the exercise of any power, right or
remedy under this Agreement shall impair such power, right or remedy or shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude other or further exercise of such or any
other power, right or remedy.
SECTION 6.4. NOTICES, ETC. All notices and other communications under
this Agreement shall be in writing and shall be personally delivered or sent by
prepaid courier, by overnight, registered or certified mail (postage prepaid) or
by prepaid telex, telecopy or telegram,
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and shall be deemed given when received by the intended recipient thereof.
Unless otherwise specified in a notice given in accordance with the foregoing
provisions of this Section 6.4, notices and other communications shall be given
to the parties hereto at their respective addresses (or to their respective
telex or telecopier numbers) indicated on Schedule 6.4.
SECTION 6.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and, subject to the next sentence, inure to the benefit of the Grantor and
the Collateral Agent and their respective successors and assigns. The Grantor
shall not assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Collateral Agent. The benefits of this
Agreement shall pass automatically with any assignment of the Secured
Obligations (or any portion thereof), to the extent of such assignment.
SECTION 6.6. PAYMENTS SET ASIDE. Notwithstanding anything to the
contrary herein contained, this Agreement, the Secured Obligations and the
Security Interest shall continue to be effective or be reinstated, as the case
may be, if at any time any payment, or any part thereof, of any or all of the
Secured Obligations is rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be restored or returned by the Collateral
Agent in connection with any bankruptcy, reorganization or similar proceeding
involving the Grantor, any other party liable with respect to the Secured
Obligations or otherwise, if the proceeds of any Collateral are required to be
returned by the Collateral Agent under any such circumstances, or if the
Collateral Agent reasonably elects to return any such payment or proceeds or any
part thereof in its discretion, all as though such payment had not been made or
such proceeds not been received. Without limiting the generality of the
foregoing, if prior to any such rescission, invalidation, declaration,
restoration or return, this Agreement shall have been canceled or surrendered or
the Security Interest or any Collateral shall have been released or terminated
in connection with such cancellation or surrender, this Agreement and the
Security Interest and such Collateral shall be reinstated in full force and
effect, and such prior cancellation or surrender shall not diminish, discharge
or otherwise affect the obligations of the Grantor in respect of the amount of
the affected payment or application of proceeds, the Security Interest or such
Collateral.
SECTION 6.7. CONTINUING SECURITY INTEREST; TERMINATION. Except as
otherwise provided in the Indenture with respect to the release of Collateral
under certain circumstances, this Agreement shall create a continuing security
interest in the Collateral and, except as provided below, the Security Interest
and all agreements, representations and warranties made herein shall survive
until, and this Agreement shall terminate only upon, the indefeasible payment
and performance in full of the Secured Obligations. Any investigation at any
time made by or on behalf of the Collateral Agent shall not diminish the right
of the Collateral Agent to rely on any such agreements, representations or
warranties herein.
Notwithstanding anything in this Agreement or applicable law to the
contrary, the agreements of the Grantor set forth in Sections 4.6.1, 4.6.4 and
6.1 shall survive the payment of all other Secured Obligations and the
termination of this Agreement.
-20-
<PAGE>
SECTION 6.8. CHOICE OF FORUM.
---------------
6.8.1. Subject to Section 6.8.2, all actions or proceedings
arising in connection with this Agreement shall be tried and litigated in state
or Federal courts located in the County of New York, State of New York, unless
such actions or proceedings are required to be brought in another court to
obtain subject matter jurisdiction over the matter in controversy. THE GRANTOR
WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS, TO
ASSERT THAT IT IS NOT SUBJECT TO THE JURISDICTION OF SUCH COURTS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
6.8.1.
6.8.2. Nothing contained in Section 6.8.1. shall preclude the
Collateral Agent from bringing any action or proceeding arising out of or
relating to this Agreement in any court not referred to in the courts of any
place where Grantor or any of Grantor's assets may be found or located. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE GRANTOR
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH ACTION OR PROCEEDING, THE JURISDICTION OF ANY
OTHER COURT OR COURTS THAT NOW OR HEREAFTER, BY REASON OF SUCH PARTY'S PRESENT
OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE TO IT.
SECTION 6.9. WAIVER AND ESTOPPEL. Except as otherwise provided in this
Agreement, the Grantor hereby waives: (i) presentment, protest, notice of
dishonor, release, compromise, settlement, extension or renewal and any other
notice of or with respect to the Secured Obligations and hereby ratifies and
confirms whatever the Collateral Agent may do in this regard; (ii) notice prior
to taking possession or control of any Collateral or any bond or security that
might be required by any court prior to allowing the Collateral Agent to
exercise any of their rights, powers or remedies; (iii) the benefit of all
valuation, appraisement, redemption and exemption laws; (iv) any rights to
require marshaling of the Collateral upon any sale or otherwise to direct the
order in which the Collateral shall be sold; (v) any set-off and (vi) any rights
to require the Collateral Agent to proceed against any Person, proceed against
or exhaust any Collateral or any other security interests or guaranties or
pursue any other remedy in the Collateral Agent's power, or to pursue any of
such rights in any particular order or manner, and any defenses arising by
reason of any disability or defense of any Person.
SECTION 6.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts. taken together, shall constitute but one and the same Agreement.
SECTION 6.11. COMPLETE AGREEMENT. This Agreement, the Indenture, the
Notes, and the other Note Documents, together with the exhibits and schedules
thereto and hereto, is intended by the parties as a final expression of their
agreement regarding the subject matter hereof and as a complete and exclusive
statement of the terms and conditions of such agreement.
-21-
<PAGE>
SECTION 6.12. LIMITATION OF LIABILITY. No claim shall be made by the
Grantor against the Collateral Agent or the Affiliates, directors, officers,
employees or agents of the Collateral Agent for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or under any other theory of liability arising out of or related to the
transactions contemplated by this Agreement and the other Note Documents, or any
act, omission or event occurring in connection therewith; and the Grantor hereby
waives, releases and agrees not to sue upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
SECTION 6.13. SUBSIDIARY SECURITY AGREEMENT. The Collateral Agent
hereby acknowledges that it is holding certain collateral pledged pursuant to
the Subsidiary Security Agreement from time to time delivered to it, among other
things, for the Grantor, as collateral agent. The Grantor hereby appoints the
Collateral Agent as its collateral agent for the foregoing purpose and agrees
that, in so holding such collateral, the Collateral Agent shall be entitled to
the immunities, indemnities and protections set forth in Section 4.6 of the
Subsidiary Security Agreement and in the Indenture, mutatis mutandis.
SECTION 6.14. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES TO THIS
AGREEMENT WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION UNDER THIS AGREEMENT
OR ANY OTHER NOTE DOCUMENT OR ANY ACTION ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION
OR ACTIONS.
(remainder of page intentionally left blank)
-22-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first set forth above.
Grantor:
-------
CASINO AMERICA, INC.,
A DELAWARE CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Collateral Agent:
-----------------
FLEET NATIONAL BANK,
AS COLLATERAL AGENT
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
<PAGE>
SCHEDULE 2.1.2
TO COMPANY
SECURITY AGREEMENT
NOTES RECEIVABLE
----------------
<PAGE>
SCHEDULE 2.1.11
TO COMPANY
SECURITY AGREEMENT
SECURITIES
----------
<PAGE>
SCHEDULE 2.1.12.2
TO COMPANY
SECURITY AGREEMENT
LEASES AND CONTRACTS
--------------------
<PAGE>
SCHEDULE 2.1.12
TO COMPANY
SECURITY AGREEMENT
INTELLECTUAL PROPERTY RIGHTS
----------------------------
<PAGE>
SCHEDULE 3.2
TO COMPANY
SECURITY AGREEMENT
LOCATIONS OF OFFICES AND NAMES
------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Entity Other Prior and Current Corporate Office
Trade or Legal Names Chief Executive Office Other Locations Fed. Tax I.D. #
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3.8
TO COMPANY
SECURITY AGREEMENT
DEPOSIT ACCOUNTS
----------------
<PAGE>
SCHEDULE 3.11
TO COMPANY
SECURITY AGREEMENT
LOCATION OF FIXTURES
--------------------
<PAGE>
EXHIBIT A
TO COMPANY
SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN PATENTS AND TRADEMARKS
-------------------------
NOTICE IS HEREBY GIVEN that Casino America, Inc., a Delaware
corporation (the "GRANTOR"), with an office located at 711 Washington Loop,
Biloxi, Mississippi 39530, and Fleet National Bank (the "COLLATERAL AGENT"),
with an office located at 777 Main Street, Hartford, Connecticut 06115, on
behalf of itself, the Collateral Agent and the holders of certain Notes issued
under an Indenture dated as of August ___, 1996 (collectively, the "SECURED
PARTIES"), have entered into the Company Security Agreement dated as of August
___, 1996 (as amended from time to time, the "COMPANY SECURITY AGREEMENT").
Pursuant to the Company Security Agreement, the Grantor has granted,
conveyed, pledged, assigned and transferred to the Collateral Agent, for the
benefit of the Secured Parties, a security interest in, (a) the registered
patents, applications for registration of patents, and licenses of registered
patents listed in Schedule A hereto, and (b) the registered trademarks and
service marks, applications for registration of trademarks and service marks,
and licenses of registered trademarks and service marks listed in Schedule B
hereto, together with the goodwill of the business symbolized thereby, to secure
the payment, performance and observance of the Secured Obligations as defined in
the Company Security Agreement.
The Commissioner of Patents and Trademarks is requested to record this
notice in its records.
Dated:
CASINO AMERICA, INC.,
a Delaware corporation
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE>
SCHEDULE A
TO
NOTICE OF SECURITY INTEREST IN PATENTS AND TRADEMARKS
FROM
CASINO AMERICA, INC.
1. Patents.
Patent Registration No. Registration Date
2. Applications for Federal Registration of Patents.
Patent Serial No. Filing Date
<PAGE>
SCHEDULE B
TO
NOTICE OF SECURITY INTEREST IN PATENTS AND TRADE
FROM
CASINO AMERICA, INC.
1. Federal Trademark and Service Mark Registrations.
Trademark/Service Mark Registration No. Registration Date
2. Trademark and Service Mark Applications for Federal
Registration.
Trademark/Service Mark Serial No.
<PAGE>
EXHIBIT G
TO INDENTURE
EXHIBIT 10.4
FORM OF SUBSIDIARY SECURITY AGREEMENT
-------------------------------------
SUBSIDIARY SECURITY AGREEMENT, dated as of August ___, 1996 (as may be
amended from time to time, the "AGREEMENT"), by and among the Persons named as
"Grantors" on the signature pages hereof (each, individually, a "GRANTOR" and
all, collectively, the "GRANTORS"), Casino America, Inc., a Delaware
corporation (the "CASINO AMERICA"), and Fleet National Bank ("FLEET"), as
collateral agent for the Trustee (as defined below) and the Persons that now or
in the future are holders of the Notes (as defined below) issued under the
Indenture described below (the "HOLDERS") (in such capacity, Fleet National Bank
or any successor in such capacity is referred to herein as the "COLLATERAL
AGENT").
R E C I T A L S
- - - - - - - -
A. Pursuant to the Indenture dated as of the date hereof (as
supplemented or otherwise amended from time to time, the "INDENTURE") by and
among the Grantor, the Subsidiary Guarantors and Fleet National Bank, as trustee
(the "TRUSTEE"), the Grantor will issue ___% Senior Secured Notes due 2003 in an
aggregate principal amount of up to $300,000,000 (the "NOTES").
B. Pursuant to the guarantee included in the Indenture (as may be
amended from time to time, the "SUBSIDIARY GUARANTEES"), the Pledgors have
guaranteed the obligations of Casino America under the Notes, the Indenture and
the other Note Documents to which Casino America is a party.
C. It is a condition precedent to the issuance of the Notes under the
Indenture that a security interest in the Collateral described herein be granted
to the Collateral Agent, for the benefit of itself, the Trustee and the Holders
(together with their respective successors and assigns, collectively, the
"SECURED PARTIES"), as set forth herein.
D. The parties acknowledge that certain provisions of this Agreement
may be subject to the Gaming Laws of certain jurisdictions, including without
limitation, Louisiana and Mississippi.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
ARTICLE 1
---------
DEFINITIONS AND RELATED MATTERS
SECTION 1.1. DEFINITIONS. Capitalized terms not otherwise defined
herein shall have the respective meanings specified in the Indenture. In
addition, the following terms with initial capital letters have the following
meanings:
"ACCOUNTS" has the meaning set forth in Section 2.1.
"ACCOUNT DEBTOR" means any Person who is or who may become obligated
to the Grantor on any Receivable.
"APPROVALS" has the meaning set forth in Section 2.1.10.3.
"CASH LOADS" has the meaning set forth in Section 2.1.4.
"CHARGES" means all federal, state, county, city, municipal or other
taxes, levies, assessments or charges that, if not paid when due, may result in
a Lien of any Governmental Authority against Collateral.
"CHATTEL PAPER" has the meaning set forth in Section 2.1.3.
"CONTRACTUAL OBLIGATIONS" has the meaning set forth in Section 4.6.1.
"DEPOSIT ACCOUNTS" has the meaning set forth in Section 2.1.5.
"DOCUMENTS" has the meaning set forth in Section 2.1.10.
"EQUIPMENT" has the meaning set forth in Section 2.1.8.
"EVENT OF DEFAULT" has the meaning set forth in Section 5.1.
"EXCLUDED ASSETS" means, collectively, "Excluded Assets" as defined in
the Indenture and "Pledged Collateral" as defined in the Company Pledge
Agreement.
"FOURTH PRIORITY COLLATERAL" means the Collateral comprising the Grand
Palais.
"FIXTURES" has the meaning set forth in Section 2.1.9.
"GAMING EQUIPMENT" has the meaning set forth in Section 2.1.8.3.
"GENERAL INTANGIBLES" has the meaning set forth in Section 2.1.12.
"INVENTORY" has the meaning set forth in Section 2.1.7.
"MOTOR VEHICLES" means all motor vehicles, tractors, trailers, buses,
shuttles and other like property, whether or not title thereto is governed by a
certificate of title on ownership.
-2-
<PAGE>
"NOTE DOCUMENTS" means the Indenture, the Notes, the Subsidiary
Guarantees and the Collateral Documents.
"NOTES RECEIVABLE" has the meaning set forth in Section 2.1.2.
"PLEDGED COLLATERAL" has the meaning set forth in Section 4.8.
"PERMITTED SALES" has the meaning set forth in Section 4.7.
"PROCEEDS" has the meaning set forth in Section 2.1.16.
"RECEIVABLES" means Accounts, Notes Receivable, Chattel Paper and
other rights to the payment of money.
"SECOND PRIORITY COLLATERAL" means the Collateral comprising (i) the
Isle-Biloxi Hotel; (ii) existing equipment subject to FF&E Financing; (iii) any
newly acquired or leased equipment financed with FF&E Financing, (iv) any
Collateral subject to Permitted Vessel Liens and (v) Pompano Park.
"SECURED OBLIGATIONS" has the meaning set forth in Section 2.2.
"SECURED PARTIES" has the meaning set forth in Recital B.
"SECURITIES" has the meaning set forth in Section 2.1.11.
"SECURITY INTEREST" has the meaning set forth in Section 2.1.
"SUPPLEMENTAL DOCUMENTATION" means financing statements, continuation
statements, consents, acknowledgments, warehouse receipts, bills of lading,
assignments of accounts, patents, trademarks or copyrights, schedules of
Collateral, mortgages and other instruments or documents necessary or requested
by the Collateral Agent (i) to create, perfect and maintain perfected a first
priority Security Interest (except as otherwise provided in this Agreement) in
any Collateral or (ii) so that the Collateral Agent receives all interest,
dividends and distributions from time to time paid with respect to, and all
Proceeds of, all Collateral the Collateral Agent is entitled to receive
hereunder.
"UCC" means Article 9 (or, with respect to Securities, Article 8) of
the Uniform Commercial Code (as amended from time to time) of the State of New
York.
SECTION 1.2. RELATED MATTERS.
---------------
1.2.1. TERMS USED IN THE UCC. Unless the context clearly otherwise
requires, all lower-case terms used and not otherwise defined herein that are
used or defined in UCC shall have the same meanings herein.
1.2.2. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part
-3-
<PAGE>
includes the whole, and "including" is not limiting. The words "hereof",
"herein", "hereby", "hereunder" and similar terms in this Agreement refer to
this Agreement as a whole (including the Preamble, the Recitals and all
Schedules and Exhibits) and not to any particular provision of this Agreement.
Article, section, subsection, exhibit, recital, preamble and schedule references
in this Agreement are to this Agreement unless otherwise specified. References
in this Agreement to any agreement, other document or law or to amendments of
any document or law or similar language, regardless of whether such reference
includes "as amended," "as may be amended from time to time" or other similar
language, shall include any amendments, supplements, replacements, renewals or
other modifications, excepting any reference to any agreement, document or law
that specifically limits said agreement, document or law to its terms as of the
date hereof.
1.2.3. DETERMINATIONS. Any determination or calculation contemplated
by this Agreement that is made by the Collateral Agent shall be final and
conclusive and binding upon the Grantor, in the absence of manifest error.
References in this Agreement to "determination" by the Collateral Agent include
good faith estimates (in the case of quantitative determinations) and good faith
beliefs (in the case of qualitative determinations). All references herein to
"discretion" of the Collateral Agent (or terms of similar import) shall mean
"absolute and sole discretion. All consents and other actions of the Collateral
Agent contemplated by this Agreement may be given, taken, withheld or not taken
in the Collateral Agent's discretion (whether or not so expressed), except as
otherwise expressly provided herein
1.2.4. GOVERNING LAW. Except to the extent otherwise required under
applicable law, the UCC shall govern the attachment, perfection, priority and
enforcement of the Security Interest and all other matters to which the UCC
applies pursuant to the terms thereof. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
1.2.5. HEADINGS. The Article and Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction hereof.
1.2.6. SEVERABILITY. If any provision of this Agreement or any Lien or
other right hereunder shall be held to be invalid, illegal or unenforceable
under applicable law in any jurisdiction, such provision, Lien or other right
shall be ineffective only to the extent of such invalidity, illegality or
unenforceability, which shall not affect any other provisions herein or any
other Lien or right granted hereby or the validity, legality or enforceability
of such provision, Lien or right in any other jurisdiction.
1.2.7. EXHIBITS AND SCHEDULES. All of the appendices, exhibits and
schedules attached to this Agreement shall be deemed incorporated herein by
reference.
-4-
<PAGE>
ARTICLE 2
---------
THE SECURITY INTEREST; SECURED OBLIGATIONS
SECTION 2.1. SECURITY INTEREST. To secure the payment and performance
of the Secured Obligations as and when due, each Grantor hereby grants, conveys,
pledges, assigns and transfers to the Collateral Agent for the benefit of the
Secured Parties, a security interest (the "SECURITY INTEREST") in, all right,
title, claim, estate and interest of such Grantor in and to all property and
interests in property, other than Excluded Assets, whether now owned and
existing or hereafter acquired or arising, and wherever located (such property
and interests in property, other than Excluded Assets, being, collectively, the
"COLLATERAL"), including the following (except as such constitute Excluded
Assets):
2.1.1. Any and all rights to payment for goods sold or leased or for
services rendered, including any such rights evidenced by Chattel Paper, whether
due or to become due and whether or not earned by performance (excluding any
such rights evidenced by Notes Receivable, the "ACCOUNTS");
2.1.2. Any and all negotiable instruments, promissory notes,
acceptances, drafts, checks, certificates of deposit and other writings that
evidence a right to the payment of money by any other Person, including the
writings listed on Schedule 2.1.2 (the "NOTES RECEIVABLE");
2.1.3. Any and all chattel paper, including writings that evidence
both a monetary obligation and a security interest in or lease of specific goods
(the "CHATTEL PAPER");
2.1.4. Any and all monies maintained by such Grantor in slot machines,
vaults, cages and other locations in any Casino for purposes of operating and
reserve cash (the "CASH LOADS").
2.1.5. Any and all present and future accounts maintained by such
Grantor, including all demand, time savings, passbook, certificate of deposit or
like accounts maintained by any Grantor at any bank, savings and loans credit
union or other similar institution (the "DEPOSIT ACCOUNTS").
2.1.6. Any and all rights to payment:
2.1.6.1. to the extent not included in Accounts, Notes
Receivable or Chattel Paper, receivable from any credit card company (such as
Visa, Mastercard, American Express and Diner's Club), whether arising out of or
relating to the sale of lodging, goods and services by the Grantor or otherwise;
2.1.6.2. and payments for hotel room occupancy (and related
reservations, tour and junket proceeds, and deposits for convention and party
reservations); and
-5-
<PAGE>
2.1.6.3. of money not listed above and any and all rights,
titles, interests, securities, Liens and guaranties evidencing, securing,
guaranteeing payment of or in any way relating to any Receivables;
2.1.7. Any and all goods that may at any time be held for sale or
lease or to be furnished under any contract of service, be so leased or
furnished, or constitute raw materials, work in process, parts, supplies or
materials that are or might be used or consumed in a business or in connection
with the manufacture, selling or leasing of such goods ("INVENTORY");
2.1.8. Any and all equipment and other goods (excluding Inventory),
including the following personal property (together with all related property
described in Section 2.1.12, the "EQUIPMENT"):
2.1.8.1. machinery, machine tools, office machinery (including
computers, typewriters and duplicating machines), motor vehicles, trailers,
rolling stock, motors, pumps, controls, tools, parts, works of art, furniture,
furnishings and trade fixtures, all athletic equipment and supplies, and all
molds, dies, drawings, blueprints, reports catalogs and computer programs
related to any of the above;
2.1.8.2. ships, boats, barges and vessels (whether under
construction or completed) and including any and all masts, bowsprits, boilers,
engines, sails, fittings, anchors, cables, chains, riggings, tackle, apparel,
furniture, capstans, outfits, tools, pumps, gears, appliances, fittings and
spare and replacement parts and all other appurtenances, accessories and
additions, improvements and replacements thereto, whether on board or not on
board, in or to any ship, boat, barge or vessel;
2.1.8.3. slot machines, electronic gaming devices and related
equipment, crap tables, blackjack tables, roulette tables, baccarat tables, keno
apparatus, cards, dice, gaming chips and plaques, tokens, chip racks, dealing
shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other
supplies and items used in connection with gaming operations (collectively, the
"GAMING EQUIPMENT"); and
2.1.8.4. stones, wood, steel and other materials used or to be
used in the building, construction, repair, renovation, refurbishment or
otherwise with respect to Improvements (as defined in any mortgage to which the
Grantor is a party) or ships, boats, barges or vessels;
2.1.9. Any and all equipment and fixtures, including machinery,
equipment or appliances for generating, storing or distributing air, water,
heat, electricity, light, fuel or refrigeration, for ventilating or sanitary
purposes, elevators, safes, laundry, kitchen and athletic equipment, trade
fixtures, and telephone, television and other communications equipment (the
"FIXTURES");
2.1.10. Any and all documents, whether or not negotiable, including
bills of lading, warehouse receipts, trust receipts and the like (the
"DOCUMENTS");
-6-
<PAGE>
2.1.11. Any and all stocks, bonds, general and limited partnership
interests, joint venture interests, limited liability company interests and
other securities, subscription rights, options, warrants, puts, calls and other
rights with respect thereto, and investment and brokerage accounts (the
"SECURITIES"), including those listed on Schedule 2.1.11;
2.1.12. Any and all general intangibles and contract rights (together
with any property listed under Section 2.1.6 above, the "GENERAL INTANGIBLES"),
including the following:
2.1.12.1. insurance policies and all rights and claims therein
or thereunder (including prepaid and unearned premiums), including insurance
against casualty (including by fire or earthquake) or liability (including
against environmental cleanup costs), title insurance, business interruption
insurance and builders risk insurance, whether covering personal or real
property;
2.1.12.2. any and all leases of real or personal property,
licensing agreements and other contracts (including the contracts listed on
Schedule 2.1.12.2), including contracts relating to the construction,
management, operation, leasing, sale, maintenance or repair of any expansion,
renovation or repair related to a Casino or a Casino Hotel, and all guarantees,
warranties, royalties, license fees and rights under such contracts including
those described on Schedule 2.1.12.2;
2.1.12.3. any and all Governmental Approvals, including
permits, licenses, certificates of use and occupancy (or their equivalents) and
zoning and other approvals, and tax and other refunds, compensation, awards,
payments and relief given or made by any Governmental Authority (including
condemnation awards) (the "APPROVALS");
2.1.12.4. deposits, surety and other bonds, choses and things
in action, goodwill, computer programs, computer software (including all source
and object codes, all media of any type or nature on which such source or object
codes are reproduced, copied, stored or maintained), technology processes,
proprietary information, patents, patent applications, copyrights, copyright
applications, trademarks, trademark applications, service marks, trade and other
names, trade secrets and customer lists, including the intellectual property
rights listed on Schedule 2.1.12.4; and
2.1.12.5. any and all architectural and engineering drawings,
plans, specifications, studies, reports and other materials, including Project
Contracts relating to a Casino or Casino Hotel;
2.1.13. Any and all books and records (including ledgers,
correspondence, credit files, computer software, computer storage media and
electronically recorded data) pertaining to the Grantor or any of the foregoing
and all equipment, receptacles, containers and cabinets therefor:
-7-
<PAGE>
2.1.14. Any and all accessions, appurtenances, components,
repairs, repair parts, spare parts, renewals, improvements, replacements,
substitutions and additions to, of or with respect to any of the foregoing;
2.1.15. Any and all rights, remedies, powers and privileges of
the Grantor with respect to any of the foregoing; and
2.1.16. Any and all proceeds and products of any of the
foregoing, whether now held and existing or hereafter acquired or arising
(collectively, the "PROCEEDS"). Proceeds shall include (i) whatever is now or
hereafter received by such Grantor upon the sale, exchange, collection, other
disposition or operation of any item of Collateral, whether such proceeds
constitute accounts, general intangibles, instruments, securities, documents,
letters of credit, chattel paper, deposit accounts, money, goods or other
personal property, (ii) any items that are now or hereafter acquired by such
Grantor with any Proceeds of Collateral, (iii) any amounts now or hereafter
payable under any insurance policy by reason of any loss of or damage to any
Collateral or the business of such Grantor, (iv) all rights to payment and
payments for hotel room occupancy (and related reservations) and the sale of
services or products in connection therewith and (v) the right to further
transfer, including by pledge, mortgage, license, assignment or sale, any of the
foregoing, provided that Proceeds shall not include any Excluded Assets.
SECTION 2.2. SECURED OBLIGATIONS. The Security Interest shall secure
the due and punctual payment and performance of any and all present and future
obligations and liabilities of each Grantor of every type or description to the
Secured Parties:
2.2.1. arising under or in connection with the Indenture or the Notes,
whether for principal, premium (if any), interest, expenses, indemnities or
other amounts (including attorneys' fees and expenses); or
2.2.2. arising under or in connection with this Agreement or any other
Note Document, including for reimbursement of amounts that may be advanced or
expended by the Collateral Agent (i) to satisfy amounts required to be paid by
such Grantor under this Agreement or any other Note Document for claims and
Charges, together with interest thereon to the extent provided or (ii) to
maintain or preserve any Collateral or to create, perfect, continue or protect
any Collateral or the Security Interest therein, or its priority; in each case
whether due or not due, direct or indirect, joint and/or several, absolute or
contingent, voluntary or involuntary, liquidated or unliquidated, determined or
undetermined, now or hereafter existing, renewed or restructured, whether or not
from time to time decreased or extinguished and later increased, created or
incurred, whether or not arising after the commencement of a proceeding under
the Federal Bankruptcy Code (including post-petition interest) and whether or
not recovery of any such obligation or liability may be barred by a statute of
limitations or such obligation or liability may otherwise be unenforceable (all
obligations and liabilities described in this Section 2.2 are collectively
referred to as the "SECURED OBLIGATIONS").
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ARTICLE 3
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REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants that all representations and
warranties made with respect to it, its assets and its obligations in the
Purchase Agreement are true and correct and makes the following additional
representations and warranties, all of which shall survive until termination of
this Agreement pursuant to Section 6.7.
SECTION 3.1. FILINGS, ETC.
3.1.1. Duly executed financing statements containing a correct
description of the Collateral have been delivered to the Collateral Agent for
filing in every governmental office in every state, county and other
jurisdiction in which the principal or any other place of business or the chief
executive office of such Grantor, or any portion of the Collateral, is located
and in each jurisdiction in which such action is necessary to establish a valid
and perfected Lien in favor of the Collateral Agent in all Collateral in which a
Lien may be perfected by filing, and no further or subsequent filing, recording
or registration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.
3.1.2. All Pledged Collateral has been delivered to the
Collateral Agent to the extent required hereby.
3.1.3. Such Grantor has executed and delivered to the
Collateral Agent for filing with the United States Patent and Trademark Office a
written notice in the form of Exhibit A (a "NOTICE OF SECURITY INTEREST IN
PATENTS AND TRADEMARKS"), duly completed and executed, with respect to each
patent, patent application, trademark, servicemark, trademark application and
servicemark application in which such Grantor has an interest.
3.1.4. All other Supplemental Documentation necessary to
perfect the Security Interest with respect to all Patents, Trademarks and
Copyrights (as defined in Section 3.5) has been delivered to the Collateral
Agent for filing in the appropriate governmental office.
SECTION 3.2. LOCATIONS OF COLLATERAL; OFFICES AND NAMES. (i) Such
Grantor's chief executive office and principal place of business are located at
the addresses set forth on Schedule 3.2, (ii) all other places of business of
such Grantor and all other locations at which any tangible Collateral or books
and records related to any Collateral are (or during the past four months were)
located are set forth on Schedule 3.2, (iii) such Grantor's federal tax
identification number is set forth on Schedule 3.2, and (iv) there are no prior
or current trade or legal names used to identify such Grantor in its business or
in the ownership of its properties other than those set forth on Schedule 3.2.
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SECTION 3.3. TITLE TO COLLATERAL; VALIDITY AND PERFECTION OF SECURITY
INTEREST; ABSENCE OF OTHER LIENS.
3.3.1. Such Grantor has good and marketable title to, or valid
and subsisting leasehold interests in, all Collateral reflected on its financial
statements as being owned or leased by it and "rights" in all other Collateral
within the meaning of Section 9-203 of the UCC.
3.3.2. The Security Interest constitutes a valid and, upon the
filing of financing statements covering the Collateral and other documents
referred to in Section 3.1 with the appropriate Governmental Authorities or
other Persons referred to in such Section, perfected Lien in all of the
Collateral and secures payment and performance of the Secured Obligations. The
Collateral is free and clear of all Liens other than the Security Interest and
other Liens permitted under Section 1011 of the Indenture, except as set forth
on Schedule 3.3.
3.3.3. Except for financing statements in favor of the
Collateral Agent or with respect to Liens permitted under Section 1011 of the
Indenture, the Grantor has filed no now-effective financing statement covering
the Collateral.
SECTION 3.4. NOTES RECEIVABLE. Schedule 2.1.2 lists all Notes
Receivable of the Grantor. There are no setoffs or counterclaims or disputes
existing or asserted with respect to any such Notes Receivable.
SECTION 3.5. PATENTS, TRADEMARKS AND COPYRIGHTS. Schedule 2.1.12.4
lists all patents, patent applications, trademarks, trademark applications,
service marks, service mark applications, copyrights and copyright applications
(collectively, "PATENTS, TRADEMARKS AND COPYRIGHTS") in which such Grantor has
an interest. Except as disclosed on Schedule 2.1.12.4, all Patents, Trademarks
and Copyrights are valid and enforceable and such Grantor is the sole and
exclusive owner of each of the Patents, Trademarks and Copyrights, free and
clear of any Liens other than Liens permitted under Section 1011 of the
Indenture (including licenses, shop rights and covenants not to sue listed on
Schedule 2.1.12.4).
SECTION 3.6. NO CONFLICTS OR CONSENTS. Neither the ownership nor the
intended use of the Collateral by such Grantor, nor the grant of the security
interest by such Grantor to Collateral Agent herein, nor the exercise by
Collateral Agent of its rights or remedies hereunder, will (i) conflict with any
provision of (a) any domestic or foreign law, statute, rule or regulation
(including without limitation any Gaming Laws), (b) the articles of
incorporation, charter, bylaws, operating agreement or partnership agreement of
such Grantor, or (c) any agreement, judgment, license, order or permit
applicable to or binding upon such Grantor, or (ii) result in or require the
creation of any lien, charge or encumbrance upon any assets or properties of
such Grantor except as expressly contemplated in the Indenture or the other Note
Documents. Except as expressly contemplated in the Indenture or the other Note
Documents and as have been heretofore duly given or obtained and remain in full
force and effect, no consent, approval, authorization or order of, and no notice
to or filing with any court, Governmental Authority (including without
limitation any Gaming Authority) or third party is required in connection with
the grant by such Grantor of the assignment and security interest herein, the
execution, delivery and performance by such
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Grantor of this Agreement, or the exercise by Collateral Agent of its rights and
remedies hereunder.
SECTION 3.7. FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, farm products.
SECTION 3.8. DEPOSIT ACCOUNTS. Schedule 3.8 contains a true and complete
description of all Deposit Accounts, maintained on the date hereof by Grantor,
as applicable, setting forth the name and address of each bank, savings
institution or other depositary institution at which each such account is
maintained and stating the title and account number of such account.
SECTION 3.9. CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS. All Chattel Paper,
Documents and instruments included in the Collateral are valid and genuine. Any
Chattel Paper, Document or instrument included in the Collateral has only one
original counterpart which constitutes Chattel Paper within the meaning of the
UCC or the law of any applicable jurisdiction. No Person other than such Grantor
or the Collateral Agent is in actual or constructive possession of any Chattel
Paper, Documents or instruments. The place where such Grantor keeps its Chattel
Paper, Documents and instruments (subject to the requirements of Section 4.1
hereof) is such Grantor's chief executive office or chief place of business
identified in Section 3.2 hereof.
SECTION 3.10. ACCOUNTS.
3.10.1. No amount payable to such Grantor under or in connection with
any of its Accounts is evidenced by any instrument or Chattel Paper which has
not been delivered to the Collateral Agent.
3.10.2. The place where such Grantor keeps its records concerning its
Accounts is such Grantor's chief executive office or chief place of business
identified in Section 3.2 hereof.
3.10.3. None of the obligors on any Accounts is a Governmental
Authority.
SECTION 3.11. INVENTORY AND EQUIPMENT; FIXTURES. The Inventory and the
Equipment of such Grantor are kept at the locations listed on Schedule 3.2. Such
Grantor has exclusive possession and control of its Equipment and Inventory and
none of the Collateral which constitutes Equipment or Inventory (i) is intended
to be kept by such Grantor at any location except the location set forth on
Schedule 3.2 or (ii) has been related to, attached to, or used in connection
with any real property so as to constitute a fixture upon such real property, or
installed in or affixed to any vessel or other goods so as to be an accession or
appurtenance to such vessel or other goods unless such real property, vessel or
other goods are included in the Collateral or otherwise subject to a valid and
duly perfected Lien in favor of the Collateral Agent. All Inventory has been
produced in compliance with all requirements of the Fair Labor Standards Act.
All Fixtures owned by such Grantor are located on the real property described on
Schedule 3.11 as being owned or leased by such Grantor.
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ARTICLE 4
---------
COVENANTS AND AGREEMENTS
SECTION 4.1. FURTHER ASSURANCES. Each Grantor shall, at its own expense,
perform such acts as may be necessary, or that the Collateral Agent may request
at any time, to assure the attachment, perfection and first priority of the
Security Interest, except with respect to the Second Priority Collateral and the
Fourth Priority Collateral, with respect to which the Security Interest shall be
a perfected security interest with a second and fourth priority, respectfully,
and to exercise the rights and remedies of the Collateral Agent hereunder or to
carry out the intent of this Agreement. Without limitation, each Grantor shall
execute and deliver (or cause any third party to execute and deliver) to the
Collateral Agent, at any time and from time to time, all Supplemental
Documentation, in form and substance acceptable to the Collateral Agent.
SECTION 4.2. INSPECTION AND VERIFICATION. Each Grantor shall keep or cause
to be kept accurate and complete records of the Collateral at such Grantor's
chief executive office. The Collateral Agent and its employees and agents shall
have the right, at all times during such Grantor's usual business hours upon
reasonable notice, to (i) inspect, and verify the quality, quantity, value and
condition of, or any other matter relating to, the Collateral, (ii) inspect all
records relating thereto and to make (or require such Grantor to provide) copies
of such records and (iii) enter upon all premises upon which any of the
Collateral is located. Notwithstanding the foregoing, the Collateral Agent shall
not contact third parties in making such inspection or verification unless an
Event of Default shall then exist.
SECTION 4.3. POWER OF ATTORNEY. Each Grantor hereby irrevocably appoints
(the appointment being irrevocable because it is coupled with an interest) the
Collateral Agent and its employees and agents as such Grantor's true and lawful
attorneys-in-fact, with full power of substitution, (i) to do all things
required to be done by such Grantor under this Agreement or the other Note
Documents and (ii) to do all things that the Collateral Agent may deem necessary
or advisable to assure the attachment, perfection and priority of the Security
Interest or otherwise to exercise the rights and remedies of the Collateral
Agent hereunder or carry out the intent of this Agreement, in each case
irrespective of whether a Default or Event of Default then exists (except as
provided in Section 4.3.5 ) and at such Grantor's expense. Without limitation,
the Collateral Agent and its officers and agents shall be entitled to do all of
the following, as fully as such Grantor might:
4.3.1. to sign the name of such Grantor on any Supplemental
Documentation and to deliver and file such Supplemental Documentation to or with
such Persons as the Collateral Agent, in its discretion, may elect;
4.3.2. to sign any certificate of ownership, registration card,
application therefor, affidavits or documents necessary to transfer title to any
of the Collateral, to receive and receipt for all licenses, registration cards
and certificates of ownership;
4.3.3. to affix, by facsimile signature or otherwise, the general or
special endorsement of such Grantor, in such manner as the Collateral Agent
shall deem advisable, to any
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Pledged Collateral that has been delivered to or obtained by the Collateral
Agent without appropriate endorsement or assignment; and
4.3.4. if such Grantor at any time fails to obtain or maintain any of
the policies of insurance on the Collateral as required under Section 1007 of
the Indenture, with endorsements as provided therein, or fails to pay any
premium in whole or in part when due under such policies, to obtain and maintain
such policies of insurance and pay such premiums and take such other action with
respect thereto as the Collateral Agent deems advisable.
4.3.5. during the existence of an Event of Default, without notice to
such Grantor and at such time or times as the Collateral Agent in its discretion
may determine, in such Grantor's or in the Collateral Agent's name:
4.3.5.1. collect any and all amounts due to such Grantor from
Account Debtors with respect to Receivables by legal proceedings or otherwise;
4.3.5.2. make, settle and adjust any claims under insurance
policies and make any decisions with respect thereto; and
4.3.5.3. attend and vote at any and all meetings of the
holders of Securities and to execute any and all written consents of such
holders with the same effect as if such Grantor had personally attended and
voted at such meetings or had personally signed such consents.
The Collateral Agent shall be under no obligation whatsoever to take any of
the foregoing actions, and absent bad faith or willful misconduct, the
Collateral Agent and its shareholders, directors, officers, employees and agents
shall have no liability or responsibility for any act taken or omitted with
respect thereto. A copy of this Agreement and, if applicable, a statement by the
Collateral Agent that an Event of Default exists shall be conclusive evidence of
the Collateral Agent's right to act under this Section 4.3 as against all third
parties.
SECTION 4.4. CHANGES OF LOCATIONS OF COLLATERAL, OFFICES, NAME OR
STRUCTURE. Each Grantor shall not remove any Collateral, books or records to, or
keep any Collateral, books or records or do business at, a location not set
forth on Schedule 3.2, adopt a trade name or change its name, chief executive
office, principal place of business, identity or corporate structure without
first giving the Collateral Agent 15 Business Days' prior written notice of such
removal, change or adoption.
SECTION 4.5. PAYMENT OF CHARGES AND CLAIMS. Each Grantor shall pay (i) all
Charges imposed upon any Collateral and (ii) all claims (including claims for
labor, services and materials) that have become due and payable and, under
applicable law, have or may become Liens (other than Liens permitted under
Section 1011 of the Indenture) upon any Collateral, in each case before any
penalty shall be incurred with respect thereto; provided that, unless
foreclosure, levy or similar proceedings shall have commenced, such Grantor need
not pay or discharge any such Charges or claims so long as the validity or
amount thereof is being contested in good faith and by appropriate proceedings
and so long as adequate reserves therefor have been
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established in accordance with GAAP. If any Grantor fails to pay or obtain the
discharge of any Charge, claim or Lien required to be paid or discharged under
this Section 4.5 and asserted against any portion of the Collateral, the
Collateral Agent may, at any time and from time to time, in its discretion and
without waiving or releasing any obligation of the Grantor under this Agreement
or the other Note Documents or waiving any Default or Event of Default, make
such payment, obtain such discharge or take such other action with respect
thereto as the Collateral Agent deems advisable.
SECTION 4.6. CONTINUING OBLIGATIONS OF EACH GRANTOR; INDEMNITY.
4.6.1. Each Grantor shall remain liable to observe and perform all
agreements and other obligations relating to or included in the Collateral (the
"CONTRACTUAL OBLIGATIONS") in accordance with their respective terms. The
Collateral Agent shall not have any duty, obligation or liability under or with
respect to any such Contractual Obligations, whether by reason or arising out of
this Agreement, the receipt by the Collateral Agent of any payment relating to
any such Contractual Obligation or otherwise, and each Grantor agrees to
indemnify and hold harmless the Collateral Agent from any and all such
obligations and liabilities.
4.6.2. The Collateral Agent shall have no duty of care with respect to
the Collateral, except that the Collateral Agent shall have an obligation to
exercise reasonable care with respect to Collateral in its possession; provided
that (i) the Collateral Agent shall be deemed to have exercised reasonable care
if Collateral in its possession is accorded treatment substantially comparable
to that which such the Collateral Agent accords its own property, and (ii) the
Collateral Agent shall have no obligation to take any actions to preserve rights
against other parties or property with respect to any Collateral. Without
limitation, the Collateral Agent shall (A) bear no risk or expense with respect
to any Collateral and (B) have no duty with respect to calls, conversions,
presentments, maturities, notices or other matters relating to Pledged
Collateral, or to maximize interest or other returns with respect thereto.
4.6.3. The Collateral Agent may at any time deliver or redeliver the
Collateral or any part thereof to any Grantor and the receipt of any of the same
by such Grantor shall be complete and full acquittance for the Collateral so
delivered, and the Collateral Agent thereafter shall be discharged from any
liability or responsibility therefor.
4.6.4. Each Grantor hereby agrees to indemnify and hold harmless the
Collateral Agent and its directors, officers, employees and agents against any
and all claims, actions, liabilities, costs and expenses of any kind or nature
whatsoever (including fees and disbursements of counsel) that may be imposed on,
incurred by, or asserted against any of them, in any way relating to or arising
out of this Agreement or any action taken or omitted by them hereunder, except
to the extent a court holds in a final and nonappealable judgment that they
resulted from the gross negligence or willful misconduct of such Persons against
and from all such obligations and liabilities.
SECTION 4.7. SALE OF COLLATERAL; FURTHER ENCUMBRANCES. Each Grantor shall
not (i) except for dispositions of Inventory in the ordinary course of such
Grantor's business and other dispositions not prohibited by the Indenture or the
other Note Documents (collectively,
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"PERMITTED SALES") sell, lease or otherwise dispose of any Collateral, or any
interest therein, or (ii) grant or suffer to exist any Lien in or on any
Collateral (except Liens permitted under Section 1011 of the Indenture) or sign
or authorize the filing of any financing statement with respect to any of the
Collateral (except with respect to Liens permitted under Section 1011 of the
Indenture). Concurrently with any Permitted Sale, the Security Interest shall
automatically be released from the Collateral so disposed of; provided, however
that the Security Interest shall continue in the Proceeds thereof. If any
Collateral, or any interest therein, is disposed of in violation of these
provisions, the Security Interest shall continue in such Collateral or interest
notwithstanding such disposition, the Person to which the Collateral or interest
is being transferred shall be bound by this Agreement, and such Grantor shall
deliver all Proceeds thereof to the Collateral Agent to be held as Collateral
hereunder.
SECTION 4.8. DELIVERY OF PLEDGED COLLATERAL. Each Grantor shall deliver to
the Collateral Agent, together with appropriate endorsements or documentation of
assignment thereof acceptable to the Collateral Agent, any and all Notes
Receivable or Chattel Paper having a face amount, negotiable Documents
evidencing title to any Collateral having a fair market value, and all
certificated Securities having a fair market value, individually or in the
aggregate, equal to or greater than $100,000 (collectively, the "PLEDGED
COLLATERAL").
SECTION 4.9. PROTECTION OF SECURITY: NOTICE OF LEVY. Each Grantor shall, at
its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all Persons and against all claims and demands and to
preserve, protect and defend the Security Interest and the priority thereof,
against any adverse Liens not permitted under the Note Documents. Each Grantor
will promptly notify the Collateral Agent of any attachment or other legal
process levied against any Collateral.
SECTION 4.10. EQUIPMENT AND FIXTURES.
4.10.1. Each Grantor, at its expense, shall cause the Equipment and
Fixtures to be maintained and preserved in the same condition, repair and
working order as when new, ordinary wear and tear excepted.
4.10.2. Each Grantor will notify the Collateral Agent in writing
promptly after material loss or damage caused by fire, wind or other casualty to
any Equipment and Fixtures. To the extent required by Section 1014 of the
Indenture, all Net Cash Proceeds of any loss, destruction or damage or other
Event of Loss (including insurance proceeds) shall be deposited (Net Cash
Proceeds to be so deposited are referred to herein as "SPECIFIED NET CASH
PROCEEDS") into the Net Cash Proceeds Account (as defined in the Accounts Pledge
Agreement) and shall be released to such Grantor or applied to the Secured
Obligations as set forth in such Accounts Pledge Agreement.
SECTION 4.11. CHANGES IN DEPOSIT ACCOUNTS. Without the prior written
approval of the Collateral Agent, which approval shall not be unreasonably
withheld, no Grantor shall maintain, or permit any of its Subsidiaries to
maintain, any Deposit Accounts other than the Deposit Accounts listed on
Schedule 3.8. Each Grantor shall (a) obtain and maintain, in accordance with all
applicable law, a first, perfected security interest in favor of the Collateral
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Agent, for the benefit of the Secured Parties, in any such Deposit Account
approved by the Collateral Agent as provided in this Section 4.11 and (b) defend
such security interest against claims and demands of all Persons whomsoever.
SECTION 4.12. MONIES IN DEPOSIT ACCOUNTS. Except for Cash Loads, each
Grantor will not permit any cash, checks, money orders or other cash equivalents
to be held by or on behalf of such Grantor other than in a Deposit Account.
ARTICLE 5
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EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
SECTION 5.1. EVENT OF DEFAULT. The occurrence of one or more "EVENTS OF
DEFAULT" (as defined in the Indenture) shall constitute an "EVENT OF DEFAULT."
SECTION 5.2. REMEDIES. If an Event of Default occurs, then, subject to
Gaming Laws, whether or not all the Secured Obligations shall have become
immediately due and payable:
5.2.1. In addition to all its other rights, powers and remedies under
this Agreement and applicable law, the Collateral Agent shall have, and may
exercise, any and all of the rights, powers and remedies of a secured party
under the UCC, all of which rights, powers and remedies shall be cumulative and
not exclusive, to the extent permitted by applicable law.
5.2.2. The Collateral Agent shall have the right, at the Collateral
Agent's sole option and as the Collateral Agent in its discretion may deem
necessary or advisable to do any or all of the following:
5.2.2.1. to foreclose the Security Interest by any available
judicial procedure or without judicial process;
5.2.2.2. to enter upon the premises of each Grantor or any other
place or places where Collateral is located through self-help and without
judicial process, without giving any Grantor notice and opportunity for a
hearing on the validity of the Collateral Agent's claim and without any
obligation to pay rent;
5.2.2.3. to inspect and appraise the Collateral and to prepare,
repair, assemble or process the Collateral for sale, lease or other disposition;
5.2.2.4. to remove Collateral to the premises of the Collateral
Agent or any other location selected by the Collateral Agent, for such time as
the Collateral Agent may desire, for any purpose not prohibited hereby;
5.2.2.5. to apply any Collateral or any other assets of any
Grantor in the possession of the Collateral Agent to the Secured Obligations;
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5.2.2.6. to notify Account Debtors and other obligors on the
Collateral that the Collateral has been assigned to the Collateral Agent and
that all payments thereon are to be made directly and exclusively to or as
specified by the Collateral Agent;
5.2.2.7. to collect by legal proceedings or otherwise all dividends,
distributions, interest, principal or other sums now or hereafter payable upon
or on account of the Collateral;
5.2.2.8. to enter into any extension or reorganization agreement or
any other agreement relating to or affecting the Collateral and, in connection
therewith, deposit or surrender control of any Collateral or accept other
property in exchange therefor;
5.2.2.9. to settle, compromise or release, on terms acceptable to the
Collateral Agent, in whole or in part, any amounts owing on the Collateral or
any insurance thereof or relating thereto or any disputes with respect thereto
or such insurance;
5.2.2.10. to receive, open and dispose of all mail addressed to any
Grantor and notify postal authorities to change the address for delivery thereof
to such address as the Collateral Agent may designate, provided that the
Collateral Agent agrees that it will promptly deliver over to such Grantor any
such opened mail as does not relate to the Collateral;
5.2.2.11. to exercise all rights and powers under Contractual
Obligations included in the Collateral, including any right of termination; and
5.2.2.12. to exercise any and all other rights, powers, privileges and
remedies of an owner of the Collateral.
5.2.3. Each Grantor shall, at the Collateral Agent's request, assemble the
Collateral and make it available to the Collateral Agent at a place to be
designated by the Collateral Agent. Each Grantor shall make available to the
Collateral Agent all computer and other equipment of the Grantor containing
books and records pertaining to the Collateral (and the assistance of the
employees of such Grantor having responsibility for such equipment) and allow
the Collateral Agent to use such computer and other equipment at no charge for
the purpose of obtaining information pertaining to the Collateral, including by
making copies of computer and other files and records.
5.2.4. Until the Collateral Agent is able to effect a sale, lease or other
disposition of Collateral or any part thereof, the Collateral Agent shall have
the right to use, process or operate the Collateral or any part thereof to the
extent that it deems appropriate for the purpose of preserving Collateral or its
value or for any other purpose deemed appropriate by the Collateral Agent. The
Collateral Agent shall have the right, without notice or demand, either in
person or by agent, and without regard to the adequacy of any security for the
Secured Obligations, to take possession of the Collateral or any part thereof
and to collect and receive the rents, issues, profits, income and proceeds
thereof. Taking possession of the Collateral shall not cure, waive or affect an
Event of Default or notice thereof or invalidate any act done pursuant to such
notice.
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5.2.5. The Collateral Agent may, if it so elects, as a matter of
strict right and without regard to the then value of the Collateral, seek the
appointment of a receiver or keeper to take possession of Collateral and to
enforce any of the Collateral Agent's remedies with respect to such appointment
without prior notice or hearing. The rights, remedies and powers of any receiver
appointed by a court shall be as ordered by the court.
5.2.6. The Collateral Agent shall have the right to sell, lease, or
otherwise dispose of all or any Collateral in its then existing condition, or
after any further assembly, manufacturing or processing thereof, at public or
private sale or sales, with such notice as may be required by Section 5.4, in
lots or in bulk, for cash or on credit, with or without representations or
warranties, all the Collateral Agent, in its discretion, may deem advisable. The
Collateral Agent shall not be obligated to make any sale of the Collateral
regardless of notice of sale having been given. If sale of all or any part of
the Collateral is made on credit or for future delivery, the Collateral so sold
may be retained by the Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. The Collateral Agent shall have the right to
conduct such sales on any Grantor's premises or elsewhere and shall have the
right to use any Grantor's premises without charge for such sales for such
duration as the Collateral Agent deem necessary or advisable. Neither the
Collateral Agent nor the Collateral need be present at any such sales. To the
extent necessary or desirable, in the judgment of the Collateral Agent, to
enable the Collateral Agent to dispose of Collateral following an Event of
Default, the Collateral Agent is authorized, without any obligation for rent,
license fees or other charge, to use the supplies, equipment, facilities and
space at each Grantor's place of business and is hereby granted a license or
other right to use, without charge, the Patents, Trademarks and Copyrights,
trade secrets, names, trade names, customer lists, labels, advertising matter,
and all property of a similar nature that each Grantor owns or is entitled to
use, as it pertains to any Collateral, in preparing, repairing, assembling,
processing, advertising for sale or lease or otherwise in connection with the
disposition of any Collateral, and each Grantor's rights under all licenses and
all franchise agreements shall to such extent and for such purpose inure to the
Collateral Agent's benefit. The Collateral Agent may purchase all or any part of
the Collateral at public or, if permitted by applicable law, private sale, and
in lieu of actual payment of the purchase price, the Collateral Agent may apply
against such purchase price any amount of the Secured Obligations. Each Grantor
agrees that any sale of Collateral conducted by the Collateral Agent in
accordance with the foregoing provisions of this Section and Section 5.3 shall
be deemed to be a commercially reasonable sale under Section 9-504 of the UCC.
SECTION 5.3. APPLICATION OF PROCEEDS.
5.3.1. Any cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon, all or any part of
the Collateral following the occurrence of an Event of Default (including
insurance proceeds) may be held by the Collateral Agent as Collateral and/or
then or at any time thereafter applied as follows:
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<PAGE>
5.3.1.1. first, to the Collateral Agent to pay all advances, charges,
costs and expenses payable to the Collateral Agent pursuant to Section 6.1; and
5.3.1.2. second, to pay the Secured Obligations in the order set forth
in the Indenture.
5.3.2. Each Grantor and any other Person then obligated therefor shall
pay to the Collateral Agent on demand any deficiency with regard to the Secured
Obligations that may remain after such sale, collection or realization of, from
or upon the Collateral.
5.3.3. Payments received from any third party on account of any
Collateral shall not reduce the Secured Obligations until paid in cash to the
Collateral Agent. The application of proceeds by the Collateral Agent shall be
without prejudice to the Collateral Agent's rights as against each Grantor or
other Persons with respect to any Secured Obligations that may then be or remain
unpaid.
5.3.4. If at any time after an Event of Default any Grantor receives
any collections upon or other Proceeds of any Collateral, whether in the form of
cash, Notes Receivable or otherwise, such Proceeds shall be received in trust
for the Collateral Agent and such Grantor shall keep all such Proceeds separate
and apart from all other funds and property so as to be capable of
identification as the property of the Collateral Agent and promptly deliver such
Proceeds to the Collateral Agent in the identical form received (with such
endorsements or assignments as are appropriate).
SECTION 5.4. NOTICE OF SALE. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Collateral Agent will send or otherwise make available to
each Grantor reasonable notice of the time and place of any public sale or of
the time on or after which any private sale of any Collateral with respect to
such Grantor is to be made. Each Grantor agrees that any notice required to be
given by the Collateral Agent of a sale or other disposition of Collateral, or
any other intended action by the Collateral Agent, that is received in
accordance with the provisions set forth in Section 6.4 ten (10) days prior to
such proposed action, shall constitute commercially reasonable and fair notice
thereof to such Grantor. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Each Grantor hereby waives any right to receive notice of any
public or private sale of any Collateral or other security for the Secured
Obligations except as expressly provided for in this Section 5.4.
ARTICLE 6
---------
GENERAL
SECTION 6.1. COLLATERAL AGENT'S EXPENSES, INCLUDING ATTORNEYS' FEES.
Regardless of the occurrence of a Default or Event of Default, each Grantor
agrees to pay to the Collateral Agent any and all advances, charges, costs and
expenses, including the reasonable fees
-19-
<PAGE>
and expenses of counsel and any experts or agents, that the Collateral Agent may
reasonably incur in connection with (i) the administration of this Agreement,
including any amendment thereto or any workout or restructuring, (ii) the
creation, perfection or continuation of the Security Interest or protection of
its priority or the Collateral, including the discharging of any prior or junior
Lien or adverse claim against the Collateral or any part thereof that is not
permitted hereby or by the Indenture, (iii) the custody, preservation or sale
of, collection from, or other realization upon, any of the Collateral, (iv) the
exercise or enforcement of any of the rights, powers or remedies of the
Collateral Agent under this Agreement or under applicable law (including
attorneys' fees and expenses incurred by the Collateral Agent in the collection
of Collateral deposited with the Collateral Agent and amounts incurred in
connection with the operation, maintenance or foreclosure of the Security
Interest) or any bankruptcy proceeding or (v) the failure by any Grantor to
perform or observe any of the provisions hereof. All such amounts and all other
amounts payable hereunder shall be payable on demand, together with interest at
the Defaulted Interest rate, if applicable.
SECTION 6.2. AMENDMENTS AND OTHER MODIFICATIONS. No amendment of any
provision of this Agreement (including a waiver thereof or consent relating
thereto) shall be effective unless the same shall be in writing and signed by
all the Grantors and the Collateral Agent. Any waiver or consent relating to any
provision of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given. No notice to or demand on any Grantor
in any case shall entitle any Grantor to any other or further notice or demand
in similar or other circumstances.
SECTION 6.3. CUMULATIVE REMEDIES; FAILURE OR DELAY. The rights and remedies
provided for under this Agreement are cumulative and are not exclusive of any
rights and remedies that may be available to the Collateral Agent under
applicable law, the other Note Documents or otherwise. No failure or delay on
the part of any of the Secured Parties in the exercise of any power, right or
remedy under this Agreement shall impair such power, right or remedy or shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude other or further exercise of such or any
other power, right or remedy.
SECTION 6.4. NOTICES, ETC. All notices and other communications under this
Agreement shall be in writing and shall be personally delivered or sent by
prepaid courier, by overnight, registered or certified mail (postage prepaid) or
by prepaid telex, telecopy or telegram, and shall be deemed given when received
by the intended recipient thereof. Unless otherwise specified in a notice given
in accordance with the foregoing provisions of this Section 6.4, notices and
other communications shall be given to the parties hereto at their respective
addresses (or to their respective telex or telecopier numbers) indicated on
Schedule 6.4.
SECTION 6.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and, subject to the next sentence, inure to the benefit of each Grantor and the
Collateral Agent and their respective successors and assigns. Each Grantor shall
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Collateral Agent. The benefits of
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<PAGE>
this Agreement shall pass automatically with any assignment of the Secured
Obligations (or any portion thereof), to the extent of such assignment.
SECTION 6.6. PAYMENTS SET ASIDE. Notwithstanding anything to the
contrary herein contained, this Agreement, the Secured Obligations and the
Security Interest shall continue to be effective or be reinstated, as the case
may be, if at any time any payment, or any part thereof, of any or all of the
Secured Obligations is rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be restored or returned by the Collateral
Agent in connection with any bankruptcy, reorganization or similar proceeding
involving any Grantor, any other party liable with respect to the Secured
Obligations or otherwise, if the proceeds of any Collateral are required to be
returned by the Collateral Agent under any such circumstances, or if the
Collateral Agent reasonably elects to return any such payment or proceeds or any
part thereof in its discretion, all as though such payment had not been made or
such proceeds not been received. Without limiting the generality of the
foregoing, if prior to any such rescission, invalidation, declaration,
restoration or return, this Agreement shall have been canceled or surrendered or
the Security Interest or any Collateral shall have been released or terminated
in connection with such cancellation or surrender, this Agreement and the
Security Interest and such Collateral shall be reinstated in full force and
effect, and such prior cancellation or surrender shall not diminish, discharge
or otherwise affect the obligations of any Grantor in respect of the amount of
the affected payment or application of proceeds, the Security Interest or such
Collateral.
SECTION 6.7. CONTINUING SECURITY INTEREST; TERMINATION. Except as
otherwise provided in the Indenture with respect to the release of Collateral
under certain circumstances, this Agreement shall create a continuing security
interest in the Collateral and, except as provided below, the Security Interest
and all agreements, representations and warranties made herein shall survive
until, and this Agreement shall terminate only upon, the indefeasible payment
and performance in full of the Secured Obligations. Any investigation at any
time made by or on behalf of the Collateral Agent shall not diminish the right
of the Collateral Agent to rely on any such agreements, representations or
warranties herein.
Notwithstanding anything in this Agreement or applicable law to the
contrary, the agreements of each Grantor set forth in Sections 4.6.1, 4.6.4 and
6.1 shall survive the payment of all other Secured Obligations and the
termination of this Agreement.
SECTION 6.8. CHOICE OF FORUM.
---------------
6.8.1. Subject to Section 6.8.2, all actions or proceedings
arising in connection with this Agreement shall be tried and litigated in state
or Federal courts located in the County of New York, State of New York, unless
such actions or proceedings are required to be brought in another court to
obtain subject matter jurisdiction over the matter in controversy. EACH GRANTOR
WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS, TO
ASSERT THAT IT IS NOT SUBJECT TO THE JURISDICTION OF SUCH COURTS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
6.8.1.
