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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED APRIL 25, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission file number 0-20538
ISLE OF CAPRI CASINOS, INC.
(Exact name of registrant as specified in its charter)
41-1659606
Delaware (I.R.S. Employer-
(State or other jurisdiction of Identification No.)
incorporation or organization)
39530
711 Washington Loop, Biloxi, (Zip Code)
Mississippi
(Address of principal executive
offices)
Registrant's telephone number, including area code (228) 436-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 Par Value Per Share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days: Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of the voting and non-voting stock held by non-
affiliates/1/ of the Company is $125,555,481, based on the last reported sale
price of $6.750 per share on June 25, 1999 on The Nasdaq Stock Market;
multiplied by 18,600,812 shares of Common Stock outstanding and held by non-
affiliates of the Company on such date.
As of June 25, 1999, the Company had a total of 23,579,662 shares of Common
Stock outstanding.
Part of Form 10-K
Document into which Incorporated
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Isle of Capri Casinos, Inc.'s Definitive Proxy
Statement for its Annual Meeting of Stockholders
to be held Part III
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/1/ Affiliates for the purpose of this item refer to the directors, executive
officers and/or persons owning 10% or more of the Company's common stock, both
of record and beneficially; however, this determination does not constitute an
admission of affiliate status for any of these individual stockholders.
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INDEX
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PAGE
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PART I.................................................................... 1
ITEM 1. Business........................................................ 1
ITEM 2. Properties...................................................... 24
ITEM 3. Legal Proceedings............................................... 26
ITEM 4. Submission of Matters to a Vote of Security Holders............. 26
PART II................................................................... 27
ITEM 5. Market for Registrant's Common Equity and Related Stockholder's
Matters................................................................ 27
ITEM 6. Selected Financial Data......................................... 28
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 30
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk..... 39
ITEM 8. Index to Consolidated Financial Statements...................... 40
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.............................................. 69
PART III.................................................................. 69
ITEM 10. Director and Executive Officers of the Registrant.............. 69
ITEM 11. Executive Compensation......................................... 69
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management............................................................. 69
ITEM 13. Certain Relationships and Related Transactions................. 69
PART IV................................................................... 69
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.................................................................... 69
Signatures................................................................ 70
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PART I
ITEM 1. Business
Overview
We are a leading developer, owner and operator of branded gaming and related
lodging and entertainment facilities in growing markets in the United States.
We wholly own and operate four gaming facilities located in Lake Charles and
Bossier City, Louisiana and Biloxi and Vicksburg, Mississippi. We also own a
57% interest in and operate a gaming facility in Black Hawk, Colorado, which
opened on December 30, 1998. Each of these five gaming facilities operates
under the name "Isle of Capri" and features our distinctive tropical island
theme. In addition, we wholly own and operate a pari-mutuel harness racing
facility in Pompano Beach, Florida and own a 50% interest in and operate
gaming activities aboard a cruise ship based in New Orleans, Louisiana. For
the fiscal year ended April 25, 1999, we had total revenue of $480.4 million
and EBITDA of $109.2 million. We were incorporated in Delaware in February
1990 under the name of Kana Corporation, and in 1992 our name was changed to
Casino America, Inc. On September 28, 1998, our name was changed to Isle of
Capri Casinos, Inc.
Strategy
Our business strategy, which has been implemented in our existing
operations, emphasizes the standardized operation and development of value-
oriented gaming facilities and complementary amenities with a tropical island
theme using the "Isle of Capri Casino" brand name. We believe 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 an emphasis on customer service and non-gaming
entertainment amenities. We seek to identify slot-oriented customers and
active casino patrons through the use of database marketing and generate
repeat visitors to our gaming facilities. We believe that our strategy fosters
customer loyalty, enhances our ability to compete effectively in existing
markets, and facilitates the consistent, efficient and cost-effective
development of gaming facilities in new markets. We also believe that good
community relations are fundamental to our success and, as a result, we take
an active role in community activities in each jurisdiction in which we have
gaming facilities.
We have historically identified and entered new gaming markets which we
believe provide attractive long-term opportunities. We anticipate that most of
our near-term focus will be expanding existing facilities and pursuing new
development opportunities. We have recently added hotels at the Isle-Bossier
City and the Isle-Vicksburg in order to compete effectively in our markets and
provide customers with a complete resort experience designed to increase a
customer's length of stay at and use of our facilities. We are currently
developing casino and hotel facilities in Tunica County, Mississippi and
Coahoma County, Mississippi, and we currently plan to construct additional
lodging facilities or other amenities at the Isle-Black Hawk, the Isle-Lake
Charles and the Isle-Biloxi. We also expect to continue reviewing gaming
opportunities in new markets on the basis of demographic, regulatory,
competitive and other factors.
Marketing
We attract customers to our casinos by designing and implementing marketing
and promotional programs that emphasize our Isle Style tropical island theme
and generate loyal customers. We have developed an extensive proprietary
database of primarily slot-oriented customers that allows us to create
effective targeted marketing and promotional programs, merchandise giveaways,
game tournaments and other special events, such as Capri Cruises. These
programs are designed to reward customer loyalty, attract new customers to our
properties and maintain high recognition of our "Isle of Capri" brand.
As of April 25, 1999, our database contained approximately 2.9 million
members, of whom approximately 1.8 million receive regular mailings. To
develop this database, we offer all of our customers membership in the
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Island Gold Players Club, which allows them to earn points based on play and
redeem these points for casino cash tokens, prizes and complimentary services
at any Isle of Capri casino. Island Gold Players Club members receive a card
that, when inserted into a slot machine or presented at a gaming table at the
issuing facility, allows us to track their gaming preferences, maximum,
minimum and total amount wagered and frequency of visits. Players are
classified in groups according to these characteristics. Our database is used
for direct mailings, giveaways and other promotional events that are tailored
to these specific groups of players. We have effectively used our database to
encourage repeat visits, increase customers' length of stay and improve our
operating results.
We place significant emphasis on attracting local residents and seek to
maintain a strong local identity in each market in which we operate by
initiating and supporting community and special events. We use radio and
television media to promote the "Isle of Capri" brand name and attract
customers to our properties. To further enhance Isle Style, we have engaged a
well-known actor to narrate our radio and television advertisements.
Current Operations
Here is an overview of our existing casino properties:
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Isle-Lake Charles Isle-Bossier City Isle-Biloxi Isle-Vicksburg Isle-Black Hawk
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Date opened............. July 29, 1995 May 20, 1994 August 1, 1992 August 9, 1993 December 30, 1998
Casino square footage... 48,900 20,000 32,500 27,000 43,000
Slot machines........... 1,836 1,079 1,212 793 1,089
Table games............. 90 45 40 28 14
Hotel rooms............. 241 539 367 124 --
Parking spaces.......... 2,000 1,200 1,300 1,100 1,100
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The Isle-Lake Charles
The Isle-Lake Charles, which commenced operations on July 29, 1995, is one
of two riverboat gaming facilities that operates two riverboats in the Lake
Charles, Louisiana market and one of three gaming facilities in southwest
Louisiana. Lake Charles is the closest gaming market to Houston, Texas, a
metropolitan area with a population of approximately 4.2 million that is
located approximately 140 miles west of Lake Charles.
The Isle-Lake Charles is located on a 19-acre site along the Calcasieu River
adjacent to Interstate 10 in Calcasieu Parish, one mile from the City of Lake
Charles. Our Crown riverboat has 24,700 square feet of gaming space with 892
slot machines and 41 table games on three levels. Our Grand Palais riverboat
has 24,200 square feet of gaming space with 944 slot machines and 49 table
games on two levels. Each of our riverboats has a large bar and foyer and the
Grand Palais riverboat has a top level which is not yet utilized. Lake Charles
is the only market in which we are required to cruise. However, because we
have two riverboats, one riverboat is always dockside, allowing us to offer
our customers continuous boarding.
The Isle-Lake Charles offers on-site accommodations to our customers through
the Inn at the Isle, a 241-room hotel, and provides free valet and self-
parking for more than 2,000 vehicles, including approximately 1,400 spaces in
an attached parking garage from which patrons can access the pavilion by
elevator. The lighted rooftop rotunda of the Isle-Lake Charles' pavilion is
topped by the Isle of Capri parrot which is 145 feet above the ground and
visible from Interstate 10. We believe that these amenities help us attract a
significant portion of the overnight visitors from Texas.
The Isle-Lake Charles also includes a 105,000 square foot land-based
pavilion. The pavilion is based on a tropical island theme and includes rock
formations, waterfalls, water arches with jets of water shooting up to 30 feet
in the air, ponds with porcelain sea life, flower beds landscaped in the shape
of playing card suits and an arcade. The pavilion provides panoramic views of
the lake and the city of Lake Charles and has separate entrances to the
riverboats. The pavilion offers customers a wide variety of non-gaming
amenities, including an 80-seat Farraddays' restaurant, a 489-seat Calypso's
buffet, a 40-seat Tradewinds deli, Caribbean Cove, which
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features free, live entertainment and can accommodate 180 customers, a Banana
Cabana souvenir gift shop and an Island Gold Players Club booth. The pavilion
also has a 16,000 square foot activity center comprised of a 1,100-seat
special events center designed for live boxing, televised pay-per-view events,
concerts, banquets and other events, meeting facilities and administrative
offices.
The Lake Charles market, excluding a nearby Native American-owned casino,
had gaming revenues of $299.7 million in 1998. We believe that the Isle-Lake
Charles attracts customers primarily from southeast Texas, including Houston,
Beaumont, Galveston, Orange and Port Arthur and local area residents.
Approximately 490,000 and 1.6 million people live within 50 and 100 miles,
respectively, of the Isle-Lake Charles.
We plan to begin construction of a new on-site 250-room deluxe hotel in the
second half of calendar 1999. We believe the availability of quality overnight
accommodations will attract a different segment of customers and increase
their length of stay at our facility.
The Isle-Bossier City
The Isle-Bossier City, which commenced operations on May 20, 1994, is one of
four dockside gaming facilities currently operating in the Bossier
City/Shreveport, Louisiana market. Bossier City/Shreveport is the closest
gaming market to Dallas/Ft. Worth, Texas, a metropolitan area with a
population of approximately 4.5 million that is located approximately 190
miles west of Bossier City/Shreveport.
The Isle-Bossier City is located on a 38-acre site along the Red River
approximately one-quarter mile off Interstate 20 and has a dockside riverboat
casino, a land-based entertainment pavilion and a parking garage. We opened
our new on-site 305-room deluxe hotel in late June 1999. We also own and
operate a 234-room hotel two miles from the Isle-Bossier City. The casino has
approximately 20,000 square feet of gaming space on three levels with 1,079
slot machines, 45 table games and a video poker bar. The approximately 72,200
square foot land-based pavilion features towering palm trees, exotic rock
formations and a waterfall. The pavilion offers a wide variety of non-gaming
amenities, including a 107-seat Farraddays' restaurant, a 352-seat Calypso's
buffet, a 40-seat Tradewinds deli, Caribbean Cove, which features free, live
entertainment and can accommodate 550 customers, a Banana Cabana souvenir gift
shop, an entertainment lounge area, a large nine-screen television wall
featuring sporting events, an Island Gold Players Club booth and
administrative offices. The Isle-Bossier City has on-site parking for 1,200
cars, of which 940 are accommodated in an attached parking garage. Additional
overflow parking is available nearby on weekends.
The 305-room Isle of Capri Casino Bossier City Hotel facility is directly
accessible from the casino through the atrium. The hotel offers spacious rooms
and provides amenities, including banquet facilities, arcade, child care
facilities, meeting rooms, a heated pool and exercise facilities with a hot
tub.
The Bossier City/Shreveport market had gaming revenue of $594.4 million in
1998. We believe that the Isle-Bossier City attracts customers primarily from
the local area, northeastern Texas and the Dallas/Ft. Worth metropolitan area.
Approximately 540,000 and 1.8 million people live within 50 and 100 miles,
respectively, of the Isle-Bossier City.
The Isle-Biloxi
The Isle-Biloxi, which commenced operations on August 1, 1992, was the first
gaming facility to open in Mississippi. Biloxi is the closest gaming market to
Mobile, Alabama, a metropolitan area with a population of approximately
600,000, that is located approximately 60 miles east of Biloxi. The Isle-
Biloxi is located at the eastern end of a cluster of facilities known as
"Casino Row" and is the first property reached by visitors coming from
Alabama, Florida and Georgia via Highway 90.
The Isle-Biloxi's eight-acre facility consists of a 50,000 square foot
dockside casino containing 32,500 square feet of gaming space with 1,212 slot
machines and 40 table games on two levels, an adjacent land-based
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pavilion, a 367-room hotel and on-site parking for 1,300 vehicles. The 32,000
square foot, 50-foot high pavilion offers a wide variety of non-gaming
amenities, including a 119-seat Farraddays' restaurant, a 280-seat Calypso's
buffet, an 88-seat Tradewinds deli, Caribbean Cove, an open-air lounge area
that can accommodate 116 customers and a Fantasy Isle Arcade of arcade games
for all ages. Calypso's and Farraddays' provide panoramic views of the Gulf of
Mexico and Deer Island. Caribbean Cove is located at the center of the
pavilion and is surrounded by a dramatic fountain and an entertainment stage.
The entertainment area features a stage and sound system used for special
events. Musical performances in the pavilion are scheduled six days a week
providing a Caribbean feel to Calypso's, Tradewinds and the hotel lobby.
Headliner entertainment appears monthly in the Flamingo Bay Ballroom with a
portion of the seating reserved for loyal customers.
The 367-room Isle of Capri Crowne Plaza Resort hotel facility is directly
accessible from the casino through the atrium. The hotel is included in the
Crowne Plaza and Holiday Inn Worldwide reservation system. The hotel offers
spacious rooms, most with balconies overlooking a marina, and provides
amenities, including meeting rooms, full room service, a heated pool and
exercise facilities with a hot tub, a dry sauna and massage therapy.
The Mississippi Gulf Coast market had gaming revenue of $813.2 million in
1998. On February 5, 1999, Beau Rivage Resort and AirTran announced that the
two companies entered a joint marketing partnership to provide daily non-stop
jet service between the Gulfport/Biloxi Regional Airport and southeastern
cities, including Dallas/Fort Worth, Houston, Ft. Lauderdale, Tampa and
AirTran's hub, Atlanta. The new service began on March 15, 1999 and increased
the daily flights arriving at the Gulfport/Biloxi Regional Airport from 21 to
28. The additional flights have increased the amount of incoming seat
availability from approximately 1,224 to approximately 1,950 per day, an
approximately 60% increase in daily seat availability.
We believe that the Isle-Biloxi attracts customers from the local area,
Alabama, Florida, Georgia and southeastern Louisiana, including New Orleans
and Baton Rouge. There are approximately 660,000 and 2.9 million people
residing within 50 to 100 miles, respectively, of the Isle-Biloxi.
The Mississippi Gulf Coast hotel market consists of approximately 16,000
hotel/motel rooms. The Isle-Biloxi's hotel occupancy is consistently in excess
of 90%. A number of our competitors in the Mississippi Gulf Coast market have
purchased existing hotels in the area, have built or are presently building or
upgrading their facilities or have announced plans to build or upgrade
additional hotels. More than 4,000 additional hotel/motel rooms have been
added over the past year or are currently under construction in this market.
Subject to amending our existing lease with the City of Biloxi, our
expansion plans for the Isle-Biloxi include replacing our existing casino and
constructing an approximately 1,000-space parking garage and a podium
containing entertainment and retail space. The podium will be constructed to
support either a time-share facility, which may be developed by a joint
venture, or additional hotel rooms.
The Isle-Vicksburg
The Isle-Vicksburg, which commenced operations on August 9, 1993, was the
first of four dockside gaming facilities to open in the Vicksburg, Mississippi
market. Vicksburg is the closest gaming market to Jackson, Mississippi, a
metropolitan area with a population of approximately 420,000 that is located
approximately 40 miles east of Vicksburg.
The Isle-Vicksburg is located on an 18-acre site along the Mississippi
River, approximately one mile north of Interstate 20, and consists of a 27,000
square foot dockside casino, a new on-site 124-room hotel and a 12,000 square
foot land-based pavilion. The casino has two levels with a total of 793 slot
machines and 28 table games. The Isle-Vicksburg provides on-site parking for
900 vehicles.
The land-based pavilion offers customers a wide variety of non-gaming
amenities, including a 67-seat Farraddays' restaurant, a 277-seat Calypso's
buffet, a Tradewinds deli, live entertainment, a Banana Cabana souvenir gift
shop, an Island Gold Players Club booth and a reception area. Customers have
easy access to the
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second level of the casino from the land-based pavilion by either escalator or
a wide stairway, both of which provide panoramic views of the Mississippi
River through a wall of windows.
In February 1999, we opened a new on-site 124-room hotel at the Isle-
Vicksburg, which has 69 deluxe rooms with balconies overlooking the
Mississippi River. The hotel is located on the bank of the Mississippi River,
adjacent to the casino. The Isle-Vicksburg's 67-space recreational vehicle
park is located approximately one-half mile from the casino and provides off-
site parking for 200 vehicles.
The Vicksburg market had gaming revenue of $202.2 million in 1998. We
believe that the Isle-Vicksburg attracts customers primarily from Vicksburg
and Jackson, Mississippi, northeastern Louisiana and tourists from other
locales. 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 more than 1.0 million
visitors in 1998.
The Isle-Black Hawk
On December 30, 1998, we opened our 57%-owned Isle-Black Hawk. This land-
based casino is the first casino reached by customers arriving from Denver,
Colorado, a metropolitan area with a population of approximately 2.2 million
that is located approximately 40 miles east of Black Hawk/Central City. The
Isle-Black Hawk is the largest of the 29 gaming facilities currently operating
in the Black Hawk/Central City market.
The Isle-Black Hawk is located on an approximately 9.4-acre site which is
readily accessible from Highway 119 and contains 43,000 square feet of gaming
space on a single floor with 1,089 slot machines, 14 table games and on-site
covered parking for 1,100 vehicles. The Isle-Black Hawk offers customers a
wide variety of non-gaming amenities, including a 52-seat Farraddays'
restaurant, a 254-seat Calypso's buffet, a 36-seat Tradewinds deli, a Banana
Cabana souvenir gift shop and a 4,000 square foot event center that can be
used for meetings and entertainment.
Isle of Capri Casinos, Inc. manages the Isle-Black Hawk for a fee which is
equal to two percent of revenue (after deducting one-half of gaming taxes)
plus ten percent of operating income, not to exceed four percent of revenue,
as defined.
The Black Hawk/Central City market had gaming revenue of $366.0 million in
1998. We believe that the Isle-Black Hawk's customers are primarily "day
trippers" from Denver, Boulder, Fort Collins and Golden, Colorado and
Cheyenne, Wyoming.
There are less than 200 hotel rooms in the Black Hawk/Central City market.
We plan to begin construction of an on-site 235-room hotel in the summer of
1999. The hotel is expected to be funded through operating cash flow, loans
and equity contributions from us and perhaps the minority owner.
Other Operations
Pompano Park
In 1995, we 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. During 1998,
Pompano Park conducted 182 live racing programs. Pompano Park also offers
daily "full card" simulcasting and wagering on other harness races and
operates a 15-table limited stakes poker room with a $10 maximum win.
Pompano Park is conveniently located off of Interstate 95 and the Florida
Turnpike on a 220-acre owned facility. Pompano Park can accommodate up to
14,500 customers and has 4,000 parking spaces and 980 horse stalls. The six-
story, air-conditioned facility includes a box seat area, a 218,400 square
foot clubhouse, a large
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grandstand, a 1,200-seat dining area from which the races can be viewed, five
concession stands, five bars and a 165-seat Player's Lounge cafeteria.
We believe that Pompano Park would be an attractive location for casino-
style gaming if such gaming were to be legalized in Florida.
Capri Cruises
On April 20, 1998, we formed Capri Cruises, a joint venture with Commodore
Cruise Lines. We own a 50% interest in the joint venture and operate the
casino on the Enchanted Capri cruise ship, which is based in the Port of New
Orleans. The cruise ship offers two and five night cruises for up to 550
passengers. We provide discounted and complimentary cruises on the Enchanted
Capri to many of our Island Gold Players Club members.
Competition
General
We face intense competition in each of the markets in which we operate. Our
existing gaming facilities compete directly with other gaming properties in
Louisiana, Mississippi and Colorado. We expect this competition to increase as
new gaming operators enter our markets, existing competitors expand their
operations, gaming activities expand in existing jurisdictions and gaming is
legalized in new jurisdictions. Several of our competitors have substantially
better name recognition, marketing and financial resources than we do. We
cannot predict with any certainty the effects of existing and future
competition on our operating results.
We also compete with other forms of gaming and entertainment such as online
computer gambling, bingo, pull tab games, card parlors, sports books, pari-
mutuel or telephonic betting on horse racing and dog racing, state-sponsored
lotteries, jai-alai, video lottery terminals, video poker terminals and, in
the future, may compete with in-flight gaming or gaming at other venues.
We also compete with gaming operations in other gaming jurisdictions such as
Las Vegas, Nevada and Atlantic City, New Jersey. Our competition also includes
casinos located on Native American reservations throughout the United States,
which have the advantages of being land-based and exempt from certain state
and federal taxes. Some Native American tribes are either in the process of
establishing or are considering the establishment of gaming at additional
locations. Expansion of existing gaming jurisdictions and the development of
new gaming jurisdictions and casinos on Native American-owned lands will
increase competition for our existing and future operations. In addition,
increased competition could limit new opportunities for us or result in the
saturation of certain gaming markets.
Louisiana Markets
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. In addition to existing competition, the granting of
additional gaming licenses in the Lake Charles or Bossier City/Shreveport
market or the relocation of existing licenses from elsewhere in the state of
Louisiana to either market would increase competition for us. The last
available gaming license in Louisiana could be awarded to an operator in
either the Lake Charles or Bossier City/Shreveport market. The Chairman of the
Louisiana Gaming Control Board has indicated that he plans to ask the
Louisiana Gaming Control Board to consider accepting applications for this
license. If the Louisiana Gaming Control Board begins accepting applications
for this license, the last gaming license would likely be awarded before the
first half of calendar 2000. Because a significant number of the Isle-Lake
Charles' and the Isle-Bossier City's customers reside in Texas, legalization
of casino gaming in Texas would have a material adverse effect on our
operating results.
The Isle-Lake Charles
The Isle-Lake Charles is one of two riverboat gaming facilities in the Lake
Charles, Louisiana market that each operates two riverboats from a single
facility. The Isle-Lake Charles, with its location at the western end of
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the Lake Charles gaming market, is the first gaming facility reached by
patrons arriving from Texas. The Isle-Lake Charles' riverboat competitor,
Players International, operates two riverboats and a 268-room hotel at a
facility approximately two miles from the Isle-Lake Charles. A land-based,
Native American-owned casino with approximately 71,000 square feet of gaming
space, a 223-room hotel and 150 recreational vehicle parking spaces is
operating in Kinder, Louisiana, approximately 35 miles northeast of the Isle-
Lake Charles. Customers from Texas must travel a total of approximately 70
miles more per round trip to visit the casino in Kinder. Riverboats in the
Lake Charles market are subject to cruising requirements, which makes the
land-based casino in Kinder more desirable to many gaming customers. However,
one of our boats at the Isle-Lake Charles is dockside at all times, allowing
us to offer continuous boarding.
The Isle-Bossier City
The Isle-Bossier City is one of four facilities currently operating in the
Bossier City/Shreveport market, a non-cruising gaming market. Despite opening
a new on-site hotel, the Isle-Bossier City will face increased competition
from existing competitors if they add to or enhance their existing facilities.
All of the facilities were opened between April 1994 and October 1996. In
January 1998, Horseshoe Gaming opened a 606-room hotel at its casino and
replaced its riverboat with a larger vessel. This 62,400 square foot, four-
deck riverboat has approximately 30,000 square feet of gaming space, making it
the largest in the Bossier City/Shreveport market. Hollywood Park, through its
Casino Magic subsidiary, opened a 188-room hotel in December 1998 and operates
a 20,000 square foot riverboat casino. Harrah's recently began construction on
a 500-room hotel at its property in Shreveport where it currently operates a
20,000 square foot riverboat casino. Hollywood Casino recently received
approval for a $185 million riverboat casino, hotel and entertainment complex
in Shreveport, although no financing for the project has been announced.
Legislation was adopted in the 1997 legislative session and approved by the
voters in Bossier Parish, Louisiana that, subject to passage of tax
legislation, would allow up to 15,000 square feet of slot machines at
Louisiana Downs, a thoroughbred racing facility located approximately six
miles east of the Isle-Bossier City. In the 1998 legislative session, the
legislature failed to adopt a tax rate. However, during the 1999 legislative
session a bill was passed which, through the creation of a special taxing
district, purports to satisfy the requirement for assessment of a tax on slot
operations at Louisiana Downs prior to the commencement of slot operations. If
slot operations open at Louisiana Downs, the Isle-Bossier City's operating
results could be adversely affected.
Mississippi Markets
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,
which could have a material adverse effect on our Mississippi properties.
The Isle-Biloxi
Twelve gaming facilities are located along the Mississippi Gulf Coast. Nine
gaming facilities are located in Biloxi, two gaming facilities are located in
Gulfport, approximately 10 miles east of Biloxi, and one gaming facility is
located in Bay St. Louis, approximately 30 miles east of Biloxi.
Intense competition on the Mississippi Gulf Coast has already contributed to
the permanent closure of four gaming facilities and reorganizations at two
other gaming facilities in the area. On March 16, 1999, Mirage Resorts, Inc.,
opened Beau Rivage, a $680.0 million, 1,780 room resort and casino with 78,000
square feet of gaming space and a 50,000 square foot meeting center. Beau
Rivage is located approximately two miles west of the Isle-Biloxi. Full House
Resorts has entered into a licensing agreement with Hard Rock Cafe for the
development of a Hard Rock Hotel & Casino adjacent to the Beau Rivage. Full
House Resorts has announced that it expects the facility to open in 2001 and
to include a 400 to 450-room hotel, a Hard Rock Live concert venue and a
signature Hard Rock Cafe.
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Because a significant number of the Isle-Biloxi's customers reside in
Alabama, legalization of gaming in Alabama would increase competition and have
a material adverse effect on the Isle-Biloxi.
We believe that the location of the Isle-Biloxi has several significant
competitive advantages. The Isle-Biloxi is located on "Casino Row", a cluster
of three casinos at the eastern end of Highway 90, affording visitors the
convenience and visual impact of three gaming facilities located within
walking distance. "Casino Row" is the first area reached by visitors from
Alabama, Florida and Georgia.
The Isle-Vicksburg
The Isle-Vicksburg is one of four gaming facilities currently operating in
the Vicksburg, Mississippi area. The Isle-Vicksburg is the second largest
casino in the Vicksburg area. We opened a 124-room on-site hotel in February
1999. Two of our competitors have an on-site hotel and our third competitor
has a hotel adjacent to its site. Lady Luck Gaming owns a site in Vicksburg
and has at various times announced plans to develop a casino and hotel at the
site.
Other local casino competition includes one gaming facility in Natchez,
Mississippi, two gaming facilities in Greenville, Mississippi and a land-
based, Native American-owned casino near Philadelphia, Mississippi. These
casinos are located within a range of 60-125 miles from Vicksburg and 70-90
miles from Jackson.
Mississippi statutes limit gaming to the Mississippi River and navigable
waters within counties bordering the Mississippi River. However, there have
been several attempts to expand gaming as far east of the Mississippi River as
possible. We expect these efforts to continue. An appeal of the Mississippi
Gaming Commission's decision denying site approval of Horseshoe Gaming's
proposed casino in eastern Warren County on the Big Black River, between the
Isle-Vicksburg and its primary market of Jackson, is pending in the
Mississippi Supreme Court. If gaming sites are approved in the eastern part of
Warren County, the Isle-Vicksburg would be materially adversely affected.
We believe that the Isle-Vicksburg enjoys certain competitive advantages in
the Vicksburg gaming market based on its convenient location and its new 124-
room on-site hotel, which has 69 deluxe rooms with balconies overlooking the
Mississippi River. The Isle-Vicksburg is located approximately one mile from
an exit off Interstate 20 that provides easy access from Jackson and the
surrounding areas. Only one competitor is located closer to Interstate 20 than
the Isle-Vicksburg. The Isle-Vicksburg also offers ample parking both on-site
and immediately adjacent to the facility. We also believe that the Isle-
Vicksburg's gaming and non-gaming facilities and distinctive tropical island
theme provide one of the most exciting and spacious gaming environments in the
Vicksburg market.
The Isle-Black Hawk
Competition in the Black Hawk/Central City, Colorado market is intense. Of
the 29 gaming facilities currently operating in the Black Hawk/Central City
market, seven have over 400 gaming positions and two offer a variety of hotel
accommodations. These seven gaming facilities all have on-site parking and
have established high-profile brand names in the local market.
New construction, development projects and expansion plans are in process at
other casino facilities. Riviera Black Hawk acquired a 300,000 square foot
site next to the Isle-Black Hawk and is developing a facility and has
announced that it will have 1,000 slot machines and a 550-space covered
parking garage. This facility is scheduled to open in early 2000. Another
competitor is constructing a nearby casino, which is also scheduled to open in
2000.
We believe that the Isle-Black Hawk's large casino, covered self-service
parking, dining amenities and unique tropical island theme give us an
advantage in the Black Hawk/Central City market. Our casino is the closest
casino in Black Hawk to the highway and is the largest casino in the Black
Hawk/Central City market.
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Recent Transactions
We recently refinanced substantially all of our existing debt, other than
certain non-recourse debt incurred by the subsidiaries that own and operate
the Isle-Black Hawk, in order to reduce borrowing rates, extend debt
maturities and improve our financial flexibility. The refinancing consisted of
the following:
. Offering of Senior Subordinated Notes. On April 23, 1999, we issued
$390.0 million principal amount of 8 3/4% senior subordinated notes
due 2009. We used the net proceeds of this offering to fund the
repurchase of our existing 12 1/2% senior secured notes due 2003 and
to repay certain other indebtedness. In connection with the offering
and sale of these notes, we entered into an amendment to the
indenture governing our 12 1/2% Senior Secured Notes due 2003, to
eliminate most of the financial and restrictive covenants in the
indenture. We effected a covenant defeasance of the remaining 12 1/2%
senior secured notes by depositing sufficient funds with the trustee
to redeem the remaining outstanding notes on August 1, 2000, the
earliest possible redemption date. The first priority liens that
secure the 12 1/2% senior secured notes were released as a result of
the defeasance of those notes.
. New Senior Credit Facility. Simultaneously with the $390 million note
offering, we entered into a new $175.0 million, five-year senior
credit facility comprised of a $50.0 million term loan and a $125.0
million undrawn revolver. Our new senior credit facility is secured
by liens on substantially all of our assets and guaranteed by all of
our significant restricted subsidiaries. We used the initial
borrowings under our new senior credit facility to repay certain
existing debt, for working capital and for other general corporate
purposes. We plan to use future borrowings under our new senior
credit facility to finance expansion projects and for working capital
and general corporate purposes.
Recent Developments
Tunica County, Mississippi
In March 1999, we acquired, for $9.5 million, the original Harrah's casino
facility located in Tunica County, Mississippi. The Tunica gaming market
generated gaming revenue of $966.7 million in 1998 and is the fifth largest
gaming market in the United States. It is the closest gaming market to the
Memphis, Tennessee metropolitan area, which has a population of approximately
1.1 million and is located approximately 30 miles northeast of Tunica County.
We are in the process of investing an additional amount of approximately $24.0
million to equip, renovate and open this facility as an Isle of Capri casino.
We plan to open the Isle-Tunica in July 1999 with approximately 875 slot
machines, 15 table games and our three trademark restaurants. We also plan to
invest approximately $40.0 million to construct an on-site hotel with up to
250 rooms and two live entertainment theaters with combined seating for 2,000
people. Construction of the hotel and theaters is scheduled to begin in the
second half of calendar 1999. We have entered into a letter of intent with a
company affiliated with entertainer Wayne Newton to form a joint venture to
operate the theaters.
The Tunica gaming market is extremely competitive. We will compete with nine
dockside gaming facilities in this market. Of these facilities, six are closer
to the Memphis, Tennessee metropolitan area, from which most customers come.
The Isle-Tunica will be the smallest facility in the Tunica gaming market in
terms of gaming square footage and number of positions and, at the time we
open the Isle-Tunica, the Isle-Tunica will be the only facility without a
hotel.
Coahoma County, Mississippi
In 1998, we acquired an option to purchase approximately 138 acres of land
in Coahoma County, Mississippi, which is readily accessible from Highway 49,
and have received site and development approval from the Mississippi Gaming
Commission to develop a gaming entertainment facility on this site. We plan to
invest approximately $60.0 million to develop, in phases, a casino and related
lodging and entertainment facilities containing approximately 930 slot
machines, 24 table games, our three trademark restaurants and a hotel with
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approximately 225 rooms. We must obtain additional permits to develop this
site, including approval from the Army Corps of Engineers, and plan to
commence operations at the Isle-Coahoma in 2000.
Coahoma County, Mississippi is located approximately 130 miles southeast of
Little Rock, Arkansas and 70 miles south of Memphis, Tennessee, across the
river from Helena, Arkansas. Lady Luck Gaming is the only gaming operator
currently in Coahoma County and operates two casinos having a total of
approximately 50,000 square feet of gaming space. Lady Luck Gaming also owns
and operates a 173-room hotel and a 314-room hotel at its site, and a 120-room
hotel in Helena, Arkansas.
This property will also compete to a lesser extent with gaming facilities in
Tunica County. Because a number of this property's customers will be drawn
from Arkansas, legalization of gaming in Arkansas would have a material
adverse effect on this project.
Future Developments
We recently adopted an expansion program, which we refer to as the
Millennium Expansion Plan, which we believe will be instrumental in driving
our continued growth. In addition to development of the Isle-Tunica and the
Isle-Coahoma, the Millennium Expansion Plan includes continued development of
additional Isle Style amenities at our existing facilities, including the
following:
. Construction of an on-site 250-room deluxe hotel at the Isle-Lake
Charles;
. Construction of a larger casino, an approximately 1,000 space parking
garage and podium containing entertainment and retail space at the
Isle-Biloxi. The podium will be constructed to support the future
development of a proposed time-share facility, which may be developed
through a joint venture, or additional hotel rooms; and
. Construction of an on-site 235-room hotel at the Isle-Black Hawk.
Subject to obtaining necessary approvals, including amending our lease with
the City of Biloxi, we expect that the components of the Millennium Expansion
Plan will be completed over the next 24 months.
Employees
As of April 25, 1999, we employed approximately 6,000 people. None of our
employees are subject to a collective bargaining agreement. We believe that
our relationship with our employees is satisfactory.
Regulatory Matters
Louisiana
In July 1991, Louisiana enacted 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 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 Riverboat Gaming Enforcement Division of the Louisiana State
Police was authorized to investigate applicants and issue licenses,
investigate violations of the statute and conduct continuing reviews of gaming
activities.
In May 1996, regulatory oversight of riverboat gaming was transferred to the
Louisiana Gaming Control Board, which is comprised of nine voting members
appointed by the governor. The Louisiana Gaming Control Board now oversees all
licensing matters for riverboat casinos, land-based casinos, video poker and
certain aspects of Native American gaming other than those responsibilities
reserved to the Louisiana State Police.
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The Louisiana Gaming Control Board is empowered to issue up to 15 licenses
to conduct gaming activities on a riverboat of new construction in accordance
with applicable law. However, no more than six licenses may be granted to
riverboats operating from any one parish.
The Louisiana State Police continues to be involved broadly in gaming
enforcement and reports to the Louisiana Gaming Control Board. Louisiana law
permits the Louisiana State Police, among other things, to continue to (1)
conduct suitability investigations, (2) audit, investigate and enforce
compliance with standing regulations, (3) initiate enforcement and
administrative actions and (4) perform "all other duties and functions
necessary for the efficient, efficacious, and thorough regulation and control
of gaming activities and operations under the Louisiana Gaming Control Board's
jurisdiction."
Louisiana gaming law specifies certain restrictions relating to the
operation of riverboat gaming, including the following:
. except in Bossier City/Shreveport, 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;
. except in Bossier City/Shreveport, each round-trip riverboat cruise
may not be less than three nor more than eight hours in duration,
subject to specific exceptions;
. agents of the Louisiana State Police are permitted on board at any
time during gaming operations;
. gaming devices, equipment and supplies may only be purchased or
leased from permitted suppliers;
. gaming may only take place in the designated gaming area while the
riverboat is on a designated river or waterway;
. gaming equipment may not be possessed, maintained or exhibited by any
person on a riverboat except in the specifically designated gaming
area or in a secure area used for inspection, repair or storage of
such equipment;
. wagers may be received only from a person present on a licensed
riverboat;
. persons under 21 are not permitted in designated gaming areas;
. except for slot machine play, wagers may be made only with tokens,
chips or electronic cards purchased from the licensee aboard a
riverboat;
. 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;
. licensees must have adequate protection and indemnity insurance;
. licensees must have all necessary federal and state licenses,
certificates and other regulatory approvals prior to operating a
riverboat; and
. gaming may only be conducted in accordance with the terms of the
license and Louisiana law.
To receive a gaming license in Louisiana, an 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 (1) pose a threat to the public interest of the State of Louisiana or to
the effective regulation and control of gaming or (2) 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 of gaming activities. In addition, the Louisiana Gaming Control
Board will not grant a license unless it finds that:
. the applicant can demonstrate the capability, either through
training, education, business experience or a combination of the
preceding, to operate a gaming operation;
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. the proposed financing of the riverboat and the gaming operations is
adequate for the nature of the proposed operation and is from a
suitable and acceptable source;
. 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;
. the applicant submits with its application for a license a detailed
plan of design of the riverboat;
. the applicant designates the docking facilities to be used by the
riverboat;
. the applicant shows adequate financial ability to construct and
maintain a riverboat; and
. the applicant has a good faith plan to recruit, train and upgrade
minorities in all employment classifications.
An initial license to conduct riverboat gaming operations is valid for a
term of five years and legislation passed in the 1999 legislative session,
provides for renewals every five years thereafter. Legislation was passed
during the 1999 regular legislative session, which, if not vetoed by the
governor, would increase the license renewal terms to five years. A gaming
license is deemed to be a privilege under Louisiana law and, as such, may be
denied, revoked, suspended, conditioned or limited at any time by the
Louisiana Gaming Control Board.
The Isle-Bossier City was issued its initial gaming license by the Riverboat
Gaming Enforcement Division of the Louisiana State Police on December 22, 1993
and the Isle-Lake Charles was issued its initial gaming license by the
Louisiana Gaming Control Board 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 its bankruptcy. Isle of Capri acquired the Grand
Palais and has been advised by the chief counsel to the Louisiana Gaming
Control Board that it will treat the running of the five-year license period
as having been suspended from June 6, 1995 until July 12, 1996, the date on
which gaming operations recommenced on the Grand Palais. The legal effect of
this communication is unclear. Louisiana gaming law provides that a renewal
application for the period succeeding the initial five-year term of an
operator's license must be made to the Louisiana Gaming Control 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 an interest
in a license is prohibited.
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, are subject to the application and suitability requirements of
Louisiana gaming law.
The sale, purchase, assignment, transfer, pledge or other hypothecation,
lease, disposition or acquisition by any person of securities which represent
5% or more of the total outstanding shares issued by a licensee is subject to
the approval of the Louisiana Gaming Control Board. A security issued by a
licensee must generally disclose these restrictions. Prior approval from the
Louisiana Gaming Control Board is required for the sale, purchase, assignment,
transfer, pledge or other hypothecation, lease, disposition or acquisition of
any ownership interest of 5% or more of any non-corporate licensee or for the
transfer of any "economic interest" of 5% or more of any licensee or
affiliated gaming person. An "economic interest" is defined 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.
Fees payable to the state for conducting gaming activities on a riverboat
include (1) $50,000 per riverboat for the first year of operation and $100,000
per year per riverboat thereafter, plus (2) 18.5% of net gaming proceeds. A
statute also authorizes local governing authorities to levy boarding fees.
Isle of Capri has development agreements with the local governing authorities
in the jurisdictions in which it operates pursuant to which it makes payments
in lieu of boarding fees.
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A licensee must notify and/or seek approval from the Louisiana Gaming
Control Board in connection with 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. The Louisiana
Gaming Control Board may issue an emergency order for not more than ten days
prohibiting payment of profits, income or accruals by, or investments in, a
licensee. Riverboat gaming licensees and their affiliated gaming persons must
notify the Louisiana Gaming Control Board 60 days prior to the receipt by any
such persons of any loans or extensions of credit or modifications thereof.
The Louisiana Gaming Control Board is required to investigate the reported
loan, extension of credit or modification thereof and to determine whether an
exemption exists on the requirement of prior written approval and, if such
exemption is not applicable, to either approve or disapprove the transaction.
If the Louisiana Gaming Control Board disapproves of a transaction, the
transaction cannot be entered into by the licensee or affiliated gaming
person. Isle of Capri is an affiliated gaming person of its subsidiaries which
hold the licenses to conduct riverboat gaming at the Isle-Bossier City and the
Isle-Lake Charles.
The failure of a licensee to comply with the requirements set forth above
may result in the suspension or revocation of that licensee's gaming license.
Additionally, if the Louisiana Gaming Control Board finds that the individual
owner or holder of a security of a corporate license or intermediary company
or any person with an economic interest in a licensee is not qualified under
Louisiana law, the Louisiana Gaming Control Board may require, under penalty
of suspension or revocation of the license, that the person not:
. receive dividends or interest on securities of the corporation;
. exercise directly or indirectly a right conferred by securities of
the corporation;
. receive remuneration or economic benefit from the licensee; or
. continue its ownership or economic interest in the licensee.
A licensee must periodically report the following information to the
Louisiana Gaming Control Board, which is not confidential and is available for
public inspection: (1) the licensee's net gaming proceeds from all authorized
games, (2) the amount of net gaming proceeds tax paid and (3) all quarterly
and annual financial statements presenting historical data, including annual
financial statements that have been audited by an independent certified public
auditor.
During the 1996 special session of the Louisiana legislature, legislation
was passed which provided for local option elections to be held in November
1996 which gave voters in each parish within the state the opportunity to
decide whether the various forms of gaming permitted under Louisiana law,
including riverboat gaming, were permissible in each parish. In November 1996,
voters in Calcasieu and Bossier parishes, the parishes in which the Isle-Lake
Charles and Isle-Bossier City are located, voted favorably to permit the
continuation of riverboat gaming.
During the 1996 special session of the Louisiana legislature, legislation
was also enacted placing on the ballot for a state-wide election a
constitutional amendment limiting the expansion of gaming. In October 1996,
voters passed the constitutional amendment. As a result, local option
elections are required before new or additional forms of gaming can be brought
into a parish.
Proposals to amend or supplement Louisiana's riverboat gaming statute are
frequently introduced in the Louisiana State legislature. There is no
assurance that changes in Louisiana gaming law will not occur or that such
changes will not have a material adverse effect on Isle of Capri's business in
Louisiana.
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
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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.
Gaming vessels in Mississippi must be located on the Mississippi River, on
navigable waters in eligible counties along the Mississippi River or in the
waters lying south of the counties along the Mississippi Gulf Coast.
Mississippi law permits unlimited stakes gaming on permanently moored vessels
on a 24-hour basis and does not restrict the percentage of space which may be
utilized for gaming. There are no limitations on the number of gaming licenses
which may be issued in Mississippi.
The ownership and operation of gaming facilities in Mississippi are subject
to extensive state and local regulation intended to:
. prevent unsavory or unsuitable persons from having any direct or
indirect involvement with gaming at any time or in any capacity;
. establish and maintain responsible accounting practices and
procedures for gaming operations;
. maintain effective control over the financial practices of licensees,
including establishing minimum procedures for internal fiscal affairs
and safeguarding of assets and revenues, providing reliable record
keeping and making periodic reports;
. provide a source of state and local revenues through taxation and
licensing fees;
. prevent cheating and fraudulent practices; and
. ensure that gaming licensees, to the extent practicable, employ
Mississippi residents.
The regulations are subject to amendment and interpretation by the
Mississippi Gaming Commission. Changes in Mississippi laws or regulations may
limit or otherwise materially affect the types of gaming that may be conducted
in Mississippi and such changes, if enacted, could have an adverse effect on
Isle of Capri and its Mississippi gaming operations.
Isle of Capri is registered as a publicly traded holding company under the
Mississippi Gaming Control Act. Isle of Capri's gaming operations in
Mississippi are subject to regulatory control by the Mississippi Gaming
Commission, the state tax commission and various other local, city and county
regulatory agencies (collectively referred to as the "Mississippi Gaming
Authorities"). Subsidiaries of Isle of Capri have obtained gaming licenses
from the Mississippi Gaming Authorities to operate the Isle-Biloxi and the
Isle-Vicksburg and have applications pending for gaming licenses for the Isle-
Tunica and the Isle-Coahoma. Isle of Capri's future gaming operations outside
of Mississippi are also subject to approval by the Mississippi Gaming
Commission.
The licenses held by Isle of Capri's Mississippi gaming operations have
terms of two years and are not transferable. The Isle-Biloxi received a third
gaming license in April 1998 and the Isle-Vicksburg obtained a third gaming
license in January 1999. There is no assurance that new licenses can be
obtained at the end of each two-year period of a license. The Isle-Tunica and
the Isle-Coahoma will have to obtain licenses before gaming operations can
begin at these locations. Moreover, the Mississippi Gaming Commission may, at
any time, and for any cause it deems reasonable, revoke, suspend, condition,
limit or restrict a license or approval to own shares of stock in the
subsidiaries of Isle of Capri that operate in Mississippi.
Substantial fines for each violation of Mississippi's gaming laws or
regulations may be levied against Isle of Capri, its subsidiaries and the
persons involved. A violation under a gaming license held by a subsidiary of
Isle of Capri operating in Mississippi may be deemed a violation of all the
other licenses held by Isle of Capri.
Isle of Capri and each of its Mississippi gaming subsidiaries must
periodically submit detailed financial, operating and other reports to the
Mississippi Gaming Commission and/or the state tax commission. Numerous
transactions, including substantially all loans, leases, sales of securities
and similar financing transactions entered into by any subsidiary of Isle of
Capri operating a casino in Mississippi, must be reported to or approved by
the
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Mississippi Gaming Commission. In addition, the Mississippi Gaming Commission
may, in its discretion, require additional information about the operations of
Isle of Capri.
Certain officers and employees of Isle of Capri and the officers, directors
and certain key employees of Isle of Capri's Mississippi gaming subsidiaries
must be found suitable or be licensed by the Mississippi Gaming Commission.