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<PAGE>
6.8.2. Nothing contained in Section 6.8.1. shall preclude the
Collateral Agent from bringing any action or proceeding arising out of or
relating to this Agreement in any court not referred to in the courts of any
place where any Grantor or any of any Grantor's assets may be found or located.
TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH ACTION OR PROCEEDING, THE JURISDICTION
OF ANY OTHER COURT OR COURTS THAT NOW OR HEREAFTER, BY REASON OF SUCH PARTY'S
PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE TO IT.
SECTION 6.9. WAIVER AND ESTOPPEL. Except as otherwise provided in this
Agreement, each Grantor hereby waives: (i) presentment, protest, notice of
dishonor, release, compromise, settlement, extension or renewal and any other
notice of or with respect to the Secured Obligations and hereby ratifies and
confirms whatever the Collateral Agent may do in this regard; (ii) notice prior
to taking possession or control of any Collateral or any bond or security that
might be required by any court prior to allowing the Collateral Agent to
exercise any of their rights, powers or remedies; (iii) the benefit of all
valuation, appraisement, redemption and exemption laws; (iv) any rights to
require marshaling of the Collateral upon any sale or otherwise to direct the
order in which the Collateral shall be sold; (v) any set-off and (vi) any rights
to require the Collateral Agent to proceed against any Person, proceed against
or exhaust any Collateral or any other security interests or guaranties or
pursue any other remedy in the Collateral Agent's power, or to pursue any of
such rights in any particular order or manner, and any defenses arising by
reason of any disability or defense of any Person.
SECTION 6.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts. taken together, shall constitute but one and the same Agreement.
SECTION 6.11. COMPLETE AGREEMENT. This Agreement, the Indenture, the
Notes, and the other Note Documents, together with the exhibits and schedules
thereto and hereto, is intended by the parties as a final expression of their
agreement regarding the subject matter hereof and as a complete and exclusive
statement of the terms and conditions of such agreement.
SECTION 6.12. LIMITATION OF LIABILITY. No claim shall be made by any
Grantor against the Collateral Agent or the Affiliates, directors, officers,
employees or agents of the Collateral Agent for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or under any other theory of liability arising out of or related to the
transactions contemplated by this Agreement and the other Note Documents, or any
act, omission or event occurring in connection therewith; and such Grantor
hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
-22-
<PAGE>
SECTION 6.13. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES TO THIS
AGREEMENT WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION UNDER THIS AGREEMENT
OR ANY OTHER NOTE DOCUMENT OR ANY ACTION ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION
OR ACTIONS.
[SECTION 6.14. SPECIAL LOUISIANA PROVISIONS. The following
provisions shall apply hereto if the remedies of the Secured Parties are
determined, by a final and nonappealable ruling of a court of competent
jurisdiction, to be governed by the laws of Louisiana. The Collateral Agent
shall have the right, upon the occurrence of an Event of Default and in addition
to all of its other rights, powers and remedies under this Agreement and
applicable law, to cause the Collateral to be seized and sold under Louisiana
executory process or under writ of fieri facias issued in execution of an
ordinary judgment obtained upon the Secured Obligations, at the Collateral
Agent's sole option, without appraisement, appraisement being hereby expressly
waived, as an entirety or in portions as the Collateral Agent may determine, to
the highest bidder for cash or under such terms as Collateral Agent deems
acceptable, and to otherwise exercise the rights, powers and remedies afforded
herein and under applicable Louisiana law. For purposes of Louisiana executory
process, the Grantors acknowledge the Secured Obligations and do hereby CONFESS
JUDGMENT thereon and consents that judgment be rendered and signed, whether
during the court's term or during vacation, in favor of the Collateral Agent and
the Secured Parties for the full amount of the Secured Obligations. Any and all
declarations of fact made by authentic act before a notary public in the
presence of two witnesses by a person declaring that such facts lie within his
knowledge shall constitute authentic evidence of such facts for the purpose of
executory process. The Grantors hereby waive: (a) the benefit of appraisement
as provided in Louisiana Code of Civil Procedure Articles 2332, 2336, 2723 and
2724, and all other laws conferring the same; (b) the demand and three days'
delay accorded by Louisiana Code of Civil Procedure Articles 2639 and 2721; (c)
the notice of seizure required by Louisiana Code of Civil Procedure Articles
2293 and 2721; (d) the three days' delay provided by Louisiana Code of Civil
Procedure Articles 2331 and 2722; (e) the benefit of the other provisions of
Louisiana Code of Civil Procedure Articles 2331, 2722 and 2723; (f) the benefit
of any other articles of the Louisiana Code of Civil Procedure not specifically
mentioned above; and (g) all pleas of division and discussion with respect to
the Secured Obligations. In the event the Collateral Agent elects, at its
option, to enter suit via ordinaria on the Secured Obligations, in addition to
the foregoing confession of judgment, each Grantor hereby waives citation, other
legal process and legal delays and hereby consents that judgment for the unpaid
principal due on the Secured Obligations, together with interest, attorneys'
fees, costs and other charges that may be due as part of the Secured
Obligations, be rendered and signed immediately.
In the event the Collateral or any part thereof is seized as an
incident to an action for the recognition or enforcement of this Agreement by
executory process, ordinary process, sequestration, writ of fieri facias, or
otherwise, the Grantors and the Collateral Agent agree that the court issuing
any such order shall, if petitioned for by the Collateral Agent, direct the
applicable sheriff to appoint as a keeper of the Collateral, the Collateral
Agent or any trustee designated by the Collateral Agent or any Person named by
the Collateral Agent at the time such
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<PAGE>
seizure is effected. This designation of a keeper will be pursuant to Louisiana
Revised Statutes 9:5136-9:5140.2 and the Collateral Agent or its trustee shall
be entitled to all the rights and benefits of a keeper afforded thereunder as
the same may be amended. The keeper shall be entitled to receive as compensation
a reasonable amount to be fixed by the court based upon the keeper's activities
and the amounts expended in connection with the management, operation and
maintenance of the Collateral. The Collateral Agent shall not be under any
obligation to petition such court for the appointment of a keeper.]
(remainder of page intentionally left blank)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first set forth above.
GRANTOR:
-------
ASMI MANAGEMENT INC., A FLORIDA CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
CSNO, INC., A LOUISIANA CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
GRAND PALAIS RIVERBOAT, INC., A LOUISIANA
CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
ISLE OF CAPRI CASINO COLORADO, INC.,
A COLORADO CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
S-1
<PAGE>
LRG HOTELS, L.L.C., A LOUISIANA LIMITED
LIABILITY COMPANY.
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
LRGP HOLDINGS, INC., A LOUISIANA CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
LOUISIANA RIVERBOAT GAMING PARTNERSHIP, A
LOUISIANA GENERAL PARTNERSHIP
BY: LRGP HOLDINGS, INC., A LOUISIANA
CORPORATION AND GENERAL PARTNER OF LOUISIANA
RIVERBOAT GAMING PARTNERSHIP
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
P.P.I., INC., A FLORIDA CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
S-2
<PAGE>
RIVERBOAT CORPORATION OF MISSISSIPPI, A
MISSISSIPPI CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE:_____________________________________
RIVERBOAT CORPORATION OF MISSISSIPPI--
VICKSBURG, A MISSISSIPPI CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
RIVERBOAT SERVICES INCORPORATED, AN IOWA
CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
ST. CHARLES GAMING COMPANY, INC., A
LOUISIANA CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
S-3
<PAGE>
COLLATERAL AGENT:
FLEET NATIONAL BANK, AS COLLATERAL AGENT
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
S-4
<PAGE>
SCHEDULE 2.1.2.
TO SUBSIDIARY
SECURITY AGREEMENT
NOTES RECEIVABLE
----------------
<PAGE>
SCHEDULE 2.1.11
TO SUBSIDIARY
SECURITY AGREEMENT
SECURITIES
----------
<PAGE>
SCHEDULE 2.1.12.4
TO SUBSIDIARY
SECURITY AGREEMENT
INTELLECTUAL PROPERTY RIGHTS
----------------------------
<PAGE>
SCHEDULE 3.2 TO
SUBSIDIARY
SECURITY AGREEMENT
<TABLE>
<CAPTION>
LOCATIONS AND NAMES
-------------------
Entity Other Prior and Current Corporate Office
Trade or Legal Names Chief Executive Office Other Locations Fed. Tax I.D. #
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE 2.1.12.2
TO SUBSIDIARY
SECURITY AGREEMENT
DEPOSIT ACCOUNTS
----------------
<PAGE>
SCHEDULE 2.1.12.4
TO SUBSIDIARY
SECURITY AGREEMENT
LEASED CONTRACTS
----------------
<PAGE>
SCHEDULE 2.1.12.4
TO SUBSIDIARY
SECURITY AGREEMENT
INTELLECTUAL PROPERTY RIGHTS
----------------------------
<PAGE>
SCHEDULE 3.11
TO SUBSIDIARY
SECURITY AGREEMENT
LOCATION OF FIXTURES
--------------------
<PAGE>
EXHIBIT A TO
SUBSIDIARY
SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN PATENTS AND TRADEMARKS
-------------------------
NOTICE IS HEREBY GIVEN that the persons named on the signature pages
of the Subsidiary Security Agreement (as defined below) (each, individually, a
"GRANTOR" and all collectively, the "GRANTORS"), Casino America, Inc., a
Delaware corporation ("CASINO AMERICA"), with an office located at 711
Washington Loop, Biloxi, Mississippi 39530, and Fleet National Bank (the
"COLLATERAL AGENT"), with an office located at 777 Main Street, Hartford,
Connecticut 06115, on behalf of itself, the Collateral Agent and the holders of
certain Notes issued under an Indenture dated as of August ___, 1996
(collectively, the "SECURED PARTIES"), have entered into a Subsidiary Security
Agreement dated as of August ___, 1996 (as amended from time to time, the
"SUBSIDIARY SECURITY AGREEMENT").
Pursuant to the Subsidiary Security Agreement, the undersigned Grantor
has granted, conveyed, pledged, assigned and transferred to the Collateral
Agent, for the benefit of the Secured Parties, a security interest in, (a) the
registered patents, applications for registration of patents, and licenses of
registered patents listed in Schedule A hereto, and (b) the registered
trademarks and service marks, applications for registration of trademarks and
service marks, and licenses of registered trademarks and service marks listed in
Schedule B hereto, together with the goodwill of the business symbolized
thereby, to secure the payment, performance and observance of the Secured
Obligations as defined in the Subsidiary Security Agreement.
The Commissioner of Patents and Trademarks is requested to record this
notice in its records
Dated:
[SUBSIDIARY GRANTOR],
a ___________________
By: ________________________________
Name: ______________________________
Title: _____________________________
<PAGE>
SCHEDULE A
TO
NOTICE OF SECURITY INTEREST IN PATENTS AND TRADEMARKS
FROM
[SUBSIDIARY GRANTOR]
1. Patents.
Patent Registration No. Registration Date
2. Applications for Federal Registration of Patents.
Patent Serial No. Filing Date
<PAGE>
SCHEDULE B
TO
NOTICE OF SECURITY INTEREST IN PATENTS AND TRADE
FROM
[SUBSIDIARY GRANTOR]
1. Federal Trademark and Service Mark Registrations.
Trademark/Service Mark Registration No. Registration Date
2. Trademark and Service Mark Applications for Federal Registration.
TRADEMARK/SERVICE MARK SERIAL NO.
<PAGE>
EXHIBIT 10.5
EXHIBIT H
TO INDENTURE
FORM OF COMPANY PLEDGE AGREEMENT
--------------------------------
COMPANY PLEDGE AGREEMENT, dated as of August ___ ,1996 (as may be
amended from time to time, the "AGREEMENT") by and between Casino America, Inc.,
a Delaware corporation (the "PLEDGOR"), and Fleet National Bank, as collateral
agent for the Trustee (as defined below) and the Persons that now or in the
future are holders of the Notes (as defined below) issued under the Indenture
described below (the "HOLDERS") (in such capacity, Fleet National Bank or any
successor in such capacity is referred to herein as the "COLLATERAL AGENT").
R E C I T A L S
- - - - - - - -
A. Pursuant to the Indenture dated as of the date hereof (as may be
amended from time to time, the "INDENTURE") by and among the Pledgor, the
Subsidiary Guarantors and Fleet National Bank, as trustee (the "TRUSTEE"), the
Pledgor will issue __% Senior Secured Notes due 2003 in an aggregate principal
amount of up to $300,000,000 (the "NOTES"), the payment of which will be
guaranteed by the Subsidiary Guarantors.
B. The Pledgor is the owner of certain shares of capital stock and of
certain partnership, limited liability company, or limited liability partnership
interest, as described on Schedule 3.4 (the "PLEDGED EQUITY") and certain notes
evidencing indebtedness made in favor of the Pledgor, as described on Schedule
3.5 (the "PLEDGED DEBT;" the Pledged Equity and the Pledged Debt being
collectively the "PLEDGED COLLATERAL").
C. It is a condition precedent to the issuance of the Notes, that the
Pledged Collateral and the other collateral described herein be pledged to the
Collateral Agent, for the benefit of itself, the Trustee and the Holders
(together with their respective successors and assigns, collectively, the
"SECURED PARTIES"), as set forth herein.
D. The parties acknowledge that certain provisions of this Agreement
may be subject to the Gaming Laws of certain jurisdictions, including without
limitation, Louisiana and Mississippi.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
ARTICLE 1
---------
DEFINITIONS AND RELATED MATTERS
SECTION 1.1. DEFINITIONS. Capitalized terms not otherwise defined
herein shall have the respective meanings specified in the Indenture. In
addition, the following terms with initial capital letters have the following
meanings:
"CHARGES" means all federal, state, county, city, municipal or other
taxes, levies, assessments or charges that, if not paid when due, may result in
a Lien of any Governmental Authority against any Collateral.
"COLLATERAL" has the meaning set forth in Section 2.1.
"CONTRACTUAL OBLIGATION" means, as applied to any Person, any
provision of any security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement, or other instrument to which
that Person is a party or by which it or any of its owned properties is bound or
to which it or any of its owned properties is subject.
"EQUITY ISSUER" has the meaning set forth in Section 2.1.3.
"EVENT OF DEFAULT" has the meaning set forth in Section 5.1.
"GOVERNING AGREEMENT" has the meaning set forth in Section 2.1.3.
"NOTE DOCUMENTS" means the Indenture, the Notes, the Subsidiary
Guarantees and the Collateral Documents.
"PLEDGED COLLATERAL" has the meaning set forth in the Recitals.
"PLEDGED DEBT CONSENT" has the meaning set forth in Section 3.5.1.
"PROCEEDS" has the meaning set forth in Section 2.1.6.
"SECURED OBLIGATIONS" has the meaning set forth in Section 2.2.
"SECURITY INTEREST" has the meaning set forth in Section 2.1.
"SUPPLEMENTAL DOCUMENTATION" means financing statements, continuation
statements, consents, acknowledgments, assignments, schedules of Collateral and
any other instruments or documents necessary or requested by the Collateral
Agent (i) to create, perfect and maintain perfected the first priority Security
Interest in any Collateral (except as otherwise provided in this Agreement) or
(ii) to enable the Collateral Agent to receive all interest, dividends and
distributions from time to time paid with respect to, and all Proceeds of, all
Collateral which the Collateral Agent is entitled to receive hereunder.
-2-
<PAGE>
"UCC" means Article 9 (or, with respect to securities, Article 8) of
the Uniform Commercial Code (as amended from time to time) of the State of New
York.
SECTION 1.2. RELATED MATTERS.
1.2.1. TERMS USED IN THE UCC. Unless the context clearly requires
otherwise, all lower-case terms used and not otherwise defined herein that are
used or defined in the UCC shall have the same meanings herein.
1.2.2. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, and "including" is not
limiting. The words "hereof", "herein", "hereby", "hereunder" and similar terms
in this Agreement refer to this Agreement as a whole (including the Preamble,
the Recitals and all Schedules and Exhibits) and not to any particular provision
of this Agreement. Article, section, subsection, exhibit, recital, preamble and
schedule references in this Agreement are to this Agreement unless otherwise
specified. References in this Agreement to any agreement, other document or law
or to amendments of any document or law or similar language, regardless of
whether such reference includes "as amended," "as may be amended from time to
time" or other similar language, shall include any amendments, supplements,
replacements, renewals or other modifications, excepting any reference to any
agreement, document or law that specifically limits said agreement, document or
law to its terms as of the date hereof.
1.2.3. DETERMINATIONS. Any determination or calculation contemplated
by this Agreement that is made by the Collateral Agent shall be final and
conclusive and binding upon the Pledgor, in the absence of manifest error.
References in this Agreement to "determination" by the Collateral Agent include
good faith estimates (in the case of quantitative determinations) and good faith
beliefs (in the case of qualitative determinations). All references herein to
"discretion" of the Collateral Agent (or terms of similar import) shall mean
"absolute and sole discretion." All consents and other actions of the Collateral
Agent contemplated by this Agreement may be given, taken, withheld or not taken
in the Collateral Agent's discretion (whether or not so expressed), except as
otherwise expressly provided herein.
1.2.4. GOVERNING LAW. Except to the extent otherwise required under
applicable law, the UCC shall govern the attachment, perfection, priority and
enforcement of the Security Interest and all other matters to which the UCC
applies pursuant to the terms thereof. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
1.2.5. HEADINGS. The Article and Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction hereof.
1.2.6. SEVERABILITY. If any provision of this Agreement or any Lien or
other right hereunder shall be held to be invalid, illegal or unenforceable
under applicable law in any jurisdiction, such provision, Lien or other right
shall be ineffective only to the extent of such
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invalidity, illegality or unenforceability, which shall not affect any other
provisions herein or any other Lien or right granted hereby or the validity,
legality or enforceability of such provision, Lien or right in any other
jurisdiction.
1.2.7. EXHIBITS AND SCHEDULES. All of the appendices, exhibits and
schedules attached to this Agreement shall be deemed incorporated herein by
reference.
ARTICLE 2
---------
THE SECURITY INTEREST; SECURED OBLIGATIONS
SECTION 2.1. SECURITY INTEREST. To secure the payment and performance
of the Secured Obligations as and when due, the Pledgor hereby grants, conveys,
pledges, assigns and transfers to the Collateral Agent, for the benefit of the
Secured Parties, a security interest (the "SECURITY INTEREST") in, all right,
title, claim and interest of the Pledgor in and to the following property,
whether now owned and existing or hereafter acquired or arising, and wherever
located (such property being, collectively, the "COLLATERAL"):
2.1.1. The Pledged Collateral and all certificates and instruments
representing or evidencing the Pledged Collateral, together with, in the case of
Pledged Debt included therein, any and all interest coupons (if any) attached
thereto and any and all notes, security agreements, pledge agreements,
mortgages, deeds of trust and other security and loan documents from time to
time evidencing or securing such indebtedness;
2.1.2. Any and all securities or partnership, limited liability
company, limited partnership or other interests issued by any issuer of the
Pledged Equity, or any successor thereto, that the Pledgor acquires or has the
right to acquire from time to time in any manner in substitution for or in
addition to any of the foregoing and any and all certificates and instruments
representing or evidencing such securities;
2.1.3. The partnership or operating agreements and other charter
documents of the respective partnership, limited liability company or limited
liability partnership that issued Pledged Equity (each, an "EQUITY ISSUER"), in
each case as amended from time to time (each, a "GOVERNING AGREEMENT");
2.1.4. Any and all additions to or replacements of the foregoing;
2.1.5. Any and all rights, powers, remedies and privileges of the
Pledgor under or with respect to any of the foregoing; and
2.1.6. Any and all proceeds and products of any of the foregoing,
whether now held and existing or hereafter acquired or arising, including any
and all cash, securities, instruments and other property from time to time paid,
payable or otherwise distributed in respect of or in exchange for any or all of
the foregoing (collectively, the "PROCEEDS"). "Proceeds" shall include (i) any
options, warrants, securities or other property issued and
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delivered by the issuer of or obligor on any Collateral as a stock dividend or
distribution in connection with any reclassification, increase or reduction of
capital or issued or delivered in connection with any merger or other
reorganization and (ii) any property received upon liquidation or dissolution of
any issuer of or obligor on any Collateral or upon or in respect of any
distribution of capital.
SECTION 2.2. SECURED OBLIGATIONS. The Security Interest shall secure
the due and punctual payment and performance of any and all present and future
obligations and liabilities of the Pledgor of every type or description to the
Secured Parties:
2.2.1. arising under or in connection with the Indenture or the Notes,
whether for principal, premium (if any), interest, expenses, indemnities or
other amounts (including attorneys' fees and expenses); or
2.2.2. arising under or in connection with this Agreement or any other
Note Document, including for reimbursement of amounts that may be advanced or
expended by the Collateral Agent (i) to satisfy amounts required to be paid by
the Pledgor under this Agreement or any other Note Document for claims and
Charges, together with interest thereon to the extent provided or (ii) to
maintain or preserve any Collateral or to create, perfect, continue or protect
any Collateral or the Security Interest therein, or its priority;
in each case whether due or not due, direct or indirect, joint and/or several,
absolute or contingent, voluntary or involuntary, liquidated or unliquidated,
determined or undetermined, now or hereafter existing, renewed or restructured,
whether or not from time to time decreased or extinguished and later increased,
created or incurred, whether or not arising after the commencement of a
proceeding under the Federal Bankruptcy Code (including post-petition interest)
and whether or not recovery of any such obligation or liability may be barred by
a statute of limitations or such obligation or liability may otherwise be
unenforceable (all obligations and liabilities described in this Section 2.2 are
collectively referred to as the "SECURED OBLIGATIONS").
ARTICLE 3
---------
WARRANTIES AND REPRESENTATIONS
The Pledgor represents and warrants that all representations and
warranties made with respect to it, its assets and its obligations in the
Purchase Agreement are true and correct and makes the following additional
representations and warranties, all of which shall survive until termination of
this Agreement pursuant to Section 6.7.
SECTION 3.1. FILINGS, ETC. Duly executed financing statements
containing a correct description of the Collateral have been delivered to the
Collateral Agent for filing in every governmental office in every state, county
and other jurisdiction in which the principal place of business or the chief
executive office of the Pledgor is located, and in each other jurisdiction in
which such action is necessary to establish a valid and perfected Lien in favor
of
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the Collateral Agent in all Collateral in which a Lien may be perfected by
filing, and no further or subsequent filing, recording or registration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements.
SECTION 3.2. LOCATIONS OF OFFICES AND NAMES. (i) The Pledgor's chief
executive office and principal place of business are located at the addresses
set forth on Schedule 3.2, (ii) all other places of business of the Pledgor and
all other locations at which any books and records related to any Collateral are
located are set forth on Schedule 3.2, including computer programs, printouts
and other computer materials, (iii) the Pledgor's federal tax identification
number is set forth on Schedule 3.2 and (iv) there are no prior or current trade
or legal names used to identify the Pledgor in its business or in the ownership
of its properties other than those set forth on Schedule 3.2.
SECTION 3.3. TITLE TO COLLATERAL; VALIDITY AND PERFECTION OF SECURITY
INTEREST; ABSENCE OF OTHER LIENS.
3.3.1. The Pledgor has good and marketable title to all Collateral.
The Security Interest constitutes a valid and, upon delivery of all Pledged
Collateral to the Collateral Agent pursuant to Section 4.1 and filing of
financing statements covering the Collateral with the appropriate Governmental
Authorities, perfected and first priority Lien in all of the Collateral that
secures payment and performance of the Secured Obligations.
3.3.2. The Collateral is free and clear of all Liens other than the
Security Interest and Liens permitted under Section 1011 of the Indenture.
SECTION 3.4. REGARDING THE PLEDGED EQUITY. Schedule 3.4 sets forth the
number of authorized and the number of issued shares of each class of Capital
Stock of each issuer of Pledged Equity. The Pledged Equity includes all issued
and outstanding shares of Capital Stock of each issuer thereof, other than
shares pledged for the benefit of the Secured Parties under the Subsidiary
Pledge Agreement. All outstanding Capital Stock of each such issuer has been
duly authorized, validly issued and is fully paid and nonassessable. There are
no outstanding options, warrants, convertible securities or other rights,
contingent or absolute, to acquire any Capital Stock of any such issuer, except
as set forth on Schedule 3.4.
SECTION 3.5. REGARDING THE PLEDGED DEBT.
--------------------------
3.5.1. The Pledgor has delivered to the Collateral Agent a Consent and
Acknowledgment in substantially the form of Exhibit A, duly executed by each
obligor on Pledged Debt (each, a "PLEDGED DEBT CONSENT"). Each Pledged Debt
Consent is in full force and effect and constitutes a legal, valid and binding
obligation of the obligor on the Pledged Debt subject thereto.
3.5.2. Except as disclosed on Schedule 3.5, (i) the Pledged Debt
constitutes the legal, valid and binding obligations of the respective obligors
thereunder in the amount thereof set forth on Schedule 3.5, (ii) no Pledged Debt
is in default and (iii) there are no setoffs or
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counterclaims or disputes existing or asserted with respect to any Pledged Debt,
except as set forth on Schedule 3.5.
ARTICLE 4
---------
COVENANTS AND AGREEMENTS
SECTION 4.1. DELIVERY OF PLEDGED COLLATERAL, ETC.
-----------------------------------
4.1.1. On the date hereof, the Pledgor is delivering to the Collateral
Agent certificates or instruments in respect of all Pledged Collateral that
exists on such date, the physical possession of which is necessary in order for
the Security Interest to be perfected or delivery of which was requested by the
Collateral Agent to assure the priority of the Security Interest therein.
Subject only to Gaming Laws, the Pledgor shall deliver to the Collateral Agent
promptly after acquisition thereof all Pledged Collateral acquired after the
date hereof. All Pledged Collateral shall be in suitable form for transfer by
delivery, or be duly endorsed to the order of the Collateral Agent or
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Collateral Agent. Subject only to
Gaming Laws and to the revocable right specified in Section 4.7, the Collateral
Agent shall have the right, at any time in its discretion and without notice to
any Pledgor, to transfer to or to register in the name of the Collateral Agent
or its nominee any or all the Collateral. It is expressly acknowledged that such
registration of the Collateral in the name of the Collateral Agent or its
nominee is solely for the purpose of assuring that the Collateral Agent receives
all cash and stock dividends and other property from time to time distributed
with respect to the Collateral and shall not be deemed to constitute the
Collateral Agent the owner (beneficial or otherwise) of any Collateral for any
other purpose, except to the extent contemplated by Section 4.7 or Article 5.
Without limitation, the Collateral Agent shall not be deemed to "control" the
Collateral or the issuer thereof for purposes of any applicable laws (including
securities, environmental, tax, bankruptcy or other laws but excluding the UCC)
as a result of the Collateral being registered in the name of the Collateral
Agent. In addition, the Collateral Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
If required by Gaming Laws, the Collateral Agent shall hold (or cause a sub-
collateral agent to hold) all Pledged Collateral at such locations as may be
required by Gaming Laws.
4.1.2. Without limiting Section 4.1.1, but subject to Section 4.7.1.2
and to Gaming Laws, if the Pledgor receives or becomes entitled to receive any
securities issued by any issuer of Pledged Equity, or any successor thereto, in
any manner in substitution for or in addition to the Pledged Equity, or if the
Pledgor shall become entitled to receive or shall receive any securities or
other property in addition to, in substitution of, as a conversion of, or in
exchange for, any of the Pledged Equity or any other Collateral, or shall
receive or become entitled to receive any interest or other payment in respect
of any Pledged Debt, the Pledgor shall receive the same as the agent for the
Collateral Agent, and shall hold the same in trust
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for and deliver the same promptly to the Collateral Agent in the exact form in
which received, together with appropriate instruments of transfer or assignments
in blank, to be held by the Collateral Agent as Collateral hereunder.
SECTION 4.2. FURTHER ASSURANCES. The Pledgor shall, at its own
expense, perform such acts as may be necessary, or that the Collateral Agent may
request at any time, to assure the attachment, perfection and priority of the
Security Interest, to exercise the rights and remedies of the Collateral Agent
hereunder or to carry out the intent of this Agreement. Without limitation, the
Pledgor shall execute and deliver (or cause any third party to execute and
deliver) to the Collateral Agent, at any time and from time to time, all
Supplemental Documentation, in form and substance acceptable to the Collateral
Agent.
SECTION 4.3. POWER OF ATTORNEY. The Pledgor hereby irrevocably
appoints (the appointment being irrevocable because it is coupled with an
interest) the Collateral Agent and its employees and agents as the Pledgor's
true and lawful attorneys-in-fact, with full power of substitution, and, subject
to Gaming Laws, to do all things (i) required to be done by the Pledgor under
this Agreement or the other Note Documents and (ii) that the Collateral Agent
may reasonably deem necessary or advisable to assure the attachment, perfection
and first priority of the Security Interest or otherwise to exercise the rights
and remedies of the Collateral Agent hereunder or carry out the intent of this
Agreement (including by voting any Collateral as contemplated by Section 4.7),
in each case irrespective of whether a Default or Event of Default then exists
(except as otherwise provided herein), in each and every instance and at the
Pledgor's expense. Without limitation, the Collateral Agent and its officers
and agents shall be entitled to do all of the following, as fully as the Pledgor
might:
4.3.1. to sign the name of the Pledgor on any Supplemental
Documentation and to deliver and file such Supplemental Documentation to or with
such Persons as the Collateral Agent, in its discretion, may elect; and
4.3.2. to affix, by facsimile signature or otherwise, the general or
special endorsement of the Pledgor, in such manner as the Collateral Agent shall
deem advisable, to any Pledged Collateral that has been delivered to or obtained
by the Collateral Agent without appropriate endorsement or assignment.
In addition, during the existence of an Event of Default, the
Collateral Agent or its employees or agents may, without notice to the Pledgor
and at such time or times as the Collateral Agent in its discretion may
determine, in the Pledgor's or in the Collateral Agent's name collect any and
all amounts due to the Pledgor from obligors with respect to any Pledged Debt by
legal proceedings or otherwise. The Collateral Agent shall be under no
obligation whatsoever to take any of the foregoing actions. Absent bad faith or
willful misconduct, the Collateral Agent and its shareholders, directors,
officers, employees and agents shall have no liability or responsibility for any
act taken with respect thereto. A copy of this Agreement and, if applicable, a
statement by the Collateral Agent that an Event of Default exists shall be
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conclusive evidence of the Collateral Agent's right to act under this Section
4.3 as against all third parties.
SECTION 4.4. CHANGES OF LOCATIONS OF COLLATERAL, OFFICES, NAME OR
STRUCTURE. The Pledgor shall give the Collateral Agent 15 Business Days notice
of the adoption of a trade name or change in its name, chief executive office,
principal place of business, identity or corporate structure or locations at
which any books or records related to any Collateral are located.
SECTION 4.5. PAYMENT OF CHARGES AND CLAIMS. The Pledgor shall pay (i)
all Charges imposed upon any Collateral and (ii) all claims that have become due
and payable and, under applicable law, have or may become Liens upon any
Collateral, in each case before any penalty shall be incurred with respect
thereto. If the Pledgor fails to pay or obtain the discharge of any Charge,
claim or Lien required to be paid or discharged under this Section 4.5 and
asserted against any Collateral, the Pledgor shall so notify the Collateral
Agent. Regardless of whether such notice is given, the Collateral Agent may, at
any time and from time to time, in its discretion and without waiving or
releasing any obligation of the Pledgor under this Agreement or the other Note
Documents or waiving any Default or Event of Default, make such payment, obtain
such discharge or take such other action with respect thereto as the Collateral
Agent deems advisable.
SECTION 4.6. CONTINUING OBLIGATION OF PLEDGOR; DUTY OF CARE;
INDEMNIFICATION.
4.6.1. Anything herein to the contrary notwithstanding, (i) the
Pledgor shall remain liable under the respective Governing Agreement to the
extent set forth therein to perform its duties and obligations thereunder, and
shall receive all allocations of income, gain, expense, loss and other items, to
the same extent as if this Agreement had not been executed, (ii) the exercise by
the Collateral Agent of any of its rights hereunder shall not release the
Pledgor from any of its duties or obligations under such Governing Agreement,
and (iii) the Secured Parties shall not have any obligation or liability, and
shall receive no allocations of income, gain, expense, loss or other items,
under such Governing Agreement or applicable law by reason of this Agreement,
nor shall the Secured Parties be obligated to perform any of the obligations or
duties of the Pledgor thereunder, to make any payment of taxes or other amounts,
to make any inquiry as to the nature or sufficiency of any payment received by
the Pledgor or the Collateral Agent or the sufficiency of any performance by any
party under such Governing Agreement or to take any action to collect or enforce
any claim for payment assigned hereunder. The Secured Parties shall not by
reason of this Agreement or the exercise of any remedies hereunder become
responsible or liable in any manner or to any extent for the obligations and
liabilities of any Interest Issuer or the Pledgor, whether now existing or
hereafter incurred.
4.6.2. The Collateral Agent shall not have any duty of care with
respect to the Collateral, other than an obligation to exercise reasonable care
with respect to Collateral in its
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possession; provided that the Collateral Agent shall be deemed to have exercised
reasonable care if Collateral in its possession is accorded treatment
substantially comparable to that which the Collateral Agent accords its own
property and is held in accordance with Section 4.9.1.3 and Gaming Laws; and
provided further that the Collateral Agent shall have no obligation to take any
actions to preserve rights against other parties with respect to any Collateral.
Without limitation, the Collateral Agent shall (A) bear no risk or expense with
respect to any Collateral and (B) have no duty with respect to calls,
conversions, presentments, maturities, notices or other matters relating to
Collateral, or to maximize interest or other returns with respect thereto.
4.6.3. The Pledgor hereby agrees to indemnify and hold harmless the
Collateral Agent and its directors, officers, employees and agents against any
and all claims, actions, liabilities, costs and expenses of any kind or nature
whatsoever (including fees and disbursements of counsel) that may be imposed on,
incurred by, or asserted against any of them, in any way relating to or arising
out of this Agreement or any action taken or omitted by them hereunder, except
to the extent a court holds in a final and nonappealable judgment that they
resulted from the gross negligence or willful misconduct of such Persons against
and from all such obligations and liabilities.
4.6.4. The Collateral Agent may at any time deliver or redeliver the
Collateral or any part thereof to the Pledgor and the receipt of any of the same
by the Pledgor shall be complete and full acquittance for the Collateral so
delivered, and the Collateral Agent thereafter shall be discharged from any
liability or responsibility therefor.
SECTION 4.7. VOTING AND OTHER CONSENSUAL RIGHTS: DISTRIBUTIONS.
4.7.1. So long as no Default shall exist:
4.7.1.1. The Pledgor shall be entitled to exercise any and all voting
rights pertaining to any Collateral (other than the Pledged Debt), for any
purpose not inconsistent with the terms of this Agreement and the other Note
Documents; provided, however, that the Pledgor shall not exercise any such right
if it would result in a Default or have a material adverse effect on any one or
more of the following: (i) the business, assets, results of operations or
financial condition of the Pledgor or the Pledgor and its Restricted
Subsidiaries taken as a whole, (ii) the ability of the Pledgor to perform its
obligations hereunder the Notes, the Indenture or under any other Note Document
to which it is a party or (iii) the Collateral or the Security Interest.
4.7.1.2. Except as otherwise provided herein or in the Indenture, the
Pledgor shall be entitled to receive and retain and use free of the Security
Interest any and all cash and other property paid or otherwise distributed in
respect of the Collateral; provided, however, that any and all (i) dividends and
other distributions paid or payable other than in cash or in the form of Pledged
Collateral, (ii) cash paid upon or in respect of any of the Pledged Collateral
upon or in respect of the liquidation or dissolution of any issuer thereof or
upon or in respect of any distribution of capital or redemption or exchange of
any Pledged
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Collateral and (iii) cash paid with respect to the principal of, or in
redemption or exchange of, any Pledged Debt, shall be delivered to the
Collateral Agent, in the exact form received, to be held as Collateral
hereunder.
4.7.2. Subject to Gaming Laws, so long as a Default shall exist, at
the sole option of the Collateral Agent, any or all rights of the Pledgor to
exercise voting and other consensual rights and to receive cash and other
property distributed in respect of Collateral as permitted by Sections 4.7.1.1
and 4.7.1.2 above, shall cease, and the Collateral Agent, if and when it
notifies the Pledgor of the exercise of such option, shall have the sole right
to exercise any or all such voting rights and receive and to hold as Collateral
any or all such cash and other property.
4.7.3. For so long as a Default shall exist, the Collateral Agent, to
the exclusion of the Pledgor, shall be entitled to exercise all rights, powers,
remedies and privileges of the Pledgor relating to the Pledged Debt (whether
exercisable at any time or only during the existence of a Default or Event of
Default as defined therein), and all performance of the obligor relating to the
Pledged Debt shall be rendered only to the Collateral Agent, as if the
Collateral Agent were the beneficiary thereunder; provided that the rights,
powers, remedies and privileges of the Collateral Agent relating to the Pledged
Debt shall be no greater than those of the Pledgor thereunder. Without
limitation, such rights shall include all rights of reimbursement and indemnity.
4.7.4. For so long as a Default shall exist:
4.7.4.1. The Pledgor shall promptly, upon becoming aware thereof,
notify the Collateral Agent of the existence of any material default or event of
default under or with respect to any Pledged Debt.
4.7.4.2. The Pledgor shall not, without the prior written consent of
the Collateral Agent (which consent may be withheld in the Collateral Agent's
discretion):
4.7.4.2.1. amend (including by way of waiver) any provision
of any of the Pledged Debt, or
4.7.4.2.2. exercise any rights, powers, remedies and privileges of the
Pledgor related to the Pledged Debt; provided that the Pledgor shall file a
proof of claim in respect of the Pledged Debt in any proceeding under the
Federal Bankruptcy Code or any similar proceeding as and when required therein.
4.7.5. Notwithstanding Sections 4.7.3 and 4.7.4, while no Default
exists, the Pledgor shall be entitled to receive and retain and use free of the
Security Interest any and all interest from time to time paid or payable in cash
with respect to the Pledged Debt; provided that this Section 4.7.5 shall not
apply to any interest paid or payable while a Default exists, all of which shall
be paid directly to the Collateral Agent, to be held as Collateral hereunder.
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4.7.6. All cash and other property required to be delivered to the
Collateral Agent hereunder shall, if received by the Pledgor, be received in
trust for the benefit of the Collateral Agent, be segregated from the other
property of the Pledgor, and promptly be delivered to the Collateral Agent in
the same form as so received (with any appropriate endorsements or assignments).
SECTION 4.8. REGISTRATION RIGHTS.
4.8.1. Subject to Gaming Laws, the Pledgor agrees that, at any time
following the occurrence of an Event of Default, upon request of the Collateral
Agent and without expense to the Collateral Agent, it shall at its own expense:
4.8.1.1. use its best efforts to obtain all necessary Governmental
Approvals for the sale by the Collateral Agent of the Collateral or any part
thereof;
4.8.1.2. prepare, cause to be filed and use its best efforts to cause
to become effective with respect to the Collateral, or any part thereof, one or
more registration statements under the Securities Act on Form S-1 (or such other
form for which the respective issuer of the Collateral then qualifies and which
is available for the sale of the Collateral in accordance with the intended
method of disposition thereof) or one or more qualifications for exemption from
registration or similar documents under the Securities Act relating to any
offering or sale by the Collateral Agent of such Collateral;
4.8.1.3. prepare, cause to be filed and use its best efforts to cause
to become effective with respect to the Collateral, or any part thereof, such
qualification statements or similar documents (including any offering circular)
as may be necessary to have such Collateral qualified or registered under the
securities laws of such other jurisdictions (including the applicable state
securities or "Blue Sky" law), and to obtain the approvals of such Governmental
Authorities as necessary for the sale of such Collateral, as the Collateral
Agent may reasonably request in connection with any such offering or sale;
4.8.1.4. include in any such registration statement, qualification
statement or similar document all appropriate information relating to the
transaction or transactions in which the Collateral Agent proposes to offer or
sell such Collateral;
4.8.1.5. cause to be filed such pre-effective and post-effective
amendments to each such registration statement, qualification statement or
similar document as may be necessary to prevent any statement therein contained
from being untrue or misleading, and such filing, qualification or registration
to be kept effective for such period, up to a maximum of nine months, as the
Collateral Agent may deem appropriate to facilitate the sale or other
disposition of such Collateral;
4.8.1.6. furnish the Collateral Agent with such number of copies of
each such registration statement, qualification statement or similar document,
and any amendments thereto as the Collateral Agent may reasonably request;
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4.8.1.7. furnish to the Collateral Agent a legal opinion as to such
matters regarding such offering or sale as the Collateral Agent may reasonably
request; and
4.8.1.8. do such further acts and things as the Collateral Agent may
deem necessary or advisable to effectuate the offering and sale by the
Collateral Agent of such Collateral in compliance with applicable law.
4.8.2. The obligations of the Pledgor under this Section 4.8 exist
notwithstanding that the Pledgor thereby may be obligated to prepare audited
financial statements other than in the ordinary course or otherwise to incur
inconvenience and expense. The costs and expenses of all registrations and
qualifications provided for hereunder shall be paid by the Pledgor, including
underwriting discounts and commissions, stock transfer taxes, registration fees,
filing fees, printing expenses, costs of special audits incident to or required
as a result of any such registration, and fees and disbursements of legal
counsel for the Collateral Agent selected by the Collateral Agent.
4.8.3. The Pledgor shall notify the Collateral Agent promptly after
the Pledgor shall receive notice that any registration statement, qualification
statement or similar document or any amendment thereto requires amendment or has
become the subject of a stop order.
4.8.4. So long as any Secured Obligation remains outstanding, the
Pledgor's obligations hereunder are continuing obligations of the Pledgor, and
the Collateral Agent shall be entitled to demand registration of the Collateral,
or any part thereof, (but only once), at any time while an Event of Default
shall exist and successively upon the occurrence of an Event of Default
following the curing or waiver of an earlier Event of Default.
4.8.5. The Pledgor agrees to indemnify and hold harmless the
Collateral Agent and each underwriter (within the meaning of the Securities Act)
acting in the transaction, and each Person controlling (within the meaning of
the Securities Act) the Collateral Agent or underwriter, from and against any
and all claims, actions, liabilities, costs and expenses (including reasonable
legal fees and expenses) based upon or arising out of any actual or alleged
untrue statement of a material fact contained in any such registration
statement, qualification statement or similar document, or part thereof, or any
actual or alleged omission to state a material fact required to be stated in any
such document, or part thereof, or necessary to make the statements contained
therein not misleading; provided, however, that the Pledgor shall not have any
liability to any Person under the foregoing indemnity on account of any actual
or alleged untrue or misleading statement contained in, or any actual or alleged
omission from, any information furnished in writing to the Pledgor by such
Person specifically for use in such document and included thereon in reliance
therein.
4.8.6. If the indemnification provided for in Section 4.8.5 is
unavailable to or otherwise insufficient to hold harmless an indemnified party
hereunder in respect of any claims, actions, liabilities, costs or expenses
referred to herein, then the Pledgor, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such claims, actions, liabilities, costs or expenses in such
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proportion as is appropriate to reflect the relative fault of the Pledgor, the
Collateral Agent and each underwriter in connection with the statements or
omissions that resulted in such claims, actions, liabilities, costs or expenses,
as well as any other relevant equitable considerations.
4.8.7. The Pledgor agrees that (i) exercise of registration and other
rights provided in this Section 4.8 is not required in connection with any
exercise of remedies under Article 5 of this Agreement, (ii) such rights may be
exercised or not exercised in the discretion of the Collateral Agent and (iii)
any request for exercise of such rights may be withdrawn in whole or in part at
any time by the Collateral Agent in its discretion. The registration and other
rights provided in this Section 4.8 may be transferred to any purchaser of the
Collateral, or any portion thereof, pursuant to any sale described in Article 5.
The Collateral Agent may exercise its rights and powers under this Section 4.8.7
prior to any sale pursuant to Article 5 or, alternatively, the Collateral Agent
may assign such rights to the purchaser at any such sale, who shall then have
the registration and other rights specified herein.
SECTION 4.9. REGULATORY MATTERS.
4.9.1. The Collateral Agent acknowledges and agrees that:
4.9.1.1. all required prior approvals under Gaming Laws will be
obtained in connection with the Collateral Agent's exercise of any of the
remedies set forth in Section 5.2 of this Agreement, including, without
limitation, any separate prior approvals required in connection with the sale,
transfer or other disposition of the Pledged Equity;
4.9.1.2. the approval of this Agreement under Gaming Laws shall not be
deemed to constitute an approval, either express or implied, of any of the
actions of the Collateral Agent permitted hereunder to the extent that such
actions require a separate prior approval under Gaming Laws, and in the event
such separate prior approval is required the Collateral Agent shall not take
such action without first obtaining such separate prior approval; and
4.9.1.3. the Collateral Agent shall hold and maintain the Pledged
Equity at all times at a location in accordance with any applicable law or
Gaming Laws and shall make the certificates and instruments representing or
evidencing such Pledged Equity available for inspection by agents or employees
of any Governmental Authority immediately upon request during normal business
hours.
4.9.2. The Pledgor shall use its best efforts to obtain all necessary
consents of any Governmental Authority under Gaming Laws to any action required
or permitted to be taken hereunder, including the delivery of the Collateral and
the exercise of remedies by the Collateral Agent.
-14-
<PAGE>
ARTICLE 5
---------
EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT
SECTION 5.1. EVENT OF DEFAULT. The occurrence of one or more "Events
of Default" (as defined in the Indenture) shall constitute an "Event of Default"
hereunder.
SECTION 5.2. REMEDIES. If there occurs an Event of Default, then,
subject to Gaming Laws, whether or not all the Secured Obligations shall have
become immediately due and payable:
5.2.1. In addition to all its other rights, powers and remedies under
this Agreement and applicable law, the Collateral Agent shall have, and may
exercise, any and all of the rights, powers and remedies of a secured party
under the UCC, all of which rights, powers and remedies shall be cumulative and
not exclusive, to the extent permitted by applicable law.
5.2.2. The Collateral Agent shall have the right, as it may deem
necessary or advisable at its discretion, to do any or all of the following:
5.2.2.1. to foreclose the Security Interest by any available
judicial procedure or without judicial process;
5.2.2.2. to notify obligors on the Collateral that the Collateral has
been assigned to the Collateral Agent and that all payments thereon are to be
made directly and exclusively to or as specified by the Collateral Agent;
5.2.2.3. to collect by legal proceedings or otherwise (including by
foreclosure of any Lien securing Pledged Debt) all dividends, distributions,
interest, principal or other sums now or hereafter payable upon or on account of
the Collateral;
5.2.2.4. to enter into any extension or reorganization agreement or
any other agreement relating to or affecting the Collateral and, in connection
therewith, deposit or surrender control of any Collateral or accept other
property in exchange therefor;
5.2.2.5. to settle, compromise or release, on terms acceptable to the
Collateral Agent, in whole or in part, any amounts owing on the Collateral or
any disputes with respect thereto;
5.2.2.6. to receive, open and dispose of all mail addressed to the
Pledgor and notify postal authorities to change the address for delivery thereof
to such address as the Collateral Agent may designate, provided that the
Collateral Agent agrees that it will promptly deliver over to the Pledgor any
such opened mail as does not relate to the Collateral; and
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<PAGE>
5.2.2.7. to exercise any and all other rights, powers, privileges and
remedies of an owner of the Collateral, including rights of conversion, exchange
or subscription or other rights or upon the exercise by the Pledgor or the
Collateral Agent of any right, power or privilege pertaining to the Collateral,
the right to deposit and deliver any and all of the Collateral to any committee,
depository, transfer agent, registrar or other designated agency upon such terms
and conditions as the Collateral Agent may determine to be appropriate, all
without liability except to account for property actually received by it, but
the Collateral Agent shall have no duty to the Pledgor to exercise any such
right, power or privilege and shall not be responsible for any failure so to do
or delay in so doing.
5.2.3. The Collateral Agent shall have the right to sell or otherwise
dispose of all or any Collateral at public or private sale or sales, with such
notice as may be required by Section 5.4, in lots or in bulk, at any exchange,
over the counter or at any of the Collateral Agent's offices or elsewhere, for
cash or on credit, with or without representations or warranties, all as the
Collateral Agent, in its discretion, may deem advisable. The Collateral need not
be present at any such sales. If sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Collateral Agent until the sale price is paid by the purchaser thereof, but
the Collateral Agent shall not incur any liability in case any such purchaser
shall fail to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may be sold again upon like notice. The Collateral
Agent shall not be obligated to make any sale of the Collateral regardless of
notice of sale having been given. The Collateral Agent may purchase all or any
part of the Collateral at public or, if permitted by applicable law, private
sale, and in lieu of actual payment of the purchase price, the Collateral Agent
may apply against such purchase price any amount of the Secured Obligations. The
Pledgor agrees that any sale of Collateral conducted by the Collateral Agent in
accordance with the foregoing provisions of this Section shall be deemed to be a
commercially reasonable sale under Section 9-504 of the UCC.
5.2.4. The Collateral Agent shall not be required to register or
qualify any of the Collateral that constitutes securities under applicable state
or federal securities laws in connection with any sale or other disposition
thereof if such disposition is effected in a manner that complies with all
applicable federal and state securities laws. The Collateral Agent shall be
authorized, with respect to any disposition that is not so registered or
qualified, to restrict (if it deems it advisable to do so) the prospective
bidders or purchasers to persons who will represent and agree that they are
"accredited investors" or "qualified institutional buyers" under applicable law
and purchasing the Collateral for their own account for investment and not with
a view to the distribution or sale thereof. If any such Collateral is sold at
private sale, the Pledgor agrees that if such Collateral is sold in a manner
that the Collateral Agent in good faith believes to be reasonable under the
circumstances then existing, then (i) the sale shall be deemed to be
commercially reasonable in all respects, (ii) the Pledgor shall not be entitled
to a credit against the Secured Obligations in an amount in excess of the
purchase price, and (iii) the Collateral Agent shall not incur any liability or
responsibility to the Pledgor in connection therewith, notwithstanding the
possibility that a substantially higher price might have been realized at a
public sale. The Pledgor recognizes that a ready market may not exist for such
-16-
<PAGE>
Collateral if it is not regularly traded on a recognized securities exchange,
and that a sale by the Collateral Agent of any such Collateral for an amount
substantially less than the price that might have been achieved had the
Collateral been so traded may be commercially reasonable in view of the
difficulties that may be encountered in attempting to sell Collateral that is
privately traded.
SECTION 5.3. APPLICATION OF PROCEEDS.
5.3.1. Any cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon, all or any part of
the Collateral following the occurrence of an Event of Default may be held by
the Collateral Agent as Collateral and/or then or at any time thereafter applied
as follows:
5.3.1.1. first, to the Collateral Agent to pay all advances, charges,
costs and expenses payable to the Collateral Agent pursuant to Section 6.1; and
5.3.1.2. second, to pay the Secured Obligations in the order set
forth in the Indenture.
5.3.2. The Pledgor and any other Person then obligated therefor shall
pay to the Collateral Agent on demand any deficiency with regard to the Secured
Obligations that may remain after such sale, collection or realization of, from
or upon the Collateral.
5.3.3. Payments received from any third party on account of any
Collateral shall not reduce the Secured Obligations until paid in cash to the
Collateral Agent. The application of proceeds by the Collateral Agent shall be
without prejudice to the Collateral Agent's rights as against the Pledgor or
other Persons with respect to any Secured Obligations that may then be or remain
unpaid.
5.3.4. If at any time after an Event of Default the Pledgor receives
any collections upon or other Proceeds of any Collateral, whether in the form of
cash, notes or otherwise, such Proceeds shall be received in trust for the
Collateral Agent and the Pledgor shall keep all such Proceeds separate and apart
from all other funds and property so as to be capable of identification as the
property of the Collateral Agent and promptly deliver such Proceeds to the
Collateral Agent in the identical form received (with such endorsements or
assignments as are appropriate).
SECTION 5.4. NOTICE OF SALE. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Collateral Agent will send or otherwise make available to
the Pledgor reasonable notice of the time and place of any public sale or of the
time on or after which any private sale of any Collateral is to be made. The
Pledgor agrees that any notice required to be given by the Collateral Agent of a
sale or other disposition of Collateral, or any other intended action by the
Collateral Agent, that is received in accordance with the provisions set forth
in Section 6.4 ten (10) days prior to such proposed action shall constitute
commercially reasonable and fair
-17-
<PAGE>
notice thereof to the Pledgor. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor and such sale may, without further notice, be made at the time and
place to which it was so adjourned. The Pledgor hereby waives any right to
receive notice of any public or private sale of any Collateral except as
expressly provided for in this Section 5.4.
ARTICLE 6
---------
GENERAL
SECTION 6.1. COLLATERAL AGENT'S EXPENSES. Regardless of the occurrence
of a Default or Event of Default, the Pledgor agrees to pay to the Collateral
Agent any and all advances, charges, costs and expenses, including the
reasonable fees and expenses of counsel and any experts or agents, that the
Collateral Agent may reasonably incur in connection with (i) the administration
of this Agreement, including any amendment hereto, or any workout or
restructuring, (ii) the creation, perfection or continuation of the Security
Interest or protection of its priority or the Collateral, including the
discharging of any prior or junior Lien or adverse claim against the Collateral
or any part thereof that is not permitted hereby or by the Indenture, (iii) the
custody, preservation or sale of, collection from, or other realization upon,
any of the Collateral, (iv) the exercise or enforcement of any of the rights,
powers or remedies of the Collateral Agent under this Agreement or under
applicable law (including attorneys' fees and expenses incurred by the
Collateral Agent in the collection of Collateral deposited with the Collateral
Agent and amounts incurred in connection with the operation, maintenance or
foreclosure of the Security Interest) or any bankruptcy proceeding or (v) the
failure by the Pledgor to perform or observe any of the provisions hereof. All
such amounts and all other amounts payable hereunder shall be payable on demand,
together with interest at the rate borne by the Notes at such time (including at
the Defaulted Interest rate, if applicable).
SECTION 6.2. AMENDMENTS AND OTHER MODIFICATIONS. No amendment of any
provision of this Agreement (including a waiver thereof or consent relating
thereto) shall be effective unless the same shall be in writing and signed by
the Collateral Agent. Any waiver or consent relating to any provision of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Pledgor in any case shall
entitle the Pledgor to any other or further notice or demand in similar or other
circumstances.
SECTION 6.3. CUMULATIVE REMEDIES; FAILURE OR DELAY. The rights and
remedies provided for under this Agreement are cumulative and are not exclusive
of any rights and remedies that may be available to the Collateral Agent under
applicable law, the other Note Documents or otherwise. No failure or delay on
the part of any of the Secured Parties in the exercise of any power, right or
remedy under this Agreement shall impair such power, right or remedy or shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude other or further exercise of such or any
other power, right or remedy.
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<PAGE>
SECTION 6.4. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be personally delivered or sent by
prepaid courier, by overnight, registered or certified mail (postage prepaid) or
by telecopy or telegram, and shall be deemed given when received by the intended
recipient thereof. Unless otherwise specified in a notice given in accordance
with the foregoing provisions of this Section 6.4, notices and other
communications shall be given to the parties hereto at their respective
addresses (or to their respective telex or telecopier numbers) set forth in
Schedule 6.4 hereof.
SECTION 6.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and, subject to the next sentence, inure to the benefit of the Pledgor and
the Collateral Agent and their respective successors and assigns. The Pledgor
shall not assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Collateral Agent. The benefits of this
Agreement shall pass automatically with any assignment of the Secured
Obligations (or any portion thereof), to the extent of such assignment.
SECTION 6.6. PAYMENTS SET ASIDE. Notwithstanding anything to the
contrary herein contained, this Agreement, the Secured Obligations and the
Security Interest shall continue to be effective or be reinstated, as the case
may be, if at any time any payment, or any part thereof, of any or all of the
Secured Obligations is rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be restored or returned by the Collateral
Agent in connection with any bankruptcy, reorganization or similar proceeding
involving the Pledgor, any other party liable with respect to the Secured
Obligations or otherwise, if the proceeds of any Collateral are required to be
returned by the Collateral Agent under any such circumstances or if the
Collateral Agent reasonably elects to return any such payment or proceeds or any
part thereof in its discretion, all as though such payment had not been made or
such proceeds not been received. Without limiting the generality of the
foregoing, if prior to any such rescission, invalidation, declaration,
restoration or return, this Agreement shall have been canceled or surrendered or
the Security Interest or any Collateral shall have been released or terminated
in connection with such cancellation or surrender, this Agreement and the
Security Interest and such Collateral shall be reinstated in full force and
effect, and such prior cancellation or surrender shall not diminish, discharge
or otherwise affect the obligations of the Pledgor in respect of the amount of
the affected payment or application of proceeds, the Security Interest or such
Collateral.
SECTION 6.7. CONTINUING SECURITY INTEREST; TERMINATION. Except as
otherwise provided in the Indenture with respect to the release of Collateral
under certain circumstances, this Agreement shall create a continuing security
interest in the Collateral and, except as provided below, the Security Interest
and all agreements, representations and warranties made herein shall survive
until, and this Agreement shall terminate only upon, the indefeasible payment in
full of the Secured Obligations. Any investigation at any time made by or on
behalf of the Collateral Agent shall not diminish the right of the Collateral
Agent to rely on any such agreements, representations or warranties herein.
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<PAGE>
Notwithstanding anything in this Agreement or applicable law to the
contrary, the agreements of the Pledgor set forth in Sections 4.6.2, 4.8.2,
4.8.5, 4.8.6 and 6.1 shall survive the payment of all other Secured Obligations
and the termination of this Agreement.
SECTION 6.8. CHOICE OF FORUM.
6.8.1. All actions or proceedings arising in connection with this
Agreement shall be tried and litigated in state or Federal courts located in the
County of New York, State of New York, unless such actions or proceedings are
required to be brought in another court to obtain subject matter jurisdiction
over the matter in controversy. EACH OF THE PLEDGOR AND THE COLLATERAL AGENT
WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS, TO
ASSERT THAT IT IS NOT SUBJECT TO THE JURISDICTION OF SUCH COURTS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
6.8.1.
6.8.2. Nothing contained in this Section 6.8 shall preclude the
Collateral Agent from bringing any action or proceeding arising out of or
relating to this Agreement in the courts of any place where the Pledgor or any
of its assets may be found or located. TO THE EXTENT PERMITTED BY THE APPLICABLE
LAWS OF ANY SUCH JURISDICTION, THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING, THE JURISDICTION OF ANY SUCH COURT OR COURTS THAT NOW OR
HEREAFTER, BY REASON OF SUCH PARTY'S PRESENT OR FUTURE DOMICILE, OR OTHERWISE,
MAY BE AVAILABLE TO IT.
SECTION 6.9. WAIVER AND ESTOPPEL. Except as otherwise provided in this
Agreement, the Pledgor hereby waives: (i) presentment, protest, notice of
dishonor, release, compromise, settlement, extension or renewal and any other
notice of or with respect to the Secured Obligations and hereby ratifies and
confirms whatever the Collateral Agent may do in this regard; (ii) notice prior
to taking possession or control of any Collateral or any bond or security that
might be required by any court prior to allowing the Collateral Agent to
exercise any of their rights, powers or remedies; (iii) the benefit of all
valuation, appraisement, redemption and exemption laws; (iv) any rights to
require marshaling of the Collateral upon any sale or otherwise to direct the
order in which the Collateral shall be sold; (v) any set-off; and (vi) any
rights to require the Collateral Agent to proceed against any Person, proceed
against or exhaust any Collateral or any other security interests or guaranties
or pursue any other remedy in the Collateral Agent's power, or to pursue any of
such rights in any particular order or manner, and any defenses arising by
reason of any disability or defense of any Person.
SECTION 6.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered,
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<PAGE>
shall be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
SECTION 6.11. COMPLETE AGREEMENT. This Agreement, the Indenture, the
Notes, and the other Note Documents, together with the exhibits and schedules
thereto and hereto, is intended by the parties as a final expression of their
agreement regarding the subject matter hereof and as a complete and exclusive
statement of the terms and conditions of such agreement.
SECTION 6.12. LIMITATION OF LIABILITY. No claim shall be made by the
Pledgor against the Collateral Agent or the Affiliates, directors, officers,
employees or agents of the Collateral Agent for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or under any other theory of liability arising out of or related to the
transactions contemplated by this Agreement and the other Note Documents, or any
act, omission or event occurring in connection therewith; and the Pledgor hereby
waives, releases and agrees not to sue upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
SECTION 6.13. CONFLICTING AGREEMENTS; COLLATERAL SPECIFICALLY COVERED
BY OTHER AGREEMENTS. To the extent the terms and provisions of this Agreement
conflict with the terms and provisions of the Company Security Agreement or any
other Collateral Document, the terms and provisions of this Agreement shall
govern as they relate to the Collateral.
SECTION 6.14. SUBSIDIARY PLEDGE AGREEMENT. The Collateral Agent hereby
acknowledges that it is holding certain collateral pledged pursuant to the
Subsidiary Pledge Agreement from time to time delivered to it, among other
things, for the Pledgor, as collateral agent. The Pledgor hereby appoints the
Collateral Agent as its collateral agent for the foregoing purpose and agrees
that, in so holding such collateral, the Collateral Agent shall be entitled to
the immunities, indemnities and protections set forth in Section 4.6 of the
Subsidiary Pledge Agreement and in the Indenture, mutatis mutandis.
SECTION 6.15. WAIVER OF TRIAL BY JURY. THE PLEDGOR AND THE COLLATERAL
AGENT WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION UNDER THIS AGREEMENT OR
ANY OTHER NOTE DOCUMENT OR ANY ACTION ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION
OR ACTIONS.
(remainder of page intentionally left blank)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first set forth above.
PLEDGOR:
-------
CASINO AMERICA, INC., A DELAWARE CORPORATION
BY: ________________________________________
NAME: ______________________________________
TITLE: _____________________________________
COLLATERAL AGENT:
----------------
FLEET NATIONAL BANK, AS COLLATERAL
AGENT
BY: ________________________________________
NAME: ______________________________________
TITLE: _____________________________________
S-1
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 3.2.
TO COMPANY
PLEDGE AGREEMENT
LOCATIONS OF OFFICES AND NAMES
------------------------------
Entity Other Prior and Current Corporate Office
Trade or Legal Names Chief Executive Office Other Locations FED. TAX I.D. #
- ----------------------------- ---------------------- --------------- ---------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE 3.4.
TO COMPANY
PLEDGE AGREEMENT
PLEDGED EQUITY
--------------
<PAGE>
SCHEDULE 3.5.
TO COMPANY
PLEDGE AGREEMENT
PLEDGED DEBT; DEFAULTS; SET-OFFS, ETC.
--------------------------------------
<PAGE>
SCHEDULE 6.4.
TO COMPANY
PLEDGE AGREEMENT
ADDRESSES FOR NOTICES
---------------------
<PAGE>
EXHIBIT A
TO COMPANY
PLEDGE AGREEMENT
CONSENT AND ACKNOWLEDGMENT
--------------------------
(PLEDGED DEBT)
--------------
To: FLEET NATIONAL BANK, ("FLEET"), as Collateral Agent under that
certain Company Pledge Agreement referred to in the Indenture dated as of August
__, 1996 relating to the Notes referred to below (as in effect on the date
hereof, the "INDENTURE")
1. Pursuant to a COMPANY PLEDGE AGREEMENT dated as of August __, 1996
(as amended from time to time, the "COMPANY PLEDGE AGREEMENT") by and between
Casino America, Inc., a Delaware corporation (the "PLEDGOR"), and Fleet National
Bank, as, collateral agent and representative for the Trustee and Persons that
now or in the future are holders of the Notes (as defined below) issued under
the Indenture described below (the "HOLDERS") (in such capacity, Fleet or any
successor in such capacity is referred to herein as the "COLLATERAL AGENT"), the
Pledgor has granted a security interest in, among other things, certain
indebtedness owed by the undersigned to the Pledgor (together with all notes,
credit agreements, security agreements, pledge agreements, mortgages, deeds of
trust and other security and loan documents evidencing or securing such
indebtedness and all Liens, rights, remedies, powers, remedies and privileges of
the Pledgor relating thereto, the "LOAN COLLATERAL"). All terms with initial
capital letters not otherwise defined herein have the meanings set forth in the
Company Pledge Agreement.
The undersigned hereby:
1. Consents to the security interest of the Collateral Agent in the
Loan Collateral.
2. Agrees that upon receipt by the undersigned of notice from the
Collateral Agent that a Default exists:
(a) the undersigned shall pay and deliver all cash or other property
from time to time payable or otherwise distributable in respect of the Loan
Collateral directly to the Collateral Agent, without any defense, set-off,
recoupment or deduction of any kind; and
(b) the undersigned will deliver directly to the Collateral Agent any
notes and other instruments executed after the date hereof from time to time
evidencing any indebtedness of the undersigned to the Pledgor.
3. Confirms that the Loan Collateral is in full force and effect on
the date hereof and agrees that the Loan Collateral will not be amended or
otherwise modified without the prior written consent of the Collateral Agent.
<PAGE>
4. Expressly waives as against the Collateral Agent any setoff or
other defense against payment and performance by the undersigned under the
Company Pledge Agreement, this Consent and Acknowledgment or the Loan Collateral
and any claim against the Collateral Agent whether arising under the Loan
Collateral or otherwise.
5. Each of the undersigned hereby acknowledges that, pursuant to the
terms of the Company Pledge Agreement:
(a) For so long as a Default shall exist, the Collateral Agent, to the
exclusion of the Pledgor, shall be entitled to exercise all rights, powers,
remedies and privileges of the Pledgor under the Loan Collateral (whether
exercisable at any time or only during the existence of a Default or Event of
Default as defined therein), and all performance of the obligor thereunder shall
be rendered only to the Collateral Agent, as if the Collateral Agent were the
lender, secured party or beneficiary thereunder, provided that the rights,
powers, remedies and privileges of the Collateral Agent under the Loan
Collateral shall be no greater than those of the Pledgor thereunder. Without
limitation, such rights shall include all rights of reimbursement and indemnity.
(b) For so long as a Default shall exist:
(i) The Pledgor shall promptly, upon becoming aware thereof, notify
the Collateral Agent of the existence of any material default or event of
default under or with respect to any Pledged Debt.
(ii) The Pledgor shall not, without the prior written consent of the
Collateral Agent (which consent may be withheld in the Collateral Agent's
discretion):
(A) amend, supplement or otherwise modify (including by
way of waiver) any provision of any of the Loan Collateral, or
(B) exercise any rights, powers, remedies and
privileges of the Pledgor under the Loan Collateral; provided that the Pledgor
shall file a proof of claim in respect of the Pledged Debt in any proceeding
under the Federal Bankruptcy Code or any similar proceeding as and when required
therein.
(c) Notwithstanding subsections (a) and (b), while no Default exists,
the Pledgor shall be entitled to receive and retain (but not accelerate, make
demand for or enforce) and use free of the Security Interest any and all
interest from time to time paid or payable in cash with respect to the
Collateral; provided that this subsection (c) (i) shall not apply to any other
amounts required to be paid under the Loan Collateral and (ii) shall not apply
to any interest or principal paid or payable while a Default exists, all of
which shall be paid directly to the Collateral Agent, to be held as Loan
Collateral hereunder.
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<PAGE>
6. Each of the undersigned represents and warrants that it is
familiar with the provisions of the Company Pledge Agreement, consents thereto
and agrees that (i) any action taken by the Pledgor in violation of the above
provision shall be without any force or Company Pledge Agreement effect (except
that the Collateral Agent shall be entitled to receive and retain as Loan
Collateral any and all proceeds of any such actions) and (ii) subject to Section
5(c) hereof, the Collateral Agent shall be conclusively deemed entitled to take
any action the Pledgor is entitled to take under the Loan Collateral.
IN WITNESS WHEREOF, the undersigned has executed this Consent and
Acknowledgment as of _______ __, ____.
__________________________, _________
_____________________
By: _________________________________
Name: ___________________________
Title: __________________________
-3-
<PAGE>
EXHIBIT 10.6
EXHIBIT I
TO INDENTURE
FORM OF SUBSIDIARY PLEDGE AGREEMENT
-----------------------------------
SUBSIDIARY PLEDGE AGREEMENT, dated as of August ___ ,1996 (as may be
amended from time to time, the "AGREEMENT") among the Persons named as
"Pledgors" on the signature pages hereof (each, individually, a "PLEDGOR" and
all, collectively, the "PLEDGORS"), Casino America, Inc., a Delaware corporation
("CASINO AMERICA"), and Fleet National Bank, as collateral agent for the Trustee
(as defined below) and the Persons that now or in the future are holders of the
Notes (as defined below) issued under the Indenture described below (the
"HOLDERS") (in such capacity, Fleet National Bank or any successor in such
capacity is referred to herein as the "COLLATERAL AGENT").
R E C I T A L S
- - - - - - - -
A. Pursuant to the Indenture dated as of the date hereof (as may be
amended from time to time, the "INDENTURE") by and among Casino America, the
Subsidiary Guarantors and Fleet National Bank, as trustee (the "TRUSTEE"),
Casino America will issue __% Senior Secured Notes due 2003 in an aggregate
principal amount of up to $300,000,000 (the "NOTES").
B. Pursuant to the guarantee included in the Indenture (as may be
amended from time to time, the "SUBSIDIARY GUARANTEES"), the Pledgors have
guaranteed the obligations of Casino America under the Notes, the Indenture and
the other Note Documents to which Casino America is a party.
C. The Pledgors are the owners of certain shares of capital stock and
of certain partnership, limited liability company or limited liability
partnership interests, as described on Schedule 3.4 (the "PLEDGED EQUITY"), and
certain notes evidencing indebtedness made in favor of the Pledgors, as
described on Schedule 3.5 (the "PLEDGED DEBT" and, collectively with the Pledged
Equity, the "SPECIFIED COLLATERAL").
D. It is a condition precedent to the issuance of the Notes, that the
Pledged Collateral and the other collateral described herein be pledged to the
Collateral Agent, for the benefit of itself, the Trustee and the Holders
(together with their respective successors and assigns, collectively, the
"SECURED PARTIES,") as set forth herein.
E. The parties acknowledge that certain provisions of this Agreement
may be subject to the Gaming Laws of certain jurisdictions, including without
limitation, Louisiana and Mississippi.
A G R E E M E N T
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NOW, THEREFORE for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
ARTICLE 1
---------
DEFINITIONS AND RELATED MATTERS
SECTION 1.1. DEFINITIONS. Capitalized terms not otherwise defined
herein shall have the respective meanings specified in the Indenture. In
addition, the following terms with initial capital letters have the following
meanings:
"CHARGES" means all federal, state, county, city, municipal or other
taxes, levies, assessments or charges that, if not paid when due, may result in
a Lien of any Governmental Authority against any Collateral.
"COLLATERAL" has the meaning set forth in Section 2.1.
"CONTRACTUAL OBLIGATION" means, as applied to any Person, any
provision of any security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement, or other instrument to which
that Person is a party or by which it or any of its owned properties is bound or
to which it or any of its owned properties is subject.
"EQUITY ISSUER" has the meaning set forth in Section 2.1.3.
"EVENT OF DEFAULT" has the meaning set forth in Section 5.1.
"GOVERNING AGREEMENT" has the meaning set forth in Section 2.1.3.
"NOTE DOCUMENTS" means the Indenture, the Notes, the Subsidiary
Guaranties and the Collateral Documents.
"PLEDGE DEBT CONSENT" has the meaning set forth in Section 3.5.1.
"PROCEEDS" has the meaning set forth in Section 2.1.6.
"SECURED OBLIGATIONS" has the meaning set forth in Section 2.2.
"SECURITY INTEREST" has the meaning set forth in Section 2.1
"SPECIFIED COLLATERAL" has the meaning set forth in the Recitals.
"SUBSIDIARY GUARANTEE OBLIGATIONS" has the meaning set forth in
Section 2.2.
"SUPPLEMENTAL DOCUMENTATION" means financing statements, continuation
statements, consents, acknowledgments, assignments, schedules of Collateral and
any other instruments or documents necessary or requested by the Collateral
Agent (i) to create, perfect and maintain perfected the first priority Security
Interest in any Collateral (except as otherwise provided in this Agreement) or
(ii) to enable the Collateral Agent to receive all interest, dividends and
distributions from time to time paid with respect to, and all Proceeds of, all
Collateral which the Collateral Agent is entitled to receive hereunder.
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"UCC" means Article 9 (or with respect to securities, Article 8) of
the Uniform Commercial Code (as amended from time to time) of the State of New
York.
SECTION 1.2. RELATED MATTERS.
1.2.1. TERMS USED IN THE UCC. Unless the context clearly requires
otherwise, all lower-case terms used and not otherwise defined herein that are
used or defined in Article 9 or 8 of the UCC shall have the same meanings
herein.
1.2.2. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, and "including" is not
limiting. The words "hereof", "herein", "hereby", "hereunder" and similar terms
in this Agreement refer to this Agreement as a whole (including the Preamble,
the Recitals and all Schedules and Exhibits) and not to any particular provision
of this Agreement. Article, section, subsection, exhibit, recital, preamble and
schedule references in this Agreement are to this Agreement unless otherwise
specified. References in this Agreement to any agreement, other document or law
or to amendments of any document or law or similar language, regardless of
whether such reference includes "as amended," "as may be amended from time to
time" or other similar language, shall include any amendments, supplements,
replacements, renewals or other modifications, excepting any reference to any
agreement, document or law that specifically limits said agreement, document or
law to its terms as of the date hereof.
1.2.3. DETERMINATIONS. Any determination or calculation contemplated
by this Agreement that is made by the Collateral Agent shall be final and
conclusive and binding upon each Pledgor, in the absence of manifest error.
References in this Agreement to "determination" by the Collateral Agent include
good faith estimates (in the case of quantitative determinations) and good faith
beliefs (in the case of qualitative determinations). All references herein to
"discretion" of the Collateral Agent (or terms of similar import) shall mean
"absolute and sole discretion." All consents and other actions of the Collateral
Agent contemplated by this Agreement may be given, taken, withheld or not taken
in the Collateral Agent's discretion (whether or not so expressed), except as
otherwise expressly provided herein.
1.2.4. GOVERNING LAW. Except to the extent otherwise required under
applicable law, the UCC shall govern the attachment, perfection, priority and
enforcement of the Security Interest and all other matters to which the UCC
applies pursuant to the terms thereof. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
1.2.5. HEADINGS. The Article and Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction hereof.
1.2.6. SEVERABILITY. If any provision of this Agreement or any Lien or
other right hereunder shall be held to be invalid, illegal or unenforceable
under applicable law in any jurisdiction, such provision, Lien or other right
shall be ineffective only to the extent of such
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<PAGE>
invalidity, illegality or unenforceability, which shall not affect any other
provisions herein or any other Lien or right granted hereby or the validity,
legality or enforceability of such provision, Lien or right in any other
jurisdiction.
1.2.7. EXHIBITS AND SCHEDULES. All of the appendices, exhibits and
schedules attached to this Agreement shall be deemed incorporated herein by
reference.
ARTICLE 2
---------
THE SECURITY INTEREST; SECURED OBLIGATIONS
SECTION 2.1. SECURITY INTEREST. To secure the payment and performance
of the Secured Obligations as and when due, each Pledgor hereby grants, conveys,
pledges, assigns and transfers to the Collateral Agent, for the benefit of the
Secured Parties a security interest (the "SECURITY INTEREST") in, all right,
title, claim and interest of such Pledgor in and to the following property,
whether now owned and existing or hereafter acquired or arising, and wherever
located (such property being, collectively, the "COLLATERAL"):
2.1.1. The Specified Collateral and all certificates and instruments
representing or evidencing the Specified Collateral, together with, in the case
of Pledged Debt included therein, any and all interest coupons (if any) attached
thereto and any and all notes, security agreements, pledge agreements,
mortgages, deeds of trust and other security and loan documents from time to
time evidencing or securing such indebtedness;
2.1.2. Any and all securities or partnership, limited liability
company, limited liability partnership or other interests issued by any issuer
of the Specified Collateral, or any successor thereto, that such Pledgor
acquires or has the right to acquire from time to time in any manner in
substitution for or in addition to any of the foregoing and any and all
certificates and instruments representing or evidencing such securities;
2.1.3. The partnership or operating agreements and other charter
documents of the respective partnership, limited liability company or limited
liability partnership that issued Pledged Equity (each, an "EQUITY ISSUER"), in
each case as amended from time to time (each, a "GOVERNING AGREEMENT");
2.1.4. Any and all additions to or replacements of the foregoing;
2.1.5. Any and all rights, powers, remedies and privileges of such
Pledgor under or with respect to any of the foregoing; and
2.1.6. Any and all proceeds and products of any of the foregoing,
whether now held and existing or hereafter acquired or arising, including any
and all cash, securities, instruments and other property from time to time paid,
payable or otherwise distributed in respect of or in exchange for any or all of
the foregoing (collectively, the "PROCEEDS"). "Proceeds" shall include (i) any
options, warrants, securities or other property issued and delivered by the
issuer of or obligor on any Collateral as a stock dividend or distribution in
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connection with any reclassification, increase or reduction of capital or issued
or delivered in connection with any merger or other reorganization and (ii) any
property received upon liquidation or dissolution of any issuer of or obligor on
any Collateral or upon or in respect of any distribution of capital.
SECTION 2.2. SECURED OBLIGATIONS.
-------------------
2.2.1. The Security Interest shall secure with respect to each
Pledgor, the due and punctual payment and performance of any and all present and
future obligations and liabilities of such Pledgor of every type or description
to the Secured Parties:
2.2.1.1. arising under or in connection with such Pledgor's
Subsidiary Guarantee, whether for principal, premium (if any), interest,
expenses, indemnities or other amounts (including attorneys' fees and expenses)
(collectively, the "SUBSIDIARY GUARANTEE OBLIGATIONS");
2.2.1.2. arising under or in connection with this Agreement or
any other Note Document, including for reimbursement of amounts that may be
advanced or expended by the Collateral Agent (i) to satisfy amounts required to
be paid by such Pledgor under this Agreement or any other Note Document for
claims and Charges, together with interest thereon to the extent provided, or
(ii) to maintain or preserve any Collateral or to create, perfect, continue or
protect any Collateral or the Security Interest therein, or its priority;
in each case whether due or not due, direct or indirect, joint and/or several,
absolute or contingent, voluntary or involuntary, liquidated or unliquidated,
determined or undetermined, now or hereafter existing, renewed or restructured,
whether or not from time to time decreased or extinguished and later increased,
created or incurred, whether or not arising after the commencement of a
proceeding under the Federal Bankruptcy Code (including post-petition interest)
and whether or not recovery of any such obligation or liability may be barred by
a statute of limitations or such obligation or liability may otherwise be
unenforceable (all obligations and liabilities described in this Section 2.2,
including the Subsidiary Guarantee Obligations, are collectively referred to
herein as the "SECURED OBLIGATIONS").
ARTICLE 3
---------
WARRANTIES AND REPRESENTATIONS
Each Pledgor represents and warrants that all representations and
warranties made with respect to it, its assets and its obligations in the
Purchase Agreement are true and correct and makes the following additional
representations and warranties, all of which shall survive until termination of
this Agreement pursuant to Section 6.7.
SECTION 3.1. FILINGS, ETC. Duly executed financing statements
containing a correct description of the Collateral have been delivered to the
Collateral Agent for filing in every governmental office in every state, county
and other jurisdiction in which the principal place of business or the chief
executive office of such Pledgor is located, and in each other
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jurisdiction in which such action is necessary to establish a valid and
perfected Lien in favor of the Collateral Agent in all Collateral in which a
Lien may be perfected by filing, and no further or subsequent filing, recording
or registration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.
SECTION 3.2. LOCATIONS OF OFFICES AND NAMES. (i) Such Pledgor's chief
executive office and principal place of business are located at the addresses
set forth on Schedule 3.2, (ii) all other places of business of such Pledgor and
all other locations at which any books and records related to any Collateral are
located are set forth on Schedule 3.2, including computer programs, printouts
and other computer materials, (iii) each Pledgor's federal tax identification
number is set forth on Schedule 3.2 and (iv) there are no prior or current trade
or legal names used to identify such Pledgor in its business or in the ownership
of its properties other than those set forth on Schedule 3.2.
SECTION 3.3. TITLE TO COLLATERAL; VALIDITY AND PERFECTION OF SECURITY
INTEREST; ABSENCE OF OTHER LIENS.
3.3.1. Such Pledgor has good and marketable title to all Collateral.
The Security Interest constitutes a valid and, upon delivery of all Specified
Collateral to the Collateral Agent pursuant to Section 4.1 and filing of
financing statements covering the Collateral with the appropriate Governmental
Authorities, perfected and first priority Lien in all of the Collateral that
secures payment and performance of the Secured Obligations, except as set forth
on Schedule 3.3.
3.3.2. The Collateral is free and clear of all Liens other than the
Security Interest and Liens permitted under Section 1011 of the Indenture.
SECTION 3.4. REGARDING THE PLEDGED EQUITY. Schedule 3.4 sets forth the
number of authorized and the number of issued shares of each class of Capital
Stock of each issuer of Pledged Equity. The Pledged Equity includes all issued
and outstanding shares of Capital Stock of each issuer thereof, other than
shares pledged for the benefit of the Secured Parties under the Subsidiary
Pledge Agreement. All outstanding Capital Stock of each such issuer has been
duly authorized, validly issued and is fully paid and nonassessable. There are
no outstanding options, warrants, convertible securities or other rights,
contingent or absolute, to acquire any Capital Stock of any such issuer, except
as set forth on Schedule 3.4.
SECTION 3.5. REGARDING THE PLEDGED DEBT.
3.5.1. Such Pledgor has delivered to the Collateral Agent a Consent
and Acknowledgment in substantially the form of Exhibit A, duly executed by each
obligor on Pledged Debt (each, a "PLEDGED DEBT CONSENT"). Each Pledged Debt
Consent is in full force and effect and constitutes a legal, valid and binding
obligation of the obligor on the Pledged Debt subject thereto.
3.5.2. Except as disclosed on Schedule 3.5, (i) the Pledged Debt
constitutes the legal, valid and binding obligations of the respective obligors
thereunder in the amount thereof
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set forth on Schedule 3.5, (ii) no Pledged Debt is in default and (iii) there
are no setoffs or counterclaims or disputes existing or asserted with respect to
any Pledged Debt, except as set forth on Schedule 3.5.
ARTICLE 4
---------
COVENANTS AND AGREEMENTS
SECTION 4.1. DELIVERY OF SPECIFIED COLLATERAL. ETC.
4.1.1. On the date hereof, each Pledgor is delivering to the
Collateral Agent certificates or instruments in respect of all Specified
Collateral that exists on such date, the physical possession of which is
necessary in order for the Security Interest to be perfected or delivery of
which was requested by the Collateral Agent to assure the priority of the
Security Interest therein. Subject only to Gaming Laws, each Pledgor shall
deliver to the Collateral Agent promptly after acquisition thereof all Specified
Collateral acquired after the date hereof. All Specified Collateral shall be in
suitable form for transfer by delivery, or be duly endorsed to the order of the
Collateral Agent or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Collateral
Agent. Subject only to Gaming Laws and to the revocable right specified in
Section 4.7, the Collateral Agent shall have the right, at any time in its
discretion and without notice to any Pledgor, to transfer to or to register in
the name of the Collateral Agent or its nominee any or all the Collateral. It is
expressly acknowledged that such registration of the Collateral in the name of
the Collateral Agent or its nominee is solely for the purpose of assuring that
the Collateral Agent receives all cash and stock dividends and other property
from time to time distributed with respect to the Collateral and shall not be
deemed to constitute the Collateral Agent the owner (beneficial or otherwise) of
any Collateral for any other purpose, except to the extent contemplated by
Section 4.7 or Article 5. Without limitation, the Collateral Agent shall not be
deemed to "control" the Collateral or the issuer thereof for purposes of any
applicable laws (including securities, environmental, tax, bankruptcy or other
laws but excluding the UCC) as a result of the Collateral being registered in
the name of the Collateral Agent. In addition, the Collateral Agent shall have
the right at any time to exchange certificates or instruments representing or
evidencing Specified Collateral for certificates or instruments of smaller or
larger denominations. If required by Gaming Laws, the Collateral Agent shall
hold (or cause a sub-collateral agent to hold) all Specified Collateral at such
locations as may be required by Gaming Laws.
4.1.2. Without limiting Section 4.1.1, but subject to Section 4.7.1.2
and to Gaming Laws, if any Pledgor receives or becomes entitled to receive any
securities issued by any issuer of Pledged Equity, or any successor thereto, in
any manner in substitution for or in addition to the Pledged Equity, or if any
Pledgor shall become entitled to receive or shall receive any securities or
other property in addition to, in substitution of, as a conversion of, or in
exchange for, any of the Pledged Equity or any other Collateral, or shall
receive or become entitled to receive any interest or other payment in respect
of any Pledged Debt, such Pledgor shall receive the same as the agent for the
Collateral Agent, and shall hold the same in trust
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for and deliver the same promptly to the Collateral Agent in the exact form in
which received, together with appropriate instruments of transfer or assignments
in blank, to be held by the Collateral Agent as Collateral hereunder.
SECTION 4.2. FURTHER ASSURANCES. Each Pledgor shall, at its own
expense, perform such acts as may be necessary, or that the Collateral Agent may
request at any time, to assure the attachment, perfection and priority of the
Security Interest, to exercise the rights and remedies of the Collateral Agent
hereunder or to carry out the intent of this Agreement. Without limitation,
each Pledgor shall execute and deliver (or cause any third party to execute and
deliver) to the Collateral Agent, at any time and from time to time, all
Supplemental Documentation, in form and substance acceptable to the Collateral
Agent.
SECTION 4.3. POWER OF ATTORNEY. Each Pledgor hereby irrevocably
appoints (the appointment being irrevocable because it is coupled with an
interest) the Collateral Agent and its employees and agents as such Pledgor's
true and lawful attorneys-in-fact, with full power of substitution, and, subject
to Gaming Laws, to do all things (i) required to be done by such Pledgor under
this Agreement or the other Note Documents and (ii) that the Collateral Agent
may reasonably deem necessary or advisable to assure the attachment, perfection
and first priority of the Security Interest or otherwise to exercise the rights
and remedies of the Collateral Agent hereunder or carry out the intent of this
Agreement (including by voting any Collateral as contemplated by Section 4.7),
in each case irrespective of whether a Default or Event of Default then exists
(except as otherwise provided herein), in each and every instance and at such
Pledgor's expense. Without limitation, the Collateral Agent and its officers
and agents shall be entitled to do all of the following, as fully as such
Pledgor might:
4.3.1. to sign the name of such Pledgor on any Supplemental
Documentation and to deliver and file such Supplemental Documentation to or with
such Persons as the Collateral Agent, in its discretion, may elect; and
4.3.2. to affix, by facsimile signature or otherwise, the general or
special endorsement of such Pledgor, in such manner as the Collateral Agent
shall deem advisable, to any Specified Collateral that has been delivered to or
obtained by the Collateral Agent without appropriate endorsement or assignment.
In addition, during the existence of an Event of Default, the
Collateral Agent or its employees or agents may, without notice to such Pledgor
and at such time or times as the Collateral Agent in its discretion may
determine, in such Pledgor's or in the Collateral Agent's name collect any and
all amounts due to such Pledgor from obligors with respect to any Pledged Debt
by legal proceedings or otherwise. The Collateral Agent shall be under no
obligation whatsoever to take any of the foregoing actions. Absent bad faith or
willful misconduct, the Collateral Agent and its shareholders, directors,
officers, employees and agents shall have no liability or responsibility for any
act taken with respect thereto. A copy of this Agreement and, if applicable, a
statement by the Collateral Agent that an Event of Default exists shall be
conclusive evidence of the Collateral Agent's right to act under this Section
4.3 as against all third parties.
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SECTION 4.4. CHANGES OF LOCATIONS OF COLLATERAL, OFFICES. NAME OR
STRUCTURE. Each Pledgor shall give the Collateral Agent 15 Business Days notice
of the adoption of a trade name or change in its name, chief executive office,
principal place of business, identity or corporate structure or location at
which any books or records related to any Collateral are located.
SECTION 4.5. PAYMENT OF CHARGES AND CLAIMS. Each Pledgor shall pay (i)
all Charges imposed upon any Collateral and (ii) all claims that have become due
and payable and, under applicable law, have or may become Liens upon any
Collateral, in each case before any penalty shall be incurred with respect
thereto. If any Pledgor fails to pay or obtain the discharge of any Charge,
claim or Lien required to be paid or discharged under this Section 4.5 and
asserted against any Collateral, such Pledgor shall so notify the Collateral
Agent. Regardless of whether such notice is given, the Collateral Agent may, at
any time and from time to time, in its discretion and without waiving or
releasing any obligation of such Pledgor under this Agreement or the other Note
Documents or waiving any Default or Event of Default, make such payment, obtain
such discharge or take such other action with respect thereto as the Collateral
Agent deems advisable.
SECTION 4.6. CONTINUING OBLIGATION OF PLEDGORS; DUTY OF CARE;
INDEMNIFICATION.
4.6.1. Anything herein to the contrary notwithstanding, (i) the
relevant Pledgor shall remain liable under the respective Governing Agreement to
the extent set forth therein to perform its duties and obligations thereunder,
and shall receive all allocations of income, gain, expense, loss and other
items, to the same extent as if this Agreement had not been executed, (ii) the
exercise by the Collateral Agent of any of its rights hereunder shall not
release such Pledgor from any of its duties or obligations under such Governing
Agreement, and (iii) the Secured Parties shall not have any obligation or
liability, and shall receive no allocations of income, gain, expense, loss or
other items, under such Governing Agreement or applicable law by reason of this
Agreement, nor shall the Secured Parties be obligated to perform any of the
obligations or duties of such Pledgor thereunder, to make any payment of taxes
or other amounts, to make any inquiry as to the nature or sufficiency of any
payment received by such Pledgor or the Collateral Agent or the sufficiency of
any performance by any party under such Governing Agreement or to take any
action to collect or enforce any claim for payment assigned hereunder. The
Secured Parties shall not by reason of this Agreement or the exercise of any
remedies hereunder become responsible or liable in any manner or to any extent
for the obligations and liabilities of any Interest Issuer or any Pledgor,
whether now existing or hereafter incurred.
4.6.2. The Collateral Agent shall not have any duty of care with
respect to the Collateral, other than an obligation to exercise reasonable care
with respect to Collateral in its possession; provided that the Collateral Agent
shall be deemed to have exercised reasonable care if Collateral in its
possession is accorded treatment substantially comparable to that which the
Collateral Agent accords its own property and is held in accordance with Section
4.9.1.3 and Gaming Laws; and provided further that the Collateral Agent shall
have no obligation to
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take any actions to preserve rights against other parties with respect to any
Collateral. Without limitation, the Collateral Agent shall (A) bear no risk or
expense with respect to any Collateral and (B) have no duty with respect to
calls, conversions, presentments, maturities, notices or other matters relating
to Collateral, or to maximize interest or other returns with respect thereto.
4.6.3. Each Pledgor hereby agrees to indemnify and hold harmless the
Collateral Agent and its directors, officers, employees and agents against any
and all claims, actions, liabilities, costs and expenses of any kind or nature
whatsoever (including fees and disbursements of counsel) that may be imposed on,
incurred by, or asserted against any of them, in any way relating to or arising
out of this Agreement or any action taken or omitted by them hereunder, except
to the extent a court holds in a final and nonappealable judgment that they
resulted from the gross negligence or willful misconduct of such Persons against
and from all such obligations and liabilities.
4.6.4. The Collateral Agent may at any time deliver or redeliver the
Collateral or any part thereof to the relevant Pledgor and the receipt of any of
the same by such Pledgor shall be complete and full acquittance for the
Collateral so delivered, and the Collateral Agent thereafter shall be discharged
from any liability or responsibility therefor.
SECTION 4.7. VOTING AND OTHER CONSENSUAL RIGHTS; DISTRIBUTIONS.
4.7.1. So long as no Default shall exist:
4.7.1.1. Each Pledgor shall be entitled to exercise any and all
voting rights pertaining to any Collateral (other than the Pledged Debt), for
any purpose not inconsistent with the terms of this Agreement and the other Note
Documents; provided, however, that such Pledgor shall not exercise any such
right if it would result in a Default or have a material adverse effect on any
one or more of the following: (i) the business, assets, results of operations or
financial condition of Casino America or Pledgor, either individually or taken
as a whole, (ii) the ability of such Pledgor to perform its obligations
hereunder the Notes, the Indenture or under any other Note Document to which it
is a party or (iii) the Collateral or the Security Interest.
4.7.1.2. Except as otherwise provided herein or in the
Indenture, each Pledgor shall be entitled to receive and retain and use free of
the Security Interest any and all cash and other property paid or otherwise
distributed in respect of the Collateral; provided, however, that any and all
(i) dividends and other distributions paid or payable other than in cash or in
the form of Specified Collateral, (ii) cash paid upon or in respect of any of
the Specified Collateral upon or in respect of the liquidation or dissolution of
any issuer thereof or upon or in respect of any distribution of capital or
redemption or exchange of any Specified Collateral and (iii) cash paid with
respect to the principal of, or in redemption or exchange of, any Pledged Debt,
shall be delivered to the Collateral Agent, in the exact form received, to be
held as Collateral hereunder.
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4.7.2. Subject to Gaming Laws, so long as a Default shall exist, at
the sole option of the Collateral Agent, any or all rights of each Pledgor to
exercise voting and other consensual rights and to receive cash and other
property distributed in respect of Collateral as permitted by Sections 4.7.1.1
and 4.7.1.2 above, shall cease, and the Collateral Agent, if and when it
notifies such Pledgor of the exercise of such option, shall have the sole right
to exercise any or all such voting rights and receive and to hold as Collateral
any or all such cash and other property.
4.7.3. For so long as a Default shall exist, the Collateral Agent, to
the exclusion of the Pledgors, shall be entitled to exercise all rights, powers,
remedies and privileges of each Pledgor relating to the Pledged Debt (whether
exercisable at any time or only during the existence of a Default or Event of
Default as defined therein), and all performance of the obligor relating to the
Pledged Debt shall be rendered only to the Collateral Agent, as if the
Collateral Agent were the beneficiary thereunder; provided that the rights,
powers, remedies and privileges of the Collateral Agent relating to the Pledged
Debt shall be no greater than those of each Pledgor thereunder. Without
limitation, such rights shall include all rights of reimbursement and indemnity.
4.7.4. For so long as a Default shall exist:
4.7.4.1. Each Pledgor shall promptly, upon becoming aware
thereof, notify the Collateral Agent of the existence of any material default or
event of default under or with respect to any Pledged Debt.
4.7.4.2. Each Pledgor shall not, without the prior written
consent of the Collateral Agent (which consent may be withheld in the Collateral
Agent's discretion):
4.7.4.2.1. amend (including by way of waiver) any provision
of any of the Pledged Debt, or
4.7.4.2.2. exercise any rights, powers, remedies and
privileges of such Pledgor related to the Pledged Debt; provided that such
Pledgor shall file a proof of claim in respect of the Pledged Debt in any
proceeding under the Federal Bankruptcy Code or any similar proceeding as and
when required therein.
4.7.5. Notwithstanding Sections 4.7.3 and 4.7.4, while no Default
exists, each Pledgor shall be entitled to receive and retain and use free of the
Security Interest any and all interest from time to time paid or payable in cash
with respect to the Pledged Debt; provided that this Section 4.7.5 shall not
apply to any interest paid or payable while a Default exists, all of which shall
be paid directly to the Collateral Agent, to be held as Collateral hereunder.
4.7.6. All cash and other property required to be delivered to the
Collateral Agent hereunder shall, if received by such Pledgor, be received in
trust for the benefit of the Collateral Agent, be segregated from the other
property of such Pledgor, and promptly be delivered to the Collateral Agent in
the same form as so received (with any appropriate endorsements or assignments).
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SECTION 4.8. REGISTRATION RIGHTS.
4.8.1. Subject to Gaming Laws, each Pledgor agrees that, at any time
following the occurrence of an Event of Default, upon request of the Collateral
Agent and without expense to the Collateral Agent, it shall at its own expense:
4.8.1.1. use its best efforts to obtain all necessary
Governmental Approvals for the sale by the Collateral Agent of the Collateral or
any part thereof;
4.8.1.2. prepare, cause to be filed and use its best efforts to
cause to become effective with respect to the Collateral, or any part thereof,
one or more registration statements under the Securities Act on Form S-1 (or
such other form for which the respective issuer of the Collateral then qualifies
and which is available for the sale of the Collateral in accordance with the
intended method of disposition thereof) or one or more qualifications for
exemption from registration or similar documents under the Securities Act
relating to any offering or sale by the Collateral Agent of such Collateral;
4.8.1.3. prepare, cause to be filed and use its best efforts to
cause to become effective with respect to the Collateral, or any part thereof,
such qualification statements or similar documents (including any offering
circular) as may be necessary to have such Collateral qualified or registered
under the securities laws of such other jurisdictions (including the applicable
state securities or "Blue Sky" law), and to obtain the approvals of such
Governmental Authorities as necessary for the sale of such Collateral, as the
Collateral Agent may reasonably request in connection with any such offering or
sale;
4.8.1.4. include in any such registration statement,
qualification statement or similar document all appropriate information relating
to the transaction or transactions in which the Collateral Agent proposes to
offer or sell such Collateral;
4.8.1.5. cause to be filed such pre-effective and post-
effective amendments to each such registration statement, qualification
statement or similar document as may be necessary to prevent any statement
therein contained from being untrue or misleading, and such filing,
qualification or registration to be kept effective for such period, up to a
maximum of nine months, as the Collateral Agent may deem appropriate to
facilitate the sale or other disposition of such Collateral;
4.8.1.6. furnish the Collateral Agent with such number of
copies of each such registration statement, qualification statement or similar
document, and any amendments thereto as the Collateral Agent may reasonably
request;
4.8.1.7. furnish to the Collateral Agent a legal opinion as to
such matters regarding such offering or sale as the Collateral Agent may
reasonably request; and
4.8.1.8. do such further acts and things as the Collateral
Agent may deem necessary or advisable to effectuate the offering and sale by the
Collateral Agent of such Collateral in compliance with applicable law.
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<PAGE>
4.8.2. The obligations of each Pledgor under this Section 4.8 exist
notwithstanding that such Pledgor thereby may be obligated to prepare audited
financial statements other than in the ordinary course or otherwise to incur
inconvenience and expense. The costs and expenses of all registrations and
qualifications provided for hereunder shall be paid by such Pledgor, including
underwriting discounts and commissions, stock transfer taxes, registration fees,
filing fees, printing expenses, costs of special audits incident to or required
as a result of any such registration, and fees and disbursements of legal
counsel for the Collateral Agent selected by the Collateral Agent.
4.8.3. Each Pledgor shall notify the Collateral Agent promptly after
such Pledgor shall receive notice that any registration statement, qualification
statement or similar document or any amendment thereto requires amendment or has
become the subject of a stop order.
4.8.4. So long as any Secured Obligation remains outstanding, each
Pledgor's obligations hereunder are continuing obligations of such Pledgor, and
the Collateral Agent shall be entitled to demand registration of the Collateral,
or any part thereof, (but only once), at any time while an Event of Default
shall exist and successively upon the occurrence of an Event of Default
following the curing or waiver of an earlier Event of Default.
4.8.5. Each Pledgor agrees to indemnify and hold harmless the
Collateral Agent and each underwriter (within the meaning of the Securities Act)
acting in the transaction, and each Person controlling (within the meaning of
the Securities Act) the Collateral Agent or underwriter, from and against any
and all claims, actions, liabilities, costs and expenses (including reasonable
legal fees and expenses) based upon or arising out of any actual or alleged
untrue statement of a material fact contained in any such registration
statement, qualification statement or similar document, or part thereof, or any
actual or alleged omission to state a material fact required to be stated in any
such document, or part thereof, or necessary to make the statements contained
therein not misleading; provided, however, that such Pledgor shall not have any
liability to any Person under the foregoing indemnity on account of any actual
or alleged untrue or misleading statement contained in, or any actual or alleged
omission from, any information furnished in writing to such Pledgor by such
Person specifically for use in such document and included thereon in reliance
therein.
4.8.6. If the indemnification provided for in Section 4.8.5 is
unavailable to or otherwise insufficient to hold harmless an indemnified party
hereunder in respect of any claims, actions, liabilities, costs or expenses
referred to herein, then each Pledgor, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such claims, actions, liabilities, costs or expenses in such
proportion as is appropriate to reflect the relative fault of such Pledgor, the
Collateral Agent and each underwriter in connection with the statements or
omissions that resulted in such claims, actions, liabilities, costs or expenses,
as well as any other relevant equitable considerations.
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<PAGE>
4.8.7. Each Pledgor agrees that (i) exercise of registration and other
rights provided in this Section 4.8 is not required in connection with any
exercise of remedies under Article 5 of this Agreement, (ii) such rights may be
exercised or not exercised in the discretion of the Collateral Agent and (iii)
any request for exercise of such rights may be withdrawn in whole or in part at
any time by the Collateral Agent in its discretion. The registration and other
rights provided in this Section 4.8 may be transferred to any purchaser of the
Collateral, or any portion thereof, pursuant to any sale described in Article 5.
The Collateral Agent may exercise its rights and powers under this Section 4.8.7
prior to any sale pursuant to Article 5 or, alternatively, the Collateral Agent
may assign such rights to the purchaser at any such sale, who shall then have
the registration and other rights specified herein.
SECTION 4.9. REGULATORY MATTERS.
------------------
4.9.1. The Collateral Agent acknowledges and agrees that:
4.9.1.1. all required prior approvals under Gaming Laws will
be obtained in connection with the Collateral Agent's exercise of any of the
remedies set forth in Section 5.2 of this Agreement, including, without
limitation, any separate prior approvals required in connection with the sale,
transfer or other disposition of the Pledged Equity;
4.9.1.2. the approval of this Agreement under Gaming Laws
shall not be deemed to constitute an approval, either express or implied, of any
of the actions of the Collateral Agent permitted hereunder to the extent that
such actions require a separate prior approval under Gaming Laws, and in the
event such separate prior approval is required the Collateral Agent shall not
take such action without first obtaining such separate prior approval; and
4.9.1.3. the Collateral Agent shall hold and maintain the
Pledged Equity at all times at a location in accordance with any applicable law
or Gaming Laws and shall make the certificates and instruments representing or
evidencing such Pledged Equity available for inspection by agents or employees
of any Governmental Authority immediately upon request during normal business
hours.
4.9.2. Each Pledgor shall use its best efforts to obtain all necessary
consents of any Governmental Authority under Gaming Laws to any action required
or permitted to be taken hereunder, including the delivery of the Collateral and
the exercise of remedies by the Collateral Agent.
ARTICLE 5
---------
EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT
SECTION 5.1. EVENT OF DEFAULT. The occurrence of one or more "Events
of Default" (as defined in the Indenture) shall constitute an "Event of Default"
hereunder.
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SECTION 5.2. REMEDIES. If there occurs an Event of Default, then,
subject to Gaming Laws, whether or not all the Secured Obligations shall have
become immediately due and payable:
5.2.1. In addition to all its other rights, powers and
remedies under this Agreement and applicable law, the Collateral Agent shall
have, and may exercise, any and all of the rights, powers and remedies of a
secured party under the UCC, all of which rights, powers and remedies shall be
cumulative and not exclusive, to the extent permitted by applicable law.
5.2.2. The Collateral Agent shall have the right, as it may
deem necessary or advisable at its discretion, to do any or all of the
following:
5.2.2.1. to foreclose the Security Interest by any available
judicial procedure or without judicial process;
5.2.2.2. to notify obligors on the Collateral that the
Collateral has been assigned to the Collateral Agent and that all payments
thereon are to be made directly and exclusively to or as specified by the
Collateral Agent;
5.2.2.3. to collect by legal proceedings or otherwise
(including by foreclosure of any Lien securing Pledged Debt) all dividends,
distributions, interest, principal or other sums now or hereafter payable upon
or on account of the Collateral;
5.2.2.4. to enter into any extension or reorganization
agreement or any other agreement relating to or affecting the Collateral and, in
connection therewith, deposit or surrender control of any Collateral or accept
other property in exchange therefor;
5.2.2.5. to settle, compromise or release, on terms acceptable
to the Collateral Agent, in whole or in part, any amounts owing on the
Collateral or any disputes with respect thereto;
5.2.2.6. to receive, open and dispose of all mail addressed to
such Pledgor and notify postal authorities to change the address for delivery
thereof to such address as the Collateral Agent may designate, provided that the
Collateral Agent agrees that it will promptly deliver over to such Pledgor any
such opened mail as does not relate to the Collateral; and
5.2.2.7. to exercise any and all other rights, powers,
privileges and remedies of an owner of the Collateral, including rights of
conversion, exchange or subscription or other rights or upon the exercise by
each Pledgor or the Collateral Agent of any right, power or privilege pertaining
to the Collateral, the right to deposit and deliver any and all of the
Collateral to any committee, depository, transfer agent, registrar or other
designated agency upon such terms and conditions as the Collateral Agent may
determine to be appropriate, all without liability except to account for
property actually received by it, but the
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<PAGE>
Collateral Agent shall have no duty to each Pledgor to exercise any such right,
power or privilege and shall not be responsible for any failure so to do or
delay in so doing.
5.2.3. The Collateral Agent shall have the right to sell or otherwise
dispose of all or any Collateral at public or private sale or sales, with such
notice as may be required by Section 5.4, in lots or in bulk, at any exchange,
over the counter or at any of the Collateral Agent's offices or elsewhere, for
cash or on credit, with or without representations or warranties, all as the
Collateral Agent, in its discretion, may deem advisable. The Collateral need not
be present at any such sales. If sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Collateral Agent until the sale price is paid by the purchaser thereof, but
the Collateral Agent shall not incur any liability in case any such purchaser
shall fail to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may be sold again upon like notice. The Collateral
Agent shall not be obligated to make any sale of the Collateral regardless of
notice of sale having been given. The Collateral Agent may purchase all or any
part of the Collateral at public or, if permitted by applicable law, private
sale, and in lieu of actual payment of the purchase price, the Collateral Agent
may apply against such purchase price any amount of the Secured Obligations.
Each Pledgor agrees that any sale of Collateral conducted by the Collateral
Agent in accordance with the foregoing provisions of this Section shall be
deemed to be a commercially reasonable sale under Section 9-504 of the UCC.
5.2.4. The Collateral Agent shall not be required to register or
qualify any of the Collateral that constitutes securities under applicable state
or federal securities laws in connection with any sale or other disposition
thereof if such disposition is effected in a manner that complies with all
applicable federal and state securities laws. The Collateral Agent shall be
authorized, with respect to any disposition that is not so registered or
qualified, to restrict (if it deems it advisable to do so) the prospective
bidders or purchasers to persons who will represent and agree that they are
"accredited investors" or "qualified institutional buyers" under applicable law
and purchasing the Collateral for their own account for investment and not with
a view to the distribution or sale thereof. If any such Collateral is sold at
private sale, each Pledgor agrees that if such Collateral is sold in a manner
that the Collateral Agent in good faith believes to be reasonable under the
circumstances then existing, then (i) the sale shall be deemed to be
commercially reasonable in all respects, (ii) such Pledgor shall not be entitled
to a credit against the Secured Obligations in an amount in excess of the
purchase price, and (iii) the Collateral Agent shall not incur any liability or
responsibility to such Pledgor in connection therewith, notwithstanding the
possibility that a substantially higher price might have been realized at a
public sale. Each Pledgor recognizes that a ready market may not exist for such
Collateral if it is not regularly traded on a recognized securities exchange,
and that a sale by the Collateral Agent of any such Collateral for an amount
substantially less than the price that might have been achieved had the
Collateral been so traded may be commercially reasonable in view of the
difficulties that may be encountered in attempting to sell Collateral that is
privately traded.
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<PAGE>
SECTION 5.3. APPLICATION OF PROCEEDS.
-----------------------
5.3.1. Any cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon, all or any part of
the Collateral following the occurrence of an Event of Default may be held by
the Collateral Agent as Collateral and/or then or at any time thereafter applied
as follows:
5.3.1.1. first, to the Collateral Agent to pay all advances, charges,
costs and expenses payable to the Collateral Agent pursuant to Section 6.1; and
5.3.1.2. second, to pay the Secured Obligations in the order
set forth in the Indenture.
5.3.2. Each Pledgor and any other Person then obligated therefor shall
pay to the Collateral Agent on demand any deficiency with regard to the Secured
Obligations that may remain after such sale, collection or realization of, from
or upon the Collateral.
5.3.3. Payments received from any third party on account of any
Collateral shall not reduce the Secured Obligations until paid in cash to the
Collateral Agent. The application of proceeds by the Collateral Agent shall be
without prejudice to the Collateral Agent's rights as against each Pledgor or
other Persons with respect to any Secured Obligations that may then be or remain
unpaid.
5.3.4. If at any time after an Event of Default each Pledgor receives
any collections upon or other Proceeds of any Collateral, whether in the form of
cash, notes or otherwise, such Proceeds shall be received in trust for the
Collateral Agent and each Pledgor shall keep all such Proceeds separate and
apart from all other funds and property so as to be capable of identification as
the property of the Collateral Agent and promptly deliver such Proceeds to the
Collateral Agent in the identical form (with such endorsements or assignments as
are appropriate).
SECTION 5.4. NOTICE OF SALE. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Collateral Agent will send or otherwise make available to
each Pledgor reasonable notice of the time and place of any public sale or of
the time on or after which any private sale of any Collateral is to be made.
Each Pledgor agrees that any notice required to be given by the Collateral Agent
of a sale or other disposition of Collateral, or any other intended action by
the Collateral Agent, that is received in accordance with the provisions set
forth in Section 6.4 ten (10) days prior to such proposed action shall
constitute commercially reasonable and fair notice thereof to each Pledgor. The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Pledgor hereby waives any right to receive notice of any public or private sale
of any Collateral except as expressly provided for in this Section 5.4.
-17-
<PAGE>
ARTICLE 6
---------
GENERAL
SECTION 6.1. COLLATERAL AGENT'S EXPENSES. Regardless of the occurrence
of a Default or Event of Default, each Pledgor agrees to pay to the Collateral
Agent any and all advances, charges, costs and expenses, including the
reasonable fees and expenses of counsel and any experts or agents, that the
Collateral Agent may reasonably incur in connection with (i) the administration
of this Agreement, including any amendment hereto, or any workout or
restructuring, (ii) the creation, perfection or continuation of the Security
Interest or protection of its priority or the Collateral, including the
discharging of any prior or junior Lien or adverse claim against the Collateral
or any part thereof that is not permitted hereby or by the Indenture, (iii) the
custody, preservation or sale of, collection from, or other realization upon,
any of the Collateral, (iv) the exercise or enforcement of any of the rights,
powers or remedies of the Collateral Agent under this Agreement or under
applicable law (including attorneys' fees and expenses incurred by the
Collateral Agent in the collection of Collateral deposited with the Collateral
Agent and amounts incurred in connection with the operation, maintenance or
foreclosure of the Security Interest) or any bankruptcy proceeding or (v) the
failure by each Pledgor to perform or observe any of the provisions hereof. All
such amounts and all other amounts payable hereunder shall be payable on demand,
together with interest at the rate borne by the Notes at such time (including at
the Defaulted interest rate, if applicable).
SECTION 6.2. AMENDMENTS AND OTHER MODIFICATIONS. No amendment of any
provision of this Agreement (including a waiver thereof or consent relating
thereto) shall be effective unless the same shall be in writing and signed by
the Collateral Agent. Any waiver or consent relating to any provision of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on each Pledgor in any case
shall entitle such Pledgor to any other or further notice or demand in similar
or other circumstances.
SECTION 6.3. CUMULATIVE REMEDIES; FAILURE OR DELAY. The rights and
remedies provided for under this Agreement are cumulative and are not exclusive
of any rights and remedies that may be available to the Collateral Agent under
applicable law, the other Note Documents or otherwise. No failure or delay on
the part of any of the Secured Parties in the exercise of any power, right or
remedy under this Agreement shall impair such power, right or remedy or shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude other or further exercise of such or any
other power, right or remedy.
SECTION 6.4. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be personally delivered or sent by
prepaid courier, by overnight, registered or certified mail (postage prepaid) or
by prepaid telex, telecopy or telegram, and shall be deemed given when received
by the intended recipient thereof. Unless otherwise specified in a notice given
in accordance with the foregoing provisions of this Section 6.4, notices and
other communications shall be given to the parties hereto at their
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<PAGE>
respective addresses (or to their respective telex or telecopier numbers) set
forth in Schedule 6.4 hereof.
SECTION 6.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and, subject to the next sentence, inure to the benefit of each Pledgor and
the Collateral Agent and their respective successors and assigns. Each Pledgor
shall not assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Collateral Agent. The benefits of this
Agreement shall pass automatically with any assignment of the Secured
Obligations (or any portion thereof), to the extent of such assignment.
SECTION 6.6. PAYMENTS SET ASIDE. Notwithstanding anything to the
contrary herein contained, this Agreement, the Secured Obligations and the
Security Interest shall continue to be effective or be reinstated, as the case
may be, if at any time any payment, or any part thereof, of any or all of the
Secured Obligations is rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be restored or returned by the Collateral
Agent in connection with any bankruptcy, reorganization or similar proceeding
involving each Pledgor, any other party liable with respect to the Secured
Obligations or otherwise, if the proceeds of any Collateral are required to be
returned by the Collateral Agent under any such circumstances or if the
Collateral Agent reasonably elects to return any such payment or proceeds or any
part thereof in its discretion, all as though such payment had not been made or
such proceeds not been received. Without limiting the generality of the
foregoing, if prior to any such rescission, invalidation, declaration,
restoration or return, this Agreement shall have been canceled or surrendered or
the Security Interest or any Collateral shall have been released or terminated
in connection with such cancellation or surrender, this Agreement and the
Security Interest and such Collateral shall be reinstated in full force and
effect, and such prior cancellation or surrender shall not diminish, discharge
or otherwise affect the obligations of each Pledgor in respect of the amount of
the affected payment or application of proceeds, the Security Interest or such
Collateral.
SECTION 6.7. CONTINUING SECURITY INTEREST; TERMINATION. Except as
otherwise provided in the Indenture with respect to the release of Collateral
under certain circumstances, this Agreement shall create a continuing security
interest in the Collateral and, except as provided below, the Security Interest
and all agreements, representations and warranties made herein shall survive
until, and this Agreement shall terminate only upon, the indefeasible payment in
full of the Secured Obligations. Any investigation at any time made by or on
behalf of the Collateral Agent shall not diminish the right of the Collateral
Agent to rely on any such agreements, representations or warranties herein.
Notwithstanding anything in this Agreement or applicable law to the
contrary, the agreements of each Pledgor set forth in Sections 4.6.2, 4.8.2,
4.8.5, 4.8.6 and 6.1 shall survive the payment of all other Secured Obligations
and the termination of this Agreement.
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<PAGE>
SECTION 6.8. CHOICE OF FORUM.
---------------
6.8.1. All actions or proceedings arising in connection with
this Agreement shall be tried and litigated in state or Federal courts located
in the County of New York, State of New York, unless such actions or proceedings
are required to be brought in another court to obtain subject matter
jurisdiction over the matter in controversy. EACH OF THE PLEDGORS AND THE
COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS, TO ASSERT THAT IT IS NOT SUBJECT TO THE JURISDICTION OF SUCH
COURTS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 6.8.1.
6.8.2. Nothing contained in this Section 6.8 shall preclude
the Collateral Agent from bringing any action or proceeding arising out of or
relating to this Agreement in the courts of any place where any Pledgor or any
of its assets may be found or located. TO THE EXTENT PERMITTED BY THE APPLICABLE
LAWS OF ANY SUCH JURISDICTION, EACH PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING, THE JURISDICTION OF ANY SUCH COURT OR COURTS THAT NOW OR
HEREAFTER, BY REASON OF SUCH PARTY'S PRESENT OR FUTURE DOMICILE, OR OTHERWISE,
MAY BE AVAILABLE TO IT.
SECTION 6.9. WAIVER AND ESTOPPEL. Except as otherwise provided in this
Agreement, each Pledgor hereby waives: (i) presentment, protest, notice of
dishonor, release, compromise, settlement, extension or renewal and any other
notice of or with respect to the Secured Obligations and hereby ratifies and
confirms whatever the Collateral Agent may do in this regard; (ii) notice prior
to taking possession or control of any Collateral or any bond or security that
might be required by any court prior to allowing the Collateral Agent to
exercise any of their rights, powers or remedies; (iii) the benefit of all
valuation, appraisement, redemption and exemption laws; (iv) any rights to
require marshaling of the Collateral upon any sale or otherwise to direct the
order in which the Collateral shall be sold; (v) any set-off; and (vi) any
rights to require the Collateral Agent to proceed against any Person, proceed
against or exhaust any Collateral or any other security interests or guaranties
or pursue any other remedy in the Collateral Agent's power, or to pursue any of
such rights in any particular order or manner, and any defenses arising by
reason of any disability or defense of any Person.
SECTION 6.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.
SECTION 6.11. COMPLETE AGREEMENT. This Agreement, the Indenture, the
Notes, and the other Note Documents, together with the exhibits and schedules
thereto and hereto, is
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<PAGE>
intended by the parties as a final expression of their agreement regarding the
subject matter hereof and as a complete and exclusive statement of the terms and
conditions of such agreement.
SECTION 6.12. LIMITATION OF LIABILITY. No claim shall be made by any
Pledgor against the Collateral Agent or the Affiliates, directors, officers,
employees or agents of the Collateral Agent for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or under any other theory of liability arising out of or related to the
transactions contemplated by this Agreement and the other Note Documents, or any
act, omission or event occurring in connection therewith; and each Pledgor
hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
SECTION 6.13. CONFLICTING AGREEMENTS; COLLATERAL SPECIFICALLY COVERED
BY OTHER AGREEMENTS. To the extent the terms and provisions of this Agreement
conflict with the terms and provisions of the Subsidiary Security Agreement or
any other Collateral Document, the terms and provisions of this Agreement shall
govern as they relate to the Collateral.
SECTION 6.14. WAIVER OF TRIAL BY JURY. EACH PLEDGOR AND THE COLLATERAL
AGENT WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION UNDER THIS AGREEMENT OR
ANY OTHER NOTE DOCUMENT OR ANY ACTION ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION
OR ACTIONS.
(remainder of page intentionally left blank)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first set forth above.
PLEDGORS:
--------
ASMI MANAGEMENT INC., A FLORIDA
CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
CSNO, INC., A LOUISIANA CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
GRAND PALAIS RIVERBOAT, INC., A
LOUISIANA CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
ISLE OF CAPRI CASINO COLORADO, INC.,
A COLORADO CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
S-1
<PAGE>
LRG HOTELS, L.L.C., A LOUISIANA LIMITED
LIABILITY COMPANY.
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
LRGP HOLDINGS, INC., A LOUISIANA
CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
LOUISIANA RIVERBOAT GAMING
PARTNERSHIP, A LOUISIANA GENERAL
PARTNERSHIP
BY: LRGP HOLDINGS, INC., A LOUISIANA
CORPORATION AND GENERAL PARTNER OF LOUISIANA
RIVERBOAT GAMING PARTNERSHIP
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
P.P.I., INC, A FLORIDA CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
S-2
<PAGE>
RIVERBOAT CORPORATION OF
MISSISSIPPI, A MISSISSIPPI CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
RIVERBOAT CORPORATION OF
MISSISSIPPI--VICKSBURG, A MISSISSIPPI
CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
-------------------------------------
RIVERBOAT SERVICES INCORPORATED,
AN IOWA CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
ST. CHARLES GAMING COMPANY, INC., A
LOUISIANA CORPORATION
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
-------------------------------------
S-3-
<PAGE>
COLLATERAL AGENT:
----------------
FLEET NATIONAL BANK, AS COLLATERAL AGENT
BY:
-----------------------------------------
NAME:
---------------------------------------
TITLE:
--------------------------------------
S-4
<PAGE>
SCHEDULE 3.2.
TO SUBSIDIARY
PLEDGE AGREEMENT
LOCATIONS OF OFFICES AND NAMES
------------------------------
Entity Other Prior and Current Corporate Office
Trade or Legal Names Chief Executive Office Other Locations
-------------------- ------------------------------------------
Fed. Tax I.D. #
- ---------------
<PAGE>
SCHEDULE 3.4.
TO SUBSIDIARY
PLEDGE AGREEMENT
PLEDGED EQUITY
--------------
<PAGE>
SCHEDULE 3.5.
TO SUBSIDIARY
PLEDGE AGREEMENT
PLEDGED DEBT; DEFAULTS; SET-OFFS, ETC.
--------------------------------------
<PAGE>
SCHEDULE 6.4.