Isle of Capri believes that all required findings of suitability related to
the Isle-Biloxi and the Isle-Vicksburg have been applied for or obtained,
although the Mississippi Gaming Commission in its discretion may require
additional persons to file applications for findings of suitability. Isle of
Capri will have to obtain findings of suitability related to the Isle-Tunica
and the Isle-Coahoma. In addition, any person having a material relationship
or involvement with Isle of Capri may be required to be found suitable or
licensed, in which case those persons must pay the costs and fees associated
with such investigation. The Mississippi Gaming Commission may deny an
application for a finding of suitability for any cause that it deems
reasonable. Changes in certain licensed positions must be reported to the
Mississippi Gaming Commission. 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 a licensed position. The
Mississippi Gaming Commission has the power to require Isle of Capri and any
of its Mississippi gaming subsidiaries to suspend or dismiss officers,
directors and other key employees or to sever relationships with other persons
who refuse to file appropriate applications or whom the authorities find
unsuitable to act in such capacities.
Employees associated with gaming must obtain work permits that are subject
to immediate suspension under certain circumstances. The Mississippi Gaming
Commission will refuse to issue a work permit to a person who has been
convicted of a felony, committed certain misdemeanors or knowingly violated
the Mississippi Gaming Control Act, and it may refuse to issue a work permit
to a gaming employee for any other reasonable cause.
At any time, the Mississippi Gaming Commission has the power to investigate
and require the finding of suitability of any record or beneficial stockholder
of Isle of Capri. Mississippi law requires any person who individually or in
association with others acquires, directly or indirectly, beneficial ownership
of more than 5% of Isle of Capri's common stock to report the acquisition to
the Mississippi Gaming Commission, and such person may be required to be found
suitable. In addition, any person who, individually or in association with
others, becomes, directly or indirectly, a beneficial owner of more than 10%
of Isle of Capri's common stock, as reported to the U.S. Securities and
Exchange Commission, must apply for a finding of suitability by the
Mississippi Gaming Commission and must pay the costs and fees that the
Mississippi Gaming Commission incurs in conducting the investigation.
The Mississippi Gaming Commission has generally exercised its discretion to
require a finding of suitability of any beneficial owner of more than 5% of a
registered publicly-traded holding company's stock. However, the Mississippi
Gaming Commission has adopted a policy that generally permits certain
institutional investors to own beneficially up to 10% of a registered public
company's stock without a finding of suitability. If a stockholder who must be
found suitable is a corporation, partnership or trust, it must submit detailed
business and financial information, including a list of beneficial owners.
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. Isle of Capri believes that compliance by
Isle of Capri with the licensing procedures and regulatory requirements of the
Mississippi Gaming Commission will not affect the marketability of Isle of
Capri's securities. Any person found unsuitable and who holds, directly or
indirectly, any beneficial ownership of Isle of Capri's securities beyond such
time as the Mississippi Gaming Commission prescribes may be guilty of a
misdemeanor. Isle of Capri is subject to disciplinary action if, after
receiving notice that a person is unsuitable to be a stockholder or to have
any other relationship with Isle of Capri or its subsidiaries operating
casinos in Mississippi, Isle of Capri:
. pays the unsuitable person any dividend or other distribution upon
its voting securities;
. recognizes the exercise, directly or indirectly, of any voting rights
conferred by its securities;
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. pays the unsuitable person any remuneration in any form for services
rendered or otherwise, except in certain limited and specific
circumstances; or
. fails to pursue all lawful efforts to require the unsuitable person
to divest himself of the securities, including, if necessary, the
immediate purchase of the securities for cash at a fair market value.
Isle of Capri may be required to disclose to the Mississippi Gaming
Commission upon request the identities of the holders of any of Isle of
Capri's debt securities. In addition, under the Mississippi Gaming Control
Act, the Mississippi Gaming Commission may, in its discretion, (1) require
holders of Isle of Capri's securities, including the notes, to file
applications, (2) investigate such holders and (3) require such holders to be
found suitable to own such securities. Although the Mississippi Gaming
Commission generally does not require the individual holders of obligations
such as the notes to be investigated and found suitable, the Mississippi
Gaming Commission retains the discretion to do so for any reason, including
but not limited to a default, or where the holder of the debt instrument
exercises a material influence over the gaming operations of the entity in
question. Any holder of debt securities required to apply for a finding of
suitability must pay all investigative fees and costs of the Mississippi
Gaming Commission in connection with such an investigation.
The Mississippi regulations provide that a change in control of Isle of
Capri may not occur without the prior approval of the Mississippi Gaming
Commission. Mississippi law prohibits Isle of Capri 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
Isle of Capri, subject to an annual renewal.
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 Isle of
Capri, 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.
Isle of Capri must 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. Isle of Capri must render
maximum assistance in determining the identity of the beneficial owner.
Mississippi law requires that certificates representing shares of Isle of
Capri common stock bear a legend to the general effect that the securities are
subject to the Mississippi Gaming Control Act and regulations of the
Mississippi Gaming Commission. The Mississippi Gaming Commission has the
authority to grant a waiver from the legend requirement, which Isle of Capri
has obtained. The Mississippi Gaming Authorities, through the power to
regulate licenses, have the power to impose additional restrictions on the
holders of Isle of Capri's securities at any time.
The Mississippi Gaming Commission has enacted a regulation requiring that,
as a condition to licensure or license renewal, an applicant must 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. In 1999, the
Mississippi Gaming Commission approved amendments to this regulation that
increased the infrastructure development requirement from 25% to 100% for new
casinos (or upon acquisition of a closed casino), but grandfathered existing
licensees and development plans approved prior to the effective date of the
new regulation (including the Isle-Tunica and the Isle-Coahoma).
"Infrastructure facilities" include any of the following:
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. a 250-room or larger hotel of at least a two-star rating as defined
by the current edition of the Mobil Travel Guide;
. theme parks;
. golf courses;
. marinas;
. entertainment facilities;
. tennis complexes; and
. any other facilities approved by the Mississippi Gaming Commission.
Parking facilities, roads, sewage and water systems or civic facilities are
not considered "infrastructure facilities." The Mississippi Gaming Commission
may reduce the number of rooms required in a hotel if it is satisfied that
sufficient rooms are available to accommodate the anticipated number of
visitors.
License fees and taxes are payable to the State of Mississippi and to the
counties and cities in which a Mississippi Gaming Subsidiary's respective
operations will be conducted. The license fee payable to the state of
Mississippi is based upon gross revenue of the licensee (generally defined as
gaming receipts less payout to customers as winnings) and equals 4% of gross
revenue of $50,000 or less per month, 6% of gross revenue over $50,000 and
less than $134,000 per calendar month, and 8% of gross revenue over $134,000
per calendar month. The foregoing license fees are allowed as a credit against
the licensee's Mississippi income tax liability for the year paid.
Additionally, a licensee must pay a $5,000 annual license fee and an annual
fee based upon the number of games it operates. The gross revenue imposed by
the Mississippi communities and counties in which Isle of Capri's casino
operations are located equals 0.4% of gross revenue of $50,000 or less per
calendar month, 0.6% of gross revenue over $50,000 and less than $134,000 per
calendar month and 0.8% of gross revenue over $134,000 per calendar month.
These fees have been imposed in, among other cities and counties, Biloxi,
Vicksburg, Tunica County and Coahoma County. Certain Local and Private Laws of
the State of Mississippi may impose fees or taxes on the Mississippi Gaming
Subsidiaries in addition to the fees described above.
The Mississippi Gaming Commission requires, as a condition of licensure or
license renewal, that casino vessels on the Mississippi Gulf Coast that are
not self-propelled must be moored to withstand a Category 4 hurricane with 155
mile-per-hour winds and 15-foot tidal surge. Isle of Capri believes that all
of its Mississippi Gaming Subsidiaries currently meet this requirement. A 1996
Mississippi Gaming Commission regulation prescribes the hurricane emergency
procedure to be used by the Mississippi Gulf Coast casinos.
The sale of food or alcoholic beverages at Isle of Capri's Mississippi
gaming locations is subject to licensing, control and regulation by the
applicable state and local authorities. The agencies involved have full power
to limit, condition, suspend or revoke any such license, and any such
disciplinary action could (and revocation would) have a material adverse
effect upon the operations of the affected casino or casinos. Certain officers
and managers of Isle of Capri and its Mississippi gaming subsidiaries must be
investigated by the Alcoholic Beverage Control Division of the State Tax
Commission in connection with liquor permits that have been issued. The
Alcoholic Beverage Control Division of the State Tax Commission must approve
all changes in licensed positions.
During 1998, certain anti-gaming groups proposed referenda that, if adopted,
would have banned gaming in Mississippi and required that gaming entities
cease operations within two years after the ban. The referenda were declared
illegal by Mississippi courts on constitutional and procedural grounds. A
revised initiative has been submitted to the Secretary of State and could be
placed on the ballot for the November 2000 election.
Colorado
The State of Colorado created the Division of Gaming (the "Division") within
the Department of Revenue to license, implement, regulate and supervise the
conduct of limited gaming under the Colorado Limited Gaming
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Act. The Director of the Division, under the supervision of a five-member
Colorado Limited Gaming Control Commission (the "Colorado Commission"), has
been granted broad power to ensure compliance with the Colorado gaming
regulations (the "Colorado Regulations"). The Director may inspect, without
notice, impound or remove any gaming device. He may examine and copy any
licensee's records, may investigate the background and conduct of licensees
and their employees, and may bring disciplinary actions against licensees and
their employees. He may also conduct detailed background investigations of
persons who loan money to Isle of Capri or its Colorado gaming subsidiaries.
The Colorado Commission is empowered to issue five types of gaming and
gaming-related licenses. The licenses are revocable and non-transferable. The
failure or inability of Isle of Capri or any of its Colorado gaming
subsidiaries to maintain necessary gaming licenses will have a material
adverse effect on the operating results of Isle of Capri. All persons employed
by Isle of Capri and its Colorado gaming subsidiaries and involved, directly
or indirectly, in gaming operations in Colorado also are required to obtain a
Colorado gaming license. All licenses must be renewed annually, except those
for key and support employees, which must be renewed every two years.
As a general rule, under the Colorado Regulations, it is a criminal
violation for any person to have a legal, beneficial, voting or equitable
interest, or right to receive profits, in more than three retail gaming
licenses in Colorado. The Colorado Commission has ruled that a person does not
have an interest in a licensee for purposes of the multiple license
prohibition if:
. such person has less than a five percent (5%) interest in an
institutional investor which has an interest in a publicly traded
licensee or publicly traded company affiliated with a licensee (such
as Isle of Capri);
. a person has a five percent (5%) or more financial interest in an
institutional investor, but the institutional investor has less than
a five percent (5%) interest in a publicly traded licensee or
publicly traded company affiliated with a licensee;
. an institutional investor has less than a five percent (5%) financial
interest in a publicly traded licensee or publicly traded company
affiliated with a licensee;
. an institutional investor possesses securities in a fiduciary
capacity for another person, and does not exercise voting control
over five percent (5%) or more of the outstanding voting securities
of a publicly traded licensee or of a publicly traded company
affiliated with a licensee;
. a registered broker or dealer retains possession of securities of a
publicly traded licensee or of a publicly traded company affiliated
with a licensee for its customers in street name or otherwise, and
exercises voting rights for less than five percent (5%) of the
publicly traded licensee's voting securities or of a publicly traded
company affiliated with a licensee;
. a registered broker or dealer acts as a market maker for the stock of
a publicly traded licensee or of a publicly traded company affiliated
with a licensee and possesses a voting interest in less than five
percent (5%) of the stock of the publicly traded licensee or of a
publicly traded company affiliated with a licensee;
. an underwriter is holding securities of a publicly traded licensee or
of a publicly traded company affiliated with a licensee as part of an
underwriting for no more than 90 days if it exercises voting rights
of less than five percent (5%) of the outstanding securities of a
publicly traded licensee or of a publicly traded company affiliated
with a licensee;
. a stock clearinghouse holds voting securities for third parties, if
it exercises voting rights with respect to less than five percent
(5%) of the outstanding securities of a publicly traded licensee or
of a publicly traded company affiliated with a licensee; or
. a person owns less than five percent (5%) of the voting securities of
the publicly traded licensee or publicly traded company affiliated
with a licensee.
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Hence, Isle of Capri's and its stockholders' business opportunities in
Colorado are limited to such interests that comply with the statute and the
Colorado Commission's rule.
In addition, pursuant to the Colorado Regulations, no manufacturer or
distributor of slot machines may have an interest in any casino operator,
allow any of its officers to have such an interest, employ any person if such
person is employed by a casino operator, or allow any casino operator or
person with a substantial interest therein to have an interest in a
manufacturer's or distributor's business. The Colorado Commission has ruled
that a person does not have a "substantial interest" if it directly or
indirectly has less than five percent (5%) of such voting securities of a
publicly traded licensee or publicly traded affiliated company of a licensee.
In other contexts, counsel for the Division has informed counsel for Isle of
Capri that, for purposes of the manufacturer/operator vertical integration
rule and the horizontal three-license rule described above, the Division has
taken the position that only a person deemed to have "beneficial ownership"
(as defined in the rules and regulations of the U.S. Securities and Exchange
Commission under Section 13(d) of the U.S. Securities Exchange Act of 1934) of
shares of the publicly traded holding company (or licensee) will be deemed to
have an "interest" under the vertical integration rule or "ownership interest"
under the horizontal rule. However, the Division has not passed on this issue
with respect to Isle of Capri, and neither the Colorado Commission nor the
Colorado legislature has addressed this issue. As a result, there is no
assurance that the Division, the Colorado Commission or the Colorado
legislature will not apply a more restrictive interpretation in this instance.
Under the Colorado Regulations, any person or entity having any direct or
indirect interest in a gaming licensee or an applicant for a gaming license,
including, without limitation, Isle of Capri and its stockholders, may be
required to supply the Colorado Commission with substantial information,
including background information, source of funding information, a sworn
statement that such person or entity is not holding his interest for any other
party, and fingerprints. Such information, investigation and licensing as an
"associated person" automatically will be required of all persons (other than
certain institutional investors discussed below) which directly or indirectly
own ten percent (10%) or more of a direct or indirect legal, beneficial or
voting interest in Black Hawk LLC, through their ownership in Isle of Capri.
Such persons must report their interest and file appropriate applications
within 45 days after acquiring such interest.
Persons directly or indirectly having a five percent (5%) or more interest
(but less than 10%) in Black Hawk LLC, through their ownership in Isle of
Capri, must report their interest to the Colorado Commission within ten (10)
days after acquiring such interest and may be required to provide additional
information and to be found suitable. If certain institutional investors
provide certain information to the Colorado Commission, such investors, at the
Colorado Commission's discretion, may be permitted to own up to 14.99% of
Black Hawk LLC, through their ownership in Isle of Capri, before being
required to be found suitable. All licensing and investigation fees will have
to be paid by the person in question. The associated person investigation fee
currently is $53 per hour.
The Colorado Commission also has the right to request information from any
person directly or indirectly interested in, or employed by, a licensee, and
to investigate the moral character, honesty, integrity, prior activities,
criminal record, reputation, habits and associations of (1) all persons
licensed pursuant to the Colorado Limited Gaming Act; (2) all officers,
directors and stockholders of a licensed privately held corporation; (3) all
officers, directors and stockholders holding either a five percent (5%) or
greater interest or a controlling interest in a licensed publicly traded
corporation; (4) all general partners and all limited partners of a licensed
partnership; (5) all persons which have a relationship similar to that of an
officer, director or stockholder of a corporation (such as members and
managers of a limited liability company); (6) all persons supplying financing
or loaning money to any licensee connected with the establishment or operation
of limited gaming and (7) all persons having a contract, lease or ongoing
financial or business arrangement with any licensee, where such contract,
lease or arrangement relates to limited gaming operations, equipment, devices
or premises.
In addition, under the Colorado Regulations, every person who is a party to
a "gaming contract" with an applicant for a license, or with a licensee, upon
the request of the Colorado Commission or the Director, must
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promptly provide to the Colorado Commission or Director all information which
may be requested concerning financial history, financial holdings, real and
personal property ownership, interests in other companies, criminal history,
personal history and associations, character, reputation in the community and
all other information which might be relevant to a determination whether a
person would be suitable to be licensed by the Colorado Commission. Failure to
provide all information requested constitutes sufficient grounds for the
Director or the Colorado Commission to require a licensee or applicant to
terminate its "gaming contract" (as defined below) with any person who failed
to provide the information requested. In addition, the Director or the
Colorado Commission may require changes in "gaming contracts" before an
application is approved or participation in the contract is allowed. A "gaming
contract" is defined as an agreement in which a person does business with or
on the premises of a licensed entity.
The Colorado Commission and the Division have interpreted the statute and
regulations to permit the Colorado Commission to investigate and license any
lenders to Isle of Capri or its Colorado gaming subsidiaries. In any event,
such lenders may not be able to exercise certain of their rights and remedies
without prior approval of the Colorado gaming authorities.
An application for licensure or suitability may be denied for any cause
deemed reasonable by the Colorado Commission or the Director, as appropriate.
Specifically, the Colorado Commission and the Director must deny a license to
any applicant who (1) fails to prove by clear and convincing evidence that the
applicant is qualified; (2) fails to provide information and documentation
requested; (3) fails to reveal any fact material to qualification, or supplies
information which is untrue or misleading as to a material fact pertaining to
qualification; (4) has been, or is any director, officer, general partner,
stockholder, limited partner or other person who has a financial or equity
interest in the applicant who has been, convicted of certain crimes, including
the service of a sentence upon conviction of a felony in a correctional
facility, city or county jail, or community correctional facility or under the
state board of parole or any probation department within ten years prior to
the date of the application, gambling-related offenses, theft by deception or
crimes involving fraud or misrepresentation, is under current prosecution for
such crimes (during the pendency of which license determination may be
deferred), is a career offender or a member or associate of a career offender
cartel, or is a professional gambler or (5) has refused to cooperate with any
state or federal body investigating organized crime, official corruption or
gaming offenses.
If the Colorado Commission determines that a person or entity is unsuitable
to own interests in Isle of Capri, then Isle of Capri and any of its Colorado
gaming subsidiaries may be sanctioned, which may include the loss by Isle of
Capri and its Colorado gaming subsidiaries of their respective approvals and
licenses.
The Colorado Commission does not need to approve in advance a public
offering of securities but rather requires a filing of notice and additional
documents with regard to such public offering prior to such public offering.
Under the regulations, the Colorado Commission may, in its discretion, require
additional information and prior approval of such public offering.
In addition, the Colorado Regulations prohibit a licensee or affiliated
company thereof, such as Isle of Capri, from paying dividends, interest or
other remuneration to any unsuitable person, or recognizing the exercise of
any voting rights by any unsuitable person. Further, Isle of Capri may
repurchase the shares of anyone found unsuitable at the lesser of the cash
equivalent to the original investment in Isle of Capri or the current market
price. The Colorado Regulations also require anyone with a material
involvement with a licensee, including a director or officer of a holding
company such as Isle of Capri, to file for a finding of suitability if
required by the Colorado Commission.
In addition to its authority to deny an application for a license or
suitability, the Colorado Commission has jurisdiction to disapprove a change
in corporate position of a licensee and may have such authority with respect
to any entity which is required to be found suitable by the Colorado
Commission. The Colorado Commission has the power to require Isle of Capri and
its Colorado gaming subsidiaries to suspend or dismiss managers, officers,
directors and other key employees or sever relationships with other persons
who refuse to file appropriate applications or whom the authorities find
unsuitable to act in such capacities; and may have such power with respect to
any entity which is required to be found suitable.
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A person or entity may not sell, lease, purchase, convey or acquire a
controlling interest in Isle of Capri without the prior approval of the
Colorado Commission. Isle of Capri may not sell any interest in its Colorado
gaming subsidiaries without the prior approval of the Colorado Commission.
The Isle-Black Hawk must meet certain architectural requirements, fire
safety standards and standards for access for disabled persons. The Isle-Black
Hawk also must not exceed certain gaming square footage limits as a total of
each floor and the full building. The casino at the Isle-Black Hawk may
operate only between 8:00 a.m. and 2:00 a.m. and may permit only individuals
21 years or older to gamble in the casino. It may permit only slot machines,
blackjack and poker, with a maximum single bet of $5.00. The Isle-Black Hawk
may not provide credit to its gaming patrons.
The Colorado Regulations permit gaming only in a limited number of cities
and certain commercial districts.
The Colorado Constitution permits a gaming tax of up to 40% on adjusted
gross gaming proceeds. Effective July 1, 1999, the Colorado Commission has set
a gaming tax rate of .25% on adjusted gross gaming proceeds of up to and
including $2 million, 2% over $2 million up to and including $4 million, 4%
over $4 million up to and including $5 million, 11% over $5 million up to and
including $10 million, 16% over $10 million up to and including $15 million
and 20% on adjusted gross gaming proceeds in excess of $10 million. Black Hawk
has imposed an annual device fee of $750 per gaming device and may revise the
same from time to time. The Colorado Commission may revise the gaming tax or
device fee at any time, but has been considering such provisions only
annually.
The sale of alcoholic beverages is subject to licensing, control and
regulation by the Colorado Liquor Agencies. All persons who directly or
indirectly own 10% or more of Black Hawk LLC, through their ownership of Isle
of Capri, must file applications and possibly be investigated by the Colorado
Liquor Agencies. The Colorado Liquor Agencies also may investigate those
persons who, directly or indirectly, loan money to or have any financial
interest in liquor licensees. All licenses are revocable and not transferable.
The Colorado Liquor Agencies have the full power to limit, condition, suspend
or revoke any such license and any such disciplinary action could (and
revocation would) have a material adverse effect upon the operating results of
Isle of Capri. The Isle-Black Hawk holds a retail gaming tavern license.
Accordingly, a person with an interest in Black Hawk LLC may not have an
interest in a hotel and restaurant license.
Florida
On June 15, 1995, the Florida Department of Business and Professional
Regulation, acting through its division of pari-mutuel wagering (the "Florida
Division"), issued its final order approving Pompano Park as a pari-mutuel
wagering permit holder for harness and quarter horse racing at Pompano Park.
The Florida Division approved Pompano Park's license to conduct a total of 184
live evening races for the season beginning July 1, 1998 to June 30, 1999.
Although Isle of Capri does not presently intend to conduct quarter horse
racing operations at Pompano Park, it may do so in the future, subject to
Florida Division approval. The Florida Division must approve any transfer of
10% or more of stock of a pari-mutuel racing permit holder such as Pompano
Park.
Chapter 550 of the Florida Statute and the applicable rules and regulations
thereunder (the "Florida Statute") establishes license fees, the tax structure
on pari-mutuel permit holders and minimum purse requirements for breeders and
owners. The Florida 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. Instead of suspending or revoking a permit or license, the
Florida Division may impose various civil penalties on the permit holder or
licensee. Penalties may not exceed $1,000 for each count or separate offense.
Pursuant to a Florida Division order and recent enactments to the Florida
Statute, Pompano Park is also authorized to conduct full-card pari-mutuel
wagering on: (1) simulcast harness races from outside Florida throughout the
racing season and (2) night thoroughbred races within Florida if the
thoroughbred permit holder
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has decided to simulcast night races. Pompano Park has been granted the
exclusive right in Florida to conduct full-card simulcasting of harness racing
on days during which no live racing is held at Pompano Park. However, on non-
race days, Pompano Park must offer to rebroadcast its simulcast signals to
pari-mutuel facilities that are not thoroughbred parks. In addition, Pompano
Park may transmit its live races into any dog racing or jai alai facility in
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. Isle of Capri believes that simulcast rights at Pompano Park and the
recent changes in the Florida Statute are important to Pompano Park's
operating results.
Effective January 1, 1997, the Florida Statute permits pari-mutuel
facilities to be licensed by the Florida 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 post time of the
first live race to two hours after the conclusion of the last live race.
Thoroughbred racing facilities must choose between operating card rooms or
simulcasting night races from outside the state, but may not do both. If
racing facilities elect to simulcast night races, they are required to
retransmit the night simulcast signal to certain other pari-mutuel facilities,
including Pompano Park.
The card room operator is the "house" and must 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, such as games 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 pari-mutuel permit
holder by card room management companies that hold a special license from the
Florida Division. All employees of the card room management company and the
card room operator need to obtain a specific $50.00 occupational license from
the Florida 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. A card room's annual occupational license fee is $250.
Each card room operator is required to pay a tax of 10% of his 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 to participate 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 Florida Statute.
Non-Gaming Regulation
Isle of Capri 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. Isle of Capri 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 Isle of Capri'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 Isle-Lake Charles and the Isle-Bossier City
must comply with U.S. Coast Guard requirements as to boat design, on-board
facilities, equipment, personnel and safety and hold U.S. Coast
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Guard Certificates of Documentation and Inspection. The U.S. Coast Guard
requirements also set limits on the operation of the riverboats and require
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. Each of Isle of Capri's riverboats is
inspected annually and, every five years, is subject to drydocking for
inspection of its hull, which could result in a temporary loss of service.
Permanently moored vessels such as the Isle-Biloxi's and the Isle-
Vicksburg's casino barges are not required to hold Certificates of
Documentation and Inspection from the U.S. Coast Guard. However, the
Mississippi Gaming Commission has engaged third parties to inspect and certify
all casino barges with respect to stability and single compartment flooding
integrity. Isle of Capri's casino barges in Mississippi must be inspected
every two years. Isle of Capri's casino barges in Mississippi must also 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. Isle of Capri would incur additional costs if either of its
Mississippi gaming facilities were not in compliance with one or more of these
regulations.
Isle of Capri is also subject to certain federal, state and local
environmental laws, regulations and ordinances that apply to non-gaming
businesses generally, such as the Clean Air Act, Clean Water Act, Resource
Conservation Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act and the Oil Pollution Act of 1990. The coverage
and attendant compliance costs associated with these laws, regulations and
ordinances may result in future additional costs to our operations.
Regulations adopted by the Financial Crimes Enforcement Network of the U.S.
Treasury Department require us to report currency transactions in excess of
$10,000 occurring within a gaming day, including identification of the patron
by name and social security number. Substantial penalties can be imposed
against Isle of Capri if it fails to comply with these regulations.
All shipboard employees of Isle of Capri, 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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ITEM 2. Properties.
Isle-Lake Charles
We own approximately 2.7 acres and lease approximately 16.25 acres of land
in Calcasieu Parish, Louisiana for use in connection with the Isle-Lake
Charles. The initial term of this lease expires in March 2000 and we have the
option to renew it for seventeen additional terms of five years each. Rent
under the Isle-Lake Charles lease is currently $1.2 million per year and is
subject to increases based on the Consumer Price Index and construction of
hotel facilities on the property.
Isle-Bossier City
We own approximately 38 acres of land in Bossier City, Louisiana for use in
connection with the Isle-Bossier City and own a 234-room hotel on
approximately 10.5 acres of land located 2.5 miles east of the Isle-Bossier
City.
Isle-Biloxi
We lease the Biloxi berth from the Biloxi Port Commission at an annual rent
of the greater of $500,000 or 1% of the gross gaming revenue net of state and
local gaming taxes. The lease terminates on July 1, 2004 and we have the
option to renew it for seven additional terms of five years each subject to
increases based on the cost of living index.
We lease our land-based facilities from the City of Biloxi at an annual rent
of $500,000 per year, plus 3% of the Isle-Biloxi's gross gaming revenues, net
of state and local gaming taxes and fees, in excess of $25.0 million. The
lease terminates on July 1, 2004, but it is renewable at our option for five
additional terms of five years each and a sixth option renewal term,
concluding on January 31, 2034, subject to rent increases based on the
Consumer Price Index. In April 1994, we entered into an addendum to this lease
which requires us to pay 4% of our gross non-gaming revenue, net of sales tax,
complimentaries and discounts.
In April 1994, in connection with the construction of a hotel, we entered
into a lease for additional land adjoining the Isle-Biloxi. This lease with
the City of Biloxi is for an initial term of 25 years, with options to renew
for six additional terms of ten years each and a final option period
concluding December 31, 2085. Annual rent is $404,000, plus 4% of gross non-
gaming revenue, as defined in the lease, and renewals are subject to rent
increases based on the Consumer Price Index.
We are a party to a lease for the exclusive use of approximately 133 parking
spaces and the additional use of 169 spaces in another parking lot on property
adjacent to the Isle-Biloxi. This lease expires on November 30, 2000. We have
also entered into a joint venture arrangement to sublease property containing
a two-level parking garage next to the Isle-Biloxi. The annual rent under this
lease is currently approximately $169,000. This lease terminates on November
30, 2000.
Isle-Vicksburg
We own approximately 13.1 acres of land in Vicksburg, Mississippi for use in
connection with the Isle-Vicksburg. We own an additional 13 acres of land in
Vicksburg on which we operate off-site parking and a recreational vehicle
park. We also entered into a lease for approximately five acres of land
adjacent to the Isle-Vicksburg to be used for additional parking.
Isle-Black Hawk
Black Hawk LLC owns approximately 9.1 acres of land in Black Hawk, Colorado
for use in connection with the Isle-Black Hawk. Black Hawk LLC also leases one
quarter acre from us.
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Pompano Park
We own approximately 220 acres at Pompano Park.
Isle-Tunica
We lease approximately 122 acres of land in Tunica County, Mississippi for
use in connection with the Isle-Tunica. The initial lease term is five years
and we have the option to renew the lease for seven additional terms of five
years. Base rent for each lease year equals the greater of 2% of gross gaming
revenue or $800,000. Once gross gaming revenue exceeds $40.0 million during
any lease year, the base rent in the following months of such year shall be
increased by an amount equal to 2% of such excess. The landlord is entitled to
receive additional rent based on excess available cash, as defined in the
lease.
Isle-Coahoma
In June 1998, we acquired an option to purchase approximately 138 acres of
land in Coahoma County, Mississippi for the development of the Isle-Coahoma.
The option expires in October 2000.
Other
We own 1.6 acres and lease 1.3 acres of land in Cripple Creek, Colorado. The
lease has an initial term of 25 years and expires in February 2020, with
options to renew for seven additional terms of ten years each. Annual rent
under this lease is currently $280,000 and will increase at a rate of $10,000
per year with a maximum increase of $300,000, subject to periodic increases
thereafter based on the Consumer Price Index. We also have an option to
purchase the leased land.
We own one additional riverboat casino and one floating pavilion that are
currently held for development or sale. We own or lease all of our gaming and
non-gaming equipment.
25
<PAGE>
ITEM 3. Legal Proceedings.
One of our subsidiaries has been named, along with numerous manufacturers,
distributors and gaming operators, including many of the country's largest
gaming operators, in a consolidated class action lawsuit pending in Las Vegas,
Nevada. These gaming industry defendants are alleged to have 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 and the extent to which there is actually an opportunity to
win on any given play. The suit seeks unspecified compensatory and punitive
damages. A motion for certification of the class is currently pending before
the court and no discovery as to the merits of the alleged claims has begun.
We are unable at this time to determine what effect, if any, the suit would
have on our financial position or results of operations. However, the gaming
industry defendants are committed to defend vigorously all claims asserted in
the consolidated action.
In February 1998, the Isle-Vicksburg was named as a defendant in an action
brought by an individual who owns property adjacent to the Big Black River in
the eastern part of Warren County, Mississippi and several other parties. Also
named as defendants in the action are two other operators in the Vicksburg
market and one of the largest banks in the State of Mississippi. The amended
complaint alleges that the defendants entered into an agreement to conduct a
campaign opposing a gaming application for a site next to property owned by
the plaintiffs. The plaintiffs allege that because of this agreement trade was
improperly restrained and competition in the gaming business was reduced. The
plaintiffs further allege that the defendants conspired for the purpose of
injuring the plaintiffs' property rights. The plaintiffs seek compensatory and
punitive damages in the amount of $238.0 million. We have denied the
allegations contained in the amended complaint and intend to vigorously defend
all claims and allegations in the action. A trial date has been set for
October 18, 1999.
In May 1998, we were named as a defendant in an action brought by several
persons who had a contractual right to acquire property in Cripple Creek,
Colorado which they sold to one of our subsidiaries in 1995. The plaintiffs
allege that we breached our purported agreement to construct a casino facility
on the property by the end of 1995. In December 1998, our motion to dismiss
the complaint was granted by the United States District Court in Denver,
Colorado. The plaintiffs have appealed this decision to the Tenth Circuit
Court of Appeals. We intend to vigorously defend all claims and allegations in
the action.
In August 1997, a lawsuit was filed which seeks to nullify a contract to
which Louisiana Riverboat Gaming Partnership is a party. Pursuant to the
contract, Louisiana Riverboat Gaming Partnership pays a fixed amount plus a
percentage of revenue to various local governmental entities, including the
city of Bossier and the Bossier Parish School Board, in lieu of payment of a
per-passenger boarding fee. Summary judgment in favor of Louisiana Riverboat
Gaming Partnership was granted on June 4, 1998. That judgment was not appealed
and is now final. On June 11, 1998, a similar suit was filed and is currently
pending. We intend to vigorously defend this suit.
We are engaged in various other litigation matters and have a number of
unresolved claims. Although the ultimate liability of this litigation and
these claims cannot be determined at this time, we believe that they will not
have a material adverse effect on our consolidated financial position or
results of operations.
ITEM 4. Submission of Matters to a Vote of Security Holders.
In April 1999, we completed a tender offer for our outstanding $315.0
million principal amount of 12 1/2% senior secured notes due 2003. We
solicited consents to amend the indenture relating to the 12 1/2% senior
secured notes. Holders of more than 99% of the outstanding 12 1/2% senior
secured notes tendered their notes to us and consented to amendments to the
indenture governing those notes. An amended indenture was executed on April
21, 1999 upon consummation of the tender offer and eliminated most of the
financial and restrictive covenants in the indenture governing the 12 1/2%
senior secured notes.
26
<PAGE>
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters.
(a) Market Information. The following table presents the high and low bid
quotations for our Common Stock as reported on the Nasdaq National Market for
the fiscal periods indicated. The quotations reflect interdealer prices,
without retail mark-up or commissions, and may not necessarily represent
actual transactions.
<TABLE>
<CAPTION>
High Low
---- ----
<S> <C> <C>
Fiscal Year Ended April 26, 1998
First Quarter................................................. 2.81 1.94
Second Quarter................................................ 3.66 1.97
Third Quarter................................................. 3.19 2.38
Fourth Quarter................................................ 3.31 2.56
Fiscal Year Ended April 25, 1999
First Quarter................................................. 4.13 3.00
Second Quarter................................................ 3.63 1.75
Third Quarter................................................. 4.25 2.44
Fourth Quarter................................................ 6.50 3.88
Fiscal Year Ending April 30, 2000
First Quarter (through June 25, 1999)......................... 7.69 5.75
</TABLE>
(b) Holders of Common Stock. As of June 25, 1999, there were 1,013 holders
of record of the Common Stock.
(c) Dividends. Isle of Capri has never paid any dividends with respect to
its Common Stock and the current policy of the Board of Directors is to retain
earnings to provide for the growth of the company. In addition, our senior
credit facility and the indenture governing our senior subordinated notes
limits our ability to pay dividends. See "Item 8--Index to Consolidated
Financial Statements--Isle of Capri Casinos, Inc.--Notes to Consolidated
Financial Statements--Note 7." Consequently, no cash dividends are expected to
be paid on our Common Stock in the foreseeable future. Further, there can be
no assurance that our current and proposed operations will generate the funds
needed to declare a cash dividend or that we will have legally available funds
to pay dividends. In addition, we may fund part of our operations in the
future from indebtedness, the terms of which may prohibit or restrict the
payment of cash dividends. If a holder of Common Stock is disqualified by the
regulatory authorities from owning such shares, such holder will not be
permitted to receive any dividends with respect to such stock. See "Item
1--Business--Regulatory Matters."
27
<PAGE>
ITEM 6. Selected Financial Data.
The following table presents our selected consolidated financial data for
the five most recent fiscal years. This data is from our audited consolidated
financial statements and the notes to those statements. Because the data in
this table does not provide all of the data contained in our financial
statements, including the related notes, you should read "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements, including the related notes, contained
elsewhere in this document, and other data we have filed with the U.S.
Securities and Exchange Commission.
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------
April 30, April 30, April 27, April 26, April 25,
1995(1) 1996(1) 1997(1) 1998 1999
--------- --------- --------- --------- ---------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenue:
Casino..................... $ 117.6 $ 123.9 $ 322.7 $ 388.2 $ 424.4
Pari-mutuel commissions and
fees...................... -- 15.1 19.4 22.6 21.4
Rooms, food, beverage and
other..................... 9.9 19.0 31.3 30.0 34.6
------- -------- -------- -------- --------
Total revenue............ 127.5 158.0 373.4 440.8 480.4
Operating expenses:
Gaming taxes............... 13.9 15.1 61.8 78.6 86.9
Casino, rooms, food,
beverage and other........ 84.1 115.3 246.5 267.5 284.3
Valuation charge(2)........ -- 9.3 7.0 -- 5.1
Restructuring charge(3).... -- 2.5 -- -- --
Accrued litigation
settlement (reversal)(4) -- -- -- -- (4.2)
Preopening expenses(5)..... 0.5 1.3 2.5 -- 3.3
Depreciation and
amortization.............. 8.9 12.1 27.1 33.6 36.3
------- -------- -------- -------- --------
Total operating
expenses................ 107.4 155.6 344.9 379.7 411.7
------- -------- -------- -------- --------
Operating income............. 20.1 2.4 28.5 61.1 68.7
Interest expense............. (14.0) (15.3) (40.3) (51.6) (48.6)
Interest income.............. 4.0 1.4 1.6 4.7 2.9
Minority interest............ -- -- -- 0.8 2.2
Equity in income (loss) of
unconsolidated joint
ventures(6)................. 19.9 16.4 (0.2) -- (1.3)
------- -------- -------- -------- --------
Income (loss) before income
taxes and extraordinary
item........................ 30.0 4.9 (10.4) 15.0 23.9
Income tax provision
(benefit)................... 11.9 3.3 (1.6) 7.5 11.8
------- -------- -------- -------- --------
Net income (loss) before
extraordinary item.......... 18.1 1.6 (8.8) 7.5 12.1
Extraordinary loss on
extinguishment of debt, net
of applicable income tax
benefit..................... -- -- (12.3) -- (36.3)
------- -------- -------- -------- --------
Net income (loss)............ $ 18.1 $ 1.6 $ (21.1) $ 7.5 $ (24.2)
======= ======== ======== ======== ========
Other Data:
EBITDA(7).................... $ 29.6 $ 27.6 $ 65.1 $ 94.7 $ 109.2
Net cash provided (required)
by:
Operating.................. 8.5 11.8 17.8 65.3 65.2
Investing.................. (20.8) (13.5) (97.4) (119.7) (52.0)
Financing.................. 6.1 1.4 112.9 55.0 19.5
Capital expenditures......... $ 46.6 $ 22.2 $ 21.5 $ 65.5 $ 95.5
Casino square footage(8)..... 86,500 104,200 128,400 128,400 171,400
Number of slot machines(8)... 2,744 3,680 4,856 4,912 6,009
Number of table games(8)..... 146 196 281 236 217
Number of hotel rooms(8)..... 242 601 601 842 966
Balance Sheet Data:
Cash and cash equivalents.... $ 19.0 $ 18.6 $ 51.8 $ 52.5 $ 85.1
Total assets................. 211.9 226.5 528.4 615.7 676.5
Long-term debt, including
current portion............. 138.9 139.8 379.5 442.1 532.8
Stockholders' equity......... 42.0 50.3 78.0 86.1 62.0
</TABLE>
Footnotes on following page
28
<PAGE>
- --------
(1) The operating results for fiscal years prior to fiscal 1998 are not
comparable to other periods presented because the Isle-Bossier City and
Isle-Lake Charles were accounted for under the equity method until August
6, 1996, when the remaining interests in these facilities were acquired by
Isle of Capri. In addition, fiscal periods prior to 1996 do not include
the operating results of one of the two Lake Charles riverboats, as it was
acquired in May 1996.
(2) The valuation charge of $9.3 million in fiscal 1996 and $7.0 million in
fiscal 1997 related to the write-down of two riverboats, a barge and
certain gaming equipment, all of which were classified as held for sale.
The valuation charge of $5.1 million for the fiscal year ended April 25,
1999 includes (a) $2.4 million for the write-down of two original
riverboat casino vessels and land that Isle of Capri was planning to
develop in Cripple Creek, Colorado and (b) $2.7 million for future
obligations under an operating lease related to land leased by Isle of
Capri in Cripple Creek, Colorado.
(3) The restructuring charge of $2.5 million in fiscal 1996 includes (a) $2.0
million related to costs associated with a change in executive management
and (b) $0.5 million related to costs associated with certain abandoned
projects.
(4) The reversal of an accrued litigation settlement of $4.2 million for the
fiscal year ended April 25, 1999 related to an accrued boarding tax
liability at the Isle-Bossier City for which it was determined that the
Isle-Bossier City was not liable.
(5) Preopening expenses of $0.5 million in fiscal 1995 related to costs
incurred in connection with the opening of the new floating pavilion
facility at the Isle-Vicksburg. Preopening expenses of $1.3 million in
fiscal 1996 related to costs incurred in connection with the opening of
the hotel at the Isle-Biloxi. Preopening expenses of $2.5 million in
fiscal 1997 related to costs incurred in connection with the opening of
the Grand Palais riverboat in Lake Charles. Preopening expenses of $3.3
million for the fiscal year ended April 25, 1999 related to costs incurred
in connection with the opening of the Isle-Black Hawk on December 30,
1998.
(6) The equity in income (loss) of unconsolidated joint ventures represents
the unconsolidated operations of the Isle-Bossier for fiscal 1995, 1996
and 1997 and the Isle-Lake Charles for fiscal 1996 and 1997. For the
fiscal year ended April 25, 1999, the equity in income (loss) of
unconsolidated joint ventures represents the loss from Isle of Capri's 50%
ownership interest in Capri Cruises.
(7) EBITDA, or "earnings before interest, income taxes, depreciation and
amortization," is a supplemental financial measurement used by Isle of
Capri in the evaluation of its business. EBITDA is defined as net income
(loss) plus (a) income taxes, (b) interest expense (net of interest
income), (c) depreciation and amortization and (d) intercompany management
fees. Additionally, EBITDA has been adjusted for the following non-
recurring items: (a) accrued litigation settlement reversal, (b) valuation
charge, (c) restructuring charge and (d) preopening expenses as reflected
in our consolidated financial statements and notes to those statements.
EBITDA also excludes equity in income (loss) of unconsolidated joint
ventures and minority interest. These adjustments to EBITDA are allocated
to Isle of Capri and its subsidiaries based on the entity giving rise to
the adjustment. However, EBITDA should only be read in conjunction with
all of our financial data summarized above and our consolidated financial
statements and notes to those statements prepared in accordance with GAAP
appearing elsewhere in this offering memorandum. EBITDA is presented not
as an alternative measure of operating results or cash flow from
operations (as determined in accordance with GAAP), but because it is a
widely accepted financial indicator of a company's ability to incur and
service debt.
(8) This data is as of the end of the respective period.
29
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
You should read the following discussion together with the financial
statements, including the related notes, the other financial information in
this Form 10-K.
The following discussion includes "forward-looking statements" within the
meaning of section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. In particular,
statements concerning the effects of increased competition in the Company's
markets, the effects of regulatory and legislative matters, the Company's
plans to make capital investments at its facilities, including, without
limitation, considerations to develop casinos as the Isle-Tunica and Isle-
Coahoma in Tunica County and Coahoma County, Mississippi, respectively, and to
develop hotels or time-share facilities at the Isle-Bossier City, the Isle-
Lake Charles, the Isle-Black Hawk, and the Isle-Biloxi and the expansion of
non-gaming amenities at all facilities, are forward-looking statements.
Although the Company believes that the expectations are reasonable, there can
be no assurance that such expectations are reasonable or that they will be
correct. Actual results may vary materially from those expected. Important
factors that could cause actual results to differ with respect to the
Company's planned capital expenditures principally include a lack of available
capital resources, construction and development risks such as shortages of
materials and labor and unforeseen delays resulting from a failure to obtain
necessary approvals, and the Company's limited experience in developing hotel
operations.
General
Isle of Capri's results of operations for the fiscal years ended April 25,
1999, April 26, 1998 and a portion of the fiscal year ended April 27, 1997
reflect the consolidated operations of all of Isle of Capri's subsidiaries,
including the Isle-Lake Charles, the Isle-Bossier City, the Isle-Biloxi, the
Isle-Vicksburg and the Isle-Black Hawk. On May 3, 1996, Isle of Capri acquired
a 50% interest in St. Charles Gaming Corporation and a 100% interest in Grand
Palais Riverboat, Inc., both of which operate a riverboat casino at the Isle-
Lake Charles. The remaining 50% of St. Charles Gaming Corporation was owned by
Louisiana Riverboat Gaming Partnership, of which Isle of Capri owned a 50%
partnership interest. Louisiana Riverboat Gaming Partnership owns the Isle-
Bossier City. On August 6, 1996, Isle of Capri acquired the remaining 50%
partnership interest of Louisiana Riverboat Gaming Partnership, which gave
Isle of Capri 100% ownership of both the Isle-Lake Charles and the Isle-
Bossier City, allowing Isle of Capri to consolidate its results of operations
for these facilities beginning in the fiscal quarter ended October 31, 1996.
Isle of Capri believes that its results of operations for the periods
subsequent to its acquisition of the remaining 50% partnership interest in
Louisiana Riverboat Gaming Partnership are not readily comparable to its
results of operations from prior periods primarily because of the
consolidation of the operating results of the Isle-Lake Charles and the Isle-
Bossier City. Further, the historical results of operations reflect the Isle-
Lake Charles as a single riverboat operation, whereas the Isle-Lake Charles
has operated two riverboats since July 12, 1996. In addition, the land-based
pavilion at the Isle-Lake Charles was expanded in May 1996.
Because of the lack of comparable information for fiscal 1998 and 1997 on a
consolidated basis, the following discussion focuses on certain events that
affected Isle of Capri's consolidated operations during the fiscal year ended
April 26, 1998 and comparable data by location. The comparable data for the
fiscal year ended April 27, 1997 related to the Isle-Lake Charles and the
Isle-Bossier City has been presented giving pro forma effect to the
acquisitions discussed above.
Isle of Capri believes that its historical results of operations may not be
indicative of its future results of operations because of the substantial
present and expected future increase in competition for gaming customers in
each of Isle of Capri's markets, as new casinos open and existing casinos add
to or enhance their facilities.
Isle of Capri also believes that its operating results are affected by
seasonality. Seasonality has historically caused the operating results for
Isle of Capri's first and fourth fiscal quarters ending in July and April,
respectively, to be notably better than the operating results for the second
and third fiscal quarters ending October and January, respectively.
30
<PAGE>
Results of Operations
Fiscal Year Ended April 25, 1999 Compared to Fiscal Year Ended April 26,
1998--Consolidated Company
Total revenue for the fiscal year ended April 25, 1999 was $480.4 million,
which included $424.4 million of casino revenue, $10.8 million of rooms
revenue, $21.4 million of pari-mutuel commissions and $23.8 million of food,
beverage and other revenue. This compares to total revenue for the previous
fiscal year ended April 26, 1998 of $440.8 million, which included $388.2
million of casino revenue, $9.5 million of room revenue, $22.6 million of
pari-mutuel commissions and $20.5 million of food, beverage and other revenue.
Casino revenue increased primarily as a result of increased market share at
the Isle-Lake Charles, the commencement of operations at the Isle-Black Hawk
on December 30, 1998 and the opening of a 124-room hotel at the Isle-
Vicksburg. Room revenue and food, beverage and other revenue have increased as
a result of the increased number of hotel rooms and the development of Isle of
Capri's themed restaurant, branded Farraddays', which opened at each of Isle
of Capri's casino properties during fiscal 1998 and were open a full year in
fiscal 1999. Pari-mutuel commissions and fees have decreased slightly compared
to the prior year as a result of adverse weather conditions and increased
competition for simulcasting contracts at Pompano Park. Revenue does not
reflect the retail value of any complimentaries.
Casino operating expenses for the fiscal year ended April 25, 1999 totaled
$77.7 million, or 18.3% of casino revenue, versus $76.1 million, or 19.6% of
casino revenue, for the fiscal year ended April 26, 1998. These expenses are
primarily comprised of salaries, wages and benefits and other operating
expenses of the casinos. Casino operating expenses have decreased primarily as
a result of continued refinement of Isle of Capri's payroll and operating cost
control programs.
Operating expenses for the fiscal year ended April 25, 1999 also included
room expenses of $3.9 million from the hotels at the Isle-Lake Charles, Isle-
Bossier City, Isle-Biloxi and the Isle-Vicksburg. These expenses are those
directly relating to the cost of providing hotel rooms. Other costs of the
hotels are shared with the casinos and are presented in their respective
expense categories. Rooms operating expenses as a percentage of rooms revenue
increased from 34.3% for the fiscal year ended April 26, 1998 to 36.1% for the
fiscal year ended April 25, 1999. Room expenses as a percentage of rooms
revenue increased primarily as a result of start up costs related to the
opening of the Isle-Vicksburg hotel in February 1999 and increased competition
for the old Isle-Bossier City hotel.
State and local gaming taxes paid in Louisiana, Mississippi and Colorado
totaled $86.9 million for the fiscal year ended April 25, 1999, compared to
$78.6 million for the fiscal year ended April 26, 1998, which is consistent
with each state's gaming tax rate for the applicable fiscal years.
Pari-mutuel operating costs of Pompano Park totaled $15.7 million in fiscal
1999 compared to $16.3 million in fiscal 1998. Such costs consist primarily of
compensation, benefits, purses, simulcast fees and other direct costs of track
operations. Pari-mutuel operating costs as a percentage of pari-mutuel
revenues have increased from 72.3% for the fiscal year ended April 26, 1998 to
73.7% for the fiscal year ended April 25, 1999. The increase is primarily
related to the decrease in revenues from simulcasting.
Food, beverage and other expenses totaled $14.2 million for the fiscal year
ended April 25, 1999, compared to $13.4 million for the fiscal year ended
April 26, 1998. These expenses have increased as a result of the opening of
the Isle-Black Hawk and were partially offset by Isle of Capri's payroll and
inventory cost reduction efforts. These expenses consist primarily of the cost
of goods sold, salaries, wages and benefits and operating expenses of these
departments. Food and beverage operating expenses as a percentage of food,
beverage and other revenues decreased from 65.3% for the fiscal year ending
April 26, 1998 to 59.6% for the fiscal year ended April 25, 1999. Food and
beverage operating margins have improved as a result of payroll and inventory
cost reduction efforts.
Marine and facilities expenses totaled $28.2 million for the fiscal year
ended April 25, 1999, versus $26.2 million for the fiscal year ended April 26,
1998. These expenses include salaries, wages and benefits, operating expenses
of the marine crews, insurance, housekeeping and general maintenance of the
riverboats and floating
31
<PAGE>
pavilions. Marine and facilities expenses have increased due to the addition
of the Isle-Black Hawk and the maturity of Isle of Capri's vessels and
facilities.
Marketing and administrative expenses totaled $144.5 million, or 30.1% of
total revenue, for the fiscal year ended April 25, 1999, versus $132.3
million, or 30.0% of total revenue, for the fiscal year ended April 26, 1998.
Marketing expenses include salaries, wages and benefits of the marketing and
sales departments, as well as promotions, advertising, special events and
entertainment. Administrative expenses include administration and human
resource department expenses, rent, new development activities, professional
fees and property taxes. Marketing and administrative expenses have increased
due primarily to the opening of the Isle-Black Hawk, while these expenses as a
percentage of total revenue remains level as a result of management's expense
containment programs.
Preopening expenses of $3.3 million for the fiscal year ended April 25, 1999
represent salaries, benefits, training, marketing and other non-capitalizable
costs, which were expensed in connection with the opening of the Isle-Black
Hawk.
Isle of Capri's results of operations for the fiscal year ended April 25,
1999 include the reversal of an accrued litigation settlement of $4.2 million
related to the boarding tax liability at the Isle-Bossier City, for which the
courts have determined Isle of Capri is not liable. Isle of Capri has also
recorded a write-down of the assets held for development or sale of $2.4
million related to its two original riverboat casino vessels and land that
Isle of Capri was planning to develop in Cripple Creek, Colorado. During the
third fiscal quarter of 1999, Isle of Capri entered into an agreement to sell
one of its two original riverboats for less than the recorded value. This sale
had not closed as of the fiscal year ended 1999. Based on the agreed upon
sales price, Isle of Capri has adjusted the valuation allowance related to
both original riverboats to reflect the fair value. Because Isle of Capri has
delayed its plans to develop a casino on the land it owns in Cripple Creek,
Isle of Capri has established a valuation allowance on the land to reflect the
fair value of the land as the carrying value. Isle of Capri also established a
reserve for a future obligation under an operating lease related to its
Cripple Creek project at the discounted present value of $2.7 million. These
items occurred during the third quarter of fiscal 1999.
Depreciation and amortization expense was $36.3 million for the fiscal year
ended April 25, 1999 and $33.6 million for the fiscal year ended April 26,
1998. These expenses relate to property and equipment, berthing and concession
rights and the amortization of intangible assets. The increase in depreciation
and amortization expense is consistent with the increase in fixed assets
placed into service, including the assets placed into service upon the
commencement of operations at the Isle-Black Hawk.
Interest expense was $45.7 million for the fiscal year ended April 25, 1999,
net of capitalized interest of $7.2 million and interest income of $2.9
million, versus $46.9 million for the year ended April 26, 1998, net of
capitalized interest of $2.7 million and interest income of $4.7 million.
Interest expense primarily relates to indebtedness incurred in connection with
the acquisition of property, equipment, leasehold improvements and berthing
and concession rights. Additionally, interest expense of $5.0 million, net of
capitalized interest of $4.8 million and interest income of $.8 million
related to Black Hawk LLC is included in the fiscal year ended April 25, 1999.
This compares to interest expense of $2.0 million, net of capitalized interest
of $2.3 million and interest income of $3.0 million, for the fiscal year ended
April 26, 1998.
Isle of Capri's effective tax rate was 49.3% prior to extraordinary items
for the fiscal year ended April 25, 1999 and 49.8% for the fiscal year ended
April 26, 1998, which includes the effects of non-deductible goodwill
amortization for income tax purposes.
Fiscal Year Ended April 25, 1999 Compared to Fiscal Year Ended April 26,
1998--By Casino Location
Isle-Lake Charles
For the fiscal year ended April 25, 1999, the Isle-Lake Charles had total
revenue of $162.5 million, of which $155.5 million was casino revenue,
compared to total revenue of $145.7 million, of which $140.9 million was
32
<PAGE>
casino revenue, for the fiscal year ended April 26, 1998. Operating income for
the fiscal year ended April 25, 1999 totaled $30.3 million, or 18.7% of total
revenue, compared to operating income of $23.4 million, or 16.1% of total
revenue, for the fiscal year ended April 26, 1998. The increase in revenue,
operating income and operating income margin are related primarily to
increased market share which has resulted from the addition of the 241-room
hotel at the Isle-Lake Charles in September 1997, increased use of the Isle-
Lake Charles' player database and entertainment center and lowered cost of
sales related to food and beverage.
Isle-Bossier City
For the fiscal year ended April 25, 1999, the Isle-Bossier City had total
revenue of $124.9 million, of which $119.5 million was casino revenue,
compared to total revenue of $126.1 million, of which $120.3 million was
casino revenue, for the fiscal year ended April 26, 1998. The decrease in
revenue relates primarily to increased competition from the opening of various
competitors' new hotels and an expanded gaming facility for one of these
competitors. Operating income for the fiscal year ended April 25, 1999 totaled
$26.0 million, or 20.8% of total revenue, compared to $24.5 million, or 19.4%
of total revenue, for the fiscal year ended April 26, 1998. The increase in
operating income and operating income margin are a result of reduced marketing
costs and more efficient management of payroll costs.
Isle-Biloxi
For the fiscal year ended April 25, 1999, the Isle-Biloxi had total revenue
of $91.6 million, of which $78.0 million was casino revenue, compared to total
revenue of $91.9 million, of which $78.5 million was casino revenue, for the
fiscal year ended April 26, 1998. Casino revenue and total revenue were flat
compared to the prior year primarily due to the closing of this location for
one week due to Hurricane Georges, offset by an overall increase in hotel,
food and beverage revenue. Operating income for the fiscal year ended April
25, 1999 totaled $19.0 million, or 20.8% of total revenue, compared to $15.8
million, or 17.2% of total revenue, for the fiscal year ended April 26, 1998.
Increased operating income margin is due primarily to reduced marketing costs,
more efficient management of payroll costs and decreased depreciation expense
as a result of certain assets becoming fully depreciated.
Isle-Vicksburg
For the fiscal year ended April 25, 1999, the Isle-Vicksburg had total
revenue of $53.2 million, of which $50.4 million was casino revenue, compared
to total revenue of $50.4 million, of which $48.2 million was casino revenue,
for the fiscal year ended April 26, 1998. Casino revenues and total revenues
increased due to the opening of a 124-room hotel at this facility in February
1999. Operating income for the fiscal year ended April 25, 1999 totaled $10.5
million, or 19.7% of total revenue, compared to $10.4 million, or 20.7% of
total revenue, for the fiscal year ended April 26, 1998. The slight decrease
in operating income margin is due primarily to increased competition from the
opening of a competitor's new hotel and start up costs incurred with the
opening of the Isle-Vicksburg's new hotel.
Isle-Black Hawk
Isle-Black Hawk began operation on December 30, 1998 and thus only had
operating results for four fiscal months in the fiscal year ending April 25,
1999. For this period the Isle-Black Hawk had total revenue of $22.0 million,
of which $20.7 million was casino revenue. Operating income before preopening
expenses of $3.3 million for the fiscal year ended April 25, 1999 totaled $4.1
million or 18.7% of total revenue.
Fiscal Year Ended April 26, 1998 Compared to Fiscal Year Ended April 27,
1997--By Casino Location
Isle-Lake Charles
For the fiscal year ended April 26, 1998, the Isle-Lake Charles had total
revenue of $145.7 million, of which $140.9 million was casino revenue,
compared to total revenue of $128.2 million, of which $124.2 million was
33
<PAGE>
casino revenue, for the fiscal year ended April 27, 1997. The increase of
$17.5 million, or 13.7% in total revenue, relates to a full year of operations
of the Grand Palais riverboat, which commenced operation on July 12, 1996, and
the addition of the 241-room hotel at the Isle-Lake Charles. Operating income
before management fees for the fiscal year ended April 26, 1998 totaled $23.4
million, or 16.1% of total revenue, compared to operating income of $15.0
million, or 11.7% of total revenue, which includes a settlement charge of $0.7
million related to the Louisiana Double Jackpot Dispute but does not include
preopening expenses of $2.5 million, for the fiscal year ended April 27, 1997.
The increase in operating income of $8.4 million, or 56.0%, is due primarily
to the addition of the second riverboat casino, the new hotel and management's
continued efforts to reduce operating expenses combined with improved direct
response marketing.
Isle-Bossier City
For the fiscal year ended April 26, 1998, the Isle-Bossier City had total
revenue of $126.1 million, of which $120.3 million was casino revenue,
compared to total revenue of $143.9 million, of which $136.2 million was
casino revenue, for the fiscal year ended April 27, 1997. The decrease in
total revenue of $17.8 million, or 12.4%, is due primarily to increased
competition among existing competitors and new competitors in the market and
the addition of amenities at existing competitors. Operating income before
management fees for the fiscal year ended April 26, 1998 totaled $24.5
million, or 19.4% of total revenue, which includes $1.2 million related to the
Bossier City Head Tax Case, compared to $16.7 million, or 11.6% of total
revenue, which includes a settlement charge of $7.4 million related to the
Louisiana Double Jackpot Dispute and $2.4 million of expenses related to the
Bossier City Head Tax Case. The increase in operating income margin, before
charges related to the Louisiana Double Jackpot Dispute and the Bossier City
Head Tax Case, from 18.4% for the fiscal year ended April 27, 1997 to 20.4%
for the fiscal year ended April 26, 1998, relates to management's continued
expense reduction efforts and more effective direct response marketing.
Isle-Biloxi
For the fiscal year ended April 26, 1998, the Isle-Biloxi had total revenue
of $91.9 million, of which $78.5 million was casino revenue, compared to total
revenue of $89.5 million, of which $75.3 million was casino revenue, for the
fiscal year ended April 27, 1997. The increase of $2.4 million, or 2.7% in
total revenue, relates to increased casino traffic due to improved use of Isle
of Capri's database for managing the occupancy of the Isle-Biloxi's hotel.
Operating income before management fees for the fiscal year ended April 26,
1998 totaled $15.8 million, or 17.2% of total revenue, compared to $14.4
million, or 16.1% of total revenue, for the fiscal year ended April 27, 1997.
The increase of $1.4 million, or 9.7%, in operating income and operating
income margin is due primarily to continuing cost reduction efforts and
improved direct response marketing.
Isle-Vicksburg
For the fiscal year ended April 26, 1998, the Isle-Vicksburg had total
revenue of $50.4 million, of which $48.2 million was casino revenue, compared
to total revenue of $53.0 million, of which $50.5 million was casino revenue,
for the fiscal year ended April 27, 1997. The decrease of $2.6 million, or
4.9% in total revenue, relates primarily to the impact of increased
competition and the overall weakness of the market. Operating income before
management fees for the fiscal year ended April 26, 1998 totaled $10.4
million, or 20.6% of total revenue, compared to $9.1 million, or 17.2% of
total revenue, for the fiscal year ended April 27, 1997. The increase of $1.3
million, or 14.3%, in operating income and operating income margin is
primarily a result of management's efforts to reduce operating expenses and
more effective direct response marketing efforts.
Fiscal Year Ended April 26, 1998--Consolidated Company
Total revenue for the fiscal year ended April 26, 1998 was $440.8 million,
which included $388.2 million of casino revenue, $9.5 million of rooms
revenue, $22.6 million of pari-mutuel commissions, simulcast fees and
admissions and $20.5 million of food, beverage and other revenue. The
consolidated revenue of Isle of Capri has
34
<PAGE>
been impacted by the inclusion of the Isle-Lake Charles and the Isle-Bossier
City into Isle of Capri's consolidated financial statements and the inclusion
of the Grand Palais Riverboat, Inc.'s operating results for a complete fiscal
year. Revenues do not reflect the retail value of any complimentaries. In
addition, as a result of the acquisition of the remaining 50% partnership
interest in Louisiana Riverboat Gaming Partnership, management fees were not
reported because these amounts are eliminated in consolidation.
Casino operating expenses for the fiscal year ended April 26, 1998 totaled
$76.1 million, or 19.6% of casino revenue. These expenses are primarily
comprised of salaries, wages and benefits and other operating expenses of the
casinos. The improvement in operating expenses as a percentage of casino
revenue is due to Isle of Capri's continued expense reduction efforts.
Operating expenses for the fiscal year ended April 26, 1998 also included
room expenses of $3.3 million from the hotels at the Isle-Lake Charles, the
Isle-Bossier City and the Isle-Biloxi. These expenses are those directly
relating to the cost of providing hotel rooms. Other costs of the hotels are
shared with the casinos and are presented in their respective expense
categories. Room expenses as a percentage of rooms revenue increased from
24.4% for the fiscal year ended April 27, 1997 to 34.3% for the fiscal year
ended April 26, 1998. This increase is related primarily to an increase in the
rooms given to casino patrons as complimentaries.
State and local gaming taxes paid in Louisiana, Mississippi and Colorado
totaled $78.6 million for the fiscal year ended April 26, 1998, which is
consistent with each state's applicable gaming tax rate for previous fiscal
years.
Pari-mutuel operating costs of Pompano Park totaled $16.3 million for the
fiscal year ended April 26, 1998. Such costs consist primarily of
compensation, benefits, purses, simulcast fees and other direct costs of track
operations. Pari-mutuel operating costs as a percentage of pari-mutuel
revenues have decreased from 82.4% for the fiscal year ended April 27, 1997 to
72.3% for the fiscal year ended April 26, 1998. The decrease is related
primarily to the increase in revenues from simulcasting.
Food, beverage and other expenses totaled $13.4 million for the fiscal year
ended April 26, 1998. These expenses consist primarily of cost of goods sold,
salaries, wages and benefits and operating expenses of these departments.
Food, beverage and other expenses as a percentage of food, beverage and other
revenue decreased from 72.4% for the fiscal year ended April 27, 1997 to 65.3%
for the fiscal year ended April 26, 1998. This decrease primarily relates to
management's expense reduction efforts, particularly with regard to product
costs and more efficient management of personnel.
Marine and facilities expenses totaled $26.2 million for the fiscal year
ended April 26, 1998. These expenses include salaries, wages and benefits,
operating expenses of the marine crews, insurance, housekeeping and general
maintenance of the riverboats and floating pavilions.
Marketing and administrative expenses totaled $132.3 million for the fiscal
year ended April 26, 1998. Marketing expenses include salaries, wages and
benefits of the marketing and sales departments, as well as promotions,
advertising, special events and entertainment. Administrative expenses include
administration and human resource department expenses, rent, new development
activities, professional fees, property taxes and franchise taxes. Marketing
and administrative operating expenses as a percentage of total revenue have
decreased from 34.5% for the fiscal year ended April 27, 1997 to 30.0% for the
fiscal year ended April 26, 1998. This decrease is due substantially to Isle
of Capri's continued expense reduction efforts, combined with a complete year
of direct response marketing.
Depreciation and amortization expense was $33.6 million for the fiscal year
ended April 26, 1998. These expenses relate to capital expenditures and
acquisition of leasehold improvements, berthing and concession rights and the
amortization of intangible assets.
Interest expense was $46.9 million for the fiscal year ended April 26, 1998,
net of interest income of $4.7 million and $2.7 million of capitalized
interest. Interest expense primarily relates to indebtedness incurred in
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<PAGE>
connection with the acquisition of property, equipment, leasehold improvements
and berthing and concession rights, including indebtedness incurred by Isle of
Capri's consolidated subsidiary, Black Hawk LLC, related to the development of
the Isle-Black Hawk, as well as indebtedness relating to the purchase of the
remaining interest in Louisiana Riverboat Gaming Partnership and the purchase
of Grand Palais Riverboat, Inc.
For the fiscal year ended April 26, 1998, Isle of Capri recorded income tax
expense of $7.5 million. Isle of Capri's effective tax rate for the fiscal
year ended April 26, 1998 was approximately 49.8%, which is higher than the
statutory rate due to non-deductible amortization of certain intangible assets
for income tax purposes.
Fiscal Year Ended April 27, 1997--Consolidated Company
Total revenue for the fiscal year ended April 27, 1997 was $373.4 million,
which included $322.7 million of casino revenue, $9.5 million of rooms
revenue, $2.1 million of management fees, $19.4 million of pari-mutuel
commissions, simulcast fees and admissions and $19.7 million of food, beverage
and other revenue. The total revenue of Isle of Capri for this period was
impacted by the inclusion of the Isle-Lake Charles and the Isle-Bossier City
into Isle of Capri's consolidated financial statements beginning on August 6,
1996 and the operations of the Grand Palais riverboat beginning on July 12,
1996. Revenue does not reflect the retail value of any complimentaries. In
addition, as a result of the acquisition of the remaining 50% partnership
interest in Louisiana Riverboat Gaming Partnership, management fees were not
reported for the periods subsequent to the date of acquisition because these
amounts are eliminated in consolidation.
Casino operating expenses for the fiscal year ended April 27, 1997 totaled
$64.3 million, or 19.9% of casino revenue, versus $26.5 million, or 21.4% of
casino revenue, for the fiscal year ended April 30, 1996. These expenses are
primarily comprised of salaries, wages and benefits and other operating
expenses of the casinos. The improvement in operating expenses as a percentage
of casino revenue is due to Isle of Capri's expense reduction efforts combined
with a shift to direct response marketing.
Operating expenses for the fiscal year ended April 27, 1997 also included
room expenses of $2.3 million from the hotels at the Isle-Bossier City and the
Isle-Biloxi. These expenses are those directly relating to the cost of
providing hotel rooms. Other costs of the hotels are shared with the casinos
and are presented in their respective expense categories.
State and local gaming taxes paid in Louisiana and Mississippi totaled $61.8
million for the fiscal year ended April 27, 1997, which is consistent with
each state's applicable gaming tax rate for previous periods.
Pari-mutuel operating costs of Pompano Park totaled $16.0 million for the
fiscal year ended April 27, 1997. Such costs consist primarily of
compensation, benefits, purses, simulcast fees and other direct costs of track
operations.
Food, beverage and other expenses totaled $14.3 million for the fiscal year
ended April 27, 1997. These expenses consist primarily of cost of goods sold,
salaries, wages and benefits and operating expenses of these departments.
Marine and facilities expenses totaled $20.7 million for the fiscal year
ended April 27, 1997. These expenses include salaries, wages and benefits,
operating expenses of the marine crews, insurance, housekeeping and general
maintenance of the riverboats and floating pavilions.
Marketing and administrative expenses totaled $128.8 million for the fiscal
year ended April 27, 1997. Marketing expenses include salaries, wages and
benefits of the marketing and sales departments, as well as promotions,
advertising, special events and entertainment. Administrative expenses include
administration and human resource department expenses, rent, new development
activities, professional fees, property taxes and franchise taxes.
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<PAGE>
Depreciation and amortization expense was $27.1 million for the fiscal year
ended April 27, 1997. These expenses relate to capital expenditures and
acquisition of leasehold improvements, berthing and concession rights and the
amortization of intangible assets.
Preopening expenses of $2.5 million for the fiscal year ended April 27, 1997
represent salaries, wages and benefits, training, marketing and other non-
capitalized costs which were expensed as incurred in connection with the
opening of the Grand Palais Riverboat.
Interest expense was $38.7 million for the fiscal year ended April 27, 1997,
net of interest income of $1.6 million. There was no capitalized interest for
the fiscal year ended April 27, 1997. Interest expense primarily relates to
indebtedness incurred in connection with the acquisition of property,
equipment, leasehold improvements and berthing and concession rights, as well
as indebtedness relating to the purchase of the remaining interest in
Louisiana Riverboat Gaming Partnership and the purchase of Grand Palais
Riverboat, Inc.
Isle of Capri had a loss before extraordinary item of $8.8 million for the
fiscal year ended April 27, 1997, primarily due to the settlement of the
Louisiana Double Jackpot dispute which resulted in a charge of $2.4 million,
net of taxes, and a valuation charge of $4.1 million, net of taxes, taken
against Isle of Capri's property held for development or sale and the
increased competition within Isle of Capri's markets beginning in the quarter
ended October 31, 1996. In addition, Isle of Capri recorded an extraordinary
after-tax charge of $12.3 million primarily resulting from the issuance of its
12 1/2% senior secured notes in August 1996. The tax benefit resulting from
this extraordinary loss was $6.6 million. Isle of Capri's effective tax rate
for the fiscal year ended April 27, 1997 was approximately 27.9%, which was
less than the statutory rate due primarily to non-deductible goodwill
amortization of certain intangible assets and the valuation allowance.
Liquidity and Capital Resources
At April 25, 1999, Isle of Capri had cash and cash equivalents of $85.1
million, compared to $52.5 million at April 26, 1998. The increase in cash is
primarily a result of cash flow from operating activities and excess proceeds
from our April 1999 refinancing. During the fiscal year ended April 25, 1999,
Isle of Capri's operating activities provided $65.2 million of cash, compared
to $65.3 million of cash provided by operating activities in the fiscal year
ended April 26, 1998.
Isle of Capri invested $95.0 million in property and equipment in the fiscal
year ended April 25, 1999, primarily for the development of the Isle-Black
Hawk, which was under construction as of the beginning of the fiscal year and
commenced operations on December 30, 1998, the development of a 124-room hotel
at the Isle-Vicksburg which opened in February 1999, cost approximately $11.5
million and was funded through Isle of Capri's operating cash flow and the
development of a 305-room deluxe hotel at the Isle-Bossier City, which was
still under construction as of the fiscal year ended April 25, 1999.
Isle of Capri anticipates that a significant portion of its principal near-
term capital requirements will relate to the completion of the 305-room deluxe
hotel at the Isle-Bossier City, which has an expected total cost of
approximately $43.0 million. Construction of this hotel began in January 1998
and approximately $35.5 million was expended as of April 25, 1999. The hotel
opened in late June 1999. Also in late June 1999, the Isle-Bossier City
purchased a seven-acre parcel of property next to its facility for $2.0
million. This property is planned to be used for additional parking.
In March 1999, Isle of Capri acquired a closed casino facility in Tunica
County, Mississippi. Isle of Capri intends to re-open this casino facility as
an Isle of Capri casino in July 1999. The total estimated cost to renovate,
equip and re-open this facility is approximately $33.5 million, including the
purchase price of $9.5 million. Isle of Capri also plans to invest an
additional amount of approximately $40.0 million to construct an on-site hotel
at the Isle-Tunica with up to 250 rooms and two live entertainment theaters
with combined seating for 2,000 people. Construction of the hotel and theaters
is scheduled to begin in the second half of calendar 1999.
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Subject to amending the existing lease with the City of Biloxi, Isle of
Capri plans to replace its existing casino at the Isle-Biloxi and construct an
approximately 1,000-space parking garage and a podium containing entertainment
and retail space. Isle of Capri estimates that the total cost of this
expansion will be $62.0 million. The podium will be constructed to support
either a time-share facility, which may be developed by a joint venture, or
additional hotel rooms. Isle of Capri has not entered into, and cannot be sure
that it will be able to enter into, an agreement for development of the time-
share facility. The existing casino barge at the Isle-Biloxi is planned to be
relocated to Coahoma County, Mississippi as part of the Isle-Coahoma, at a
value of approximately $20.0 million.
Isle of Capri has applied for a license from the Mississippi Gaming
Commission to operate a dockside casino in Coahoma County, Mississippi. Isle
of Capri has received site and development approval from the Mississippi
Gaming Commission and is in the process of seeking other approvals to develop
the 138-acre property and build a casino and related lodging and entertainment
facility, including our three trademark restaurants. Development costs for the
Isle-Coahoma are expected to be approximately $60.0 million, including
approximately $20.0 million related to the transfer of the current Isle-Biloxi
casino barge. The actual cash expenditures for the Isle-Coahoma are expected
to be approximately $40.0 million.
Isle of Capri Black Hawk, LLC plans to construct a hotel containing
approximately 235 rooms at the Isle-Black Hawk for approximately $29.0
million. Isle of Capri is assisting Isle of Capri Black Hawk, LLC by financing
the development of this hotel and plans to loan $5.0 million with interest
payable in cash and another $5.0 million with interest payable in kind (with
additional notes). Additionally, Isle of Capri will contribute up to $10.0
million in additional equity to supplement funds generated from Isle of Capri
Black Hawk, LLC operations to complete the hotel.
Isle of Capri is in the planning stages of constructing an on-site 250-room
deluxe hotel at the Isle-Lake Charles. This project is estimated to cost $33.0
million.
Isle of Capri exercised an option to purchase 146 acres at Pompano Park for
$13.0 million and in June 1999 sold 135 acres of this property for $16.3
million.
On April 20, 1998, Isle of Capri and Commodore Cruise Lines created a 50/50
joint venture named Capri Cruises to operate cruise ships. As of April 25,
1999, Isle of Capri had invested $3.0 million in this joint venture, which is
operating one cruise ship from the Port of New Orleans. Isle of Capri owns a
50% interest in and operates the gaming facilities aboard the ship.
All of Isle of Capri's development plans are subject to obtaining permits,
licenses and approvals from appropriate regulatory and other agencies and, in
certain circumstances, negotiating acceptable leases. In addition, many of our
plans are preliminary, subject to continuing refinement or otherwise subject
to change.
Isle of Capri anticipates that capital improvements approximating $14.0
million will be made during fiscal 2000 to maintain its existing facilities
and remain competitive in its markets. Isle of Capri expects that available
cash and cash from future operations, as well as borrowings under the new
senior credit facility, will be adequate to fund future expansion, planned
capital expenditures, service debt and meet working capital requirements.
There is no assurance that Isle of Capri will have the capital resources to
make all of the expenditures described above or that planned capital
investments will be sufficient to allow Isle of Capri to remain competitive in
its existing markets. In addition, the indenture restricts, among other
things, Isle of Capri's ability to borrow money, create liens, make restricted
payments and sell assets.
Isle of Capri's new senior credit facility limits, among other things, Isle
of Capri's ability to borrow money, make capital expenditures, use assets as
security in other transactions, make restricted payments or restricted
investments, incur contingent obligations, sell assets and enter into leases
and transactions with affiliates. In addition, the new senior credit facility
requires Isle of Capri to meet certain financial ratios and tests, including:
.a minimum consolidated net worth test;
38
<PAGE>
.a maximum consolidated total leverage test;
.a maximum consolidated senior leverage test; and
.a minimum consolidated fixed charge coverage test.
Isle of Capri must repay all amounts borrowed under its new senior credit
facility by April 23, 2004. Isle of Capri will be required to make quarterly
principal payments on the $50.0 million term loan portion of its new senior
credit facility beginning in July 1999. Such payments will initially be $0.8
million per quarter and will increase by $0.8 million per quarter in July of
each year that the term loan is outstanding. In addition, Isle of Capri will
be required to make substantial quarterly interest payments on the outstanding
balance of its new senior credit facility and interest payments of $17.1
million semi-annually on its Senior Subordinated Notes.
Isle of Capri is highly leveraged and may be unable to obtain additional
debt or equity financing on acceptable terms. As a result, limitations on Isle
of Capri's capital resources could delay or cause Isle of Capri to abandon
certain plans for capital improvements at its existing properties and
development of new properties. Isle of Capri will continue to evaluate its
planned capital expenditures at each of its existing locations in light of the
operating performance of the facilities at such locations.
Year 2000 Compliance
Isle of Capri has completed the evaluation of its information technology
infrastructure for Year 2000 issues. The evaluation process included a
detailed inventory of all computer hardware and software systems, detailed
vendor communication and the creation of a concise Year 2000 plan. Most of
Isle of Capri's systems infrastructure is currently Year 2000 compliant. Isle
of Capri has received assurances that it believes are reasonable from vendors
of material products used by Isle of Capri that their products are Year 2000
compliant. Isle of Capri is changing to a casino player tracking and table
system which is Year 2000 compliant. The total cost of this change is
approximately $0.4 million. Isle of Capri has not incurred and does not intend
to incur any material costs to modify its information technology
infrastructure in order to be Year 2000 compliant. All software needed will be
provided by the respective information technology vendor at no charge to Isle
of Capri. Isle of Capri expects to have all software modifications in place by
September 1999.
Isle of Capri and its results of operations and financial condition could be
adversely affected by a failure of one or more of the third parties with which
it does business to satisfactorily address and resolve any Year 2000 issues.
In addition, Year 2000 difficulties experienced by public utilities, the
banking system, the postal system or other similar infrastructure enterprises
could adversely affect Isle of Capri. However, Isle of Capri believes that the
impact of such problems on Isle of Capri would be the same as on other
businesses in the same area or areas. Isle of Capri believes these risks range
from slight financial malfunctions to, in a worst case scenario, an extensive
and costly inability to communicate with customers and suppliers. Isle of
Capri believes that it has an effective program in place to resolve all Year
2000 issues. Isle of Capri has no contingency plans in the event it does not
complete all phases of its Year 2000 program, as program completion is
currently on schedule.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.
As a result of the variable interest rates on the Senior Term Loan of $50
million and Senior Revolving Note of $125 million under the Senior Credit
Facility, the Isle of Capri's earnings are exposed to changes in short-term
interest rates. At June 1999, no amounts were drawn on the Senior Revolving
Note. Isle of Capri does not use interest rate derivative instruments to
manage exposure to interest rate changes.
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ITEM 8. Index to Consolidated Financial Statements.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Isle of Capri Casinos, Inc.
Report of Independent Auditors........................................... 41
Consolidated Balance Sheets, April 25, 1999 and April 26, 1998........... 42
Consolidated Statements of Operations, Years ended April 25, 1999, April
26, 1998 and April 27, 1997............................................. 43
Consolidated Statements of Stockholders' Equity, Years ended April 25,
1999, April 26, 1998 and April 27, 1997................................. 44
Consolidated Statements of Cash Flows, Years ended April 25, 1999, April
26, 1998 and April 27, 1997............................................. 45
Notes to Consolidated Financial Statements............................... 47
</TABLE>
40
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Isle of Capri Casinos, Inc.
We have audited the accompanying consolidated balance sheets of Isle of
Capri Casinos, Inc. as of April 25, 1999 and April 26, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows
for the years ended April 25, 1999, April 26, 1998 and April 27, 1997. 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 audits 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 Isle of Capri
Casinos, Inc. at April 25, 1999 and April 26, 1998, and the consolidated
results of its operations and its cash flows for the years ended April 25,
1999, April 26, 1998 and April 27, 1997, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
New Orleans, Louisiana
June 10, 1999
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<PAGE>
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
April 25, April 26,
ASSETS 1999 1998
------ --------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 85,117 $ 52,460
Accounts Receivable:
Related parties............................................. 41 79
Other....................................................... 5,894 5,636
Income tax receivable......................................... 7,509 3,563
Deferred income taxes......................................... 4,684 3,279
Prepaid expenses and other assets............................. 5,771 4,240
-------- --------
Total current assets...................................... 109,016 69,257
Property and equipment--net..................................... 411,176 333,811
Other assets:
Investment in and advances to joint ventures.................. 1,851 1,709
Property held for development or sale......................... 5,532 7,943
Licenses and other intangible assets, net of accumulated
amortization of $8,960 and $6,058, respectively.............. 63,408 66,311
Goodwill, net of accumulated amortization of $8,644 and
$6,023, respectively......................................... 52,818 60,550
Berthing, concession, and leasehold rights, net of accumulated
amortization of $2,149 and $1,836, respectively.............. 4,119 4,432
Deferred financing costs, net of accumulated amortization of
$1,305 and $3,073, respectively.............................. 19,398 15,313
Restricted cash............................................... 5,480 50,341
Prepaid deposits and other 3,686 6,068
-------- --------
Total assets.............................................. $676,484 $615,735
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt.......................... $ 5,883 $ 12,453
Accounts payable--trade....................................... 20,102 14,365
Accrued liabilities:
Interest.................................................... 2,033 11,771
Payroll and related......................................... 23,867 17,854
Property and other taxes.................................... 11,700 10,095
Progressive jackpots and slot club awards................... 5,351 3,505
Other....................................................... 9,888 7,912
-------- --------
Total current liabilities................................. 78,824 77,955
Long-term debt, less current maturities......................... 526,873 429,642
Deferred income taxes........................................... 4,689 16,155
Minority interest............................................... 4,143 5,852
Stockholders' equity:
Preferred stock, $.01 par value; 2,050,000 shares authorized;
none issued.................................................. -- --
Common stock, $.01 par value; 45,000,000 shares authorized;
shares issued and outstanding: 23,568,562 236 236
Class B common stock, $.01 par value; 3,000,000 shares
authorized; none issued...................................... -- --
Additional paid-in capital.................................... 63,146 63,146
Retained earnings (deficit)................................... (1,427) 22,749
-------- --------
Total stockholders' equity................................ 61,955 86,131
-------- --------
Total liabilities and stockholders' equity................ $676,484 $615,735
======== ========
</TABLE>
See notes to consolidated financial statements.
42
<PAGE>
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------
April 25, April 26, April 27,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenue:
Casino...................................... $424,379 $388,223 $322,677
Rooms....................................... 10,829 9,528 9,483
Pari-mutuel commissions and fees............ 21,351 22,565 19,405
Food, beverage, and other................... 23,818 20,500 19,716
Management fee--unconsolidated joint ven-
tures...................................... -- -- 2,110
-------- -------- --------
Total revenue............................. 480,377 440,816 373,391
Operating expenses:
Casino...................................... 77,679 76,072 64,301
Rooms....................................... 3,914 3,271 2,316
Gaming taxes................................ 86,855 78,586 61,769
Pari-mutuel................................. 15,741 16,315 15,987
Food and beverage........................... 14,204 13,379 14,280
Marine and facilities....................... 28,218 26,203 20,717
Marketing and administrative................ 144,541 132,300 128,849
Valuation charge............................ 5,097 -- 7,000
Accrued litigation settlement (reversal).... (4,215) -- --
Preopening expenses......................... 3,320 -- 2,500
Depreciation and amortization............... 36,277 33,588 27,149
-------- -------- --------
Total operating expenses.................. 411,631 379,714 344,868
-------- -------- --------
Operating income.............................. 68,746 61,102 28,523
Interest expense.............................. (48,638) (51,579) (40,332)
Interest income:
Unconsolidated joint ventures............... -- -- 203
Other....................................... 2,907 4,702 1,418
Minority interest............................. 2,209 819 --
Equity in loss of unconsolidated joint
ventures..................................... (1,340) -- (166)
-------- -------- --------
Income (loss) before income taxes and
extraordinary item........................... 23,884 15,044 (10,354)
Income tax provision (benefit)................ 11,775 7,497 (1,560)
-------- -------- --------
Income (loss) before extraordinary item....... 12,109 7,547 (8,794)
Extraordinary loss on extinquishment of debt,
net of applicable income tax benefit of
$19,538, $0, $6,600, respectively............ (36,285) -- (12,257)
-------- -------- --------
Net income (loss)............................. $(24,176) $ 7,547 $(21,051)
======== ======== ========
Earnings (loss) per share of common stock:
Earnings (loss) per common share:
Income (loss) before extraordinary item..... $ 0.51 $ 0.32 $ (0.39)
Extraordinary loss, net..................... $ (1.54) $ -- $ (0.55)
-------- -------- --------
Net income (loss)........................... $ (1.03) $ 0.32 $ (0.94)
======== ======== ========
Earnings (loss) per common share--assuming
dilution:
Income (loss) before extraordinary item..... $ 0.51 $ 0.32 $ (0.39)
Extraordinary loss, net..................... $ (1.52) $ -- $ (0.55)
-------- -------- --------
Net income (loss)........................... $ (1.01) $ 0.32 $ (0.94)
======== ======== ========
Weighted average diluted shares............... 23,859 23,465 22,483
</TABLE>
See notes to consolidated financial statements.
43
<PAGE>
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
<TABLE>
<CAPTION>
Shares of Additional Retained Total
Common Common Paid-in Earnings Stockholders'
Stock Stock Capital (Deficit) Equity
---------- ------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1996... 16,038,882 $160 $13,857 $36,253 $50,270
Issuance of common stock
for Rights Offering.... 3,079,980 31 17,850 -- 17,881
Issuance of common stock
for acquisitions....... 4,100,000 41 27,074 -- 27,115
Issuance of warrants for
acquisitions........... -- -- 3,333 -- 3,333
Exercise of stock
options................ 65,625 1 165 -- 166
Issuance of stock for
compensation........... 60,800 -- 259 -- 259
Net loss................ -- -- -- (21,051) (21,051)
---------- ---- ------- ------- -------
Balance, April 27, 1997... 23,345,287 233 62,538 15,202 77,973
Exercise of stock
options................ 8,438 -- 8 -- 8
Issuance of stock for
deferred financing
costs.................. 174,337 2 498 -- 500
Issuance of stock for
compensation........... 40,500 1 102 -- 103
Net income.............. -- -- -- 7,547 7,547
---------- ---- ------- ------- -------
Balance, April 26, 1998... 23,568,562 236 63,146 22,749 86,131
Net loss................ -- -- -- (24,176) (24,176)
---------- ---- ------- ------- -------
Balance, April 25, 1999... 23,568,562 $236 $63,146 $(1,427) $61,955
========== ==== ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
44
<PAGE>
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------
April 25, April 26, April 27,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Operating activities:
Net income (loss).............................. $(24,176) $ 7,547 $(21,051)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization................ 36,277 33,588 27,149
Amortization of bond discount and deferred
financing costs............................. 2,317 1,926 1,294
Valuation charge............................. 5,097 -- 7,000
Deferred income taxes........................ (7,763) 5,303 (1,837)
Gain on disposal of assets................... 659 -- --
Equity in loss of unconsolidated joint
ventures.................................... 1,340 -- 166
Extraordinary item (net of taxes)............ 36,285 -- 12,257
Minority interest............................ (2,209) (819) --
Other........................................ -- -- 445
Changes in current assets and liabilities,
net of acquisitions:
Accounts Receivable........................ (278) 6,324 (4,971)
Income tax receivable...................... 15,592 -- --
Prepaid expenses and other assets.......... (1,126) 1,168 (854)
Accounts payable and accrued expenses...... 3,203 10,272 (1,843)
-------- -------- --------
Net cash provided by operating activities...... 65,218 65,309 17,755
Investing activities:
Purchase of property and equipment............. (94,996) (65,455) (21,490)
Net cash paid for acquisitions................. -- -- (80,495)
Proceeds from disposals of property and
equipment..................................... 202 251 739
Investments in and advances to joint ventures.. (1,482) (2,628) 1,845
(Increase) decrease in restricted cash......... 44,861 (50,341) --
Deposits and other............................. (601) (1,555) 1,976
-------- -------- --------
Net cash used in investing activities.......... (52,016) (119,728) (97,425)
Financing activities:
Proceeds from borrowings....................... 447,088 75,000 318,168
Principal payments on debt and cash paid to
retire debt................................... (414,136) (17,823) (210,341)
Deferred financing costs....................... (13,497) (2,152) (12,943)
Proceeds from sale of stock and exercise of
options....................................... -- 8 18,047
-------- -------- --------
Net cash provided by financing activities...... 19,455 55,033 112,931
-------- -------- --------
Net increase in cash and cash equivalents...... 32,657 614 33,261
Cash and cash equivalents at beginning of
year.......................................... 52,460 51,846 18,585
-------- -------- --------
Cash and cash equivalents at end of year....... $ 85,117 $ 52,460 $ 51,846
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
45
<PAGE>
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------
April 25, April 26, April 27,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Supplemental disclosures of cash flow
information:
Cash payments (receipts) for:
Interest...................................... $63,297 $50,479 $37,092
Income taxes--net of refunds.................. 3,140 (4,840) 9,328
Supplemental schedule of noncash investing and
financing activities:
Notes Payable and Debt issued for:
Property and equipment........................ 8,369 -- --
Capital Contributions:
Land, net of mortgage of $396,000............. -- 7,504 --
Financing costs............................... -- -- 1,073
Property and equipment........................ -- 1,615 514
Acquisitions:
Debt assumed.................................. -- -- (37,142)
Stock issued.................................. -- -- (27,115)
Warrants issued............................... -- -- (3,333)
Other:
Deferred financing costs funded through
issuance of common stock..................... -- 500 --
Construction costs funded through accounts
payable...................................... 2,401 1,614 --
</TABLE>
See notes to consolidated financial statements.
46
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
Isle of Capri Casinos, Inc., (the "Company") formerly known as Casino
America, Inc. was incorporated as a Delaware corporation on February 14, 1990
and changed its name to Isle of Capri Casinos, Inc. on October 1, 1998. The
Company, through its subsidiaries, is engaged in the business of developing,
owning and operating riverboat, dockside and land-based casinos and related
facilities. The Company has licenses to conduct and currently conducts gaming
operations in Biloxi and Vicksburg, Mississippi, in Bossier City and Lake
Charles, Louisiana, and in Black Hawk, Colorado through its subsidiaries. On
May 3, 1996, the Company acquired 100% of Grand Palais Riverboat, Inc.
("GPRI") and a 50% interest in St. Charles Gaming Company, Inc. ("SCGC"). On
August 6, 1996 the Company acquired the 50% interests in Louisiana Riverboat
Gaming Partnership ("LRGP") and LRG Hotels, LLC and LRGP's 50% interest in
SCGC, which were owned by outside parties. As of August 6, 1996, LRGP, LRG
Hotels, LLC and SCGC became wholly-owned subsidiaries of the Company. Prior to
this date, the Company's investments in these subsidiaries were accounted for
using the equity method of accounting. On April 25, 1997, Isle of Capri Black
Hawk, L.L.C. ("ICBH"), a Colorado limited liability company, was formed. ICBH
is owned by Casino America of Colorado, Inc. ("Casino America of Colorado"), a
wholly-owned subsidiary of the Company and a third party. As of April 25,
1999, Casino America of Colorado owned 57% of ICBH, making it a consolidated
subsidiary of the Company. As such the operating results of ICBH are reflected
in the consolidated operating results of the Company. All material
intercompany balances and transactions have been eliminated in consolidation.
Certain reclassifications have been made to the prior-year financial
statements to conform to the fiscal 1999 presentation.
The Company is engaged in the business of developing, owning and operating
riverboat, dockside and land-based casinos and related facilities. The Company
commenced operations in Biloxi, Mississippi and Vicksburg, Mississippi, on
August 1, 1992 and August 9, 1993, respectively. LRGP commenced operations in
Bossier City, Louisiana on May 20, 1994 and SCGC and GPRI commenced operations
in Lake Charles, Louisiana on July 29, 1995 and July 12, 1996, respectively.
ICBH commenced operations in Black Hawk, Colorado on December 30, 1998.
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.