TO SUBSIDIARY
PLEDGE AGREEMENT
ADDRESSES FOR NOTICES
---------------------
<PAGE>
EXHIBIT A
TO SUBSIDIARY
PLEDGE AGREEMENT
CONSENT AND ACKNOWLEDGMENT
--------------------------
(PLEDGED DEBT)
--------------
To: FLEET NATIONAL BANK, ("FLEET"), as Collateral Agent under that certain
Subsidiary Pledge Agreement referred to in the Indenture dated as of August
__, 1996 relating to the Notes referred to below (as in effect on the date
hereof, the "INDENTURE")
1. Pursuant to a SUBSIDIARY PLEDGE AGREEMENT dated as of August __,
1996 (as amended from time to time, the "SUBSIDIARY PLEDGE AGREEMENT") by and
among the Persons named as "Pledgors" on the signature pages thereof (each,
individually, a "PLEDGOR" and all, collectively, the "PLEDGORS"), and Fleet
National Bank, as, collateral agent and representative for the Trustee and
Persons that now or in the future are holders of the Notes (as defined below)
issued under the Indenture described below (the "HOLDERS") (in such capacity,
Fleet or any successor in such capacity is referred to herein as the "COLLATERAL
AGENT"), each Pledgor has granted a security interest in, among other things,
certain indebtedness owed by the undersigned to such Pledgor (together with all
notes, credit agreements, security agreements, pledge agreements, mortgages,
deeds of trust and other security and loan documents evidencing or securing such
indebtedness and all Liens, rights, remedies, powers, remedies and privileges of
such Pledgor relating thereto, the "LOAN COLLATERAL"). All terms with initial
capital letters not otherwise defined herein have the meanings set forth in the
Subsidiary Pledge Agreement.
The undersigned hereby:
1. Consents to the security interest of the Collateral Agent in the
Loan Collateral.
2. Agrees that upon receipt by the undersigned of notice from the
Collateral Agent that a Default exists:
(a) the undersigned shall pay and deliver all cash or other
property from time to time payable or otherwise distributable in respect of the
Loan Collateral directly to the Collateral Agent, without any defense, set-off,
recoupment or deduction of any kind; and
(b) the undersigned will deliver directly to the Collateral Agent
any notes and other instruments executed after the date hereof from time to time
evidencing any indebtedness of the undersigned to each Pledgor.
3. Confirms that the Loan Collateral is in full force and effect on
the date hereof and agrees that the Loan Collateral will not be amended or
otherwise modified without the prior written consent of the Collateral Agent.
<PAGE>
4. Expressly waives as against the Collateral Agent any setoff or
other defense against payment and performance by the undersigned under the
Subsidiary Pledge Agreement, this Consent and Acknowledgment or the Loan
Collateral and any claim against the Collateral Agent whether arising under the
Loan Collateral or otherwise.
5. Each of the undersigned hereby acknowledges that, pursuant to the
terms of the Subsidiary Pledge Agreement:
(a) For so long as a Default shall exist, the Collateral Agent,
to the exclusion of any Pledgor, shall be entitled to exercise all rights,
powers, remedies and privileges of each Pledgor under the Loan Collateral
(whether exercisable at any time or only during the existence of a Default or
Event of Default as defined therein), and all performance of the obligor
thereunder shall be rendered only to the Collateral Agent, as if the Collateral
Agent were the lender, secured party or beneficiary thereunder, provided that
the rights, powers, remedies and privileges of the Collateral Agent under the
Loan Collateral shall be no greater than those of each Pledgor thereunder.
Without limitation, such rights shall include all rights of reimbursement and
indemnity.
(b) For so long as a Default shall exist:
(i) Each Pledgor shall promptly, upon becoming aware thereof,
notify the Collateral Agent of the existence of any material default or event of
default under or with respect to any Pledged Debt.
(ii) Each Pledgor shall not, without the prior written
consent of the Collateral Agent (which consent may be withheld in the Collateral
Agent's discretion):
(A) amend, supplement or otherwise modify (including by
way of waiver) any provision of any of the Loan Collateral, or
(B) exercise any rights, powers, remedies and privileges
of such Pledgor under the Loan Collateral; provided that such Pledgor shall file
a proof of claim in respect of the Pledged Debt in any proceeding under the
Federal Bankruptcy Code or any similar proceeding as and when required therein.
(c) Notwithstanding subsections (a) and (b), while no
Default exists, each Pledgor shall be entitled to receive and retain (but not
accelerate, make demand for or enforce) and use free of the Security Interest
any and all interest from time to time paid or payable in cash with respect to
the Collateral; provided that this subsection (c) (i) shall not apply to any
other amounts required to be paid under the Loan Collateral and (ii) shall not
apply to any interest or principal paid or payable while a Default exists, all
of which shall be paid directly to the Collateral Agent, to be held as Loan
Collateral hereunder.
6. Each of the undersigned represents and warrants that it is
familiar with the provisions of the Subsidiary Pledge Agreement, consents
thereto and agrees that (i) any action taken by any Pledgor in violation of the
above provision shall be without any force or
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Subsidiary Pledge Agreement effect (except that the Collateral Agent shall be
entitled to receive and retain as Loan Collateral any and all proceeds of any
such actions) and (ii) subject to Section 5(c) hereof, the Collateral Agent
shall be conclusively deemed entitled to take any action any Pledgor is entitled
to take under the Loan Collateral.
IN WITNESS WHEREOF, the undersigned has executed this Consent and
Acknowledgment as of __________ __, ____.
__________________________, _________
_____________________
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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<PAGE>
EXHIBIT 10.7
------------
MORTGAGE, LEASEHOLD MORTGAGE, * UNITED STATES OF AMERICA
SECURITY AGREEMENT AND
ASSIGNMENT OF LEASES, *
RENTALS AND PROCEEDS
* STATE OF
BY ----------------
*
- -------------------
- ------------------- * COUNTY OF
---------------
IN FAVOR OF *
FLEET NATIONAL BANK, COLLATERAL *
AGENT
* * * * * * * *
BE IT KNOWN that on this ____ day of _____________, 1996, before me,
the undersigned Notary Public, duly commissioned and qualified in and for the
State and County aforesaid, and in the presence of the undersigned competent
witnesses, personally came and appeared,
_________________________________________, a _______________________
organized under the laws of the State of Louisiana, appearing herein
through ________________________, duly authorized pursuant to a
resolution of its board of directors, a certified copy of which is
attached hereto as Exhibit "A",
TAXPAYER IDENTIFICATION NUMBER:
-------------------------
MAILING ADDRESS:
----------------------------
----------------------------
(the "Mortgagor"), who declared as follows:
RECITALS
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(1) Casino America, Inc. (the "Company") and certain of its direct and
indirect Subsidiaries, including Mortgagor, have entered into that
certain Indenture dated of even date herewith (as amended,
supplemented or otherwise modified from time to time in accordance
with its terms, the "Indenture") with FLEET NATIONAL BANK, a national
banking association, as Trustee and Collateral Agent, whose taxpayer
identification number is ______________ and whose mailing address is
____________________ ___________________________ (in
<PAGE>
its capacity as Collateral Agent under the Indenture, and together
with any successor in such capacity appointed pursuant to the
Indenture, the "Mortgagee"), providing with respect to the issue and
sale of up to $300,000,000.00 aggregate principal amount of the
Company's ____% Senior Secured Notes due _______________, 2003 (all
such notes as are authenticated and delivered under the Indenture,
each bearing its own number, date and principal amount, being
hereinafter collectively referred to as the "Notes").
(2) From time to time the Company will make a portion of the proceeds from
the issuance of the Notes available to Mortgagor [to retire certain
Indebtedness and] for working capital purposes, and therefore,
Mortgagor will derive substantial direct benefit from the transactions
contemplated herein, in the Indenture and in the other Note Documents.
(3) In order to induce the Holders to purchase the Notes, the Mortgagor
has executed and delivered its Subsidiary Guarantee dated
_______________, 1996, in favor of Mortgagee, pursuant to which
Mortgagor has jointly, severally, solidarily and unconditionally
guaranteed all of the Company's obligations under the Notes and the
Indenture (the "Subsidiary Guarantee"), and has agreed to execute and
deliver this Mortgage to secure the obligations of the Mortgagor under
the Subsidiary Guarantee and all other Note Documents to which it is a
party.
(4) The Mortgagor acknowledges and agrees that the Mortgagee is the
authorized agent of the Holders, as the Collateral Agent under the
Indenture, and is entitled to accept this Mortgage in such capacity on
behalf itself, the Trustee and of the Holders (together with their
respective successors and assigns, collectively the "Secured
Parties").
ARTICLE I
PURPOSES; DEFINITIONS
Section 1.1 Purposes.
A. The Mortgagor declares that this Mortgage is granted to secure the
due and punctual payment and performance of any and all present and future
obligations and liabilities of the Mortgagor of every type or description
to the Secured Parties:
(a) arising under or in connection with the Indenture or the
Notes, whether for principal, premium, if any, interest, expenses,
indemnities or other amounts (including attorneys' fees and expenses);
or
(b) arising under or in connection with this Mortgage or any
other Note Document, including for reimbursement of amounts that may
be advanced or expended by the Mortgagee (i) to satisfy amounts
required to be paid by the Mortgagor under this Mortgage or any other
Note Document for claims and Charges, together with interest thereon
to the extent provided, or (ii) to maintain or preserve any Collateral
(including, without limitation, the Property) or to
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create, perfect, continue or protect any Collateral (including,
without limitation, the Property) or the Lien thereon, or its
priority;
in each case, whether due or not due, direct or indirect, joint and/or
several or solidary, absolute or contingent, voluntary or involuntary,
liquidated or unliquidated, determined or undetermined, now or hereafter
existing, renewed or restructured, whether or not from time to time
decreased or extinguished and later increased, created or incurred, whether
or not arising after the commencement of a proceeding under the Federal
Bankruptcy Code (including post-petition interest) and whether or not
recovery of any such obligation or liability may be barred by a statute of
limitations or prescriptive period or such obligation or liability may
otherwise be unenforceable, and including all obligations and liabilities
of the Mortgagor and/or the Company under any instrument now or hereafter
evidencing or securing any of the foregoing and all future advances
hereunder or pursuant to the Indenture, the Notes, the Subsidiary Guarantee
and/or the other Note Documents to the fullest extent permitted by
Louisiana Civil Code article 3298 (all obligations and liabilities of the
Mortgagor and the Company described in this Section 1.1 shall be
collectively referred to as the "Secured Obligations"). This Mortgage may
be construed and enforced variously and simultaneously as a mortgage,
assignment, pledge, contract or security agreement as may be appropriate
under applicable Laws from time to time in order to effectuate fully the
purposes and agreements herein set forth.
B. The maximum amount of Secured Obligations that may be outstanding
at any time and from time to time that this Mortgage secures, including,
without limitation, as a mortgage, as a leasehold mortgage, as a collateral
assignment, as an assignment of leases and rentals and as a security
agreement, shall be $500,000,000.00. This Mortgage is and shall remain
effective, even though the amount of the Secured Obligations may now be
zero or may later be reduced to zero, until all of the amounts, liabilities
and obligations, present and future, comprising the Secured Obligations
have been incurred and are extinguished. When no Secured Obligations
secured by this Mortgage exist and the Mortgagee is not bound to permit any
Secured Obligations to be incurred, this Mortgage may be terminated by the
Mortgagor upon thirty (30) days prior written notice sent by the Mortgagor
to the Mortgagee in accordance with the provisions of this Mortgage. A
portion of the Secured Obligations matures on ____________, 2003.
Section 1.2 Definitions. Unless otherwise defined herein, terms defined
in the Indenture and used but not otherwise defined herein shall have the
meanings given to them in the Indenture. As used herein, the following terms
shall have the meanings indicated:
"Advances" means any sums advanced by the Mortgagee for the curing of
defects, for the maintenance or preservation of the Property or for the
payment of insurance premiums, Taxes or keeper costs hereunder, as provided
for and in accordance with Section 5.8 hereof.
"Charges" means all federal, state, parish, city, municipal or other
Taxes, levies, assessments or charges that, if not paid when due, may
result in a Lien of any Governmental Authority against the Property.
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<PAGE>
"Collateral" has the meaning given such term in the Indenture.
"Commercial Laws" means the Commercial Laws (Title 10 of the Louisiana
Revised Statutes).
"Company" has the meaning given such term in Recital (1) on the first
page hereof.
"Environmental Laws" means all federal, state and local Laws,
ordinances, rules and regulations in any way relating to or regulating
human health or safety, or industrial hygiene or environmental conditions,
or protection of the environment, or pollution or contamination of the air,
soil, surface water or groundwater, and includes, without limitation, (i)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601, et seq., as amended by the Superfund
Amendments and Reauthorization Act of 1986, and any amendments thereto and
regulations thereunder, (ii) the Resource Conversation and Recovery Act of
1976, 42 U.S.C. Section 6901, et seq., as amended by the Hazardous and
Solid Waste Amendments of 1984, and any amendments thereto and regulations
thereunder and (iii) the Clean Water Act, 33 U.S.C. Section 1251, et seq.,
and any amendments thereto and regulations thereunder.
"Event of Default" has the meaning given such term in the Indenture.
"Fixtures" means goods that after placement on an immovable become
component parts of land, buildings and other constructions and which are
used in the conduct of a trade, business, occupation or other commercial or
industrial activity.
"Governmental Authority" has the meaning given such term in the
Indenture.
"Grantor" has the meaning given such term in the Indenture.
"Hazardous Materials" means any substance or material that is
described as a toxic or hazardous substance, waste or material or a
pollutant or contaminant or infectious waste, or words of similar import,
in any of the Environmental Laws, and includes, without limitation,
asbestos, petroleum or petroleum products (including crude oil or any
fraction thereof, natural gas, natural gas liquids, liquefied natural gas
or synthetic gas usable for fuel, or any mixture thereof), polychlorinated
biphenyls, urea formaldehyde, radon gas, radioactive matter and medical
waste.
"Holders" has the meaning given such term in the Indenture.
"Immovable Property" has the meaning given such term in Section
2.1(A).
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<PAGE>
"Improvements" has the meaning given such term in Section 2.1(C).
"Indebtedness" has the meaning given such term in the Indenture.
"Indenture" has the meaning given such term in Recital (1) on the
first page hereof.
"Laws" means all applicable constitutions, treaties, statutes, laws,
ordinances, regulations, orders, writs, injunctions or decrees of the
United States or of any state, commonwealth, nation, territory, possession,
county, parish, municipality or Governmental Authority.
"Leases" has the meaning given such term in Section 2.2.
"Lien" means any lien, privilege, pledge, assignment, hypothecation,
conditional sale agreement, title retention agreement, financing lien,
lessor or lessee's interest under any lease, subordination of any claim or
right, security interest, mortgage or other encumbrance, whether arising by
mortgage, pledge agreement or under Laws.
"Losses" has the meaning given such term in Section 4.15(F).
"Mortgage" means this Mortgage, Leasehold Mortgage, Security Agreement
and Assignment of Leases, Rentals and Proceeds.
"Mortgagee" means Fleet National Bank, a national banking association,
as Collateral Agent for the Holders, and its successors and assigns in such
capacity.
"Mortgagor" means __________________________ and its successors and
assigns.
"Note Documents" means the Indenture, the Notes, the Subsidiary
Guarantees, the Collateral Documents and all other documents under or by
reason of which the Secured Obligations are evidenced, governed, secured or
otherwise dealt with, and all other agreements, certificates and writings
heretofore or hereafter delivered in connection therewith by the Mortgagor,
the Company or any other Subsidiary Guarantor.
"Notes" has the meaning given such term in Recital (1) on the first
and second pages hereof.
"Permitted Encumbrances" means:
(a) Liens permitted with respect to the Property by Section 1011 of
the Indenture; and
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<PAGE>
(b) Those matters set forth on Exhibit "E" attached hereto.
"Person" means any individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or Governmental Authority.
"Primary Leases" has the meaning given such term in Section 2.1(B).
"Proceeds" has the meaning given such term in Section 2.1(D).
"Property" has the meaning given such term in Section 2.1.
"Rentals" has the meaning given such term in Section 2.2.
"Secured Obligations" has the meaning given such term in Section 1.1.
"Secured Parties" has the meaning set forth in Recital (4) on the
second page hereof.
"Subsidiary Guarantee" has the meaning given such term in Recital (3)
on the second page hereof.
"Taxes" mean all taxes, forced contributions, assessments, charges,
fees, levies, imposts, duties, deductions, withholdings or other charges
from time to time or at any time imposed by any Laws or any Governmental
Authority.
Section 1.3 Number and Gender of Words. Whenever herein the singular
number is used, the same shall include the plural where appropriate and vice
versa, and words of any gender shall include each other gender where
appropriate.
Section 1.4 Headings. The captions, headings and arrangements used in
this Mortgage are for convenience only and do not in any way affect, limit,
amplify or modify the terms and provisions hereof. All references in this
Mortgage to Exhibits, Schedules and Sections refer to the Exhibits, Schedules
and Sections of this Mortgage (as modified, amended or supplemented from time to
time) unless expressly provided otherwise. All Exhibits and Schedules attached
to this Mortgage are a part hereof for all purposes.
Section 1.5 Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Mortgage to a particular agreement, instrument or document also refer to and
include all renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document, provided that
nothing contained in this Section shall be construed to authorize any Person to
execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.
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<PAGE>
ARTICLE II
PROPERTY
Section 2.1 Hypothecation. In order to secure the full and punctual
payment and performance of the Secured Obligations, the Mortgagor does by these
presents specially mortgage, assign, affect, pledge and hypothecate unto and in
favor of the Mortgagee, and grant in favor of the Mortgagee a continuing
security interest in, to inure to the use and benefit of the Mortgagee, for
itself and the other Secured Parties, all the following described property
(collectively, the "Property"):
A. Fee Estate.
----------
All presently existing and hereafter acquired rights, title and
interest of the Mortgagor in and to any of the immovable property described
on Exhibit "B" attached hereto (the "Immovable Property"), and all of
Mortgagor's right, title and interest in and to any right to purchase, use
or occupy any land adjacent to any of the Immovable Property and any land
lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining any of the Immovable Property.
B. Leasehold Estate.
----------------
All presently existing and hereafter acquired rights, title and
interest of the Mortgagor in, to and under (i) that certain lease by and
between Mortgagor, as lessee, and ___________, as lessor, dated _________,
and the leasehold estate created thereby, which lease and leasehold estate
cover and affect the immovable property described on Exhibit "C" attached
hereto and (ii) that certain lease by and between Mortgagor, as lessee, and
_______________, as lessor, dated _____________, and the leasehold estate
created thereby, which lease and leasehold estate cover and affect the
immovable property described on Exhibit "D" attached hereto. The leases
described in clauses (i) and (ii) above shall be collectively referred to
as the "Primary Leases".
C. Improvements.
------------
All presently existing and hereafter acquired rights, title and
interest of the Mortgagor in and to all buildings, structures,
improvements, other constructions and Fixtures of every kind and
description now or hereafter situated on the Immovable Property or the
properties covered by the Primary Leases (the "Improvements"), together
with any and all appurtenances, powers, liberties, easements, air rights,
development rights, sewer rights, licenses, concession agreements, streets,
alleys, passages, ways, riparian rights, batture rights, water courses,
servitudes, estates, titles, interests, prescriptions, advantages and other
rights and privileges whatsoever in any way belonging, relating or
appertaining to the Immovable Property, the Improvements or the Primary
Leases (or the leasehold estates created thereby) or granted to Mortgagor
to use in connection therewith.
D. Additions, Etc. and Proceeds.
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<PAGE>
This Mortgage, without further action, shall also attach to all (1)
subsequent additions, substitutions and replacements to and for any or all
of the Property, (2) present and future component parts thereof and
accessions thereto, (3) natural increases, accessions, accretions and
issues of the Property and (4) rights of the Mortgagor to receive proceeds
attributable to the sale, insurance loss, condemnation or other taking of
all or any part of the Property, and any contract, tort or other damage
awards in connection with, relating to or arising out of all or any part of
the Property (including, without limitation, any sums which may be awarded
or become payable to the Mortgagor for damages caused by public works or
constructions on or near the Property).
With respect to the proceeds referred to in clause (4) above
(collectively, the "Proceeds"), this Mortgage is a collateral assignment
thereof pursuant to La. R.S. 9:5386 et seq., whether such Proceeds or any
of them now exist or arise in the future, and Mortgagor does hereby
irrevocably make, constitute and appoint Mortgagee and the agents of
Mortgagee as the true and lawful mandataries and attorneys-in-fact of
Mortgagor to carry out and enforce all of Mortgagor's rights, title and
interest in and to any or all of the Proceeds hereby collaterally assigned.
The Proceeds shall be included in the term "Property" for all purposes of
this Mortgage. The collateral assignment herein made of the Proceeds shall
not be construed as imposing upon Mortgagee any obligations with respect
thereto unless and until Mortgagee shall become the absolute owner thereof
and Mortgagor shall have been wholly dispossessed thereof.
In the event that Mortgagor becomes the owner of all or any part of
the property covered by the Primary Leases, this Mortgage shall
automatically and without need of further act become a mortgage on
Mortgagor's full ownership interest in such property.
The Property is to remain so specially mortgaged, assigned, affected, pledged
and hypothecated unto and in favor of the Mortgagee, for the benefit of the
Secured Parties, and subject to the security interests created hereby until the
full and final payment and performance or discharge of the Secured Obligations,
and the Mortgagor is herein and hereby bound and obligated not to sell,
alienate, deteriorate or encumber the Property to the prejudice of this act, and
not to permit or suffer the same to be so sold, alienated, deteriorated or
encumbered, except as otherwise may be permitted hereunder.
Section 2.2 Assignment and Pledge of Leases and Rentals. In order to
further secure the full and punctual payment and performance of the Secured
Obligations, the Mortgagor hereby pledges, pawns, conveys, assigns and transfers
unto the Mortgagee, for the benefit of the Secured Parties, (a) all of the
rentals, income, profits, security deposits and other sums (collectively, the
"Rentals") due or becoming due under or otherwise payable under or received or
receivable in connection with all leases and subleases, whether written or
verbal, or any letting of, or any agreement for the use or occupancy of, all or
any part of the Property, presently or subsequently granted and bearing against
the Property, or any part thereof (all such leases and subleases, together with
all modifications, extensions and renewals thereof shall be collectively
referred to as the "Leases"), (b) all Leases and (c) any and all benefits and
advantages to be derived from the Leases and all guarantees of any obligations
of any lessee under any of the Leases; provided, however, that so long as no
Event of Default shall have occurred, the Mortgagor shall be entitled to
continue to collect the Rentals and exercise all of
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its rights under the Leases. The assignment of Leases and Rentals in this
Section is, and is intended to be, an absolute and present assignment from the
Mortgagor to the Mortgagee, for the benefit of the Secured Parties, made in
accordance with and to the fullest extent permitted by La. R.S. (S) 9:4401 and
is not intended to constitute merely the present passing of a security interest.
The Mortgagor will not perform any acts and will not execute any instrument
which would prevent the Mortgagee from exercising its rights under this Section
2.2.
Section 2.3 Uniform Commercial Code Security Agreement. This Mortgage
also is intended to be a security agreement under the Commercial Laws for any of
the items specified above in Section 2.1 as part of the Property that, as a
matter of law, may be subject to a security interest under the Commercial Laws.
In order to further secure the full and punctual payment and performance of the
Secured Obligations, the Mortgagor hereby grants to the Mortgagee, for the
benefit of the Secured Parties, a security interest in all such items. The
Mortgagor agrees that the Mortgagee may file this Mortgage in the real estate
records or other appropriate index as a financing statement for any of such
items specified above, and any copy of this Mortgage or of any other security
agreement or financing statement shall be sufficient as a financing statement.
Mortgagor shall pay all reasonable costs and expenses of any record searches for
financing statements that Mortgagee reasonably may require. Without the prior
written consent of the Mortgagee, the Mortgagor shall not create under the
Commercial Laws any other security interests in any of the items described
above, including replacements and additions thereof or thereto owned by the
Mortgagor, other than Liens expressly permitted hereunder or by the Indenture.
Section 2.4 Confession of Judgment. Solely for purposes of executory
process (and for no other purpose whatsoever) under Louisiana law, the Mortgagor
does hereby acknowledge and CONFESS JUDGMENT in favor of the Mortgagee for the
full amount of the Secured Obligations.
Section 2.5 Attorneys' Fees. In case the Secured Obligations are placed
in the hands of an attorney at law for the filing of foreclosure proceedings, to
protect the rights of the Mortgagee or to enforce any of the agreements
contained in this Mortgage, the Mortgagor herein and hereby agrees to pay all
costs of collection, including, but not limited to, the reasonable fees and
expenses of the attorneys at law who may be employed for such purposes, incurred
in connection with the protection of or realization of collateral or in
connection with any of Mortgagee's collection efforts, whether or not suit on
the Secured Obligations or any foreclosure proceedings are filed, and further
agrees that the maximum Secured Obligations secured by this Mortgage shall be
increased by the amount of said costs, fees and expenses.
Section 2.6 Release of Property; Mortgagor and Lien Not Released. The
Mortgagee may at any time, on behalf of the Secured Parties and without notice
to the Mortgagor, release any part of the Property from the effect of this
Mortgage, grant an extension or deferment of time for the discharge of any
obligation hereunder, permit the substitution and transfer of documents,
agreements and instruments evidencing the Secured Obligations, agree in writing
with the Mortgagor or any other Person to modify the terms of payment or
performance of the Secured Obligations, including, without limitation, to modify
the rate of interest, the period of amortization or the amount of the monthly
installments payable under the Notes, accept or release other or additional
security for the Secured Obligations, reconvey any part of the
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Property, consent to the granting of any easement or servitude affecting the
Property and join in any extension or subordination agreement, in each case
without affecting the liability of the Mortgagor hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MORTGAGOR
The Mortgagor hereby represents, warrants, covenants, promises, stipulates
and agrees as follows:
Section 3.1 Title. The Mortgagor has good and merchantable title as owner
of the Property, free and clear of any and all Liens except Permitted
Encumbrances; Mortgagor has and will continue to have full power and lawful
authority to grant, release, convey, assign, transfer, mortgage, pledge,
hypothecate and otherwise create the Liens on the Property as provided herein.
The Property is accurately, completely, adequately and sufficiently described
herein and in Exhibits "B", "C" and "D" attached hereto as required by Laws for
this Mortgage to create a Lien on all of the Property.
Section 3.2 First Priority Mortgage. This Mortgage constitutes a valid
Mortgage and, upon proper recording hereof, will constitute a valid and
perfected first mortgage Lien on, and security interest in, the Property, and
first priority assignment of Leases and Rentals, subject in each case only to
the Permitted Encumbrances, and there are no defenses or offsets to Mortgagor's
obligations pursuant to this Mortgage or the other Note Documents to which it is
a party, including, without limitation, the applicable obligations to pay and
perform the Secured Obligations.
Section 3.3 Location of Offices; Taxpayer Identification Number. The
Mortgagor's chief executive office and principal place of business is
________________________________, _____________________. The Mortgagor's
Federal Taxpayer Identification Number is _____________.
Section 3.4 Enforceability. The execution and delivery of this Mortgage
and the Subsidiary Guarantee and other Note Documents to which Mortgagor is a
party will result in valid and legally binding obligations of the Mortgagor
enforceable against it in accordance with the respective terms and provisions
hereof and thereof.
Section 3.5 Required Filings. Schedule 1 sets forth all filings required
to perfect the Liens, assignments and security interests created by this
Mortgage.
Section 3.6 Leases.
A. With respect to the Primary Leases, Mortgagor represents that (i)
it has provided Mortgagee with a true and complete copy of each of the
Primary Leases; (ii) each of the Primary Leases is valid, binding and in
full force and effect and has not been amended or modified, except as
heretofore disclosed in writing by Mortgagor to Mortgagee; (iii) to the
best of Mortgagor's knowledge, no default exists on the part of any lessor,
or on the part of Mortgagor as lessee, in the performance of any of the
terms,
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covenants, provisions, conditions or agreements contained in the Primary
Leases; and (iv) Mortgagor knows of no condition which, with the giving of
notice or the lapse of time or both, would constitute a default under the
Primary Leases on the part of any lessor or Mortgagor as lessee, except as
heretofore disclosed in writing by Mortgagor to Mortgagee.
B. With respect to the assignment of Leases and Rentals set forth
above, Mortgagor represents that (i) it has provided Mortgagee with a true
and complete copy of each Lease; (ii) Mortgagor is not, in the capacity of
lessor, a party to any other lease, whether written or oral, or any
agreement for the use and occupancy of any of the Property as of the date
hereof, except as heretofore disclosed in writing by Mortgagor to
Mortgagee; (iii) the Leases are valid, binding and in full force and effect
and have not been amended or modified, except as heretofore disclosed in
writing by Mortgagor to Mortgagee; (iv) Mortgagor is the sole owner of the
lessor's interest in the Leases; (v) Mortgagor has not executed any other
assignment or pledge of any of the Leases or Rentals or performed any other
act or executed any other instrument which might prejudice Mortgagee's
rights hereunder; (vi) to the best of Mortgagor's knowledge, no default
exists on the part of any lessee, or on the part of Mortgagor as lessor, in
the performance of the terms, covenants, provisions, conditions or
agreements contained in the Leases; (vii) Mortgagor knows of no condition
which, with the giving of notice or the passage of time or both, would
constitute a default under any of the Leases on the part of any lessee or
Mortgagor as lessor, except as heretofore disclosed in writing by Mortgagor
to Mortgagee; (viii) no rent has been paid by any lessee for more than one
installment in advance; and (ix) the payment of none of the Rentals to
accrue under the Leases has been or will be waived, released, reduced,
discounted or otherwise discharged or compromised by Mortgagor, except as
heretofore disclosed in writing by Mortgagor to Mortgagee.
Section 3.7 Peaceable Possession. Mortgagor's possession of the Property
has been peaceable and undisturbed and, to the best of Mortgagor's knowledge,
without investigation or inquiry, the title thereto has never been disputed or
questioned, and Mortgagor does not know of any facts by reason of which any
adverse claim to any part of the Property or to any undivided interest therein
might be set up or made.
Section 3.8 Taxes. Mortgagor has not received any notice of any federal,
state or local tax claims or Liens assessed or filed against Mortgagor or the
Property for Taxes which are due and payable, unsatisfied of record or docketed
in any court of the state in which the Property is located or in any court
located in the United States.
Section 3.9 Casualty and Condemnation. The Property has not been damaged
or destroyed by fire or other casualty, and no condemnation or eminent domain
proceedings have been commenced and/or are pending with respect to the Property,
and, to the best of Mortgagor's knowledge, no such condemnation or eminent
domain proceedings are about to be commenced.
Section 3.10 No Consents or Approvals. No consent or approval of any
trustee or holder of any Indebtedness or other obligation of Mortgagor, and no
consent, permission,
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authorization, order or license of any Governmental Authority (other than those
which have already been obtained and delivered to Mortgagee), is necessary in
connection with the execution, delivery and performance of this Mortgage or any
other Note Document to which Mortgagor is a party or any transaction
contemplated hereby or thereby.
Section 3.11 No Conflicts. There is no provision of any indenture or
agreement, written or oral, to which Mortgagor is a party or under which
Mortgagor is obligated, and no statute, rule or regulation, or judgment, decree
or order of any Governmental Authority, binding on Mortgagor, which would be
contravened by the execution and delivery of this Mortgage or any other Note
Document to which Mortgagor is a party or by the performance of any provision,
condition, covenant or other term hereof or thereof.
Section 3.12 Accordance With Laws and Regulations. The Property is in
compliance with all applicable Laws, including without limitation Environmental
Laws, moratoriums, condominium and coastal zone management laws and regulations
and with all applicable building, safety and fire codes, as well as zoning and
subdivision laws and regulations. All environmental impact statements,
subdivision maps, drawings, specifications and reports relating to the Property
have been or will be timely prepared and filed with all Governmental Authorities
having jurisdiction over such matters and requiring any such submittals.
Section 3.13 No Hazardous Activities. To the best of Mortgagor's
knowledge, (a) no industrial use has ever been made of any part of the Property,
(b) none of the Property has ever been used for storage, treatment or disposal
of any Hazardous Materials, (c) no manufacturing, landfilling or chemical
production has ever occurred on any part of the Property and (d) there have
never been any underground storage tanks located on any part of the Property.
Section 3.14 No Hazardous Materials. Except as disclosed to and
acknowledged by Mortgagee in writing, Mortgagor represents and warrants that:
(a) During the period of ownership by Mortgagor or any of its
Affiliates of the Property, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any
Hazardous Materials by any Person on, under or about any of the Property;
and
(b) Mortgagor has no knowledge of or reason to believe that there has
been (1) any use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Materials by any prior
owners or occupants of the Property or (2) any actual or threatened
litigation or claims of any kind by any Person relating to such matters.
ARTICLE IV
COVENANTS OF MORTGAGOR
So long as the Secured Obligations or any part thereof remains
outstanding or unpaid, the Mortgagor specially covenants, promises, stipulates
and agrees with the Mortgagee as follows:
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Section 4.1 Warranty. The Mortgagor shall warrant, preserve and defend
the title to the Property, the interest of the Mortgagee and the Secured Parties
in and to the Property and the validity, enforceability and priority of the Lien
of this Mortgage, this assignment of Leases and Rentals and this grant of a
security interest against the claims and demands of all Persons whomsoever, at
its sole cost and expense.
Section 4.2 Payment; Performance of Covenants. The Mortgagor shall make
prompt payment when due of all amounts owing hereunder and under the Subsidiary
Guarantee and other Note Documents to which Mortgagor is a party and all other
Secured Obligations as the same become due, without offset, counterclaim or
defense, and shall punctually and properly perform all of the Mortgagor's
covenants, duties, agreements and conditions (a) under this Mortgage and the
Subsidiary Guarantee and other Note Documents to which Mortgagor is a party or
(b) imposed upon or assumed by Mortgagor by virtue of the provisions of any
deed, conveyance, lease, agreement, statute or ordinance pursuant to which
Mortgagor or any predecessor in title of the Property acquired the Property or
any rights or privileges appurtenant thereto or for the benefit thereof.
Section 4.3 Payment of Taxes and Utilities. Subject to the right to
contest certain matters with respect to the Property pursuant to Section 4.6,
the Mortgagor shall cause to be paid all Taxes levied or assessed against the
Property or any part thereof prior to the date upon which any fine, penalty,
interest or cost may be added thereto or imposed by Laws for the nonpayment
thereof. Mortgagor shall deliver to Mortgagee promptly after a request therefor
by Mortgagee, receipted bills or cancelled checks evidencing the payment of
prior Taxes to the date upon which any fine, penalty, interest or cost may be
added thereto or imposed by Laws for the nonpayment thereof. In the case of any
assessment payable in installments, each installment thereof shall be paid prior
to or on the date on which such installment becomes due and payable without
imposition of any fine, penalty, interest or cost. Mortgagor shall not be
entitled to any credit on the Secured Obligations, or any other sums which may
become payable under the terms hereof, under any other Note Document or
otherwise, by reason of the payment of Taxes. Mortgagor shall timely pay all
charges for electricity, power, gas, water and other utilities used in
connection with the Property.
Section 4.4 Payment of Indebtedness Pertaining to Property. Subject to
the right to contest certain matters with respect to the Property pursuant to
Section 4.6, the Mortgagor shall cause all Indebtedness, claims, encumbrances
and liabilities of any kind or character (including, without limitation, claims
for labor, materials, supplies and rent) incurred in the operation, maintenance
and development of the Property to be paid within ninety (90) days after same
become due.
Section 4.5 Other Compliance. Subject to the right to contest certain
matters with respect to the Property pursuant to Section 4.6, Mortgagor agrees
(i) to perform and comply with all covenants, agreements and restrictions
affecting the Property and with all Laws, ordinances, acts, rules, regulations
and orders of any Governmental Authority exercising any power of regulation or
supervision over Mortgagor or any part of the Property, whether now or hereafter
enacted or enforced and whether the same be directed to the direction, repair,
manner of use or structural alteration of the Improvements or otherwise, (ii) to
comply with the terms of all insurance policies covering or applicable to the
Property, all requirements of the
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issuer of any such policy and all orders, rules, regulations and other
requirements of or standards recommended by the National and Regional Fire
Protection Association (or any other body exercising similar functions)
applicable to or affecting the Property or any use or condition of the Property
and (iii) to procure, maintain and comply with all permits, licenses, approvals
or other authorizations required for any use of the Property being made and for
the proper erection, installation, operation and maintenance of the Improvements
and the FF&E or any portion of the foregoing. With respect to the compliance
obligations of Mortgagor in this Section 4.5, other than Mortgagor's obligation
to comply with all Environmental Laws, Mortgagor shall have no compliance
obligation under this Section 4.5 if failure to comply would not have a material
adverse affect on (a) the use made by Mortgagor of, the value or condition of or
the business conducted on the Property or (b) the rights or interest of any
Secured Party.
Section 4.6 Contest of Taxes, Indebtedness and Other Claims. Mortgagor
shall have the right to contest, at its own expense, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity of any Taxes, Indebtedness, claims, assessments or encumbrances
referred to herein (other than this Mortgage or any other Note Document securing
all or any portion of the Secured Obligations), or any of the Laws, ordinances,
acts, rules, regulations, orders, licenses and authorizations referred to
herein; provided that (a) Mortgagor gives Mortgagee timely notice of its
intention to contest the same, (b) the commencement of such proceedings shall
suspend the collection or enforcement of the matter under contest, or, if the
commencement of such proceedings does not suspend such collection or
enforcement, Mortgagor shall have made payment of any item sought to be
collected with or without protest, (c) there shall be no impairment of the Lien
of this Mortgage or undue interference with the normal conduct of Mortgagor's
riverboat gaming or hotel operations at the Property, (d) neither the Property
nor any part thereof or interest therein would be in immediate danger of being
sold, forfeited or lost, (e) neither Mortgagee nor any Secured Party would be
potentially subject to criminal, or in imminent danger of civil, liability for
failure to comply therewith pending the outcome of such proceedings, (f) in the
case of Taxes, assessments, charges or other impositions, Mortgagor shall have
either (i) paid the amount in dispute prior to instituting such contest, in
which event the notice requirement of subparagraph (a) of this Section shall be
satisfied by giving notice prior to initiating such contest rather than prior to
making payment, or (ii) furnished such security, if any, as may be required by
Mortgagee during the pendency of such proceedings and (g) if such contest be
finally resolved against Mortgagor, Mortgagor shall promptly pay the amount
required to be paid, together with all interest and penalties accrued thereon,
or comply with any applicable requirements. Mortgagor shall indemnify and hold
Mortgagee and each Secured Party harmless from and against any liability, loss,
damage, cost or expense of any kind that may be imposed upon Mortgagee or any
Secured Party in connection with any such contest and any determination
resulting therefrom.
Section 4.7 Performance Under Leases.
A. Primary Leases.
(i) Mortgagor shall continue to perform faithfully all of the
lessee's obligations under the Primary Leases.
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(ii) Mortgagor shall promptly (and in any event within ___ days
of Mortgagor's receipt thereof) furnish Mortgagee with an accurate and
complete copy of all notices received by Mortgagor in connection with
the Primary Leases.
(iii) Mortgagor shall promptly exercise each individual option,
if any, to extend or renew the term of each of the Primary Leases and
hereby expressly authorizes and appoints Mortgagee as its agent and
attorney-in-fact to exercise any such option in the name and on behalf
of Mortgagor, which power of attorney shall be irrevocable and shall
be deemed to be coupled with an interest.
(iv) In the event that either or both of the Primary Leases is
rejected or disaffirmed by the lessor thereunder (or by any receiver,
trustee, custodian or other party who succeeds to the rights of such
lessor) pursuant to any bankruptcy, insolvency, reorganization,
moratorium or similar law, Mortgagor covenants that it will not elect
to treat such Primary Lease as terminated under 11 U.S.C. (S)365(h) or
any similar or successor law or right and hereby assigns to Mortgagee
the sole and exclusive right to make or refrain from making any such
election, and Mortgagor agrees that any such selection, if made by
Mortgagor, shall be void and of no force or effect.
(v) If the lessor under either or both of the Primary Leases (or
any receiver, trustee, custodian or other party who succeeds to the
rights of such lessor) rejects or disaffirms such Primary Lease
pursuant to any bankruptcy, insolvency, reorganization, moratorium or
similar law and Mortgagee elects to have Mortgagor remain in
possession under any legal right Mortgagor may have to occupy the
premises leased pursuant to such Primary Lease, (a) Mortgagor shall
remain in such possession and shall perform all acts necessary for
Mortgagor to retain its legal rights and to remain in such possession
for the unexpired term of such Primary Lease (including all renewals
thereof), whether such acts are required under the then existing terms
and provisions of such Primary Lease or otherwise, and (b) all of the
terms and provisions of this Mortgage and the Lien created hereby
shall remain in full force and effect and shall be extended
automatically to such possession, occupancy and interest of Mortgagor.
(vi) Immediately upon obtaining knowledge of a breach by the
lessor under either or both of the Primary Leases (or by any receiver,
trustee, custodian or other party who succeeds to the rights of such
lessor) or any inability of such lessor (or any such receiver,
trustee, custodian or other party) to perform the terms and provisions
of such Primary Lease (including by reason of a rejection or
disaffirmance of such Primary Lease pursuant to any bankruptcy,
insolvency, reorganization, moratorium or similar law), Mortgagor will
notify Mortgagee of any such breach or inability, and Mortgagor shall,
at its expense, diligently commence and prosecute any proceedings as
may be necessary or advisable against such lessor in connection with
such breach and shall, upon the request of Mortgagee, deliver to
Mortgagee copies of all papers served in connection therewith;
provided that no settlement or compromise of any such proceeding
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shall be made by Mortgagor without Mortgagee's prior written consent
if such settlement or compromise could have a materially adverse
affect on the Property or the rights of the Mortgagee or the Secured
Parties hereunder.
(vii) Mortgagor shall give immediate notice to Mortgagee of any
notice of default given to, or any lawsuit instituted against,
Mortgagor by any lessor under either or both of the Primary Leases,
and Mortgagor shall furnish Mortgagee with an accurate and complete
copy of such notice of default and with any pleadings received by
Mortgagor or Mortgagor's counsel from any such lessor within ___ days
of Mortgagor's receipt thereof. Mortgagee may, but shall not be
obligated to, take any action Mortgagee deems necessary or desirable
to cure any default by Mortgagor under the Primary Leases; provided,
however, that in the event of any failure by Mortgagor to perform any
covenant to be observed and performed under either or both of the
Primary Leases, the performance by Mortgagee on behalf of Mortgagor of
such Primary Lease covenant shall not remove or waive, as between
Mortgagor and Mortgagee, the corresponding breach of covenant by
Mortgagor under this Mortgage, and all expenses incurred by Mortgagee
in connection with the curing of such default, of every kind and
character, shall be a demand obligation owing by Mortgagor to
Mortgagee and shall bear interest from the date of expenditure until
paid at a rate equal to the rate provided for in Section 5.8 for
Advances to bear, and the same shall be secured by the Lien evidenced
by this Mortgage. Furthermore, the Mortgagor agrees to indemnify and
hold the Mortgagee harmless from and against any and all liability,
loss or damage which the Mortgagee may incur under the Primary Leases
by reason of the mortgage of Mortgagee's interest in the Primary
Leases and from any and all claims and demands whatsoever which may be
asserted against Mortgagee by reason of any alleged undertaking or
obligation on Mortgagee's part to perform or discharge any of the
terms, covenants or agreements contained in the Primary Leases, except
to the extent that any such claims and demands arise out of the gross
negligence or willful misconduct of Mortgagee.
(viii) Mortgagor shall, at Mortgagor's sole cost and expense,
appear in and defend any action or proceeding arising under or in any
manner connected with the Primary Leases or the obligations, duties or
liabilities of the lessor or Mortgagor thereunder.
B. Assigned Leases.
(i) Mortgagor shall continue to perform faithfully all of the
lessor's obligations under the Leases.
(ii) Mortgagor shall give prompt written notice to Mortgagee of
any notice of default given to, or any lawsuit instituted against,
Mortgagor by any lessee under any of the Leases, and Mortgagor shall
furnish Mortgagee with an accurate and complete copy of such notice of
default and with any pleadings received by Mortgagor or Mortgagor's
counsel from such lessee. Mortgagee
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may, but shall be obligated to, take any action Mortgagee deems
necessary or desirable to cure any default by Mortgagor under any of
the Leases, and all expenses incurred by Mortgagee in connection with
the curing of such default, of every kind and character, shall be a
demand obligation owing by Mortgagor to Mortgagee and shall bear
interest from the date of expenditure until paid at a rate equal to
the rate provided for in Section 5.8 for Advances to bear, and the
same shall be secured by the Lien evidenced by this Mortgage.
(iii) Mortgagor shall, at Mortgagor's sole cost and expense,
appear in and defend any action or proceeding arising under or in any
manner connected with any of the Leases or the obligations, duties or
liabilities of any lessee or Mortgagor thereunder.
(iv) Mortgagor shall enforce each of the Leases and all remedies
available to Mortgagor against the lessee thereunder in case of
default under any of the Leases by any such lessee.
(v) The Mortgagor agrees to indemnify and hold the Mortgagee
harmless from and against any and all liability, loss or damage which
the Mortgagee may incur under the Leases by reason of the assignment
of the Leases contained herein, and from any and all claims and
demands whatsoever which may be asserted against Mortgagee by reason
of any alleged undertaking or obligation on Mortgagee's part to
perform or discharge any of the terms, covenants or agreements
contained in the Leases, and Mortgagee shall not be obligated to
perform or discharge, nor does it undertake to perform or discharge,
nor shall anything herein contained be construed to bind the Mortgagee
to the performance or discharge of, any of the obligations, duties or
liabilities under any of the Leases, or otherwise to impose any
obligation on the Mortgagee with respect to the Leases or Rentals.
Section 4.8 Actions With Respect to Lessee Bankruptcies. In the event the
lessee under any Lease should be the subject of any proceeding under the Federal
Bankruptcy Code, as amended from time to time, or any other federal, state or
local statute which provides for the possible termination or rejection of any of
the Leases assigned hereby, Mortgagor covenants and agrees that with respect to
any of the Leases so terminated or rejected, no settlement for damages shall be
made without the prior written consent of Mortgagee, and any check in payment of
damages for termination or rejection of any such Lease will be made payable both
to Mortgagor and Mortgagee. Mortgagor hereby assigns any such payment to
Mortgagee and agrees to endorse and deliver to Mortgagee any check evidencing
any such payment, the proceeds of which will be applied in accordance with the
Indenture.
Section 4.9 Lease Proceeds Held in Trust. Any amounts received by
Mortgagor or its agents for performance of any actions with respect to the
Leases which are prohibited by the terms of this Mortgage, including, without
limitation, any amounts received in connection with any cancellation,
modification or amendment of any Leases which is prohibited by the terms of this
Mortgage and any amounts received by Mortgagor as Rentals from and after the
date of any Event of Default, shall be held by Mortgagor as trustee for
Mortgagee, and all such amounts
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shall be accounted for to Mortgagee and shall not be commingled with other funds
of Mortgagor. Any Person acquiring or receiving all or any portion of such
trust funds shall acquire or receive the same in trust for Mortgagee as if such
Person had actual or constructive notice that such funds were impressed with the
trust in accordance herewith; by way of example and not of limitation, such
notice may be given by an instrument recorded in the conveyance records of the
Parish of _____________ stating that Mortgagor has received or will receive such
amounts in trust for Mortgagee.
Section 4.10 Insurance Requirements.
A. The Mortgagor shall keep the Property and each and every part and
parcel thereof constantly insured in such amounts and for such coverages as
follows:
(a) Special causes of loss insurance (formerly known as all-risk
insurance), including flood and sprinkler leakage coverage, if
applicable, in an amount sufficient to prevent Mortgagor from being or
becoming a co-insurer within the terms of the policy or policies
providing such insurance, and in any event for not less than either
amounts required by Laws or the full replacement value of the
Improvements and the FF&E;
(b) Business interruption insurance for loss occasioned by the
perils commonly insured against in a special causes of loss policy, in
an aggregate amount not less than the real estate taxes, additional
interest and other assessments for the Immovable Property, the
leasehold estates created by the Primary Leases and the Improvements
and all other continuing expenses of the Property;
(c) Commercial general liability insurance, with the combined
single limit for any one occurrence of at least $10,000,000.00;
(d) Workers compensation and employer's liability insurance,
subject to statutory limits or better, in respect of any work or other
operations on, about or in connection with the Property; and
(e) Such other insurance with respect to the Property in such
amounts and against such other insurable hazards which are commonly
insured against in respect of properties similar to the Property (and,
with respect to this clause (e) only, provided that such insurance is
available at commercially reasonable rates).
B. All policies of insurance at any time carried by Mortgagor on the
Property (whether carried pursuant to the requirements of this Mortgage or
otherwise) shall name Mortgagee as the Person to which all payments made by
such insurance company shall be paid. Each insurance policy maintained by
Mortgagor under subsections (a), (b) and, if appropriate, (e) above shall
contain a standard noncontributory first mortgage loss payable endorsement
in favor of Mortgagee. The insurance maintained by Mortgagor under
subsections (c) and, if appropriate, (e) above shall name Mortgagee as an
additional insured. All insurance maintained by Mortgagor shall contain
clauses
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providing that the carrier shall notify the Mortgagee in writing at least
thirty (30) days in advance of any policy reduction, non-renewal or
cancellation (or at least ten (10) days in advance of a cancellation for
nonpayment of premiums) and that all losses shall be payable
notwithstanding (1) any negligence of Mortgagor or any lessee or occupant
of any portion of the Property or any of their respective agents or
employees which might, absent such agreement, result in a forfeiture of all
or any part of any insurance payment, (2) the occupation or use of the
Property for purposes more hazardous than permitted by the terms of such
policy, (3) any foreclosure or other action or proceeding taken pursuant to
any provision of this Mortgage or (4) any change in title or ownership of
the Property or any part thereof. Mortgagor shall pay the premiums on all
policies of insurance pertaining to the Property as the same become due and
payable. Each policy of insurance required by this Mortgage shall be
carried with a company which is licensed to do business in the state in
which the Property is located and is rated at least "A-" by A.M. Best &
Company, Inc. or, if such carrier is not rated by A.M. Best & Company,
Inc., having the financial stability and size deemed appropriate by a
reputable insurance broker. All policies of insurance placed with a mutual
company shall be nonassessable. Mortgagor shall deliver the original
policies to the Mortgagee and shall deliver satisfactory evidence of
renewal of all such policies to Mortgagee not less than ten (10) days in
advance of the expiration date of the existing policy or policies,
accompanied by evidence of payment of premium satisfactory to Mortgagee.
C. Mortgagor shall not carry separate or additional insurance
concurrent in form or contributing, in the event of loss, with that
required hereunder unless such insurance is endorsed in favor of Mortgagee
as loss payee or additional insured, as applicable, and contains
endorsements providing coverage secondary to the insurance required to be
carried hereunder. Nothing contained herein shall prohibit Mortgagor from
holding or obtaining an owner's policy of title insurance covering the
Immovable Property.
D. In any suit or action for damages arising from the alleged
negligence of Mortgagor, in which action the Mortgagee and/or any Secured
Party is included as a defendant, Mortgagor will assume all of the burden,
cost and expense of the settlement of such action or claim and will pay any
judgment which may be obtained against Mortgagee or any Secured Party.
E. In the event the Mortgagor should, for any reason whatsoever, fail
to keep the Property or any part thereof so insured, or to keep said
policies so assigned or payable, or fail to deliver to the Mortgagee the
original policies of insurance and the renewals thereof, then the
Mortgagee, if it so elects, may itself have such insurance effected in such
amounts and in such companies as it may deem proper and may pay the
premiums therefor, and all expenses so incurred of every kind and character
shall be a demand obligation owing by the Mortgagor to the Mortgagee and
shall bear interest from the date of expenditure until paid at a rate equal
to the rate provided for in Section 5.8 for Advances to bear, and the same
shall be secured by the Lien evidenced by this Mortgage. The Mortgagee
shall not be responsible for the solvency of any company issuing any
insurance policy, whether or not selected or approved by it, or for the
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collection of any amount due under any such policy, and shall be
responsible and accountable only for such money as may be actually received
by it.
F. In the event of any insured loss, the Mortgagor shall give
immediate written notice to the insurance carrier and to the Mortgagee.
Mortgagor hereby authorizes and directs any insurance company concerned to
make payment of such loss (only with respect to the insurance policies
described in subparagraphs (a), (b) and, as applicable, (e) above) directly
and solely to Mortgagee to be applied as hereinafter provided. Mortgagor,
acting in its reasonable judgment, shall make any necessary proof of loss
and shall adjust and compromise all claims under all policies and shall
cause the applicable insurance company to make payment thereof as herein
provided, and Mortgagor shall sign all receipts, vouchers, releases and
other instruments which may be reasonably necessary or desirable in aid of
such payment. Any insurance proceeds paid to Mortgagee shall be held as
trust funds, and Mortgagee shall dispose of such proceeds as provided in
Section 4.11. In the event that any insurance proceeds are paid by check
to Mortgagor or to Mortgagor and Mortgagee as joint payees, Mortgagor
agrees that it shall endorse such check over to Mortgagee.
G. Nothing contained in this Section 4.10 or elsewhere in this
Mortgage shall relieve Mortgagor of its duty to maintain, repair, replace
or restore the Property from time to time in accordance with the applicable
provisions of this Mortgage and the Indenture, and nothing in this Section
4.10 or elsewhere in this Mortgage shall relieve Mortgagor of its duty to
pay the Secured Obligations, which shall be absolute regardless of the
occurrence of damage to or destruction of or condemnation of all or any
portion of the Property.
Section 4.11 Damage to and Destruction of the Property. In the event
that, at any time during the term of the Notes, the Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty covered by insurance,
and if such damage, destruction or casualty shall constitute an Event of Loss
(as defined in the Indenture), then the insurance proceeds payable in connection
therewith shall be payable to the Mortgagee in accordance with the provisions of
Section 4.10 and shall be deposited in the Collateral Account (as defined in the
Indenture) and shall be released, applied and/or distributed in accordance with
Sections 1014 and 1110 of the Indenture. Upon the occurrence of an Event of
Default which has not been waived in writing by the Holders in accordance with
Section 513 of the Indenture, the Mortgagee shall have the right to apply such
insurance proceeds in accordance with Section 506 of the Indenture.
Section 4.12 Condemnation. The Mortgagor shall promptly notify the
Mortgagee of any action or proceeding relating to any condemnation or other
taking, whether direct or indirect, of all or part of the Property, and the
Mortgagor shall appear in and prosecute any such action or proceeding unless
otherwise directed by the Mortgagee in writing. In the event that the Property,
or any part thereof, shall be taken in condemnation proceedings, or by exercise
of right of eminent domain, or by conveyance in lieu of condemnation, or as a
result of the exercise by any Governmental Authority of any right or option to
purchase (hereinafter collectively called "Proceedings"), Mortgagee shall have
the right to participate in any such Proceedings at Mortgagor's expense,
including reasonable attorneys' fees and disbursements, and any eminent domain
awards that may be made or any proceeds thereof or any payments for
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damages or for conveyances in lieu of condemnation shall be deposited with
Mortgagee and held in trust by Mortgagee and distributed in the manner set forth
in Section 4.13. Mortgagor shall, upon request of the Mortgagee, make, execute,
acknowledge and deliver any and all additional assignments, documents and
instruments as may be reasonably necessary from time to time to enable the
Mortgagee to collect and receipt for any such sums. The Mortgagor hereby
irrevocably designates and appoints the Mortgagee, from and after the occurrence
of an Event of Default, as attorney-in-fact for the Mortgagor to commence,
appear in and prosecute, in the Mortgagee's or the Mortgagor's name, any
Proceeding and to settle or compromise any claim.
Section 4.13 Application of Condemnation Awards. If, at any time during
the term of the Notes, there occurs a Proceeding that constitutes an Event of
Loss, any eminent domain awards payable in connection therewith or any payments
for damages or for conveyances in lieu of condemnation shall be deposited in the
Collateral Account and shall be released, applied and/or distributed in
accordance with Sections 1014 and 1110 of the Indenture. Upon the occurrence of
an Event of Default which has not been waived in writing by the Holders in
accordance with Section 513 of the Indenture, Mortgagee shall have the right to
apply such eminent domain awards or any payments for damages or for conveyances
in lieu of condemnation in accordance with Section 506 of the Indenture.
Section 4.14 Preservation and Maintenance of Property. The Mortgagor (a)
shall not commit waste, (b) shall not abandon the Property, (c) in the event of
any damage, injury or loss to the Property, shall restore or repair promptly and
in a good and workmanlike manner all or any part of the Property to the
substantial equivalent of its condition prior to such damage, injury or loss or
such other condition as the Mortgagee may approve in writing, whether or not
insurance proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property in good condition, repair and
working order, ordinary wear and tear excepted, shall not remove or demolish the
Property without the Mortgagee's prior written consent and shall replace
fixtures, equipment, machinery and appliances on the Property when necessary to
keep such items in as good condition as existed on the date of this Mortgage and
to insure the operation of Mortgagor's business at all normal times, (e) shall
comply with all applicable Laws, ordinances, regulations and requirements of any
Governmental Authority with jurisdiction over the Property, (f) shall not make
any structural alterations to the Property without the Mortgagee's prior written
consent and (g) shall give notice in writing to the Mortgagee of and, unless
otherwise directed in writing by the Mortgagee, appear in and defend, any action
or proceeding affecting the Property, the security or priority of this Mortgage
or the rights or powers of the Mortgagee. Notwithstanding anything above to the
contrary, (i) the Mortgagor may remove or sell any Fixture, equipment, machinery
or appliance in or on the Property when such is in the ordinary course of
business or is incident to the replacement of FF&E with items of like kind,
which replacements may be leased or purchased by the Mortgagor with the proceeds
of FF&E Financing to the extent permitted by the Indenture and (ii) Mortgagor
may discontinue maintenance of the Property in accordance with Section 1006 of
the Indenture.
Section 4.15 Environmental Hazards.
A. The Mortgagor shall not (i) cause or permit the presence, use,
generation, manufacture, production, processing, installation, release,
escape, spillage, seepage,
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leakage, dumping, pouring, emptying, emission, discharge, storage
(including above-and under-ground storage tanks for petroleum or petroleum
products, but excluding small containers of gasoline used for maintenance
equipment or similar purposes and in compliance with applicable
Environmental Laws), treatment, management, transportation, handling,
disposal or the like of any Hazardous Materials on, under, in or about the
Property, or in any way affecting the Property, and which are in violation
of applicable Environmental Laws and would form the basis for any present
or future claim, demand or action seeking cleanup of the Property, or the
transportation of any Hazardous Materials to or from the Property in
violation of applicable Environmental Laws or (ii) cause or exacerbate any
occurrence or condition on the Property that is or may be in violation of
any Hazardous Materials Laws. No Hazardous Materials shall be placed on,
in, under or about the Property except in strict compliance with applicable
Environmental Laws. The Mortgagor shall not cause or permit the migration
of Hazardous Materials from the Property to any other property or onto the
Property from any property or area adjacent to the Property in violation of
applicable Environmental Laws. The Mortgagor shall at all times comply
with all applicable Environmental Laws and all notices of violations of
Environmental Laws prior to the issuance of any regulatory or judicial
order or assessment of any fines. The Mortgagor shall take all reasonable
and appropriate steps to secure compliance by all lessees and sublessees of
the Property with its obligations in this Section.
B. The Mortgagor shall advise the Mortgagee promptly, in writing, of
any notice or other communication, written or oral, from the United States
Environmental Protection Agency, the Louisiana Department of Environmental
Quality or any other federal, state or local Governmental Authority having
jurisdiction over the Property with respect to any alleged violation of any
Environmental Laws or the generation, presence, management, release,
escape, spillage, seepage, leakage, dumping, pouring, emptying, treatment,
discharge, emission, handling, storage, transportation, disposal or the
like of Hazardous Materials or storage tanks.
C. The Mortgagee may, from time to time at mortgagor's expense (but
not more frequently than ____________), obtain an environmental audit
prepared by an independent engineer or other qualified environmental
consultant in order to verify the absence of Hazardous Materials on, in,
under or about the Property and, if deemed necessary by the Mortgagee, an
environmental risk assessment of the Property, of the Mortgagor's hazardous
waste management practices and/or of any hazardous waste disposal sites
used by the Mortgagor. All tests and samplings shall be conducted using
generally accepted and scientifically valid technology and methodologies.
The Mortgagor shall give the engineer or environmental consultant
reasonable access to the Property and to all records in the possession of
the Mortgagor that may indicate the presence (whether current or past) or
release of Hazardous Materials on, in, under or about the Property. The
Mortgagor shall also provide the engineer or environmental consultant an
opportunity to interview such Persons employed in connection with the
Property as the engineer or consultant deems appropriate.
D. The Mortgagor shall promptly notify the Mortgagee in writing of:
(i) any enforcement, cleanup, removal or other governmental or regulatory
action, investigation
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or any other proceeding instituted, (ii) any suit, cause of action or any
other claim made or threatened by any third party against the Mortgagor or
the Property relating to damage, contribution, cost recovery, compensation,
loss or injury resulting from any Hazardous Materials and (iii) the
Mortgagor's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Property that could cause all or any
portion of the Property to be subject to any restrictions on the ownership,
occupancy, transferability or use of the Property under Environmental Laws.
The provisions of the preceding sentence shall be in addition to any and
all other obligations and liabilities that the Mortgagor may have to the
Mortgagee under applicable law.