Fiscal Year End
Effective April 27, 1997, the Company changed from an April 30 fiscal year
end to a fiscal year consisting of four, thirteen week quarters, which is also
known as a "four-five-four" fiscal year. This "four-five-four" fiscal year
creates more comparability of the Company's quarterly operations, by having an
equal number of weeks (13) and week-end days (26) in each quarter. Fiscal 1999
commenced on April 27, 1998 and ended April 25, 1999.
Cash Equivalents
The Company considers all highly liquid investments with a maturity at the
time of purchase of three months or less to be cash equivalents. Cash
equivalents are placed primarily with a high-credit-quality financial
institution. At April 25, 1999, cash equivalents were invested primarily in
short-term commercial paper and U.S. Treasury Bills. The carrying amount of
cash equivalents approximates fair value because of the short maturity of
these instruments.
47
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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>
Furniture, fixtures, and equipment................................. 5--10
Leasehold improvements............................................. 10--31
Buildings and improvements......................................... 25
Riverboats and floating pavilions.................................. 25
</TABLE>
Interest capitalized during the fiscal years ended April 25, 1999, April 26,
1998 and April 27, 1997 totaled $7.2 million, $2.7 million and $0,
respectively. Depreciation expense for the fiscal years ended April 25, 1999,
April 26, 1998 and April 27, 1997 totaled $30.4 million, $27.1 million and
$22.7 million, respectively.
Long-lived Assets
The Company periodically evaluates the carrying value of long-lived assets
to be held and used, including excess of cost over net assets acquired, in
accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" (SFAS 121). SFAS 121 requires impairment losses to be
recorded on long-lived assets used in operations, including related excess of
cost over net assets acquired, when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amounts. In that event, a loss is recognized based
on the amount by which the carrying amount exceeds the fair market value of
the long-lived assets. Loss on long-lived assets to be disposed of is
determined in a similar manner, except that fair market values are reduced for
the cost of disposal.
Deferred Financing Costs
The costs of issuing long-term debt have been capitalized and are being
amortized using the effective interest method over the term of the related
debt.
Berthing, Concession, and Leasehold Rights
Berthing, concession and leasehold rights are recorded at cost and are being
amortized over approximately twenty years using the straight-line method.
Other Assets
Licenses and other intangible assets--principally represent the license
value attributed to the Louisiana gaming licenses acquired through the
Company's acquisition of SCGC, GPRI and LRGP. These assets are being amortized
over a twenty-five-year period using the straight-line method.
Goodwill--reflects the excess purchase price the Company paid in acquiring
the net identifiable tangible and intangible assets of SCGC, GPRI and LRGP.
Goodwill is being amortized over a twenty-five-year period using the straight-
line method.
Restricted cash--represents cash proceeds from the 13% First Mortgage Notes
due 2004 with Contingent Interest issued by ICBH (the "First Mortgage Notes")
held in trust by IBJ Whitehall Bank and Trust Company in New York, as trustee
for ICBH, a majority-owned subsidiary of the Company. These funds are held in
three
48
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
separate accounts (Construction Disbursement, Completion Reserve and Interest
Reserve) with usage restricted by an indenture between ICBH and the trustee,
dated August 20, 1997 governing the ICBH First Mortgage Notes (the
"Indenture"). Amounts remaining in the Construction Disbursement Account as of
April 25, 1999, $1.2 million, will be used to complete the construction of a
casino entertainment complex by ICBH in Black Hawk, Colorado. Amounts in the
Completion Reserve Account, $0.8 million, will be used in the event there are
insufficient funds in the Construction Disbursement Account to complete the
casino entertainment complex. In addition, the Company has other restricted
cash totaling $3.5 million related to various operating deposits.
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 $49.7 million, $37.0
million, and $30.3 million for the years ended April 25, 1999, April 26, 1998
and April 27, 1997, respectively. The estimated cost of providing such
complimentary services, which is included in casino expense, was $33.1
million, $32.6 million and $24.9 million for the years ended April 25, 1999,
April 26, 1998 and April 27, 1997, respectively.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense for the
years ended April 25, 1999, April 26, 1998 and April 27, 1997 totaled $10.8
million, $10.7 million and $15.7 million, respectively.
49
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Earnings per Common Share
The following table sets forth the computation of basic and diluted earnings
(loss) per share:
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------
April 25, April 26, April 27,
1999 1998 1997
----------- ----------- -----------
(In thousands, except share data)
------------------------------------
<S> <C> <C> <C>
Numerator:
Income (loss) before extraordinary
item.................................. $ 12,109 $ 7,547 $ (8,794)
Extraordinary loss, net................ (36,285) -- (12,257)
----------- ----------- -----------
Net income (loss)...................... (24,176) 7,547 (21,051)
Numerator for basic earnings (loss) per
share--income (loss) available to
common stockholders................... (24,176) 7,547 (21,051)
Effect of dilutive securities.......... -- -- --
----------- ----------- -----------
Numerator for diluted earnings (loss)
per share--income (loss) available to
common stockholders after assumed
conversions........................... $ (24,176) $ 7,547 $ (21,051)
=========== =========== ===========
Denominator:
Denominator for basic earnings (loss)
per share--weighted-average shares.... 23,568,562 23,455,338 22,483,270
Effect of dilutive securities
Employee stock options............... 290,317 9,508 --
Warrants............................. -- -- --
----------- ----------- -----------
Dilutive potential common shares....... 290,317 9,508 --
----------- ----------- -----------
Denominator for diluted earnings (loss)
per share--adjusted weighted-average
shares and assumed conversions........ 23,858,879 23,464,846 22,483,270
=========== =========== ===========
Basic earnings (loss) per share
Income (loss) before extraordinary
item.................................. $ 0.51 $ 0.32 $ (0.39)
Extraordinary loss, net................ (1.54) -- (0.55)
----------- ----------- -----------
Net income (loss)...................... $ (1.03) $ 0.32 $ (0.94)
=========== =========== ===========
Diluted earnings (loss) per share
Income (loss) before extraordinary
item.................................. $ 0.51 $ 0.32 $ (0.39)
Extraordinary loss, net................ (1.52) -- (0.55)
----------- ----------- -----------
Net income (loss)...................... $ (1.01) $ 0.32 $ (0.94)
=========== =========== ===========
</TABLE>
Stock Options
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the market value of the shares at the date of
grant. The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" in accounting for its stock
option plans and accordingly, does not recognize compensation cost.
50
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
New Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities", which is
required to be adopted in years beginning after June 15, 1999. Because of the
Company's minimal use of derivatives, management does not anticipate that the
adoption of the new Statement will have a significant effect on its results of
operations or financial position.
In April 1998, the Accounting Standards Executive Committee issued Statement
of Position (SOP) 98-5, "Reporting the Costs of Start-up Activities". The SOP
is effective for years beginning after December 15, 1998, and requires that
start-up costs capitalized prior to adoption be written-off and any future
start-up costs be expensed as incurred. Management does not anticipate that
the adoption of the new Statement will have a significant effect on its
results of operations or financial position.
2. Acquisitions
Isle of Capri--Tunica
In March 1999, the Company acquired the original Harrah's casino facility
located in Tunica County, Mississippi for $9.5 million. The Company estimates
that it will invest an additional $24.0 million to equip, renovate and open
this facility as an Isle of Capri casino. The Company plans to open the Isle-
Tunica in July 1999 with approximately 875 slot machines, 15 table games and
its three trademark restaurants. The Company also plans to invest
approximately $40.0 million to construct an on-site hotel with up to 250 rooms
and two live entertainment theaters with combined seating for 2,000 people.
Construction of the hotel and theaters is scheduled to begin in the second
half of 1999.
Louisiana Riverboat Gaming Partnership
On August 6, 1996, the Company acquired the remaining 50% interest in LRGP
held by outside parties (the "LRGP Acquisition"). The consideration for the
acquisition was $85 million in cash, five-year warrants to purchase 500,000
shares of the Company's common stock at an exercise price of $10.50 per share
and $1.5 million per year for seven years, payable monthly beginning on
October 1, 1998. The acquisition was accounted for as a purchase, and as a
result, the operating results of LRGP and SCGC from the acquisition date
forward are consolidated in the Company's statements of operations.
St. Charles Gaming Company, Inc.
On May 3, 1996, the Company purchased the remaining 50% interest in SCGC not
already owned by LRGP (the "SCGC Acquisition"), 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 from LRGP (up to a maximum of
$5.0 million) to 416,667 shares of common stock of the Company at an exercise
price of $12 per share. The purchase agreement also provided for the
restructuring of certain indebtedness owed to the seller. The acquisition was
accounted for as a purchase, however, the operating results of SCGC were still
accounted for under the equity method of accounting as the Company did not
obtain a controlling interest in SCGC.
Grand Palais Riverboat, Inc.
On May 3, 1996, the Company purchased all of the outstanding shares of
common stock of 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
51
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
licenses issued by the State of Louisiana, and other permits and
authorizations. The acquisition was accounted for as a purchase, and the
operating results of GPRI have been included in the Company's consolidated
statements of operations from the date operations commenced. GPRI commenced
operations on July 12, 1996 as part of a two-riverboat operation with SCGC.
The aggregate consideration paid by the Company in connection with the GPRI
acquisition was approximately $60.8 million, consisting of $7.5 million in
cash, approximately $37.1 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. Additionally, 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.
3. Isle of Capri Black Hawk, L.L.C.
On April 25, 1997, a subsidiary of the Company, Casino America of Colorado,
formed ICBH, a limited liability company, with Blackhawk Gold, Ltd., a wholly-
owned subsidiary of Nevada Gold and Casino, Inc. The primary purpose of ICBH
is to develop a casino entertainment complex in Black Hawk, Colorado (the
"Isle-Black Hawk"), which opened on December 30, 1998. ICBH plans to construct
a hotel containing approximately 235 rooms at the site of the Isle-Black Hawk.
The Company has a majority ownership interest in ICBH. As a consolidated
subsidiary of the Company, the operating results of ICBH are reflected in the
consolidated results of the Company. ICBH was a development stage company in
fiscal 1998.
4. Capri Cruises L.L.C.
On April 20, 1998, the Company signed an agreement with Commodore Holdings
Limited, parent company of Commodore Cruise Line, to create a joint venture
named Capri Cruises to operate cruise ships in strategic markets. Cruise
operations began in early June 1998. As of April 25, 1999, the Company had
invested $3.0 million into this 50/50 unconsolidated joint venture, which is
operating one cruise ship from the Port of New Orleans.
5. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
April 25, April 26,
1999 1998
--------- ---------
(In thousands)
<S> <C> <C>
Property and equipment:
Land and land improvements............................. $ 60,776 $ 55,800
Leasehold improvements................................. 98,120 97,692
Buildings and improvements............................. 123,845 49,668
Riverboats and floating pavilions...................... 97,332 92,974
Furniture, fixtures, and equipment..................... 98,145 87,902
Construction in progress............................... 42,966 33,969
-------- --------
521,184 418,005
Less: accumulated depreciation......................... 110,008 84,194
-------- --------
$411,176 $333,811
======== ========
</TABLE>
52
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash equivalents--The carrying amounts approximate fair value because of
the short maturity of these instruments.
Restricted cash--The carrying amounts approximate fair value because of
the short maturity of these instruments.
Long-term debt--The fair value of the company's long-term debt is
estimated based on the quoted market price of the underlying debt issue or
the discounted cash flow of future payments utilizing current rates
available to the company for debt of similar remaining maturities. Debt
obligations with a short remaining maturity are valued at the carrying
amount.
The estimated carrying amounts and fair values of the Company's financial
instruments are as follows:
April 25, 1999 April 26, 1998
------------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- --------
(In thousands)
Financial assets:
Cash equivalents....................... $ 85,117 $ 85,117 $ 52,460 $ 52,460
Restricted cash........................ 5,480 5,480 50,341 50,341
Financial liabilities:
Senior secured notes................... $ -- $ -- $315,000 $351,225
First mortgage notes................... 75,000 81,375 75,000 76,125
Other long-term debt................... 67,756 67,756 52,095 52,095
Senior subordinated notes.............. 390,000 390,000 -- --
53
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
April April
25, 1999 26, 1998
-------- --------
(In thousands)
<S> <C> <C>
8 3/4% senior subordinated notes (described below)......... $390,000 $ --
Variable rate Term Loan (7.82% at April 25, 1999), due in
quarterly installments ranging from $833,333 to
$4,166,667, not including interest, through April 2004.... 50,000 --
12 1/2% note payable, due in monthly installments of
$125,000, including interest, beginning October 1997
through October 2005...................................... 6,527 6,692
8% note payable, due in monthly installments of $66,667,
including interest, through July 2002..................... 2,283 2,874
8% note payable, due in monthly installments of $11,365,
including interest, through December 2015................. 1,250 1,285
11% note payable, issued by Isle of Capri Black Hawk,
L.L.C., due in monthly installments of $73,692, including
interest, through October 2000; non-recourse to Isle of
Capri Casinos, Inc........................................ 1,522 --
13% First Mortgage Notes, issued by Isle of Capri Black
Hawk, L.L.C., due August 2004; non-recourse to Isle of
Capri Casinos, Inc........................................ 75,000 75,000
Other...................................................... 6,174 5,346
Notes paid in full during fiscal 1999:
12 1/2% senior secured notes........................... -- 315,000
Variable rate notes.................................... -- 23,619
11 1/2% note payable................................... -- 7,647
9 1/4% notes payable................................... -- 3,669
6% note payable........................................ -- 963
-------- --------
532,756 442,095
Less: current maturities................................. 5,883 12,453
-------- --------
Long-term debt........................................... $526,873 $429,642
======== ========
</TABLE>
On April 23, 1999, the Company issued $390,000,000 of 8 3/4% Senior
Subordinated Notes due 2009 (the "Senior Subordinated Notes"). The Senior
Subordinated Notes are guaranteed by all of the Company's significant
subsidiaries, excluding the subsidiaries that own and operate the Isle-Black
Hawk. Interest on the Senior Subordinated Notes is payable semiannually on
each April 15 and October 15 through maturity. The Senior Subordinated Notes
are redeemable, in whole or in part, at the Company's option at any time on or
after April 15, 2004 at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest to the
applicable redemption date, if redeemed during the 12-month period beginning
on April 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004.................. 104.375%
2005.................. 102.917%
2006.................. 101.458%
2007 and
thereafter........... 100.000%
</TABLE>
The Company issued the Senior Subordinated Notes under an indenture between
the Company, the subsidiary guarantors and a trustee. The indenture, among
other things, restricts the Company's ability and the
54
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
ability of its restricted subsidiaries to borrow money, make restricted
payments, use assets as security in other transactions, enter into
transactions with affiliates, or pay dividends on or repurchase our stock or
our restricted subsidiaries' stock. The Company is also restricted in its
ability to issue and sell capital stock of its subsidiaries and in its ability
to sell assets in excess of specified amounts or merge with or into other
companies.
At April 25, 1999, no dividends were permitted to be paid under these
restrictions.
A substantial part of the proceeds from the Senior Subordinated Notes were
used to prepay long-term debt, including all of the $315,000,000 of 12 1/2%
Senior Secured Notes due 2003. The proceeds were also used to pay accrued
interest and other transaction fees and costs.
Simultaneously with the issuance of the Senior Subordinated Notes, the
Company entered into a new $175.0 million five-year Senior Credit Facility
(the "Senior Credit Facility") comprised of a $50.0 million term loan and a
$125.0 million undrawn revolver. The new Senior Credit Facility is secured by
liens on substantially all of the Company's assets and guaranteed by all of
its significant restricted subsidiaries, excluding Casino America of Colorado,
Inc., Black Hawk LLC and their subsidiaries. The Company used the initial
borrowings under the Senior Credit Facility to repay certain existing debt and
for working capital and for other general corporate purposes. The Company
plans to use future borrowings under the Senior Credit Facility primarily for
expansion of its existing casino facilities and the development of new casino
facilities.
On August 20, 1997, ICBH issued $75 million of 13% First Mortgage Notes due
2004 with Contingent Interest (the "ICBH First Mortgage Notes"), which is non-
recourse debt to the Company. Interest on the ICBH First Mortgage Notes is
payable semiannually on February 28 and August 31 of each year, commencing
February 28, 1998. Additionally, contingent interest is payable on the ICBH
First Mortgage Notes on each interest payment date, in an aggregate principal
amount of 5% of the Consolidated Cash Flow (as defined in the Indenture). The
ICBH First Mortgage Notes are redeemable at the option of ICBH, in whole or in
part, at any time on or after August 1, 2001 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 31 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001.................. 106.500%
2002.................. 103.200%
2003 and thereafter... 100.000%
</TABLE>
Beginning with the first operating year after the Isle-Black Hawk begins
gaming operations, ICBH will be required to offer to purchase, at the price of
101% of the aggregate principal amount thereof, the maximum principal amount
of the ICBH First Mortgage Notes that may be purchased with 50% of the Isle-
Black Hawk's excess cash flow, as defined.
The Company has $6.5 million available in bank lines of credit. As of April
25, 1999, the Company had no outstanding balances under these lines of credit.
ICBH obtained a letter of credit as a requirement to obtain a building
permit from the City of Black Hawk (the "City"). The letter of credit,
totaling $2.1 million, can be drawn upon by the City if for any reasons ICBH
fails to complete the construction project. The letter of credit is secured by
a deposit held in trust of $1.1 million, which was funded by the Company and
the balance is secured by the Company's open line of credit with the bank.
55
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Substantially all of the Company's assets are pledged as collateral for
long-term debt. At April 25, 1999, the Company was in compliance with all debt
covenants.
The aggregate principal payments due on total long-term debt over the next
five fiscal years and thereafter are as follows:
<TABLE>
<CAPTION>
For the Fiscal Year Ending
(In thousands)
--------------
<S> <C>
2000........................................................... $ 5,883
2001........................................................... 10,120
2002........................................................... 12,109
2003........................................................... 14,893
2004........................................................... 18,135
Thereafter..................................................... 471,616
--------
$532,756
========
</TABLE>
8. Lease Commitments
The Company has an agreement with the Biloxi Port Commission which provides
the Company with certain docking rights. This agreement expires in 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 in 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 $25.0 million. 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.
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
56
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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 as if it had been
$500,000 annually plus adjustments thereto based on the Consumer Price Index.
In February 1995, in conjunction with its planned Cripple Creek Colorado
operation, the Company entered into a land lease. 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.
The Company leases approximately 16.25 acres of land in Calcasieu Parish,
Louisiana for use in connection with the Isle-Lake Charles. The initial term
of this lease expires in March 2000 and we have the option to renew it for
seventeen additional terms of five years each. Rent under the Isle-Lake
Charles lease is currently $1.2 million per year and is subject to increases
based on the Consumer Price Index and construction of hotel facilities on the
property.
In March 1999, the Company entered into a lease for land in Tunica County,
Mississippi for use in connection with the Isle-Tunica. The initial lease term
is five years with the option to renew the lease for seven additional terms of
five years. Base rent for each lease year equals the greater of 2% of gross
gaming revenue or $800,000. Once gross gaming revenue exceeds $40.0 million
during any lease year, the base rent in the following months of such year
shall be increased by an amount equal to 2% of such excess. The landlord is
entitled to receive additional rent based on excess available cash, as defined
in the lease.
Minimum rental obligations under all noncancelable operating leases with
terms of one year or more as of April 25, 1999, are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ending
(In thousands)
--------------
<S> <C>
2000............................................................. $8,624
2001............................................................. 6,930
2002............................................................. 5,517
2003............................................................. 2,962
2004............................................................. 1,648
</TABLE>
Rent expense for operating leases was approximately $10.8 million, $6.8
million and $7.1 million for the years ended April 25, 1999, April 26, 1998
and April 27, 1997, respectively. Such amounts include contingent rentals of
$2.6 million, $2.7 million and $2.5 million for the years ended April 25,
1999, April 26, 1998 and April 27, 1997, respectively.
9. Related Party Transactions
On January 2, 1998, the Company acquired approximately 0.7 acres of property
(the "Acquired Property") contiguous to the property being developed by ICBH.
The acquired property will be used for the expansion of the entrance and the
signage of the Isle-Black Hawk. On January 2, 1998, ICBH, as Lessee, entered
into a lease agreement with the Company for the Acquired Property and will
utilize the Acquired Property in developing the Isle-Black Hawk. The lease
payment consists of $102,000 paid upon the inception of the lease and $17,000
per month, commencing July 15, 1998, and continuing until December 31, 2002,
and thereafter on a year to year basis. During the term of the lease, ICBH has
the right to purchase the property for $1.5 million plus all interest and out-
of-pocket costs that the Company incurred in connection with the purchase and
ownership of the land, less any payments made by ICBH, as lessee.
57
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company provides management services to all of its wholly-owned
riverboat casino entities, pursuant to respective management agreements.
Management fees for these services are based upon a percentage of each
entity's revenue and operating income, as defined in the management
agreements. The revenue under the management agreements is eliminated through
consolidation. However, the management services provided by the Company to
LRGP and SCGC prior to these entities becoming wholly-owned subsidiaries of
the Company as of the August 6, 1996 acquisition date, are reflected as
Management fee--unconsolidated joint ventures in the accompanying consolidated
statements of operations.
10. Income Taxes
Income tax expense (benefit) consist of the following:
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------
April 25, April 26, April 27,
1999 1998 1997
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Current:
Federal......................................... $ (485) $1,131 $(6,219)
State........................................... 485 1,063 (104)
-------- ------ -------
-- 2,194 (6,323)
Deferred:
Federal......................................... (8,558) 4,841 (1,569)
State........................................... 795 462 (268)
-------- ------ -------
(7,763) 5,303 (1,837)
-------- ------ -------
$(7,763) $7,497 $(8,160)
======== ====== =======
</TABLE>
A reconciliation of income tax expense (benefit) to the statutory corporate
federal tax rate of 35% is as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------
April 25, April 26, April 27,
1999 1998 1997
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Statutory tax expense (benefit)................. $(11,178) $5,265 $(10,224)
Effects of:
State taxes................................... 591 991 (68)
Goodwill...................................... 1,185 1,327 834
Valuation allowance........................... -- -- 903
Other--net.................................... 1,639 (86) 395
-------- ------ --------
$ (7,763) $7,497 $ (8,160)
======== ====== ========
</TABLE>
58
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Significant components of the Company's net deferred income tax liability
are as follows:
<TABLE>
<CAPTION>
April 25, April 26,
1999 1998
--------- ---------
(In thousands)
<S> <C> <C>
Deferred tax liabilities:
Property and equipment.................................... $28,996 $29,078
Other..................................................... 1,290 1,402
------- -------
Total deferred tax liabilities.............................. 30,286 30,480
Deferred tax assets:
Dividends................................................. 258 350
Write-down of assets held for sale........................ 7,440 5,690
Preopening costs.......................................... (1,012) 291
Accrued expenses.......................................... 5,035 3,837
Charitable contribution carryover......................... 433 434
Alternative minimum tax credit............................ 4,732 3,353
Net operating losses...................................... 21,797 16,218
Other..................................................... (518) 493
------- -------
Total deferred tax assets................................... 38,165 30,666
Valuation allowance on deferred tax assets.................. (7,884) (13,062)
------- -------
Net deferred tax assets..................................... 30,281 17,604
------- -------
Net deferred tax liabilities................................ $ 5 $12,876
======= =======
</TABLE>
At April 25, 1999, the Company had alternative minimum tax credits which can
be carried forward indefinitely to reduce future regular tax liabilities.
Additionally, as of April 25, 1999, the Company has federal net operating loss
carry-forwards of $56.0 million for income tax purposes, with expiration dates
from 2008 to 2018. Approximately $22.0 million of net operating losses are
subject to limitation under the income tax regulations, which may limit the
amount ultimately utilized.
The utilization of pre-acquisition net operating losses resulted in a
reduction to goodwill of $5.1 million in fiscal 1999 and $3.3 million in
fiscal 1998.
11. Common Stock
Stock-based compensation.
Under the Company's 1992 and 1993 Stock Option Plans, as amended, a maximum
of 1,058,750 and 1,200,000 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 ranging from 20% to 25%,
commencing one year after the date of grant.
59
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Stock options outstanding are as follows:
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
1999 Exercise 1998 Exercise 1997
Options Price Options Price Options
--------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Outstanding options at
beginning of fiscal year.. 2,718,199 $5.24 1,980,138 $6.49 1,518,188
Options granted............ 1,342,500 3.05 1,096,500 3.41 777,500
Options exercised.......... -- -- (8,438) 0.89 (65,625)
Options canceled........... (101,212) 6.10 (350,001) 6.78 (249,925)
--------- --------- ---------
Outstanding options at end
of fiscal year............ 3,959,487 $4.48 2,718,199 $5.24 1,980,138
========= ========= =========
</TABLE>
Weighted average fair value of options granted during fiscal 1999 and 1998
was $2.18 and $2.35, respectively.
The following table summarizes information about stock options outstanding
at April 25, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------- --------------------------
Weighted Average Weighted Weighted
Ranges of Number Remaining Average Number Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
- --------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ .89-$ 5.70 3,198,437 8.36 years $ 3.35 556,787 $ 4.07
5.88- 11.25 519,300 6.46 years 7.02 341,581 7.29
11.56- 18.00 241,750 4.53 years 13.94 241,750 13.94
--------- ---------
$ .89-$18.00 3,959,487 7.88 years $ 4.48 1,140,118 $ 7.13
========= =========
</TABLE>
Pro forma information regarding net income and earnings per share is required
by Statement of Financial Accounting Standard No. 123, Accounting for Stock-
based Compensation. Had compensation costs for the Company's two stock option
plans been determined based on the fair value at the grant dates for awards in
fiscal years 1999, 1998 and 1997 consistent with the provisions of SFAS 123,
the Company's net earnings and earnings per share would have been reduced to
the pro forma amounts disclosed below:
<TABLE>
<CAPTION>
Fiscal Year Ended
April 25, April 26, April 27,
1999 1998 1997
--------- --------- ---------
(In thousands, except per
share data)
<S> <C> <C> <C>
Net income (loss)
As reported................................... $(24,176) $7,547 $(21,051)
Pro forma..................................... $(25,153) $6,798 $(21,527)
Earnings (loss) per common share
Basic
As reported................................... $ (1.03) $ 0.32 $ (0.94)
Pro forma..................................... $ (1.07) $ 0.29 $ (0.96)
Diluted
As reported................................... $ (1.01) $ 0.32 $ (0.94)
Pro forma..................................... $ (1.05) $ 0.29 $ (0.96)
</TABLE>
60
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions used for
grants in fiscal 1999, 1998 and 1997: options vest at 20% per year for five
years beginning with the grant date for fiscal 1999 and 1998; and 25% per year
for four years in fiscal 1997; dividend yield of 0%; weighted average expected
volatility of .70, .74, and .85, respectively; risk-free interest rate of
5.2%, 5.3% and 7.1%, respectively; and expected lives of 6 years.
The pro forma effect on net income (loss) for fiscal 1999, 1998 and 1997 is
not representative of the pro forma effect on net income for future years
because it does not take into account pro forma compensation expense related
to grants made prior to fiscal 1996 or the potential for issuance of
additional stock options in future years.
Warrants
The Company has the following outstanding warrants:
<TABLE>
<CAPTION>
Expiration Number of Exercise
Date Issued Date Warrants Shares Price
- ----------- ---------- -------- ------- --------
<S> <C> <C> <C> <C>
June 1995.............................. June 9, 2001 1 416,667 $12.00
May 1996............................... May 3, 2001 1 12,500 $ 5.88
May 1996............................... May 3, 2001 500,000 500,000 $10.00
May 1996............................... May 3, 2001 1 416,667 $12.00
August 1996............................ August 6, 2001 500,000 500,000 $10.50
</TABLE>
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 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 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 was to ensure that all shareholders had the
same opportunity to purchase shares of the Company's common stock as had been
afforded to the Chairman and Chief Executive Officer of the Company and his
family.
The Offering expired on July 26, 1996. The number of shares sold through the
Offering was 3,079,980, resulting in proceeds totaling $17,881,000.
12. Stockholder Rights Plan
In February 1997, the Company adopted a Stockholder Rights Plan. The Plan is
designed to preserve the long-term value of the shareholders' investment in
the Company. Under the Plan, each shareholder will receive a distribution of
one Right for each share of the Company's outstanding common stock. The Rights
were distributed to shareholders of record on March 3, 1997 and will expire
ten years thereafter. Each right entitles the holder to purchase one one-
thousandth (1/1,000) of a share of a new series of participating preferred
stock at an initial exercise price of $12.50. Initially the rights are
represented by the Company's common stock certificates and are not
exercisable. The rights become exercisable shortly after a person or group
acquires
61
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
beneficial ownership of 15% or more of the Company or publicly announces its
intention to commence a tender or exchange offer that would result in the 15%
beneficial ownership level. Under certain circumstances involving a buyer's
acquisition of a 15% position in the Company, all Rights holders except the
buyer will be entitled to purchase common stock at half price. If the Company
is acquired through a merger, after such an acquisition, all Rights holders
except the buyer will be entitled to purchase stock in the buyer at half
price. The Company may redeem the rights at one cent each at any time before a
buyer acquires 15% of the Company's stock.
13. Preopening Expenses
Preopening expenses of $3.3 million in fiscal 1999 and $2.5 million in
fiscal 1998 represent salaries, benefits, training, marketing and other
noncapitalizable costs, which were incurred prior to and expensed in
connection with the opening of the Isle-Black Hawk in fiscal 1999 and the
opening of GPRI in fiscal 1997.
14. Valuation Charge
During fiscal 1996 the Company recorded a valuation charge of $9.3 million
related to the write-down of two riverboats, a barge and certain gaming
equipment, which were not being used in operations and were reclassified as
assets held for sale. The assets were written down based upon written and oral
purchase/lease option agreements at that time. During fiscal 1997, the Company
did not place any of these assets into service, nor sell any of these assets
and the purchase/lease agreements that were in effect at the end of fiscal
1996 expired. As a result, the Company revised its estimate of fair value less
cost to sell these assets, and has recorded an additional write down of $6.0
million based on negotiations with potential buyers.
Additionally, during fiscal 1997, the Company wrote off $1.0 million of
design and development costs related to a project for which the Company
revised the original scope.
During fiscal 1999 the Company recorded a valuation charge totaling $5.1
million. The valuation charge reflects the write-down of assets held for
development or sale of $2.4 million related to its two original riverboat
casino vessels and land the Company was planning to develop in Cripple Creek,
Colorado. During the third quarter ended January 24, 1999, the Company entered
an agreement to sell one of its two original riverboats for less than the
recorded value. This sale had not closed as of the end of the fiscal year
ended April 25, 1999. However, the Company has adjusted the valuation
allowance related to both riverboats to reflect the fair value, based on the
agreed upon sales price. Also, management has delayed its plans to develop a
casino on land it owns in Cripple Creek, Colorado. Accordingly, management has
established a valuation allowance on the land it owns in Cripple Creek to
reflect the fair value as the carrying value. Additionally, the valuation
charge includes $2.7 million related to future obligations under an operating
lease related to its Cripple Creek, Colorado project.
15. Extraordinary Item
The Company incurred a pre-tax extraordinary loss totaling $55.8 million
related to the refinancing of its 12 1/2% Senior Secured Notes and other debt
on April 23, 1999. The extraordinary loss included early payment premiums, as
well as the write-off of consent fees and debt acquisition costs. The tax
benefit from the extraordinary loss was approximately $19.5 million.
16. 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
$635,000, $609,000 and $633,000 for the years ended April 25, 1999, April 26,
1998 and April 27, 1997, respectively. The Company's contribution is based on
a percentage of employee contributions and may include an additional
discretionary amount.
62
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
17. Litigation
One of the Company's subsidiaries has been named, along with numerous
manufacturers, distributors and gaming operators, including many of the
country's largest gaming operators, in a consolidated class action lawsuit
pending in Las Vegas, Nevada. These gaming industry defendants are alleged to
have 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 and the extent to which there is
actually an opportunity to win on any given play. The suit seeks unspecified
compensatory and punitive damages. A motion for certification of the class is
currently pending before the court and no discovery as to the merits of the
alleged claims has begun. 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. However, the gaming industry defendants are committed to defend
vigorously all claims asserted in the consolidated action.
In February 1998, the Isle-Vicksburg was named as a defendant in an action
brought by an individual who owns property adjacent to the Big Black River in
the eastern part of Warren County, Mississippi and several other parties. Also
named as defendants in the action are two other operators in the Vicksburg
market and one of the largest banks in the State of Mississippi. The amended
complaint alleges that the defendants entered into an agreement to conduct a
campaign opposing a gaming application for a site next to property owned by
the plaintiffs. The plaintiffs allege that because of this agreement trade was
improperly restrained and competition in the gaming business was reduced. The
plaintiffs further allege that the defendants conspired for the purpose of
injuring the plaintiffs' property rights. The plaintiffs seek compensatory and
punitive damages in the amount of $238.0 million. The Company has denied the
allegations contained in the amended complaint and intends to vigorously
defend all claims and allegations in the action.
In May 1998, the Company was named as a defendant in an action brought by
several persons who had a contractual right to acquire property in Cripple
Creek, Colorado which they sold to one of the Company's subsidiaries in 1995.
The plaintiffs allege that the Company breached its purported agreement to
construct a casino facility on the property by the end of 1995. In December
1998, its motion to dismiss the complaint was granted by the United States
District Court in Denver, Colorado. The plaintiffs have appealed this decision
to the Tenth Circuit Court of Appeals. The Company intends to vigorously
defend all claims and allegations in the action.
On August 26, 1997, a lawsuit was filed which seeks to nullify a contract to
which Louisiana Riverboat Gaming Partnership is a party. Pursuant to the
contract, Louisiana Riverboat Gaming Partnership pays a fixed amount plus a
percentage of revenue to various local governmental entities, including the
city of Bossier and the Bossier Parish School Board, in lieu of payment of a
per-passenger boarding fee. Summary judgment in favor of Louisiana Riverboat
Gaming Partnership was granted on June 4, 1998. That judgment was not appealed
and is now final. On June 11, 1998, a similar suit was filed and is currently
pending. The Company intends to vigorously defend this suit.
The Company is engaged in various other litigation matters and has a number
of unresolved claims. Although the ultimate liability of this litigation and
these claims cannot be determined at this time, the Company believes that they
will not have a material adverse effect on the Company's consolidated
financial position or results of operations.
63
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
18. Consolidating Condensed Financial Information
The Company's subsidiaries (excluding certain subsidiaries) have fully and
unconditionally guaranteed the payment of all obligations under the Company's
$390 million 8 3/4% Senior Subordinated Notes due 2009. The following table
presents the consolidating condensed financial information of Isle of Capri
Casinos, Inc., as the parent company, its guarantor subsidiaries and its
nonguarantor subsidiaries as of April 25, 1999 and April 26, 1998.
Consolidating condensed financial information for guarantor subsidiaries has
been omitted for fiscal 1997 as the parent had no operations or assets
separate from its investments in its subsidiaries and registered debt was
guaranteed by all direct and indirect subsidiaries of the parent.
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATING CONDENSED GUARANTOR, NONGUARANTOR AND PARENT COMPANY FINANCIAL
INFORMATION
AS OF AND FOR THE YEARS ENDED APRIL 25, 1999 AND APRIL 26, 1998
(In Thousands)
<TABLE>
<CAPTION>
(b)
Isle of Capri (a) Non-Wholly Isle of
Casinos, Inc. Wholly Owned Consolidating Capri
Guarantor Owned Non- and Casinos,
(Parent Guarantor Guarantor Eliminating Inc.
Obligor) Subsidiaries Subsidiaries Entries Consolidated
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
As of April 25, 1999
Balance Sheet
Current assets.......... $ 36,599 $ 60,679 $11,738 $ -- $109,016
Intercompany
receivables............ 220,578 159,361 -- (379,939) --
Investments in
subsidiaries........... 233,541 -- -- (231,690) 1,851
Property and equipment,
net.................... 6,605 324,194 80,377 -- 411,176
Other assets............ 44,377 103,916 6,148 -- 154,441
-------- -------- ------- --------- --------
Total Assets............ $541,700 $648,150 $98,263 $(611,629) $676,484
======== ======== ======= ========= ========
Current liabilities..... $ 13,395 $ 56,074 $ 9,419 $ (64) $ 78,824
Intercompany payables... 24,593 349,994 5,289 (379,876) --
Long-term debt, less
current maturities..... 441,757 9,348 75,768 -- 526,873
Deferred income taxes... -- 4,689 -- -- 4,689
Minority interest....... -- -- -- 4,143 4,143
Stockholders' equity.... 61,955 228,045 7,787 (235,832) 61,955
-------- -------- ------- --------- --------
Total Liabilities and
Stockholders' Equity... $541,700 $648,150 $98,263 $(611,629) $676,484
======== ======== ======= ========= ========
</TABLE>
64
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
(b)
Isle of Capri (a) Non-Wholly Isle of
Casinos, Inc. Wholly Owned Consolidating Capri
Guarantor Owned Non- and Casinos,
(Parent Guarantor Guarantor Eliminating Inc.
Obligor) Subsidiaries Subsidiaries Entries Consolidated
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
For the year ended April
25, 1999
Statement of Operations
Revenue:
Casino................ $ -- $403,700 $20,679 $ -- $424,379
Rooms, food, beverage
and other............ 429 54,561 1,367 (359) 55,998
-------- -------- ------- -------- --------
Total revenue........... 429 458,261 22,046 (359) 480,377
Operating expenses:
Casino................ -- 74,793 2,886 -- 77,679
Gaming taxes.......... -- 82,925 3,930 -- 86,855
Rooms, food, beverage
and other............ 4,390 192,565 14,224 (359) 210,820
Depreciation and
amortization......... 3,439 31,853 985 -- 36,277
-------- -------- ------- -------- --------
Total operating
expenses............... 7,829 382,136 22,025 (359) 411,631
-------- -------- ------- -------- --------
Operating income
(loss)................. (7,400) 76,125 21 -- 68,746
Interest expense, net... (5,671) (34,853) (5,207) -- (45,731)
Minority interest....... -- -- -- 2,209 2,209
Equity in income (loss)
of unconsolidated joint
venture 36,955 -- -- (38,295) (1,340)
-------- -------- ------- -------- --------
Income (loss) before
income taxes and
extraordinary item..... 23,884 41,272 (5,186) (36,086) 23,884
Income tax provision
(benefit).............. 11,775 2,374 -- (2,374) 11,775
-------- -------- ------- -------- --------
Income (loss) before
extraordinary item..... 12,109 38,898 (5,186) (33,712) 12,109
Extraordinary loss on
extinguishment of debt
(net of applicable
income tax benefit).... (36,285) -- -- -- (36,285)
-------- -------- ------- -------- --------
Net income (loss)....... $(24,176) $ 38,898 $(5,186) $(33,712) $(24,176)
======== ======== ======= ======== ========
Statement of Cash Flows
Net cash provided by
(used in) operating
activities............. $(33,503) $ 94,689 $ 2,757 $ 1,275 $ 65,218
Net cash provided by
(used in) investing
activities............. (7,465) (49,368) 6,092 (1,275) (52,016)
Net cash provided by
(used in) financing
activities............. 56,773 (38,840) 1,522 -- 19,455
-------- -------- ------- -------- --------
Net increase (decrease)
in cash and cash
equivalents............ 15,805 6,481 10,371 -- 32,657
Cash and cash
equivalents at
beginning of year...... 20,021 31,892 547 -- 52,460
-------- -------- ------- -------- --------
Cash and cash
equivalents at end of
year................... $ 35,826 $ 38,373 $10,918 $ -- $ 85,117
======== ======== ======= ======== ========
</TABLE>
65
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
(b)
Isle of Capri (a) Non-Wholly Isle of
Casinos, Inc. Wholly Owned Consolidating Capri
Guarantor Owned Non- and Casinos,
(Parent Guarantor Guarantor Eliminating Inc.
Obligor) Subsidiaries Subsidiaries Entries Consolidated
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
As of April 26, 1998
Balance Sheet
Current assets.......... $ 20,732 $ 46,913 $ 1,612 $ -- $ 69,257
Intercompany
receivables............ 190,117 122,536 -- (312,653) --
Investments in
subsidiaries........... 196,208 -- -- (194,499) 1,709
Property and equipment,
net.................... 3,194 289,675 40,942 -- 333,811
Other assets............ 42,239 115,396 53,323 -- 210,958
-------- -------- ------- --------- --------
Total Assets............ $452,490 $574,520 $95,877 $(507,152) $615,735
======== ======== ======= ========= ========
Current liabilities..... $ 19,393 $ 50,969 $ 7,904 $ (311) $ 77,955
Intercompany payables... 23,892 288,450 -- (312,342) --
Long-term debt, less
current maturities..... 323,074 31,568 75,000 -- 429,642
Deferred income taxes... -- 16,155 -- -- 16,155
Minority interest....... -- -- -- 5,852 5,852
Stockholders' equity.... 86,131 187,378 12,973 (200,351) 86,131
-------- -------- ------- --------- --------
Total Liabilities and
Stockholders' Equity... $452,490 $574,520 $95,877 $(507,152) $615,735
======== ======== ======= ========= ========
For the year ended April
26, 1998
Statement of Operations
Revenue:
Casino................ $ -- $388,223 $ -- $ -- $388,223
Rooms, food, beverage
and other............ 268 52,729 -- (404) 52,593
-------- -------- ------- --------- --------
Total revenue........... 268 440,952 -- (404) 440,816
Operating expenses:
Casino................ -- 76,072 -- -- 76,072
Gaming taxes.......... -- 78,586 -- -- 78,586
Rooms, food, beverage
and other............ (645) 192,517 -- (404) 191,468
Depreciation and
amortization......... 1,575 32,013 -- -- 33,588
-------- -------- ------- --------- --------
Total operating
expenses............... 930 379,188 -- (404) 379,714
-------- -------- ------- --------- --------
Operating income
(loss)................. (662) 61,764 -- -- 61,102
Interest expense, net... (6,990) (37,855) (2,032) -- (46,877)
Minority interest....... -- -- -- 819 819
Equity in income (loss)
of unconsolidated joint
venture................ 22,696 -- -- (22,696) --
-------- -------- ------- --------- --------
Income (loss) before
income taxes and
extraordinary item..... 15,044 23,909 (2,032) (21,877) 15,044
Income tax provision
(benefit).............. 7,497 (556) -- 556 7,497
-------- -------- ------- --------- --------
Income (loss) before
extraordinary item..... 7,547 24,465 (2,032) (22,433) 7,547
Extraordinary loss on
extinguishment of debt
(net of applicable
income tax benefit).... -- -- -- -- --
-------- -------- ------- --------- --------
Net income (loss)....... $ 7,547 $ 24,465 $(2,032) $ (22,433) $ 7,547
======== ======== ======= ========= ========
</TABLE>
66
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
(b)
Isle of Capri (a) Non-Wholly Isle of
Casinos, Inc. Wholly Owned Consolidating Capri
Guarantor Owned Non- and Casinos,
(Parent Guarantor Guarantor Eliminating Inc.
Obligor) Subsidiaries Subsidiaries Entries Consolidated
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
For the year ended April
26, 1998
Statement of Cash Flows
Net cash provided by
(used in) operating
activities............. $ 5,975 $48,323 $ 3,596 $7,415 $ 65,309
Net cash provided by
(used in) investing
activities............. (4,618) (34,683) (80,096) (331) (119,728)
Net cash provided by
(used in) financing
activities............. (2,730) (12,200) 77,047 (7,084) 55,033
------- ------- ------- ------ --------
Net increase (decrease)
in cash and cash
equivalents............ (1,373) 1,440 547 -- 614
Cash and cash
equivalents at
beginning of year...... 21,394 30,452 -- -- 51,846
------- ------- ------- ------ --------
Cash and cash
equivalents at end of
year................... $20,021 $31,892 $ 547 $ -- $ 52,460
======= ======= ======= ====== ========
</TABLE>
- --------
(a) The following wholly owned subsidiaries were guarantors on the 8 3/4%
Notes: Riverboat Corporation of Mississippi, Riverboat Corporation of
Mississippi Vicksburg, Louisiana Riverboat Gaming Partnership, St. Charles
Gaming Company, Inc., Grand Palais Riverboat, Inc., and PPI, Inc.
(b) The following non-wholly owned subsidiaries were not guarantors on the
8 3/4% Notes: Isle of Capri Black Hawk, L.L.C. and Isle of Capri Capital
Corp.
19. Selected Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
Fiscal Quarters Ended 1999
---------------------------------------
(In thousands)
July 26 October 25 January 24 April 25
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Revenue.............................. $114,079 $106,926 $115,120 $144,252
Operating income..................... 16,925 14,684 11,902 25,235
Net income (loss) before
extraordinary item.................. 2,692 1,928 1,045 6,444
Extraordinary item, net.............. -- -- -- (36,285)
Net income (loss).................... 2,692 1,928 1,045 (29,841)
Net income (loss) per share before
extraordinary item
Basic.............................. 0.11 0.08 0.04 0.27
Diluted............................ 0.11 0.08 0.04 0.27
Net income (loss) per common share
Basic.............................. 0.11 0.08 0.04 (1.27)
Diluted............................ 0.11 0.08 0.04 (1.23)
</TABLE>
67
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Fiscal Quarters Ended 1998
---------------------------------------
(In thousands)
July 27 October 26 January 25 April 26
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Revenue................................ $111,737 $106,273 $105,819 $116,987
Operating income....................... 16,027 13,932 12,219 18,924
Net income (loss)...................... 2,948 1,077 260 3,262
Net income (loss) per common share
Basic................................ 0.13 0.05 0.01 0.14
Diluted.............................. 0.13 0.05 0.01 0.14
</TABLE>
Quarterly data may not necessarily sum to the full year data reported in the
Company's consolidated financial statements.
The first two quarters of fiscal 1998 earnings per common share have been
restated to comply with Statement of Financial Accounting Standards No. 128,
Earnings Per Share.
The third quarter of fiscal 1999 includes the following non-recurring items:
a valuation charge of $5.1 million related to the write-down of certain assets
held for sale or development, a $4.2 million reversal of an accrued litigation
settlement and preopening expenses related to the opening of the Isle-Black
Hawk in December 1998 totaling $3.3 million.
The fourth quarter of fiscal 1999 includes an extraordinary after-tax charge
of $36.3 related to the refinancing of the Company's 12 1/2% Senior Secured
Notes and other debt on April 23, 1999.
68
<PAGE>
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
ITEM 10. "Directors and Executive Officers of the Registrant,"
ITEM 11. "Executive Compensation,"
ITEM 12. "Security Ownership of Certain Beneficial Owners and Management" and
ITEM 13. "Certain Relationships and Related Transactions" have been omitted
from this report and are incorporated by reference to Isle of Capri's
definitive proxy statement to be filed with the U.S. Securities and
Exchange Commission within 120 days after the end of the fiscal year
covered by this report.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Documents Filed as Part of this Report.
1. Financial Statements.
The following financial statements and report of independent auditors
are included on pages 41 to 68 of this Form 10-K:
Isle of Capri Casinos, Inc.
Report of Independent Auditors
Consolidated Balance Sheets--April 25, 1999 and April 26, 1998
Consolidated Statements of Operations--Years ended April 25, 1999,
April 26, 1998 and April 27, 1997
Consolidated Statements of Stockholders' Equity--Years ended April
25, 1999, April 26, 1998 and April 27, 1997
Consolidated Statements of Cash Flows--Years ended April 25, 1999,
April 26, 1998 and April 27, 1997
Notes to Consolidated Financial Statements
2. Financial Statements Schedules.
None required or applicable.
3. Exhibits.
A list of the exhibits included as part of this Form 10-K is set
forth in the Exhibit Index that immediately precedes such exhibits,
which is incorporated herein by reference.
(b) Reports on Form 8-K. Isle of Capri filed a Current Report on Form 8-K on
March 15, 1999 containing the press release announcing the commencement of
Isle of Capri's tender offer and consent solicitation for its outstanding
12 1/2% Senior Subordinated Notes due 2003.
69
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Isle of Capri Casinos, Inc.,
Dated: June 30, 1999 By: /s/ Bernard Goldstein
----------------------------------
Bernard Goldstein
Chairman of the Board, Chief
Executive Officer, and Director
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Bernard Goldstein Chairman of the June 30, 1999
- ----------------------------------- Board, Chief
Bernard Goldstein Executive Officer
and Director
(Principal
Executive Officer)
/s/ John M. Gallaway President, Chief June 30, 1999
- ----------------------------------- Operating Officer
John M. Gallaway and Director
/s/ Rexford A. Yeisley Chief Financial June 30, 1999
- ----------------------------------- Officer (Principal
Rexford A. Yeisley Financial and
Accounting Officer)
/s/ Allan B. Solomon Executive Vice June 30, 1999
- ----------------------------------- President,
Allan B. Solomon Secretary, General
Counsel and Director
/s/ Emauel Crystal Director June 30, 1999
- -----------------------------------
Emauel Crystal
/s/ Robert S. Goldstein Director June 30, 1999
- -----------------------------------
Robert S. Goldstein
/s/ Alan J. Glazer Director June 30, 1999
- -----------------------------------
Alan J. Glazer
/s/ W. Randolph Baker Director June 30, 1999
- -----------------------------------
Randolph Baker
70
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
3.1 Certificate of Incorporation of Casino America, Inc., as amended.(5)
3.1A Amendment to the Company's Certificate of Incorporation dated
September 28, 1998.
3.2 Bylaws of Casino America, Inc., as amended.(5)
3.2A Amendments to Bylaws of Casino America, Inc. dated as of February 7,
1997.(14)
4.1 Specimen Certificate of Common Stock.(2)
4.3A Specimen Warrant Agreement with respect to warrants to purchase
900,000 shares of Isle of Capri Casinos, Inc. Common Stock.(3)
4.3B Form of Warrant Agreement with respect to warrants to purchase 500,000
shares of Isle of Capri Casinos, Inc. Common Stock.(13)
4.4A Warrant, dated June 9, 1995, of Crown Casino Corporation to purchase
up to 416,667 shares of Common Stock of Isle of Capri Casinos, Inc.(7)
4.4B Warrant, dated May 3, 1996, of Crown Casino Corporation to purchase up
to 416,667 shares of Common Stock of Isle of Capri Casinos, Inc.(8)
4.5 Indenture dated November 1, 1993 between Casino America, Inc. and
Shawmut Bank Connecticut, National Association, as Trustee.(4)
4.5A First Supplemental Indenture dated as of April 29, 1994 between Casino
America, Inc. and Shawmut Bank Connecticut, National Association, as
Trustee.(4)
4.5B Second Supplemental Indenture dated as of March 8, 1995 between Casino
America, Inc. and Shawmut Bank Connecticut, National Association, as
Trustee.(7)
4.5C Third Supplemental Indenture dated as of May 3, 1996 between Casino
America, Inc. and Fleet National Bank, as Trustee.(8)
4.5D Fourth Supplemental Indenture, dated as of July 26, 1996 between
Casino America, Inc. and Fleet National Bank, as Trustee.(8)
4.6A Indenture dated as of August 1, 1996 between Casino America, Inc. and
Fleet National Bank, as Trustee.(8)
4.6B First Supplemental Indenture, dated as of April 21, 1999, between Isle
of Capri Casinos, Inc. and Fleet National Bank, as trustee.
4.7 Isle of Capri Casinos, 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 Isle of Capri
Casinos, Inc.'s total consolidated assets.
4.8 Rights Agreement dated as of February 7, 1997 between Casino America,
Inc. and Norwest Bank Minnesota, N.A., as Rights Agent.(13)
4.9 Indenture, dated as of April 23, 1999, among the Company, the
Subsidiary Guarantors named therein and State Street Bank and Trust
Company, as trustee.
4.10 Registration Rights Agreement, dated as of April 23, 1999, among Isle
of Capri Casinos, Inc., the Subsidiary Guarantors named therein and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wasserstein
Perella Securities, Inc., for themselves and on behalf of the other
initial purchasers.
10.1 Amended and Restated Berth Rental Agreement dated May 12, 1992 between
the Biloxi Port Commission and Riverboat Corporation of
Mississippi.(2)
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
10.2 Biloxi Waterfront Project Lease dated May 12, 1986 with Point Cadet
Development Corporation.(2)
10.3 Addendum to Lease Agreement, dated August 1, 1992, between the City of
Biloxi, Mississippi, Point Cadet Development Corporation, and
Riverboat Corporation of Mississippi.(4)
10.3A Second Addendum to Lease, dated April 9, 1994, by and between the City
of Biloxi, Mississippi, Point Cadet Development Corporation, the
Biloxi Port Commission and Riverboat Corporation of Mississippi.(4)
10.3B Third Addendum to Casino Lease, dated April 26, 1995, by and between
the City of Biloxi, Mississippi, Point Cadet Development Corporation,
the Biloxi Port Commission and Riverboat Corporation of
Mississippi.(7)
10.4 Declaration of Shared Facilities Agreement for the Isle of Capri
Casino and Hotel, Biloxi, Mississippi, dated as of April 26, 1995,
made by Riverboat Corporation of Mississippi.(7)
10.5 Intercreditor Agreement, dated as of May 1, 1995, by and among The
Peoples Bank, Shawmut Bank of Connecticut, N.A. and Riverboat
Corporation of Mississippi.(7)
10.6 Agreement for Sale and Purchase by and between Casino America, Inc.
and Pompano Park Associates, Limited Partnership, dated as of November
8, 1994.(7)
10.6A Variable Gaming Adjustment Covenant made as of June 30, 1995 by PPI,
Inc. in favor of Pompano Park Associates, Limited Partnership.(7)
*10.7 Casino America, Inc. 1992 Stock Option Plan.(1)
*10.8 Casino America, Inc. 1992 Stock Option Plan Amendment.(3)
*10.9 Casino America, Inc. 1993 Stock Option Plan, as amended.(7)
*10.10 Casino America, Inc. description of Employee Bonus Plan.(3)
10.11 Partnership Agreement dated January 4, 1993 of Louisiana Riverboat
Gaming Partnership.(3)
10.11A First Amendment to Partnership Agreement of Louisiana Riverboat Gaming
Partnership dated August 31, 1993.(5)
10.11B Second Amendment to Partnership Agreement of Louisiana Riverboat
Gaming Partnership dated April 20, 1995.(7)
10.12 Management Agreement dated January 4, 1993 between Riverboat Services,
Inc. and Louisiana Riverboat Gaming Partnership.(3)
10.13 Management Agreement dated as of March 2, 1995 between Riverboat
Services, Inc. and St. Charles Gaming Company, Inc.(7)
*10.14 Casino America, Inc. Retirement Trust and Savings Plan.(3)
10.15 Deed of Trust, Leasehold Deed of Trust, Assignment of Rents, Fixture
Filing, Security Agreement and Financing Statement, dated as of
November 15, 1993, in a Principal Amount of $105,000,000 by Riverboat
Corporation of Mississippi to J. Morton Matrick, as trustee for the
benefit of Shawmut Bank Connecticut, National Association, as
Indenture Trustee.(4)
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
10.15A Deed of Trust, Leasehold Deed of Trust, Assignment of Rents, Fixture
Filing, Security Agreement and Financing Statement, dated as of
November 15, 1993, in a Principal Amount of $105,000,000 by Riverboat
Corporation of Mississippi to J. Morton Matrick, as trustee for the
benefit of Shawmut Bank Connecticut, National Association, as
Indenture Trustee.(4)
10.16 Security Agreement, dated November 16, 1993, from Casino America, Inc.
and The Collateral Grantors Party thereto to Shawmut Bank Connecticut,
National Association, as Trustee.(4)
10.17 First Preferred Fleet Mortgage, dated November 15, 1993, by Riverboat
Corporation of Mississippi to Shawmut Bank Connecticut, National
Association, as Trustee.(4)
10.18 Security Agreement Supplement No. 2, dated January 4, 1994, between
Casino America, Inc. and Shawmut Bank Connecticut, National
Association, as Trustee.(4)
10.19 First Amendment to First Preferred Fleet Mortgage, dated January 6,
1994, by Riverboat Corporation of Mississippi to Shawmut Bank
Connecticut, National Association, as Trustee.(4)
*10.20 Director's Option Plan.(6)
10.21 Biloxi Waterfront Project Lease dated April 9, 1994 by and between the
City of Biloxi, Mississippi and Riverboat Corporation of
Mississippi.(4)
10.21A First Amendment to Biloxi Waterfront Project Lease (Hotel Lease),
dated April 26, 1995, by and between Riverboat Corporation of
Mississippi and the City of Biloxi, Mississippi.(7)
10.22 Settlement Agreement, dated April 14, 1994, by and between the City of
Biloxi, Mississippi, Point Cadet Development Corporation, Riverboat
Corporation of Mississippi, the Company, Sea Harvest, Inc. and Wayne
Hicks and Terryss Hicks.(4)
10.23 Management Agreement dated December 23, 1994 between Riverboat
Corporation of Mississippi and Mississippi Innkeepers, Inc.(7)
10.24 Amended Stock Purchase Agreement dated as of June 2, 1995, among Crown
Casino Corporation, St. Charles Gaming Company, Inc. and Louisiana
Riverboat Gaming Partnership.(7)
10.25 Crowne Plaza Resort New Development License Agreement between Holiday
Inns Franchising, Inc. and Riverboat Corporation of Mississippi, dated
December 30, 1994.(7)
10.26 Security Agreement--Pledge dated as of June 9, 1995, between Louisiana
Riverboat Gaming Partnership and Crown Casino Corporation.(7)
10.27 Shareholders Agreement, dated as of June 9, 1995 by and between Crown
Casino Corporation and Louisiana Riverboat Gaming Partnership.(7)
10.28 Amended and Restated Lease between Port Resources, Inc. and CRU, Inc.,
as landlords and St. Charles Gaming Company, Inc., as tenant, of
certain land in Calcasieu Parish, Louisiana, dated April 19, 1999.
10.29 Bareboat Charter Party Agreement dated as of March 20, 1995, between
Riverboat Chartering Company, L.C., and Riverboat Corporation of
Mississippi.(7)
10.30 Purchase Option Agreement, dated as of March 20, 1995, between
Riverboat Chartering Company, L.C. and Riverboat Corporation of
Mississippi.(7)
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
10.31 Guaranty Agreement, dated as of March 20, 1995, between Riverboat
Chartering Company, L.C. and Riverboat Corporation of Mississippi.(7)
10.32 Development Agreement between St. Charles Gaming Company, Inc. and
Calcasieu Parish Police Jury dated June 5, 1995.(7)
10.33 Note Purchase Agreement, dated as of July 20, 1995, by and among
Louisiana Riverboat Gaming Partnership, St. Charles Gaming Company,
Inc., Nomura Holding America Inc. and First National Bank of
Commerce.(7)
10.34 Lease between Pompano Park Associates, Inc., as Lessor, and Casino
America, Inc., as Lessee, dated as of July 1, 1995.(7)
10.35 Ground Lease with Option to Purchase, dated February 9, 1995, between
Iron Dukes, Inc. and Isle of Capri Casino Colorado, Inc.(7)
10.36 Promissory Note dated June 29, 1995 by and between PPI, Inc. and
Capital Bank.(9)
10.37 Florida Real Estate Mortgage, Assignment of Rents, and Security
Agreement dated June 29, 1995 by and between PPI, Inc. and Capital
Bank.(9)
*10.38 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and John M. Gallaway.
*10.39 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and Allan B. Solomon.
*10.40 Employment Agreement dated January 6, 1999 by and between Isle of
Capri Casinos, Inc. and Rexford A. Yeisley.
10.41 Stock Purchase Agreement dated February 27, 1996 by and between Casino
America, Inc., on the one hand, and Bernard Goldstein, Robert
Goldstein, Richard Goldstein and Jeffrey Goldstein, on the other
hand.(10)
10.42 Stock Purchase and Sale Agreement pursuant to a Plan of Reorganization
dated December 29, 1995 between Casino America, Inc. and Grand Palais
Riverboat, Inc. with exhibits.(10)
10.43 Form of Stock Purchase Agreement dated January 19, 1996 by and among
Casino America, Inc. and Crown Casino Corporation, without
exhibits.(10)
10.44 Purchase Agreement, dated July 2, 1996, by and between CSNO, Inc.,
LRGP Holdings, Inc. and Louisiana River Site Development, Inc.(12)
10.45 Escrow Agreement, dated July 2, 1996, by and among LRGP Holdings,
Inc., Casino America, Inc., Louisiana River Site Development, Inc.,
Louisiana Downs, Inc. and Boult, Cummings, Conners & Berry, PLC.(12)
*10.46 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and Edward Reese.
*10.47 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and Robert Boone.
*10.48 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and James Guay.
*10.49 Employment Agreement dated January 6, 1999 by and between Isle of
Capri Casinos, Inc. and Timothy M. Hinkley.
10.50 Management Agreement dated April 28, 1997 between Casino America, Inc.
and Riverboat Corporation of Mississippi.(14)
</TABLE>
74
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
10.51 Management Agreement dated as of April 28, 1997 between Casino
America, Inc. and Riverboat Corporation of Mississippi--Vicksburg.(14)
10.52 Management Agreement dated April 25, 1997 between Casino America, Inc.
and ICB, L.L.C.(15)
10.53 Operating Agreement of ICB, L.L.C. dated as of April 25, 1997 between
Casino America of Colorado, Inc. and Blackhawk Gold, Ltd.(14)
10.54 Amended Casino America, Inc. 1992 Stock Option Plan.(11)
10.55 Amended Casino America, Inc. l993 Stock Option Plan.(11)
10.56 Management Agreement dated July 29, 1997 between Casino America, Inc.
and Isle of Capri Black Hawk, L.L.C.(16)
10.57 Joint Venture Agreement of Capri Cruises between Commodore Cruises
Limited and Isle of Capri Casino Corporation.(19)
*10.58 Amended Casino America, Inc. 1993 Stock Option Plan.(15)
*10.59 Amended Casino America, Inc. 1993 Stock Option Plan.(17)
10.60 Lease by and among R. M. Leatherman, Jr., et al. and Isle of Capri -
Tunica, Inc. dated March 1, 1999.(18)
10.61 Asset Purchase Agreement by and between Tunica Partners, LP and Isle
of Capri Casino--Tunica, Inc. and Isle of Capri Casinos, Inc. dated
October 7, 1998.(18)
10.62 Amendment No. 1 to Asset Purchase Agreement dated December 7,
1998.(18)
10.63 Amendment No. 2 to Asset Purchase Agreement dated February 24,
1999.(18)
*10.64 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and Bernard Goldstein.
*10.65 Employment Agreement dated January 25, 1999 between Isle of Capri
Casinos, Inc. and Gregory D. Guida.
*10.66 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and William C. Kilduff, Jr.
*10.67 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and Roger Deaton.
*10.68 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and Mark Fulton.
*10.69 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and Mike Howard.
*10.70 Employment Agreement dated January 6, 1999 between Isle of Capri
Casinos, Inc. and Robert S. Fiore.
*10.71 Employment Agreement dated March 1, 1999 between Isle of Capri
Casinos, Inc. and Robert Griffin.
10.72 Credit Agreement, dated as of April 23, 1999, among Isle of Capri
Casinos, Inc., the lenders listed therein, Canadian Imperial Bank of
Commerce, as administrative agent and issuing lender, Bank One of
Louisiana, N.A., as syndication agent and Wells Fargo Bank, N.A., as
documentation agent.
10.73 Purchase Agreement, dated as of April 20, 1999, among Isle of Capri
Casinos, Inc., the Subsidiary Guarantors named therein and Merrill
Lynch & Co., Merrill Lynch, Pierce Fenner & Smith Incorporated and
Wasserstein Perella Securities, Inc., for themselves and as
representatives of the other initial purchasers.
21 Subsidiaries of Isle of Capri Casinos, Inc.
23.1 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
</TABLE>
75
<PAGE>
- --------
(1) Filed as an exhibit to Casino America, Inc.'s Current Report on Form 8-K
filed June 17, 1992 (File No. 0-20538), and incorporated into the Casino
America, Inc.'s Form 10-K for the year ended April 27, 1997, by reference.
(2) Filed as an exhibit to the Casino America, Inc.'s Annual Report on Form
10-K for the fiscal year ended April 30, 1992 (File No. 0-20538), and
incorporated into the Casino America, Inc.'s Form 10-K for the year ended
April 27, 1997, by reference.
(3) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 30, 1993 (File No. 0-20538), and
incorporated into Casino America, Inc.'s Form 10-K for the year ended
April 27, 1997, by reference.
(4) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 30, 1994 (File No. 0-20538), and
incorporated into Casino America, Inc.'s Form 10-K for the year ended
April 27, 1997, by reference.
(5) Filed as an exhibit to Casino America, Inc.'s Registration Statement on
Form S-1 filed September 3, 1993, as amended (File No. 33-68434), and
incorporated into Casino America, Inc.'s Form 10-K for the year ended
April 27, 1997, by reference.
(6) Filed as an exhibit to Casino America, Inc.'s Registration Statement on
Form S-8 filed June 30, 1994 (File No. 33-80918), and incorporated into
Casino America, Inc.'s Form 10-K for the year ended April 27, 1997, by
reference.
(7) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 30, 1995 (File No. 0-20538), and
incorporated into Casino America, Inc.'s Form 10-K for the year ended
April 26, 1998, by reference.
(8) Filed as an exhibit to Casino America, Inc.'s Registration Statement on
Form S-3 filed on March 21, 1996 (No. 333-02610), and incorporated into
Casino America, Inc.'s Form 10-K for the year ended April 27, 1997, by
reference.
(9) Filed as an exhibit to Casino America, Inc.'s Quarterly Report on Form
10-Q for the fiscal quarter ended October 31, 1995, and incorporated into
Casino America, Inc.'s Form 10-K for the fiscal year ended April 27, 1997,
by reference.
(10) Filed as an exhibit to Casino America, Inc.'s Quarterly Report on Form
10-Q for the fiscal quarter ended January 31, 1996, and incorporated into
Casino America, Inc.'s Form 10-K for the fiscal year ended April 27,
1997, by reference.
(11) Filed as an exhibit to Casino America, Inc.'s Proxy Statement for the
fiscal year ended April 30, 1996, by reference.
(12) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 30, 1996, by reference.
(13) Filed as an exhibit to Casino America, Inc.'s Current Report on Form 8-K
filed on February 24, 1997, and incorporated into the Company's Form 10-K
for the fiscal year ended April 27, 1997, by reference.
(14) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 27, 1997, by reference.
(15) Filed as an exhibit to Casino America, Inc.'s Proxy Statement for the
fiscal year ended April 27, 1997, by reference.
(16) Filed as an exhibit to the Isle of Capri Black Hawk L.L.C./Isle of Capri
Black Hawk Capital Corp. Registration Statement on Form S-4 (registration
number 333-38093), and incorporated into Casino America, Inc.'s Form 10-K
for the year ended April 26, 1998, by reference.
(17) Filed as an Exhibit to the Casino America, Inc.'s Proxy Statement for the
fiscal year ended April 26, 1998, by reference.
(18) Filed as an Exhibit to the Isle of Capri Casinos, Inc.'s Quarterly Report
on Form 10-Q for the fiscal quarter ended January 24, 1999, by reference.
(19) Filed as an Exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 26, 1998, by reference.
* Management contract or compensatory plan.
76
<PAGE>
EXHIBIT 3.1A
CERTIFICATE OF AMENDMENT
OF
CASINO AMERICA, INC.
--------------------
CASINO AMERICA, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: THAT the Board of Directors of siad corporation by the unanimous
written consent of its members adopted a resolution proposing and declaring
advisable the following amendment to the Certificate of Incorporation of this
corporation:
RESOLVED, that the Certificate of Incorporation of Casino America,
Inc. be amended by changing Article FIRST thereof so that, as amended, said
Article FIRST shall be and read as follows:
"FIRST: The name of the Corporation is Isle of Capri Casinos, Inc."
SECOND: That at a meeting of stockholders, the stockholders have given
consent to said amendment in accordance with the provisions of Section 212 and
Section 222 of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 212, 222 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
executed by its authorized officer this 28/th/ day of September, 1998.
CASINO AMERICA, INC.
By: _______________________________
Name: Allan B. Solomon
Title: Executive Vice President
and Secretary
<PAGE>
EXHIBIT 4.6B
FIRST SUPPLEMENTAL INDENTURE
This FIRST SUPPLEMENTAL INDENTURE, dated as of April 21, 1999 (this
''Supplemental Indenture''), by and among Isle of Capri Casinos, Inc., a
Delaware corporation, as issuer (the ''Company''), Riverboat Corporation of
Mississippi, a Mississippi corporation, Riverboat Corporation of Mississippi-
Vicksburg, a Mississippi corporation, Riverboat Services, Inc., 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 limited liability
company, Grand Palais Riverboat, Inc., a Louisiana corporation, LRGP Holdings,
Inc., a Louisiana corporation, PPI, Inc., a Florida corporation, ASMI Management
Inc., a Florida corporation, Isle of Capri Casino Colorado, Inc., a Colorado
corporation, and Fleet National Bank, as trustee (the ''Trustee'').
W I T N E S S E T H
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
entered into an indenture, dated as of August 1, 1996 (the ''Indenture''),
pursuant to which the Company has issued $315,000,000 aggregate principal amount
of its 12 1/2% Senior Secured Notes due 2003 (the "Notes");
WHEREAS, Section 902 of the Indenture provides that under certain
circumstances the Company and the Trustee may amend the Indenture with the
consent of Holders (as defined in the Indenture) of at least a majority in
principal amount of the Notes then outstanding;
WHEREAS, the Company and the Subsidiary Guarantors desire to amend
certain provisions of the Indenture affecting the Notes, as set forth below;
WHEREAS, the Holders of at least a majority in aggregate principal
amount of the Notes outstanding have consented to the amendments to be effected
by this Supplemental Indenture; and
WHEREAS, all things necessary to make this Supplemental Indenture a
valid agreement, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree, for the equal and proportionate benefit of all
Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in the Indenture.
The words ''herein,'' ''hereof'' and ''hereby'' and other words of similar
import used in this Supplemental Indenture refer to this Supplemental Indenture
as a whole and not to any particular section hereof.
1
<PAGE>
2. Amendment to Section 801. Upon the Effective Date, Section 801
is hereby amended by deleting such section and all references thereto throughout
the Indenture in its entirety.
3. Amendment to Article Ten. (a) Upon the Effective Date, the
following sections under Article 10 of the Indenture are hereby amended by
deleting all such sections and all references thereto throughout the Indenture
in their entirety:
(i) Section 1004. Corporate Existence.
(ii) Section 1005. Payment of Taxes and Other Claims.
(iii) Section 1006. Maintenance of Properties.
(iv) Section 1007. Maintenance of Insurance.
(v) Section 1009. Filing and Provisions of Exchange Act Reports.
(vi) Section 1010. Limitation on Indebtedness.
(vii) Section 1012. Limitation on Restricted Payments.
(viii) Section 1013. Limitation on Dividends and Other Payment
Restrictions.
(ix) Section 1015. Ownership of Stock of Restricted Subsidiaries.
(x) Section 1017. Change in Nature of Business .
(xi) Section 1023. Stay, Extension and Usury Laws.
(b) Upon the Effective Date, Section 1016 is hereby amended to read in
its entirety as follows:
"Section 1016. Limitation on Transactions with Affiliates.
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."
2
<PAGE>
5. Amendment to Section 501. (a) Upon the Effective Date,
subsection (4) of the section of the Indenture entitled Section 501 is hereby
amended to read in its entirety as follows
"(4) 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"
(b) Upon the Effective Date, subsections (5), (6), (7), (8) and (9) of
the section of the Indenture entitled "Section 501. Events of Default." are
hereby amended by deleting all such subsections and all references thereto in
their entirety.
6. Amendments to Section 101. Upon the Effective Date, certain
definitions under Section 101 shall be deemed deleted when references to such
definitions would be eliminated as a result of the foregoing amendments.
7. Time Amendments Become Operative. Upon execution and delivery of
this Supplemental Indenture, the terms and conditions of this Supplemental
Indenture shall be part of the terms and conditions of the Indenture for any and
all purposes, and all the terms and conditions of both shall be read together as
though they constitute one and the same instrument, except that in case of
conflict, the provisions of this Supplemental Indenture will control.
Notwithstanding an earlier execution date, the provisions of this Supplemental
Indenture shall not become operative until the date upon which the Company
accepts the Notes for purchase and payment pursuant to the Offer to Purchase and
Consent Solicitation Statement and accompanying Consent and Letter of
Transmittal, dated March 15, 1999. The Company shall promptly notify the
Trustee in writing that this Supplemental Indenture has become operative.
8. Full Force and Effect. Except as they have been modified by this
Supplemental Indenture, each and every provision of the Indenture shall continue
in full force and effect, and all references to the Indenture shall be deemed to
mean the Indenture as amended pursuant hereto.
9. Trustee Reliance. The Trustee enters into this Supplemental
Indenture in reliance on an Opinion of Counsel, as contemplated by Section 903
of the Indenture, and makes no independent determination that this Supplemental
Indenture is authorized or permitted.
10. Recitals. The recitals of this Supplemental Indenture shall be
deemed representations of the Company, and the Trustee accepts no responsibility
for such recitals.
11. Counterparts. This Supplemental Indenture may be executed in
any number of counterparts and in separate counterparts, each of which when so
executed shall be deemed to be an original, but all of which counterparts shall
together constitute but one and the same instrument.
12. Governing Law. This Supplemental Indenture shall be governed
by, and construed in accordance with, the laws of the State of New York without
giving effect to applicable
3
<PAGE>
principles of conflict of laws to the extent that the application of the laws of
another jurisdiction would be required thereby.
13. Headings. The headings of this Supplemental Indenture have been
inserted for convenience of reference only, and are not to be considered a part
hereof and shall in no way modify or restrict any of the terms and provisions
hereof.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:____________________________
Name:
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI
By:____________________________
Name:
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI-VICKSBURG
By:____________________________
Name:
Title:
RIVERBOAT SERVICES, INC.
By:____________________________
Name:
Title:
CSNO, INC.
By:____________________________
Name:
Title:
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
By:____________________________
Name:
Title:
ST. CHARLES GAMING COMPANY, INC.
By:____________________________
Name:
Title:
LRG HOTELS, L.L.C.
By:____________________________
Name:
Title:
GRAND PALAIS RIVERBOAT, INC.
By:____________________________
Name:
Title:
LRPG HOLDINGS, INC.
By:____________________________
Name:
Title:
<PAGE>
PPI, INC.
By:____________________________
Name:
Title:
ASMI MANAGEMENT INC.
By:____________________________
Name:
Title:
ISLE OF CAPRI CASINO COLORADO, INC.
By:____________________________
Name:
Title:
FLEET NATIONAL BANK, As Trustee.
By:____________________________
Name:
Title:
<PAGE>
ANNEX II
THE PROPOSED AMENDMENTS
The Indenture, dated as of August 1, 1996 (the "Indenture"), Isle of
Capri Casinos, Inc., as issuer (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., Isle of Capri Casino
Colorado, Inc., and Fleet National Bank, as trustee (the "Trustee") contains,
among other things, the covenants and events of default set forth below that
will be eliminated when the Proposed Amendments (as defined in the Offer to
Purchase and Consent Solicitation Statement, dated March 15, 1999) become
effective. The following is qualified in its entirety by reference to the
Indenture. The definitions of certain capitalized terms used in this Annex II
are set forth below under "Certain Definitions." Capitalized terms used herein
and not defined in this Annex II have the meanings ascribed to such terms in the
Indenture.
Elimination of Covenants
- ------------------------
If the Proposed Amendments are adopted, the following covenants and
references thereto will be deleted in their entirety from the Indenture:
Section 801. Company and Restricted Subsidiaries May Consolidate,
Merge or Convey Only on Certain Terms. The Indenture provides that 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 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
AII-1
<PAGE>
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; 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 1004. Corporate Existence. The Indenture provides that 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 or 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 or 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.
AII-2
<PAGE>
Section 1005. Payment of Taxes and Other Claims. The Indenture
provides that 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 Indenture provides that
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 this covenant
does not prevent the Company from discontinuing the maintenance of any 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.
Section 1007. 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.
Section 1009. Filing and Provision of Exchange Act Reports. The Indenture
provides that, whether or not the Company is subject to the periodic reporting
requirements under the Exchange Act, the Company 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 within 15 days after it is filed.
Section 1010. Limitation on Indebtedness. The Indenture provides that
the Company may not, and may not cause or permit any Restricted Subsidiary to,
directly or
AII-3
<PAGE>
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 1010 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 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 and 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,
AII-4
<PAGE>
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.
Section 1012. 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
AII-5
<PAGE>
(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.
Section 1013. 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 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
AII-6
<PAGE>
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.
Section 1015. Ownership of Stock of Restricted Subsidiaries. The
Indenture provides that 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 Sections 801 and 1014 of the Indenture. Additionally,
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 1017. 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.
Section 1023. Stay, Extension and Usury Law. The Indenture provides
that the Company and the Subsidiary Guarantor have covenanted (to the extent
permitted under applicable law) that they will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage or,
any stay or extension or any usury law or other law, wherever enacted, now or at
any time hereafter in force, that would prohibit or forgive the Company or any
Subsidiary Guarantors from paying all or any portion of the principal or,
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 the provisions of this Indenture
or such Collateral Documents.
Amendment of Covenant
- ----------------------
If the Proposed Amendments are adopted, the following provisions of
Section 1016 will be deleted:
AII-7
<PAGE>
The Company may not, and the Company may not permit, cause or suffer
any Restricted Subsidiary to, conduct any business or enter into any
transactions 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, an 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 "Limitations 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 Transactions 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 approves
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.
Elimination of Events of Default
- ---------------------------------
If the Proposed Amendments are adopted, the following events of
default from Section 501 will be deleted in their entirety from the Indenture:
(i) the default by the Company or any Subsidiary Guarantor in the
performance, or breach, of the covenant described under Section 801 of the
Indenture;
(ii)(a) one or more defaults by the Company or any Restricted
Subsidiary in the payment of 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 the applicable grace period without cure or waiver,
or (b) Indebtedness, other than Non-Recourse Indebtedness, of the Company or any
Restricted Subsidiary aggregating $7.5 million or more shall have been
AII-8
<PAGE>
accelerated or otherwise declared due and payable, or required to be pre-paid or
repurchased (other than by regularly scheduled required prepayment), prior to
the Stated Maturity thereof;
(iii) the entry of one or more judgments, orders or decrees being
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
the enforcement thereof stayed, by reason of a pending appeal or otherwise, for
a period of 60 consecutive days;
(iv) 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;
(v) 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, 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 as they become
due; or
(vi) the revocation, termination, suspension or cessation to be
effective or 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 (A) 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 (B) 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).
AII-9
<PAGE>
Deletion of Definitions
- ------------------------
If the Amendments are adopted, certain definitions will be deleted
from the Indenture when references to such definitions would be eliminated as a
result of the foregoing.
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 Issue Date, 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
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.
AII-10
<PAGE>
"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
AII-11
<PAGE>
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 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.
"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, but shall not include Excluded
Assets.
"Collateral Agent" means the Trustee, 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
the Indenture.
"Company Pledge Agreement" means the Company Pledge Agreement, dated
as of the Issue Date, between the Company and the Collateral Agent, securing the
Secured
AII-12
<PAGE>
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 Issue Date, between the Company and the Collateral Agent,
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 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
AII-13
<PAGE>
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
AII-14
<PAGE>
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 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.
"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 one other barge (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
AII-15
<PAGE>
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) of the Company 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.
"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
AII-16
<PAGE>
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.
"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,
AII-17
<PAGE>
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 write-offs 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.
"Isle-Biloxi Hotel" means the 367 room hotel facility owned and
operated by the Company at the Isle-Biloxi on the Issue Date.
AII-18
<PAGE>
"Isle-Bossier City" means the Isle of Capri Casino located in Bossier
City, Louisiana.
"Isle-Lake Charles" means the Isle of Capri Casino located in Lake
Charles, Louisiana (including the Grand Palais).
"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 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.
"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 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
AII-19
<PAGE>
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 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
AII-20
<PAGE>
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 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;
AII-21
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(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).
"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 furnishing 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
AII-22
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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.
"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 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.
AII-23
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"Ship Mortgages" means the 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 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).
"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'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 Issue Date, 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 Issue Date, 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.
AII-24
<PAGE>
"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.
AII-25
<PAGE>
The Depositary for the Offer and the Consent Solicitation is:
Fleet National Bank
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Courier:
<S> <C> <C>
__________________________ __________________________ _______________________
__________________________ __________________________ _______________________
__________________________ __________________________ _______________________
__________________________ __________________________ _______________________
</TABLE>
Any questions or requests for assistance or additional copies of this
Statement, the Consent and Letter of Transmittal, the Notice of Guaranteed
Delivery or other Offer Documents may be directed to the Information Agent at
the address and telephone numbers set forth below. Beneficial owners may also
contact the Dealer Managers at the telephone numbers set forth below or their
Custodian for assistance concerning the Offer and the Consent Solicitation.
The Information Agent for the Offer and the Consent Solicitation is:
D.F. King & Co., Inc.
_______________________
_______________________
_______________________
Banks and Brokers, please call:
_______________________
The Dealer Managers for the Offer and the Solicitation Agents for the Consent
Solicitation are:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Merrill Lynch & Co. Wasserstein Perella Securities, Inc.
- --------------------------------------------------------------------------------------------------
<S> <C>
World Financial Center-North Tower 31 West 52nd Street
- --------------------------------------------------------------------------------------------------
New York, New York 10281 New York, New York 10019-6163
- --------------------------------------------------------------------------------------------------
[(___) _________ (toll-free)] [(___) _________ (toll-free)]
- --------------------------------------------------------------------------------------------------
(888) 654-8637 (212) 969-2765
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 4.9
================================================================================
ISLE OF CAPRI CASINOS, INC.
ISSUER
RIVERBOAT CORPORATION OF MISSISSIPPI
RIVERBOAT CORPORATION OF MISSISSIPPI-VICKSBURG
RIVERBOAT SERVICES, INC.
CSNO, INC.
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
ST. CHARLES GAMING COMPANY, INC.
LRG HOTELS, L.L.C.
GRAND PALAIS RIVERBOAT, INC.
LRGP HOLDINGS, INC.
PPI, INC.
ISLE OF CAPRI CASINO COLORADO, INC.
ISLE OF CAPRI CASINO-TUNICA, INC.
IOC-COAHOMA, INC.
ISLE OF CAPRI HOTELS-BOSSIER CITY, L.L.C.
SUBSIDIARY GUARANTORS
TO
STATE STREET BANK AND TRUST COMPANY
TRUSTEE
________________________________________
INDENTURE
DATED AS OF APRIL 23, 1999
________________________________________
$390,000,000
8 3/4% SENIOR SUBORDINATED NOTES DUE 2009
================================================================================
<PAGE>
Isle of Capri Casinos, Inc.
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture dated as of April 23, 1999
______________________________________________
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
----------- -----------------
<S> <C>
(S) 310(a)(1)................. 607
(S) 310(a)(2)................. 607
(S) 310(b).................... 604; 608
(S) 311....................... 101; 604; 611
(S) 312(a).................... 305; 703
(S) 312(b).................... 703
(S) 312(c).................... 703
(S) 313(a).................... 704
(S) 313(b).................... 704
(S) 313(c).................... 601; 704; 705
(S) 314(a).................... 705; 1009
(S) 314(a)(4)................. 1008(a)
(S) 314(c)(1)................. 102
(S) 314(c)(2)................. 102
(S) 314(d).................... 704
(S) 314(e).................... 102
(S) 315(a).................... 602
(S) 315(b).................... 601
(S) 315(c).................... 602
(S) 315(d).................... 602
(S) 315(e) 607
(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
(S) 318(c).................... 111
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION............................................................. 2
SECTION 101. DEFINITIONS................................................ 2
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS....................... 26
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE..................... 26
SECTION 104. ACTS OF HOLDERS............................................ 27
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY....................... 28
SECTION 106. NOTICE TO HOLDERS; WAIVER.................................. 28
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS................... 29
SECTION 108. SUCCESSORS AND ASSIGNS..................................... 29
SECTION 109. SEPARABILITY CLAUSE........................................ 29
SECTION 110. BENEFITS OF INDENTURE...................................... 29
SECTION 111. GOVERNING LAW.............................................. 29
SECTION 112. LEGAL HOLIDAYS............................................. 29
SECTION 113. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.......... 30
SECTION 114. RULES OF CONSTRUCTION...................................... 30
ARTICLE TWO NOTE FORMS....................................................... 31
SECTION 201. FORMS GENERALLY............................................ 31
SECTION 202. TEMPORARY NOTES............................................ 32
ARTICLE THREE THE NOTES...................................................... 32
SECTION 301. TITLE AND TERMS............................................ 32
SECTION 302. DENOMINATIONS.............................................. 33
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING............. 33
SECTION 304. NOTE REGISTRAR; PAYING AGENT; DEPOSITARY; GLOBAL NOTE
HOLDER..................................................... 34
SECTION 305. NOTEHOLDER LISTS........................................... 34
SECTION 306. TRANSFER AND EXCHANGE...................................... 34
SECTION 307. MUTILATED, DESTROYED, LOST AND STOLEN NOTES................ 40
SECTION 308. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED............. 40
SECTION 309. PERSONS DEEMED OWNERS...................................... 41
SECTION 310. CANCELLATION............................................... 42
SECTION 311. COMPUTATION OF INTEREST.................................... 42
SECTION 312. CUSIP NUMBER............................................... 42
ARTICLE FOUR SATISFACTION AND DISCHARGE...................................... 42
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.................... 42
SECTION 402. APPLICATION OF TRUST MONEY................................. 43
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
ARTICLE FIVE REMEDIES........................................................ 44
SECTION 501. EVENTS OF DEFAULT.......................................... 44
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT......... 46
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.................................................... 46
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM........................... 47
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES..... 48
SECTION 506. APPLICATION OF MONEY COLLECTED............................. 48
SECTION 507. LIMITATION ON SUITS........................................ 49
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM, INTEREST.......................................... 49
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES......................... 49
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE............................. 50
SECTION 511. DELAY OR OMISSION NOT WAIVER............................... 50
SECTION 512. CONTROL BY HOLDERS......................................... 50
SECTION 513. WAIVER OF PAST DEFAULTS.................................... 50
SECTION 514. WAIVER OF STAY OR EXTENSION LAWS........................... 51
ARTICLE SIX THE TRUSTEE...................................................... 51
SECTION 601. NOTICE OF DEFAULTS......................................... 51
SECTION 602. CERTAIN RIGHTS OF TRUSTEE.................................. 51
SECTION 603. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.. 52
SECTION 604. MAY HOLD NOTES............................................. 53
SECTION 605. MONEY HELD IN TRUST........................................ 53
SECTION 606. COMPENSATION AND REIMBURSEMENT............................. 53
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.................... 54
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.......... 54
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR..................... 55
SECTION 610. MERGER OR CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS................................................... 55
SECTION 611. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.......... 56
SECTION 612. PAYING AGENT, REGISTRAR.................................... 56
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.............. 57
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.. 57
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS..... 57
SECTION 703. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS............... 58
SECTION 704. REPORTS BY TRUSTEE......................................... 58
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 705. REPORTS BY COMPANY........................................ 58
ARTICLE EIGHT CONSOLIDATION, MERGER OR CONVEYANCE, TRANSFER OR LEASE......... 59
SECTION 801. COMPANY AND RESTRICTED SUBSIDIARIES MAY CONSOLIDATE,
MERGE, TRANSFER OR LEASE ONLY ON CERTAIN TERMS............ 59
SECTION 802. SUCCESSOR SUBSTITUTED..................................... 61
ARTICLE NINE SUPPLEMENTAL INDENTURES AND AMENDMENTS.......................... 61
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF HOLDERS.... 61
SECTION 902. SUPPLEMENTAL INDENTURES WITH THE CONSENT OF HOLDERS....... 62
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES...................... 63
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURE.......................... 63
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT....................... 64
SECTION 906. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES............. 64
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES......................... 64
ARTICLE TEN CERTAIN COVENANTS................................................ 64
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST........... 64
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY........................... 65
SECTION 1003. AGENCY FOR NOTE PAYMENTS TO BE HELD IN TRUST.............. 65
SECTION 1004. CORPORATE EXISTENCE....................................... 66
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS......................... 67
SECTION 1006. MAINTENANCE OF PROPERTIES................................. 67
SECTION 1007. MAINTENANCE OF INSURANCE.................................. 67
SECTION 1008. STATEMENT BY OFFICERS AS TO DEFAULT....................... 67
SECTION 1009. REPORTS TO HOLDERS OF NOTES............................... 68
SECTION 1010. LIMITATION ON INDEBTEDNESS................................ 68
SECTION 1011. LIMITATION ON LIENS....................................... 70
SECTION 1012. LIMITATION ON RESTRICTED PAYMENTS......................... 71
SECTION 1013. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES......................... 73
SECTION 1014. LIMITATION ON ASSET SALES AND EVENTS OF LOSS.............. 74
SECTION 1015. LIMITATION ON DISPOSITION OF STOCK OF RESTRICTED
SUBSIDIARIES.............................................. 75
SECTION 1016. LIMITATION ON TRANSACTIONS WITH AFFILIATES................ 75
SECTION 1017. CHANGE IN NATURE OF BUSINESS.............................. 76
SECTION 1018. RESTRICTED AND UNRESTRICTED SUBSIDIARIES; SUBSIDIARY
GUARANTORS................................................ 76
SECTION 1019. STAY, EXTENSION AND USURY LAWS............................ 78
SECTION 1020. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS...... 78
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
ARTICLE ELEVEN REDEMPTION OF AND REPURCHASE OF SECURITIES.................... 78
SECTION 1101. RIGHT OF REDEMPTION....................................... 78
SECTION 1102. APPLICABILITY OF ARTICLE.................................. 79
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE..................... 79
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED OR
REPURCHASED............................................... 80
SECTION 1105. NOTICE OF REDEMPTION...................................... 80
SECTION 1106. DEPOSIT OF REDEMPTION PRICE............................... 81
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.......................... 81
SECTION 1108. NOTES REDEEMED IN PART.................................... 81
SECTION 1109. CHANGE OF CONTROL REPURCHASE OFFER........................ 81
SECTION 1110. ASSET SALE/LOSS PROCEEDS REPURCHASE OFFER................. 82
SECTION 1111. PROCEDURES FOR OFFERS TO REPURCHASE NOTES................. 82
SECTION 1112. EFFECT OF REPURCHASE NOTICE............................... 84
SECTION 1113. DEPOSIT OF REPURCHASE PRICE............................... 84
SECTION 1114. COVENANT TO COMPLY WITH SECURITIES LAWS UPON REPURCHASE
OF NOTES.................................................. 85
SECTION 1115. REPAYMENT TO THE COMPANY.................................. 85
ARTICLE TWELVE GUARANTEES.................................................... 85
SECTION 1201. SUBSIDIARY GUARANTEES..................................... 85
SECTION 1202. NATURE OF SUBSIDIARY GUARANTEES........................... 86
SECTION 1203. AUTHORIZATION............................................. 86
SECTION 1204. CERTAIN WAIVERS........................................... 87
SECTION 1205. NO SUBROGATION; CERTAIN AGREEMENTS........................ 88
SECTION 1206. BANKRUPTCY; NO DISCHARGE.................................. 88
SECTION 1207. SEVERABILITY OF VOID OBLIGATIONS UNDER SUBSIDIARY
GUARANTEES................................................ 89
SECTION 1208. RIGHT OF CONTRIBUTION..................................... 89
SECTION 1209. ADDITIONAL SUBSIDIARY GUARANTORS.......................... 90
ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE.......................... 91
SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE................................................ 91
SECTION 1302. DEFEASANCE AND DISCHARGE.................................. 91
SECTION 1303. COVENANT DEFEASANCE....................................... 91
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE........... 92
SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS............. 93
SECTION 1306. REINSTATEMENT............................................. 93
SECTION 1307. COUNTERPARTS.............................................. 94
ARTICLE FOURTEEN SUBORDINATION............................................... 94
SECTION 1401. AGREEMENT TO SUBORDINATE.................................. 94
SECTION 1402. LIQUIDATION; DISSOLUTION; BANKRUPTCY...................... 94
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 1403. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS................. 95
SECTION 1404. ACCELERATION OF THE NOTES................................. 97
SECTION 1405. WHEN DISTRIBUTION MUST BE PAID OVER....................... 97
SECTION 1406. NOTICE BY THE COMPANY AND SUBSIDIARY GUARANTORS........... 97
SECTION 1407. SUBROGATION............................................... 98
SECTION 1408. RELATIVE RIGHTS........................................... 98
SECTION 1409. SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY AND
SUBSIDIARY GUARANTORS..................................... 98
SECTION 1410. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.................. 99
SECTION 1411. RIGHTS OF TRUSTEE AND PAYING AGENT........................ 99
SECTION 1412. AUTHORIZATION TO EFFECT SUBORDINATION..................... 100
SECTION 1413. MODIFICATION OF TERMS OF SENIOR INDEBTEDNESS.............. 100
</TABLE>
-v-
<PAGE>
INDENTURE, dated as of April 23, 1999, by and among:
(1) Isle of Capri Casinos, Inc., a Delaware corporation (the
"Company") the principal office of which is located at 711 Washington Loop,
Biloxi, Mississippi 39530,
(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 general
partnership, St. Charles Gaming Company, Inc., a Louisiana corporation, LRG
Hotels, L.L.C., a Louisiana limited liability company, Grand Palais Riverboat,
Inc., a Louisiana corporation, LRGP Holdings, Inc., a Louisiana corporation,
PPI, Inc., a Florida corporation, Isle of Capri Casino Colorado, Inc., a
Colorado corporation, Isle of Capri Hotel-Bossier City, L.L.C., a Louisiana
limited liability company, Isle of Capri Casino-Tunica, Inc., a Mississippi
corporation, and IOC-Coahoma, Inc., a Mississippi corporation (collectively, the
"Subsidiary Guarantors"),
(3) any other person that may from time to time become a party hereto
as a Subsidiary Guarantor by executing and delivering to the Trustee an Addendum
to Subsidiary Guarantee, and
(4) State Street Bank and Trust Company, as trustee (the "Trustee").