E. Mortgagor shall promptly take any and all necessary remedial
action in response to the presence, storage, use, disposal, transportation
or discharge of any Hazardous Materials on, under, above or about the
Property; provided, however, that Mortgagor shall not take any such
remedial action or enter into any settlement agreement, consent decree or
other compromise in respect to any claims, proceedings, lawsuits or actions
completed or threatened as a result of any actual or alleged Hazardous
Materials on, under, above or about the Property, or enter into any
settlement agreement, consent decree or other compromise in respect to any
claims, proceedings, lawsuits or actions completed or threatened pursuant
to any Environmental Laws, without, in each case, obtaining Mortgagee's
prior written consent; provided further, however, that Mortgagor's prior
consent shall not be necessary in the event that the presence of Hazardous
Materials on, under, above or about the Property either: (i) poses an
immediate threat to the health, safety or welfare of any individual or (ii)
is of such a nature that an immediate remedial response is necessary and it
is not possible to obtain Mortgagee's consent prior to undertaking such
action. In the event Mortgagor undertakes any remedial action with respect
to any Hazardous Materials on, under, above or about the Property as set
forth in clauses (i) and (ii) above, Mortgagor shall immediately notify
Mortgagee of any such remedial action, and shall conduct and complete such
remedial action in compliance with all applicable Environmental Laws and in
accordance with the orders and directives of all federal, state and local
Governmental Authorities having jurisdiction.
F. The Mortgagor shall indemnify, defend and hold harmless the
Mortgagee from and against any and all claims, demands, costs, losses,
liabilities, expenses (including reasonable attorneys' fees, whether suit
is instituted or not), judgments, fines or amounts paid in settlement
(collectively, "Losses") incurred by the Mortgagee in connection with or as
a result of the presence, storage, use, disposal, transportation, discharge
or release or threatened release on, under, above or about the Property of
any Hazardous Materials or any violations of any Environmental Laws arising
out of acts or omissions of the Mortgagor, its agents, employees or
contractors or a third party. To the extent of such indemnity, Losses
indemnified against specifically shall include costs incurred in connection
with (i) any investigation or monitoring of site conditions; (ii) any clean
up, containment, remediation, removal or restoration work required or
performed by any federal, state or local governmental entity or performed
by Mortgagor or any other Person because of the presence, storage, use,
disposal, transportation, discharge or release or threatened release of any
Hazardous Materials on, in, under or about the Property and (iii) any
claims by third parties for losses due to the presence, storage, use,
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disposal, transportation, discharge or release or threatened release of
such Hazardous Materials or the cleanup, containment, remediation or
removal thereof.
G. The Mortgagor shall not install or permit the installation of
friable asbestos or any substance containing asbestos in or on the
Property. With respect to any such material or materials currently present
in or on the Property, the Mortgagor shall promptly comply with all Laws
with respect to the safe removal thereof, at the Mortgagor's sole expense.
H. The indemnity provisions contained in this Section 4.15 shall
survive the repayment of the Secured Obligations and the cancellation of
this Mortgage.
Section 4.16 Use of Property. The Mortgagor shall maintain, preserve and
renew all rights of way, servitudes, grants, privileges, licenses, permits,
zoning approvals and franchises necessary for the use of the Property and shall
not, unless required by applicable law or unless the Mortgagee has otherwise
agreed in writing, allow changes in the use for which the Property was intended
at the time this Mortgage was executed. The Mortgagor shall not initiate or
acquiesce in a change in the zoning classification of the Property without the
Mortgagee's prior written consent.
Section 4.17 Inspection. The Mortgagee is authorized and empowered to
enter, and to authorize its employees, agents or contractors identified in
writing to the Mortgagor to enter, upon any or all of the Property at any
reasonable time and from time to time upon prior notice to the Mortgagor to
inspect the same, to perform or observe any covenants, conditions or terms that
the Mortgagor shall fail to perform, meet or comply with, to make such repairs,
replacements, renewals or additions as shall be necessary or for any other
purpose in connection with the maintenance, protection or preservation of the
Mortgagee's security, without thereby becoming liable to the Mortgagor or any
Person in possession holding under the Mortgagor. Any inspections performed by
or for the Mortgagee shall be performed at times and in a manner so as not to
unreasonably interfere with the Mortgagor's business or the operation of the
Property. The Mortgagor will keep accurate books and records in which full,
true and correct entries shall be promptly made with respect to the Property and
the operation thereof.
Section 4.18 Negative Covenants. The Mortgagor hereby agrees that, so
long as any of the Secured Obligations remains outstanding or unpaid, the
Mortgagor shall not, directly or indirectly, without the prior written consent
of the Mortgagee or except as may be provided in the Indenture:
A. Create, incur, assume or suffer to exist any Indebtedness relating
to the Property, except the Secured Obligations under this Mortgage;
B. Create, incur or place, or permit to be created, incurred or
placed, any Liens on the Property, or part thereof, or any revenues related
thereto, except for the Permitted Encumbrances and Liens in favor of the
Mortgagee;
C. Convey, sell, lease, assign, transfer or otherwise dispose of the
Property, or permit any conveyance, sale, lease, assignment, transfer or
other disposition of the
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Property, except obsolete or worn out FF&E disposed of in the ordinary
course of business;
D. Terminate, modify, amend or surrender either or both of the
Primary Leases or waive, condone, release or discharge any lessor
thereunder from the obligations, covenants, conditions and agreements to be
performed by such lessor thereunder;
E. Terminate, modify or amend any of the Leases or any of the terms
thereof, or grant any concessions in connection therewith, either orally or
in writing, except for such terminations, modifications, amendments or
concessions as are entered into in the ordinary course of business, are
commercially reasonable and could not be materially adverse to the interest
of Mortgagee, and any attempted termination, modification or amendment of
any of the Leases in violation of this Subsection (E) shall be null and
void;
F. Collect any of the Rentals arising or accruing under any of the
Leases in advance of the time when the same shall become due under the
terms thereof without first advising the Mortgagee of such action;
G. Discount any future accruing Rentals without Mortgagee's prior
written consent, except for commercially reasonable discounts made in the
ordinary course of business that could not be materially adverse to the
interest of Mortgagee;
H. Execute any other assignments of any of the Leases or any interest
therein or any of the Rentals thereunder;
I. Accept the surrender of any the Leases, or suffer or permit to
occur any release of liability of any lessee in a manner which is adverse
in any material respect to the interests of Mortgagee, or suffer or permit
to occur any right on the part of a lessee to withhold payment of rent in a
manner which is adverse in any material respect to the interest of
Mortgagee;
J. Alter, modify or change the terms of any guarantees of any of the
Leases or suffer or permit to occur the cancellation or termination of any
such guarantees without the prior written consent of Mortgagee, except for
alterations, modifications, changes, cancellations or terminations of
guarantees as are entered into in the ordinary course of business and are
commercially reasonable and cannot be materially adverse to the interest of
Mortgagee; or
K. Request, consent to, agree to or accept a subordination of any of
the Leases to the Lien of any mortgage or other encumbrance now or
hereafter affecting the Property except the Lien of this Mortgage.
Section 4.19 Cure of Defects. If the validity or priority of this
Mortgage or of any rights or Liens created or evidenced hereby with respect to
the Property or any part thereof or the title or right of occupancy of the
Mortgagor to the Property or any part thereof shall be endangered or questioned
or shall be attacked directly or indirectly or if any legal proceedings
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are instituted against the Mortgagor with respect thereto, upon discovery of
such actual or alleged defect, the Mortgagor shall give written notice thereof
to the Mortgagee promptly and, at the Mortgagor's own cost and expense,
diligently endeavor to cure any defect that may be developed or claimed and take
all necessary and proper steps for the defense of such legal proceedings,
including, but not limited to, the employment of counsel agreeable to the
Mortgagee, the prosecution or defense of litigation and the release or discharge
of all adverse claims. The Mortgagee (whether or not named as a party to legal
proceedings with respect thereto) is hereby authorized and empowered to take
such additional steps as in its judgment and discretion may be necessary or
proper for the defense of any such legal proceedings or the protection of the
validity or priority of this Mortgage and the Liens created or evidenced hereby,
including, but not limited to, the employment of independent counsel, the
prosecution or defense of litigation, the compromise or discharge of any adverse
claims made with respect to the Property, the purchase of any tax title and the
removal of prior Liens or security interests, and all expenses so incurred of
every kind and character shall be a demand obligation owing by the Mortgagor to
the Mortgagee and shall bear interest from the date of expenditure until paid at
a rate equal to the rate provided for in Section 5.8 for Advances to bear, and
the same shall be secured by the Lien evidenced by this Mortgage, and the party
incurring such expenses shall be subrogated to all rights of the Person
receiving such payment.
Section 4.20 Estoppel Certificate. The Mortgagor shall, within ten (10)
business days of a written request therefor by the Mortgagee, furnish the
Mortgagee with a written statement, duly acknowledged, setting forth the sums
secured by this Mortgage and any right of set-off, counterclaim or other defense
which exists against such sums and the obligations of this Mortgage.
Section 4.21 Further Assurances. On request of the Mortgagee, the
Mortgagor shall promptly (a) correct any defect, error or omission which may be
discovered in the contents of this Mortgage or the Subsidiary Guarantee or any
other Note Documents to which Mortgagor is a party or in the execution or
acknowledgment of this Mortgage or the Subsidiary Guarantee or any other Note
Documents to which Mortgagor is a party and (b) execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register any and all such
further acts, deeds, conveyances, security agreements, mortgages, assignments,
estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments as reasonably may be required from time to time
in order (i) to carry out more effectively the purposes of this Mortgage, the
Subsidiary Guarantee and any other Note Documents to which Mortgagor is a party,
(ii) to more fully identify and subject to the Liens created by this Mortgage
any of the properties, rights or interests required to be encumbered hereby,
including, specifically, any additions, substitutions, replacements or
appurtenances to the Property, (iii) to perfect and maintain the validity,
effectiveness and priority of this Mortgage and the Liens intended to be created
hereby and (iv) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Mortgagee any of the rights granted or now or
hereafter intended by the parties hereto to be granted to the Mortgagee
hereunder or under any other instrument or agreement executed in connection
herewith. The Mortgagor shall pay all costs connected with any of the
foregoing.
Section 4.22 Further Assurances With Respect to Leases. Upon notice and
demand, Mortgagor shall, from time to time, execute, acknowledge and deliver or
cause to be executed,
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acknowledged and delivered to Mortgagee, in form satisfactory to Mortgagee, one
or more separate assignments confirmatory of the general assignment of the
Leases and rights relating thereto provided for in this Mortgage and/or one or
more agreements restricting Mortgagor's right or power as against Mortgagee as
provided herein and/or granting Mortgagee the right to enforce any provision of
any Lease. Mortgagor shall pay to Mortgagee the expenses incurred by Mortgagor
in connection with the preparation and recording of any such assignment or
agreement, including, without limitation, its reasonable attorneys' fees. Upon
notice and demand, Mortgagor shall, from time to time, provide Mortgagee with a
duly executed estoppel certificate from each lessor under the Primary Leases and
from each lessee and sublessee under the Leases in a form reasonably required by
Mortgagee.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.1 Event of Default; Remedies. The Mortgagor specifically agrees
that if any one or more Events of Default shall occur under the Indenture, THEN,
AND IN EACH AND EVERY SUCH CASE, the Mortgagee may at its option and in
accordance with the provisions of Article V of the Indenture declare the entire
amount of the Secured Obligations to be due and payable immediately without
presentment, demand, protest, notice of protest or dishonor or other notice of
default of any kind, all of which are hereby expressly waived by Mortgagor,
anything in this Mortgage or in the Subsidiary Guarantee to the contrary
notwithstanding. In addition to the foregoing, upon the occurrence of any Event
of Default, the Mortgagee may take such action, without notice or demand or
putting in default (all of which are hereby expressly waived by Mortgagor), as
it deems advisable and in accordance with Article V of the Indenture to protect
and enforce its rights against the Mortgagor and in and to the Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such order as the
Mortgagee may determine, in its sole discretion, without impairing or otherwise
affecting the other rights and remedies of the Mortgagee:
(i) institute proceedings for the complete foreclosure of this
Mortgage, in which case the Property may be sold for cash or upon
credit in one or more parcels under ordinary or executory process, at
the Mortgagee's sole option, and with or without appraisement,
appraisement being expressly waived; or
(ii) to the extent permitted and pursuant to the procedures
provided by applicable law, institute proceedings for the partial
foreclosure of this Mortgage for the portion of the Secured
Obligations then due and payable, subject to the continuing Lien of
this Mortgage for the balance of the Secured Obligations not then due;
or
(iii) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained
in this Mortgage or the Subsidiary Guarantee or any other Note
Document to which Mortgagor is a party; or
(iv) apply for the appointment of a trustee, receiver,
liquidator or conservator of the Property, without regard for the
adequacy of the security for
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the Secured Obligations and without regard for the solvency of the
Mortgagor or of any Person liable for the payment of the Secured
Obligations; or
(v) withdraw all cash in the Collateral Account and apply such
cash and other cash, if any, then held by it in accordance with
Section 506 of the Indenture; or
(vi) sell any of the Property that is subject to the provisions
of the Commercial Laws at public or private sale, for cash, upon
credit or for future delivery, at such price or prices as the
Mortgagee may deem satisfactory, and in connection with any such sale,
the Mortgagor hereby specifically waives all rights of redemption,
stay or appraisal which it has or may have under any Laws now existing
or hereafter adopted and agrees that ten (10) days prior written
notice of the time and place of any such sale or other intended
disposition of any such Property constitutes "reasonable notification"
within the meaning of the Commercial Laws, except that shorter or no
notice shall be reasonable as to any of such Property which is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market; or
(vii) pursue such other remedies as the Mortgagee may have under
applicable law, including, without limitation, as a secured party
under the Commercial Laws, in equity, by virtue of any other security
instrument or otherwise.
The Mortgagee may proceed under this Mortgage solely as to the
immovable property interests or solely as to the movable property interests
or as to both the immovable and movable property interests in accordance
with its rights and remedies in respect of the immovable property
interests. The Mortgagee is hereby appointed agent and attorney-in-fact
for the Mortgagor and is hereby authorized and empowered to carry out and
enforce all incorporeal rights pledged by the Mortgagor hereunder. This
power, being coupled with an interest, is irrevocable so long as any of the
Secured Obligations remains outstanding.
Section 5.2 Effect of Sale. Any sale of, or the grant of options to
purchase, or any other realization upon, any Property shall operate to divest
all right, title, interest, claim and demand, either at law or in equity, of the
Mortgagor therein and thereto and shall be a perpetual bar both at law and in
equity against the Mortgagor and against any and all Persons claiming or
attempting to claim the Property so sold, optioned or realized upon, or any part
thereof, from, through and under the Mortgagor. The proceeds or avails of any
sale made under or by virtue of this Mortgage, together with any other sums
which then may be held by the Mortgagee under this Mortgage, shall be applied in
accordance with Section 5.06 of the Indenture. Upon any sale made under or by
virtue of this Mortgage, the Mortgagee may bid for and acquire the Property or
any part thereof and in lieu of paying cash therefor may make settlement for the
purchase price by crediting upon the Secured Obligations the net sales price
after deducting therefrom the expenses of the sale and the costs of the action
and any other sums which the Mortgagee is authorized to deduct under this
Mortgage.
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Section 5.3 Keeper. In connection with each and all of the foregoing and
acting pursuant to the authority granted under Louisiana Revised Statutes (S)(S)
9:5136-5140.2, as the same may hereafter be amended or supplemented, the
Mortgagor and the Mortgagee hereby expressly designate the Mortgagee, or any
agent, servant, employee or other Person named by the Mortgagee, as "keeper" of
each and all of the Property pending the judicial sale thereof, with all the
powers set forth in said statutes (as hereafter amended), including the right to
employ agents to operate the Property. All reasonable costs, expenses and
liabilities of every character incurred by the Mortgagee or any such other
Person as keeper in connection with managing, operating, maintaining and
possessing the Property shall constitute a demand obligation owing by the
Mortgagor to the Mortgagee, and shall draw interest from date of expenditure
until paid at the rate provided in Section 5.8 hereof for Advances to bear. All
of such costs, expenses and liabilities shall constitute a portion of the
Secured Obligations secured by this Mortgage. The keeper shall be entitled to
receive as compensation, in excess of such costs, expenses and liabilities, a
reasonable amount to be fixed by the court based upon the keeper's activities
and the amounts expended in connection with the management, operation and
maintenance of the Property. The designation of keeper made herein shall not be
deemed to require the Mortgagee to provoke the appointment of such a keeper.
Section 5.4 Certain Waivers. The Mortgagor hereby expressly waives any
and all homestead exemptions and other exemptions to which the Mortgagor is or
may be entitled under the Constitution and statutes of the State of Louisiana
insofar as the Property is concerned. The Mortgagor further waives to the
extent permitted by law: (a) the benefit of appraisement provided for in
Louisiana Code of Civil Procedure articles 2332, 2336, 2723 and 2724, and all
other laws conferring the same; (b) the demand and three (3) days delay provided
for in Louisiana Code of Civil Procedure articles 2639 and 2721; (c) the notice
of seizure provided for in Louisiana Code of Civil Procedure articles 2293 and
2721; (d) the three (3) days delay provided for in Louisiana Code of Civil
Procedure articles 2331 and 2722; and (e) other benefits provided in Louisiana
Code of Civil Procedure articles 2331, 2722 and 2723.
Section 5.5 Waiver of Marshalling. Notwithstanding the existence of any
other security interest in the Property held by the Mortgagee or by any other
party, the Mortgagee shall have the right to determine the order in which any or
all of the Property shall be subjected to the remedies provided in this
Mortgage. The Mortgagor, any party who consents to this Mortgage and any party
who has actual or constructive notice of this Mortgage waives all right to
require the marshalling of assets in connection with the exercise of any of the
remedies permitted by law or provided in this Mortgage.
Section 5.6 Actions With Respect to Leases.
A. In addition to all of Mortgagee's rights and remedies set forth
above, if an Event of Default shall occur, the Mortgagor does hereby
authorize the Mortgagee, either in person or by an agent, or by a keeper
appointed by the court, to enter upon and take possession of the Property
and exercise all rights available to Mortgagee under La. R.S. (S)9:4401 and
to perform all acts necessary for the operation and maintenance of said
Property in the same manner and to the same extent that the Mortgagor might
reasonably so act, such entry or taking possession to be made by actual
entry of possession or by written notice served personally upon or sent by
certified mail to the Mortgagor, and no
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further authorization shall be required. In furtherance thereof and not by
way of limitation, the Mortgagee is specifically empowered to demand, sue
for, collect and/or receive all the Rentals which shall be paid by the
lessees under the Leases and to exercise all the rights and privileges of
the Mortgagor under the Leases, including, but not limited to, the right to
make, enforce, modify, terminate and accept the surrender of any of the
Leases, fix or modify the Rentals, execute new Leases of all or any part of
the Property, including Leases which extend beyond the maturity date of the
Notes, and do any actions which the Mortgagee otherwise deems proper to
protect its interest in the Leases and Rentals. The Mortgagor irrevocably
instructs and directs all lessees under the Leases, upon demand and notice
from the Mortgagee of the Mortgagor's Event of Default hereunder, to pay
the Rentals under the Leases directly to the Mortgagee without liability of
said lessees for the determination of the actual existence of any Event of
Default by the Mortgagor claimed by the Mortgagee, said lessees being
hereby expressly relieved of any and all duty, liability and obligation to
the Mortgagor in connection with any and all Rentals so paid. The
Mortgagee shall apply the net amount of the Rentals collected, after
payment of all proper costs and charges, in accordance with Section 506 of
the Indenture.
B. Prior to the maturity of the Secured Obligations by acceleration
or lapse of time, the collection, receipt and application by Mortgagee of
any of the Rentals pursuant to the assignment of Leases and Rentals
provisions of this Mortgage shall not constitute a waiver of (i) any
continuing Default or Event of Default under any of the Secured
Obligations, the Indenture or Notes or (ii) any of the rights and remedies
of Mortgagee hereunder by reason of any such Default or Event of Default.
After the maturity of the Secured Obligations by acceleration or lapse of
time, the collection, receipt and application by Mortgagee of any of the
Rentals pursuant to the assignment of Leases and Rentals provisions of this
Mortgage shall not constitute a waiver of any other rights and remedies of
Mortgagee hereunder to enforce collection of the amount due on the Secured
Obligations, provided that appropriate credit shall be given for (a) any of
the Rentals collected by Mortgagee before the seizure of the Property to
enforce this Mortgage and the appointment of a receiver/keeper pursuant to
the terms of this Mortgage and (b) any of the Rentals collected by the
receiver or keeper of the Property following such seizure and appointment.
Section 5.7 Rights and Remedies Cumulative. All rights and remedies
herein given to the Mortgagee shall be cumulative and in addition to every other
right and remedy herein specifically given and now or hereafter existing; and
each and every right and remedy, whether specifically given or otherwise
existing, may be exercised from time to time and so often and in such order as
may be deemed expedient by the Mortgagee, and the exercise or the beginning of
the exercise of any such right or remedy shall not be deemed a waiver of the
right to exercise, at the same time or thereafter, any other right or remedy.
No delay or omission by the Mortgagee in the exercise of any right or remedy
shall impair any such right or remedy or operate as a waiver of any other right
or remedy then or thereafter existing.
Section 5.8 Performance by the Mortgagee; Advances. If the Mortgagor
should fail, refuse or be unable to pay any sum of money herein covenanted to be
paid by the Mortgagor, or fail, refuse or be unable to keep or perform any
additional covenant or covenants whatsoever
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contained in this instrument, the Mortgagee may, but shall not be obligated to,
pay such Advances or perform or attempt to perform any such covenant, provided,
however, that nothing herein contained shall be construed as making the
Mortgagee liable for any loss, damage or injury resulting from the nonpayment or
non-performance thereof. The Mortgagee agrees to give the Mortgagor prior
notice and the opportunity to cure before making such Advances only to the
extent the Mortgagee, in its reasonable discretion, feels that the Mortgagee or
the Property will not risk incurring damage as a result of giving such notice.
The Mortgagor covenants and agrees that, within ____ (__) days after demand
therefore by the Mortgagee, the Mortgagor will repay the Advances to the
Mortgagee, but until the repayment thereof, such Advances shall bear interest at
the rate of __________ percent (___%) per annum from the dates thereof until
repaid. This Mortgage shall be deemed to secure the obligations of the
Mortgagor to repay the Advances together with interest thereon and reasonable
attorneys' fees and expenses and other charges and expenses of any and every
kind for the full protection and preservation of the Property or this Mortgage,
including payments required in respect of any Lien, privilege or mortgage
affecting the Property and relating thereto.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Release of Mortgage. Upon the observance and performance of
each and every covenant and condition set forth in the Note Documents and
indefeasible payment and performance in full of the Secured Obligations, then
this Mortgage shall be released at the Mortgagor's request and expense, provided
that no release hereof shall impair the Mortgagor's warranties and indemnities
contained herein. Otherwise, this Mortgage shall remain in full force and
effect.
Section 6.2 Survival of Assignment. Notwithstanding anything to the
contrary contained in this Mortgage, the assignment, pledge and mortgaging of
the Leases and Rentals and any Proceeds derived from the Property, and the right
to apply any of the foregoing in accordance with the terms of this Mortgage,
shall survive any foreclosure of the Lien of this Mortgage.
Section 6.3 Waivers. Any and all covenants in this Mortgage may from time
to time, by instrument in writing signed by the Mortgagee and delivered to the
Mortgagor, be waived to such extent and in such manner as the Mortgagee may
desire, but no such waiver shall ever affect or impair the Mortgagee's rights or
Liens hereunder, except to the extent specifically stated in such written
instrument.
Section 6.4 Authentic Evidence. Any and all declarations of fact made by
authentic act before a Notary Public in the presence of two witnesses by any
Person declaring such facts lie within his knowledge shall constitute authentic
evidence of such facts for the purpose of executory process.
Section 6.5 No Waiver. No forbearance on the part of the Mortgagee and no
extension of the time for the payment of the Secured Obligations given by the
Mortgagee shall operate to release, discharge, modify, change or affect, in
whole or in part, the liability of the Mortgagor hereunder or for the payment of
the Secured Obligations or performance of the obligations
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secured hereby or the liability of any other Person hereunder or for the payment
of the Secured Obligations.
Section 6.6 Severability. A determination that any provision of this
Mortgage is unenforceable or invalid in any jurisdiction shall not affect the
enforceability or validity of such provision in any other jurisdiction or the
enforceability or validity of any other provision hereof in any jurisdiction,
and the determination that the application of any provision of this Mortgage to
any Person or circumstance is illegal or unenforceable in any jurisdiction
should not affect the enforceability or validity of such provision in any other
jurisdiction or the enforceability or validity of such provision as it may apply
to other Persons or circumstances.
Section 6.7 Notices. Whenever this Mortgage requires or permits any
consent, approval, notice, request or demand from one party to another, the
consent, approval, notice, request or demand must be in writing and shall be
deemed sufficiently given or furnished if delivered by personal delivery, by
telegraph, telecopy or telex, by expedited delivery service with proof of
delivery, or by registered or certified United States mail, postage prepaid, at
the following addresses, or to such address as may be hereafter notified in
writing by the respective parties hereto:
If to the
Mortgagor: __________________________
__________________________
__________________________
Attention: _______________
Telecopy No.: ____________
with a copy to: Casino America, Inc.
700 Loop Boulevard
Biloxi, Mississippi 39530
Attention: Julie Watt
Telecopy No.: (601) 435-5998
If to the
Mortgagee: Fleet National Bank, as Collateral Agent
_____________________________
_____________________________
Attention: Trust Department
Telecopy No.: ______________
Section 6.8 Relationship of Parties. No right or benefit conferred on the
Mortgagee under this Mortgage shall constitute or be deemed to constitute the
Mortgagee a partner or a joint venturer with the Mortgagor. The Mortgagor and
the Mortgagee specifically acknowledge that the relationship between the
Mortgagor and the Mortgagee is solely that of borrower and a lender's agent and
that all payments required to be made by the Mortgagor to the Mortgagee
hereunder or under the Subsidiary Guarantee or any other Note Documents to which
the Mortgagor is a party are required solely by reason of that relationship.
The Mortgagor
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acknowledges that the rights and responsibilities of the Mortgagee under this
Mortgage shall, as between the Mortgagee and the Secured Parties, be governed by
the Indenture and by such other agreements with respect thereto as may exist
from time to time among them, but as between the Mortgagee and the Mortgagor,
the Mortgagee shall be conclusively presumed to be acting as agent for the
Secured Parties with full and valid authority so to act or refrain from acting,
and the Mortgagee shall be under no obligation to make any inquiry respecting
such authority.
Section 6.9 Mortgage Absolute. The obligations of the Mortgagor under
this Mortgage are independent of the obligations of the Mortgagor or the Company
under the other Note Documents, and a separate action or actions may be brought
and prosecuted against the Mortgagor to enforce this Mortgage, irrespective of
whether any action is brought against the Company or whether the Company has
joined in any such action or actions. All rights of the Mortgagee and the
mortgage, assignment and security interest hereunder, and all obligations of the
Mortgagor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any Note Document or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Mortgagor or the
Company under any of the Note Documents, or any other amendment or waiver
of or any consent to any departure from the Note Documents, including,
without limitation, any increase in such obligations resulting from the
extension of additional credit to the Company or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the obligations of the Mortgagor or
the Company under the Note Documents;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the obligations of the Mortgagor or the Company under the
Note Documents, or any manner of sale or other disposition of any
Collateral for all or any of such obligations or any other assets of the
Company;
(e) any change, restructuring or termination of the corporate
structure or existence of the Company; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company or a third party grantor of a
security interest, mortgage or other Lien.
Section 6.10 Mortgagee's Duties. The rights, authority to approve,
consent to, disapprove and withhold consent from, exercise judgment or
discretion and such other powers (collectively, the "Powers") conferred on
Mortgagee hereunder are solely to protect its interest in the Property, and
Mortgagee shall be under no obligation to exercise any such Powers. Except for
accounting for monies actually received by it hereunder and the safe custody of
any
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Property in its possession, Mortgagee shall not have any duty as to any matters
relating to any Property or as to ascertaining or taking any action with respect
to any Property, whether or not the Mortgagee or any Secured Party has or is
deemed to have knowledge of such matters, or as to taking any necessary steps to
preserve rights against any parties or other rights pertaining to any Property.
Nothing herein shall affect any obligation of Mortgagee to the Secured Parties
under the Indenture or under applicable Laws.
Section 6.11 Interpretation. It is acknowledged and agreed that, in the
preparation of this Mortgage, indistinguishable contributions were made by
representatives of both Mortgagor and Mortgagee and that Mortgagor and Mortgagee
each waives any and all rights, both in law or in equity, to have the provisions
of this Mortgage or any part thereof interpreted in favor of one over the other
based upon a claim that representatives of one or the other were the principal
draftsman of such document.
Section 6.12 Conflicts between Collateral Documents. In the event that
any of the Property hereunder is also subject to a valid and enforceable Lien
under the terms of any other Collateral Document and the terms of such other
Collateral Document are inconsistent in any respect with the terms of this
Mortgage, then with respect to all Property which is also subject to such other
Collateral Document, the terms which are most restrictive or, in the case of
equally restrictive terms, the terms which are most specific, shall be
controlling; provided, however, that if any provision of either document is
unenforceable with respect to any item of Property subject thereto, then the
provision of the document which is enforceable with respect to such Property
shall be controlling.
Section 6.13 Multiple Originals. This Mortgage may be executed in
multiple originals, all of which such multiple originals together shall
constitute one and the same mortgage.
Section 6.14 Binding Effect. This Mortgage is binding upon the Mortgagor
and the Mortgagee and their respective successors and assigns, and shall inure
to the benefit of the Mortgagee and its successors and assigns. The benefit of
this Mortgage shall pass automatically with any assignment of the Secured
Obligations (or any portion thereof) to the extent of such assignment.
Section 6.15 Waiver of Certificates. The parties hereto expressly waive
the production of conveyance, mortgage or tax certificates and hereby relieve
and release me, Notary, and my official surety and agree to hold me and said
surety harmless from and by reason of the failure to procure and attach same to
this Mortgage.
Section 6.16 WAIVER OF TRIAL BY JURY. MORTGAGOR HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING
UNDER THIS MORTGAGE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF MORTGAGOR IN RESPECT OF THIS MORTGAGE OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER
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SOUNDING IN CONTRACT OR TORT OR OTHERWISE. MORTGAGOR HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS MORTGAGE WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
MORTGAGOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
Section 6.17 Governing Law. This Mortgage and all matters relating or
pertaining hereto shall be governed by and construed in accordance with the laws
of the State of Louisiana. Notwithstanding the foregoing, the Notes, the
Indenture and the provisions thereof shall be governed by and construed in
accordance with the laws of the State of New York.
Section 6.18 Gaming Restrictions. This Mortgage is subject to the
Louisiana Economic Development and Gaming Corporation Act, La. R.S. 4:601 et
seq., and the rules and regulations thereunder (collectively, the "Louisiana
Gaming Regulations"), and the exercise of remedies hereunder will be subject to
the Louisiana Gaming Regulations.
Section 6.19 Reinscription of Mortgage. Mortgagor shall cause this
Mortgage to be reinscribed in the manner provided by Laws in the records of both
the Recorder of Mortgages and the Register of Conveyances for the Parish of
_________ at least forty-five (45) days prior to the tenth (10th) anniversary of
the date of this Mortgage.
THUS DONE AND PASSED in the place and on the day, month and year first
above written in the presence of the undersigned competent witnesses, who
hereunto sign their names with the Mortgagor and me, Notary, after due reading
of the whole.
WITNESSES TO ALL MORTGAGOR:
SIGNATURES:
-------------------------------
By:
------------------------------
Its:
------------------------------
- --------------------------------
- --------------------------------
--------------------------------------------
NOTARY PUBLIC
My Commission Expires:
---------------------
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SCHEDULE 1
----------
Filings
1. The Mortgage is to be recorded in the conveyance and mortgage records of
__________ Parish, Louisiana.
2. A financing statement describing the Fixtures and the personal property
described in Section 2.1(C) is to be filed in the mortgage records of
__________ Parish, Louisiana.
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EXHIBIT LIST
------------
Exhibit "A" -- Mortgagor Authorization
Exhibit "B" -- Fee Estate Description
Exhibit "C" -- Leasehold Estate Description
Exhibit "D" -- Leasehold Estate Description
Exhibit "E" -- Permitted Encumbrances
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EXHIBIT "B"
-----------
Property Description
[SEE ATTACHED PAGES B-1 THROUGH B-3]
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EXHIBIT "C"
-----------
Permitted Encumbrances
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EXHIBIT 10.8
Prepared by:
Butler, Snow, O'Mara, Stevens & Cannada, PLLC
Attention: Don B. Cannada
17th Floor, Deposit Guaranty Plaza
Post Office Box 22567
Jackson, Mississippi 39225-2567
(601) 948-5711
To the Chancery Clerk of the Second Judicial District of Harrison County,
Mississippi:
The real property described herein is situated in the ______ Quarter of the
______ Quarter of Section ______, Township ______, Range ______ of the Second
Judicial District of Harrison County, Mississippi.
DEED OF TRUST, LEASEHOLD DEED
OF TRUST, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES,
RENTALS AND PROCEEDS
-----------------------------
THIS DEED OF TRUST, LEASEHOLD DEED OF TRUST, SECURITY AGREEMENT AND
ASSIGNMENT OF LEASES, RENTALS AND PROCEEDS (the "Deed of Trust") is made and
entered into on this ______ day of ____________, 1996, by RIVERBOAT CORPORATION
OF MISSISSIPPI, a Mississippi corporation (the "Grantor") in favor of
________________________, an individual (the "Trustee"), as Trustee for the
benefit of FLEET NATIONAL BANK, a national banking association, as trustee and
collateral agent under the Indenture (as hereinafter defined) (together with any
successor trustee or collateral agent appointed pursuant to the Indenture, the
"Beneficiary").
RECITALS
--------
(1) Casino America, Inc. (the "Company") and certain of its direct and
indirect Subsidiaries, including Grantor, have entered into that
certain Indenture dated of even date herewith (as amended,
supplemented or otherwise modified from time to time in accordance
with its terms, the "Indenture") with Beneficiary, providing with
respect to the issue and sale of up to $300,000,000.00 aggregate
principal amount of the Company's ____% Senior Secured Notes having a
final maturity date of _______________, 2003 (all such notes as are
authenticated and delivered under the Indenture being hereinafter
collectively referred to as the "Notes").
(2) From time to time the Company will make a portion of the proceeds from
the issuance of the Notes available to Grantor for working capital
purposes, and therefore, Grantor will derive substantial direct
benefit from the transactions contemplated herein, in the Indenture
and in the other Note Documents.
(3) In order to induce the Holders to purchase the Notes, the Grantor has
executed and delivered its Subsidiary Guarantee dated _______________,
1996, in favor of Beneficiary, pursuant to which Grantor has jointly,
severally,
<PAGE>
solidarily and unconditionally guaranteed all of the Company's obligations
under the Notes and the Indenture (the "Subsidiary Guarantee"), and has
agreed to execute and deliver this Deed of Trust to secure the obligations
of the Grantor and of the Company under the Indenture, the Notes, the
Subsidiary Guarantee and all other Note Documents.
(4) The Grantor acknowledges and agrees that the Beneficiary is the authorized
agent of the Holders, as the trustee and collateral agent under the
Indenture, and is entitled to act under this Deed of Trust in such
capacities on behalf of the Holders.
ARTICLE I
PURPOSES; DEFINITIONS
Section 1.1 Purposes.
A. The Grantor declares that this Deed of Trust is granted to secure the
due and punctual payment and performance of any and all present and future
obligations and liabilities of the Grantor and/or the Company, of every type or
description, to the Beneficiary and/or the Holders, or any of their respective
successors or assigns,
(a) arising under or in connection with the Indenture or the
Notes, whether for principal, premium, if any, interest, expenses,
indemnities or other amounts (including attorneys' fees and expenses);
or
(b) arising under or in connection with this Deed of Trust, the
Subsidiary Guarantee or any other Note Document, including for
reimbursement of amounts that may be advanced or expended by the
Beneficiary (i) to satisfy amounts required to be paid by the Grantor
and/or the Company under this Deed of Trust, the Subsidiary Guarantee or
any other Note Document for claims and Charges, together with interest
thereon to the extent provided, or (ii) to maintain or preserve any
Collateral (including, without limitation, the Property) or to create,
perfect, continue or protect the first priority Lien granted hereunder;
in each case, whether direct or indirect, joint or several, absolute or
contingent, voluntary or involuntary, however arising, and whether due or not
due, secured or unsecured, determined or undetermined, liquidated or
unliquidated, now or hereafter existing, renewed or restructured, whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and including all obligations and liabilities of the Grantor and/or
the Company under any instrument now or hereafter evidencing or securing any of
the foregoing and all future advances hereunder or pursuant to the Indenture,
the Notes, the Subsidiary Guarantee and/or the other Note Documents to the
fullest extent permitted by the laws of the State of Mississippi (all
obligations and liabilities of the Grantor and the Company described in this
Section 1.1 shall be collectively referred to as the "Secured Obligations").
This Deed of Trust may be construed and enforced variously and simultaneously as
a deed of trust, assignment, pledge, contract or security agreement as may be
appropriate
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under applicable Laws from time to time in order to effectuate fully
the purposes and agreements herein set forth.
B. The maximum amount of Secured Obligations that may be outstanding
at any time and from time to time that this Deed of Trust secures,
including, without limitation, as a deed of trust, as a leasehold deed of
trust, as a collateral assignment, as an assignment of leases and rentals
and as a security agreement, shall be $______________. This Deed of Trust
is and shall remain effective, until all of the amounts, liabilities and
obligations, present and future, comprising the Secured Obligations have
been incurred and are extinguished. When no Secured Obligations secured by
this Deed of Trust exist and the Beneficiary is not bound to permit any
Secured Obligations to be incurred, this Deed of Trust shall be terminated
by the Grantor as required under applicable Laws. A portion of the Secured
Obligations finally matures on ____________, 2003.
Section 1.2 Definitions. Unless otherwise defined herein, terms defined
in the Indenture and used but not otherwise defined herein shall have the
meanings given to them in the Indenture. As used herein, the following terms
shall have the meanings indicated:
"Advances" means any sums advanced by the Beneficiary for the curing
of defects, for the maintenance or preservation of the Property or for the
payment of insurance premiums or Taxes hereunder, as provided for and in
accordance with Section 5.6 hereof.
"Beneficiary" means Fleet National Bank, a national banking
association, as Trustee and Collateral Agent for the Holders under the
Indenture, and its successors and assigns in such capacities.
"Charges" means ____________________________________________.
"Code" has the meaning given such term in Section 2.3.
"Company" has the meaning given such term in Recital (1) on the first
page hereof.
"Deed of Trust" means this Deed of Trust, Leasehold Deed of Trust,
Security Agreement and Assignment of Leases, Rentals and Proceeds.
"Environmental Laws" means all federal, state and local Laws,
ordinances, rules and regulations in any way relating to or regulating
human health or safety, or industrial hygiene or environmental conditions,
or protection of the environment, or pollution or contamination of the air,
soil, surface water or groundwater, and includes, without limitation, (i)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601, et seq., as amended by the Superfund
Amendments and Reauthorization Act of 1986, and any amendments thereto and
regulations thereunder, (ii) the Resource Conversation and Recovery Act
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of 1976, 42 U.S.C. Section 6901, et seq., as amended by the Hazardous and
Solid Waste Amendments of 1984, and any amendments thereto and regulations
thereunder and (iii) the Clean Water Act, 33 U.S.C. Section 1251, et seq.,
and any amendments thereto and regulations thereunder.
"Event of Default" has the meaning given such term in the Indenture.
"Fixtures" means goods that after placement on real estate become
component parts of land, buildings and other constructions and which are
used in the conduct of a trade, business, occupation or other commercial or
industrial activity.
"Governmental Authority" has the meaning given such term in the
Indenture.
"Grantor" means Riverboat Corporation of Mississippi and its
successors and assigns.
"Hazardous Materials" means any substance or material that is
described as a toxic or hazardous substance, waste or material or a
pollutant or contaminant or infectious waste, or words of similar import,
in any of the Environmental Laws, and includes, without limitation,
asbestos, petroleum or petroleum products (including crude oil or any
fraction thereof, natural gas, natural gas liquids, liquefied natural gas
or synthetic gas usable for fuel, or any mixture thereof), polychlorinated
biphenyls, urea formaldehyde, radon gas, radioactive matter and medical
waste.
"Holders" has the meaning given such term in the Indenture.
"Improvements" has the meaning given such term in Section 2.1(C).
"Indebtedness" has the meaning given such term in the Indenture.
"Indenture" has the meaning given such term in Recital (1) on the
first page hereof.
"Land" has the meaning given such term in Section 2.1(A).
"Laws" means all applicable constitutions, treaties, statutes, laws,
ordinances, regulations, orders, writs, injunctions or decrees of the
United States or of any state, commonwealth, nation, territory, possession,
county, parish, municipality or Governmental Authority.
"Leases" has the meaning given such term in Section 2.2.
"Lien" means any lien, privilege, pledge, assignment, hypothecation,
conditional sale agreement, title retention agreement, financing lien,
lessor or
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lessee's interest under any lease, subordination of any claim or
right, security interest, mortgage or other encumbrance, whether arising by
deed of trust, mortgage, pledge agreement or under Laws.
"Losses" has the meaning given such term in Section 4.15(F).
"Note Documents" means the Indenture, the Notes, the Subsidiary
Guarantees, the Collateral Documents and all other documents under or by
reason of which the Secured Obligations are evidenced, governed, secured or
otherwise dealt with, and all other agreements, certificates and writings
heretofore or hereafter delivered in connection therewith by the Grantor,
the Company or any other Subsidiary Guarantor.
"Notes" has the meaning given such term in Recital (1) on the first
page hereof.
"Permitted Encumbrances" means:
(a) Liens permitted with respect to the Property by Section 1011 of
the Indenture; and
(b) Those matters set forth on Exhibit "E" attached hereto.
"Person" means any individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or Governmental Authority.
"Primary Leases" has the meaning given such term in Section 2.1(B).
"Proceeds" has the meaning given such term in Section 2.1(D).
"Property" has the meaning given such term in Section 2.1.
"Rentals" has the meaning given such term in Section 2.2.
"Secured Obligations" has the meaning given such term in Section 1.1.
"Subsidiary Guarantee" has the meaning given such term in Recital (3)
on the second page hereof.
"Taxes" mean all taxes, forced contributions, assessments, charges,
fees, levies, imposts, duties, deductions, withholdings or other charges
from time to time or at any time imposed by any Laws or any Governmental
Authority.
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Section 1.3 Number and Gender of Words. Whenever herein the singular
number is used, the same shall include the plural where appropriate and vice
versa, and words of any gender shall include each other gender where
appropriate.
Section 1.4 Headings. The captions, headings and arrangements used in
this Deed of Trust are for convenience only and do not in any way affect, limit,
amplify or modify the terms and provisions hereof. All references in this Deed
of Trust to Exhibits and Sections refer to the Exhibits and Sections of this
Deed of Trust (as modified, amended or supplemented from time to time) unless
expressly provided otherwise. All Exhibits attached to this Deed of Trust are a
part hereof for all purposes.
Section 1.5 Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this Deed
of Trust to a particular agreement, instrument or document also refer to and
include all renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document, provided that
nothing contained in this Section shall be construed to authorize any Person to
execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.
ARTICLE II
PROPERTY
Section 2.1 Deed of Trust Conveyance. In order to secure the full and
punctual payment and performance of the Secured Obligations, the Grantor hereby
grants, bargains, assigns, hypothecates, pledges, sells, conveys and warrants
unto the Trustee, to have and to hold in trust, for the benefit of the
Beneficiary, and grants in favor of the Beneficiary a continuing security
interest in, to inure to the use and benefit of the Beneficiary, for itself and
the ratable benefit of the Holders, all the following described property
(collectively, the "Property"):
A. Fee Estate.
All presently existing and hereafter acquired rights, title and
interest of the Grantor in and to any of the land described on Exhibit "B"
attached hereto (the "Land"), and all of Grantor's right, title and
interest in and to any right to purchase, use or occupy any land adjacent
to any of the Land and any land lying in the bed of any street, road or
avenue, opened or proposed, in front of or adjoining any of the Land.
B. Leasehold Estate.
All presently existing and hereafter acquired rights, title and
interest of the Grantor in, to and under (i) that certain lease by and
between Grantor, as lessee, and ___________, as lessor, dated _________,
and the leasehold estate created thereby, which lease and leasehold estate
cover and affect the property described on Exhibit "C" attached hereto and
(ii) that certain lease by and between Grantor, as
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lessee, and _______________, as lessor, dated _____________, and the
leasehold estate created thereby, which lease and leasehold estate cover
and affect the property described on Exhibit "D" attached hereto. The
leases described in clauses (i) and (ii) above shall be collectively
referred to as the "Primary Leases".
C. Improvements.
All presently existing and hereafter acquired rights, title and
interest of the Grantor in and to all buildings, structures, improvements,
other constructions and Fixtures of every kind and description now or
hereafter situated on the Land or the properties covered by the Primary
Leases (the "Improvements"), together with any and all appurtenances,
powers, liberties, easements, air rights, development rights, sewer rights,
licenses, concession agreements, streets, alleys, passages, ways, riparian
rights, batture rights, water courses, servitudes, estates, titles,
interests, prescriptions, advantages and other rights and privileges
whatsoever in any way belonging, relating or appertaining to the Land, the
Improvements or the Primary Leases (or the leasehold estates created
thereby) or granted to Grantor to use in connection therewith.
D. Additions, Etc. and Proceeds.
This Deed of Trust, without further action, shall also attach to all
(1) subsequent additions, substitutions and replacements to and for any or
all of the Property, (2) present and future component parts thereof and
accessions thereto, (3) natural increases, accessions, accretions and
issues of the Property and (4) rights of the Grantor to receive proceeds
attributable to the sale, insurance loss, condemnation or other taking of
all or any part of the Property, and any contract, tort or other damage
awards in connection with, relating to or arising out of all or any part of
the Property (including, without limitation, any sums which may be awarded
or become payable to the Grantor for damages caused by public works or
constructions on or near the Property) (collectively, the "Proceeds").
In the event that Grantor becomes the owner of all or any part of the
property covered by the Primary Leases, this Deed of Trust shall
automatically and without need of further act become a deed of trust on
Grantor's full ownership interest in such property.
The Property is to remain subject to the Lien of this Deed of Trust in favor of
the Beneficiary and subject to the security interests created hereby until the
full and final payment and performance or discharge of the Secured Obligations,
and the Grantor is herein and hereby bound and obligated not to sell, alienate,
waste or encumber the Property to the prejudice hereof, and not to permit or
suffer the same to be so sold, alienated, wasted or encumbered, except as
otherwise may be permitted hereunder.
Section 2.2 Assignment and Pledge of Leases and Rentals. In order to
further secure the full and punctual payment and performance of the Secured
Obligations, the Grantor hereby pledges, conveys, assigns and transfers unto the
Beneficiary, (a) all of the
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rentals, income, profits, security deposits and other sums (collectively, the
"Rentals") due or becoming due under or otherwise payable under or received or
receivable in connection with all leases and subleases, whether written or
verbal, or any letting of, or any agreement for the use or occupancy of, all or
any part of the Property, presently or subsequently granted and bearing against
the Property, or any part thereof (all such leases and subleases, together with
all modifications, extensions and renewals thereof shall be collectively
referred to as the "Leases"), (b) all Leases and (c) any and all benefits and
advantages to be derived from the Leases and all guarantees of any obligations
of any lessee under any of the Leases; provided, however, that so long as no
Event of Default shall have occurred, the Grantor shall be entitled to continue
to collect the Rentals and exercise all of its rights under the Leases. The
assignment of Leases and Rentals in this Section is, and is intended to be, an
absolute and present assignment from the Grantor to the Beneficiary made in
accordance with and to the fullest extent permitted by applicable Laws and is
not intended to constitute merely the present passing of a security interest.
The Grantor will not perform any acts and will not execute any instrument which
would prevent the Beneficiary from exercising its rights under this Section 2.2.
Section 2.3 Uniform Commercial Code Security Agreement. This Deed of
Trust also is intended to be a security agreement under the Uniform Commercial
Code (as from time to time in effect in the State of Mississippi, the "Code")
for any of the items specified above in Section 2.1 as part of the Property
that, as a matter of law, may be subject to a security interest under the Code.
In order to further secure the full and punctual payment and performance of the
Secured Obligations, the Grantor hereby grants the Beneficiary a security
interest in all such items. The Grantor agrees that the Beneficiary may file
this Deed of Trust in the real estate records or other appropriate index as a
financing statement for any of such items specified above, and any copy of this
Deed of Trust or of any other security agreement or financing statement shall be
sufficient as a financing statement. Grantor shall pay all reasonable costs and
expenses of any record searches for financing statements that Beneficiary
reasonably may require. Without the prior written consent of the Beneficiary,
the Grantor shall not create under the Code any other security interests in any
of the items described above, including replacements and additions thereof or
thereto owned by the Grantor, other than Liens expressly permitted hereunder or
by the Indenture.
Section 2.4 Attorneys' Fees. In case the Secured Obligations are placed
in the hands of an attorney at law for the commencement of foreclosure
proceedings, to protect the rights of the Beneficiary or to enforce any of the
agreements contained in this Deed of Trust, the Grantor herein and hereby agrees
to pay all costs of collection, including, but not limited to, the reasonable
fees and expenses of the attorneys at law who may be employed for such purposes,
incurred in connection with the protection of or realization of collateral or in
connection with any of Beneficiary's collection efforts, whether or not suit on
the Secured Obligations or any foreclosure proceedings are commenced, and
further agrees that the maximum Secured Obligations secured by this Deed of
Trust shall be increased by the amount of said costs, fees and expenses.
Section 2.5 Release of Property; Grantor and Lien Not Released. The
Beneficiary may at any time, on behalf of the Holders and without notice to the
Grantor, release any part of the Property from this Deed of Trust, grant an
extension or deferment of time for
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the discharge of any obligation hereunder, permit the substitution and transfer
of documents, agreements and instruments evidencing the Secured Obligations,
agree in writing with the Grantor or any other Person to modify the terms of
payment or performance of the Secured Obligations, including, without
limitation, to modify the rate of interest, the period of amortization or the
amount of the monthly installments payable under the Notes, accept or release
other or additional security for the Secured Obligations, reconvey any part of
the Property, consent to the granting of any easement or servitude affecting the
Property and join in any extension or subordination agreement, in each case
without affecting the liability of the Grantor hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Grantor
The Grantor hereby represents, warrants, covenants, promises, stipulates
and agrees as follows:
Section 3.1 Title. The Grantor has good and merchantable title as fee or
leasehold owner of the Property, free and clear of any and all Liens except
Permitted Encumbrances; Grantor has and will continue to have full power and
lawful authority to grant, release, convey, assign, transfer, mortgage, pledge,
hypothecate and otherwise create the Liens on the Property as provided herein.
The Property is accurately, completely, adequately and sufficiently described
herein and in Exhibits "B", "C" and "D" attached hereto as required by Laws for
this Deed of Trust to create a Lien on all of the Property.
Section 3.2 First Priority Deed of Trust. This Deed of Trust constitutes
a valid Deed of Trust and, upon proper recording hereof, will constitute a valid
and perfected first deed of trust Lien on, and security interest in, the
Property, and first priority assignment of Leases and Rentals, subject in each
case only to the Permitted Encumbrances, and there are no defenses or offsets to
Grantor's obligations pursuant to this Deed of Trust or the other Note Documents
to which it is a party, including, without limitation, the Company's and
Grantor's applicable obligations to pay and perform the Secured Obligations.
Section 3.3 Location of Offices; Taxpayer Identification Number. The
Grantor's chief executive office and principal place of business is 711
Washington Loop, Biloxi, Mississippi 39530. The Grantor's Federal Taxpayer
Identification Number is 72-1235811.
Section 3.4 Enforceability. The execution and delivery of this Deed of
Trust and the Subsidiary Guarantee and other Note Documents to which Grantor is
a party will result in valid and legally binding obligations of the Grantor
enforceable against it in accordance with the respective terms and provisions
hereof and thereof.
Section 3.5 Required Filings. Schedule 1 sets forth all filings required
to perfect the Liens, assignments and security interests created by this Deed of
Trust.
Section 3.6 Leases.
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A. With respect to the Primary Leases, Grantor represents that (i)
it has provided Beneficiary with a true and complete copy of each of the
Primary Leases; (ii) each of the Primary Leases is valid, binding and in
full force and effect and has not been amended or modified, except as
heretofore disclosed in writing by Grantor to Beneficiary; (iii) to the
best of Grantor's knowledge, no default exists on the part of any lessor,
or on the part of Grantor as lessee, in the performance of any of the
terms, covenants, provisions, conditions or agreements contained in the
Primary Leases; and (iv) Grantor knows of no condition which, with the
giving of notice or the lapse of time or both, would constitute a default
under the Primary Leases on the part of any lessor or Grantor as lessee,
except as heretofore disclosed in writing by Grantor to Beneficiary.
B. With respect to the assignment of Leases and Rentals set forth
above, Grantor represents that (i) it has provided Beneficiary with a true
and complete copy of each Lease; (ii) Grantor is not, in the capacity of
lessor, a party to any other lease, whether written or oral, or any
agreement for the use and occupancy of any of the Property as of the date
hereof, except as heretofore disclosed in writing by Grantor to
Beneficiary; (iii) the Leases are valid, binding and in full force and
effect and have not been amended or modified, except as heretofore
disclosed in writing by Grantor to Beneficiary; (iv) Grantor is the sole
owner of the lessor's interest in the Leases; (v) Grantor has not executed
any other assignment or pledge of any of the Leases or Rentals or performed
any other act or executed any other instrument which might prejudice
Beneficiary's rights hereunder; (vi) to the best of Grantor's knowledge, no
default exists on the part of any lessee, or on the part of Grantor as
lessor, in the performance of the terms, covenants, provisions, conditions
or agreements contained in the Leases; (vii) Grantor knows of no condition
which, with the giving of notice or the passage of time or both, would
constitute a default under any of the Leases on the part of any lessee or
Grantor as lessor, except as heretofore disclosed in writing by Grantor to
Beneficiary; (viii) no rent has been paid by any lessee for more than one
installment in advance; and (ix) the payment of none of the Rentals to
accrue under the Leases has been or will be waived, released, reduced,
discounted or otherwise discharged or compromised by Grantor, except as
heretofore disclosed in writing by Grantor to Beneficiary.
Section 3.7 Peaceable Possession. Grantor's possession of the Property
has been peaceable and undisturbed and, to the best of Grantor's knowledge,
without investigation or inquiry, the title thereto has never been disputed or
questioned, and Grantor does not know of any facts by reason of which any
adverse claim to any part of the Property or to any undivided interest therein
might be set up or made.
Section 3.8 Taxes. Grantor has not received any notice of any federal,
state or local tax claims or Liens assessed or filed against Grantor or the
Property for Taxes which are due and payable, unsatisfied of record or docketed
in any court of the state in which the Property is located or in any court
located in the United States.
Section 3.9 Casualty and Condemnation. The Property has not been damaged
or destroyed by fire or other casualty, and no condemnation or eminent domain
proceedings
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have been commenced and/or are pending with respect to the Property, and, to the
best of Grantor's knowledge, no such condemnation or eminent domain proceedings
are about to be commenced.
Section 3.10 No Consents or Approvals. No consent or approval of any
trustee or holder of any Indebtedness or other obligation of Grantor (other than
those which have already been obtained and delivered to Beneficiary), and no
consent, permission, authorization, order or license of any Governmental
Authority (other than those which have already been obtained and delivered to
Beneficiary), is necessary in connection with the execution, delivery and
performance of this Deed of Trust or any other Note Document to which Grantor is
a party or any transaction contemplated hereby or thereby.
Section 3.11 No Conflicts. There is no provision of any indenture or
agreement, written or oral, to which Grantor is a party or under which Grantor
is obligated, and no statute, rule or regulation, or judgment, decree or order
of any Governmental Authority, binding on Grantor, which would be contravened by
the execution and delivery of this Deed of Trust or any other Note Document to
which Grantor is a party or by the performance of any provision, condition,
covenant or other term hereof or thereof.
Section 3.12 Accordance With Laws and Regulations. The Property is in
compliance with all applicable Environmental Laws, moratoriums, condominium and
coastal zone management laws and regulations and with all applicable building,
safety and fire codes, as well as zoning and subdivision laws and regulations.
All environmental impact statements, subdivision and condominium maps, drawings,
specifications and reports relating to the Property have been or will be timely
prepared and filed with all Governmental Authorities having jurisdiction over
such matters and requiring any such submittals.
Section 3.13 No Hazardous Activities. To the best of Grantor's knowledge,
(a) no industrial use has ever been made of any part of the Property, (b) none
of the Property has ever been used for storage, treatment or disposal of any
Hazardous Materials, (c) no manufacturing, landfilling or chemical production
has ever occurred on any part of the Property and (d) there have never been any
underground storage tanks located on any part of the Property.
Section 3.14 No Hazardous Materials. Except as disclosed to and
acknowledged by Beneficiary in writing, Grantor represents and warrants that:
(a) During the period of ownership by Grantor or any of its
Affiliates of the Property, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any
Hazardous Materials by any Person on, under or about any of the Property;
and
(b) Grantor has no knowledge of or reason to believe that there has
been (1) any use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Materials by any prior
owners or occupants of the Property or (2) any actual or threatened
litigation or claims of any kind by any Person relating to such matters.
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ARTICLE IV
COVENANTS OF Grantor
So long as the Secured Obligations or any part thereof remains
outstanding or unpaid, the Grantor specially covenants, promises, stipulates and
agrees with the Beneficiary as follows:
Section 4.1 Warranty. The Grantor shall warrant, preserve and defend the
title to the Property, the interest of the Beneficiary and the Holders in and to
the Property and the validity, enforceability and priority of the Lien of this
Deed of Trust, this assignment of Leases and Rentals and this grant of a
security interest against the claims and demands of all Persons whomsoever, at
its sole cost and expense.
Section 4.2 Payment; Performance of Covenants. The Grantor shall make
prompt payment when due of all amounts owing hereunder and under the Subsidiary
Guarantee and other Note Documents to which Grantor is a party and all other
Secured Obligations as the same become due, without offset, counterclaim or
defense, and shall punctually and properly perform all of the Grantor's
covenants, duties, agreements and conditions (a) under this Deed of Trust and
the Subsidiary Guarantee and other Note Documents to which Grantor is a party or
(b) imposed upon or assumed by Grantor by virtue of the provisions of any deed,
conveyance, lease, agreement, statute or ordinance pursuant to which Grantor or
any predecessor in title of the Property acquired the Property or any rights or
privileges appurtenant thereto or for the benefit thereof.
Section 4.3 Payment of Taxes and Utilities. Subject to the right to
contest certain matters with respect to the Property pursuant to Section 4.6,
the Grantor shall cause to be paid all Taxes levied or assessed against the
Property or any part thereof prior to the date upon which any fine, penalty,
interest or cost may be added thereto or imposed by Laws for the nonpayment
thereof. Grantor shall deliver to Beneficiary promptly after a request therefor
by Beneficiary, receipted bills or cancelled checks evidencing the payment of
prior Taxes to the date upon which any fine, penalty, interest or cost may be
added thereto or imposed by Laws for the nonpayment thereof. In the case of any
assessment payable in installments, each installment thereof shall be paid prior
to or on the date on which such installment becomes due and payable without
imposition of any fine, penalty, interest or cost. Grantor shall not be
entitled to any credit on the Secured Obligations, or any other sums which may
become payable under the terms hereof, under any other Note Document or
otherwise, by reason of the payment of Taxes. Grantor shall timely pay all
charges for electricity, power, gas, water and other utilities used in
connection with the Property.
Section 4.4 Payment of Indebtedness Pertaining to Property. Subject to
the right to contest certain matters with respect to the Property pursuant to
Section 4.6, the Grantor shall cause all Indebtedness, claims, encumbrances and
liabilities of any kind or character (including, without limitation, claims for
labor, materials, supplies and rent) incurred in the operation, maintenance and
development of the Property to be paid within ninety (90) days after same become
due.
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Section 4.5 Other Compliance. Subject to the right to contest certain
matters with respect to the Property pursuant to Section 4.6, Grantor agrees (i)
to perform and comply with all covenants, agreements and restrictions affecting
the Property and with all Laws, ordinances, acts, rules, regulations and orders
of any Governmental Authority exercising any power of regulation or supervision
over Grantor or any part of the Property, whether now or hereafter enacted or
enforced and whether the same be directed to the direction, repair, manner of
use or structural alteration of the Improvements or otherwise, (ii) to comply
with the terms of all insurance policies covering or applicable to the Property,
all requirements of the issuer of any such policy and all orders, rules,
regulations and other requirements of or standards recommended by the National
and Regional Fire Protection Association (or any other body exercising similar
functions) applicable to or affecting the Property or any use or condition of
the Property and (iii) to procure, maintain and comply with all permits,
licenses, approvals or other authorizations required for any use of the Property
being made and for the proper erection, installation, operation and maintenance
of the Improvements and the FF&E or any portion of the foregoing. With respect
to the compliance obligations of Grantor in this Section 4.5, other than
Grantor's obligation to comply with all Environmental Laws, Grantor shall have
no compliance obligation under this Section 4.5 if failure to comply would not
have a material adverse affect on (a) the use made by Grantor of, the value or
condition of or the business conducted on the Property or (b) the rights or
interest of any Holder.