RECITALS OF THE COMPANY AND THE SUBSIDIARY GUARANTORS
A. The Company has duly authorized the creation of an issue of 8
3/4% Senior Subordinated Notes Due 2009 (the "Transfer Restricted Notes") and
the Company's 8 3/4% Senior Subordinated Notes due 2009 to be issued in exchange
for the Transfer Restricted Notes pursuant to the terms of the Registration
Rights Agreement (as defined below) (the "Exchange Notes" and, together with the
Transfer Restricted Notes, 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 Twelve 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 (as defined below), 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.
1
<PAGE>
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 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.
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 (as defined below), 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.
"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.
"Act" when used with respect to any Holder, has the meaning specified
in Section 104.
2
<PAGE>
"Additional Interest" means all additional interest owed pursuant to
Section 2.5 of the Registration Rights Agreement
"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.
"Agent" means any Registrar, Paying Agent, co-registrar, co-paying
agent or other agent appointed pursuant to Section 1002.
"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:
(1) the FFC Preferred Stock,
(2) the Airplane,
(3) the Real Estate Options,
(4) the Cripple Creek Land, and
(5) 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 $2.0 million), assignment, issuance or other disposition (including,
without limitation, by means of a sale-leaseback transaction) by the
3
<PAGE>
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
(1) Assets Held for Sale or Development,
(2) any Excess Land,
(3) current assets, as defined in accordance with GAAP, in the
ordinary course of business,
(4) damaged, worn out or other obsolete property in the
ordinary course of business if such property is no longer necessary for the
proper conduct of such business,
(5) 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,
(6) each other disposition (or series of related dispositions)
that results in Net Cash Proceeds to the Company and its Restricted
Subsidiaries of less than or equal to $1.0 million and
(7) 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 and the Trustee.
"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
or in the city in which the principal corporate trust office of the Trustee is
located are authorized or obligated by law or executive order to close.
4
<PAGE>
"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 this 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 $500.0 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 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 by the Company or a
Restricted Subsidiary and containing at least 600 slot machines and 10,000
square feet of space dedicated to the operation of games of chance.
5
<PAGE>
"Casino Hotel" means any hotel or similar hospitality facility with at
least 100 rooms owned by the Company or a Restricted Subsidiary and serving a
Casino.
"Casino Related Facility" means any building, restaurant, theater,
amusement park or other entertainment facility, parking or recreational vehicle
facility or retail shops located at or adjacent to, and directly ancillary to, a
Casino and used or to be used in connection with such Casino, other than a
Casino Hotel.
"Change of Control" means after the Issue Date, an event or series of
events by which:
(1) 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;
(2) 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;
(3) 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
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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
(4) 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.
"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 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 Obligations" has the meaning set forth in Section 1201.
"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.
"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 in accordance with GAAP and without
duplication):
(i) all Consolidated Interest Expense,
(ii) Consolidated Non-cash Charges,
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(iii) Consolidated Income Tax Expense,
(iv) all extraordinary losses as determined in accordance
with GAAP, and
(v) 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") consisting of 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
this 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 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
(a) the incurrence or retirement of any Indebtedness of the Company
and its Restricted Subsidiaries at any time during the Reference Period or
subsequent to such Reference Period but prior to the Transaction Date,
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
(b) 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 a result of
the Asset Acquisition) incurring Acquired Indebtedness) occurring during
the Reference Period or subsequent to such Reference Period but prior to
the Transaction Date, and any permanent prepayment, repayment, redemption,
purchase or retirement of Indebtedness in connection with such Asset Sale,
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Event of Loss or 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,
Furthermore, in calculating Consolidated Interest Expense 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):
(a) 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 other financing costs, amortization of deferred financing cost
and debt discount or premium),
(b) the aggregate amount of the interest component of rentals in
respect of Capitalized Lease Obligations recognized by such Person and its
Restricted Subsidiaries,
(c) 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,
(d) the interest portion of any deferred payment obligation,
(e) 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
(f) 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)
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(a) the Net Income (or net loss) of any Person (the "other Person")
(i) other than a Restricted Subsidiary, except in each such
case such Net Income shall be included to the extent of the amount of
management fees or 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, other than dividends, if applicable, or other distributions
to pay obligations of or with respect to such Unrestricted Subsidiary, such
as income taxes, or
(ii) in which the Company or any of its Restricted Subsidiaries
has a joint interest with a third party (which interest of a third party
causes the Net Income (or net loss) of such other Person not 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 management
fees or 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,
other than dividends, if applicable, or other distributions to pay
obligations of or with respect to such Unrestricted Subsidiary, such as
income taxes,
(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 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.
"Consolidated Net Worth" means, at any date of determination, the sum
of
(a) the consolidated equity of the common stockholders of such Person
and its Restricted Subsidiaries on such date, plus
(b) 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
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(i) 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 this Indenture in the book value
of any asset owned by such Person or a Restricted Subsidiary of such
Person,
(ii) all investments in Persons that are not Restricted
Subsidiaries, and
(iii) 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 225 Franklin Street, Boston, Massachusetts, except that with respect
to presentation of Notes for payment or for registration of transfer or
exchange, such term shall also mean the office or agency of the Trustee at 61
Broadway, 15/th/ Floor, New York, New York.
"Credit Facility" means one or more debt or commercial paper
facilities with banks or other institutional lenders (including the New Credit
Facility) providing for revolving credit loans, term loans or letters of credit,
in each case together with any amendments, supplements, modifications (including
by any extension of the maturity thereof), substitutions, refinancings or
replacements thereof by a lender or a syndicate of lenders in one or more
successive transactions (including any such transaction that changes the amount
available thereunder, replaces such agreement or document or provides for other
agents or lenders).
"Cripple Creek Land" means the real estate owned or leased by the
Company in Cripple Creek, Colorado.
"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 308.
"Defeasance" and "Covenant Defeasance" have the meanings specified in
Sections 1302 and 1303, respectively.
"Depositary" means, with respect to the Notes issueable or issued in
whole or in part in global form, the Person specified in Section 304 hereof as
the Depositary with respect to the Notes, and any successor thereto.
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"Designated Senior Indebtedness" shall mean (i) Indebtedness incurred
under the New Credit Facility and (ii) any other Senior Indebtedness in a
principal amount of at least $25.0 million outstanding which, at the time of
determination, is specifically designated in the instrument governing such
Senior Indebtedness as "Designated Senior Indebtedness" by the Company and is
otherwise permitted to be "Designated Senior Indebtedness" under the New Credit
Agreement.
"Discontinued Assets" means the following assets held for sale by the
Company or its Subsidiaries as of the Issue Date:
(a) the Emerald Lady riverboat and the Diamond Lady riverboat;
(b) the Lucky Seven barge and one other barge (vessel number 511360);
and
(c) 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.
"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) that has a Fair Market Value of $5.0
million or more, any of the following:
(a) any loss, destruction or damage of such property or asset;
(b) 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
(c) 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 Land" means the following real and personal property:
(a) approximately 12 acres of land owned by the Company or its
Restricted Subsidiaries as of the Issue Date adjacent to the Isle-Bossier
City, and
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(b) approximately 7 acres of land owned by the U.S. Department
of Housing and Urban Development as of the Issue Date in proximity to the
Isle-Bossier City, in the event such property is acquired by the Company or
its Restricted Subsidiaries.
"Excess Sale/Loss Proceeds" and "Excess Sale/Loss Proceeds Offer" have
the meanings set forth in Section 1014 and Section 1110, respectively.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" or "fair value" means, with respect to any asset
or property, the price which could be reasonably expected to 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 this 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.
"FFC Preferred Stock" means the shares of preferred stock, $100 par
value, of Freedom Financial Corporation owned by the Company.
"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 any 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.
"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.
"Holder" or "Noteholder" means a Person in whose name a Note is
registered in the Note Register.
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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, bankers' acceptances or other
similar facilities, other than a trade payable or other than 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, any
obligation,
(i) to pay or purchase such liability,
(ii) 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
(iii) to purchase or lease (other than pursuant to an
operating lease of hotel rooms or similar lodging facilities
entered into for the principal purpose of providing lodging
at or near the site of a Casino, which facilities are
reasonably expected to be beneficial to the Company's
operating results) property or to purchase services,
in each such case 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
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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.
"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 Twelve.
"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 this 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.
"Initial Purchasers" means Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Wasserstein Perella Securities, Inc., CIBC
Oppenheimer Corp. and Jefferies & Company, Inc. as the initial purchasers of the
Transfer Restricted Notes pursuant to the Purchase Agreement, dated as of April
20, 1999, between the Company, the Subsidiary Guarantors and Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wasserstein Perella
Securities, Inc., CIBC Oppenheimer Corp. and Jefferies & Company, Inc.
"Interest Payment Date" means October 15, 1999 and each April 15 and
October 15 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 (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), 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
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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 write-offs 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.
"Isle-Bossier City" means the Isle of Capri Casino located in Bossier
City, Louisiana.
"Isle-Lake Charles" means the Isle of Capri Casino located in Lake
Charles, Louisiana.
"Isle-Tunica" means the Isle of Capri Casino that is being developed
and will be located in Tunica, Mississippi.
"Isle-Vicksburg" means the Isle of Capri Casino located in Vicksburg,
Mississippi.
"Issue Date" means the date of original issuance of the Notes.
"Legended Note" means any Note required to contain the legend set
forth in Section 306(h) hereof.
"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 this 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.
"Marketable Securities" means Cash Equivalents or any fund investing
primarily in Cash Equivalents.
"Material Operations" means assets or operations of the Company or its
Subsidiaries that (a) exceed 5% of the assets of the Company and its
Consolidated Subsidiaries or (b) contributed more than 5% of the income from
continuing operations of the Company and its Consolidated Subsidiaries (before
income taxes, extraordinary items and intercompany management or similar fees)
for the most recently completed four fiscal quarters of the Company for which
financial statements are available.
"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 Notes is due and payable.
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"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 and permanently reduce any commitment with
respect to any 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.
"Net Worth" and "Maximum Net Worth" have the meanings specified in
Section 1208.
"New Credit Facility" means the Credit Agreement to be entered into on
or prior to the Issue Date among the Company, certain lenders and agents named
therein and Canadian Imperial Bank of Commerce, as Administrative Agent and
Issuing Lender, including any notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended (including any amendment and restatement thereof), modified, extended,
deferred, refunded, substituted, replaced or refinanced from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available borrowings
thereunder or adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all of any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, creditor, lender or group of creditors or lenders.
"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
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,
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whether as a result of the failure to pay principal or interest when due or any
other reason, is limited to foreclosure 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: (a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; (b) 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; (c)
Notes, except to the extent provided in Sections 1302 and 1303, with respect to
which the Company has effected defeasance and/or covenant defeasance as provided
in Article Thirteen; and (d) 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 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.
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"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 (including any Additional Interest), on any Notes on behalf
of the Company and at the office of which the Notes may be presented for such
payment.
"Permitted Equity Holders" means Bernard Goldstein, Irene Goldstein
and their lineal descendants (including adopted children and their lineal
descendants) and any entity the equity interests of which are owned by only such
persons or which was established for the exclusive benefit of, or the estate of,
any of the foregoing.
"Permitted Investments" means
(a) Investments in Marketable Securities,
(b) loans or advances to employees not to exceed an aggregate of
$250,000 in any fiscal year of the Company and $1.0 million in the
aggregate at any one time outstanding,
(c) Investments in Isle of Capri Black Hawk LLC by the Company
or a Restricted Subsidiary in an aggregate amount not to exceed the
sum of $10.0 million at any one time outstanding, and
(d) 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 (i) $25.0 million and (ii) up to $5.0
million of the amount permitted to be invested pursuant to clause (c)
above that is not so invested in either case, at any one time
outstanding.
"Permitted Liens" means:
(a) 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;
(b) 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, maritime
Liens for crew wages, salvage, suppliers and providers of services,
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
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reserve or other adequate provision as shall be required in conformity
with GAAP shall have been made therefor;
(c) leases or subleases granted to others not interfering in any
material respect with the business of the Company or any Restricted
Subsidiary;
(d) 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;
(e) 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;
(f) Liens arising 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);
(g) any interest or title of a lessor in property subject to any
Capitalized Lease Obligation or an operating lease;
(h) Liens arising from the filing of Uniform Commercial Code
financing statements with respect to leases;
(i) Liens arising from any final judgment or order not
constituting an Event of Default;
(j) 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 (b)(v)
of Section 1010; and
(k) 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).
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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 Lien" 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)
(a) agrees to release such Lien upon satisfaction of such FF&E
Financing,
(b) 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
(c) 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.
"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 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.
"Qualified Institutional Buyer" shall have the meaning specified in
Rule 144A under the Securities Act.
"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 $30.0 million, and after which the
Common Stock is traded on a national securities exchange or quoted on The NASDAQ
National Market.
"Real Estate Options" means
(a) all options held by the Company or its Restricted
Subsidiaries, directly or indirectly, at the Issue Date for an amount,
in each case, not exceeding $1.0 million, to purchase or lease land,
and
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(b) all options acquired by the Company, directly or indirectly,
after the Issue Date for an amount, in each case, not exceeding $2.0
million, to purchase or lease land.
"Redeemable Capital Stock" means any class or series of Capital Stock
to the extent that, either by its terms, by the terms of any security into which
it is convertible or exchangeable, or by contract or otherwise, is, or upon the
happening of an event or passage of time would be, required to be redeemed prior
to the final Stated Maturity of the Notes or is redeemable at the option of the
holder thereof at any time prior to such Stated Maturity, or is convertible into
or exchangeable for debt securities at any time prior to such Stated Maturity.
"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.
"Registration Rights Agreement" means that certain Registration Rights
Agreement among the Company, the Subsidiary Guarantors and the Initial
Purchasers, dated as of the date hereof.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the April 1 or October 1 (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 1111.
"Repurchase Notice" has the meaning set forth in Section 1111.
"Repurchase Offer" has the meaning set forth in Section 1111.
"Responsible Officer" when used with respect to the Trustee, means any
officer in the Trustee's "Corporate Trust 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 this Indenture and
(iii) in the case of a Subsidiary, dividends or distributions payable
to the Company or to a Restricted Subsidiary of the Company);
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(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
(i) in a Person that would be, directly or indirectly, a
Restricted Subsidiary of the Company immediately after giving
effect to such Investment, or
(ii) 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 any Subsidiary of the Company that has
not been designated as an Unrestricted Subsidiary pursuant to and in compliance
with the provisions described under Section 1018, or a Subsidiary that has been
designated as a Restricted Subsidiary pursuant to and in compliance with the
provisions described in Section 1018.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means (a) principal of, premium, if any, and
interest (including post-petition interest) on, and all fees, costs, expenses
and other amounts payable with respect to the Indebtedness under the New Credit
Facility, and (b) the principal of, premium, if any, and interest on any
Indebtedness of the Company or the Subsidiary Guarantors, whether outstanding on
the Issue Date or thereafter created, incurred or assumed, unless, in the case
of any particular Indebtedness, the instrument creating or evidencing the same
or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to any Indebtedness of the
Company or the Subsidiary Guarantors, as applicable. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include, to the extent constituting
Indebtedness,
(a) Indebtedness evidenced by the Notes or the Subsidiary Guarantees,
(b) Indebtedness that is subordinate or junior in right of payment to
any Indebtedness of the Company or the Subsidiary Guarantors,
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(c) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, U.S. Code, is without recourse
to the Company or the Subsidiary Guarantors,
(d) Indebtedness which is represented by Redeemable Capital Stock,
(e) Indebtedness for goods, materials or services purchased in the
ordinary course of business or Indebtedness consisting of trade payables or
other current liabilities (other than any current liabilities owing under
the New Credit Facility or the current portion of any long-term
Indebtedness which would constitute Senior Indebtedness but for the
operation of this clause (e)),
(f) Indebtedness of or amounts owed by the Company or the Subsidiary
Guarantors for compensation to employees or for services rendered to the
Company or the Subsidiary Guarantors,
(g) Indebtedness of or amounts owed by the Company or a Restricted
Subsidiary to the Company or another Restricted Subsidiary,
(h) any liability for Federal, state, local or other taxes owed or
owing by the Company or the Subsidiary Guarantors,
(i) Indebtedness of the Company or a Subsidiary Guarantor to any
other Subsidiary of the Company, and
(j) that portion of any Indebtedness which at the time of issuance
is issued in violation of this Indenture.
"Significant Restricted Subsidiary" means any Restricted Subsidiary
that is a guarantor of the Company's obligations under the New Credit Facility
or any other Credit Facility.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 308.
"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 or similar governing body of such corporation or other
entity (irrespective of whether at the time Capital
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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 this
Indenture.
"Subsidiary Guarantors" means each existing and future Significant
Restricted Subsidiary of the Company and any other Subsidiary that executes a
Subsidiary Guarantee.
"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 that are
(a) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged, or
(b) 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
(a) the Company has designated, pursuant to the provisions
described under Section 1018 as an Unrestricted Subsidiary and that
has not been redesignated as a Restricted Subsidiary pursuant to such
paragraph, and
(b) any Subsidiary of any such 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.
"Wholly Owned" with respect to a Subsidiary of any person means (a)
with respect to a Subsidiary that is a partnership, limited liability company or
similar entity, a Subsidiary whose capital or other equity interest is 99% or
greater beneficially owned by such person, and (b) with respect to a Subsidiary
that is other than a partnership, limited liability
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company or similar entity, a Subsidiary whose capital stock or other equity
interest is 100% beneficially owned by such person.
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.
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:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) 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;
(c) 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
(d) 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
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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 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 thirty
(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,
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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.
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,
(a) 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 Goodwin Square, 225 Asylum Street,
23/rd/ Floor, Hartford, Connecticut 06103, or at such other address as the
Trustee shall notify the Holders and the Company, or
(b) 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
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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.
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.
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 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 (including any Additional 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.
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SECTION 113. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Noteholder or Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and Subsidiary Guarantors or
any other obligor on the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 114. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP as in effect at the date hereof;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular; and
(e) 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.
30
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ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Transfer Restricted 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, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required by this Indenture and as may be required to comply with law
or the rules of the Commission or 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 C. 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.
Transfer Restricted Notes will be initially issued in global form,
substantially in the form of Exhibit A (including footnotes 1 and 2 thereto) and
---------
the Exchange Notes, if any, in exchange for Transfer Restricted Notes will be
initially issued in global form, substantially in the form of Exhibit B
---------
(including footnotes 1 and 2 thereto) (each of Exhibit A and Exhibit B,
--------- ---------
including such footnotes, hereinafter referred to as a "Global Note", and with
any Transfer Restricted Notes issued in exchange therefor, the "Global Notes").
Each Global Note will represent such of the Outstanding Notes as shall be
specified therein and will provide that it represents the aggregate amount of
Outstanding Notes from time to time endorsed thereon and that the aggregate
amount of Outstanding Notes represented thereby may from time to time be reduced
or increased, as appropriate, to reflect transfers, exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the amount of Outstanding Notes represented thereby shall be made by
the Trustee or the Global Note Holder, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof.
Holders of Transfer Restricted Notes who elect to take physical
delivery of their certificates (collectively, the "Non-Global Purchasers") will
be issued certificates in the registered form of certificated Notes,
substantially in the form of Exhibit A (excluding footnotes 1 and 2 thereto) and
---------
Exchange Notes that are issued to Non-Global Purchasers in exchange for Transfer
Restricted Notes will initially be issued in the form of certificated Notes,
substantially in the form of Exhibit B (excluding footnotes 1 and 2 thereto)
---------
(collectively, the "Certificated Notes").
Payment of the principal of, premium, interest (including any
Additional Interest) on any Certificated Note shall be made to the Holder
thereof by wire transfer of immediately available funds to the accounts
specified by the Holders thereof, or if no such account is specified, by mailing
a check to each Holder's registered address.
Payment of the principal of, premium, interest (including any
Additional Interest) on the Global Note will be made by wire transfer of
immediately available funds to the accounts specified by the Global Note Holder.
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The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
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 Transfer Restricted Notes which may
be authenticated and delivered under this Indenture is limited to $390.0
million. If Exchange Notes are issued, then the aggregate principal amount of
Transfer Restricted Notes then Outstanding shall be reduced by the aggregate
principal amount of Exchange Notes so issued.
The Notes shall be known and designated as the "8 3/4% Senior
Subordinated Notes due 2009" of the Company. Their Stated Maturity shall be
April 15, 2009, and they shall accrue interest at the rate of 8 3/4% per annum
from April 23, 1999, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, payable on October 15, 1999 and
semiannually thereafter on April 15 and October 15 in each year and at said
Stated Maturity, until the principal thereof is paid or duly provided for.
32
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The principal of (and premium, if any, on) and interest (including any
Additional 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 or as otherwise provided in Section 201. 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 issueable 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 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. NOTE REGISTRAR; PAYING AGENT; DEPOSITARY; GLOBAL NOTE
HOLDER.
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 ("Registrar) and an office or agency where
the notes may presented for payment. 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 Company initially appoints The Depositary Trust
Company to act as Depositary with respect to the Global Notes and the Trustee is
hereby initially appointed as note registrar (the "Note Registrar").
SECTION 305. NOTEHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Noteholders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Note Registrar, the Company shall furnish to the Trustee on
or at least five (5) Business Days before each Interest Payment Date and at such
other times as the Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
all Noteholders, including the aggregate principal amount of Notes held by each
thereof, and the Company shall otherwise comply with TIA Section 312(a).
SECTION 306. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Certificated Notes. When Certificated
-------------------------------------------
Notes
34
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are presented to the Note Registrar with a request to register the transfer of
the Certificated Notes or to exchange such Certificated Notes for an equal
principal amount of Certificated Notes of other authorized denominations, the
Note Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
-------- -------
Certificated Notes presented or surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar, duly
executed by the Holder thereof or by such Holder's attorney, duly
authorized in writing; and
(ii) in the case of Legended Notes that are Certificated Notes,
shall be accompanied by the following additional information and
documents, as applicable:
(A) if such Legended Note is being delivered to the
Registrar by a Noteholder for registration in the name of such
Noteholder, without transfer, a certification from such
Noteholder to that effect; or
(B) if such Legended Note is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act or a
transaction meeting the requirements of Rule 904 under the
Securities Act ("Regulation S") or pursuant to an effective
------------
registration statement under the Securities Act, a certification
to that effect; or
(C) if such Legended Note is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act or in a transaction exempt from the registration
requirements of the Securities Act, a certification to that
effect and an Opinion of Counsel to the effect that such transfer
does not require registration under the Securities Act.
(b) Restrictions on Transfer of a Certificated Note for a Beneficial
----------------------------------------------------------------
Interest in a Global Note. A Certificated Note may not be exchanged for a
- -------------------------
beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Certificated
Note, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Trustee, together with:
(i) if such Certificated Note is a Legended Note, certification
that such Certificated Note is being transferred (w) to a Qualified
Institutional Buyer in accordance with Rule 144A under the Securities
Act, (x) in a transaction meeting the requirements of Regulation S,
(y) pursuant to an effective registration statement under the
Securities Act or (z) in reliance on another exemption from the
registration requirements of the Securities Act or in a transaction
exempt from the registration requirements of the Securities Act, in
either case based on an
35
<PAGE>
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act; and
(ii) whether or not such Certificated Note is a Legended Note,
written instructions directing the Trustee to make, or to direct the
Global Note Holder to make, an endorsement on the Global Notes to
reflect an increase in the aggregate principal amount of the Notes
represented by the Global Notes;
then the Trustee shall cancel such Certificated Note in accordance with Section
310 hereof and cause, or direct the Global Note Holder to cause, in accordance
with the standing instructions and procedures existing between the Depositary
and the Global Note Holder, the aggregate principal amount of Notes represented
by the Global Notes to be increased accordingly. If no Global Notes are then
Outstanding, the Issuer shall issue and, upon receipt of an authentication order
in accordance with Section 303 hereof, the Trustee shall authenticate a new
Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange
-------------------------------------
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depositary therefor, which
shall include restrictions on transfer comparable to those set forth herein to
the extent required by the Securities Act.
(d) Transfer and Exchange of a Beneficial Interest in a Global Note
---------------------------------------------------------------
for a Certificated Note. Any Person having a beneficial interest in a Global
- -----------------------
Note may upon request exchange such beneficial interest for a Certificated Note.
Upon receipt by the Trustee of written instructions including registration
instructions from the Depositary or its nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in the case of a beneficial interest
in a Legended Note only, the following additional information and documents:
(i) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification from such Person to that effect;
(ii) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 or in a transaction meeting the requirements
of Regulation S or pursuant to an effective registration statement
under the Securities Act, a certification to that effect from the
transferee or transferor; or
(iii) if such beneficial interest is being transferred in
reliance on an exemption from the registration requirements of the
Securities Act other than set forth in clauses (i) and (ii) of this
Section 306(d), a certification to that effect from the transferee or
transferor and an Opinion of Counsel to the effect that such transfer
does not require registration under the Securities Act;
36
<PAGE>
then the Trustee, or the Global Note Holder at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Global Note Holder, the aggregate principal
amount of the Global Note to be reduced and, following such reduction, the
Company will execute and the Trustee will authenticate and deliver a
Certificated Note to the transferee. Certificated Notes issued in exchange for
a beneficial interest in a Global Note pursuant to this Section 306 shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect Participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Certificated Notes
to the Persons in whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
-----------------------------------------------------
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in Section 306(f)), a Global Note may not be transferred as
a whole except by the Depositary to a nominee of the Depositary or by a nominee
of the Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.
(f) Authentication of Certificated Notes in Absence of Depositary or
----------------------------------------------------------------
at the Issuer's Election. If at any time (i) the Depositary for a Global Note
- ------------------------
notifies the Company that the Depositary is unwilling or unable to continue as
Depositary for the Global Note and a successor Depositary for the Global Note is
not appointed by the Company within ninety (90) days after delivery of such
notice, or (ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Certificated Notes under this
Indenture, then, the Company will execute, and the Trustee, upon receipt of an
Officers' Certificate requesting the authentication and delivery of Certificated
Notes, shall authenticate and deliver Certificated Notes, in an aggregate
principal amount equal to the principal amount of the Global Note, in exchange
for such Global Note.
(g) Cancellation and/or Adjustment of Global Note. At such time as
---------------------------------------------
all beneficial interests in a Global Note have either been exchanged for
Certificated Notes, redeemed, converted, repurchased, or canceled or, with
respect to a Global Note that is a Transfer Restricted Note, exchanged for
beneficial interests in Exchange Notes, such Global Note shall be returned to or
retained by and canceled by the Trustee in accordance with the provisions of
this Indenture. At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for Certificated Notes, redeemed,
converted, repurchased, canceled or, with respect to a Global Note that is a
Transfer Restricted Note, exchanged for beneficial interests in Exchange Notes,
the aggregate principal amount of Notes represented by such Global Note shall be
reduced and an endorsement shall be made on such Global Note, by the Trustee or
the Global Note Holder at the direction of the Trustee, to reflect such
reduction.
(h) Legends.
-------
(i) Except as otherwise provided by the following paragraphs
(ii) and (iii), each certificate evidencing the Global Notes and the
Certificated Notes (and all
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Notes issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the following form:
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF ISLE OF CAPRI CASINOS, INC. THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A
PERSON WHO THE SELLER BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF ISLE OF CAPRI CASINOS,
INC. SO REQUESTS), (2) TO ISLE OF CAPRI CASINOS, INC. OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
(ii) Upon any sale or transfer of a Legended Note, (including any
Legended Note represented by a Global Note) pursuant to Rule 144 under the
Securities Act, pursuant to an effective registration statement under the
Securities Act or in connection with which the Trustee receives an Opinion
of Counsel to the effect that such Note will no longer be subject to resale
restrictions under federal and state securities laws:
(A) in the case of any Legended Note that is a Certificated
Note, the Registrar shall permit the Holder thereof to exchange such
Legended Note for a Certificated Note that does not bear the legend
set forth in (i) above and rescind any restriction on the transfer of
such Legended Note; and
(B) in the case of any Legended Note represented by a
Global Note, such Legended Note shall not be required to bear the
legend set forth in (i) above, but shall continue to be subject to the
provisions of Section 306(c) hereof; provided, however, that with
-------------- -------- -------
respect to any request for an exchange of a Legended Note that is
represented by a Global Note for a Certificated Note that
38
<PAGE>
does not bear the legend set forth in (i) above, which request is made
in reliance upon Rule 144, the Holder thereof shall certify in writing
to the Registrar that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of Exhibit C
---------
hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 303 hereof, the Trustee
shall authenticate Exchange Notes in exchange for Transfer Restricted Notes
accepted for exchange pursuant to the Registration Rights Agreement, which
Exchange Notes shall not bear the legend set forth in (i) above, and the
Registrar shall rescind any restriction on the transfer of such Notes, in
each case unless the Holder of such Transfer Restricted Notes is (A) a
broker-dealer who purchased such Transfer Restricted Notes directly from
the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act, (B) a Person participating in the
distribution (within the meaning of the Securities Act) of the Transfer
Restricted Notes or (C) a Person who is an affiliate (as defined in Rule
144 under the Securities Act) of the Company or any Subsidiary Guarantor.
(i) Obligations with respect to Transfers and Exchanges of
------------------------------------------------------
Certificated Notes.
- ------------------
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Certificated Notes
and Global Notes at the Registrar's request.
(ii) 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.
(iii) All Certificated Notes and Global Notes issued upon any
registration of transfer or exchange of Certificated Notes or Global Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Certificated
Notes or Global Notes surrendered upon such registration of transfer or
exchange.
(iv) The Company shall not be required (A) to issue, register
the transfer of or exchange any Note during a period beginning at the
opening of business fifteen (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, (B) 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 (C) 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.
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(v) Prior to due presentment for registration of transfer of
any Note, the Trustee, any Agent and the Company shall deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of, premium,
interest (including any Additional Interest) on such Note, and for all
other purposes whatsoever, whether or not such Note is overdue, and neither
the Trustee, any Agent nor the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Certificated Notes and the
Global Notes in accordance with the provisions of Section 303 hereof.
SECTION 307. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If any mutilated Note is surrendered to the Trustee or 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.
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 308. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest (including Additional 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
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<PAGE>
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 (including Additional Interest) may at the
Company's option be paid by mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 310,
to the address of such Person as it appears in the Note Register, in the manner
provided in Section 201.
Any interest (including Additional 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 fifteen (15) days and not less
than ten (10) days prior to the date of the proposed payment and not less than
ten (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
ten (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.
SECTION 309. 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 308) interest (including
any Additional Interest) on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and none of the Company, the Subsidiary
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Guarantors, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 310. 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, upon request, certification of their disposal
delivered to the Company.
SECTION 311. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
SECTION 312. CUSIP NUMBER.
The Company in issuing the Notes may use one or more CUSIP numbers to
identify the Notes, and if so, such CUSIP number shall be included in notices of
redemption or exchange as a convenience to Holders; provided, however, that any
-------- -------
such notice may state that no representation is made as to the correctness or
accuracy of such CUSIP number printed in the notice or on the Notes and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly notify the Trustee of any change in the CUSIP
number.
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
(a) either
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(i) all Notes theretofore authenticated and delivered (other
than (x) Notes which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 307 and (y) 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
(ii) all such Notes not theretofore delivered to the Trustee for
cancellation (1) have become due and payable, or (2) will become due
and payable at their Stated Maturity within one year, or (3) 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 (1), (2) or (3),
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
(including any Additional 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;
(b) 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
(c) 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 (a)(ii) 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 (including any Additional 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):
(a) default in the payment of any interest (including any Additional
Interest) on the Notes when it becomes due and payable, and continuance of
such default for a period of thirty (30) days; or
(b) 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
(c) default by the Company or any Subsidiary Guarantor in the
performance, or breach, of any term, covenant or agreement in this
Indenture (other than default specified in paragraphs (a), (b) or (d) of
this Section), and the continuance of such default or breach for a period
of thirty (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
(d) the default by the Company or any Subsidiary Guarantor in the
performance, or breach, of the covenant described under Section 801; 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 a Change of Control Offer in accordance with Section
1109; or
(e)(1) one or more defaults by the Company or any Restricted
Subsidiary in the payment of the principal of, premium in respect of or
interest on any other Indebtedness, other than Non-Recourse Indebtedness,
in an aggregate principal amount of $10.0 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 (2) Indebtedness, other than Non-Recourse Indebtedness, of the Company
or any Restricted Subsidiary in an aggregate principal amount of $10.0
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
(f) one or more final judgments, orders or decrees are entered
against the Company or any Restricted Subsidiary or any of their respective
properties which require
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the payment of money not covered by insurance in excess of $10.0 million,
either individually or in an aggregate amount, and such judgment, order or
decree shall not be discharged, waived or enforcement thereof stayed, by
reason of pending appeal or otherwise, for a period of sixty (60)
consecutive days; or
(g) 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
(h) 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
(i) 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 ninety (90) consecutive days
(other than 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 (1) is in the best interest of
the Company and its Subsidiaries, taken as a whole, (2) does not adversely
affect the holders of the Notes in any material respect and (3) is not
reasonably expected to have, nor are the reasons therefor reasonably
expected to have, any material adverse effect on 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, Louisiana or such other jurisdiction in which any Material
Operations of the Company or its Subsidiaries are located); or
(j) any of (1) a default or material breach by any Restricted
Subsidiary of its obligations under any Subsidiary Guarantee which
continues for a period of thirty (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, (2) the
repudiation by any Restricted Subsidiary of its obligations under the
Subsidiary Guarantees or (3) a judgment or decree by a court or
Governmental Agency of
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competent jurisdiction declaring the unenforceability of the payment
obligations under the Subsidiary Guarantees.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) 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 Outstanding Notes may, by written notice, and the Trustee upon the request
of the Holders of not less than 25% in aggregate principal amount of the
Outstanding Notes is obligated to, declare the principal amount of and accrued
interest on all the Notes to be due and payable immediately provided that so
long as the New Credit Facility is in effect, such acceleration shall not be
effective until the earlier of (a) five (5) Business Days following the delivery
of notice of acceleration to the agent under the New Credit Facility and (b) the
acceleration of any Indebtedness under the New Credit Facility. If an Event of
Default specified in clause (g) or (h) of Section 501 occurs and is continuing,
then the principal amount of and accrued interest on 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 Outstanding Notes, by written notice to the Trustee,
may rescind and annul such declaration and its consequences if all existing
Events of Default, other than the non-payment of amounts of principal of and
accrued interest on Notes that has become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513 and if such
recession of acceleration would not conflict with any judgment or decree.
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 (e) of Section 501 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 thirty (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
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(a) default is made in the payment of any installment of
interest (including any Additional Interest) on any Note when such interest
becomes due and payable and such default continues for a period of thirty
(30) days, or
(b) 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 (including any Additional
Interest) and interest on any overdue principal and premium, if any, and, to the
extent that payment of such interest (including any Additional 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 aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
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 (including any Additional
Interest)) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest (including any Additional 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
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(b) 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 money on account of principal (or premium,
if any) or interest (including any Additional 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 the amounts then due and unpaid for
principal of (and premium, if any, on) and interest (including any
Additional 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 (including any
Additional Interest) respectively; and
Third: The balance, if any, to the Person or Persons entitled
thereto.
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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
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of 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;
(c) 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;
(d) the Trustee for fifteen (15) days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 15-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.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM, 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 Twelve) and in
such Note of the principal of (and premium, if any, on) and (subject to Section
309) interest (including any Additional Interest) on, such Note on the
respective Stated Maturity 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.
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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 307, 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 aggregate 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 (a) such
direction shall not be in conflict with any rule of law or with this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction and (c) 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 (a) in respect of the
payment of the principal of (or premium, if any, on) or interest (including any
Additional Interest) on any Note or (b) 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.
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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 forty-five (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 (including any Additional 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 (e)
of Section 501 no such notice to Holders shall be given until at least 30 days
after the occurrence thereof. The provisions of the proviso to Section 315(b) of
the Trust Indenture Act is hereby excluded from this Indenture.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, 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;
(b) 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;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any
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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;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, 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;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) 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
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 to be supplied to the
Company prior to registration of the Notes under the Securities Act will be true
and accurate, subject to the qualifications set forth therein. The
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Trustee shall not be accountable for the use or application by the Company of
Notes or the proceeds thereof.
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.
SECTION 606. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder 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);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) 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, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
The 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
(including any Additional Interest) on particular Notes.
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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 $500.0 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 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
thirty (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:
(i) the Trustee shall fail to comply with the provisions of TIA
Section 310(b), or
(ii) 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
(iii) 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, (x) the Company, by a Board Resolution, may remove the
Trustee, or (y) 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.
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(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.
(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.
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
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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 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 $500.0 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 give 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.
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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
(i) semiannually, not more than five (5) 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 thirty (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
fifteen (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 ten (10) Business Days after such
acquisition by the Company and within ten (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 (6)
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 (5) Business Days after the
receipt of such application, at its election, either: (x) 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 (y) inform
such applicants as to the approximate number of Holders whose names
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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, of the reasonable expenses of mailing,
unless within five (5) 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 of 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.
If required by TIA Section 313(a), within sixty (60) days after April
15 of each year commencing April 15, 2000, 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 April 15. The Trustee shall also comply with
TIA Section 313(b).
SECTION 705. REPORTS BY COMPANY.
The Company shall:
(a) file with the Trustee copies of all Exchange Act reports as
required under Section 1009;
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(b) 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
(c) transmit by mail to all Holders, in the manner and to the
extent provided in TIA Section 313(c), within thirty (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, TRANSFER OR LEASE
SECTION 801. COMPANY AND RESTRICTED SUBSIDIARIES MAY CONSOLIDATE,
MERGE, TRANSFER OR LEASE 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:
(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 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;
(ii) the surviving entity shall expressly assume, by a
supplemental indenture (or similar instrument) executed and delivered
to the Trustee, in form and substance reasonably satisfactory to the
Trustee, all of the obligations of the Company under the Notes and
this Indenture;
(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) shall immediately before
and after giving effect to such transaction or series of transactions
(including, without limitation,
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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;
(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 additional
Indebtedness pursuant to Section 1010 (other than under clauses (b)(i)
through (b)(viii) thereof);
(vi) 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 this 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 provisions
of Section 1011 are 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 if
(i) the surviving entity shall be the Company or a Restricted
Subsidiary;
(ii) the surviving entity shall expressly assume, by a
supplemental indenture (or similar instrument) executed and delivered
to the Trustee, in form and substance reasonably satisfactory to the
Trustee, all of the obligations of such Restricted Subsidiary under
the Notes, the Subsidiary Guarantees (if applicable) and this
Indenture; 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; 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.
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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 Subsidiary Guarantees (if applicable) 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 Subsidiary Guarantees (if applicable) and may be dissolved and liquidated.
(b) Upon any consolidation of a Restricted Subsidiary that is a
Subsidiary Guarantor with or merger of a Restricted Subsidiary that is a
Subsidiary Guarantor with or into any other corporation or any conveyance,
transfer or lease of the properties and assets of a Restricted Subsidiary that
is a Subsidiary Guarantor 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 Subsidiary Guarantees 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 Subsidiary Guarantees and may
be dissolved and liquidated.
ARTICLE NINE
SUPPLEMENTAL INDENTURES AND AMENDMENTS
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT THE 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 Subsidiary Guarantees), 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 Subsidiary Guarantees; or
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(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 Subsidiary Guarantees 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 the
Subsidiary Guarantees; provided that such action shall not adversely affect
the interests of the Holders in any material respect; or
(6) to add or release a Subsidiary Guarantor to or from the
Subsidiary Guarantees as permitted by this Indenture;
(7) to comply with any requirement of the Commission or state
securities regulators in connection with the qualification of this
Indenture under the TIA or any registration or qualification of the Notes
(including the Subsidiary Guarantees) under the Securities Act or state
securities laws; or
(8) to make any other change that does not adversely affect the
rights of any Holder.
SECTION 902. SUPPLEMENTAL INDENTURES WITH THE CONSENT OF HOLDERS.
(a) 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 supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders hereunder; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby,
(i) reduce the principal amount outstanding of, change the
Stated Maturity of, or alter the redemption provisions of the Notes,
or
(ii) change the currency in which any Notes or any premium or
the accrued interest thereon is payable, or
(iii) 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 this Indenture or the Notes, or
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(iv) impair the right to institute suit for the enforcement of
any payment on or with respect to the Notes, or
(v) modify the ability to waive defaults or specified
covenants, except to increase the percentage of Notes required to
effect a waiver, or
(vi) reduce the rate of or change the time for, payment of
interest on the Notes, or
(vii) modify or change any provision of this Indenture or the
related definitions affecting the subordination or ranking of the
Notes or any Subsidiary Guarantee in any manner that materially and
adversely affects the Holders, or
(viii) amend, change or modify the obligation of the Company to
make and consummate a Change of Control Offer in the event of a Change
of Control or make and consummate an Excess Sale/Loss Proceeds Offer
with respect to any Asset Sale or Event of Loss or modify any of the
provisions or definitions with respect thereto.
(b) In addition to the foregoing, no modification or amendment may,
without the consent of at least 66K% of the aggregate principal amount of the
Outstanding Notes, modify the terms of or release any of the Subsidiary
Guarantees except as otherwise provided in Article Twelve or Section 1018.
(c) It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article Nine or the modifications
thereby of the trusts created by this Indenture, 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 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 which affects the Trustee's own
rights, duties or immunities under this Indenture 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.
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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, (x) 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 (y) 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.
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture 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.
ARTICLE TEN
CERTAIN COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, 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) and
any interest (including any Additional 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
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respect of the Notes and this Indenture may be served. State Street Bank and
Trust Company, 61 Broadway, 15/th/ Floor, New York, New York, 10006 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.
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 (including any Additional 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 (including any Additional
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 (including any Additional 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 (including any Additional Interest)
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest (including any Additional
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:
(a) hold all sums held by it for the payment of the principal of
(and premium, if any, on) or interest (including any Additional 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;
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(b) 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 (including any Additional Interest); and
(c) 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 (including any Additional Interest) on any Note and
remaining unclaimed for two years after such principal (and premium, if any) or
interest (including any Additional 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 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 (thirty) 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
Restricted Subsidiary; provided, however, that the Company shall not be required
to preserve any such right or franchise if the Board of Directors shall in good
faith determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Restricted 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, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or property
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of the Company or any Restricted Subsidiary and (b) 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 Restricted 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
Restricted Subsidiary or used or held for use in the conduct of its business or
the business of any Restricted 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, as 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 Restricted Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1007. MAINTENANCE OF INSURANCE.
The Company will, and will cause its Restricted 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 jurisdiction of
the gaming operations of the company and its Restricted Subsidiaries and
reasonably sufficient to avoid a material adverse change in the financial
condition or results of operation of the Company and its Restricted Subsidiaries
taken as a whole. All insurance shall name the Trustee as additional insured or
loss payee, as applicable.
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 and the Notes. For purposes of
this paragraph, such compliance shall be determined without regard to any period
of grace or requirement of notice under this Indenture.
(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 Restricted 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 (5) Business Days of its occurrence.
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SECTION 1009. REPORTS TO HOLDERS OF NOTES.
Whether or not the Company is subject to the reporting requirements of
the Exchange Act, the Company shall deliver to the Trustee and each Holder of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that describes
the financial condition and results of operations of the Company and its
Consolidated Subsidiaries (provided that, such reports shall show in reasonable
detail, either on the face of the financial statements or in the footnotes
thereto, the financial condition and results of operations of the Company and
its Significant Restricted Subsidiaries separate from the financial condition
and results of operations of the Unrestricted Subsidiaries and other
Subsidiaries of the Company that are not Subsidiary Guarantors with such
reasonable detail as required by the Commission or as would be required by the
Commission if the Company were subject to the periodic reporting requirements of
the Exchange Act) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Company were required to file such reports, in each case within the time
periods specified in the Commission's rules and regulations. In addition,
following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, the
Company has agreed that for so long as any Notes remain Outstanding, the Company
will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
SECTION 1010. LIMITATION ON INDEBTEDNESS.
(a) 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
(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
1.0
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(b) Notwithstanding the foregoing provisions of this Section 1010,
the Company and its Restricted Subsidiaries may incur
(i) 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 incurrence of such Indebtedness or
issuance of Disqualified Stock by the issuer thereof;
(ii) Indebtedness under the Notes, the Subsidiary Guarantees and
this Indenture;
(iii) Indebtedness outstanding on the Issue Date;
(iv) FF&E Financing and Capitalized Lease Obligations to acquire
or refinance furniture, fixtures and equipment incident to and useful in
the operation of Casinos, Casino Hotels or any Casino Related Facility,
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
(1) the principal amount of FF&E Financing and Capitalized
Lease Obligations outstanding on the Issue Date, plus
(2) $15.0 million, plus
(3) $10.0 million times the number of Casinos acquired or
developed by the Company and its Restricted Subsidiaries after
the Issue Date, plus
(4) $7.5 million times the number of Casino Hotels
acquired or developed by the Company or its Restricted
Subsidiaries after the Issue Date;
(v) 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 (vi) of this Section),
in an amount not to exceed $15.0 million in the aggregate at any time
outstanding; Interest Rate and Currency Protection Obligations entered into
in connection with the incurrence of Indebtedness otherwise permitted under
this 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.
(vi) Indebtedness issued in exchange for or to repay, prepay,
repurchase, redeem, defease, retire or refinance ("refinance") any
Indebtedness (x) incurred pursuant
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to the provisions of Section (a) above or (y) permitted by clauses (ii) or
(iii) above or this clause (vi) of this Section (b), provided that
(1) 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
such excess shall be permitted only to the extent that it is
otherwise permitted to be incurred under this covenant, and
(2) 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 if
such Indebtedness that is being exchanged or refinanced is
subordinated to the Notes.