Section 4.6 Contest of Taxes, Indebtedness and Other Claims. Grantor
shall have the right to contest, at its own expense, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity of any Taxes, Indebtedness, claims, assessments or encumbrances
referred to herein (other than this Deed of Trust or any other Note Document
securing all or any portion of the Secured Obligations), or any of the Laws,
ordinances, acts, rules, regulations, orders, licenses and authorizations
referred to herein; provided that (a) Grantor gives Beneficiary timely notice of
its intention to contest the same, (b) the commencement of such proceedings
shall suspend the collection or enforcement of the matter under contest, or, if
the commencement of such proceedings does not suspend such collection or
enforcement, Grantor shall have made payment of any item sought to be collected
with or without protest, (c) there shall be no impairment of the Lien of this
Deed of Trust or undue interference with the normal conduct of Grantor's
riverboat gaming operation at the Property, (d) neither the Property nor any
part thereof or interest therein would be in immediate danger of being sold,
forfeited or lost, (e) neither Beneficiary nor any Holder would be potentially
subject to criminal, or in imminent danger of civil, liability for failure to
comply therewith pending the outcome of such proceedings, (f) in the case of
Taxes, assessments, charges or other impositions, Grantor shall have either (i)
paid the amount in dispute prior to instituting such contest, in which event the
notice requirement of subparagraph (a) of this Section shall be satisfied by
giving notice prior to initiating such contest rather than prior to making
payment, or (ii) furnished such security, if any, as may be required by
Beneficiary during the pendency of such proceedings and (g) if such contest be
finally resolved against Grantor, Grantor shall promptly pay the amount required
to be paid, together with all interest and penalties accrued thereon, or comply
with any applicable requirements. Grantor shall indemnify and hold Beneficiary
and each Holder harmless from and against any liability, loss, damage, cost or
expense of any kind that may be imposed
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upon Beneficiary or any Holder in connection with any such contest and any
determination resulting therefrom.
Section 4.7 Performance Under Leases.
A. Primary Leases.
(i) Grantor shall continue to perform faithfully all of the
lessee's obligations under the Primary Leases.
(ii) Grantor shall promptly furnish Beneficiary with an accurate
and complete copy of all notices received by Grantor in connection
with the Primary Leases.
(iii) Grantor shall promptly exercise each individual option, if
any, to extend or renew the term of each of the Primary Leases and
hereby expressly authorizes and appoints Beneficiary as its agent and
attorney-in-fact to exercise any such option in the name and on behalf
of Grantor, which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest.
(iv) In the event that any of the Primary Leases is rejected or
disaffirmed by the lessor thereunder (or by any receiver, trustee,
custodian or other party who succeeds to the rights of such lessor)
pursuant to any bankruptcy, insolvency, reorganization, moratorium or
similar law, Grantor covenants that it will not elect to treat such
Primary Lease as terminated under 11 U.S.C. (S)365(h) or any similar
or successor law or right and hereby assigns to Beneficiary the sole
and exclusive right to make or refrain from making any such election,
and Grantor agrees that any such selection, if made by Grantor, shall
be void and of no force or effect.
(v) If the lessor under any of the Primary Leases (or any
receiver, trustee, custodian or other party who succeeds to the rights
of such lessor) rejects or disaffirms such Primary Lease pursuant to
any bankruptcy, insolvency, reorganization, moratorium or similar law
and Beneficiary elects to have Grantor remain in possession under any
legal right Grantor may have to occupy the premises leased pursuant to
such Primary Lease, (a) Grantor shall remain in such possession and
shall perform all acts necessary for Grantor to retain its legal
rights and to remain in such possession for the unexpired term of such
Primary Lease (including all renewals thereof), whether such acts are
required under the then existing terms and provisions of such Primary
Lease or otherwise, and (b) all of the terms and provisions of this
Deed of Trust and the Lien created hereby shall remain in full force
and effect and shall be extended automatically to such possession,
occupancy and interest of Grantor.
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(vi) Immediately upon obtaining knowledge of a breach by the
lessor under any of the Primary Leases (or by any receiver, trustee,
custodian or other party who succeeds to the rights of such lessor) or
any inability of such lessor (or any such receiver, trustee, custodian
or other party) to perform the terms and provisions of such Primary
Lease (including by reason of a rejection or disaffirmance of such
Primary Lease pursuant to any bankruptcy, insolvency, reorganization,
moratorium or similar law), Grantor will notify Beneficiary of any
such breach or inability, and Grantor shall, at its expense,
diligently commence and prosecute any proceedings as may be necessary
or advisable against such lessor in connection with such breach and
shall, upon the request of Beneficiary, deliver to Beneficiary copies
of all papers served in connection therewith; provided that no
settlement or compromise of any such proceeding shall be made by
Grantor without Beneficiary's prior written consent if such settlement
or compromise could have a materially adverse affect on the Property
or the rights of the Beneficiary or Holders hereunder.
(vii) Grantor shall give prompt notice to Beneficiary of any
notice of default given to, or any lawsuit instituted against, Grantor
by any lessor under any of the Primary Leases, and Grantor shall
furnish Beneficiary with an accurate and complete copy of such notice
of default and with any pleadings received by Grantor or Grantor's
counsel from any such lessor. Beneficiary may, but shall not be
obligated to, take any action Beneficiary deems necessary or desirable
to cure any default by Grantor under the Primary Leases; provided,
however, that in the event of any failure by Grantor to perform any
covenant to be observed and performed under either or both of the
Primary Leases, the performance by Beneficiary on behalf of Grantor of
such Primary Lease covenant shall not remove or waive, as between
Grantor and Beneficiary, the corresponding breach of covenant by
Grantor under this Deed of Trust, and all expenses incurred by
Beneficiary in connection with the curing of such default, of every
kind and character, shall be a demand obligation owing by Grantor to
Beneficiary and shall bear interest from the date of expenditure until
paid at a rate equal to the rate provided for in Section 5.6 for
Advances to bear, and the same shall be secured by this Deed of Trust.
(viii) Grantor shall, at Grantor's sole cost and expense, appear
in and defend any action or proceeding arising under or in any manner
connected with the Primary Leases or the obligations, duties or
liabilities of the lessor or Grantor thereunder.
B. Assigned Leases.
(i) Grantor shall continue to perform faithfully all of the
lessor's obligations under the Leases.
(ii) Grantor shall give prompt written notice to Beneficiary of
any notice of default given to, or any lawsuit instituted against,
Grantor by any
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lessee under any of the Leases, and Grantor shall furnish Beneficiary
with an accurate and complete copy of such notice of default and with
any pleadings received by Grantor or Grantor's counsel from such
lessee. Beneficiary may, but shall be obligated to, take any action
Beneficiary deems necessary or desirable to cure any default by
Grantor under any of the Leases, and all expenses incurred by
Beneficiary in connection with the curing of such default, of every
kind and character, shall be a demand obligation owing by Grantor to
Beneficiary and shall bear interest from the date of expenditure until
paid at a rate equal to the rate provided for in Section 5.6 for
Advances to bear, and the same shall be secured by the Lien evidenced
by this Deed of Trust.
(iii) Grantor shall, at Grantor's sole cost and expense, appear
in and defend any action or proceeding arising under or in any manner
connected with any of the Leases or the obligations, duties or
liabilities of any lessee or Grantor thereunder.
(iv) Grantor shall enforce each of the Leases and all remedies
available to Grantor against the lessee thereunder in case of default
under any of the Leases by any such lessee.
(v) The Grantor agrees to indemnify and hold the Beneficiary
harmless from and against any and all liability, loss or damage which
the Beneficiary may incur under the Leases by reason of the assignment
of the Leases contained herein, and from any and all claims and
demands whatsoever which may be asserted against Beneficiary by reason
of any alleged undertaking or obligation on Beneficiary's part to
perform or discharge any of the terms, covenants or agreements
contained in the Leases, and Beneficiary shall not be obligated to
perform or discharge, nor does it undertake to perform or discharge,
nor shall anything herein contained be construed to bind the
Beneficiary to the performance or discharge of, any of the
obligations, duties or liabilities under any of the Leases, or
otherwise to impose any obligation on the Beneficiary with respect to
the Leases or Rentals.
Section 4.8 Actions With Respect to Lessee Bankruptcies. In the event the
lessee under any Lease should be the subject of any proceeding under the Federal
Bankruptcy Code, as amended from time to time, or any other federal, state or
local statute which provides for the possible termination or rejection of any of
the Leases assigned hereby, Grantor covenants and agrees that with respect to
any of the Leases so terminated or rejected, no settlement for damages shall be
made without the prior written consent of Beneficiary, and any check in payment
of damages for termination or rejection of any such Lease will be made payable
both to Grantor and Beneficiary. Grantor hereby assigns any such payment to
Beneficiary and agrees to endorse and deliver to Beneficiary any check
evidencing any such payment, the proceeds of which will be applied in accordance
with the Indenture.
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Section 4.9 Lease Proceeds Held in Trust. Any amounts received by Grantor
or its agents for performance of any actions with respect to the Leases which
are prohibited by the terms of this Deed of Trust, including, without
limitation, any amounts received in connection with any cancellation,
modification or amendment of any Leases which is prohibited by the terms of this
Deed of Trust and any amounts received by Grantor as Rentals from and after the
date of any Event of Default, shall be held by Grantor as trustee for
Beneficiary, and all such amounts shall be accounted for to Beneficiary and
shall not be commingled with other funds of Grantor. Any Person acquiring or
receiving all or any portion of such trust funds shall acquire or receive the
same in trust for Beneficiary as if such Person had actual or constructive
notice that such funds were impressed with the trust in accordance herewith; by
way of example and not of limitation, such notice may be given by an instrument
recorded in the land records of the County of _____________, Mississippi stating
that Grantor has received or will receive such amounts in trust for Beneficiary.
Section 4.10 Insurance Requirements.
A. In addition to any insurance requirements set forth in the
Indenture, the Grantor shall keep the Property and each and every part and
parcel thereof constantly insured in such amounts and for such coverages as
follows:
(a) Special causes of loss insurance (formerly known as all-risk
insurance), including flood and sprinkler leakage coverage, if
applicable, in an amount sufficient to prevent Grantor from being or
becoming a co-insurer within the terms of the policy or policies
providing such insurance, and in any event for not less than either
amounts required by Laws or the full replacement value of the
Improvements and the FF&E;
(b) Business interruption insurance for loss occasioned by the
perils commonly insured against in a special causes of loss policy, in
an aggregate amount not less than the real estate taxes, additional
interest and other assessments for the Land, the leasehold estates
created by the Primary Leases and the Improvements and all other
continuing expenses of the Property;
(c) Commercial general liability insurance, with the combined
single limit for any one occurrence of at least $10,000,000.00;
(d) Workers compensation and employer's liability insurance,
subject to statutory limits or better, in respect of any work or other
operations on, about or in connection with the Property; and
(e) Such other insurance with respect to the Property in such
amounts and against such other insurable hazards which are commonly
insured against in respect of properties similar to the Property (and,
with respect to this clause (e) only, provided that such insurance is
available at commercially reasonable rates).
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B. All policies of insurance at any time carried by Grantor on the
Property (whether carried pursuant to the requirements of this Deed of
Trust or otherwise) shall name Beneficiary as the Person to which all
payments made by such insurance company shall be paid. Each insurance
policy maintained by Grantor under subsections (a), (b) and, if
appropriate, (e) above shall contain a standard noncontributory first
mortgage loss payable endorsement in favor of Beneficiary. The insurance
maintained by Grantor under subsections (c) and, if appropriate, (e) above
shall name Beneficiary as an additional insured. All insurance maintained
by Grantor shall contain clauses providing that the carrier shall notify
the Beneficiary in writing at least thirty (30) days in advance of any
policy reduction, non-renewal or cancellation (or at least ten (10) days in
advance of a cancellation for nonpayment of premiums) and that all losses
shall be payable notwithstanding (1) any negligence of Grantor or any
lessee or occupant of any portion of the Property or any of their
respective agents or employees which might, absent such agreement, result
in a forfeiture of all or any part of any insurance payment, (2) the
occupation or use of the Property for purposes more hazardous than
permitted by the terms of such policy, (3) any foreclosure or other action
or proceeding taken pursuant to any provision of this Deed of Trust or (4)
any change in title or ownership of the Property or any part thereof.
Grantor shall pay the premiums on all policies of insurance pertaining to
the Property as the same become due and payable. Each policy of insurance
required by this Deed of Trust shall be carried with a company which is
licensed to do business in the state in which the Property is located and
is rated at least "A-" by A.M. Best & Company, Inc. or, if such carrier is
not rated by A.M. Best & Company, Inc., having the financial stability and
size deemed appropriate by a reputable insurance broker. All policies of
insurance placed with a mutual company shall be nonassessable. Grantor
shall deliver the original policies to the Beneficiary and shall deliver
satisfactory evidence of renewal of all such policies to Beneficiary not
less than ten (10) days in advance of the expiration date of the existing
policy or policies, accompanied by evidence of payment of premium
satisfactory to Beneficiary.
C. Grantor shall not carry separate or additional insurance
concurrent in form or contributing, in the event of loss, with that
required hereunder unless such insurance is endorsed in favor of
Beneficiary as loss payee or additional insured, as applicable, and
contains endorsements providing coverage secondary to the insurance
required to be carried hereunder. Nothing contained herein shall prohibit
Grantor from holding or obtaining an owner's policy of title insurance
covering the Land.
D. In any suit or action for damages arising from the alleged
negligence of Grantor, in which action the Beneficiary and/or any Holder is
included as a defendant, Grantor will assume all of the burden, cost and
expense of the settlement of such action or claim and will pay any judgment
which may be obtained against Beneficiary or any Holder.
E. In the event the Grantor should, for any reason whatsoever, fail
to keep the Property or any part thereof so insured, or to keep said
policies so assigned or payable, or fail to deliver to the Beneficiary the
original policies of insurance and the
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renewals thereof, then the Beneficiary, if it so elects, may itself have
such insurance effected in such amounts and in such companies as it may
deem proper and may pay the premiums therefor, and all expenses so incurred
of every kind and character shall be a demand obligation owing by the
Grantor to the Beneficiary and shall bear interest from the date of
expenditure until paid at a rate equal to the rate provided for in Section
5.6 for Advances to bear, and the same shall be secured by the Lien
evidenced by this Deed of Trust. The Beneficiary shall not be responsible
for the solvency of any company issuing any insurance policy, whether or
not selected or approved by it, or for the collection of any amount due
under any such policy, and shall be responsible and accountable only for
such money as may be actually received by it.
F. In the event of any insured loss, the Grantor shall give
immediate written notice to the insurance carrier and to the Beneficiary.
Grantor hereby authorizes and directs any insurance company concerned to
make payment of such loss (only with respect to the insurance policies
described in subparagraphs (a), (b) and, as applicable, (e) above,
provided, however, in the case of subparagraph (a) only, any such payments
should be made to Beneficiary only after an Event of Default which has not
been waived in writing by the Holders in accordance with Section 513 of the
Indenture) directly and solely to Beneficiary to be applied as hereinafter
provided. Grantor, acting in its reasonable judgment, shall make any
necessary proof of loss and shall adjust and compromise all claims under
all policies and shall cause the applicable insurance company to make
payment thereof as herein provided, and Grantor shall sign all receipts,
vouchers, releases and other instruments which may be reasonably necessary
or desirable in aid of such payment. Any insurance proceeds paid to
Beneficiary shall be held as trust funds, and Beneficiary shall dispose of
such proceeds as provided in Section 4.11. In the event that any insurance
proceeds are paid by check to Grantor or to Grantor and Beneficiary as
joint payees, Grantor agrees that it shall endorse such check over to
Beneficiary.
G. Nothing contained in this Section 4.10 or elsewhere in this Deed
of Trust shall relieve Grantor of its duty to maintain, repair, replace or
restore the Property from time to time in accordance with the applicable
provisions of this Deed of Trust and the Indenture, and nothing in this
Section 4.10 or elsewhere in this Deed of Trust shall relieve Grantor of
its duty to pay the Secured Obligations, which shall be absolute regardless
of the occurrence of damage to or destruction of or condemnation of all or
any portion of the Property.
Section 4.11 Damage to and Destruction of the Property. In the event
that, at any time during the term of the Notes, the Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty covered by insurance,
and if such damage, destruction or casualty shall constitute an Event of Loss
(as defined in the Indenture), then the insurance proceeds payable in connection
therewith shall be payable to the Beneficiary in accordance with the provisions
of Section 4.10 and shall be deposited in the Collateral Account (as defined in
the Indenture) and shall be released, applied and/or distributed in accordance
with Sections 1014 and 1110 of the Indenture. Upon the occurrence of an Event of
Default which has not been waived in writing by the Holders in accordance with
Section 513 of the
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Indenture, the Beneficiary shall have the right to apply such insurance proceeds
in accordance with Section 506 of the Indenture.
Section 4.12 Condemnation. The Grantor shall promptly notify the
Beneficiary of any action or proceeding relating to any condemnation or other
taking, whether direct or indirect, of all or part of the Property, and the
Grantor shall appear in and prosecute any such action or proceeding unless
otherwise directed by the Beneficiary in writing. In the event that the
Property, or any part thereof, shall be taken in condemnation proceedings, or by
exercise of right of eminent domain, or by conveyance in lieu of condemnation,
or as a result of the exercise by any Governmental Authority of any right or
option to purchase (hereinafter collectively called "Proceedings"), Beneficiary
shall have the right to participate in any such Proceedings at Grantor's
expense, including reasonable attorneys' fees and disbursements, and any eminent
domain awards that may be made or any proceeds thereof or any payments for
damages or for conveyances in lieu of condemnation shall be deposited with
Beneficiary and held in trust by Beneficiary and distributed in the manner set
forth in Section 4.13. Grantor shall, upon request of the Beneficiary, make,
execute, acknowledge and deliver any and all additional assignments, documents
and instruments as may be reasonably necessary from time to time to enable the
Beneficiary to collect and receipt for any such sums. The Grantor hereby
irrevocably designates and appoints the Beneficiary, from and after the
occurrence of an Event of Default, as attorney-in-fact for the Grantor to
commence, appear in and prosecute, in the Beneficiary's or the Grantor's name,
any Proceeding and to settle or compromise any claim.
Section 4.13 Application of Condemnation Awards. If, at any time during
the term of the Notes, there occurs a Proceeding that constitutes an Event of
Loss, any eminent domain awards payable in connection therewith or any payments
for damages or for conveyances in lieu of condemnation shall be deposited in the
Collateral Account and shall be released, applied and/or distributed in
accordance with Sections 1014 and 1110 of the Indenture. Upon the occurrence of
an Event of Default which has not been waived in writing by the Holders in
accordance with Section 513 of the Indenture, Beneficiary shall have the right
to apply such eminent domain awards or any payments for damages or for
conveyances in lieu of condemnation in accordance with Section 506 of the
Indenture.
Section 4.14 Preservation and Maintenance of Property. The Grantor (a)
shall not commit waste, (b) shall not abandon the Property, (c) in the event of
any damage, injury or loss to the Property, shall restore or repair promptly and
in a good and workmanlike manner all or any part of the Property to the
substantial equivalent of its condition prior to such damage, injury or loss or
such other condition as the Beneficiary may approve in writing, whether or not
insurance proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property in good condition, repair and
working order, ordinary wear and tear excepted, shall not remove or demolish the
Property without the Beneficiary's prior written consent and shall replace
fixtures, equipment, machinery and appliances on the Property when necessary to
keep such items in as good condition as existed on the date of this Deed of
Trust and to insure the operation of Grantor's business at all normal times, (e)
shall comply with all applicable Laws, ordinances, regulations and requirements
of any Governmental Authority with jurisdiction over the Property, (f) shall not
make any structural alterations to the Property without the
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Beneficiary's prior written consent and (g) shall give notice in writing to the
Beneficiary of and, unless otherwise directed in writing by the Beneficiary,
appear in and defend, any action or proceeding affecting the Property, the
security or priority of this Deed of Trust or the rights or powers of the
Beneficiary. Notwithstanding anything above to the contrary, (i) the Grantor
may remove or demolish any Improvement now existing or to be erected on the
Property and may remove or sell any Fixture, equipment, machinery or appliance
in or on the Property when such is in the ordinary course of business or is
incident to the replacement of FF&E with items of like kind, which replacements
may be leased or purchased by the Grantor with the proceeds of FF&E Financing to
the extent permitted by the Indenture and (ii) Grantor may discontinue
maintenance of the Property in accordance with Section 1006 of the Indenture.
Section 4.15 Environmental Hazards.
A. The Grantor shall not (i) cause or permit the presence, use,
generation, manufacture, production, processing, installation, release,
escape, spillage, seepage, leakage, dumping, pouring, emptying, emission,
discharge, storage (including above-and under-ground storage tanks for
petroleum or petroleum products, but excluding small containers of gasoline
used for maintenance equipment or similar purposes and in compliance with
applicable Environmental Laws), treatment, management, transportation,
handling, disposal or the like of any Hazardous Materials on, under, in or
about the Property, or in any way affecting the Property, and which are in
violation of applicable Environmental Laws and would form the basis for any
present or future claim, demand or action seeking cleanup of the Property,
or the transportation of any Hazardous Materials to or from the Property in
violation of applicable Environmental Laws or (ii) cause or exacerbate any
occurrence or condition on the Property that is or may be in violation of
any Hazardous Materials Laws. No Hazardous Materials shall be placed on,
in, under or about the Property except in strict compliance with applicable
Environmental Laws. The Grantor shall not cause or permit the migration of
Hazardous Materials from the Property to any other property or onto the
Property from any property or area adjacent to the Property in violation of
applicable Environmental Laws. The Grantor shall at all times comply with
all applicable Environmental Laws and all notices of violations of
Environmental Laws prior to the issuance of any regulatory or judicial
order or assessment of any fines. The Grantor shall take all reasonable
and appropriate steps to secure compliance by all lessees and sublessees of
the Property with its obligations in this Section.
B. The Grantor shall advise the Beneficiary promptly, in writing, of
any notice or other communication, written or oral, from the United States
Environmental Protection Agency, the Louisiana Department of Environmental
Quality or any other federal, state or local Governmental Authority having
jurisdiction over the Property with respect to any alleged violation of any
Environmental Laws or the generation, presence, management, release,
escape, spillage, seepage, leakage, dumping, pouring, emptying, treatment,
discharge, emission, handling, storage, transportation, disposal or the
like of Hazardous Materials or storage tanks.
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C. The Beneficiary, [at its sole option and expense,] may, from time
to time, obtain an environmental audit prepared by an independent engineer
or other qualified environmental consultant in order to verify the absence
of Hazardous Materials on, in, under or about the Property and, if deemed
necessary by the Beneficiary, an environmental risk assessment of the
Property, of the Grantor's hazardous waste management practices and/or of
any hazardous waste disposal sites used by the Grantor. All tests and
samplings shall be conducted using generally accepted and scientifically
valid technology and methodologies. The Grantor shall give the engineer or
environmental consultant reasonable access to the Property and to all
records in the possession of the Grantor that may indicate the presence
(whether current or past) or release of Hazardous Materials on, in, under
or about the Property. The Grantor shall also provide the engineer or
environmental consultant an opportunity to interview such Persons employed
in connection with the Property as the engineer or consultant deems
appropriate. [Following the occurrence and during the continuance of an
Event of Default, any such environmental audit shall be at the Grantor's
expense.]
D. The Grantor shall promptly notify the Beneficiary in writing of:
(i) any enforcement, cleanup, removal or other governmental or regulatory
action, investigation or any other proceeding instituted, (ii) any suit,
cause of action or any other claim made or threatened by any third party
against the Grantor or the Property relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous
Materials and (iii) the Grantor's discovery of any occurrence or condition
on any real property adjoining or in the vicinity of the Property that
could cause all or any portion of the Property to be subject to any
restrictions on the ownership, occupancy, transferability or use of the
Property under Environmental Laws. The provisions of the preceding sentence
shall be in addition to any and all other obligations and liabilities that
the Grantor may have to the Beneficiary under applicable law.
E. Grantor shall promptly take any and all necessary remedial action
in response to the presence, storage, use, disposal, transportation or
discharge of any Hazardous Materials on, under, above or about the
Property; provided, however, that Grantor shall not take any such remedial
action or enter into any settlement agreement, consent decree or other
compromise in respect to any claims, proceedings, lawsuits or actions
completed or threatened as a result of any actual or alleged Hazardous
Materials on, under, above or about the Property, or enter into any
settlement agreement, consent decree or other compromise in respect to any
claims, proceedings, lawsuits or actions completed or threatened pursuant
to any Environmental Laws, without, in each case, obtaining Beneficiary's
prior written consent; provided further, however, that Grantor's prior
consent shall not be necessary in the event that the presence of Hazardous
Materials on, under, above or about the Property either: (i) poses an
immediate threat to the health, safety or welfare of any individual or (ii)
is of such a nature that an immediate remedial response is necessary and it
is not possible to obtain Beneficiary's consent prior to undertaking such
action. In the event Grantor undertakes any remedial action with respect to
any Hazardous Materials on, under, above or about the Property as set
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forth in clauses (i) and (ii) above, Grantor shall immediately notify
Beneficiary of any such remedial action, and shall conduct and complete
such remedial action in compliance with all applicable Environmental Laws
and in accordance with the orders and directives of all federal, state and
local Governmental Authorities having jurisdiction.
F. The Grantor shall indemnify, defend and hold harmless the
Beneficiary from and against any and all claims, demands, costs, losses,
liabilities, expenses (including reasonable attorneys' fees, whether suit
is instituted or not), judgments, fines or amounts paid in settlement
(collectively, "Losses") incurred by the Beneficiary in connection with or
as a result of the presence, storage, use, disposal, transportation,
discharge or release or threatened release on, under, above or about the
Property of any Hazardous Materials or any violations of any Environmental
Laws arising out of acts or omissions of the Grantor, its agents, employees
or contractors or a third party. To the extent of such indemnity, Losses
indemnified against specifically shall include costs incurred in connection
with (i) any investigation or monitoring of site conditions; (ii) any clean
up, containment, remediation, removal or restoration work required or
performed by any federal, state or local governmental entity or performed
by Grantor or any other Person because of the presence, storage, use,
disposal, transportation, discharge or release or threatened release of any
Hazardous Materials on, in, under or about the Property and (iii) any
claims by third parties for losses due to the presence, storage, use,
disposal, transportation, discharge or release or threatened release of
such Hazardous Materials or the cleanup, containment, remediation or
removal thereof.
G. The Grantor shall not install or permit the installation of
friable asbestos or any substance containing asbestos in or on the
Property. With respect to any such material or materials currently present
in or on the Property, the Grantor shall promptly comply with all Laws with
respect to the safe removal thereof, at the Grantor's sole expense.
H. The indemnity provisions contained in this Section 4.15 shall
survive the repayment of the Secured Obligations and the cancellation of
this Deed of Trust.
Section 4.16 Use of Property. The Grantor shall maintain, preserve and
renew all rights of way, servitudes, grants, privileges, licenses, permits,
zoning approvals and franchises necessary for the use of the Property and shall
not, unless required by applicable law or unless the Beneficiary has otherwise
agreed in writing, allow changes in the use for which the Property was intended
at the time this Deed of Trust was executed. The Grantor shall not initiate or
acquiesce in a change in the zoning classification of the Property without the
Beneficiary's prior written consent.
Section 4.17 Inspection. The Beneficiary is authorized and empowered to
enter, and to authorize its employees, agents or contractors identified in
writing to the Grantor to enter, upon any or all of the Property at any
reasonable time and from time to time upon prior notice to the Grantor to
inspect the same, to perform or observe any covenants, conditions or terms that
the Grantor shall fail to perform, meet or comply with, to make
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such repairs, replacements, renewals or additions as shall be necessary or for
any other purpose in connection with the maintenance, protection or preservation
of the Beneficiary's security, without thereby becoming liable to the Grantor or
any Person in possession holding under the Grantor. Any inspections performed
by or for the Beneficiary shall be performed at times and in a manner so as not
to unreasonably interfere with the Grantor's business or the operation of the
Property. The Grantor will keep accurate books and records in which full, true
and correct entries shall be promptly made with respect to the Property and the
operation thereof.
Section 4.18 Negative Covenants. The Grantor hereby agrees that, so long
as any of the Secured Obligations remains outstanding or unpaid, the Grantor
shall not, directly or indirectly, without the prior written consent of the
Beneficiary or except as may be provided in the Indenture:
A. Create, incur, assume or suffer to exist any Indebtedness relating
to the Property, except the Secured Obligations under this Deed of Trust;
B. Create, incur or place, or permit to be created, incurred or
placed, any Liens on the Property, or part thereof, or any revenues related
thereto, except for the Permitted Encumbrances and Liens in favor of the
Beneficiary;
C. Convey, sell, lease, assign, transfer or otherwise dispose of the
Property, or permit any conveyance, sale, lease, assignment, transfer or
other disposition of the Property, except obsolete or worn out FF&E
disposed of in the ordinary course of business;
D. Terminate, modify, amend or surrender either or both of the
Primary Leases or waive, condone, release or discharge any lessor
thereunder from the obligations, covenants, conditions and agreements to be
performed by such lessor thereunder;
E. Terminate, modify or amend any of the Leases or any of the terms
thereof, or grant any concessions in connection therewith, either orally or
in writing, except for such terminations, modifications, amendments or
concessions as are entered into in the ordinary course of business, are
commercially reasonable and could not be materially adverse to the interest
of Beneficiary, and any attempted termination, modification or amendment of
any of the Leases in violation of this Subsection (E) shall be null and
void;
F. Collect any of the Rentals arising or accruing under any of the
Leases in advance of the time when the same shall become due under the
terms thereof without first advising the Beneficiary of such action;
G. Discount any future accruing Rentals without Beneficiary's prior
written consent, except for commercially reasonable discounts made in the
ordinary course of business that could not be materially adverse to the
interest of Beneficiary;
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H. Execute any other assignments of any of the Leases or any interest
therein or any of the Rentals thereunder;
I. Accept the surrender of any the Leases, or suffer or permit to
occur any release of liability of any lessee in a manner which is adverse
in any material respect to the interests of Beneficiary, or suffer or
permit to occur any right on the part of a lessee to withhold payment of
rent in a manner which is adverse in any material respect to the interest
of Beneficiary;
J. Alter, modify or change the terms of any guarantees of any of the
Leases or suffer or permit to occur the cancellation or termination of any
such guarantees without the prior written consent of Beneficiary, except
for alterations, modifications, changes, cancellations or terminations of
guarantees as are entered into in the ordinary course of business and are
commercially reasonable and cannot be materially adverse to the interest of
Beneficiary; or
K. Request, consent to, agree to or accept a subordination of any of
the Leases to the Lien of any mortgage or other encumbrance now or
hereafter affecting the Property except the Lien of this Deed of Trust.
Section 4.19 Cure of Defects. If the validity or priority of this Deed of
Trust or of any rights or Liens created or evidenced hereby with respect to the
Property or any part thereof or the title of the Grantor to the Property or any
part thereof shall be endangered or questioned or shall be attacked directly or
indirectly or if any legal proceedings are instituted against the Grantor with
respect thereto, upon discovery of such actual or alleged defect, the Grantor
shall give written notice thereof to the Beneficiary promptly and, at the
Grantor's own cost and expense, diligently endeavor to cure any defect that may
be developed or claimed and take all necessary and proper steps for the defense
of such legal proceedings, including, but not limited to, the employment of
counsel agreeable to the Beneficiary, the prosecution or defense of litigation
and the release or discharge of all adverse claims. The Beneficiary (whether or
not named as a party to legal proceedings with respect thereto) is hereby
authorized and empowered to take such additional steps as in its judgment and
discretion may be necessary or proper for the defense of any such legal
proceedings or the protection of the validity or priority of this Deed of Trust
and the Liens created or evidenced hereby, including, but not limited to, the
employment of independent counsel, the prosecution or defense of litigation, the
compromise or discharge of any adverse claims made with respect to the Property,
the purchase of any tax title and the removal of prior Liens or security
interests, and all expenses so incurred of every kind and character shall be a
demand obligation owing by the Grantor to the Beneficiary and shall bear
interest from the date of expenditure until paid at a rate equal to the rate
provided for in Section 5.6 for Advances to bear, and the same shall be secured
by the Lien evidenced by this Deed of Trust, and the party incurring such
expenses shall be subrogated to all rights of the Person receiving such payment.
Section 4.20 Estoppel Certificate. The Grantor shall, within ten (10)
business days of a written request therefor by the Beneficiary, furnish the
Beneficiary with a written statement, duly acknowledged, setting forth the sums
secured by this Deed of Trust and any
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right of set-off, counterclaim or other defense which exists against such sums
and the obligations of this Deed of Trust.
Section 4.21 Further Assurances. On request of the Beneficiary, the
Grantor shall promptly (a) correct any defect, error or omission which may be
discovered in the contents of this Deed of Trust or the Subsidiary Guarantee or
any other Note Documents to which Grantor is a party or in the execution or
acknowledgment of this Deed of Trust or the Subsidiary Guarantee or any other
Note Documents to which Grantor is a party and (b) execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, deeds, conveyances, security agreements, deeds of trust,
mortgages, assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments as reasonably may be required
from time to time in order (i) to carry out more effectively the purposes of
this Deed of Trust, the Subsidiary Guarantee and any other Note Documents to
which Grantor is a party, (ii) to more fully identify and subject to this Deed
of Trust any of the properties, rights or interests required to be encumbered
hereby, including, specifically, any additions, substitutions, replacements or
appurtenances to the Property, (iii) to perfect and maintain the validity,
effectiveness and priority of this Deed of Trust and the Liens intended to be
created hereby and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Beneficiary any of the rights granted or
now or hereafter intended by the parties hereto to be granted to the Beneficiary
hereunder or under any other instrument or agreement executed in connection
herewith. The Grantor shall pay all costs connected with any of the foregoing.
Section 4.22 Further Assurances With Respect to Leases. Upon notice and
demand, Grantor shall, from time to time, execute, acknowledge and deliver or
cause to be executed, acknowledged and delivered to Beneficiary, in form
satisfactory to Beneficiary, one or more separate assignments confirmatory of
the general assignment of the Leases and rights relating thereto provided for in
this Deed of Trust and/or one or more agreements restricting Grantor's right or
power as against Beneficiary as provided herein and/or granting Beneficiary the
right to enforce any provision of any Lease. Grantor shall pay to Beneficiary
the expenses incurred by Grantor in connection with the preparation and
recording of any such assignment or agreement, including, without limitation,
its reasonable attorneys' fees. Upon notice and demand, Grantor shall, from
time to time, provide Beneficiary with a duly executed estoppel certificate from
each lessor under the Primary Leases and from each lessee and sublessee under
the Leases in a form reasonably required by Beneficiary.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.1 Event of Default; Remedies. The Grantor specifically agrees
that if any one or more Events of Default shall occur under the Indenture, the
Beneficiary shall have the right, forthwith, at the Beneficiary's election, by
and through the Trustee or otherwise, to exercise any and all rights and
remedies granted to the Beneficiary under this Deed of Trust, the Indenture, the
Notes or any of the other Note Documents or otherwise
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available to the Beneficiary at law or in equity, all of which rights and
remedies shall be cumulative and not exclusive, and which shall include, without
limitation, the following:
(a) The Beneficiary shall have the right forthwith, at the
Beneficiary's election and in accordance with the provisions of
Article V of the Indenture, by and through the Trustee or otherwise,
to declare the entire indebtedness of the Grantor under the Notes and
the Secured Obligations immediately due and payable; and, in any such
case, the prepayment premium, if any, which would have been applicable
to a voluntary prepayment of the Secured Obligations at the time of
such declaration by the Beneficiary shall be treated as part of the
Secured Obligations and added to and become a part of the principal
thereof;
(b) The Beneficiary shall have the right, forthwith, at the
Beneficiary's election, by and through the Trustee or otherwise, and
without further notice or demand and without the commencement of any
action to foreclose this Deed of Trust, to enter immediately upon and
take possession of the Property without further consent or assignment
by the Grantor, with the right to lease the Property, or any part
thereof, and to collect and receive all of the rents, issues and
profits, and all other amounts past due, due or to become due to the
Grantor by reason of the Grantor's ownership of the Property, and to
apply the same, after the payment of all necessary charges and
expenses in connection with the operation of the Property (including
any managing agent's commission, at the option of the Beneficiary), on
account of interest and principal amortization under the Notes, taxes,
payments in lieu of taxes, water and sewer charges, assessments and
insurance premiums with respect to the Property, and any advance made
by the Beneficiary for improvements, alterations or repairs to the
Property or on account of any other Secured Obligations. The Grantor
hereby irrevocably appoints the Beneficiary as the Grantor's attorney-
in-fact to institute summary proceedings against any tenant, licensee,
concessionaire or other occupant of any portion of the Property who
shall fail to comply with the provisions of any covenant, agreement or
condition applicable to the possession or occupancy of the Property by
such tenant, licensee, concessionaire or other occupant. If the
Grantor or any other Person claiming by, through or under the Grantor
is occupying all or any part of the Property, it is hereby agreed that
the Grantor and each such other Person shall, at the option of the
Beneficiary, either immediately surrender possession of the Property
to the Beneficiary and vacate the part of the Property so occupied or
pay a reasonable rental for the use thereof, monthly in advance, to
the Beneficiary; and
(c) The Beneficiary shall have the right forthwith, at the
Beneficiary's election, by and through the Trustee or otherwise, to
sell or offer for sale the Property in such portions, order and
parcels as the Beneficiary may determine, with or without having first
taken possession of same, at public auction for cash or cash
equivalent, including, without limitation, for certified checks, bank
drafts, wire transfer funds, cashier checks and any other
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method of payment which, in the sole discretion of the Beneficiary, is
"cash equivalent", to the highest and best bidder during legal hours,
at any front door of the county courthouse of the county in which the
Land is situated after having advertised and given notice of said
sale, giving the time, place and terms thereof, together with a
description of the Land according to the laws of the State of
Mississippi governing sales of land under deeds of trust in force at
the time the publication of said notice has begun. If the Land is
situated in two or more counties or in two judicial districts of the
same county, then the Trustee shall have power, in case the Trustee is
directed to foreclose under this Deed of Trust, to select in which
county, or judicial district, the sale of all the Property shall be
made, and the selection shall be binding upon the Grantor and the
Beneficiary and all persons claiming through or under them, whether by
contract or by law. The Trustee shall have full power to fix the day,
time and place of sale, and may sell the Property in parcels or as a
whole as the Trustee may deem best. The Trustee shall have full power
to conduct any sale through an agent appointed by the Trustee for the
purpose, but said appointment of agent need not be recorded. At any
such sale: (i) the Trustee shall not be required to have physically
present, or to have constructive possession of, the Property (the
Grantor hereby covenanting and agreeing to deliver to the Trustee any
portion of the Property not actually or constructively possessed by
the Trustee immediately upon demand by the Trustee) and the title to
and right of possession of any such Property shall pass to the
purchaser thereof as completely as if the same had been actually
present and delivered to purchaser at such sale; (ii) the Trustee may,
from time to time, adjourn said sale to a later date without
readvertising, by giving notice of the time and place of such
continued sale at the time when and where the Trustee shall make such
adjournment; (iii) each and every recital contained in any instrument
of conveyance made by the Trustee shall conclusively establish the
truth and accuracy of the matters recited therein, including, without
limitation, nonpayment of the Secured Obligations, advertisement and
conduct of such sale in the manner provided herein and otherwise by
law and by appointment of any successor Trustee hereunder; (iv) any
and all prerequisites to the validity of such sale shall be
conclusively presumed to have been performed; (v) the receipt of the
Trustee or of such other party making the sale shall be a sufficient
discharge to the purchaser for its or his purchase money and no such
purchaser, or its or his assigns, successors or personal
representatives, shall thereafter be obligated to see to the
application of such purchase money or be in any way answerable for any
loss, misapplication or nonapplication thereof; (vi) the Grantor shall
be completely and irrevocably divested of all of the Grantor's right,
title, interest, claim and demand whatsoever, either at law or in
equity, in and to the property sold and such sale shall be a perpetual
bar both at law and in equity against the Grantor, and against any and
all other persons claiming or to claim the Property sold or any part
thereof; (vii) the Beneficiary may be a purchaser at any such sale;
and (viii) and the Trustee, in the Beneficiary's own name or as the
attorney of the Grantor (the Trustee being for that purpose by this
Deed of Trust duly and irrevocably authorized and appointed as the
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Grantor's agent and attorney in fact, coupled with an interest and
with full power of substitution, delegation and revocation) to make,
execute, acknowledge and deliver to the purchaser or purchasers
thereof a good and sufficient deed or deeds of the Property in fee
simple or leasehold as applicable, and to receive the proceeds of such
sale or sales.
(d) The Beneficiary shall have the right, forthwith, at the
Beneficiary's election, to institute an action, suit or proceeding in
equity for the specific performance of any covenant, condition or
agreement contained in this Deed of Trust or the Subsidiary Guarantee
or any other Note Document to which Grantor is a party; or
(e) The Beneficiary shall have the right, forthwith, at the
Beneficiary's election, to apply for the appointment of a trustee,
receiver, liquidator or conservator of the Property, without regard
for the adequacy of the security for the Secured Obligations and
without regard for the solvency of the Grantor or of any Person liable
for the payment of the Secured Obligations; or
(f) The Beneficiary shall have the right, forthwith, at the
Beneficiary's election, to withdraw all cash in the Collateral Account
and apply such cash and other cash, if any, then held by it in
accordance with Section 506 of the Indenture; or
The Grantor waives the provisions of Section 89-1-55 of the Mississippi
Code of 1972, or laws amendatory thereof, if any, so far as the same restricts
the right of the Trustee to offer at sale more than one hundred sixty (160)
acres at a time, and the Trustee may offer the Land as a whole, regardless of
the manner in which the Land may be described.
Should the Property be sold in one or more parcels as permitted herein, the
right of sale arising out of any Event of Default shall not be exhausted by any
one or more such sales, but other and successive sales may be made until all of
the Property has been sold or until the indebtedness secured by this Deed of
Trust has fully satisfied.
The Grantor hereby irrevocably and unconditionally waives and releases:
(i) all benefits that might accrue to the Grantor by virtue of any present or
future law exempting the Property from attachment, levy or sale or execution or
providing for any appraisement, valuation, stay of execution, exemption from
civil process, redemption or extension of time for payment; (ii) all notices of
any Event of Default or of the Trustee's exercise of any right, remedy or
recourse provided for hereunder or under any of the other Loan Documents; and
(iii) any right to a marshalling of assets or a sale in inverse order of
alienation.
In case the Beneficiary or the Trustee, on behalf of the Beneficiary, shall
have proceeded to invoke any right, remedy or recourse permitted hereunder or
under any of the other Note Documents and shall thereafter elect to discontinue
or abandon same for any reason, the Beneficiary or the Trustee, on behalf of the
Beneficiary, as applicable, shall have the unqualified right so to do and, in
such event, the Grantor, the Beneficiary and the
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Trustee shall be restored to their former positions with respect to the
indebtedness secured hereby, this Deed of Trust, the Note Documents, the
Property and otherwise, and the rights, remedies, recourses and powers of the
Beneficiary and the Trustee, on behalf of the Beneficiary, shall continue as if
same had never been invoked.
Section 5.2 Limitation on Sale Proceeds. Although this Deed of Trust
shall ratably secure all of the Secured Obligations, the aggregate proceeds
realized by the Trustee and Beneficiary hereunder, either as a result of the
direct exercise of the rights afforded to the Trustee and Beneficiary hereunder
or as a result of a sale of any of the Property by the Trustee or Beneficiary
following the exercise of such rights hereunder, shall not exceed the lesser of
(a) the net amount realized by Trustee or Beneficiary as the result of the
exercise of such rights, or (b) $120,000.000. If the Property is sold in more
than one sale, the aggregate amount of proceeds shall be calculated as of the
date of the final sale.
5.3 Personal Property Remedies. Upon the occurrence of an Event of
Default under this Deed of Trust, the Beneficiary, pursuant to the Code, shall
have the right, at the Beneficiary's option, by and through the Trustee or
otherwise:
(a) To proceed as to both the real and personal property covered by
this Deed of Trust in accordance with the Beneficiary's rights and remedies
in respect of said real property, in which event (i) the provisions of the
Code otherwise applicable to sale of the personal property collateral
hereunder shall not apply, and (ii) the sale of the personal property
collateral hereunder in conjunction with and as one parcel with said real
estate (or any portion thereof) shall be deemed to be a commercially
reasonable manner of sale; or
(b) To proceed as to the personal property collateral hereunder
separately from the Land and Improvements, in which event the requirement
of reasonable notice shall be met by mailing notice of the sale, postage
prepaid, to the Grantor or any other person entitled thereto at least ten
(10) days before the time of the sale or other disposition of any of the
personal property collateral hereunder.
Section 5.4 Actions With Respect to Leases.
A. In addition to all of Beneficiary's rights and remedies set forth
above, if an Event of Default shall occur, the Grantor does hereby
authorize the Beneficiary, either in person or by an agent, or by a keeper
appointed by the court, to enter upon and take possession of the Property
and exercise all rights available to Beneficiary under applicable Laws and
to perform all acts necessary for the operation and maintenance of said
Property in the same manner and to the same extent that the Grantor might
reasonably so act, such entry or taking possession to be made by actual
entry of possession or by written notice served personally upon or sent by
certified mail to the Grantor, and no further authorization shall be
required. In furtherance thereof and not by way of limitation, the
Beneficiary is specifically empowered to demand, sue for, collect and/or
receive all the Rentals which shall be paid by the lessees under the Leases
and to exercise all the rights and privileges of the Grantor under the
Leases, including, but not limited to, the right to make,
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enforce, modify, terminate and accept the surrender of any of the Leases,
fix or modify the Rentals, execute new Leases of all or any part of the
Property, including Leases which extend beyond the maturity date of the
Notes, and do any actions which the Beneficiary otherwise deems proper to
protect its interest in the Leases and Rentals. The Grantor irrevocably
instructs and directs all lessees under the Leases, upon demand and notice
from the Beneficiary of the Grantor's Event of Default hereunder, to pay
the Rentals under the Leases directly to the Beneficiary without liability
of said lessees for the determination of the actual existence of any Event
of Default by the Grantor claimed by the Beneficiary, said lessees being
hereby expressly relieved of any and all duty, liability and obligation to
the Grantor in connection with any and all Rentals so paid. The
Beneficiary shall apply the net amount of the Rentals collected, after
payment of all proper costs and charges, in accordance with Section 506 of
the Indenture.
B. Prior to the maturity of the Secured Obligations by acceleration
or lapse of time, the collection, receipt and application by Beneficiary of
any of the Rentals pursuant to the assignment of Leases and Rentals
provisions of this Deed of Trust shall not constitute a waiver of (i) any
continuing Default or Event of Default under any of the Secured
Obligations, the Indenture or Notes or (ii) any of the rights and remedies
of Beneficiary hereunder by reason of any such Default or Event of Default.
After the maturity of the Secured Obligations by acceleration or lapse of
time, the collection, receipt and application by Beneficiary of any of the
Rentals pursuant to the assignment of Leases and Rentals provisions of this
Deed of Trust shall not constitute a waiver of any other rights and
remedies of Beneficiary hereunder to enforce collection of the amount due
on the Secured Obligations, provided that appropriate credit shall be given
for (a) any of the Rentals collected by Beneficiary before the seizure of
the Property to enforce this Deed of Trust and the appointment of a
receiver/keeper pursuant to the terms of this Deed of Trust and (b) any of
the Rentals collected by the receiver or keeper of the Property following
such seizure and appointment.
Section 5.5 Rights and Remedies Cumulative. All rights and remedies
herein given to the Beneficiary shall be cumulative and in addition to every
other right and remedy herein specifically given and now or hereafter existing;
and each and every right and remedy, whether specifically given or otherwise
existing, may be exercised from time to time and so often and in such order as
may be deemed expedient by the Beneficiary, and the exercise or the beginning of
the exercise of any such right or remedy shall not be deemed a waiver of the
right to exercise, at the same time or thereafter, any other right or remedy.
No delay or omission by the Beneficiary in the exercise of any right or remedy
shall impair any such right or remedy or operate as a waiver of any other right
or remedy then or thereafter existing.
Section 5.6 Performance by the Beneficiary; Advances. If the Grantor
should fail, refuse or be unable to pay any sum of money herein covenanted to be
paid by the Grantor, or fail, refuse or be unable to keep or perform any
additional covenant or covenants whatsoever contained in this instrument, the
Beneficiary may, but shall not be obligated to, pay such Advances or perform or
attempt to perform any such covenant, provided, however,
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that nothing herein contained shall be construed as making the Beneficiary
liable for any loss, damage or injury resulting from the nonpayment or non-
performance thereof. The Beneficiary agrees to give the Grantor prior notice
and the opportunity to cure before making such Advances only to the extent the
Beneficiary, in its reasonable discretion, feels that the Beneficiary or the
Property will not risk incurring damage as a result of giving such notice. The
Grantor covenants and agrees that, within ten (10) days after demand therefore
by the Beneficiary, the Grantor will repay the Advances to the Beneficiary, but
until the repayment thereof, such Advances shall bear interest at the rate of
[fifteen (15%)] percent per annum from the dates thereof until repaid. This
Deed of Trust shall be deemed to secure the obligations of the Grantor to repay
the Advances together with interest thereon and reasonable attorneys' fees and
expenses and other charges and expenses of any and every kind for the full
protection and preservation of the Property or this Deed of Trust, including
payments required in respect of any Lien, privilege or mortgage affecting the
Property and relating thereto.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Release of Deed of Trust. If the Secured Obligations are paid
and performed in full in accordance with the terms of this Deed of Trust, the
Indenture, the Subsidiary Guarantees and the Collateral Documents, and if the
Grantor shall well and truly perform all of the Grantor's covenants contained
herein, then this Deed of Trust shall be released at the Grantor's request and
expense, provided that no release hereof shall impair the Grantor's warranties
and indemnities contained herein. Otherwise, this Deed of Trust shall remain in
full force and effect.
Section 6.2 Survival of Assignment. Notwithstanding anything to the
contrary contained in this Deed of Trust, the assignment, pledge and mortgaging
of the Leases and Rentals and any Proceeds derived from the Property, and the
right to apply any of the foregoing in accordance with the terms of this Deed of
Trust, shall survive any foreclosure of the Lien of this Deed of Trust.
Section 6.3 Waivers. Any and all covenants in this Deed of Trust may from
time to time, by instrument in writing signed by the Beneficiary and delivered
to the Grantor, be waived to such extent and in such manner as the Beneficiary
may desire, but no such waiver shall ever affect or impair the Beneficiary's
rights or Liens hereunder, except to the extent specifically stated in such
written instrument.
Section 6.4 No Waiver. No forbearance on the part of the Beneficiary and
no extension of the time for the payment of the Secured Obligations given by the
Beneficiary shall operate to release, discharge, modify, change or affect, in
whole or in part, the liability of the Grantor hereunder or for the payment of
the Secured Obligations or performance of the obligations secured hereby or the
liability of any other Person hereunder or for the payment of the Secured
Obligations.
Section 6.5 Severability. A determination that any provision of this Deed
of Trust is unenforceable or invalid in any jurisdiction shall not affect the
enforceability or validity
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of such provision in any other jurisdiction or the enforceability or validity of
any other provision hereof in any jurisdiction, and the determination that the
application of any provision of this Deed of Trust to any Person or circumstance
is illegal or unenforceable in any jurisdiction should not affect the
enforceability or validity of such provision in any other jurisdiction or the
enforceability or validity of such provision as it may apply to other Persons or
circumstances.
Section 6.6 Notices. Whenever this Deed of Trust requires or permits any
consent, approval, notice, request or demand from one party to another, the
consent, approval, notice, request or demand must be in writing and shall be
deemed sufficiently given or furnished if delivered by personal delivery, by
telegraph, telecopy or telex, by expedited delivery service with proof of
delivery, or by registered or certified United States mail, postage prepaid, at
the following addresses, or to such address as may be hereafter notified in
writing by the respective parties hereto:
If to the
Grantor: Riverboat Corporation of Mississippi
700 Loop Boulevard
Biloxi, Mississippi 39530
Attention: Julie Watt
Telecopy No.: (601) 435-5998
If to the
Beneficiary: Fleet National Bank, as Trustee
821 Gravier Street, 16th Floor
New Orleans, Louisiana 70112
Attention: Corporate Trust Department
Telecopy No.: (504) 561-1432
Section 6.7 Relationship of Parties. No right or benefit conferred on the
Beneficiary under this Deed of Trust shall constitute or be deemed to constitute
the Beneficiary a partner or a joint venturer with the Grantor. The Grantor and
the Beneficiary specifically acknowledge that the relationship between the
Grantor and the Beneficiary is solely that of borrower and a lender's agent and
that all payments required to be made by the Grantor to the Beneficiary
hereunder or under the Subsidiary Guarantee or any other Note Documents to which
the Grantor is a party are required solely by reason of that relationship. The
Grantor acknowledges that the rights and responsibilities of the Beneficiary
under this Deed of Trust shall, as between the Beneficiary and the Holders, be
governed by the Indenture and by such other agreements with respect thereto as
may exist from time to time among them, but as between the Beneficiary and the
Grantor, the Beneficiary shall be conclusively presumed to be acting as agent
for the Holders with full and valid authority so to act or refrain from acting,
and the Beneficiary shall be under no obligation to make any inquiry respecting
such authority.
Section 6.8 Deed of Trust Absolute. The obligations of the Grantor under
this Deed of Trust are independent of the obligations of the Grantor or the
Company under the
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other Note Documents, and a separate action or actions may be brought and
prosecuted against the Grantor to enforce this Deed of Trust, irrespective of
whether any action is brought against the Company or whether the Company has
joined in any such action or actions. All rights of the Beneficiary and the
mortgage, assignment and security interest hereunder, and all obligations of
the Grantor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any Note Document or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Grantor or the
Company under any of the Note Documents, or any other amendment or waiver
of or any consent to any departure from the Note Documents, including,
without limitation, any increase in such obligations resulting from the
extension of additional credit to the Company or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the obligations of the
Grantor or the Company under the Note Documents;
(d) any manner of application of Collateral, or proceeds thereof,
to all or any of the obligations of the Grantor or the Company under the
Note Documents, or any manner of sale or other disposition of any
Collateral for all or any of such obligations or any other assets of the
Company;
(e) any change, restructuring or termination of the corporate
structure or existence of the Company; or
(f) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Company or a third party
grantor of a security interest, mortgage or other Lien.
Section 6.9 Beneficiary's Duties. The rights, authority to approve,
consent to, disapprove and withhold consent from, exercise judgment or
discretion and such other powers (collectively, the "Powers") conferred on
Beneficiary hereunder are solely to protect its interest in the Property, and
Beneficiary shall be under no obligation to exercise any such Powers. Except
for accounting for monies actually received by it hereunder and the safe custody
of any Property in its possession, Beneficiary shall not have any duty as to any
matters relating to any Property or as to ascertaining or taking any action with
respect to any Property, whether or not the Beneficiary or any Holder has or is
deemed to have knowledge of such matters, or as to taking any necessary steps to
preserve rights against any parties or other rights pertaining to any Property.
Nothing herein shall affect any obligation of Beneficiary to the Holders under
the Indenture or under applicable Laws.
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Section 6.10 Interpretation. It is acknowledged and agreed that, in the
preparation of this Deed of Trust, indistinguishable contributions were made by
representatives of both Grantor and Beneficiary and that Grantor and Beneficiary
each waives any and all rights, both in law or in equity, to have the provisions
of this Deed of Trust or any part thereof interpreted in favor of one over the
other based upon a claim that representatives of one or the other were the
principal draftsman of such document.
Section 6.11 Conflicts between Collateral Documents. In the event that
any of the Property hereunder is also subject to a valid and enforceable Lien
under the terms of any other Collateral Document and the terms of such other
Collateral Document are inconsistent in any respect with the terms of this Deed
of Trust, then with respect to all Property which is also subject to such other
Collateral Document, the terms [which are most restrictive or, in the case of
equally restrictive terms, the terms which are most specific,] shall be
controlling; provided, however, that if any provision of either document is
unenforceable with respect to any item of Property subject thereto, then the
provision of the document which is enforceable with respect to such Property
shall be controlling.
Section 6.12 Multiple Originals. This Deed of Trust may be executed in
multiple originals, all of which such multiple originals together shall
constitute one and the same mortgage.
Section 6.13 Binding Effect. This Deed of Trust is binding upon the
Grantor and the Beneficiary and their respective successors and assigns, and
shall inure to the benefit of the Beneficiary and its successors and assigns.
Section 6.14 WAIVER OF TRIAL BY JURY. Grantor HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER
THIS Deed of Trust OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF Grantor IN RESPECT OF THIS Deed of Trust OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
Grantor HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS Deed of Trust WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF Grantor TO THE WAIVER OF ITS RIGHT TO TRIAL
BY JURY.
Section 6.15 Governing Law. This Deed of Trust and all matters relating
or pertaining hereto shall be governed by and construed in accordance with the
laws of the State of Mississippi. Notwithstanding the foregoing, the Notes, the
Indenture and the provisions thereof shall be governed by and construed in
accordance with the laws of the State of New York.
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Section 6.16 Gaming Restrictions. This Deed of Trust is subject to the
Mississippi Gaming Control Act, (S)75-76-1 et seq., Mississippi Code of 1972,
and the rules and regulations thereunder (collectively, the "Mississippi Gaming
Regulations"), and the exercise of remedies hereunder will be subject to the
Mississippi Gaming Regulations.
ARTICLE VII
THE TRUSTEE
The following provisions shall govern with respect to the Trustee:
7.1 Liability of Trustee. The Trustee shall not be liable for any error
of judgment or act done by the Trustee in good faith, or be otherwise
responsible or accountable to the Grantor under any circumstances whatsoever,
nor shall the Trustee be personally liable in case of entry by the Trustee, or
anyone entering by virtue of the powers herein granted, upon the Property for
debts contracted or liability or damages incurred in the management or operation
of the Property. The Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or proposed to
be taken by the Trustee hereunder, believed by the Trustee in good faith to be
genuine. The Trustee shall be entitled to reimbursement for expenses incurred
by the Trustee in the performance of the Trustee's duties hereunder and to
reasonable compensation for such of the Trustee's services hereunder as shall be
rendered. The Beneficiary will, from time to time, pay the compensation due to
the Trustee hereunder and reimburse the Trustee for, and save the Trustee
harmless against, any and all liability and expenses which may be incurred by
the Trustee in the performance of the Trustee's duties.
7.2 Moneys Held by Trustee. All moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law), and the Trustee shall be
under no liability for interest on any money received by the Trustee hereunder.
7.3 Substitute Trustee. The Trustee may resign at any time with or
without notice. If the Trustee shall die, resign or become disqualified from
acting in the execution of this trust or shall fail or refuse to execute the
same when requested by the Beneficiary so to do, or if, for any reason, the
Beneficiary shall prefer to appoint a substitute trustee to act instead of the
aforenamed Trustee, the Beneficiary shall have full power to appoint, by a
writing recorded in the land records of the county in which the Land is
situated, a substitute trustee and, if preferred, several substitute trustees in
succession who shall succeed to all the estates, rights, powers and duties of
the aforenamed Trustee. If the Beneficiary is a corporation, such appointment
may be made by any one of the Beneficiary's officers or agents.
7.4 Rights of Substitute Trustee. Any new Trustee appointed pursuant to
any of the provisions hereof shall, without any further act, deed or conveyance,
become vested with all the estates, properties, rights, powers and trusts of its
or his predecessor in the rights hereunder with like effect as if originally
named as Trustee herein, but nevertheless, upon the written request of the
Beneficiary or of the successor Trustee, the Trustee ceasing to act
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shall execute and deliver an instrument transferring to such successor Trustee,
upon the trusts herein expressed, all the estates, properties, rights, powers
and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver any of the property and money held by such Trustee to the successor
Trustee so appointed in its or his place.
IN WITNESS WHEREOF, the Grantor has caused this Deed of Trust to be duly
executed as of the _______ day of ___________________, 1996.