(vii) Indebtedness incurred by the Company and its Restricted
Subsidiaries under one or more Credit Facilities in an aggregate principal
amount at any one time outstanding not to exceed $200.0 million (less any
Indebtedness incurred pursuant to this clause (vii) that is permanently
prepaid, repaid, redeemed, purchased or retired with Net Cash Proceeds from
any Asset Sale or Event of Loss pursuant to the terms of the covenant
described in Section 1014; and
(viii) Indebtedness, other than Indebtedness permitted by
clauses (i) through (vii) of this Section, which does not exceed $25.0
million (less any Indebtedness incurred pursuant to this clause (viii) that
is permanently prepaid, repaid, redeemed, purchased or retired with Net
Cash Proceeds from any Asset Sale or Event of Loss pursuant to the terms of
the covenant described in Section 1014) 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, 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 by it after
the Issue Date or any proceeds therefrom, unless the Notes are equally and
ratably secured (except that Liens securing Subordinated Indebtedness shall be
expressly subordinate to the Liens securing the Notes to the same extent such
Subordinated Indebtedness is subordinate to the Notes), other than:
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(a) Liens existing on the Issue Date;
(b) Liens securing Senior Indebtedness of the Company and the
Subsidiary Guarantors permitted to be incurred under this Indenture;
(c) Liens securing FF&E Financing or Capitalized Lease
Obligations permitted pursuant to clause (b)(iv) of Section 1010; 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 (x) the
cost and (y) the Fair Market Value of the property or assets
purchased or acquired with the proceeds of such FF&E Financing or
Capitalized Lease Obligation,
(ii) the Indebtedness secured by such Lien shall have
otherwise been permitted to be incurred under this 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;
(d) Liens securing Indebtedness incurred pursuant to clause
(b)(viii) of Section 1010;
(e) the replacement, extension or renewal of any Lien permitted
by clauses (a) through (iv) 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 change in any direct or contingent obligor) of the
Indebtedness secured thereby; and
(f) 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 from and after the Issue Date, 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 Section
1010 (other than under clauses (b)(i) through (b)(viii) thereof); and
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(c) the aggregate amount of all Restricted Payments declared or
made after the Issue Date does not exceed the sum of the following amounts
(without duplication)
(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 January 25, 1999 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) on or after the Issue Date, plus
(iii) to the extent not otherwise included in the Company's
Consolidated Net Income, 100% of cash dividends, if applicable,
or distributions or the amount of the cash principal and interest
payments received since the Issue Date by the Company or any
Restricted Subsidiary from any Unrestricted Subsidiary or in
respect of any Investment constituting a Restricted Payment
(other than dividends, if applicable, or distributions to pay
obligations owed to a person other than the Company or any
Restricted Subsidiary by or with respect to such Unrestricted
Subsidiary, such as income taxes) until the entire amount of the
Investment in such Unrestricted Subsidiary has been received or
the entire amount of such Investment constituting a Restricted
Payment has been returned, as the case may be, and 50% of such
amounts thereafter;
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
(1) the payment of any dividend within sixty (60) days after the
date of its declaration if, at the date of declaration, such payment
would be permitted by such provisions;
(2) 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,
(3) the repurchase of Capital Stock from directors, officers and
employees (or their respective estates or beneficiaries) upon death,
disability,
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retirement or termination of employment up to an amount not to exceed
an aggregate of $2.0 million in any fiscal year of the Company, and
(4) Permitted Investments.
The full amount of any Restricted Payment made pursuant to the foregoing
clause (1) or clause (2) or clause (b) 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) 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
(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, this Indenture and the
Subsidiary Guarantees,
(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
Subsidiaries, 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,
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(v) any such contractual encumbrance in existence as of the
Issue Date or imposed by or in connection with the incurrence of any
FF&E Financing or Capitalized Lease Obligations permitted pursuant to
clause (b)(iv) 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,
(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,
(vii) restrictions imposed by the New Credit Facility, and
(viii) replacements of restrictions imposed pursuant to clauses
(i) through (vii) that are no more restrictive than those being
replaced.
SECTION 1014. LIMITATION ON ASSET SALES AND EVENTS OF LOSS.
The Company shall not, directly or indirectly, and shall 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 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 100% of the Net
Cash Proceeds therefrom to either (x) prepay, repay, redeem or purchase (and
permanently reduce the commitments under) any Senior Indebtedness or (y) 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 so
applied either to prepay, repay, redeem or purchase any Senior Indebtedness or
make a Permitted Related Investment 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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SECTION 1015. LIMITATION ON DISPOSITION OF STOCK OF RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, issue, transfer, convey, sell, lease or otherwise
dispose of any shares of Capital Stock of a Restricted Subsidiary to any Person
(other than to the Company or a wholly owned Subsidiary), unless (a) (i) such
transfer, conveyance, sale, lease or other disposition is of all of the Capital
Stock of such Restricted Subsidiary or (ii) after giving effect to such
transfer, conveyance, sale, lease or other disposition, the Company or the
applicable Subsidiary Guarantor remains the owner of a majority of the Capital
Stock of such Restricted Subsidiary and (b) the Net Cash Proceeds for such
transfer, conveyance, sale, lease or other disposition are applied in accordance
with Section 1014 herein. 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, other than 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 pursuant to Section 1012), from a
financial point of view,
(b) such transactions that are existing on the Issue Date, 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 part of a common plan) under clause (a) above involving aggregate payments
or other Fair Market Value
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(i) in excess of $5.0 million unless, prior to the consummation
thereof, the transaction is approved by the Board of Directors of the
Company, including a majority of the disinterested directors, such
approval to be evidenced by a Board Resolution delivered to the
Trustee with an Officers' Certificate stating that such Board of
Directors has determined that Affiliate Transaction complies with
clause (a) above, and
(ii) in excess of $15.0 million unless, prior to the consummation
thereof, the Company shall have received an opinion, from an
independent nationally recognized firm experienced in the appraisal or
similar review of similar types of transactions, that such transaction
or series of related transactions is on terms which are fair, from a
financial point of view, to the Company or such Restricted Subsidiary.
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. 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,
other than Casino America of Colorado, Inc. and Isle of Capri Black Hawk LLC and
any entity that becomes a direct or indirect Subsidiary of the Company 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 (x) the Subsidiary to be so designated has total
assets of $100,000 or less (y) 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 (b)(i) through
(b)(viii) 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 the paragraph below and
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(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 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, the Isle-Lake Charles or the Isle-Tunica as an Unrestricted
Subsidiary.
(b) 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 the interest of the
Company and any of its Restricted Subsidiaries in 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.
(c) 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 of the Company (whether or not a Subsidiary on the Issue Date) shall
be classified as a Restricted Subsidiary.
(d) An Unrestricted Subsidiary may be redesignated a Restricted
Subsidiary, provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if,
(i) such Indebtedness is permitted to be incurred under Section
1010 (other than under clauses (b)(i) through (b)(vii) thereof), and
(ii) no Default or Event of Default shall have occurred and be
continuing.
(e) 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 this 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 this 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.
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(f) On the Issue Date, the Subsidiary Guarantors include the Persons
listed as parties to this Indenture in clause (ii) 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 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 Guarantee until released as set
forth in paragraph (a) above or in Section 1210.
SECTION 1019. 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 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 (including any Additional 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 Subsidiary Guarantees
in a manner inconsistent with the provisions of this Indenture or the Subsidiary
Guarantees.
SECTION 1020. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, create, incur, assume, guarantee or in any other manner become
liable with respect to any Indebtedness (other than the Notes and the Subsidiary
Guarantees) that is subordinate in right of payment to any Senior Indebtedness
of the Company or such Restricted Subsidiary, as applicable, unless such
Indebtedness is either
(a) pari passu in right of payment with the Notes or the
Subsidiary Guarantee, as applicable, or
(b) subordinate in right of payment to the Notes or the
Subsidiary Guarantees, as applicable, in the same manner and at least to
the same extent as the Notes are subordinated to Senior Indebtedness of the
Company or as such Subsidiary Guarantee is subordinated to Senior
Indebtedness of such Subsidiary Guarantor, as applicable.
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 on or after April 15, 2004,
subject to the conditions and
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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 April 15, 2002, the Company may redeem, at its
option, up to 35% of the Outstanding Notes at a Redemption Price of 108.75% 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
$253.5 million in principal amount of the Notes remains outstanding.
(c) Notwithstanding any other provision hereof, if any Gaming
Authority requires that a Holder 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 thirty (30) days after
being requested to do so in such circumstances by the Gaming Authority or by the
Company pursuant to an order of 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 thirty (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 a redemption price equal
to the lesser of
(A) the principal amount thereof, and
(B) the price at which such Holder acquired the 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
thirty (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 paragraph (c) to this Section 1101 to a
"Holder" shall include any beneficial owner of Notes.
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,
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the Company shall, at least sixty (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 or repurchased shall be determined by
the Trustee on a pro rata basis, by lot or by such other method as the Trustee
shall deem 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 thirty (30) nor more than sixty (60) days prior to the
Redemption Date, to each Holder of Notes to be redeemed. All notices of
redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) 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,
(d) 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
(e) the place or places where such Notes are to be surrendered
for payment of the Redemption Price.
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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 309.
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.
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 Repurchase Offer") from all Holders of
the Notes in
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accordance with the procedures set forth in Section 1111, 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 1111.
SECTION 1110. ASSET SALE/LOSS PROCEEDS REPURCHASE OFFER.
At each such time as the aggregate amount of Excess Sale/Loss Proceeds
equals $10.0 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 1111, 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 Repurchase Date, subject to satisfaction by or on behalf of the Holder of
the requirements set forth in paragraph (c) of Section 1111. Each Excess
Sale/Loss Proceeds Offer shall remain open for a period of at least twenty (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 retain such
unutilized portion of the Excess Sale/Loss Proceeds for any application or use
not prohibited by the terms of this Indenture. 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. PROCEDURES FOR OFFERS TO REPURCHASE NOTES.
(a) Within five (5) days after (i) the occurrence of a Change of
Control or (ii) each time the Excess Sale/Loss Proceeds aggregate $10.0 million,
as the case may be, the Company shall give written notice thereof to the
Trustee. Within fifteen (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 or Asset Sale/Loss Proceeds 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);
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(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 twenty (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;
(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 (x) the Repurchase Date and (y) 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 or 1110, 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.
(d) 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
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Section shall have the right to withdraw such Repurchase Notice in accordance
with Section 1112.
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.
SECTION 1112. EFFECT OF REPURCHASE NOTICE.
(a) 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 (x) the applicable
Repurchase Date with respect to such Note (provided that the conditions of
paragraph (c) of Section 1111 have been satisfied) and (y) 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 1111.
(b) 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:
(i) the certificate number and series of the Note in respect
of which such notice of withdrawal is being submitted,
(ii) the principal amount of the Note with respect to which
such notice of withdrawal is being submitted, and
(iii) 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.
(c) 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 1113. 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
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Company 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.
SECTION 1114. COVENANT TO COMPLY WITH SECURITIES LAWS UPON REPURCHASE OF
NOTES.
In connection with any offer to repurchase or repurchase of Notes
under Section 1109 or 1110, the Company shall comply with all applicable federal
and state securities laws (including, without limitation, Exchange Act Rule 14e-
1) so as to permit the rights and obligations under Sections 1109 and 1110 to
be exercised to the greatest extent practicable in the time and in the manner
specified in such Sections.
SECTION 1115. 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
GUARANTEES
SECTION 1201. SUBSIDIARY GUARANTEES.
Subject to the provisions of Article Fourteen of this Indenture, 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 and the
Notes, whether for principal, premium (if any) or interest (including any
Additional 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
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Company Obligations and, except as otherwise provided in Section 1018 or Section
1201, 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 1202. 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 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, any of the Company Obligations, 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 1203. 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:
(a) 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
and the Notes or any provision thereof,
(b) 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;
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(c) release, add or settle with any Subsidiary Guarantor in
respect of its Subsidiary Guarantee or the Company Obligations;
(d) accept partial payments on the Company Obligations and apply
any and such payments or recoveries 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;
(e) refund at any time, at such Beneficiary's sole discretion,
any payments or recoveries received by such Beneficiary in respect of any
Company Obligations; and
(f) otherwise deal with the Company and any Subsidiary Guarantor
as such Beneficiary may elect in its sole discretion.
SECTION 1204. CERTAIN WAIVERS.
Each Subsidiary Guarantor waives:
(a) the right to require the Beneficiaries to proceed against
the Company or any other Subsidiary Guarantor, or to pursue any other
remedy in any Beneficiary's 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;
(b) 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;
(c) the benefit of any statute of limitations affecting the
Company Obligations or any Subsidiary Guarantor's liability hereunder,
(d) any requirement of marshaling or any other principle of
election of remedies;
(e) 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,
(f) 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 or the Notes, all other notices of any kind, including (i) notice
of any action taken or omitted by the Beneficiaries in reliance hereon,
(ii) notice of any default by the Company or any Subsidiary Guarantor,
(iii) notice that any portion of the Company Obligations is due, (iv)
notice of any action against the Company or any Subsidiary Guarantor, or
the assertion of any right of any Beneficiary hereunder;
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(g) 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
(h) all applicable laws of the States of Mississippi, Louisiana,
Iowa, Florida and Colorado.
SECTION 1205. 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),
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 Company 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 1206. BANKRUPTCY; NO DISCHARGE.
(a) Without limiting Section 1202, 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 Company 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 Company 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.
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(b) Notwithstanding anything in this Article Twelve to the contrary,
any Event of Default under clause (g) or (h) of Section 501 of this Indenture
shall render all 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 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 Company 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, 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 1207. 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 1208. 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 Company 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 Federal 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,
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liabilities subordinated to 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 Worth
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 Federal Bankruptcy Code and applicable state
fraudulent conveyance or transfer laws.
SECTION 1209. 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
C 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 1210. RELEASE OF A SUBSIDIARY GUARANTOR.
(a) In the event of (i) a sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor or the sale of a
Subsidiary Guarantor by way of merger, consolidation or otherwise, that, in each
case, complies with the provisions set forth in Section 1014 of this Indenture,
(ii) a Subsidiary Guarantor becoming an Unrestricted Subsidiary pursuant to the
terms of this Indenture or (iii) a sale or other disposition of all of the
Capital Stock of any Subsidiary Guarantor that complies with the provisions set
forth in Section 1014 of this Indenture, then such Subsidiary Guarantor or the
Person acquiring such assets, as applicable, shall be immediately released and
relieved of any obligations under its Subsidiary Guarantee without any further
action, provided that the Company complies with the provisions of the covenant
described in Section 1014 of this Indenture. Upon release of any Subsidiary
Guarantor from its Subsidiary Guarantee pursuant to the terms of this Indenture,
each other Subsidiary Guarantor not so released shall remain liable for the full
amount of principal of, and interest on, the Notes as and to the extent provided
in this Indenture.
(b) The Trustee shall deliver an appropriate instrument evidencing
the release of a Subsidiary Guarantor upon receipt of a request of the Company
accompanied by an Officers' Certificate and an opinion of counsel as to the
compliance with this Section 1210. Any Subsidiary Guarantor not so released or
the entity surviving such Subsidiary Guarantor, as applicable, will remain or be
liable under its Subsidiary Guarantee as provided in this Article Twelve.
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ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. 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 1302 or Section 1303 be
applied to all Outstanding Notes upon compliance with the conditions set forth
below in this Article Thirteen.
SECTION 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1301 of the option
applicable to this Section 1302, 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 1304
(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 1305 and the other Sections of
this Indenture referred to in clauses (a) and (b) below, and to have satisfied
all its other obligations under such Notes and this Indenture insofar as such
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: (a) the
rights of Holders of Outstanding Notes to receive, solely from the trust fund
described in Section 1304 and as more fully set forth in such Section, payments
in respect of the principal of (and premium, if any, on) and interest (including
any Additional Interest) on such Notes when such payments are due, (b) the
Company's obligations with respect to such Notes under Sections 304, 305, 306,
1002 and 1003, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (d) this Article Thirteen. Subject to compliance with this
Article Thirteen, the Company may exercise its option under this Section 1302
notwithstanding the prior exercise of its option under Section 1303 with respect
to the Notes.
SECTION 1303. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1301 of the option
applicable to this Section 1303, the Company shall be immediately released from
its obligations under any covenant or obligation contained in Section 801 and
Sections 1005 through 1020 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. 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 or the Notes to any such covenant or
obligation or by reason of any reference in
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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(c), (d), (e), (f), (i) and (j), but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section
1302 or Section 1303 to the Outstanding Notes:
(a) 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 Thirteen 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, (i) money in
an amount, or (ii) 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 (1) day before
the due date of any payment, money in an amount, or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, 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 (including any
Additional 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 (including any Additional
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.
(b) No Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit.
(c) 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.
(d) In the case of an election under Section 1302, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) 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
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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.
(e) In the case of an election under Section 1303, 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.
(f) 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 1302
or the Covenant Defeasance under Section 1303 (as the case may be) have
been complied with.
SECTION 1305. 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 1305, the "Trustee") pursuant to Section 1304 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 (including any Additional 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 1304 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 Thirteen 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 1304 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 Thirteen.
SECTION 1306. REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1305 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
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under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1302 or 1303, 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 1305; provided, however, that if the Company makes any
payment of principal of (or premium, if any, on) or interest (including any
Additional 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.
SECTION 1307. COUNTERPARTS.
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.
ARTICLE FOURTEEN
SUBORDINATION
SECTION 1401. AGREEMENT TO SUBORDINATE
The Company and the Subsidiary Guarantors agree for themselves and for
their successors, and each Holder by accepting a Note agrees, that the payment
of principal of, and premium, interest (including any Additional Interest) on
and any other amounts owing by the Company and the Subsidiary Guarantors with
respect to, the Notes is subordinated in right of payment, to the extent and in
the manner provided in this Article Fourteen, to the prior payment in full of
all Senior Indebtedness (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Indebtedness. This Article Fourteen shall
constitute a continuing offer to all persons or entities who become holders of,
or continue to hold, Senior Indebtedness. Notwithstanding anything to the
contrary in this Indenture or the Notes, the provisions of this Article Fourteen
are made for the benefit of the holders of Senior Indebtedness, each of whom is
an obligee hereunder and is entitled to enforce such holder's rights hereunder,
without any act or notice of acceptance hereof or reliance hereon. No amendment,
modification or discharge of any provision of this Article Fourteen shall be
effective against any holder of Senior Indebtedness unless expressly consented
to in writing by such holder. The provisions of this Article Fourteen apply
notwithstanding anything to the contrary contained in the Notes or this
Indenture. Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof and interest thereon and other
amounts due in connection therewith shall first be paid in full, or such payment
duly provided for in Cash or in manner satisfactory to the holders of such
Senior Indebtedness, before any payment is made on account of the Notes or this
Indenture.
SECTION 1402. LIQUIDATION; DISSOLUTION; BANKRUPTCY
(a) In the event of any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization, dissolution or other winding-
up of a Subsidiary Guarantor, whether voluntary or involuntary, or any
assignment for the benefit of creditors or other marshalling of assets or
liabilities of such Subsidiary Guarantor:
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(i) all Senior Indebtedness of the Company must be paid in full in
cash or as otherwise may be acceptable to the holders of such Senior
Indebtedness before any payment or distribution (excluding any payment or
distribution provided for by a plan of reorganization giving effect to
these subordination provisions of certain permitted equity securities or
securities that are subordinated to the Senior Indebtedness to at least the
same extent as the Notes and which have a term which exceeds the term of
such Senior Indebtedness and other than payments from trusts previously
created pursuant to the provisions described in Article Thirteen) is made
on account of the principal of, premium, if any, or interest (including
Additional Interest) on or any amounts payable with respect to the Notes,
and,
(ii) until Senior Indebtedness is paid in full, any distribution to
which Holders of Notes would be entitled but for this provision shall be
made to the holders of Senior Indebtedness as their interests may appear,
except that holders of the Notes may receive Capital Stock or any
securities described in paragraph (a)(i) above.
(b) In the event of any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization, dissolution or other winding-
up of a Subsidiary Guarantor, whether voluntary or involuntary, or any
assignment for the benefit of creditors or other marshalling of assets or
liabilities of such Subsidiary Guarantor:
(i) all Senior Indebtedness of such Subsidiary Guarantor must be paid
in full in cash or as otherwise may be acceptable to the holders of such
Senior Indebtedness before any payment or distribution (excluding any
payment or distribution of certain permitted equity or securities that are
subordinated to the Senior Indebtedness to at least the same extent as the
Subsidiary Guarantees and which have a term which exceeds the term of such
Senior Indebtedness is made on account of the Subsidiary Guarantee of such
Subsidiary Guarantor, and,
(ii) until Senior Indebtedness of such Subsidiary Guarantor is paid in
full, any distribution to which holders of Notes would be entitled but for
this provision shall be made to the holders of Senior Indebtedness as their
interests may appear, except that holders of the Notes may receive Capital
Stock or any securities described in paragraph (b)(i) above.
SECTION 1403. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS
During the continuance of any default in the payment of the Designated
Senior Indebtedness of the Company or a Subsidiary Guarantor at maturity or
pursuant to which the maturity thereof may immediately be accelerated beyond the
applicable grace period, no payment or distribution of any assets of the Company
or such Subsidiary Guarantor of any kind or character (excluding any payment or
distribution provided for by a plan of reorganization giving effect to these
subordination provisions of certain permitted equity or securities that are
subordinated to the Senior Indebtedness to at least the same extent as the Notes
and which have a term which exceeds the term of such Senior Indebtedness and
other than payments from trusts previously created pursuant to the provisions
described in Article Thirteen) shall be made on
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account of the principal of, premium, if any, or interest (including Additional
Interest) on or any other amounts payable with respect thereto, or the purchase,
redemption or other acquisition of, the Notes or such Subsidiary Guarantee,
respectively, unless and until such default has been cured or waived or has
ceased to exist or such Designated Senior Indebtedness shall have been
discharged or paid in full.
During the continuance of any non-payment default with respect to any
Designated Senior Indebtedness of the Company or a Subsidiary Guarantor pursuant
to which the maturity thereof may be accelerated (in accordance with its terms a
"Non-payment Default") and after receipt by the Trustee from the representatives
of holders of such Designated Senior Indebtedness of a written notice of such
Non-Payment Default, no payment or distribution of any assets of the Company or
such Subsidiary Guarantor, respectively, of any kind or character (excluding any
payment or distribution provided for by a plan of reorganization giving effect
to these subordination provisions of certain permitted equity or securities that
are subordinated to Senior Indebtedness to at least the same extent as the Notes
and which have a term which exceeds the term of such Senior Indebtedness and
other than payments from trusts previously created pursuant to the provisions
described in Article Thirteen) may be made by the Company or such Subsidiary
Guarantor, respectively, on account of the principal of, premium, if any, or
interest (including Additional Interest) on or any amounts payable with respect
to, or the purchase, redemption or other acquisition of, the Notes or such
Subsidiary Guarantee, respectively, for the period specified hereinbelow (the
"Payment Blockage Period").
The Payment Blockage Period will commence upon the receipt of written
notice of a Non-payment Default by the Trustee from the representatives of
holders of Designated Senior Indebtedness specifying an election to effect a
Payment Blockage Period and will end on the earlier to occur of the following
events:
(a) 179 days shall have elapsed since the receipt of such notice of a
Non-payment Default (provided that such Designated Senior Indebtedness
shall not theretofore have been accelerated)
(b) such default is cured or waived or ceases to exist or such
Designated Senior Indebtedness is discharged or
(c) such Payment Blockage Period shall have been terminated by written
notice to the Company or the Trustee from the representatives of holders of
Designated Senior Indebtedness initiating such Payment Blockage Period.
After the end of any Payment Blockage Period, the Company shall
promptly resume making any and all required payments in respect of the Notes,
including any missed payments. Notwithstanding anything in this Article
Fourteen or the Notes to the contrary,
(i) in no event shall a Payment Blockage Period extend beyond
179 days from the date of the receipt by the Trustee of the notice
initiating such Payment Blockage Period,
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(ii) there shall be a period of at least 186 consecutive days in
each 365-day period when no Payment Blockage Period is in effect, and
(iii) not more than one Payment Blockage Period with respect to
the Notes may be commenced within any period of 365 consecutive days.
A Non-payment Default with respect to Designated Senior Indebtedness
that existed or was continuing on the date of commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall not give rise to the commencement of a second
Payment Blockage Period, whether or not within a period of 365 consecutive days,
unless such Non-payment Default has been cured or waived for a period of not
less than 90 consecutive days and subsequently recurs.
SECTION 1404. ACCELERATION OF THE NOTES
The Company, the Subsidiary Guarantors and the Trustee shall promptly
notify holders of Senior Indebtedness of the issuance by the Trustee or the
receipt of an acceleration notice following an Event of Default, whereupon the
Trustee shall promptly notify the holders of Designated Senior Indebtedness of
such acceleration notice, provided that failure to give such notice shall not
affect the subordination of the Notes to the Senior Indebtedness as provided in
this Article Fourteen.
SECTION 1405. WHEN DISTRIBUTION MUST BE PAID OVER
In the event that the Trustee or any Holder receives any payment of
any principal of, (premium, if any) or interest (including any Additional
Interest) on the Notes or the Subsidiary Guarantees, in violation of this
Article Fourteen, such payment shall be held by the Trustee or such Holder, in
trust for the benefit of and shall be paid forthwith over and delivered to, the
holders of Senior Indebtedness as their interests may appear or their
representative under the New Credit Facility, indenture or any other agreement
pursuant to which Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of all obligations with
respect to Senior Indebtedness remaining unpaid to the extent necessary to pay
such obligations in full in accordance with their terms, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article Fourteen, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
Fourteen, except if such payment is made as a result of the willful misconduct
or gross negligence of the Trustee.
SECTION 1406. NOTICE BY THE COMPANY AND SUBSIDIARY GUARANTORS
97
<PAGE>
The Company and the Subsidiary Guarantors shall promptly notify the
Trustee and the Paying Agent of any facts known to them that would cause a
payment of any obligations with respect to the Notes to violate this Article
Fourteen, but failure to give such notice shall not affect the subordination of
the Notes to the Senior Indebtedness as provided in this Article Fourteen.
--------
SECTION 1407. SUBROGATION
After all Senior Indebtedness is irrevocably paid in full in cash or
cash equivalents satisfactory to the holders thereof and until the Notes are
paid in full, Holders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior
---- -----
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the Holders have been applied to
the payment of Senior Indebtedness. A distribution made under this Article
Fourteen to holders of Senior Indebtedness that otherwise would have been made
to Holders is not, as between the Company and Holders, a payment by the Company
on the Notes.
SECTION 1408. RELATIVE RIGHTS
This Article Fourteen defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this in this Indenture shall:
(a) impair, as between the Company, the Subsidiary Guarantors and
Holders, the obligation of the Company and the Subsidiary Guarantors, which
are absolute and unconditional, to pay principal of (premium, if any) and
interest (including any Additional Interest) on the Notes in accordance
with their terms;
(b) affect the relative rights of Holders and creditors of the Company
and Subsidiary Guarantors other than their rights in relation to holders of
Senior Indebtedness; or
(c) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Indebtedness to receive distributions and
payments otherwise payable to Holders.
If the Company or the Subsidiary Guarantors fail because of this
Article Fourteen to pay principal of (premium, if any) or interest (including
any Additional Interest) on a Note on the due date, the failure shall
nonetheless constitute a Default or Event of Default.
SECTION 1409. SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY AND
SUBSIDIARY GUARANTORS
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the
98
<PAGE>
Company, the Subsidiary Guarantors or any Holder or by the failure of the
Company, the Subsidiary Guarantors or any Holder to comply with this Indenture.
SECTION 1410. DISTRIBUTION OR NOTICE TO REPRESENTATIVE
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
representative.
Upon any payment or distribution of assets of the Company referred to
in this Article Fourteen, the Trustee and the Holders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other Indebtedness of the
Company or Subsidiary Guarantors, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Fourteen.
SECTION 1411. RIGHTS OF TRUSTEE AND PAYING AGENT
Notwithstanding the provisions of this Article Fourteen or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office prior to the date of such payment written notice of facts
that would cause the payment of any obligations with respect to the Notes to
violate this Article Fourteen. Nothing in this Article Fourteen shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 606
hereof.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior
Indebtedness (or a Representative of such holder) to establish that such notice
has been given by a holder of Senior Indebtedness (or a Representative of any
such holder). In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Fourteen, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Fourteen, and if such evidence is not
furnished, the Trustee may defer any payment which it may be required to make
for the benefit of such person pursuant to the terms of this Indenture pending
judicial determination as to the rights of such Person to receive such payment.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
99
<PAGE>
SECTION 1412. AUTHORIZATION TO EFFECT SUBORDINATION
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article Fourteen, and appoints the Trustee to act as the Holder's attorney-in-
fact for any and all such purposes. If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any proceeding referred to in
Section 504 hereof at least 30 days before the expiration of the time to file
such claim, the agents of the lenders under the New Credit Facility are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 1413. MODIFICATION OF TERMS OF SENIOR INDEBTEDNESS.
Any renewal or extension of the time of payment of any Senior
Indebtedness or the exercise by the holders of Senior Indebtedness of any of
their rights under any instrument creating or evidencing Senior Indebtedness,
including without limitation the waiver of default thereunder, may be made or
done all without notice to or assent from the holders of the Notes or the
Trustee.
No compromise, alteration, amendment, modification, extension, renewal
or other change of, or waiver, consent or other action (including any sale,
exchange or release of property pledged, mortgaged or otherwise securing Senior
Indebtedness or the release of any person liable in any manner for the
collection of Senior Indebtedness) (collectively, an "Action") in respect of,
any liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Indebtedness is outstanding or of such Senior Indebtedness, whether or
not such Action is in accordance with the provisions of any applicable document,
shall in any way alter or affect any of the provisions of this Article Thirteen
or of the Notes relating to the subordination hereof.
100
<PAGE>
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.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as Trustee
By:___________________________________________________
Name:
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI
By:___________________________________________________
Name:
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI-VICKSBURG
By:___________________________________________________
Name:
Title:
RIVERBOAT SERVICES, INC.
By:___________________________________________________
Name:
Title:
CSNO, INC.
By:___________________________________________________
Name:
Title:
101
<PAGE>
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
By:___________________________________________________
Name:
Title:
ST. CHARLES GAMING COMPANY, INC.
By:___________________________________________________
Name:
Title:
LRG HOTELS, L.L.C.
By:___________________________________________________
Name:
Title:
GRAND PALAIS RIVERBOAT, INC.
By:___________________________________________________
Name:
Title:
LRGP HOLDINGS, INC.
By:___________________________________________________
Name:
Title:
PPI, INC.
By:___________________________________________________
Name:
Title:
ISLE OF CAPRI CASINO COLORADO, INC.
By:___________________________________________________
Name:
Title:
102
<PAGE>
ISLE OF CAPRI CASINO-TUNICA, INC.
By:___________________________________________________
Name:
Title:
IOC-COAHOMA, INC.
By:___________________________________________________
Name:
Title:
ISLE OF CAPRI HOTELS-BOSSIER CITY, L.L.C.
By:___________________________________________________
Name:
Title:
103
<PAGE>
EXHIBIT A
---------
Form of Transfer Restricted Note
-1-
<PAGE>
EXHIBIT B
---------
Form of Exchange Note
-2-
<PAGE>
EXHIBIT C
---------
Form of Senior Subordinated
Subsidiary Guarantee
-3-
<PAGE>
EXHIBIT 4.10
_______________________________
Registration Rights Agreement
Dated as of April 23, 1999
among
Isle of Capri Casinos, Inc.,
the Subsidiary Guarantors listed on the Signature pages hereof
and
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Wasserstein Perella Securities, Inc.
CIBC Oppenheimer Corp.
and
Jefferies & Company, Inc.
_______________________________
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into this 23rd day of April, 1999, among Isle of Capri Casinos, Inc.
(formerly Casino America, Inc.), a Delaware corporation (the "Company"),
Riverboat Corporation of Mississippi, a Mississippi corporation ("RCM"),
Riverboat Corporation of Mississippi-Vicksburg, a Mississippi corporation ("RCM-
Vicksburg"), Riverboat Services, Inc., an Iowa corporation ("RSI"), CSNO, Inc.,
a Louisiana corporation ("CSNO"), Louisiana Riverboat Gaming Partnership, a
Louisiana general partnership ("LRGP"), St. Charles Gaming Company, Inc., a
Louisiana corporation ("SCGC"), LRG Hotels, L.L.C., a Louisiana limited
liability company ("LRGH"), Grand Palais Riverboat, Inc., a Louisiana
corporation ("GPRI"), LRGP Holdings, Inc., a Louisiana corporation ("LRGP
Holdings"), PPI, Inc., a Florida corporation ("PPI"), Isle of Capri Casino
Colorado, Inc., a Colorado corporation ("Isle Colorado"), Isle of Capri Casino-
Tunica, Inc., a Mississippi corporation ("Isle-Tunica"), Isle of Capri Hotels-
Bossier City, L.L.C., a Louisiana limited liability company ("Isle Bossier
Hotel") and IOC-Coahoma, Inc., a Mississippi corporation ("IOC - Coahoma" and
together with RCM, RCM-Vicksburg, RSI, CSNO, LRGP, SCGC, LRGH, GPRI, LRGP
Holdings, PPI, Isle Colorado, Isle-Tunica and Isle Bossier Hotel, the
"Subsidiary Guarantors"), Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Wasserstein Perella Securities, Inc. ("Wasserstein Perella"),
CIBC Oppenheimer Corp. and Jefferies & Company, Inc. (collectively, the "Initial
Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated April
20, 1999 among the Company, the Subsidiary Guarantors and the Initial Purchasers
(the "Purchase Agreement"), which provides for the sale by the Company to the
Initial Purchasers of an aggregate of $390,000,000 in principal amount of the
Company's 8 3/4% Senior Subordinated Notes due 2009, Series A (the "Notes"),
which are guaranteed by the Subsidiary Guarantors. In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Company and the
Subsidiary Guarantors have agreed to provide to the Initial Purchasers and their
direct and indirect transferees the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing under
the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions
-----------
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
--------
to time.
"1934 Act" shall mean the Securities Exchange Act of l934, as amended
--------
from time to time.
"Broker Prospectus Period" shall mean a period of at least 365 days
------------------------
after the consummation of the Exchange Offer during which the Company shall make
a prospectus meeting the requirements of the 1933 Act available to all
Participating Broker-Dealers for use in connection with any resale of any
Exchange Notes acquired in the Exchange Offer.
<PAGE>
"Closing Date" shall mean the Closing Time as defined in the Purchase
------------
Agreement.
"Company" shall have the meaning set forth in the preamble and shall
-------
also include the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company, provided, however, that such depositary
must have an address in the Borough of Manhattan, in the City of New York.
"Exchange Notes" shall mean the 8 3/4% Senior Subordinated Notes due
--------------
2009, Series B issued by the Company and guaranteed by the Subsidiary Guarantors
under the Indenture containing terms identical to the Notes in all material
respects (except for references to certain interest rate provisions,
restrictions on transfers and restrictive legends), to be offered to Holders of
Notes in exchange for Transfer Restricted Notes pursuant to the Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the Company and the
--------------
Subsidiary Guarantors of Exchange Notes for Transfer Restricted Notes pursuant
to Section 2.1 hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
---------------------------
Act effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement,
including the Prospectus contained therein, all exhibits thereto and all
documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2.1
---------------
hereof.
"Holder" shall mean an Initial Purchaser, for so long as it owns any
------
Transfer Restricted Notes, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Transfer Restricted Notes
under the Indenture and each Participating Broker-Dealer that holds Exchange
Notes for so long as such Participating Broker-Dealer is required to deliver a
prospectus meeting the requirements of the 1933 Act in connection with any
resale of such Exchange Notes.
"Indenture" shall mean the Indenture relating to the Notes, dated as
---------
of April 23, 1999, between the Company, the Subsidiary Guarantors, and State
Street Bank and Trust Company, as trustee, as the same may be amended,
supplemented, waived or otherwise modified from time to time in accordance with
the terms thereof.
"Initial Purchaser" or "Initial Purchasers" shall have the meaning set
----------------- ------------------
forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of Outstanding (as defined in the Indenture) Transfer
Restricted Notes; provided that whenever the consent or approval of Holders of
--------
a specified percentage of Transfer
2
<PAGE>
Restricted Notes is required hereunder, Transfer Restricted Notes held by the
Company and other obligors on the Notes or any Affiliate (as defined in the
Indenture) of the Company or any Subsidiary Guarantor shall be disregarded in
determining whether such consent or approval was given by the Holders of such
required percentage amount.
"Notes" shall have the meaning set forth in the preamble hereof.
-----
"Participating Broker-Dealer" shall mean any of Merrill Lynch, Pierce,
---------------------------
Fenner & Smith Incorporated, Wasserstein Perella Securities, Inc., CIBC
Oppenheimer Corp. and Jefferies & Company, Inc. and any other broker-dealer
which makes a market in the Notes and exchanges Transfer Restricted Notes in the
Exchange Offer for Exchange Notes.
"Person" shall mean an individual, partnership (general or limited),
------
corporation, limited liability company, trust or unincorporated organization, or
a government or agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2.1
----------------
hereof.
"Private Exchange Notes" shall have the meaning set forth in Section
----------------------
2.1 hereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Transfer Restricted Notes covered by a Shelf Registration Statement, and
by all other amendments and supplements to a prospectus, including post-
effective amendments, and in each case including all material incorporated by
reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble.
------------------
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company and the Subsidiary Guarantors with
this Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. (the "NASD") registration and
filing fees, including, if applicable, the fees and expenses of any "qualified
independent underwriter" that is required to be retained by any holder of
Transfer Restricted Notes in accordance with the rules and regulations of the
NASD, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws and compliance with the rules of the NASD
(including reasonable fees and disbursements of counsel for any underwriters or
Holders in connection with blue sky qualification of any of the Exchange Notes
or Transfer Restricted Notes and any filings with the NASD), (iii) all expenses
of any Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with this
Agreement, (iv) all fees and expenses incurred in connection with the listing,
if any, of any of the Transfer Restricted Notes on any securities exchange or
exchanges, (v) all rating agency fees, (vi) the fees and disbursements of
counsel for the Company and the Subsidiary Guarantors and of the independent
public accountants of the Company and the Subsidiary Guarantors, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, (vii) the fees and
3
<PAGE>
expenses of the Trustee (including the reasonable fees and disbursements of its
counsel), and any escrow agent or custodian, and (viii) any fees and
disbursements of the underwriters customarily required to be paid by issuers or
sellers of securities and the fees and expenses of any special experts retained
by the Company and the Subsidiary Guarantors in connection with any Registration
Statement, but excluding underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of Transfer Restricted Notes
by a Holder. Notwithstanding the foregoing, except as specifically provided
above, the Company and the Subsidiary Guarantors shall not be responsible for
the fees and expenses of the Initial Purchasers in connection with the Exchange
Offer, or the fees and expenses of counsel to the Initial Purchasers in
connection therewith.
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any of the Exchange Notes or Transfer Restricted Notes
pursuant to the provisions of this Agreement, and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission or any
---
successor agency or government body performing the functions currently performed
by the United States Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2.2 of this
Agreement which covers Transfer Restricted Notes or Private Exchange Notes on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule that may
be adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Transfer Restricted Notes" shall mean the Notes and, if issued, the
--------------------------
Private Exchange Notes; provided, however, that Notes and, if issued, the
Private Exchange Notes, shall cease to be Transfer Restricted Notes when (i)
such Transfer Restricted Note has been exchanged by a person (other than a
Participating Broker-Dealer) for an Exchange Note in the Exchange Offer, (ii)
following the exchange by a Participating Broker-Dealer in the Exchange Offer of
a Transfer Restricted Note for an Exchange Note, the date on which such Exchange
Note is sold to a purchaser who received from such Participating Broker-Dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, as amended or supplemented, (iii) such
Transfer Restricted Note has been effectively registered under the 1933 Act and
disposed of in accordance with the Shelf Registration Statement, (iv) such
Transfer Restricted Note is eligible for distribution to the public pursuant to
Rule l44(k) (or any similar provision then in force, but not Rule 144A) under
the 1933 Act, or (v) such Transfer Restricted Note ceases to be outstanding.
"Trustee" shall mean the trustee with respect to the Notes under the
-------
Indenture.
4
<PAGE>
2. Registration Under the 1933 Act
-------------------------------
2.1 Exchange Offer. The Company and the Subsidiary Guarantors shall,
--------------
for the benefit of the Holders, at the Company's and Subsidiary Guarantors'
cost, (A) file the Exchange Offer Registration Statement with the SEC on or
prior to the 75th day following the Closing Date, which Exchange Offer
Registration Statement shall be on an appropriate form under the 1933 Act and
shall relate to a proposed Exchange Offer and the issuance and delivery to the
Holders who so elect, in exchange for the Transfer Restricted Notes (other than
Private Exchange Notes), of a like principal amount of Exchange Notes, (B) use
their best efforts to have the Exchange Offer Registration Statement declared
effective by the SEC under the 1933 Act on or prior to the 120th day following
the Closing Date, (C) commence the Exchange Offer promptly after the Exchange
Offer Registration Statement is declared effective, (D) keep the Exchange Offer
open for acceptance for not less than 20 business days after notice thereof is
mailed to Holders (or longer if required by applicable law) (such period
referred to herein as the "Exchange Period") and consummate the Exchange Offer
no later than 30 business days following the date on which the Exchange Offer
Registration Statement is declared effective by the SEC, (E) use their best
efforts to issue, promptly after the end of the Exchange Period, Exchange Notes
in exchange for all Notes that have been properly tendered for exchange during
the Exchange Period and (F) use their best efforts to maintain the effectiveness
of the Exchange Offer Registration Statement during the Exchange Period and
thereafter until such time as the Company has issued Exchange Notes in exchange
for all Transfer Restricted Notes that have been properly tendered for exchange
during the Exchange Period. The Exchange Notes will be issued under the
Indenture. Upon the effectiveness of the Exchange Offer Registration Statement,
the Company and the Subsidiary Guarantors shall promptly commence the Exchange
Offer, it being the objective of such Exchange Offer to enable each Holder
eligible and electing to exchange Transfer Restricted Notes for Exchange Notes
(assuming that such Holder makes certain representations and warranties to the
Company, including representations that (a) it is not an affiliate of the
Company within the meaning of Rule 405 under the 1933 Act, (b) any Exchange
Notes to be received by it will be acquired in the ordinary course of its
business, (c) if such Holder is not a broker-dealer, that it is not engaged in,
and does not intend to engage in, the distribution of the Exchange Notes, (d) if
such Holder is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Transfer Restricted Notes acquired as a result of
market-making or other trading activities, that such broker-dealer will deliver
a prospectus in connection with any resale of such Exchange Notes, and (e) it
has no arrangements or understandings with any Person to participate in the
distribution of the Transfer Restricted Notes or the Exchange Notes) to transfer
such Exchange Notes from and after their receipt without any limitations or
restrictions under the 1933 Act and under state securities or blue sky laws.
In connection with the Exchange Offer, the Company and the Subsidiary
Guarantors shall additionally:
(a) utilize the services of the Depositary for the Exchange Offer;
(b) permit Holders to withdraw tendered Transfer Restricted Notes at
any time prior to 5:00 p.m. (Eastern Standard Time), on the last business day of
the Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter
5
<PAGE>
setting forth the name of such Holder, the principal amount of Transfer
Restricted Notes delivered for exchange, and a statement that such Holder is
withdrawing such Holder's election to have such Notes exchanged;
(c) notify each Holder that any Transfer Restricted Notes not
tendered will remain outstanding and continue to accrue interest, but will not
retain any rights under this Agreement (except in the case of the Initial
Purchasers and Participating Broker-Dealers as provided herein); and
(d) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them and having the status of an unsold
allotment in the initial distribution, the Company and the Subsidiary Guarantors
upon the request of any Initial Purchaser shall, simultaneously with the
delivery of the Exchange Notes in the Exchange Offer, issue and deliver to such
Initial Purchaser in exchange (the "Private Exchange") for the Notes held by
such Initial Purchaser, a like principal amount of debt securities of the
Company that are identical (except that such securities shall bear appropriate
transfer restrictions) to the Exchange Notes (the "Private Exchange Notes") and
shall be guaranteed by the Subsidiary Guarantors.
The Exchange Notes and the Private Exchange Notes shall be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture and which, in either case, has been qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), or is exempt from such
qualification and shall provide that the Exchange Notes shall not be subject to
the transfer restrictions set forth in the Indenture but that the Private
Exchange Notes shall be subject to such transfer restrictions. The Exchange
Notes, the Private Exchange Notes and the Notes shall vote and consent together
on all matters as one class and none of the Exchange Notes, the Private Exchange
Notes or the Notes will have the right to vote or consent as a separate class on
any matter. The Private Exchange Notes shall be of the same series as, and the
Company shall use all commercially reasonable efforts to have the Private
Exchange Notes bear the same CUSIP number as, the Exchange Notes. The Company
and the Subsidiary Guarantors shall not have any liability under this Agreement
solely as a result of such Private Exchange Notes not bearing the same CUSIP
number as the Exchange Notes.
As soon as practicable after the close of the Exchange Offer and/or
the Private Exchange, as the case may be, the Company and the Subsidiary
Guarantors shall:
(i) accept for exchange all Transfer Restricted Notes duly tendered
and not validly withdrawn pursuant to the Exchange Offer in accordance with
the terms of the Exchange Offer Registration Statement and the letter of
transmittal which shall be an exhibit thereto;
(ii) accept for exchange all Notes properly tendered pursuant to the
Private Exchange;
(iii) deliver to the Trustee for cancellation all Transfer Restricted
Notes so accepted for exchange; and
6
<PAGE>
(iv) cause the Trustee promptly to authenticate and deliver Exchange
Notes or Private Exchange Notes, as the case may be, to each Holder of
Transfer Restricted Notes so accepted for exchange in a principal amount
equal to the principal amount of the Transfer Restricted Notes of such
Holder so accepted for exchange.
Interest on each Exchange Security and Private Exchange Security,
including Additional Interest, will accrue from the last date on which interest
was paid on the Transfer Restricted Notes surrendered in exchange therefor or,
if no interest has been paid on the Transfer Restricted Notes, from the Closing
Date. The Company shall inform the Initial Purchasers of the names and
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders and otherwise facilitate
the tender of Transfer Restricted Notes in the Exchange Offer.