RIVERBOAT CORPORATION OF MISSISSIPPI
By:________________________________________
Its
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STATE OF
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COUNTY OF
-----------------------
Personally appeared before me, the undersigned authority in and for the
said county and state, on this _______ day of __________________, 1996, within
my jurisdiction, the within named ___________________________, who acknowledged
that [he] [she] is ___________________________ of RIVERBOAT CORPORATION OF
MISSISSIPPI, a Mississippi corporation, and that for and on behalf of the said
corporation, and as its act and deed, [he] [she] executed the above and
foregoing instrument, after having been duly authorized by said corporation so
to do.
------------------------------------
NOTARY PUBLIC
My Commission Expires:
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[AFFIX NOTARIAL SEAL]
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SCHEDULE 1
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Filings
1. The Deed of Trust is to be recorded in [Harrison, Second Judicial District]
[Warren] County, Mississippi.
2. A financing statement describing the Fixtures and the personal property
described in Section 2.1(C) is to be filed in the deed of trust records of
[Harrison, Second Judicial District] [Warren] County, Mississippi.
<PAGE>
EXHIBIT LIST
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Exhibit "A" -- Grantor Authorization
Exhibit "B" -- Fee Estate Description
Exhibit "C" -- Leasehold Estate Description
Exhibit "D" -- Leasehold Estate Description
Exhibit "E" -- Permitted Encumbrances
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EXHIBIT "A"
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Grantor Authorization
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EXHIBIT "B"
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Fee Estate Description
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EXHIBIT "C"
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Leasehold Estate Description
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EXHIBIT "D"
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Leasehold Estate Description
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EXHIBIT "E"
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Permitted Encumbrances
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Exhibit 10.9
MORTGAGE (FLORIDA)
THIS MORTGAGE made the ____ day of August, 1996, between PPI, Inc., a
Florida corporation whose mailing address is 2200 Corporate Boulevard, N.W.,
Suite 310, Boca Raton, Florida (hereinafter referred to as Mortgagor), and Fleet
National Bank, a national banking association, as Trustee and Collateral Agent,
whose mailing address is ________________________________, (hereinafter referred
to as Mortgagee),
W I T N E S S E T H:
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Whereas Mortgagor is the owner of a fee estate in the premises
described in Exhibit A attached hereto (hereinafter referred to as the
Premises);
Whereas Casino America, Inc. (the Company) and certain of its direct
and indirect Subsidiaries, including Mortgagor, have entered into that certain
Indenture dated of even date herewith (as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the Indenture) with
Mortgagee, providing with respect to the issue and sale of up to $300,000,000.00
aggregate principal amount of the Company's ____% Senior Secured Note due
_______________, 2003 (all such notes as are authenticated and delivered under
the Indenture being hereinafter collectively referred to as the Notes).
Whereas from time to time the Company will make a portion of the
proceeds from the issuance of the Notes available to Mortgagor to reduce certain
indebtedness and for working capital purposes, and therefore, Mortgagor will
derive substantial direct benefit from the transactions contemplated herein, in
the Indenture and in the other collateral documents and all other documents
under or by reason of which the Secured Obligations, as hereinafter defined are
evidenced, governed or otherwise dealt with and all other agreements,
certificates and writings heretofore or hereinafter delivered in connection
therewith by the Mortgagor, the Company or any Subsidiary Guarantor (the Note
Documents).
Whereas in order to induce the Holders, as defined in the Indenture,
to purchase the Notes, the Mortgagor has executed and delivered its Subsidiary
Guarantee dated _______________, 1996, in favor of Mortgagee, pursuant to which
Mortgagor has jointly, severally, solidarily and unconditionally guaranteed all
of the Company's obligations under the Notes and the Indenture (the Subsidiary
Guarantee), and has agreed to execute and deliver this Mortgage to secure the
obligations of the Mortgagor and of the Company under the Indenture, the Notes,
the Subsidiary Guarantee and all other Note Documents.
Whereas the Mortgagor acknowledges and agrees that the Mortgagee is
the authorized agent of the Holders, as the Trustee and Collateral Agent under
the Indenture, and is entitled to accept this Mortgage in such capacities on
behalf of the Holders.
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NOW THEREFORE, to secure the payment of Ten Million and 00/100
Dollars ($10,000,000.00), comprising a portion of all obligations and
liabilities of the Mortgagor and/or the Company under any instrument now or
hereinafter evidencing or securing any of the foregoing and all future advances
herewith or pursuant to the Indenture, the Notes, the Subsidiary Guarantee
and/or the other Note Documents to the fullest extent permitted by law (the
Secured Obligations), Mortgagor has mortgaged, given, granted, bargained, sold,
aliened, enfeoffed, conveyed, confirmed and assigned, and by these presents does
mortgage, give, grant, bargain, sell, alien, enfeoff, convey, confirm and assign
unto Mortgagee forever all right, title and interest of Mortgagor now owned, or
hereafter acquired, in and to the following property, rights and interests (such
property, rights and interests being hereinafter collectively referred to as the
Mortgaged Property):
(a) the Premises;
(b) all buildings and improvements now or hereafter located on the
Premises (hereinafter referred to as the Improvements);
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Mortgagor, either in law or in equity, in possession or
expectancy, in and to the Mortgaged Property or any part thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and powers,
and all estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments, and appurtenances of any nature whatsoever, in any way belonging,
relating or pertaining to the Mortgaged Property (including, without limitation,
any and all development rights, air rights or similar or comparable rights of
any nature whatsoever now or hereafter appurtenant to the Premises or now or
hereafter transferred to the Premises) and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises to the center line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Mortgagor, or in which
Mortgagor has or shall have an interest, now or hereafter located upon the
Mortgaged Property, or appurtenances thereto, or usable in connection with the
present or future operation and occupancy of the Mortgaged Property and all
building equipment, materials and supplies of any nature whatsoever owned by
Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter
located upon the Mortgaged Property (hereinafter collectively referred to as the
Equipment), and the right, title and interest of Mortgagor in and to any of the
Equipment which may be subject to any security agreements (as defined in the
Uniform Commercial Code of the State in which the Premises are located),
superior in lien to the lien of this Mortgage;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Mortgaged Property,
whether from the exercise of the right of eminent domain (including any transfer
made in lieu of the exercise of said right), or for any other injury to or
decrease in the value of the Mortgaged Property;
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(g) all leases and other agreements affecting the use or occupancy of
the Mortgaged Property now or hereafter entered into (hereinafter referred to as
the Leases) and the right to receive and apply the rents, issues and profits of
the Mortgaged Property (hereinafter referred to as the Rents) to the payment of
the Secured Obligations;
(h) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Mortgaged Property; and
(i) the right, in the name and on behalf of Mortgagor, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest of
Mortgagee in the Mortgaged Property;
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the proper use and benefit of Mortgagee, and the successors and
assigns of Mortgagee, forever;
AND Mortgagor covenants and agrees with and represents and warrants to
Mortgagee as follows:
l. Payment of Secured Obligations. Mortgagor will pay the Secured
Obligations at the time and in the manner provided for its payment in the Notes,
the Indenture, the Note Documents the Subsidiary Guarantee and in this Mortgage.
2. Warranty of Title. Subject to (i) that certain Florida Real
Estate Mortgage, Assignment of Rents, And Security Agreement, dated as of June
29, 1995, executed by Mortgagor in favor of Capital Bank, a Florida banking
corporation, which mortgage was recorded June 30, 1995 in Official Records Book
23630 at Page 782 (the First Mortgage) and (ii) to those permitted exceptions
(the Permitted Exceptions) to title specifically set forth in Exhibit B attached
hereto; Mortgagor warrants the title to the Premises, the Improvements, the
Equipment and the balance of the Mortgaged Property and that there are no
defenses or offsets to Mortgagors obligations pursuant to this Mortgage or the
Note Documents to which it is a party, including, without limitation, the
Company's and Mortgagor's applicable obligations to pay and perform the Secured
Obligations. Mortgagor also represents and warrants that (i) Mortgagor is now,
and after giving effect to this Mortgage will be, in a solvent condition, (ii)
the execution and delivery of this Mortgage by Mortgagor does not constitute a
"fraudulent conveyance" within the meaning of Title 11 of the United States Code
as now constituted or under any other applicable statute, (iii) no bankruptcy or
insolvency proceedings are pending or contemplated by or against Mortgagor, (iv)
the Mortgagor's chief executive office and principal place of business is 2200
Corporate Boulevard, N.W. Suite 310, Boca Raton, Florida, (v) Mortgagor's
Federal Taxpayer Identification Number is __________________, (vi) the execution
and delivery of this Mortgage and the Subsidiary Guarantee and other Note
Documents to which Mortgagor is a party will result in valid and legally binding
obligations of the Mortgagor enforceable against it in accordance with
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the respective terms and provisions hereof and thereof, (vii) with respect to
the assignment of Leases and Rents set forth above, Mortgagor represents that
(a) it has provided Mortgagee with a true and complete copy of each Lease; (b)
Mortgagor is not, in the capacity of lessor, a party to any other lease, whether
written or oral, or any agreement for the use and occupancy of any of the
Mortgaged Property as of the date hereof, except as heretofore disclosed in
writing by Mortgagor to Mortgagee; (c) the Leases are valid, binding and in full
force and effect and have not been amended or modified, except as heretofore
disclosed in writing by Mortgagor to Mortgagee; (d) Mortgagor is the sole owner
of the lessor's interest in the Leases; (e) Mortgagor has not executed any other
assignment or pledge of any of the Leases or Rents or performed any other act or
executed any other instrument which might prejudice Mortgagee's rights
hereunder; (f) to the best of Mortgagor's knowledge, no default exists on the
part of any lessee, or on the part of Mortgagor as lessor, in the performance of
the terms, covenants, provisions, conditions or agreements contained in the
Leases; (g) Mortgagor knows of no condition which, with the giving of notice or
the passage of time or both, would constitute a default under any of the Leases
on the part of any lessee or Mortgagor as lessor, except as heretofore disclosed
in writing by Mortgagor to Mortgagee; (h) no Rents have been paid by any lessee
for more than one installment in advance; and (i) the payment of none of the
Rents to accrue under the Leases has been or will be waived, released, reduced,
discounted or otherwise discharged or compromised by Mortgagor, except as
heretofore disclosed in writing by Mortgagor to Mortgagee, (viii) Mortgagor's
possession of the Mortgaged Property has been peaceable and undisturbed and, to
the best of Mortgagor's knowledge, without investigation or inquiry, the title
thereto has never been disputed or questioned, and Mortgagor does not know of
any facts by reason of which any adverse claim to any part of the Mortgaged
Property or to any undivided interest therein might be set up or made, (ix)
Mortgagor has not received any notice of any federal, state or local tax claims
or liens assessed or filed against Mortgagor or the Mortgaged Property for Taxes
or hereafter defined, which are due and payable, unsatisfied of record or
docketed in any court of the state in which the Mortgaged Property is located or
in any court located in the United States; (x) the Mortgaged Property has not
been damaged or destroyed by fire or other casualty, and no condemnation or
eminent domain proceedings have been commenced and/or are pending with respect
to the Mortgaged Property, and, to the best of Mortgagor's knowledge, no such
condemnation or eminent domain proceedings are about to be commenced, (xi) no
consent or approval of any trustee or holder of any indebtedness or other
obligation of Mortgagor, and no consent, permission, authorization, order or
license of any Governmental Authority (other than those which have already been
obtained and delivered to Mortgagee), is necessary in connection with the
execution, delivery and performance of this Mortgage or any other Note Document
to which Mortgagor is a party or any transaction contemplated hereby or thereby,
(xii) there is no provision of any indenture or agreement, written or oral, to
which Mortgagor is a party or under which Mortgagor is obligated, and no
statute, rule or regulation, or judgment, decree or order of any Governmental
Authority, binding on Mortgagor, which would be contravened by the execution and
delivery of this Mortgage or any other Note Document to which Mortgagor is a
party or by the performance of any provision, condition, covenant or other term
hereof or thereof, (xiii) the Mortgage Property is in compliance with all
applicable Environmental Laws, moratoriums, condominium and coastal zone
management laws and regulations and with all applicable building, safety and
fire codes, as well as zoning and subdivision laws and regulations. All
environmental impact statements, subdivision and condominium maps, drawings,
specifications and reports relating to the Mortgaged Property have been or will
be timely prepared and filed with
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all Governmental Authorities having jurisdiction over such matters and requiring
any such submittals.
3. Insurance. Mortgagor (i) will keep the Improvements and the
Equipment insured against loss or damage by fire, standard extended coverage
perils and such other hazards as Mortgagee shall from time to time require in
amounts approved by Mortgagee, which amounts shall in no event be less than 100%
of the full insurable value of the Improvements and the Equipment and shall be
sufficient to meet all applicable co-insurance requirements, and (ii) will
maintain rental and business interruption insurance and such other forms of
insurance coverage with respect to the Mortgaged Property as Mortgagee shall
from time to time require in amounts approved by Mortgagee. All policies of
insurance (hereinafter referred to as the Policies) shall be issued by insurers
having a minimum policy holders rating of "A" per the latest rating publication
of Property and Casualty Insurers by A.M. Best Company and who are lawfully
doing business in New York and in the State in which the Premises are located
and are otherwise acceptable in all respects to Mortgagee. All Policies shall
contain the standard New York mortgagee non-contribution clause endorsement or
an equivalent endorsement satisfactory to Mortgagee naming Mortgagee as the
person to which all payments made by the insurer thereunder shall be paid and
shall otherwise be in form and substance satisfactory in all respects to
Mortgagee. Blanket insurance policies shall not be acceptable for the purposes
of this paragraph unless otherwise approved to the contrary by Mortgagee.
Mortgagor shall pay the premiums for the Policies as the same become due and
payable. At the request of Mortgagee, Mortgagor will deliver the Policies to
Mortgagee. Not later than ten (10) days prior to the expiration date of each of
the Policies, Mortgagor will deliver to Mortgagee a renewal policy or policies
marked "premium paid" or accompanied by other evidence of payment of premium
satisfactory to Mortgagee. If at any time Mortgagee is not in receipt of written
evidence that all insurance required hereunder is in force and effect, Mortgagee
shall have the right without notice to Mortgagor to take such action as
Mortgagee deems necessary to protect its interest in the Mortgaged Property,
including, without limitation, the obtaining of such insurance coverage as
Mortgagee in its sole discretion deems appropriate, and all expenses incurred by
Mortgagee in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Mortgagor to Mortgagee upon demand.
Mortgagor shall at all times comply with and shall cause the Improvements and
Equipment and the use, occupancy, operation, maintenance, alteration, repair and
restoration thereof to comply with the terms, conditions, stipulations and
requirements of the Policies. If the Premises, or any portion thereof, is
located in a Federally designated "special flood hazard area", in addition to
the other Policies required under this paragraph, a flood insurance policy shall
be delivered by Mortgagor to Mortgagee. If no portion of the Premises is located
in a Federally designated "special flood hazard area" such fact shall be
substantiated by a certificate in form satisfactory to Mortgagee from a licensed
surveyor, appraiser or professional engineer or other qualified person. If the
Mortgaged Property shall be damaged or destroyed, in whole or in part, by fire
or other property hazard or casualty, Mortgagor shall give prompt notice thereof
to Mortgagee. Sums paid to Mortgagee by any insurer may be retained and applied
by Mortgagee toward payment of the Secured Obligations whether or not then due
and payable in such order, priority and proportions as Mortgagee in its
discretion shall deem proper or, at the discretion of Mortgagee, the same may be
paid, either in whole or in part, to Mortgagor for such purposes as Mortgagee
shall designate. If Mortgagee
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shall receive and retain such insurance proceeds, the lien of this Mortgage
shall be reduced only by the amount thereof received and retained by Mortgagee
and actually applied by Mortgagee in reduction of the Secured Obligations.
4. Payment of Taxes, etc. Mortgagor shall pay all taxes,
assessments, water rates, sewer rents and other charges, including vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed against the Mortgaged Property
(hereinafter referred to as the Taxes) prior to the date upon which any fine,
penalty, interest or cost may be added thereto or imposed by law for the
nonpayment thereof. Mortgagor shall deliver to Mortgagee, upon request,
receipted bills, canceled checks and other evidence satisfactory to Mortgagee
evidencing the payment of the Taxes prior to the date upon which any fine,
penalty, interest or cost may be added thereto or imposed by law for the
nonpayment thereof.
5. Escrow Fund. Mortgagor will, subject to the provisions of the
First Mortgage, at the option of Mortgagee, pay to Mortgagee, on the first day
of each calendar month one-twelfth of an amount (hereinafter referred to as the
Escrow Fund) which would be sufficient to pay the Taxes payable, or estimated by
Mortgagee to be payable, during the ensuing twelve (l2) months. Mortgagee will
apply the Escrow Fund to the payment of Taxes which are required to be paid by
Mortgagor pursuant to the provisions of this Mortgage. If the amount of the
Escrow Fund shall exceed the amount of the Taxes payable by Mortgagor pursuant
to the provisions of this Mortgage, Mortgagee shall, in its discretion, (a)
return any excess to Mortgagor, or (b) credit such excess against future
payments to be made to the Escrow Fund. In allocating such excess, Mortgagee
may deal with the person shown on the records of Mortgagee to be the owner of
the Mortgaged Property. If the Escrow Fund is not sufficient to pay the Taxes,
as the same become payable, Mortgagor shall pay to Mortgagee, upon request, an
amount which Mortgagee shall estimate as sufficient to make up the deficiency.
Until expended or applied as above provided, any amounts in the Escrow Fund may
be commingled with the general funds of Mortgagee and shall constitute
additional security for the Secured Obligations and shall not bear interest.
6. Condemnation. Notwithstanding any taking by any public or quasi-
public authority through eminent domain or otherwise, Mortgagor shall continue
to pay the Secured Obligations at the time and in the manner provided for its
payment in the Indenture, the Notes, the Note Documents, the Subsidiary
Guarantee and this Mortgage and the Secured Obligations shall not be reduced
until any award or payment therefor shall have been actually received and
applied by Mortgagee to the discharge of the Secured Obligations. Mortgagee may
apply the entire amount of any such award or payment to the discharge of the
Secured Obligations whether or not then due and payable in such order, priority
and proportions as Mortgagee in its discretion shall deem proper. If the
Mortgaged Property is sold, through foreclosure or otherwise, prior to the
receipt by Mortgagee of such award or payment, Mortgagee shall have the right,
whether or not a deficiency judgment on the Notes or the Subsidiary Guarantee
shall have been sought, recovered or denied, to receive such award or payment,
or a portion thereof sufficient to pay the Secured Obligations, whichever is
less. Mortgagor shall file and prosecute its claim or claims for any such award
or payment in good faith and with due diligence and cause the same to be
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collected and paid over to Mortgagee. Mortgagor hereby irrevocably authorizes
and empowers Mortgagee, in the name of Mortgagor or otherwise, to collect and
receipt for any such award or payment and to file and prosecute such claim or
claims. Although it is hereby expressly agreed that the same shall not be
necessary in any event, Mortgagor shall, upon demand of Mortgagee, make, execute
and deliver any and all assignments and other instruments sufficient for the
purpose of assigning any such award or payment to Mortgagee, free and clear of
any encumbrances of any kind or nature whatsoever.
7. Leases and Rents. Subject to the terms of this paragraph,
Mortgagee waives the right to enter the Mortgaged Property for the purpose of
collecting the Rents, and grants Mortgagor the right to collect the Rents.
Mortgagor shall hold the Rents, or an amount sufficient to discharge all current
sums due on the Secured Obligations, in trust for use in payment of the Secured
Obligations. The right of Mortgagor to collect the Rents may be revoked by
Mortgagee upon any default by Mortgagor under the terms of the Notes, the
Indenture, the Note Documents, the Subsidiary Guarantee or this Mortgage by
giving notice of such revocation to Mortgagor. Following such notice Mortgagee
may retain and apply the Rents toward payment of the Secured Obligations in such
order, priority and proportions as Mortgagee, in its discretion, shall deem
proper, or to the operation, maintenance and repair of the Mortgaged Property,
and irrespective of whether Mortgagee shall have commenced a foreclosure of this
Mortgage or shall have applied or arranged for the appointment of a receiver.
Mortgagor shall not, without the consent of Mortgagee, make, or suffer to be
made, any Leases or cancel or modify any Leases or accept prepayments of
installments of the Rents for a period of more than one (l) month in advance or
further assign the whole or any part of the Rents. Mortgagor shall (a) fulfill
or perform each and every provision of the Leases on the part of Mortgagor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Mortgagor shall send or receive under the Leases to Mortgagee, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Mortgagee may have herein, in the event of any default under this Mortgage,
Mortgagee, at its option, may require Mortgagor to pay monthly in advance to
Mortgagee, or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Mortgaged
Property as may be in possession of Mortgagor. Upon default in any such
payment, Mortgagor will vacate and surrender possession of the Mortgaged
Property to Mortgagee, or to such receiver and, in default thereof, Mortgagor
may be evicted by summary proceedings or otherwise. Nothing contained in this
paragraph shall be construed as imposing on Mortgagee any of the obligations of
the lessor under the Leases.
8. Maintenance of the Mortgaged Property. Mortgagor shall cause the
Mortgaged Property to be maintained in good condition and repair and will not
commit or suffer to be committed any waste of the Mortgaged Property. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment), without the consent of
Mortgagee. Mortgagor shall promptly comply with all existing and future
governmental laws, orders, ordinances, rules and regulations affecting the
Mortgaged Property, or any portion thereof or the use thereof. Mortgagor shall
promptly repair, replace or rebuild any part of the Mortgaged Property which may
be damaged or destroyed by fire or other property hazard or casualty (including
any fire or other property hazard or casualty
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for which insurance was not obtained or obtainable) or which may be affected by
any taking by any public or quasi-public authority through eminent domain or
otherwise, and shall complete and pay for, within a reasonable time, any
structure at any time in the process of construction or repair on the Premises.
If such fire or other property hazard or casualty shall be covered by the
Policies, Mortgagor's obligation to repair, replace or rebuild such portion of
the Mortgaged Property shall be contingent upon Mortgagee paying Mortgagor the
proceeds of the Policies, or such portion thereof as shall be sufficient to
complete such repair, replacement or rebuilding, whichever is less. Mortgagor
will not, without obtaining the prior consent of Mortgagee, initiate, join in or
consent to any private restrictive covenant, zoning ordinance, or other public
or private restrictions, limiting or affecting the uses which may be made of the
Mortgaged Property or any part thereof.
9. Environmental Provisions. For the purposes of this paragraph the
following terms shall have the following meanings: (i) the term "Hazardous
Material" shall mean any material or substance that, whether by its nature or
use, is subject to regulation under any Environmental Requirement, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
(S)9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S)1801
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S)6901 et
seq.), the Toxic Substances Control Act (15 U.S.C. (S)2601 et seq.), the Clean
Air Act (42 U.S.C. (S)7401 et seq.) and the Federal Water Pollution Control Act
(33 U.S.C. (S)1251 et seq.), all as presently in effect and as the same may
hereafter be amended, any regulation pursuant thereto, or any other present or
future law, ordinance, rule, regulation, order or directive addressing
environmental, health or safety issues of or by any Governmental Authority,
(iii) the term "Governmental Authority" shall mean the Federal government, or
any state or other political subdivision thereof, or any agency, court or body
of the Federal government, any state or other political subdivision thereof,
exercising executive, legislative, judicial, regulatory or administrative
functions, and (iv) the term "diligent inquiry" shall mean a level of inquiry at
least equal to an environmental site assessment of the Mortgaged Property
conducted in accordance with Mortgagee's environmental policies and procedures.
Mortgagor hereby represents and warrants to Mortgagee that to the best of
Mortgagor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Mortgaged Property, except as
specifically set forth in the Environmental Reports described in Exhibit C
attached hereto, (ii) no Hazardous Material has been or is currently located at,
in, on, under or about the Mortgaged Property in a manner which violates any
Environmental Requirement, or which requires cleanup or corrective action of any
kind under any Environmental Requirement, (iii) no releasing, emitting,
discharging, leaching, dumping or disposing of any Hazardous Material from the
Mortgaged Property onto or into any other property or from any other property
onto or into the Mortgaged Property has occurred or is occurring in violation of
any Environmental Requirement, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Mortgaged Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Mortgaged Property into full compliance with all Environmental Requirements.
Mortgagor shall comply, and shall cause all tenants or other occupants of the
Mortgaged Property to comply, in all respects with all Environmental
Requirements, and will not generate, store, handle, process, dispose of or
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otherwise use, and will not permit any tenant or other occupant of the Mortgaged
Property to generate, store, handle, process, dispose of or otherwise use,
Hazardous Materials at, in, on, under or about the Mortgaged Property in a
manner that could lead or potentially lead to the imposition on Mortgagor,
Mortgagee or the Mortgaged Property of any liability or lien of any nature
whatsoever under any Environmental Requirement. Mortgagor shall notify Mortgagee
promptly in the event of any spill or other release of any Hazardous Material
at, in, on, under or about the Mortgaged Property which is required to be
reported to a Governmental Authority under any Environmental Requirement, will
promptly forward to Mortgagee copies of any notices received by Mortgagor
relating to alleged violations of any Environmental Requirement and will
promptly pay when due any fine or assessment against Mortgagee, Mortgagor or the
Mortgaged Property relating to any Environmental Requirement. If at any time it
is determined that the operation or use of the Mortgaged Property violates any
applicable Environmental Requirement or that there are Hazardous Materials
located at, in, on, under or about the Mortgaged Property which, under any
Environmental Requirement, require special handling in collection, storage,
treatment or disposal, or any other form of cleanup or corrective action,
Mortgagor shall, within thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Mortgagee, take, at its sole cost and
expense, such remedies and actions as may be necessary to fully comply in all
respects with all Environmental Requirements; provided, however, that if such
compliance cannot reasonably be completed within such thirty (30) day period,
Mortgagor shall commence such necessary action within such thirty (30) day
period and shall thereafter diligently and expeditiously proceed to fully comply
in all respects and in a timely fashion with all Environmental Requirements. If
Mortgagor fails to timely take, or to diligently and expeditiously proceed to
complete in a timely fashion, any such action, Mortgagee may, in its sole and
absolute discretion, make advances or payments towards the performance or
satisfaction of the same, but shall in no event be under any obligation to do
so. All sums so advanced or paid by Mortgagee (including, without limitation,
counsel and consultant fees and expenses, investigation and laboratory fees and
expenses, and fines or other penalty payments) and all sums advanced or paid in
connection with any judicial or administrative investigation or proceeding
relating thereto, will immediately, upon demand, become due and payable from
Mortgagor and shall bear interest at Defaulted Interest, as defined in the
Indenture from the date any such sums are so advanced or paid by Mortgagee until
the date any such sums are repaid by Mortgagor to Mortgagee. Mortgagor will
execute and deliver, promptly upon request, such instruments as Mortgagee may
deem useful or necessary to permit Mortgagee to take any such action, and such
additional notes and mortgages, as Mortgagee may require to secure all sums so
advanced or paid by Mortgagee. If a lien is filed against the Mortgaged Property
by any Governmental Authority resulting from the need to expend or the actual
expending of monies arising from an action or omission, whether intentional or
unintentional, of Mortgagor or for which Mortgagor is responsible, resulting in
the releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying
or dumping of any Hazardous Material into the waters or onto land located within
or without the State where the Mortgaged Property is located, then Mortgagor
will, within thirty (30) days from the date that Mortgagor is first given notice
that such lien has been placed against the Mortgaged Property (or within such
shorter period of time as may be specified by Mortgagee if such Governmental
Authority has commenced steps to cause the Mortgaged Property to be sold
pursuant to such lien) either (a) pay the claim and remove the lien, or (b)
furnish a cash deposit, bond, or such other security with respect thereto as is
satisfactory in
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all respects to Mortgagee and is sufficient to effect a complete discharge of
such lien on the Mortgaged Property. Mortgagee may, at its option, at intervals
of not less than one year, or more frequently if Mortgagee reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirement, cause an environmental audit of the
Mortgaged Property or portions thereof to be conducted to confirm Mortgagor's
compliance with the provisions of this paragraph, and Mortgagor shall cooperate
in all reasonable ways with Mortgagee in connection with any such audit and
shall pay all costs and expenses incurred in connection therewith. Mortgagor
will defend, indemnify, and hold harmless Mortgagee, its employees, agents,
officers, and directors, from and against any and all claims, demands,
penalties, causes of action, fines, liabilities, settlements, damages, costs, or
expenses of whatever kind or nature, known or unknown, foreseen or unforeseen,
contingent or otherwise (including, without limitation, counsel and consultant
fees and expenses, investigation and laboratory fees and expenses, court costs,
and litigation expenses) arising out of, or in any way related to, (i) any
breach by Mortgagor of any of the provisions of this paragraph, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release, or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Mortgaged Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Mortgaged Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Mortgaged Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirement or any
policy or requirement of Mortgagee hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Indenture, the Notes, the Note Documents, the
Subsidiary Guarantee, this Mortgage or any other document or instrument now or
hereafter executed and delivered in connection with the loan evidenced by the
Indenture, the Notes, the Note Documents, the Subsidiary Guarantee, and secured
by this Mortgage, constitute the personal recourse undertakings, obligations and
liabilities of Mortgagor. If this Mortgage is foreclosed or Mortgagor tenders a
deed or assignment in lieu of foreclosure, Mortgagor shall deliver the Mortgaged
Property to the purchaser at foreclosure or to Mortgagee, its nominee, or wholly
owned subsidiary, as the case may be, in a condition that complies in all
respects with all Environmental Requirements. The obligations and liabilities of
Mortgagor under this paragraph shall survive and continue in full force and
effect and shall not be terminated, discharged or released, in whole or in part,
irrespective of whether the Secured Obligations has been paid in full and
irrespective of any foreclosure of this Mortgage or acceptance by Mortgagee, its
nominee or wholly owned subsidiary of a deed or assignment in lieu of
foreclosure and irrespective of any other fact or circumstance of any nature
whatsoever.
10. Estoppel Certificates. Mortgagor, within ten (10) days after
request by Mortgagee and at its expense, will furnish Mortgagee with a
statement, duly acknowledged and certified, setting forth the amount of the
Secured Obligations and the offsets or defenses thereto, if any.
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11. Transfer or Encumbrance of the Mortgaged Property and creation of
Indebtedness. No part of the Mortgaged Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Mortgagor
(whether stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, sold, transferred, assigned or conveyed, or
permitted to be further encumbered, sold, transferred, assigned or conveyed
without the prior consent of Mortgagee, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of Mortgagee.
Additionally, Mortgagor shall not incur, create or suffer to exist any
indebtedness relating to the Mortgaged Property, except the Secured Obligations
under this Mortgage. The provisions of the foregoing sentences of this
paragraph shall apply to each and every such further creation of indebtedness,
encumbrance, sale, transfer, assignment or conveyance, regardless of whether or
not Mortgagee has consented to, or waived by its action or inaction its rights
hereunder with respect to, any such creation of indebtedness or further
encumbrance, sale, transfer, assignment or conveyance, and irrespective of
whether such creation of indebtedness further encumbrance, sale, transfer,
assignment or conveyance is voluntary, by reason of operation of law or is
otherwise made.
12. Notice. Any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be in writing and shall be hand
delivered or sent by Federal Express, or other reputable courier service, or by
postage pre-paid registered or certified mail, return receipt requested, and
shall be deemed given (i) when received at the following addresses if hand
delivered or sent by Federal Express, or other reputable courier service, and
(ii) three (3) business days after being postmarked and addressed as follows if
sent by registered or certified mail, return receipt requested:
If to Mortgagor:
2200 Corporate
Boulevard, N.W. Suite 310
Boca Raton, Florida
With a copy to:
Becker & Poliakoff
3111 Sterling Road
Ft. Lauderdale, Florida 33319
Attention: Alan Koslow, Esq.
If to Mortgagee:
______________________________
______________________________
______________________________
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With a copy to:
Hughes Hubbard & Reed, LLP
201 South Biscayne Boulevard
Suite 2500
Miami, Florida 33131
Attention: Robert I. Goldfarb
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
13. Sale of Mortgaged Property. If this Mortgage is foreclosed, the
Mortgaged Property, or any interest therein, may, at the discretion of
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.
14. Changes in Laws Regarding Taxation. In the event of the passage
after the date of this Mortgage of any law of the State in which the Premises
are located deducting from the value of real property for the purpose of
taxation any lien or encumbrance thereon or changing in any way the laws for the
taxation of mortgages or Secured Obligations secured by mortgages for state or
local purposes or the manner of the collection of any such taxes, and imposing a
tax, either directly or indirectly, on this Mortgage, the Indenture, the Notes,
the Note Documents, the Subsidiary Guarantee, or the Secured Obligations,
Mortgagor shall, if permitted by law, pay any tax imposed as a result of any
such law within the statutory period or within fifteen (15) days after demand by
Mortgagee, whichever is less, provided, however, that if, in the opinion of the
attorneys for Mortgagee, Mortgagor is not permitted by law to pay such taxes,
Mortgagee shall have the right, at its option, to declare the Secured
Obligations due and payable on a date specified in a prior notice to Mortgagor
of not less than thirty (30) days.
15. No Credits on Account of the Secured Obligations. Mortgagor will
not claim or demand or be entitled to any credit or credits on account of the
Secured Obligations for any part of the Taxes assessed against the Mortgaged
Property or any part thereof and no deduction shall otherwise be made or claimed
from the taxable value of the Mortgaged Property, or any part thereof, by reason
of this Mortgage or the Secured Obligations.
16. Offsets, Counterclaims and Defenses. Any assignee of this Mort-
gage, the Indenture, the Notes and the Note Documents, or the Subsidiary
Guarantee shall take the same free and clear of all offsets, counterclaims or
defenses of any nature whatsoever which Mortgagor may have against any assignor
of this Mortgage, the Indenture, the Notes, the Note Documents and the
Subsidiary Guarantee and no such offset, counterclaim or defense shall be
interposed or asserted by Mortgagor in any action or proceeding brought by any
such assignee upon this Mortgage or the Indenture, the Notes, the Note Documents
and the Subsidiary Guarantee and any such right to interpose or assert any such
offset, counterclaim or defense in any such action or proceeding is hereby
expressly waived by Mortgagor.
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17. Other Security for the Secured Obligations. Mortgagor shall
observe and perform all of the terms, covenants and provisions contained in the
Indenture, the Notes and the Subsidiary Guarantee, the Note Documents, and in
all other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Secured Obligations, in whole or in part, or
otherwise executed and delivered in connection with the Indenture, the Notes,
the Note Documents, the Subsidiary Guarantee, this Mortgage or the loan
evidenced and secured thereby.
18. Documentary Stamps. If at any time the United States of America,
any state thereof or any governmental subdivision of any such state, shall
require revenue or other stamps to be affixed to the Indenture, the Notes, the
Note Documents, the Subsidiary Guarantee, or this Mortgage, Mortgagor will pay
for the same, with interest and penalties thereon, if any.
19. Right of Entry. Mortgagee and its agents shall have the right to
enter and inspect the Mortgaged Property at all reasonable times.
20. Books and Records. Mortgagor will keep and maintain or will
cause to be kept and maintained on a fiscal year basis in accordance with
generally accepted accounting practices consistently applied proper and accurate
books, records and accounts reflecting all of the financial affairs of Mortgagor
and all items of income and expense in connection with the operation of the
Mortgaged Property or in connection with any services, equipment or furnishings
provided in connection with the operation of the Mortgaged Property, whether
such income or expense be realized by Mortgagor or by any other person
whatsoever excepting lessees unrelated to and unaffiliated with Mortgagor who
have leased from Mortgagor portions of the Mortgaged Property for the purpose of
occupying the same. Mortgagee shall have the right from time to time at all
times during normal business hours to examine such books, records and accounts
at the office of Mortgagor or other person maintaining such books, records and
accounts and to make copies or extracts thereof as Mortgagee shall desire.
Mortgagor will furnish Mortgagee annually, within sixty (60) days next following
the end of each fiscal year of Mortgagor, with (i) a complete executed copy of
an audited financial statement prepared by a certified public accountant
acceptable to Mortgagee, and certified to by a duly authorized representative of
Mortgagor as being true, complete and accurate, covering the operation of the
Mortgaged Property for such fiscal year and containing a fully itemized
statement of profit and loss and of surplus and a balance sheet, and otherwise
in form and substance satisfactory to Mortgagee, and (ii) a complete executed
copy of an audited financial statement of Mortgagor for such fiscal year
prepared by a certified public accountant acceptable to Mortgagee, and certified
to by a duly authorized representative of Mortgagor as being true, complete and
accurate, and containing a fully itemized statement of profit and loss and of
surplus and a balance sheet, and otherwise in form and substance satisfactory to
Mortgagee. Within sixty (60) days after the end of each fiscal year of
Mortgagor, Mortgagor shall furnish to Mortgagee a certificate signed by a duly
authorized representative of Mortgagor certifying on the date thereof either
that there does or does not exist an event which constitutes, or which upon
notice or lapse of time or both would constitute, a default or an event of
default under this Mortgage and if such default or event of default exists, the
nature thereof and the period of time it has existed. Mortgagor shall furnish
to Mortgagee, within ten (10) days after request, such further detailed
information covering the
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operation of the Mortgaged Property and the financial affairs of Mortgagor, any
affiliate of Mortgagor or any Guarantor (as hereinafter defined), as may be
requested by Mortgagee.
21. Performance of Other Agreements. Mortgagor shall observe and
perform each and every term to be observed or performed by Mortgagor pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
22. Events of Defaults. The Secured Obligations shall become due at
the option of Mortgagee upon the occurrence of any one or more of the following
events (herein collectively referred to as Events of Default):
(a) if any one or more Events of Defaults, as defined in the
Indenture, shall occur under the Indenture;
(b) if Mortgagor shall fail to pay within twenty (20) days of
notice and demand by Mortgagee, any installment of any assessment against the
Mortgaged Property for local improvements heretofore or hereafter laid, which
assessment is or may become payable in annual or periodic installments and is or
may become a lien on the Mortgaged Property, notwithstanding the fact that such
installment may not be due and payable at the time of such notice and demand;
(c) if without the consent of Mortgagee (which consent in any and
all circumstances may be withheld in the sole and absolute discretion of
Mortgagee) any part of the Mortgaged Property or any interest of any nature
whatsoever therein or any interest of any nature whatsoever in Mortgagor
(whether stock, equity, beneficial, profit, loss or otherwise) is in any manner
further encumbered, sold, transferred, assigned or conveyed, and irrespective of
whether any such further encumbrance, sale, transfer, assignment or conveyance
is voluntary, by reason or operation of law or is otherwise made;
(d) if without the consent of Mortgagee any Improvement or the
Equipment (except for normal replacement of the Equipment) is removed,
demolished or materially altered, or if the Mortgaged Property is not kept in
good condition and repair;
(e) if the Policies are not kept in full force and effect, or if
the Policies are not delivered to Mortgagee upon request;
(f) if without the consent of Mortgagee any Leases are made,
canceled or modified or if any portion of the Rents is paid for a period of more
than one (1) month in advance or if any of the Rents are further assigned;
(g) if Mortgagor or other person shall be in default under the
First Mortgage.
(h) if the Mortgaged Property shall become subject (i) to any tax
lien, other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis
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pendens, notice of pendency, stop order, notice of intention to file mechanic's
or materialman's lien, mechanic's or materialman's lien or other lien of any
nature whatsoever and the same shall not either be discharged of record or in
the alternative insured over to the satisfaction of Mortgagee by the title
company insuring the lien of this Mortgage within a period of thirty (30) days
after the same is filed or recorded, and irrespective of whether the same is
superior or subordinate in lien or other priority to the lien of this Mortgage
and irrespective of whether the same constitutes a perfected or inchoate lien or
encumbrance on the Mortgaged Property or is only a matter of record or notice;
or
23. Right to Cure Defaults. If default in the performance of any of
the covenants of Mortgagor herein occurs, Mortgagee may, at its discretion,
remedy the same and for such purpose shall have the right to enter upon the
Mortgaged Property or any portion thereof without thereby becoming liable to
Mortgagor or any person in possession thereof holding under Mortgagor. If
Mortgagee shall remedy such a default or appear in, defend, or bring any action
or proceeding to protect its interest in the Mortgaged Property or to foreclose
this Mortgage or to collect the Secured Obligations, the costs and expenses
thereof (including reasonable attorneys' fees to the extent permitted by law),
with interest as provided in this paragraph, shall be paid by Mortgagor to
Mortgagee upon demand and shall constitute part of the Secured Obligations
secured by this Mortgage. All such costs and expenses incurred by Mortgagee in
remedying such default or in appearing in, defending, or bringing any such
action or proceeding, shall be paid by Mortgagor to Mortgagee upon demand, with
Defaulted Interest, provided, however, that the Defaulted Interest shall in no
event exceed the maximum interest rate which Mortgagor may by law pay, for the
period after notice from Mortgagee that such costs or expenses were incurred to
the date of payment to Mortgagee.
24. Appointment of Receiver. Mortgagee, in any action to foreclose
this Mortgage or upon the actual or threatened waste to any part of the
Mortgaged Property or upon the occurrence of any default hereunder, shall be at
liberty, without notice, to apply for the appointment of a receiver of the
Rents, and shall be entitled to the appointment of such receiver as a matter of
right, without regard to the value of the Mortgaged Property as security for the
Secured Obligations, or the solvency or insolvency of any person then liable for
the payment of the Secured Obligations.
25. Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term of this Mortgage shall not be deemed to be a waiver of
any term of this Mortgage. Mortgagor shall not be relieved of Mortgagor's
obligation to pay the Secured Obligations at the time and in the manner provided
for its payment in the Notes, the Indenture, the Note Documents, the Subsidiary
Guarantee and this Mortgage by reason of (i) failure of Mortgagee to comply with
any request of Mortgagor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Notes, the Indenture,
the Note Documents, the Subsidiary Guarantee or any other mortgage, instrument
or document evidencing, securing or guaranteeing payment of the Secured
Obligations or any portion thereof, (ii) the release, regardless of
consideration, of the whole or any part of the Mortgaged Property or any other
security for the Secured Obligations, or (iii) any agreement or stipulation
between Mortgagee and any subsequent owner or owners of the Mortgaged Property
or other person extending the time
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of payment or otherwise modifying or supplementing the terms of the Indenture,
the Notes, the Note Documents, the Subsidiary Guarantee, this Mortgage or any
other mortgage, instrument or document evidencing, securing or guaranteeing
payment of the Secured Obligations or any portion thereof, without first having
obtained the consent of Mortgagor, and in the latter event, Mortgagor shall
continue to be obligated to pay the Secured Obligations at the time and in the
manner provided in the Indenture, the Notes, the Note Documents, the Subsidiary
Guarantee and this Mortgage, as so extended, modified and supplemented, unless
expressly released and discharged from such obligation by Mortgagee in writing.
Regardless of consideration, and without the necessity for any notice to or
consent by the holder of any subordinate lien, encumbrance, right, title or
interest in or to the Mortgaged Property, Mortgagee may release any person at
any time liable for the payment of the Secured Obligations or any portion
thereof or any part of the security held for the Secured Obligations and may
extend the time of payment or otherwise modify the terms of the Notes, the
Indenture, the Note Documents, the Subsidiary Guarantee or this Mortgage,
including, without limitation, a modification of the interest rate payable on
the principal balance of the Notes, the Indenture, the Note Documents, the
Subsidiary Guarantee without in any manner impairing or affecting this Mortgage
or the lien thereof or the priority of this Mortgage, as so extended and
modified, as security for the Secured Obligations over any such subordinate
lien, encumbrance, right, title or interest. Mortgagee may resort for the
payment of the Secured Obligations to any other security held by Mortgagee in
such order and manner as Mortgagee, in its discretion, may elect. Mortgagee may
take action to recover the Secured Obligations, or any portion thereof, or to
enforce any covenant hereof without prejudice to the right of Mortgagee
thereafter to foreclose this Mortgage. Mortgagee shall not be limited
exclusively to the rights and remedies herein stated but shall be entitled to
every additional right and remedy now or hereafter afforded by law. The rights
of Mortgagee under this Mortgage shall be separate, distinct and cumulative and
none shall be given effect to the exclusion of the others. No act of Mortgagee
shall be construed as an election to proceed under any one provision herein to
the exclusion of any other provision.
26. Indemnity. Anything in this Mortgage to the contrary
notwithstanding, Mortgagor shall indemnify and hold Mortgagee harmless and
defend it at Mortgagor's sole cost and expense against any loss or liability,
cost or expense (including, without limitation, reasonable attorneys' fees and
disbursements of Mortgagee's counsel, whether in-house staff, retained firms, or
otherwise) and all claims, actions, procedures and suits arising out of or in
connection with:
(i) any ongoing matters arising out of the transaction
contemplated by this Mortgage, the Indenture, the Notes, the Note Documents, the
Subsidiary Guarantee and the Secured Obligations (including, but not limited to,
all costs of any reappraisals of the Mortgaged Property or any other collateral
for the Secured Obligations);
(ii) any amendment to, or restructuring of, the Secured
Obligations and the Indenture, the Notes, the Note Documents and the Subsidiary
Guarantee;
(iii) any and all lawful action that may be taken by Mortgagee in
connection with the enforcement of the provisions of this Mortgage or the
Indenture, the Notes,
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the Note Documents and the Subsidiary Guarantee, whether
or not suit is filed in connection with the same, or in connection with the
Mortgagor, any guarantor and/or any partner, joint venturer or shareholder
thereof becoming a party to a voluntary or involuntary federal or state
bankruptcy, insolvency or similar proceeding; and
All sums expended by Mortgagee shall be payable on demand and, until reimbursed
by Mortgagor pursuant hereto, shall be deemed additional principal of the
Secured Obligations and shall bear interest at the penalty interest rate set
forth in the Notes.
27. Liability. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.
28. Governing Law. This Mortgage and all matters pertaining thereto
shall be governed by and construed in accordance with the laws of the State of
Florida. Notwithstanding the foregoing, the Indenture, and the Notes, and the
provisions thereof shall be governed by and construed in accordance with the
laws of the State of New York.
29. Security Agreement. This Mortgage constitutes both a real
property mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code, and the Mortgaged Property includes both real and personal
property and all other rights and interest, whether tangible or intangible in
nature, of Mortgagor in the Mortgaged Property. Mortgagor by executing and
delivering this Mortgage has granted to Mortgagee, as security for the Secured
Obligation, a security interest in the Equipment. If Mortgagor shall default
under the Indenture, the Notes, the Note Documents, the Subsidiary Guarantee, or
this Mortgage, Mortgagee, in addition to any other rights and remedies which it
may have, shall have and may exercise immediately and without demand, any and
all rights and remedies granted to a secured party upon default under the
Uniform Commercial Code, including, without limiting the generality of the
foregoing, the right to take possession of the Equipment or any part thereof,
and to take such other measures as Mortgagee may deem necessary for the care,
protection and preservation of the Equipment. Upon request or demand of
Mortgagee, Mortgagor shall at its expense assemble the Equipment and make it
available to Mortgagee at a convenient place acceptable to Mortgagee. Mortgagor
shall pay to Mortgagee on demand any and all expenses, including legal expenses
and attorneys' fees, incurred or paid by Mortgagee in protecting its interest in
the Equipment and in enforcing its rights hereunder with respect to the
Equipment. Any notice of sale, disposition or other intended action by
Mortgagee with respect to the Equipment sent to Mortgagor in accordance with the
provisions of this Mortgage at least seven (7) days prior to the date of any
such sale, disposition or other action, shall constitute reasonable notice to
Mortgagor, and the method of sale or disposition or other intended action set
forth or specified in such notice shall conclusively be deemed to be
commercially reasonable within the meaning of the Uniform Commercial Code unless
objected to in writing by Mortgagor within five (5) days after receipt by
Mortgagor of such notice. The proceeds of any sale or disposition of the
Equipment, or any part thereof, may be applied by Mortgagee to the payment of
the Secured Obligations in such order, priority and proportions as Mortgagee in
its discretion shall deem proper.
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30. Further Acts, etc. Mortgagor will, at the cost of Mortgagor, and
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring and
confirming unto Mortgagee the property and rights hereby mortgaged or intended
now or hereafter so to be, or which Mortgagor may be or may hereafter become
bound to convey or assign to Mortgagee, or for carrying out the intention or
facilitating the performance of the terms of this Mortgage or for filing,
registering or recording this Mortgage and, on demand, will execute and deliver
and hereby authorizes Mortgagee to execute in the name of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or comparable security instruments, to evidence more effectively the
lien hereof upon the Mortgaged Property.
31. Headings, etc. The headings, titles and captions of various
paragraphs of this Mortgage are for convenience of reference only and are not to
be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
32. Filing of Mortgage, etc. Mortgagor forthwith upon the execution
and delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or evidencing the lien
hereof upon the Mortgaged Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect, preserve and perfect the lien hereof upon, and the interest of
Mortgagee in the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property and any
instrument of further assurance, and all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. Mortgagor shall hold harmless and indemnify
Mortgagee, its successors and assigns, against any liability incurred by reason
of the imposition of any tax on the making and recording of this Mortgage.
33. Usury Laws. This Mortgage and the Indenture, the Notes, the Note
Documents, the Subsidiary Guarantee are subject to the express condition that at
no time shall Mortgagor be obligated or required to pay interest on the
principal balance due under the Indenture, the Notes, the Note Documents, the
Subsidiary Guarantee at a rate which could subject the holder of the Indenture,
the Notes, the Note Documents, the Subsidiary Guarantee to either civil or
criminal liability as a result of being in excess of the maximum interest rate
which Mortgagor is permitted by law to contract or agree to pay. If by the
terms of this Mortgage or the Indenture, the Notes, the Note Documents, the
Subsidiary Guarantee Mortgagor is at any time required or obligated to pay
interest on the principal balance due under the Indenture, the Notes, the Note
Documents, the Subsidiary Guarantee at a rate in excess of such maximum rate,
the rate of interest under the Indenture, the Notes, the Note Documents, the
Subsidiary Guarantee shall be deemed to be immediately reduced to such maximum
rate and the interest payable shall be computed at such
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maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Indenture, the Notes, the Note Documents, the
Subsidiary Guarantee.
34. Sole Discretion of Mortgagee. Except as may otherwise be
expressly provided to the contrary, wherever pursuant to the Indenture, the
Notes, the Note Documents, the Subsidiary Guarantee, this Mortgage, or any other
document or instrument now or hereafter executed and delivered in connection
therewith or otherwise with respect to the loan secured hereby, Mortgagee
exercises any right given to it to consent or not consent, or to approve or
disapprove, or any arrangement or term is to be satisfactory to Mortgagee, the
decision of Mortgagee to consent or not consent, or to approve or disapprove or
to decide that arrangements or terms are satisfactory or not satisfactory, shall
be in the sole and absolute discretion of Mortgagee and shall be final and
conclusive.
35. Recovery of Sums Required To Be Paid. Mortgagee shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Secured Obligations as the same become due, without
regard to whether or not the balance of the Secured Obligations shall be due,
and without prejudice to the right of Mortgagee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Mortgagor
existing at the time such earlier action was commenced.
36. Authority. Mortgagor (and the undersigned representative of
Mortgagor, if any) has full power, authority and legal right to execute this
Mortgage and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm and assign the Mortgaged Property pursuant to the terms hereof and to
keep and observe all of the terms of this Mortgage on Mortgagor's part to be
performed.
37. Actions and Proceedings. Mortgagee shall have the right to
appear in and defend any action or proceeding brought with respect to the
Mortgaged Property and to bring any action or proceeding, in the name and on
behalf of Mortgagor, which Mortgagee, in its discretion, feels should be brought
to protect its interest in the Mortgaged Property.
38. Inapplicable Provisions. If any term, covenant or condition of
this Mortgage shall be held to be invalid, illegal or unenforceable in any
respect, this Mortgage shall be construed without such provision.
39. Duplicate Originals. This Mortgage may be executed in any number
of duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.
40. Certain Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form and the
word "Mortgagor" shall mean each Mortgagor and any subsequent owner or owners of
the Mortgaged Property or any part thereof or interest therein; the word
"Mortgagee" shall mean Mortgagee or any subsequent holder of the Notes, the
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<PAGE>
Indenture, the Note Documents, the Subsidiary Guarantee; the word "person" shall
include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority, or other entity; the words
"Mortgaged Property" shall include any portion of the Mortgaged Property or
interest therein; and the word "Secured Obligations" shall mean all sums secured
by this Mortgage. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
41. Waiver of Notice. Mortgagor shall not be entitled to any notices
of any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor, and Mortgagor hereby expressly waives the right to
receive any notice from Mortgagee with respect to any matter for which this
Mortgage does not specifically and expressly provide for the giving of notice by
Mortgagee to Mortgagor.
42. No Oral Change. This Mortgage may only be modified, amended, or
changed by an agreement in writing signed by Mortgagor and Mortgagee, and may
only be released, discharged or satisfied of record by an agreement in writing
signed by Mortgagee. No waiver of any term, covenant or provision of this
Mortgage shall be effective unless given in writing by Mortgagee and if so given
by Mortgagee shall only be effective in the specific instance in which given.
Mortgagor acknowledges that the Notes, the Indenture, the Note Documents, the
Subsidiary Guarantee, this Mortgage, and the other documents and instruments
executed and delivered in connection therewith or otherwise in connection with
the loan secured hereby set forth the entire agreement and understanding of
Mortgagor and Mortgagee with respect to the loan secured hereby and that no oral
or other agreements, understanding, representation or warranties exist with
respect to the loan secured hereby other than those set forth in the Notes, the
Indenture, the Note Documents, the Subsidiary Guarantee, this Mortgage, and such
other executed and delivered documents and instruments.
43. Absolute and Unconditional Obligation. Mortgagor acknowledges
that Mortgagor's obligation to pay the Secured Obligations in accordance with
the provision of the Indenture, the Notes, the Note Documents, the Subsidiary
Guarantee and this Mortgage is and shall at all times continue to be absolute
and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Indenture, the
Notes, the Note Documents, the Subsidiary Guarantee or this Mortgage or the
obligation of Mortgagor thereunder to pay the Secured Obligations or the
obligations of any other person relating to the Indenture, the Notes, the Note
Documents, the Subsidiary Guarantee or this Mortgage or the obligations of
Mortgagor under the Indenture, the Notes, the Note Documents, the Subsidiary
Guarantee or this Mortgage or otherwise with respect to the loan secured hereby,
and Mortgagor absolutely, unconditionally and irrevocably waives any and all
right to assert any defense, setoff, counterclaim or crossclaim of any nature
whatsoever with respect to the obligation of Mortgagor to pay the Secured
Obligations in accordance with the provisions of Indenture, the Notes, the Note
Documents, the Subsidiary Guarantee and this Mortgage or the obligations of any
other person relating to the Indenture, the Notes, the Note Documents, the
Subsidiary Guarantee or this Mortgage or obligations of Mortgagor under the
Indenture, the Notes, the Note Documents, the Subsidiary Guarantee or this
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<PAGE>
Mortgage or obligations of Mortgagor under the Indenture, the Notes, the Note
Documents, the Subsidiary Guarantee or this Mortgage or otherwise with respect
to the loan secured hereby in any action or proceeding brought by Mortgagee to
collect the Secured Obligations, or any portion thereof, or to enforce,
foreclose and realize upon the lien and security interest created by this
Mortgage or any other document or instrument securing repayment of the Secured
Obligations, in whole or in part.
44. Waiver of Trial by Jury. Mortgagor hereby irrevocably and
unconditionally waives, and Mortgagee by its acceptance of the Indenture, the
Notes, the Note Documents, the Subsidiary Guarantee and this Mortgage
irrevocably and unconditionally waives, any and all rights to trial by jury in
any action, suit or counterclaim arising in connection with, out of or otherwise
relating to the Indenture, the Notes, the Note Documents, the Subsidiary
Guarantee, this Mortgage, any other document or instrument now or hereafter
executed and delivered in connection therewith or the loan secured by this
Mortgage.
45. Waiver of Statutory Rights. Mortgagor shall not and will not
apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called "Moratorium Laws", now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this
Mortgage, but hereby waives the benefit of such laws to the full extent that
Mortgagor may do so under applicable law. Mortgagor for itself and all who may
claim through or under it waives any and all right to have the property and
estates comprising the Mortgaged Property marshalled upon any foreclosure of the
lien of this Mortgage and agrees that any court having jurisdiction to foreclose
such lien may order the Mortgaged Property sold as an entirety. Mortgagor
hereby waives for itself and all who may claim through or under it, and to the
full extent Mortgagor may do so under applicable law, any and all rights of
redemption from sale under any order or decree of foreclosure of this Mortgage
or granted under any statute now existing or hereafter enacted.
46. Relationship. The relationship of Mortgagee to Mortgagor
hereunder is strictly and solely that of lender and borrower and nothing
contained in the Indenture, the Notes, the Note Documents, the Subsidiary
Guarantee, this Mortgage, or any other document or instrument now or hereafter
executed and delivered in connection therewith or otherwise in connection with
the loan secured hereby is intended to create, or shall in any event or under
any circumstance be construed as creating, a partnership, joint venture,
tenancy-in-common, joint tenancy or other relationship of any nature whatsoever
between Mortgagee and Mortgagor other than as lender and borrower.
47. Additional Remedies. Notwithstanding any other provision of this
Mortgage to the contrary, if Mortgagor shall default in the observance or
performance of any of the terms, covenants and provisions of this Mortgage on
its part to be observed or performed, or if any one of the events of default
specified this Mortgage shall occur, Mortgagee may, at its option, exercise any
one or more or all of the following remedies in addition to those set forth
elsewhere in this Mortgage:
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<PAGE>
(a) at any time, without notice, in its sole discretion, enter
upon and take possession of the Mortgaged Property or any part thereof, to
perform any acts Mortgagee deems necessary or proper to conserve the Mortgaged
Property and the security thereof and to collect and receive all Rents,
including those past due as well as those accruing thereafter;
(b) as a matter of strict right and without regard to the value
or occupancy of the security, have a receiver appointed to enter upon and take
possession of the Mortgaged Property, collect the Rents and apply the same as
the court may direct, such receiver to have all the rights and powers permitted
under the laws of the State of Florida;
(c) Institute an action of mortgage foreclosure, or take action
as the law may allow, at law or in equity, for the enforcement of this mortgage,
and proceed thereon to final judgment and execution of the entire unpaid balance
of the Secured Obligations including costs of suit, interest and reasonable
attorneys' fees;
(d) Institute partial foreclosure proceedings with respect to the
portion of the Secured Obligations so in default, as if under a full
foreclosure, and without declaring the entire Secured Obligations due, provided
that if foreclosure sale is made because of default of a part of the Secured
Obligations, such sale may be made subject to the continuing lien of this
Mortgage for the unmatured part of the Secured Obligations; and it is agreed
that such sale pursuant to a partial foreclosure, if so made, shall not in any
manner affect the unmatured part of this Mortgage and the lien thereof shall
remain in full force and effect just as though no foreclosure sale had been made
under the provisions of this subsection. Notwithstanding the filing of any
partial foreclosure or entry of a decree of sale therein, Mortgagee may elect at
any time prior to a foreclosure sale pursuant to such decree, to discontinue
such partial foreclosure and to accelerate the Secured Obligations by reason of
any uncured default or defaults upon which such partial foreclosure was
predicated or by reason of any other defaults, and proceeds with full
foreclosure proceedings. It is further agreed that several foreclosure sales
may be made pursuant to partial foreclosures without exhausting the right of
full or partial foreclosure sale for any unmatured part of the Secured
Obligations, it being the purpose to provide for a partial foreclosure sale of
the secured Secured Obligations of any matured portion of the secured Secured
Obligations without exhausting the power to foreclose and to sell the Mortgaged
Property pursuant to any such partial foreclosure for any other part of the
secured Secured Obligations whether matured at the time or subsequently
maturing; and without exhausting any right of acceleration and full foreclosure.
(e) Institute an action for specific performance of any covenant
contained herein or in aid of the execution of any power herein granted; and
(f) Exercise any and all other rights and remedies granted under
this Mortgage or now or hereafter existing in equity, at law, by virtue of
statute or otherwise.
In the case of either (a) or (b) above, Mortgagee or the receiver may
also take possession of, and for these purposes use, any and all personal
property constituting part of the Mortgaged Property and used by Mortgagor in
the rental, sale or leasing thereof or any part thereof. The expenses
(including receiver's fees, counsel fees, costs and agent's compensation)
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<PAGE>
incurred pursuant to the powers herein contained shall be secured by this
Mortgage. Mortgagee shall (after payment of all costs and expenses incurred)
apply the Rents received by it to the Secured Obligations in such priority and
proportions as Mortgagee in its discretion shall deem proper. The right to
enter and take possession of the Mortgaged Property, to manage and operate the
same, and to collect the Rents, whether by a receiver or otherwise, shall be in
addition to any other right or remedy hereunder or afforded by law, and may be
exercised concurrently therewith or independently thereof.
48. Future Advances. This Mortgage shall secure such future or
additional advances as may be made by Mortgagee at its option to Mortgagor or
Mortgagor's successor in title for any purpose, provided that all those advances
are to be made within 20 years from the date of this Mortgage or within such
lesser period of time as may be provided hereafter by law as a prerequisite for
the sufficiency and actual notice or record of notice of the optional future or
additional advances as against the rights of creditors or subsequent purchasers
for valuable consideration. The total amount of the indebtedness secured by
this Mortgage may decrease or increase from time to time but the total unpaid
principal balance as secured at any one time by this Mortgage shall not exceed
the maximum principal amount of TWENTY MILLION and 00/100 Dollars ($20,000.000),
plus interest, and any disbursements made for the payment of taxes, levies, or
insurance on the property covered by the lien of this Mortgage with interest on
those disbursements. It shall be a default hereunder if Mortgagor shall file
for record a notice limiting the maximum principal amount which may be secured
by this Mortgage if the effect of the filing of such notice would in any way
prohibit Mortgagee from making future advances to be secured by this Mortgage in
the full amount hereinabove set forth.
49. Homestead Exemptions. Mortgagor hereby represents and declares
that the Mortgaged Property forms no part of any property owned, used or claimed
by Mortgagor as exempted from forced sale under the laws of the State of
Florida, and disclaims, waives and renounces all and every claim to exemption
under any homestead exemption law or other laws.
50. Sale of the Properties; Application of Proceeds. Subject to the
requirements of applicable law, the proceeds or avails of foreclosure sale and
all moneys received by Mortgagee pursuant to any right given or action taken
under the provisions of this Mortgage, shall be applied as follows:
First: To the payment of the costs and expenses of any such sale or
other enforcement proceedings in accordance with the terms hereof and of any
judicial proceeding wherein the same may be made, and in addition thereto,
reasonable compensation to Mortgagee, its agents and counsel, and of all sums
due to Mortgagee under the Indenture, the Notes, the Note Documents and
Subsidiary Guarantee and all actual out-of-pocket expenses, advances,
liabilities and sums made or furnished or incurred by Mortgagee under this
Mortgage and the Indenture, the Notes, the Note Documents and the Subsidiary
Guarantee and together with Defaulted Interest such lesser amount as may be the
maximum amount permitted by law), and all taxes, assessments or other charges,
except any taxes, assessments or other charges subject to which the Mortgaged
Property shall have been sold;
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<PAGE>
Second: To the payment of the Secured Obligations when due, owing or
unpaid for principal and interest; and in case such proceeds shall be
insufficient to pay in full the whole amount so due and unpaid, then first, to
the payment of all amounts of interest on the principal at the time due and
payable on the Indenture, the Notes, the Note Documents and Subsidiary
Guarantee.
Third: To the payment of any other sums required to be paid by
Mortgagor pursuant to any provision of this Mortgage;
Fourth: To the payment or the surplus, if any, to whomsoever may be
lawfully entitled to receive the same.
51. Remedies Not Exclusive. Mortgagee shall be entitled to enforce
payment and performance of the Secured Obligations or any obligations secured
hereby and to exercise all rights and powers under this Mortgage or other
agreement or any laws now or hereafter in force, notwithstanding some or all of
the Secured Obligations and obligation may now or hereafter be otherwise
secured, whether by mortgage, deed of trust, pledge, lien, assignment or
otherwise. Neither the acceptance of this Mortgage nor its enforcement, whether
by court action or pursuant to the power of sale or other powers herein
contained, shall prejudice or in any manner affect Mortgagee's right to realize
upon or enforce any other security now or hereafter held by Mortgagee it being
agreed that Mortgagee shall be entitled to enforce this Mortgage and any other
security now or hereafter held by Mortgagee in such order as it may in its
absolute discretion determine. No remedy herein conferred upon or reserved to
Mortgagee is intended to be exclusive of any other remedy given hereunder or now
or hereafter existing at law or in equity or by statute. Every power or remedy
given to Mortgagee or to which Mortgagee may be otherwise entitled, may be
exercised concurrently or independently, from time to time and as often as may
be deemed expedient by Mortgagee.
IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage the day
and year first above written.
Signed in the presence of: PPI, Inc., a Florida corporation
_____________________________ By:______________________________
_____________________________
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<PAGE>
STATE OF FLORIDA)
)SS:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ___ day of
_________, 1996, by ____________________ as _________________ of PPI, Inc., a
Florida corporation. He is either personally known to me or has produced
satisfactory identification.
_______________________________________________
Notary Public, State of Florida at Large
_______________________________________________
Print Name of Notary
My Commission Expires:_________________________
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<PAGE>
Exhibit A
Premises
<PAGE>
Exhibit B
Permitted Exceptions
<PAGE>
Exhibit C
Environmental Reports
<PAGE>
EXHIBIT 10.10
-------------
================================================================================
FIRST PREFERRED SHIP MORTGAGE
ON THE WHOLE OF THE
___________________
(OFFICIAL NUMBER ____________)
$300,000,000
================================================================================
_________________________________
_________________________________
_________________________________
OWNER AND MORTGAGOR
IN FAVOR OF
FLEET NATIONAL BANK,
IN ITS CAPACITY AS COLLATERAL AGENT UNDER
THAT CERTAIN INDENTURE DATED AS OF
______________, 1996 BETWEEN
______________________________
AND CASINO AMERICA, INC.
[ADDRESS]
================================================================================
DATED: ______________, 1996
================================================================================
Discharge Amount: $300,000,000 Together
With Interest, Expenses, Fees and
Performance of Mortgage Covenants
<PAGE>
FIRST PREFERRED SHIP MORTGAGE
-----------------------------
THIS FIRST PREFERRED SHIP MORTGAGE (hereinafter called the "MORTGAGE") on
the whole of the Vessel (as hereinafter defined), which is dated as of
______________, 1996, is provided and made by
______________________________________, a Louisiana ______________
_____________, whose mailing address is __________________________
___________________________ (hereinafter called "MORTGAGOR") to FLEET NATIONAL
BANK, as Collateral Agent under the Indenture (as hereinafter defined) whose
mailing address is ____________________ ______________________________
(hereinafter called "MORTGAGEE"). Capitalized terms not otherwise defined herein
shall have the meanings set forth for such terms in the Indenture (as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, pursuant to an Indenture dated of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "INDENTURE"), among
CASINO AMERICA, INC., a Delaware corporation, as issuer (including its
successors and assigns, the "COMPANY"), the Mortgagee, as Trustee and Collateral
Agent for the benefit of the Holders, a copy of such Indenture being attached
hereto as EXHIBIT "A" and incorporated herein by reference, and the Subsidiary
Guarantors, the Company is issuing up to $300,000,000 aggregate principal amount
of its ______% Senior Secured Notes due 2003 (the "NOTES"), subject to the terms
and conditions set forth in the Indenture; and
WHEREAS, the principal of and interest on the Notes are due and payable
upon the terms and conditions therein recited and mature on _______________,
2003, and a copy of the form of such Notes is attached hereto as EXHIBIT "B" and
incorporated herein by reference; and
WHEREAS, a portion of the net proceeds derived from the issuance of the
Notes is being used to retire certain indebtedness of Mortgagor, and Mortgagor,
as a Subsidiary of the Company, will otherwise benefit, either directly or
indirectly, from advances of the proceeds of the Notes made by the Company; and
WHEREAS, Mortgagor has entered into a Subsidiary Guaranty of even date
herewith, pursuant to which Mortgagor has jointly, severally, solidarily and
unconditionally guaranteed all of the Company's obligations under the Notes and
the Indenture (the "SUBSIDIARY GUARANTY"); and
WHEREAS, Mortgagor is the sole owner of the Vessel herein described below;
and
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WHEREAS, the Vessel has been documented in the name of the Mortgagor under
the laws and the flag of the United States with the National Vessel
Documentation Center; and
WHEREAS, it is a condition precedent to Mortgagee's execution of the
Indenture and the purchase of the Notes by Holders that Mortgagor shall have
executed and delivered this Mortgage to the Mortgagee, for its benefit and the
benefit of the Holders;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to secure the due and punctual payment and performance of any
and all present and future obligations and liabilities of Mortgagor of every
type or description to Mortgagee: (i) arising under or in connection with the
Indenture or the Notes, whether for principal, premium (if any) interest,
expenses, indemnities or other amounts (including attorneys' fees and expenses);
or (ii) arising under or in connection with this Mortgage or any other Note
Document, including for reimbursement of amounts that may be advanced or
expended by the Mortgagee (a) to satisfy amounts required to be paid by
Mortgagor under this Mortgage or any other Note Document for claims and Charges,
together with interest thereon to the extent provided or (b) to maintain or
preserve any Collateral, including the Vessel (as hereinafter defined) or to
create, perfect, continue or protect any Collateral or the Security Interest
____ therein, including the Vessel (as hereinafter defined), or its priority; in
each case whether due or not due, direct or indirect, joint and/or several,
absolute or contingent, voluntary or involuntary, liquidated or unliquidated,
determined or undetermined, now or hereafter existing, renewed or restructured,
whether or not from time to time decreased or extinguished and later increased,
created or incurred, whether or not arising after the commencement of a
proceeding under the Federal Bankruptcy Code (including post-petition interest)
and whether or not recovery of any such obligation or liability may be barred by
a statute of limitations or such obligation or liability may otherwise be
unenforceable (all obligations and liabilities described herein are collectively
referred to as the "Secured Obligations"), Mortgagor does by these presents
mortgage, convey and grant a continuing security interest in, unto Mortgagee,
for itself and the ratable benefit of the Secured Parties, and to Mortgagee's
successors and assigns in the capacity of Collateral Agent, the whole of the
following named and described vessel (hereinafter referred to as the "Vessel")
to wit:
OFFICIAL
VESSEL NAME NUMBER
----------- ------
--------------- --------
together with all materials, equipment and accessories now or from time to time
installed thereon, and substitutions therefor, whether
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<PAGE>
now existing or hereafter acquired, including without limitation its boilers,
engines, machinery, masts, spars, boats, cables, motors, navigation and radar
equipment, tools, anchors, chains, booms, cranes, rigs, pumps, pipe, tanks,
tackle, apparel, furniture, fixtures, rigging, supplies, fittings and machinery,
equipment and accessories relating to gaming operations (including but not
limited to all gaming supplies, table games, money continuing and wrapping
equipment, casino related signage, gaming equipment (as hereinafter defined) and
communication systems, visual and electronic surveillance systems and
transportation systems), tools, utensils, food and beverage, liquor, uniforms,
linens, housekeeping and maintenance supplies, fuel, all financial equipment,
computer equipment, calculators, adding machines and any other electronic
equipment of every nature used in connection with the operation of the Vessel,
all machinery, equipment, engines, appliances and fixtures for generating or
distributing air, water, heat, electricity, light, fuel or refrigeration, or for
ventilating or sanitary purposes, or for the exclusion of vermin or insects, or
for the removal of dust, refuse or garbage, all wall-beds, wall-safes, built-in
furniture and installations, shelving, lockers, partitions, doorstops, vaults,
motors, elevators, dumb-waiters, awnings, window shades, venetian blinds, light
fixtures, fire hoses and brackets and boxes for the same, fire sprinklers,
alarm, surveillance and security systems, computers, drapes, drapery rods and
brackets, mirrors, mantels, screens, linoleum, carpets and carpeting, plumbing,
bathtubs, showers, sinks, basins, pipes, faucets, water closets, laundry
equipment, washers, dryers, ice-boxes and heating units, all kitchen and
restaurant equipment, including but not limited to silverware, dishes, menus,
cooking utensils, stoves, refrigerators, ovens, ranges, dishwashers, disposals,
water heaters, incinerators, furniture, fixtures and furnishings, all cocktail
lounge supplies, including but not limited to bars, glassware, bottles and
tables used in connection with the Vessel, all chaise lounges, hot tubs,
swimming pool heaters and equipment, and all other recreational equipment
(computerized and otherwise), beauty and barber equipment, and maintenance
supplies used in connection with the Vessel, all specifically designed
installations and furnishings, and all furniture, furnishings and Personal
property of every nature whatsoever now or hereafter owned or leased by the
Mortgagor or in which the Mortgagor has any rights or interest and located in or
on, or attached to, or used or intended to be used or which are now or may
hereafter be appropriated for use on or in connection with the operation of the
Vessel, or in connection with any construction being conducted or which may be
conducted thereon, and all extensions, additions, accessions, improvements,
betterments, renewals, substitutions, and replacements to any of the foregoing,
all of which (to the fullest extent permitted by law) shall be conclusively
deemed appurtenances to the Vessel, and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired, whether on
board or not, and all additions, improvements and replacements hereafter made in
or to
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the Vessel, but shall not include FF&E the acquisition of which is now or
hereafter subject to an FF&E Financing (a) which is permitted pursuant to the
Indenture and (b) the terms of which prohibits Liens on the FF&E subject thereto
other than the Liens securing such FF&E financing. For purposes hereof, "gaming
equipment" shall mean any equipment or mechanical, electromechanical or
electronic contrivance, component or machine, including a slot machine, used
directly or indirectly with gaming or any game, which affects the result of a
wager by determining wins or losses.
TO HAVE AND TO HOLD ALL and singular the above-described Vessel unto
Mortgagee, its successors and assigns forever.
Provided, however, that if the Secured Obligations are paid and performed
in full in accordance with the terms of the Indenture, the Subsidiary Guaranty,
this Mortgage and the other Note Documents, and the Indenture is satisfied and
discharged in accordance with the terms hereof, then this Mortgage shall cease
and, in such event, at the expense of the Mortgagor, the Mortgagee agrees to
execute all documents as the Mortgagor may reasonably require to discharge this
Mortgage under the laws of the United States; otherwise, it shall remain in full
force and effect. Mortgagor agrees to perform and to observe the terms,
covenants and agreements contained in its Subsidiary Guaranty, this Mortgage,
the Indenture, and in the other Note Documents to which it is a party, and to
hold the Vessel subject thereto.
Nothing herein shall be deemed or construed to subject to the Lien hereof
any property other than a vessel or vessels as the term is used in the Ship
Mortgage Act, 1920, as amended, recodified as 46 U.S.C. (S) 31301 et seq. (the
"SHIP MORTGAGE ACT").
The terms and conditions of this Mortgage are as follows:
ARTICLE I
---------
Particular Representations, Warranties and Covenants of Mortgagor
- -----------------------------------------------------------------
The Mortgagor hereby represents, warrants, covenants and agrees with the
Mortgagee as follows:
1. Mortgagor is and shall continue to be a citizen of the United States
within the meaning of Section 2 of the Shipping Act, 1916, as amended (46 App.
U.S.C. (S) 802), entitled to own and operate the Vessel in the coastwise trade
under its marine document, which marine document shall be maintained in full
force and effect by the Mortgagor; the Vessel is duly documented in the name of
the Mortgagor under the United States flag with the National Vessel
Documentation Center; and all action necessary for the execution, delivery,
validity and performance of Mortgagor's Subsidiary Guaranty, this Mortgage and
the other Note Documents to
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<PAGE>
which Mortgagor is a party have been duly taken. Mortgagor is a corporation
duly organized and is and shall continue to be validly existing and in good
standing under the laws of the State of Louisiana and is authorized to do
business and is in good standing in any other state wherein Mortgagor is
required to be qualified to do business.
2. Mortgagor lawfully owns and possesses the Vessel free of all Liens
whatsoever, except for (i) Liens which secure Mortgagee, its successors or
assigns, (ii) Liens which relate to wages of a stevedore, when employed directly
by a Person listed in 46 U.S.C. (S) 31341, crews' wages, salvage and general
average, and (iii) those Liens permitted to exist pursuant to the Indenture
(collectively, the "PERMITTED ENCUMBRANCES"); all of which shall be and remain
inferior to the Lien granted hereby except for those Liens specifically
described in Schedule 1 hereto (the "PRIOR PERMITTED ENCUMBRANCES"). Mortgagor
shall warrant and defend title to and possession of all and every part of the
Vessel for the benefit of Mortgagee against all Persons whomsoever, except for
the claims and demands relating to Permitted Encumbrances being properly
asserted.
3. Mortgagor shall comply with, and not permit the Vessel to be operated
contrary to, any provision of any law, treaty, convention, rule, regulation or
order of the United States, any State, and/or of any department or agency
thereof, specifically including, without limitation, any Gaming Authority (as
defined in the Indenture), and shall not operate the Vessel outside of the
navigation limits of the insurance carried pursuant to Section 11 of this
Article I. Mortgagor shall do every thing necessary to establish and maintain
this Mortgage as a valid and enforceable first preferred ship mortgage (within
the meaning of the Ship Mortgage Act) on the Vessel, prior to all other Liens
and encumbrances, except for Prior Permitted Encumbrances (including, but not
limited to, paying and discharging all debts, damages and liabilities whatsoever
which have given or may give rise to maritime or possessory Liens on or claims
enforceable against the Vessel).
4. Neither Mortgagor nor the master of the Vessel, or any one acting in
its or their behalf, has or shall have any right, power of authority to create,
incur or permit to be placed or imposed or continued upon the Vessel any Lien
whatsoever, except for Permitted Encumbrances, and in no event shall any Lien be
imposed or placed or continued upon the Vessel which would or might be prior to
or on a parity with or which might impair the Lien of this Mortgage, except for
Prior Permitted Encumbrances, provided that the right of Mortgagor to create or
permit the existence of such encumbrances shall in no event be construed as
permitting any libel, attachment, or other seizure of the Vessel under process
or color of legal authority to remain undissolved or undischarged, or in any
respect modify or alter any obligation of Mortgagor under Section 7 of this
Article I.
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5. Mortgagor shall pay and discharge when due and payable from time to
time, all taxes, assessments, governmental charges, fines and penalties lawfully
imposed upon the Vessel and upon any income therefrom; provided that Mortgagor
may omit to pay any such taxes, assessments, governmental charges, fines or
penalties that are being contested in good faith and with due diligence and by
appropriate legal proceedings so long as (a) adequate reserves with respect
thereto are maintained on the books of Mortgagor in accordance with generally
accepted accounting principles, (b) Mortgagor gives Mortgagee timely notice of
its intention to contest the same, (c) the commencement of such proceedings
shall suspend the collection or enforcement of the matter under contest, or, if
the commencement of such proceedings does not suspend such collection or
enforcement, Mortgagor shall have made payment of any item sought to be
collected with or without protest, (d) there shall be no impairment of the Lien
of this Mortgage or any other Note Document or undue interference with the
normal conduct of Mortgagor's riverboat gaming operation on the Vessel or at the
real property adjacent to which the Vessel is operating, (e) neither the Vessel
nor the real property adjacent to which the Vessel is operating, nor any part
thereof or interest therein, would be in any immediate danger of being sold,
forfeited or lost, (f) neither Mortgagee nor any Holder would be potentially
subjected to criminal, or in imminent danger of civil, liability for failure to
comply therewith pending the outcome of such proceedings, (g) in the case of
taxes, assessments, charges, fines, penalties or other impositions, Mortgagor
shall have either (i) paid the amount in dispute prior to instituting such
contest, in which event the notice requirement of clause (b) above shall be
satisfied by giving notice prior to initiating such contest rather than prior to
making payment, or (ii) furnished reasonable security during the pendency of
such proceedings, and (h) if such contest be finally resolved against Mortgagor,
Mortgagor shall promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable
requirement. Mortgagor shall indemnify and save Mortgagee and each Holder
harmless from and against any liability, loss, damage, cost or expense of any
kind that may be imposed upon Mortgagee or such Holder in connection with any
such contest and any determination resulting therefrom, and the right of
Mortgagor to contest the validity of any claim contemplated by this Section 5
shall in no event be construed as permitting any libel, attachment, or other
seizure of the Vessel under process or color of legal authority to remain
undissolved or undischarged, or in any respect modify or alter any obligation of
Mortgagor under Section 7 of this Article I.
6. Mortgagor will cause a properly certified copy of this Mortgage to be
exhibited to any and all Persons having business with such Vessel which might
give rise to any Lien thereon other than Liens for stevedores' and crews' wages,
salvage and general average, and to any representative of the Mortgagee on
demand. A notice of this Mortgage shall be prominently displayed aboard the
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Vessel, printed in plain type of such size that it shall cover a space not less
than six (6) inches wide by nine (9) inches high, which said notice shall read
as follows:
Notice of Mortgage
------------------
This vessel is owned by __________________________ ___________, a Louisiana
___________________, and is covered by a First Preferred Ship Mortgage in
favor of Fleet National Bank, as Collateral Agent for the Holders under an
Indenture dated as of _____________, 1996 with Casino America, Inc., and
others, said First Preferred Ship Mortgage having been executed under
authority of the Ship Mortgage Act, 1920, as amended, recodified at 46
U.S.C. (S) 31301 et seq. Under the terms of said First Preferred Ship
Mortgage, neither the Mortgagor nor the Master, nor any agent of this
Vessel nor any other Person has any right, power or authority to create,
incur or permit to be imposed upon this Vessel any Lien whatsoever other
than Permitted Encumbrances (as defined in such First Preferred Ship
Mortgage).
7. If, notwithstanding the prohibition against creating Liens against the
Vessel, the Vessel shall be libeled, arrested, attached, detained, seized or
levied upon or taken into custody under process or under color of any authority,
Mortgagor shall forthwith notify Mortgagee by telegram, confirmed by letter, and
forthwith discharge or release the Vessel therefrom, and in any event within
fifteen (15) days after such libel, attachment, detention, seizure, levy or
taking into custody; provided, however, if the Mortgagor or any charterer of the
Vessel shall invoke the benefits of 46 App. U.S.C. (S) 181 to (S) 186,
inclusive, as amended, providing for the limitation of the liability of ship
owners, then and in that event, the release and discharge of the Vessel shall be
effected within five (5) days from the date of the order of the district court
for the payment into the registry of the court of the amount of the value of
petitioner's interest in the Vessel and its pending freight, if any; and
provided, further, that in any such proceeding to limit liability the Vessel
shall not be surrendered or offered to be surrendered to a trustee as provided
in 46 App. U.S.C. (S) 185(b), without the written consent of Mortgagee first had
and obtained. If Mortgagor shall fail or neglect to release the Vessel from
libel, arrest, attachment, detainment, seizure or levy, Mortgagee or any Person
acting on behalf of Mortgagee may, but shall not be obligated to, furnish
security to release the Vessel and by so doing shall not be deemed to have cured
the default of Mortgagor and the cost of same shall be charged against Mortgagor
and be promptly repaid to Mortgagee with interest thereon at the same rate (the
"DEFAULT RATE") as is provided upon any overdue principal amount of the
indebtedness evidenced by the Notes and with costs and the interest thereon
shall constitute a debt secured by the Lien of this Mortgage.
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8. Mortgagor shall (i) at all reasonable times afford Mortgagee or its
representatives complete opportunity to inspect the Vessel and its cargoes and
papers (including the Vessel's logs), (ii) furnish Mortgagee with full
information regarding any material casualties or other accidents or damage to
the Vessel, (iii) at the reasonable request of Mortgagee, deliver for inspection
copies of any and all contracts and documents relating to the Vessel, whether on
board or not, and (iv) certify upon Mortgagee's request, but not more often than
quarterly, that all wages and other claims whatsoever, which might have given
rise to a Lien upon the Vessel, have been paid.
9. (a) Mortgagor shall not, without the prior written consent of
Mortgagee, sell, lease, demise, charter, or further mortgage the Vessel or any
interest therein. Any such written consent to any one sale, lease, demise,
charter or mortgage shall not be construed to be a waiver of this provision with
respect to any subsequent proposed sale, lease, demise, charter or mortgage of
the Vessel (or any interest therein). Any such sale, mortgage, charter or
transfer of the Vessel or any interest therein shall be subject to the
provisions of this Mortgage and the Lien hereof.
(b) Mortgagor shall not, except as herein expressly permitted, change
the name or flag of the Vessel or make any substantial change in the Vessel's
structure without the written consent of Mortgagee first had and obtained, which
consent with respect to a change of name, flag or structure of the Vessel shall
not be unreasonably withheld, and any such written consent to any change of
name, flag or structure shall not be construed to be a waiver of this provision
with respect to any subsequent proposed change of name, flag or structure. In
the event of Mortgagee's consent to any change of name or flag of the Vessel,
such change shall not be undertaken unless and until all filings, recordations
or other actions necessary to perfect and protect the Lien created by this
Mortgage and to enable the Mortgagee to exercise and enforce its rights and
remedies hereunder with respect to the Vessel after giving effect to such change
of name or flag shall have been completed (including, without limitation,
opinions of counsel as to the perfected status of the Mortgagee after giving
effect to such change of name or flag, if required by Mortgagee).
10. From time to time Mortgagor shall execute and deliver such other and
further instruments and assurances as: (i) may be required to effect the
purposes of this Mortgage; (ii) necessary to maintain and effectuate this
Mortgage as a valid and enforceable first preferred mortgage (within the
meaning of the Ship Mortgage Act) on the Vessel, prior to all other Liens and
encumbrances, except Prior Permitted Encumbrances; (iii) necessary for operation
of the Vessel by Mortgagee, as herein provided; and (iv) necessary to effectuate
sales as hereinafter provided in paragraph (c) of Section 7 of Article II.
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11. (a) So long as any of the Secured Obligations secured hereby remain
outstanding, Mortgagor, at its expense and at no expense to the Mortgagee, shall
keep the Vessel insured against (i) risks of fire, explosion and marine perils,
and against all other liabilities and risks insured under the form of policy
known as "American Institute Hull Clauses (June 2, 1977)," or equivalent
including, but not limited to, strikes, riots, and civil commotion coverage,
(ii) risks covered by protection and indemnity insurance (including, without
limitation, coverage against third party claims for pollution liability
including statutory and governmental clean up liabilities) and (iii) such other
risks and liabilities, including employees' compensation, from time to time
reasonably specified by Mortgagee. The Mortgagor will keep the Vessel insured,
in lawful money of the United States and in the broadest form available in
markets acceptable to the Mortgagee, for not less than (A) in the case of the
insurance referred to in clause (i) above, the full insurable value of the
Vessel; provided, however, that the aggregate amount of such insurance in
respect of the Vessel shall never be less than the aggregate outstanding amount
of the Secured Obligations secured hereby, and (B) in the case of the insurance
referred to in clause (ii) above, in the maximum amount commercially reasonably
available from time to time; provided, however, that any protection and
indemnity insurance shall be in an amount not less than the amount of insurance
against total loss.
(b) The policy or policies of insurance shall be issued by
underwriters or associations having an A.M. Best & Company, Inc. rating of A- or
higher, or if such underwriter or association is not rated by A.M. Best &
Company, Inc., having the financial stability and size deemed appropriate by a
reputable insurance broker, and shall contain conditions, terms, stipulations
and insurance covenants as shall be reasonably satisfactory to the Mortgagee.
The Mortgagor shall furnish to the Mortgagee, annually, not later than ninety
(90) days after the end of Mortgagor's fiscal year, a detailed certificate or
opinion signed by a firm of marine insurance brokers reasonably satisfactory to
the Mortgagee that the insurance coverages in place and the amounts thereof are
prudent and reasonable taking into account existing industry practices, and the
risks associated with the trade of the Vessel and comply with Mortgagor's
obligations under this Section 11. Cover notes and/or certificates for all
insurance coverages provided for herein shall be furnished to the Mortgagee upon
execution of this Mortgage and delivered to Mortgagee whenever requested but, in
all events, no less than annually on or before January 15th of each year and at
the time such insurance coverages are renewed, extended or a new insurance
policy substituted therefor. All policies required hereunder shall contain
provisions that the same may not be cancelable or materially modified until
thirty (30) days following delivery to Mortgagee of written notice of intent to
cancel. Any language contained in the printed policy or insurance certificate
which relieves the insurance carrier from responsibility to the
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Mortgagee in the event such carrier fails to provide such notice must be
deleted.
(c) All insurance and the policies evidencing the same shall by their
terms be taken out in the joint names of Mortgagor and Mortgagee, if required by
Mortgagee, and shall by their terms be payable to them as their respective
interests may appear. The interest of Mortgagee is hereby declared to be the
outstanding amount of the Secured Obligations, whether contingent or absolute,
due or to become due, and in event of a total loss of the Vessel, actual or
constructive, or a compromised constructive loss or requisition, Mortgagee shall
be paid the entire amount of insurance covering the Vessel for application in
accordance with the Indenture. The Mortgagor shall not declare or agree with
the underwriters that the Vessel is a constructive or compromised, agreed or
arranged total loss without the prior written consent of the Mortgagee. The
proceeds of all other insurance shall be paid to Mortgagor and Mortgagee
jointly, and provided that Mortgagor is not in default under this Mortgage,
Mortgagee shall, at its option, either make available to Mortgagor by an
appropriate payment order directed to the interested underwriter the proceeds of
all insurance to pay any outstanding bill for supplying or repairing the Vessel
and/or outstanding third-party claim, provided that Mortgagor pays the amount of
the deductible; or reimburse Mortgagor in whole or in part for any expenditures
Mortgagor may have made for repairing the Vessel and/or obtaining waivers of
Liens or appropriate releases for the thirty-party claims. Should Mortgagor not
effect repairs to the Vessel or pay third-party claims, or in either event
furnish and/or pay the deductible, or if Mortgagor is in default hereunder, then
Mortgagee shall be entitled to receive the proceeds of any insurance applicable
to such loss and upon payment shall credit the net proceeds of any insurance as
hereinafter provided in Section 9 of Article II.
(d) Mortgagor agrees to renew all insurance policies or cause or
procure the same to be renewed before the relevant policies or contracts expire
and to procure that the insurers or a firm of independent marine insurance
brokers shall promptly confirm in writing to the Mortgagee as and when each such
renewal is effected. The Mortgagor agrees to cause such insurers or independent
marine insurance brokers to agree (x) to advise the Mortgagee promptly of any
failure to renew or other event which could cause a lapse in coverage and of any
default in payment of any premium and of any other act or omission on the part
of the Mortgagor of which they have knowledge and which might, in their opinion,
invalidate or render unenforceable, or cause the lapse of, or prevent the
renewal or extension of, in whole or in part, the insurance on the Vessel and
(y) to mark their records and advise the Mortgagee at least thirty days prior to
the expiration date of any of the insurance policies, that such insurance
policies have been renewed or replaced with new insurance which complies with
the provisions hereof.
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(e) Mortgagor warrants that it will maintain all such insurance
unimpaired by any act, breach of warranty or otherwise, and that it will not be
guilty of or permit any act of omission or commission which will in any way
invalidate, void or suspend any insurance herein provided to be maintained.
Mortgagor shall also procure and maintain breach of warranty or Mortgagee's
interest insurance in favor of Mortgagee on each of the above policies.
Mortgagor shall pay for any loss of or damage to the Vessel by any cause
whatsoever and any third-party claims whatsoever which would constitute a Lien
against the Vessel not covered by insurance or for which no reimbursement or
incomplete reimbursement is secured from the insurance.
12. Mortgagor shall, at its own expense, at all times keep the Vessel in a
good and efficient state of repair and perform all ordinary maintenance on the
Vessel and make all proper renewals and replacements necessitated by wear, tear,
normal depreciation and casualty so as to comply with the provisions of all
laws, regulations and requirements (statutory or otherwise) from time to time
applicable to vessels registered under the flag of the United States and engaged
in the service in which the Vessel is engaged. In the event of damage to the
Vessel less than a total loss, actual or constructive, as constructive total
loss is defined in the policy or policies of hull insurance procured hereunder,
Mortgagor shall make and pay for the repairs necessitated thereby, and in that
event Mortgagor shall pay the amount of the deductible average provided in the
insurance, and if Mortgagor has paid for such repairs and is not in default
under the terms of this Mortgage, Mortgagor shall be entitled to receive the
proceeds of insurance applicable to the repaired damage in the manner provided
in Section 11(c) above; and if Mortgagor does not make such repairs, Mortgagor
nevertheless shall remain bound for the amount of the deductible average
provided in such insurance.
13. The Mortgagor agrees to keep books of record and account in accordance
with generally accepted accounting principles and to make said books of record
and account available to Mortgagee during normal business hours when requested
to do so by Mortgagee and to furnish Mortgagee with any and all information and
statements as Mortgagee may reasonably request.
14. The entry into and performance by the Mortgagor of each of this
Mortgage, Mortgagor's Subsidiary Guaranty, and the other Note Documents to which
Mortgagor is a party, does not, and will not violate in any respect (i) any
applicable law or regulation of any governmental or official authority or body,
or (ii) any agreement, contract or other undertaking to which the Mortgagor is a
party or which is binding on the Mortgagor or any of its assets.
15. All consents, licenses, approvals and authorizations (including any
approvals of the U.S. Maritime Administration) required for the entry into,
performance, validity and
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enforceability of this Mortgage, Mortgagor's Subsidiary Guaranty and the other
Note Documents to which Mortgagor is a party have been obtained and are in full
force and effect.
16. Except for the filing with the National Vessel Documentation Center,
it is not necessary for the legality, validity, enforceability or admissibility
in evidence of this Mortgage that it, or any document relating hereto, be
registered, filed, recorded or enrolled with any court or authority in any
relevant jurisdiction or that, except for the recording fee payable to the U.S.
Coast Guard, any stamp, registration or similar taxes or fee be paid on or in
relation to this Mortgage, Mortgagor's Subsidiary Guaranty and the Note
Documents.
17. The Mortgagor will cause the Vessel, upon documentation with the
National Vessel Documentation Center and at all times thereafter, to hold a
valid Certificate of Inspection and to be operationally seaworthy.
18. The Mortgagor will submit or cause the Vessel to be submitted to such
periodic surveys as may be required for inspection purposes and to supply or to
cause to be supplied to the Mortgagee at its request, copies of all survey
reports and a copy of the Certificate of Inspection concerning the Vessel.
19. The Mortgagor will promptly furnish and cause to be furnished to the
Mortgagee all such information as it may from time to time reasonably request
regarding the Vessel, its employment, position and engagements, particulars of
all towages and salvages and copies of all charters and other contracts for its
employment or otherwise concerning the matters addressed by this Mortgage.
20. The Mortgagor agrees to notify the Mortgagee in writing of:
(i) any accident to the Vessel involving repairs the cost of which
will or is likely to exceed $50,000.00;
(ii) any occurrence which has or is likely to render the Vessel a
total loss or a constructive total loss;
(iii) any requirement or recommendation made by any insurer or
classification society or by any competent authority with which there is
not prompt compliance with the reasons therefor;
(iv) any arrest of the Vessel or the exercise or purported exercise of
any Lien on the Vessel or its earnings; and
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(v) any occurrence of an event of default specified in Article II
hereof or an event which with notice, lapse of time or both will constitute
an event of default specified therein.
21. In the event that at any time and from time to time this Mortgage, any
other Note Document or any provisions hereof or thereof shall be deemed
invalidated in whole or in part by reason of any present or future law or any
decision of any court, or if the documents at any time held by Mortgagee shall
be deemed by Mortgagee for any reason insufficient to carry out the true intent
and spirit of this Mortgage and each other Note Document, then Mortgagor,
forthwith upon the reasonable request of Mortgagee, will execute and deliver, on
its own behalf, such other and further assurances and documents as may be
reasonably necessary to more effectively subject the Vessel to the payment of
the Secured Obligations, as provided in this Mortgage and each other Note
Document and the performance of the terms and provisions of this Mortgage and
each other Note Document and do such things as Mortgagee in its sole discretion
may reasonably deem to be necessary to carry out the true intent of this
Mortgage.
22. In the event of the requisition (whether of title or use),
condemnation, sequestration, seizure or forfeiture of the Vessel by any
governmental or purported authority or by anyone else, any payments in respect
thereof shall be paid to Mortgagee and applied in accordance with the terms of
Section 11(c) of this Article I.
ARTICLE II
----------
Events of Default and Remedies of Mortgagee
1. In the event that Mortgagor fails to procure and/or maintain
insurance, as provided in Section 11 of Article I above, Mortgagee may, at its
option, without any obligations so to do, and without waiver of any of its
rights hereunder, procure such insurance as it deems necessary to protect its
security and the cost of the same shall be charged against Mortgagor and be
promptly repaid to Mortgagee with interest thereon at the Default Rate, and such
insurance costs and the interest thereon shall constitute a debt secured by the
Lien of this Mortgage.
2. In the event that the Vessel shall be arrested or detained by a
Marshal or other officer of any court of law, equity, or admiralty jurisdiction,
or by any governmental or other authority, on a claim for which Mortgagor is
alleged to be liable, and shall not be released from arrest or detention as and
within the time prescribed by the provisions of Section 7 of Article I above,
Mortgagor hereby authorizes and empowers Mortgagee, as its duly appointed
representative, in the name of Mortgagor, or its successors or assigns, to apply
for, claim and receive, or take possession of the Vessel with all rights and
powers Mortgagor, its
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successors or assigns may have, possess, and exercise in any such event. The
power hereby granted shall be irrevocable and may be exercised not only by said
representatives of Mortgagee, but also by an appointee or appointees of such
representatives, with full power of substitution, to the same extent as if such
appointee or appointees had been named as one of the attorneys above named by
express designation. Mortgagor also authorizes and empowers any Person duly
acting under the provisions of this Section 2 of Article II to appear in the
name of Mortgagor, its successors or assigns, in any court where a suit may be
pending against Mortgagor, or against the Vessel because of or on account of any
alleged Lien against the Vessel and from which it has not been released, and to
take such proceedings as such Person may deem proper for the defense of such
suit and for the release of the Vessel therefrom. All expenditures or
liabilities made or incurred by them, or any of them, in the premises, in good
faith, shall be debts due from Mortgagor to Mortgagee, and shall be promptly
repaid by Mortgagor to Mortgagee with interest thereon at the Default Rate, and
shall be secured by the Lien of this Mortgage.
3. In the event Mortgagor fails properly to maintain the Vessel and make
proper repairs, renewals and replacements, as required by the provisions of
Section 12 of Article I above, Mortgagee may, at its option, without any
obligation so to do and without waiver of any of its rights hereunder, perform
such maintenance and make such repairs, renewals and replacements and the cost
of the same shall be charged against Mortgagor and be promptly repaid to
Mortgagee with interest thereon at the Default Rate, and all such expenditures
and the interest thereon shall constitute a debt from Mortgagor to Mortgagee
secured by the Lien of this Mortgage.
4. In the event that Mortgagee, though without any obligation so to do,
employs an attorney to protect the Vessel or to prevent the impairment of
Mortgagee's security represented by the Vessel and/or makes any reasonable
expenditure for any other matter in any instance where Mortgagor is obligated by
this Mortgage to employ such attorney and/or make such expenditure shall be
charged against Mortgagor and be promptly repaid to Mortgagee with interest
thereon at the Default Rate, and all such expenditures and the interest thereon
shall constitute a debt from Mortgagor to Mortgagee secured by the Lien of this
Mortgage.
5. In the event that Mortgagee should make any expenditure or incur any
costs which Mortgagor is obligated by this Mortgage so to do, such expenditure
or costs shall be charged against Mortgagor and be repaid promptly to Mortgagee
with interest thereon at the Default Rate and shall constitute a debt from
Mortgagor to Mortgagee secured by the Lien of this Mortgage.
6. The following events are events of default ("Events of Default"):
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(a) An Event of Default under and as defined in the Indenture shall
occur and be continuing.
(b) Failure by Mortgagor in the performance or observance of any of
its obligations hereunder if such failure shall continue unremedied for a period
of thirty (30) days following the date of written notice thereof to Mortgagor
from the Mortgagee; and
(c) Any representation, warranty or certification made or deemed made
herein (or in any modification or supplement hereto) by the Mortgagor, or any
certificate furnished to the Mortgagor pursuant to the provisions hereof, shall
prove to have been false or misleading as of the time made or furnished in any
material respect.
7. In case of the occurrence of any event of default specified in Section
6 of this Article II and its continuance for the period, if any, specified with
reference thereto in said section, then, and in each and every case, such
default subsisting, Mortgagee:
(a) May declare the Secured Obligations to then become due and payable
immediately without prejudice to any other rights and remedies of the Mortgagee;
(b) May retake the Vessel without legal process wherever it may be and
Mortgagor, or other Person in possession, shall forthwith surrender possession
of the Vessel to Mortgagee, upon demand; Mortgagee then shall retake or may
hold, lay up, lease, operate, manage and control or otherwise use the Vessel in
any service upon such of the inland waterways of the United States as Mortgagee
may elect and may insure the Vessel and make all necessary or proper repairs and
useful alterations, additions, betterments and improvements thereto as to it may
seem judicious and shall be entitled to collect and receive all tolls, earnings,
income, rents, issues and profits of or arising out of the operation or
management of the Vessel and after deducting all expenses of operation and/or
repairs, maintenance, alterations, additions, betterments and improvements and
all payments for taxes, insurance, as well as just and reasonable compensation
for its own services, and for all its agents, attorneys and employees, Mortgagee
shall apply the net money arising, as aforesaid, as provided by Section 8 of
this Article II;
(c) May retake the Vessel without legal process wherever it may be and
Mortgagor or any other Person in possession shall forthwith surrender possession
of the Vessel upon demand of Mortgagee and Mortgagee may sell the Vessel at
public sale, free from any and all claims of or by Mortgagor in law, in equity,
in admiralty or by statute, which said sale shall be made at a time and place
and upon such notice as may be required by law; if not
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governed by any applicable provisions of law, such sale shall be made at such
time and place as Mortgagee may fix, after notice of the time, place and terms
of said sale, together with a description of the property to be sold, has been
published for six (6) consecutive days (except Sunday) preceding the date for
such sale, in a newspaper printed in the English language and customarily
published on each business day and of general circulation in the county of
documentation, or in a newspaper published in the county in which the place of
sale is located if other than the said county. Mortgagee and its successors or
assigns hereby are appointed the true and lawful attorneys irrevocable of
Mortgagor in its name and stead to make all necessary transfers of property thus
sold, and for that purpose it or they will execute all necessary instruments of
assignment and transfer, Mortgagor hereby ratifying and confirming all that its
said attorneys shall lawfully do by virtue hereof; and Mortgagee shall have the
right to become the purchaser hereunder;
(d) May proceed to protect and enforce its rights under this
Mortgage, including all rights and remedies arising by reason of the provisions
of the Ship Mortgage Act, and all acts amendatory thereof and supplement
thereto, by suit or suits in equity or actions at law, or by suit in admiralty
in rem or in personam, whether for specific performance of any covenant or
agreement contained herein or for any foreclosure hereunder or for the
enforcement of any proper legal or equitable remedy or remedy in admiralty as
Mortgagee, being advised by counsel, shall deem most effectual to protect and
enforce the rights aforesaid; in connection with any such proceeding, Mortgagee
shall be entitled, as a matter of right, to the appointment of a receiver of the
mortgaged property and of tolls, rents, income, revenues, profits and earnings
thereof; and
(e) May proceed personally against Mortgagor in any court of
competent jurisdiction to recover, with interest thereon at the Default Rate,
any damages which Mortgagee may sustain by reason of any infraction by Mortgagor
of any Secured Obligations contained in Sections 1 through 20, inclusive, of
Article 1 above.
Each and every power or remedy herein conferred on Mortgagee shall be
cumulative and in addition to all other powers or remedies now or hereafter
existing in admiralty, in equity, in law or by statute (including the Louisiana
Commercial Laws (La. R.S. 10:1-101 et seq.)) and may be exercised as often as
may be deemed expedient by Mortgagee. No delay or omission by Mortgagee shall
impair any right, power or remedy and no waiver of any default shall waive any
other default.
8. If at any time after one or more events of default enumerated in
Section 6 of this Article II shall have occurred and before the Vessel shall
have been sold pursuant to any provision of this Article II (whether or not
proceedings for foreclosure shall
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<PAGE>
have been commenced and/or prosecuted in any court), Mortgagor shall make good
such default or defaults, including without limitation, payment of any past due
installment of principal and interest of the Secured Obligations secured by the
Lien of this Mortgage, and reimbursement of any advances and expenditures made
by Mortgagee in accordance with the provisions of Sections 1, 2, 3, 4 and 5 of
this Article II, with interest thereon, together with attorneys' fees and costs,
then, and in every such case, Mortgagee shall waive such default or defaults and
its or their consequences and shall rescind any action theretofore taken by it,
including without limitation, the acceleration of payment of the Secured
Obligations secured by this Mortgage; but no waiver shall extend to or affect
any subsequent default or impair any right consequent thereon.
9. The net proceeds of any judicial or other sale, of any charter,
management or other use of the Vessel by Mortgagee, of any claim for damages to
the Vessel and of any insurance received by Mortgagee (except to the extent that
such insurance proceeds are to be paid to Mortgagor in accordance with any
provisions of this Mortgage) shall be held and applied by Mortgagee from time to
time in accordance with the terms of the Indenture, any other provision of this
Mortgage to the contrary notwithstanding.
Should there not be any funds or insufficient funds to liquidate all valid
claims of Mortgagee, then Mortgagor shall remain bound to Mortgagee for any
unpaid amount or balance due and shall be liable to pay said amount to Mortgagee
with interest thereon as provided in this Mortgage, but, if after payment in
full, any amount remains, it shall be paid to the Person or entity entitled
thereto.
10. If an event of default has occurred, which has not been cured pursuant
to provisions hereof, Mortgagor shall not at any time insist upon, plead in any
manner whatever, claim or take the benefit or advantage of, any stay or
extension, valuation or appraisement law for the purpose of preventing or
hindering the enforcement or foreclosure of this Mortgage, and it covenants that
it will not hinder, delay or impede the execution of any power herein granted
and declared to Mortgagee, but that it will suffer and permit the execution of
every such power as though no such law or laws had been made or enacted, nor
after any sale or sales will it claim or exercise any right under any statute or
otherwise to redeem the property so sold or any part thereof.
11. Without prejudice to any other rights and remedies of Mortgagee
arising under this Mortgage or the other Note Documents, Mortgagor hereby agrees
and undertakes to indemnify Mortgagee against all obligations and liabilities
whatsoever and whensoever incurred by Mortgagee in good faith in the enforcement
of its rights hereunder or under any other Note Documents.
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<PAGE>
12. (a) Mortgagor hereby irrevocably appoints Mortgagee its attorney-
in-fact until the termination of this Mortgage as herein provided to do in its
name, all acts which Mortgagor, or its successors or assigns, could do in
relation to the Vessel, including without limitation, to demand, collect,
receive, compromise, settle and sue for (insofar as Mortgagee lawfully may), all
freights, hire, earnings, issues, revenues, income and profits of the Vessel,
and all amounts due from underwriters under the insurance as payment for losses
or as return premiums or otherwise, salvage awards and recoveries, recoveries in
general average or otherwise, and all other sums due or to become due to
Mortgagor or arising from the Vessel, and to make, give and execute in the name
of Mortgagor, acquittances, receipts, releases, or other discharges for the
same, whether under seal or otherwise, to take possession of, sell or otherwise
dispose of or manage or employ the Vessel, to execute and deliver charters and a
bill of sale for the Vessel, and to endorse and accept in the name of Mortgagor
all checks, notes, drafts, warrants, agreements and all other instruments in
writing with respect to the foregoing; provided Mortgagee shall take no action
under the power of attorney granted hereby, unless an event of default has
occurred and Mortgagor has received prompt written notice of such event of
default.
(b) The exercise by or on behalf of Mortgagee of the power granted in
this Section 12 shall not require any Person dealing with Mortgagee to conduct
any inquiry as to whether any such event of default has occurred and is
continuing, nor shall such Person be in any way affected by notice that any such
event of default has not occurred and is not continuing, and the exercise by
Mortgagee of such power shall, with regard to such Person, be conclusive
evidence of the Mortgagee's right to exercise the same.
(c) Wherever and whenever herein any right, power or authority is
granted or given to Mortgagee, such right, power or authority may be exercised
in all cases by Mortgagee or such agent or agents as it may appoint, and the act
or acts of such agent or agents when taken shall constitute the act of Mortgagee
hereunder. Without limitation of the foregoing, in each instance where Mortgagee
has engaged a consultant to advise Mortgagee in connection with the exercise of
any such rights, powers and authority, Mortgagee shall be entitled to rely upon
the advice of such consultant and when so relying shall conclusively be deemed
to have acted in a reasonable manner.
13. The powers conferred on Mortgagee by this Mortgage are solely to
protect its interest and the interests of the Holders in the Vessel and shall
not impose any duty upon it to exercise such powers. Except for the safe
custody of any part of the Vessel in its possession (subject to standards of
care governing the Mortgage hereunder) and the accounting for moneys actually
received by it hereunder, Mortgagee shall have no duty as to any part of the
Vessel whether or not Mortgagee or any Holder has or is deemed to
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<PAGE>
have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to the
Vessel.
ARTICLE III
-----------
Possession Until Default
Until an event of default shall have occurred and shall have continued for
the time, if any, specified with reference thereto in Article II above,
Mortgagee shall permit Mortgagor and Mortgagor shall have the right to possess,
use, manage, operate and enjoy the Vessel and to take, collect and receive, and
use the freights, issues, rents, income and profits thereof and apply the same
to all legitimate uses.
ARTICLE IV
----------
Miscellaneous Provisions
1. All covenants and agreements of Mortgagor herein contained shall bind
Mortgagor, its successors and assigns forever, and shall inure to the benefit of
Mortgagee and its successors and assigns forever. Following any assignment of
this Mortgage by Mortgagee, any reference herein to "Mortgagee" shall be deemed
to refer to the assignee.
2. The total amount of this Mortgage is Three Hundred Million Dollars
($300,000,000.00), plus interest, expenses and costs as provided herein, in
Mortgagor's Subsidiary Guaranty and in the other Note Documents, and performance
of the Mortgage covenants. The discharge amount of this Mortgage is the same as
the total amount. Notwithstanding the foregoing or any other statement
contained herein regarding the maturity of this Mortgage, this Mortgage shall
remain in full force and effect until the payment in full of the Secured
Obligations and until the full and final performance by Mortgagor of all of its
covenants contained in this Mortgage, the Subsidiary Guaranty and the other Note
Documents.
3. The interest of the Mortgagor in the Vessel and the interest mortgaged
by this Mortgage is that of one-hundred percent (100%) absolute and sole
ownership.
4. Any notice or demand which by any provision of this Mortgage is
required or permitted to be given, delivered or served on Mortgagor may be
given, delivered or served by being deposited, first class postage prepaid, in a
post office letter box addressed (until another address is filed by Mortgagor in
writing with Mortgagee for the purpose of this section), as follows:
__________________________________________________, Attention: _______________
with copies to: Casino America, Inc., 700 Loop
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<PAGE>
demand which by any provision of this Mortgage is required or permitted to be
given, delivered or served on Mortgagee may be given, delivered or served by
being deposited, postage prepaid, in a post office box addressed (until another
address is filed by Mortgagee in writing with Mortgagor for the purposes of this
section) as follows: Fleet National Bank, as Collateral Agent, Attention:
___________________.
5. In the event of any casualty, accident, loss or other occurrence which
gives rise to a preferred maritime Lien against the Vessel within the meaning of
46 U.S.C. (S) 31301, et seq., and (S) 31341 et seq., or any other claim against
the Vessel which primes the preferred ship mortgage herein granted, except for
Liens arising and accruing in the ordinary course of business but not yet due,
or in the event that Mortgagor receives notice that any third party claims or
contends that he or some other party holds a preferred maritime Lien or a claim
against the Vessel which primes the preferred ship mortgage herein granted, and
if any such Lien or claim is not covered in full by insurance maintained by the
Mortgagor or the Mortgagor's insurance company has issued a reservation of
rights with respect to any such Lien or claim, then, and in any such events,
Mortgagor will give Mortgagee immediate notice thereof.
6. If any provision of this Mortgage, or any obligation, right or remedy
created by this Mortgage be declared invalid in any legal proceeding, no other
valid obligation, right or remedy created by this Mortgage shall be affected
thereby.
7. Nothing in this Mortgage, express or implied, is intended to confer
upon any Person other than the parties hereto and their respective successors,
permitted assigns and other transferees any rights or remedies under or by
reason of this Mortgage.
8. This instrument may, for convenience, be executed in any number of
original counterparts, each of which shall be deemed an original and all of
which taken together shall be and constitute one instrument. Any word importing
the singular shall as well include the plural and any pronoun importing gender
shall include the masculine, feminine or neuter.
9. Each of the provisions of this Mortgage is subject to, and shall be
enforced in compliance with, all applicable Gaming Laws.
10. Anything herein to the contrary notwithstanding, it is intended that
nothing herein shall waive the preferred status of this Mortgage and that, if
any provision or portion of this Mortgage shall be construed to waive its
preferred status, then such provision or portion to such extent shall be void
and of no
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<PAGE>
effect without affecting the remaining provisions, which shall remain in full
force and effect.
11. The provisions of the Indenture regarding amendments are specifically
incorporated in this Mortgage by reference, with the same force and effect as if
the same were set out in this Mortgage in full. All references in such
incorporated provisions to "Company" shall without further reference mean and
refer to Mortgagor and all references in such incorporated provisions to "this
Indenture" shall without further reference mean and refer to this Mortgage.
12. Mortgagor hereby indemnifies Mortgagee, its agents, if any, and each
Holder and saves each of them harmless from and against all liability, loss,
damages, judgments and expenses, including reasonable attorneys' fees,
disbursements, bond expenses, printing and automated document preparation and
retention expenses and other ordinary litigation expenses, incurred in
connection with any action or proceeding to foreclose this Mortgage or in or to
which Mortgagee or any Holder may be made a party due to the existence of this
Mortgage or to which action or proceeding Mortgagee or any Holder may become a
party for the purpose of protecting the Lien of this Mortgage. All sums paid by
Mortgagee or any Holder to prosecute or defend the rights herein set forth shall
be deemed a part of the Secured Obligations and shall be paid by Mortgagor to
Mortgagee or such Holder within ten days after written demand, and if not paid
within that period, shall accrue interest from and including the date of
disbursement or advance by Mortgagee or such Holder to and including the date of
payment by Mortgagor at the Default Rate.
13. This Mortgage shall be governed by and construed in accordance with
the provisions of the Ship Mortgage Act, and where the Ship Mortgage Act is
silent, by the General Maritime Law of the United States, and only to the extent
not addressed thereby, by the laws of the State of Louisiana.
[INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the Mortgagor has caused to be executed by its duly
authorized officer this instrument which is effective as of the day and year
first above written.
WITNESSES: ______________________________
_________________________ By:_______________________
Its:______________________
_________________________
________________________________________
Notary Public
My commission expires:__________________
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<PAGE>
STATE OF ____________________
COUNTY OF ____________________
PERSONALLY APPEARED BEFORE ME, the undersigned Notary Public in and for the
county and state aforesaid, _______________________, who being duly sworn did
depose and say that he is the _______________ of
_____________________________________________ (the "______________"), the
_________________ that executed the foregoing instrument, and that by and with
the authority of the ________________, he signed and executed the foregoing
instrument, as the free and voluntary act and deed of said _________________,
for and on behalf of the ___________, for the uses, purposes and benefits
therein expressed.
GIVEN UNDER MY HAND AND OFFICIAL SEAL, this ____ day of ___________, 1996.
______________________________
Notary Public
My commission expires:
______________________________
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<PAGE>
SCHEDULE 1
TO
FIRST PREFERRED SHIP MORTGAGE
DATED THE _______________, 1996
BY
______________________________
1. Liens for wages of a stevedore, when employed directly by a Person listed
in 46 U.S.C. (S) 31341, cruises' wages, salvage and general average,
whether now existing or hereafter arising and other maritime liens which
arise by operation of law during the normal operations of the Vessel which
(a) are paid in the ordinary course of business and (b) have not been
recorded on the General Index or Abstract of Title (U.S.C.G. 1332) of the
Vessel or judicially asserted.
2. Whether now existing or hereafter arising, Liens attaching only to existing
FF&E on the Vessel subject to financing and any newly acquired or leased
FF&E in the event the acquisition thereof is financed with FF&E Financing
permitted pursuant to the Indenture, in each case where the FF&E so
acquired has been pledged as collateral security for the repayment of the
FF&E Financing and where the terms of such FF&E financing do not prohibit
the pledge of such FF&E for the benefit of the Holders.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Historical Consolidated Financial Information", and to the use of
our report dated June 3, 1996, with respect to the consolidated financial
statements of Casino America, Inc., and to the use of our report dated May 22,
1996, with respect to the financial statements of Louisiana Riverboat Gaming
Partnership, in Amendment No. 2 to the Registration Statement (Form S-3 No.
333-7517) and related Prospectus of Casino America, Inc. for the registration
of Senior Secured Notes.
Ernst & Young LLP
Chicago, Illinois
July 29, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 2 to the
registration statement on Form S-3 (file no. 333-7517) of our report, dated
August 7, 1995, except as to the third paragraph of Note D for which the date
is September 21, 1995 on our audits of the financial statements of St. Charles
Gaming Company, Inc., as of April 30, 1995 and 1994 and for the year ended
April 30, 1995 and the period from June 25, 1993 (acquisition date) to April
30, 1994, and of our report, which includes an explanatory paragraph relating
to the substantial doubt about the Company's ability to continue as a going
concern as a result of significant current debt obligations, dated March 8,
1996, except for Note 11 as to which the date is March 26, 1996 on our audits
of the financial statements of St. Charles Gaming Company, Inc., as of
December 31, 1995 and April 30, 1995 and for the eight month period ended
December 31, 1995, and the year ended April 30, 1995, both appearing in
Amendment No. 1 to the Form 8K/A of Casino America, Inc. filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1934. We
also consent to the inclusion in this registration statement on Form S-3 of
our report, dated June 14, 1996, on our audits of the financial statements of
St. Charles Gaming Company, Inc., as of April 30, 1995 and 1996 and for the
period from June 25, 1993 (acquisition date) to April 30, 1994 and for the
years ended April 30, 1995 and 1996. Our report dated June 14, 1996, updates
the aforementioned reports. We also consent to the reference to our firm under
the caption "Experts".
Coopers & Lybrand L.L.P.
Dallas, Texas
July 31, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Amendment No. 2 to the
Registration Statement (Form S-3 No. 333-7517) and related Prospectus of
Casino America, Inc. for the registration of Senior Secured Notes of our
report dated October 22, 1993, with respect to the financial statements of St.
Charles Gaming Company, Inc. included in Casino America, Inc.'s Current Report
on Form 8-K/A dated May 3, 1996, filed with the Securities and Exchange
Commission on June 4, 1996 and amended on June 28, 1996.
FRED J. BASTIE & ASSOCIATES, P.C.
Dallas, Texas
July 31, 1996
<PAGE>
EXHIBIT 25.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM T-1
------------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE
TRUST INDENTURE ACT OF l939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
[_] CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
FLEET NATIONAL BANK
----------------------------------------
(Exact name of trustee as specified in its charter)
Not applicable 06-0850628
- ------------------------------ ---------------------------
(State of incorporation if (I.R.S. Employer
not a national bank) Identification No.)
777 Main Street, Hartford, Connecticut 06115
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Patricia Beaudry, 777 Main Street, Hartford, CT (860) 728-2065
- --------------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
Casino America, Inc.
- --------------------------------------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 41-1659606
- ------------------------------ ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
711 Washington Loop, Biloxi, Mississippi 39530
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Senior Secured Notes
------------------------------------------------------------------
(Title of the indenture securities)
<PAGE>
Item l. 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:
The Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Boston
Boston, Massachusetts
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers:
The trustee is so authorized.
Item 2. Affiliations with obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee; none with respect to Fleet Financial
Group, Inc. and its affiliates (the "affiliates").
Item l6. List of exhibits. List below all exhibits filed as a part of this
statement of eligibility and qualification.
*l. A copy of the Articles of Association of the Trustee as now in
effect. (See Exhibit T-1, Registration No. 333-4936.)
*2. A copy of the Certificate of Authority of the Trustee to do
Business. (See Exhibit T-1, Registration No. 333-4936.)
*3. A copy of the Certification of Fiduciary Powers of the Trustee.
(See Exhibit T-1, Registration No. 333-4936.)
*4. A copy of the By-laws of the Trustee as now in effect. (See
Exhibit T-1, Registration No. 333-4936.)
5. Consent of the trustee required by Section 32l(b) of the Act.
*6. A copy of the latest Consolidated Reports of Condition and Income
("Consolidated Report") of Fleet National Bank of Connecticut (which
changed its name to Fleet National Bank on April 1, 1996) and which as of
the date hereof remains the latest Consolidated Report as now in effect and
published pursuant to law or the requirements of its supervising or
examining authority. (See Exhibit T-1, Registration No. 333-4936.)
- ---------------------------
*The Exhibits thus designated are incorporated herein by reference.
Following the description of such Exhibits is a reference to the copy of the
Exhibit heretofore filed with the Securities and Exchange Commission.
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<PAGE>
NOTES
Inasmuch as this Form T-l is filed prior to the ascertainment by the
trustee of all facts on which to base its answer to Item 2, the answer to said
Item is based upon incomplete information. Said Item may, however, be
considered correct unless amended by an amendment to this Form T-l.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of l939, the
trustee, Fleet National Bank, a national banking 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, all in the City of Hartford, and State of
Connecticut, on the 31st day of July, 1996.
FLEET NATIONAL BANK,
Trustee
By /s/ Steven Cimalore
___________________________________
Name: Steven Cimalore
Title: Vice President
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