2.2 Shelf Registration. If,
------------------
(i) the Company or any Subsidiary Guarantor is not permitted to file
the Exchange Offer Registration Statement or to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or SEC
policy,
(ii) for any other reason the Exchange Offer is not consummated
within 150 days after the Closing Date,
(iii) any Holder notifies the Company within 30 days following the
date upon which the Exchange Offer Registration Statement is declared effective
that
(1) such Holder is not entitled to participate in the Exchange
Offer,
(2) such Holder may not resell or otherwise transfer the
Exchange Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the prospectus
contained in the Exchange Offer Registration Statement is
not appropriate for such resales by such Holder, or
(3) such Holder is a broker-dealer and owns Notes acquired
directly from the Company or an affiliate of the Company, or
(iv) the holders of a majority in aggregate principal amount of the
Transfer Restricted Notes are not eligible to participate in the Exchange Offer
and to receive Exchange Notes that they may resell to the public without volume
restrictions under the 1933 Act and without similar restrictions under
applicable blue sky or state securities laws,
then in case of each of clauses (i) through (iv) the Company and the Subsidiary
Guarantors shall, at their cost:
(a) use their best efforts to file with the SEC on or prior
to the 60th day after such filing obligation arises and thereafter
shall use their best efforts to cause to be declared effective no
later than 120 days after such filing obligation arises, a Shelf
Registration Statement relating to the offer and sale of the Transfer
7
<PAGE>
Restricted Notes by the Holders from time to time in accordance with
the methods of distribution elected by the Holders of a majority in
aggregate principal amount of Transfer Restricted Notes participating
in the Shelf Registration and set forth in such Shelf Registration
Statement; provided, however, that, if the obligation to file the
Shelf Registration Statement arises because the Exchange Offer has not
been consummated within 150 days after the Closing Date, the Company
and Subsidiary Guarantors shall use their best efforts to file the
Shelf Registration Statement on or prior to the 181st day following
the Closing Date,
(b) use their best efforts to keep the Shelf Registration
Statement continuously effective, supplemented and amended (including
through a post-effective amendment on Form S-3 if the Company is
eligible to use such Form) in order to permit the Prospectus forming
part thereof to be usable by Holders for a period of two years from
the date the Shelf Registration Statement is declared effective by the
SEC, or for such shorter period that will terminate when all Transfer
Restricted Notes covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or cease to be
outstanding or otherwise to be Transfer Restricted Notes (the
"Effectiveness Period"); provided, however, that the Effectiveness
Period in respect of the Shelf Registration Statement shall, upon
written request to the Company, be extended to the extent required to
permit dealers to comply with the applicable prospectus delivery
requirements of Rule 174 under the 1933 Act and as otherwise provided
herein, and
(c) notwithstanding any other provisions hereof, use their best
efforts to ensure that (i) any Shelf Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any
supplement thereto complies in all material respects with the 1933 Act
and the rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any Prospectus
forming part of any Shelf Registration Statement, and any supplement
to such Prospectus (as amended or supplemented from time to time),
does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in
light of the circumstances under which they were made, not misleading.
The Company and the Subsidiary Guarantors shall not permit any
securities other than Transfer Restricted Notes to be included in the Shelf
Registration Statement. The Company and the Subsidiary Guarantors further
agree, if necessary, to supplement or amend the Shelf Registration Statement, as
required by Section 3(b) below, and to furnish to the Holders of Transfer
Restricted Notes copies of any such supplement or amendment promptly after its
being used or filed with the SEC.
2.3 Expenses. The Company and the Subsidiary Guarantors shall pay
--------
all Registration Expenses in connection with the registration pursuant to
Section 2.1 or 2.2. Each
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Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Transfer Restricted
Notes pursuant to the Shelf Registration Statement.
2.4 Effectiveness
-------------
(a) The Company and the Subsidiary Guarantors will be deemed not to
have used their best efforts to cause the Exchange Offer Registration Statement
or the Shelf Registration Statement, as the case may be, to become, or to
remain, effective during the requisite period if either the Company or any
Subsidiary Guarantor voluntarily takes any action that would, or omits to take
any action which omission would, result in any such Registration Statement not
being declared effective, or in the Holders of Transfer Restricted Notes covered
thereby not being able to exchange or offer and sell such Transfer Restricted
Notes during that period as and to the extent contemplated hereby, unless such
action is required by applicable law, in each case other than under the
circumstances described in paragraphs 3(e)(iii), (iv), (v) or (vi) below.
(b) An Exchange Offer Registration Statement pursuant to Section 2.1
hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will not
be deemed to have become effective unless it has been declared effective by the
SEC; provided, however, that if, after it has been declared effective, the
offering of Transfer Restricted Notes pursuant to an Exchange Offer Registration
Statement or a Shelf Registration Statement is interfered with by any stop
order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will not be effective
during the period of such interference, until the offering of Transfer
Restricted Notes pursuant to such Registration Statement may legally resume.
2.5 Additional Interest. In the event that either,
-------------------
(a) the Exchange Offer Registration Statement is not filed with the
SEC on or prior to the 75th calendar day following the Closing Date, or a
Shelf Registration Statement is not filed with the SEC prior to the dates
specified for such filing in Section 2.2 hereof;
(b) the Exchange Offer Registration Statement has not been declared
effective by the SEC under the 1933 Act on or prior to the 120th calendar
day following the Closing Date, or a Shelf Registration Statement is not
declared effective by the SEC under the 1933 Act on or prior to the 120th
day after such filing obligation arises,
(c) the Exchange Offer is not consummated within 150 days following
the Closing Date,
(d) a Shelf Registration Statement is declared effective but
thereafter, during the period for which the Company and the Subsidiary
Guarantors are required to maintain the effectiveness of such Shelf
Registration Statement, it ceases to be effective or usable in connection
with the resale of the Notes covered by such Shelf Registration Statement,
or
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(e) the Exchange Offer Registration Statement is declared effective,
but thereafter, during the Broker Prospectus Period, it ceases to be
effective (or the Company or any Subsidiary Guarantor restricts the use of
the prospectus included therein) (each such event referred to in these
clauses (a) through (e) above, a "Registration Default"),
then, the interest rate borne by the Transfer Restricted Notes shall be
increased by one-quarter of one percent (0.25%) per annum with respect to the
first 90-day period (or portion thereof) while a Registration Default is
continuing immediately following the occurrence of such Registration Default,
which rate will increase by an additional one quarter of one percent (0.25%) per
annum at the beginning of each subsequent 90-day period (or portion thereof)
while a Registration Default is continuing until all Registration Defaults have
been cured, provided that the maximum aggregate increase in the interest rate on
the Transfer Restricted Notes will in no event exceed one percent (1.00%) per
annum (the "Additional Interest"). Following the cure of all Registration
Defaults the accrual of Additional Interest will cease and the interest rate on
the Transfer Restricted Notes will revert to the original rate. Notwithstanding
the foregoing, any Registration Default specified in clause (a), (b) or (c) of
this Section that relates to the Exchange Offer Registration Statement or the
Exchange Offer shall be deemed cured at such time as the Shelf Registration
Statement is declared effective by the SEC, or earlier upon the cure of the
Registration Default described therein.
If the Shelf Registration Statement is unusable by the Holders whose
Transfer Restricted Notes are covered thereby for any reason, and the aggregate
number of days in any consecutive twelve-month period for which the Shelf
Registration Statement shall not be usable exceeds 30 days in the aggregate,
then the interest rate borne by such Holders' Notes will be increased by one-
quarter of one percent (0.25%) per annum for the first 90-day period (or portion
thereof) beginning on the 31st day in any consecutive twelve-month period that
such Shelf Registration Statement ceases to be usable, which rate shall be
increased by an additional one-quarter of one percent (0.25%) per annum at the
beginning of each subsequent 90-day period (or portion thereof) in any
consecutive twelve-month period during which the Shelf Registration Statement is
unusable, provided that the maximum aggregate increase in the interest rate on
such Holder's Notes will in no event exceed one percent (1.00%) per annum. Any
amounts payable under this paragraph shall also be deemed "Additional Interest"
for purposes of this Agreement. Upon any such Shelf Registration Statement once
again becoming usable, the interest rate borne by the Notes will be reduced to
the original interest rate if no other Registration Default shall be continuing
at such time. Additional Interest shall be computed based on the actual number
of days elapsed in each 90-day period in which the Shelf Registration Statement
is unusable.
The Company shall notify the Trustee within three business days after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Any Additional Interest due
shall be payable on each interest payment date to the Holder of Notes with
respect to which Additional Interest is due and owing. Each obligation to pay
Additional Interest shall be deemed to accrue from and including the day
following the applicable Event Date.
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3. Registration Procedures.
-----------------------
In connection with the obligations of the Company and the Subsidiary
Guarantors with respect to Registration Statements pursuant to Sections 2.1 and
2.2 hereof, the Company and the Subsidiary Guarantors shall:
(a) prepare and file with the SEC a Registration Statement, within
the relevant time period specified in Section 2, on the appropriate form under
the 1933 Act, which form (i) shall be selected by the Company, (ii) shall, in
the case of a Shelf Registration, be available for the sale of the Transfer
Restricted Notes by the selling Holders thereof, (iii) shall comply as to form
in all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by the SEC
to be filed therewith or incorporated by reference therein, and (iv) shall
comply in all respects with the requirements of Regulation S-T under the 1933
Act;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under applicable
law to keep such Registration Statement effective for the applicable period; and
cause each Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provision then in force) under the 1933 Act and comply with the provisions of
the 1933 Act, the 1934 Act and the rules and regulations thereunder applicable
to them with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders thereof
(including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Transfer Restricted Notes to be covered thereby, at least five business days
prior to filing, that a Shelf Registration Statement with respect to such
Transfer Restricted Notes is being filed and advising such Holders that the
distribution of such Transfer Restricted Notes will be made in accordance with
the method selected by a majority in aggregate principal amount of the Holders
of Transfer Restricted Notes participating in the Shelf Registration; (ii)
furnish to each Holder of Transfer Restricted Notes to be covered thereby and to
each underwriter of an underwritten offering of Transfer Restricted Notes, if
any, without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such other
documents as such Holder or underwriter may reasonably request, including
financial statements and schedules and, if the Holder so requests, all exhibits
in order to facilitate the public sale or other disposition of the Transfer
Restricted Notes; and (iii) hereby consent to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Notes in connection with the offering and sale of the Transfer
Restricted Notes covered by the Prospectus or any amendment or supplement
thereto;
(d) use their best efforts to register or qualify the Transfer
Restricted Notes under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Transfer Restricted Notes covered by a
Registration Statement and each underwriter of an underwritten offering of
Transfer Restricted Notes shall reasonably request by the time the applicable
Registration Statement is declared effective by the SEC, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
each such Holder and
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<PAGE>
underwriter to consummate the disposition in each such jurisdiction of such
Transfer Restricted Notes owned by such Holder; provided, however, that the
Company and the Subsidiary Guarantors shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where they
would not otherwise be required to qualify but for this Section 3(d), or (ii)
take any action which would subject them to general service of process or
taxation in any such jurisdiction where they are not then so subject;
(e) notify promptly each Holder of Transfer Restricted Notes under a
Shelf Registration or any Participating Broker-Dealer who has notified the
Company that it is utilizing the Exchange Offer Registration Statement as
provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, confirm such advice in writing promptly (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements to a Registration Statement have become effective,
(ii) of any request by the SEC or any state securities authority for post-
effective amendments and supplements to a Registration Statement and Prospectus
or for additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) in the case of a Shelf
Registration, if, between the effective date of a Registration Statement and the
closing of any sale of Transfer Restricted Notes covered thereby, the
representations and warranties of the Company and the Subsidiary Guarantors
contained in any underwriting agreement, securities sales agreement or other
similar agreement, if any, relating to the offering cease to be true and correct
in all material respects, (v) of the happening of any event or the discovery of
any facts during the period a Shelf Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of any
changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading, (vi) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Transfer
Restricted Notes or the Exchange Notes, as the case may be, for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose
and (vii) of any determination by the Company that a post-effective amendment to
such Registration Statement would be appropriate;
(f) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution" which section shall be in customary form, and which
shall contain a summary statement of the positions taken or policies made
by the staff of the SEC with respect to the potential "underwriter" status
of any broker-dealer that holds Transfer Restricted Notes acquired for its
own account as a result of market-making activities or other trading
activities and that will be the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of Exchange Notes to be received by such broker-
dealer in the Exchange Offer, whether such positions or policies have been
publicly disseminated by the staff of the SEC or such positions or
policies, represent the prevailing views of the staff of the SEC, including
a statement that any such broker-dealer who receives Exchange Notes for
Transfer Restricted Notes pursuant to the Exchange Offer may be deemed a
statutory underwriter and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such Exchange
Notes, (ii) furnish to each Participating Broker-Dealer who has delivered
to the Company the notice referred to in Section 3(e), without charge,
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<PAGE>
as many copies of each Prospectus included in the Exchange Offer
Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, as such Participating Broker-Dealer may
reasonably request, (iii) hereby consent to the use of the Prospectus
forming part of the Exchange Offer Registration Statement or any amendment
or supplement thereto, by any Person subject to the prospectus delivery
requirements of the SEC, including all Participating Broker-Dealers, in
connection with the sale or transfer of the Exchange Notes covered by the
Prospectus or any amendment or supplement thereto, and (iv) include in the
transmittal letter or similar documentation to be executed by an exchange
offeree in order to participate in the Exchange Offer (x) the following
provision:
"If the exchange offeree is a broker-dealer holding Transfer
Restricted Notes acquired for its own account as a result of
market-making activities or other trading activities, it
will deliver a prospectus meeting the requirements of the
1933 Act in connection with any resale of Exchange Notes
received in respect of such Transfer Restricted Notes
pursuant to the Exchange Offer;" and
(y) a statement to the effect that by a broker-dealer's making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Transfer Restricted Notes, the broker-
dealer will not be deemed to admit that it is an underwriter within the
meaning of the 1933 Act;
(g) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(h) in the case of a Shelf Registration, furnish to each Holder of
Transfer Restricted Notes, and each underwriter, if any, without charge, at
least one conformed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless
requested);
(i) in the case of a Shelf Registration, cooperate with the selling
Holders of Transfer Restricted Notes to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Notes to be sold and
not bearing any restrictive legends; and enable such Transfer Restricted Notes
to be in such denominations (consistent with the provisions of the Indenture)
and registered in such names as the selling Holders or the underwriters, if any,
may reasonably request at least three business days prior to the closing of any
sale of Transfer Restricted Notes;
(j) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Sections 3(e)(v)
and 3(e)(vi) hereof, as promptly as practicable after the occurrence of such an
event, use their best efforts to prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Transfer Restricted
Notes or Participating Broker-Dealers, such Prospectus will not contain at the
time of such delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of
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<PAGE>
the circumstances under which they were made, not misleading or will remain so
qualified. At such time as such public disclosure is otherwise made or the
Company determines that such disclosure is not necessary, in each case to
correct any misstatement of a material fact or to include any omitted material
fact, the Company and the Subsidiary Guarantors agree promptly to notify each
Holder of such determination and to furnish each Holder such number of copies of
the Prospectus as amended or supplemented, as such Holder may reasonably
request;
(k) in the case of a Shelf Registration, a reasonable time prior to
the filing of any Registration Statement, any Prospectus, any amendment to a
Registration Statement or amendment or supplement to a Prospectus, provide
copies of such document to the Initial Purchasers on behalf of such Holders; and
make representatives of the Company and the Subsidiary Guarantors as shall be
reasonably requested by the Holders of Transfer Restricted Notes, or the Initial
Purchasers on behalf of such Holders, available for discussion of such document;
(l) obtain a CUSIP number for all Exchange Notes, Private Exchange
Notes or Transfer Restricted Notes, as the case may be, not later than the
effective date of a Registration Statement, and provide the Trustee with
certificates for the Exchange Notes, Private Exchange Notes or the Transfer
Restricted Notes, as the case may be, in a form eligible for deposit with the
Depositary;
(m) (i) cause the Indenture to be qualified under the TIA in
connection with the registration of the Exchange Notes or Transfer Restricted
Notes, as the case may be, (ii) cooperate with the Trustee and the Holders to
effect such changes to the Indenture as may be required for the Indenture to be
so qualified in accordance with the terms of the TIA and (iii) execute, and use
their best efforts to cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified in a timely
manner;
(n) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Transfer
Restricted Notes and if so requested by the holders of such Transfer Restricted
Notes and in such connection whether or not an underwriting agreement is entered
into and whether or not the registration is an underwritten registration:
(i) make such representations and warranties to the Holders of
such Transfer Restricted Notes and the underwriters, if any, as the Company
and the Subsidiary Guarantors are able to make, in form, substance and
scope as are customarily made by issuers to underwriters in similar
underwritten offerings as may be reasonably requested by them;
(ii) in connection with an underwritten registration, obtain
opinions of counsel to the Company and the Subsidiary Guarantors and
updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and
the holders of a majority in principal amount of the Transfer Restricted
Notes being sold) addressed to each selling Holder and the underwriters, if
any, covering the matters customarily covered in opinions requested in
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<PAGE>
sales of securities or underwritten offerings and such other matters as may
be reasonably requested by such Holders and underwriters;
(iii) in connection with an underwritten registration, obtain
"cold comfort" letters and updates thereof from the Company's and the
Subsidiary Guarantor's independent certified public accountants (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements are, or are required to be, included in the
Registration Statement) addressed to the underwriters, if any, and use
reasonable efforts to have such letter addressed to the selling Holders of
Transfer Restricted Notes (to the extent consistent with Statement on
Auditing Standards No. 72 of the American Institute of Certified Public
Accounts), such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters to underwriters in
connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders
and an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Transfer Restricted Notes, which agreement shall be
in form, substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the
same to set forth indemnification provisions and procedures substantially
equivalent to the indemnification provisions and procedures set forth in
Section 4 hereof with respect to the underwriters and all other parties to
be indemnified pursuant to said Section or, at the request of any
underwriters, in the form customarily provided to such underwriters in
similar types of transactions; and
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar offerings
to the Holders of a majority in principal amount of the Transfer Restricted
Notes being sold and the managing underwriters, if any.
The above shall be done at (i) the effectiveness of such Shelf Registration
Statement (and each post-effective amendment thereto) and (ii) each closing
under any underwriting or similar agreement as and to the extent required
thereunder;
(o) in the case of a Shelf Registration or if a Prospectus is
required to be delivered by any Participating Broker-Dealer in the case of an
Exchange Offer, make available for inspection by representatives of the Holders
of the Transfer Restricted Notes, any underwriters participating in any
disposition pursuant to a Shelf Registration Statement, any Participating
Broker-Dealer and any counsel or accountant retained by any of the foregoing,
all non-confidential financial and other records, pertinent corporate documents
and properties of the Company or any Subsidiary Guarantor reasonably requested
by any such persons, and cause the respective officers, directors, employees,
and any other agents of the Company and the Subsidiary Guarantors to supply all
information reasonably requested by any such representative, underwriter,
special counsel or accountant in connection with a Registration Statement, and
15
<PAGE>
make such representatives of the Company and the Subsidiary Guarantors available
for discussion of such documents as shall be reasonably requested by such
persons;
(i) If so requested by the Initial Purchasers, in the case of an
Exchange Offer Registration Statement, a reasonable time prior to filing of
any Exchange Offer Registration Statement, any Prospectus forming a part
thereof, any amendment to an Exchange Offer Registration Statement or
amendment or supplement to such Prospectus, provide copies of such document
to the Initial Purchasers and to counsel to the Holders of Transfer
Restricted Notes; and
(ii) in the case of a Shelf Registration, a reasonable time prior
to filing any Shelf Registration Statement, any Prospectus forming a part
thereof, any amendment to such Shelf Registration Statement or amendment or
supplement to such Prospectus, provide copies of such documents to the
Initial Purchasers, if so requested, to the Holders of Transfer Restricted
Notes to be covered thereby, to counsel for such Holders designated by them
and to the underwriter or underwriters of an underwritten offering of such
Transfer Restricted Notes, if any, make such changes in any such document
prior to the filing thereof relating to such Holders or such Transfer
Restricted Notes as the counsel to the Holders or the underwriter or
underwriters reasonably request and not file any such document in a form to
which the holders of a majority in aggregate principal amount of Transfer
Restricted Notes covered by such Shelf Registration Statement, counsel for
such Holders of the Transfer Restricted Notes covered by such Shelf
Registration Statement, or any underwriter shall not have previously been
advised and furnished a copy of or to which the Majority Holders of
Transfer Restricted Notes covered by such Shelf Registration Statement,
counsel to such Holders or Transfer Restricted Notes or any underwriter
shall reasonably object, and make the representatives of the Company and
the Subsidiary Guarantors available for discussion of such document as
shall be reasonably requested by such Holders of Transfer Restricted Notes,
the counsel for such Holders of Transfer Restricted Notes or any
underwriter;
(p) in the case of a Shelf Registration, use their best efforts to
cause all Transfer Restricted Notes to be listed on any securities exchange on
which similar debt securities issued by the Company and the Subsidiary
Guarantors are then listed if requested by the Holders of a majority in
aggregate principal amount of such Transfer Restricted Securities covered by
such Shelf Registration Statement, or if requested by the underwriter or
underwriters of an underwritten offering of Transfer Restricted Notes, if any;
(q) in the case of a Shelf Registration, use their best efforts to
cause the Transfer Restricted Notes to be rated by the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Notes covered by such Shelf Registration
Statement, or if requested by the underwriter or underwriters of an underwritten
offering of Transfer Restricted Notes, if any;
(r) otherwise comply with all applicable rules and regulations of the
SEC and make available to their security holders, as soon as reasonably
practicable, an earnings statement covering at least 12 months which shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;
and
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<PAGE>
(s) cooperate and assist in any filings required to be made with the
NASD and, in the case of a Shelf Registration, in the performance of any due
diligence investigation by any underwriter and its counsel (including any
"qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD).
In the case of a Shelf Registration Statement, the Company and the
Subsidiary Guarantors may (as a condition to such Holder's participation in the
Shelf Registration) require each Holder of Transfer Restricted Notes to furnish
to the Company and Subsidiary Guarantors such information regarding the Holder
and the proposed distribution by such Holder of such Transfer Restricted Notes
as the Company and Subsidiary Guarantors may from time to time reasonably
request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company or any Subsidiary Guarantor of
the happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(v) hereof, such Holder will forthwith discontinue
disposition of Transfer Restricted Notes pursuant to a Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(k) hereof, and, if so directed by the
Company and Subsidiary Guarantors, such Holder will deliver to the Company and
Subsidiary Guarantors (at its expense) all copies in such Holder's possession,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Notes current at the time of
receipt of such notice.
If any of the Transfer Restricted Notes covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Transfer Restricted
Notes to be included in such offering and shall be acceptable to the Company and
Subsidiary Guarantors. No Holder of Transfer Restricted Notes may participate
in any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Transfer Restricted Notes on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
4. Indemnification; Contribution.
-----------------------------
(a) The Company and the Subsidiary Guarantors agree to indemnify and
hold harmless the Initial Purchasers and each of their affiliates and any other
Person under common control with the Initial Purchasers, each Holder, each
Participating Broker-Dealer, each Person who participates as an underwriter (any
such Person being an "Underwriter") and each Person, if any, who controls any
Holder or 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 any Registration Statement
(or any amendment or supplement thereto) pursuant to which Exchange Notes
or Transfer Restricted Notes were registered under the
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1933 Act, including all documents incorporated therein by reference, 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 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
4(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 any indemnified party),
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
subparagraph (i) or (ii) above;
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 the
Holder or underwriter expressly for use in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto);
and provided, further, that the indemnity agreement contained in this subsection
(a) shall not inure to the benefit of any Holder or Participating Broker-Dealer
from whom the person asserting any such losses, claims, damages or liabilities
purchased the Notes concerned, to the extent that a prospectus relating to such
Notes was required to be delivered by such Holder or Participating Broker-Dealer
under the 1933 Act in connection with such purchase and any such loss, claim,
damage or liability of such Holder or Participating Broker-Dealer results from
the fact that there was not sent or given to such person, at or prior to the
sale of such Notes to such person, a copy of such prospectus if the Company had
previously furnished copies thereof to such Holder or Participating Broker-
Dealer.
(b) Each Holder severally, but not jointly, agrees to indemnify and
hold harmless the Company, the Subsidiary Guarantors, the Initial Purchasers,
each Underwriter and the other selling Holders, and each of their respective
directors and officers, and each Person, if any, who controls the Company, any
Subsidiary Guarantor, the Initial Purchasers, any Underwriter or any other
selling Holder 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 Section 4(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Shelf
18
<PAGE>
Registration Statement (or any amendment thereto) or any Prospectus included
therein (or any amendment or supplement thereto) in reliance upon and in
conformity with written information with respect to such Holder furnished to the
Company and the Subsidiary Guarantors by such Holder expressly for use in the
Shelf Registration Statement (or any amendment thereto) or such Prospectus (or
any amendment or supplement thereto); provided, however, that no such Holder
shall be liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Transfer Restricted Notes pursuant to
such Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure so to 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. An
indemnifying party may participate at its own expense in the defense of 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 party or parties be liable
for the fees and expenses of more than one counsel (in addition to any 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.
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 4 (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.
(d) If the indemnification provided for in this Section 4 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, in such proportion as is appropriate to reflect
the relative fault of the Company and the Subsidiary Guarantors, on the one
hand, and the Holders and the Initial Purchasers, on the other hand, 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.
The relative fault of the Company and the Subsidiary Guarantors on the
one hand and the Holders and the Initial Purchasers on the other hand 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, the Holders or the Initial Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
19
<PAGE>
The Company, the Subsidiary Guarantors, the Holders and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 4 were determined by pro rata allocation (even if the
Initial Purchasers 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 4. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above in this Section 4 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.
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 4, each Person, if any, who controls an
Initial Purchaser or Holder 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
Initial Purchaser or Holder, and each director of the Company or any Subsidiary
Guarantor, and each Person, if any, who controls the Company or any 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 and the
Subsidiary Guarantors. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the principal
amount of Notes set forth opposite their respective names in Schedule A to the
Purchase Agreement and not joint.
5. Miscellaneous.
-------------
5.1 Rule 144 and Rule 144A. For so long as the Company and the
----------------------
Subsidiary Guarantors are subject to the reporting requirements of Section 13 or
15 of the 1934 Act, the Company and the Subsidiary Guarantors covenant that they
will file the reports required to be filed by them under the 1933 Act and
Section 13(a) or 15(d) of the 1934 Act and the rules and regulations adopted by
the SEC thereunder. If the Company and the Subsidiary Guarantors cease to be so
required to file such reports, the Company and Subsidiary Guarantors covenant
that they will upon the request of any Holder of Transfer Restricted Notes (a)
make publicly available such information as is necessary to permit sales
pursuant to Rule 144 under the 1933 Act, (b) deliver such information to a
prospective purchaser as is necessary to permit sales pursuant to Rule 144A
under the 1933 Act and take such further action as any Holder of Transfer
Restricted Notes may reasonably request, and (c) take such further action that
is reasonable in the circumstances, in each case, to the extent required from
time to time to enable such Holder to sell its Transfer Restricted Notes without
registration under the 1933 Act within the limitation of the exemptions provided
by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to
time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time
to time, or (iii) any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Transfer Restricted Notes, the Company and the
Subsidiary Guarantors will deliver to such Holder a written statement as to
whether they have complied with such requirements.
20
<PAGE>
5.2 No Inconsistent Agreements. The Company and the Subsidiary
--------------------------
Guarantors have not entered into, and the Company and the Subsidiary Guarantors
will not after the date of this Agreement enter into, any agreement which is
inconsistent with the rights granted to the Holders of Transfer Restricted Notes
in this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not and will not for the term of this
Agreement in any way conflict with the rights granted to the holders of the
Company's or Subsidiary Guarantors' other issued and outstanding securities
under any such agreements.
5.3 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company and the Subsidiary Guarantors have obtained
the written consent of Holders of at least a majority in aggregate principal
amount of the outstanding Transfer Restricted Notes affected by such amendment,
modification, supplement, waiver or departure.
5.4 Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(a) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 5.4, which address initially, and until so changed, is the address set
forth in the Purchase Agreement with respect to the Initial Purchasers; and (b)
if to the Company and the Subsidiary Guarantors, initially at the Company's
address set forth in the Purchase Agreement, and thereafter at such other
address of which notice is given in accordance with the provisions of this
Section 5.4.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the benefit
---------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Notes in violation of the terms of the Purchase Agreement or the Indenture. If
any transferee of any Holder shall acquire Transfer Restricted Notes, in any
manner, whether by operation of law or otherwise, such Transfer Restricted Notes
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Transfer Restricted Notes such person shall be conclusively deemed
to have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
21
<PAGE>
5.6 Third Party Beneficiaries. The Initial Purchasers (even if the
-------------------------
Initial Purchasers are not Holders of Transfer Restricted Notes) shall be third
party beneficiaries to the agreements made hereunder between the Company and the
Subsidiary Guarantors, on the one hand, and the Holders, on the other hand, and
shall have the right to enforce such agreements directly to the extent they deem
such enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Transfer Restricted Notes shall be a third
party beneficiary to the agreements made hereunder between the Company and the
Subsidiary Guarantors, on the one hand, and the Initial Purchasers, on the other
hand, and shall have the right to enforce such agreements directly to the extent
it deems such enforcement necessary or advisable to protect its rights
hereunder.
5.7 Specific Enforcement. Without limiting the remedies available
--------------------
to the Initial Purchasers and the Holders, the Company and the Subsidiary
Guarantors acknowledge that any failure by the Company or the Subsidiary
Guarantors to comply with their obligations under Sections 2.1 through 2.4
hereof may result in material irreparable injury to the Initial Purchasers or
the Holders for which there is no adequate remedy at law, that it would not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such relief
as may be required to specifically enforce the Company's and Subsidiary
Guarantors' obligations under Sections 2.1 through 2.4 hereof.
5.8 Restriction on Resales. Until the expiration of two years after
----------------------
the original issuance of the Notes and the Guarantees, the Company and the
Subsidiary Guarantors will not, and will cause their "affiliates" (as such term
is defined in Rule 144(a)(1) under the 1933 Act) not to, resell any Notes and
Guarantees which are "restricted securities" (as such term is defined under Rule
144(a)(3) under the 1933 Act) that have been reacquired by any of them and shall
immediately upon any purchase of any such Notes and Subsidiary Guarantees submit
such Notes and Subsidiary Guarantees to the Trustee for cancellation.
5.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5.10 Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.12 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ISLE OF CAPRI CASINOS, INC.
By:_________________________________
Name:
Title:
RIVERBOAT CORPORATION OF
MISSISSIPPI
By:_________________________________
Name:
Title:
RIVERBOAT CORPORATION OF
MISSISSIPPI-VICKSBURG
By:_________________________________
Name:
Title:
RIVERBOAT SERVICES, INC.
By:_________________________________
Name:
Title:
CSNO, INC.
By:_________________________________
Name:
Title:
LOUISIANA RIVERBOAT GAMING
PARTNERSHIP
By:_________________________________
Name:
Title:
1
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
BY:_________________________________
Name:
Title:
LRG HOTELS. L.L.C
By:________________________________
Name:
Title
GRAND PALAIS RIVERBOAT, INC.
BY:_________________________________
Name:
Title:
LRGP HOLDINGS, INC.
By:_________________________________
Name:
Title:
PPI, INC.
By:_________________________________
Name:
Title:
ISLE OF CAPRI CASINO COLORADO, INC.
By:_________________________________
Name:
Title:
2
<PAGE>
ISLE OF CAPRI CASINO-TUNICA, INC.
By:________________________________
Name:
Title:
IOC-COAHOMA, INC.
By:________________________________
Name:
Title:
ISLE OF CAPRI HOTELS-BOSSIER CITY,
L.L.C.
By:________________________________
Name:
Title:
3
<PAGE>
Confirmed and accepted as
of the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WASSERSTEIN PERELLA SECURITIES, INC.
CIBC OPPENHEIMER CORP.
JEFFERIES & COMPANY, INC.
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:______________________
Name:
Title:
BY: WASSERSTEIN PERELLA SECURITIES, INC.
By:______________________
Name:
Title:
4
<PAGE>
EXHIBIT 10.28
STATE OF LOUISIANA
PARISH OF CALCASIEU
AMENDED AND RESTATED LEASE
THIS AMENDED AND RESTATED LEASE (hereinafter "the Lease" or "this Lease") is
made this ___ day of April, 1999, between PORT RESOURCES, INC., a Louisiana
corporation, and CRU, INC., a Louisiana corporation, (hereinafter collectively,
"LANDLORD"), and ST. CHARLES GAMING COMPANY, INC., a Louisiana corporation,
(hereinafter, "TENANT") and ISLE OF CAPRI CASINOS, INC. a Delaware corporation,
and LOUISIANA RIVERBOAT GAMING PARTNERSHIP, a Louisiana general partnership,
(the last two (2) parties of which hereinafter collectively, the "Guarantors").
This Lease amends and restates in their entirety the provisions of that certain
Agreement of Lease affecting the North Tract Property (as hereinafter defined)
between Port Resources, Inc. and CRU, Inc. and St. Charles Gaming Company, Inc.,
dated July 17, 1995 (as amended from time to time by Amendment To Lease and
Second Amendment To Lease, hereinafter the "North Tract Lease") and the
provisions of that certain Agreement of Lease affecting the South Tract Property
(as hereinafter defined) between Port Resources, Inc. and CRU, Inc. and St.
Charles Gaming Company, Inc., dated March 24, 1995 (as amended from time to time
by May 3, 1995 Amendment To Lease, May 16, 1995 Second Amendment To Lease, and
June 6, 1995 Third Amendment To Lease, hereinafter the "South Tract Lease").
WITNESSETH
1. LEASED PROPERTY. LANDLORD leases to TENANT and TENANT leases from
LANDLORD the following described property with all improvements and
appurtenances thereto located in the Parish of Calcasieu and State of Louisiana:
I.
That certain tract or parcel of land described as Block 22, less and
except the North 40.00 feet thereof; Block 30, less and except a 40.00
foot by 396.00 foot strip on the North side thereof, belonging to Olin
Corporation (formerly Mathieson Alkali Works Inc.); Block 21 and Block
29 of the Old Townsite of Westlake, and a 60.00 foot right-of-way,
known as Hazel Avenue, all lying within Section 36, Township 9 South,
Range 9 West, Calcasieu Parish, Louisiana, being more particularly
described as follows to-wit:
Commencing at the Northwest Corner of Block 22 of the Old Townsite of
Westlake in Section 36, Township 9 South, Range 9 West, Calcasieu
Parish, Louisiana;
Thence South 00 14' 51" West, along the West line of Block 22 and West
line of said Section 36, for a distance of 40.00 feet, the point of
beginning of herein described tract;
Thence South 88 35' 31" East, 40.00 feet South of and parallel with
the North line of said Block 22 and Block 30, for a distance of 396.00
feet;
Thence North 00 14' 51" East, parallel with the West line of Block 22,
for a distance of 40.00 feet, to the North line of Block 30 of the Old
Townsite of Westlake;
Thence South 88 35' 31" East, along the North line of said Block 30,
for a distance of 159.12 feet to the West bank of the Calcasieu River:
Page 1 of 13
<PAGE>
Thence Southerly, following the meander of the top west bank or right
descending bank of the Calcasieu River, for a distance of 508.70 feet
more or less to the South line of Block 29 of the Old Townsite of
Westlake;
Thence North 88 35' 31" West, along the South line of Blocks 29 and 21
of the Old Townsite of Westlake for a distance of 517.50 feet to the
Southwest Corner of said Block 21 and West line of the aforesaid
Section 36;
Thence North 00 14' 51" East, along the West line of Blocks 21 and 22
for a distance of 451.40 feet to the point of commencement;
Herein described tract is subject to a 60.00 foot road right-of-way,
known as Hazel Avenue, lying East of Westlake Avenue between Blocks
22, 30 and 21, 29 of the Old Townsite of Westlake.
Herein described tract containing 5.75 acres, more or less,
(hereinafter sometimes the "North Tract Property" or "Tract 1").
AND
II.
That certain tract or parcel of land described as Blocks 41 and 42 of
the Old Townsite of Westlake, that portion of Landry Street lying East
of Westlake Avenue, abandoned by document bearing file number 1495741
in the records of Calcasieu Parish, Louisiana, and that portion of
land lying between the South line of said Blocks 41 and 42 and the
North line of property belonging to Lake Charles Harbor and Terminal
District, all lying within Section 36, Township 9 South, Range 9 West,
Calcasieu Parish, Louisiana, being more particularly described as
follows to-wit:
Beginning at the Southwest Corner of Block 21 of the Old Townsite of
Westlake, said point also being the Northwest Corner of Landry Street,
abandoned as per document bearing file number 1495741 records of
Calcasieu Parish, Louisiana, in Section 36, Township 9 South, Range 9
West, Calcasieu Parish, Louisiana;
Thence South 88 35' 31" East, along the South line of Blocks 21 and 29
of the Old Townsite of Westlake, for a distance of 517.50 feet to the
top West bank of the Calcasieu River;
Thence Southerly, following the meander of the top West bank or right
descending bank of said Calcasieu River, for a distance of 903.90,
more or less, to the North line of property belonging to the Lake
Charles Harbor and Terminal District;
Thence North 89 45' 09" West, along said North property line for a
distance of 563.00 feet to an existing 2 1/2" cap pipe, marking the
Northwest Corner of Lake Charles Harbor and Terminal District
property, said point also being on the West line of the aforesaid
Section 36;
Thence North 00 14' 51" East, along the West line of said Section
Page 2 of 13
<PAGE>
36, for a distance of 859.69 feet to the point of beginning.
Herein described tract is possibly subject to a 28.00 foot right-of-
way on the South side of Blocks 41 and 42.
Herein described tract containing 10.43 acres more or less,
(hereinafter sometimes the "South Tract Property" or "Tract 2".
The North Tract Property, or Tract 1, and the South Tract Property, or Tract 2,
sometimes hereinafter collectively are referred to as the "Leased Property".
The Leased Property generally encompasses a portion of the area known as the
Burton Shellyard on the west bank of the Calcasieu River south of Interstate 10.
TENANT acknowledges and confirms that TENANT has made improvements to and has
been operating a riverboat gaming facility on the Leased Property since July,
1995 upon the execution of the South Tract Lease. TENANT confirms it has
inspected the Leased Property and its apparent boundaries and is satisfied that
its size, boundaries, encroachments, if any, and configuration are adequate for
the uses intended under this Lease and hereby accepts the Leased Property in the
condition presented.
2. TERM. The Initial Term of this Lease shall be five (5) years (hereinafter,
the "Initial Term"), to commence March 25, 1995. TENANT shall have the option
to renew this Lease for seventeen (17) additional five (5) year terms
(hereinafter, the "Renewal Term") under the same terms and conditions of this
Lease and as further provided below. Unless TENANT notifies LANDLORD of its
intention not to exercise its option to renew at least six (6) months prior to
the expiration of the Initial Term and any Renewal Term of this Lease, the Lease
shall automatically be renewed for the next Renewal Term.
3. RENTAL.
(A) Initial Term. TENANT covenants and agrees to pay to LANDLORD annual
rent of Eight Hundred Fifty Thousand and 00/100 Dollars ($850,000.00), payable
monthly in advance without demand, deduction, abatement or set off on the first
day of each and every month for the first four (4) years of said initial term in
two separate, equal payments of Thirty Five Thousand Four Hundred Sixteen and
66/100 Dollars ($35,416.66) each payable to Port Resources, Inc. and to CRU,
Inc. TENANT covenants and agrees to pay to LANDLORD annual rent of One Million
and 00/100 Dollars ($1,000,000.00), payable monthly in advance without demand,
deductions, abatement or set off on the first day of each and every month for
the fifth (5th) year of said initial term in two separate, equal payments of
Forty One Thousand Six Hundred Sixty Six and 66/100 Dollars ($41,666.66) each
payable to Port Resources, Inc. and to CRU, Inc.
Increase In Rent For Planned Hotel Construction. Effective upon
execution of this instrument, the above stated annual rent is increased by
$200,000 which increase is payable monthly in advance without demand, deduction,
abatement or setoff on the first day of each and every month in two(2) separate,
equal payments of Eight Thousand Three Hundred Thirty three and 33/100
($8,333.33) each to Port Resources, Inc. and to CRU, Inc. on the assumption that
a hotel containing fewer than 260 keyed rooms is to be constructed on the Leased
Property. This increase in annual rent shall be $350,000 per annum if the hotel
to be constructed on the Leased Property contains 260 or more keyed rooms. If
the hotel constructed, or being constructed, on the Leased Property contains
fewer than 260 keyed rooms, annual rent also shall automatically increase by
another $150,000 upon breaking ground for construction of any other hotel, or
any addition to the hotel constructed, or being constructed, on the Leased
Property.
Notwithstanding anything in this Lease or elsewhere to the contrary, the
above described $200,000 increase in annual rent, the above described $350,000
increase in annual rent and the $150,000 increase in annual rent, as the case
may be, shall continue to be due and payable under this Lease should TENANT
decide not to build, or finish building, any hotel and/or any addition thereto,
on the Leased Property or to cease operation of any such hotel.
Page 3 of 13
<PAGE>
(B) First Renewal Term. The rent during the first Renewal Term shall
increase over the rent during the Initial Term in annual increments of five (5%)
per cent per annum or the percentage increase in the average consumer price
index- all urban consumers (i.e., the percentage increase in the CPI-U [all
urban consumers]) as published by the Chamber/Southwest Louisiana whose offices
are in Lake Charles, Louisiana, or such organization's successor for the
previous twelve (12) month period, whichever percentage is higher, computed on
the total rent due for the prior twelve (12) month rental period. If at any
time in the future the Chamber/Southwest Louisiana and its successor do not
exist, the parties shall negotiate in good faith to utilize another
organization's published average CPI-U for purposes of this provision.
(C) Second through all subsequent Renewal Terms. During the third
through all subsequent Renewal Terms, inclusive, the annual rent for each year
of such Renewal Term shall be not less than the rent for the last twelve (12)
months of the preceding Renewal Term and shall increase over the rent for the
last twelve (12) months of the preceding Renewal Term by an amount equal to the
greater of (i) ten percent (10%) or (ii) the sum of the percentage increase in
the average consumer price index-all urban consumers (i.e., the sum of the
percentage increase in the CPI-U [All Urban Consumers]) for each year of the
preceding Renewal Term as published by the Chamber/Southwest Louisiana whose
offices are in Lake Charles, Louisiana, or such organization's successor,
computed on the total annual rent due for the last twelve (12) months of the
preceding Renewal Term. If at any time in the future the Chamber/Southwest
Louisiana and its successor do not exist, the parties shall negotiate to utilize
another organization's published average CPI-U for purposes of this provision.
(See Page 4.b for provisions of second Renewal Term.)
Notwithstanding the foregoing, the rent during the third and all subsequent
Renewal terms shall not be less than One Million Eight Hundred Thousand and
00/100 ($1,800,000.00) Dollars per year.
(D) Proration. Rent for any period of occupancy of less than one month
shall be prorated in proportion to the number of days of occupancy in that
month.
(E) Payment. All rent shall be paid to Port Resources, Inc. at Suite 1700,
CM Tower, One Lakeshore Drive, Lake Charles, Louisiana 70602 and to CRU, Inc. at
101 North Huntington Street, Sulphur, Louisiana 70663-2601 or at such other
address or addresses as LANDLORD, or either of them, may from time to time
designate in writing.
4. USE. The Leased Property shall be used and occupied as a gaming facility
and hotel and any other lawful purpose relating thereto and for no other purpose
without the prior written consent of LANDLORD. The gaming facility and hotel
shall be constructed and operated in accordance with the laws and regulations of
the State of Louisiana and any other political subdivision having jurisdiction.
5. ZONING. LANDLORD does not warrant that any covenant, restriction,
easement, zoning and other governmental laws or regulation in effect as of the
date hereof permit the use of the Leased Property for operation of a gaming
facility or hotel and uses incidental thereto.
6. SERVICES. LANDLORD shall furnish no services. TENANT shall be responsible
for and shall pay for all utilities including any sewerage or drainage charges.
7. CONDITION OF LEASED PROPERTY. TENANT acknowledges that, prior to TENANT'S
lease and occupancy of the Leased Property for a river boat gaming facility, the
Leased Property was previously used as a stone and aggregate off-loading
facility and a storage, sale and distribution yard for stone and aggregate.
LANDLORD is relieved of any obligations of repair including but not limited to
those obligations found in (S)2, Chapter 2 of Title IX Of Lease, of the
Louisiana Civil Code. TENANT undertakes all of these obligations of repair and
maintenance and otherwise assumes all obligations and responsibility for the
condition of the Leased Property and indemnifies and holds LANDLORD harmless for
any claim, demand or damage arising occasioned to anyone from said condition.
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<PAGE>
8. ALTERATIONS AND IMPROVEMENTS.
(A) TENANT may, from time to time during this Lease or any renewal or
extension thereof, at its own expense make, install or construct such
alterations and improvements, structural or otherwise, and install such
identifications, signs, furniture, fixtures and equipment in or on the Leased
Property as will, in the judgment of TENANT, adapt the same to the purposes of
its business. However, no underground storage tanks shall be installed. Any
dredging, excavations, bulkheads or alterations to the shoreline or construction
of docking facilities or marinas shall require the prior written consent of
LANDLORD. LANDLORD's consent shall not be unreasonably withheld or delayed
after TENANT has fully disclosed such plans to LANDLORD.
(B) All improvements and alterations made by TENANT (other than TENANT's
personal property and trade fixtures) shall become, upon the expiration or
termination of this Lease, the property of LANDLORD and shall remain on the
Leased Property. Not later than the last day of the term or upon termination of
this Lease, and provided TENANT is not in default, TENANT will remove all of its
personal property, equipment, trade fixtures and signs and repair all damage
resulting from such removal.
9. COVENANT AGAINST LIENS. At its cost and expense (whether by payment, by
filing the necessary bond, by order of a court of competent jurisdiction or
otherwise), TENANT shall promptly remove and discharge of record all liens,
encumbrances and charges upon the Leased Property, or TENANT's Leasehold
interest therein, which arise as a result of any act or omission by TENANT,
including all such liens, encumbrances and charges that either arise out of the
possession, use, occupancy, maintenance, repair or rebuilding of the Leased
Property or arise by reason of labor or materials furnished or claimed to have
been furnished to TENANT or otherwise. Prior to commencement of any
construction activities, TENANT shall provide a surety bond or bonds in a
company or companies and in a form satisfactory to LANDLORD in an aggregate
amount of not less than one hundred fifty (150%) percent of the contract amount,
guaranteeing TENANT's performance under the terms of this covenant and to
protect and indemnify LANDLORD against any mechanic's liens, materialman's
liens, architect's lien, builder's lien or any other lien arising out of any
construction or repair activities conducted on the Leased Property; provided,
however, that TENANT may contest the validity of any lien or claim having first
posted the bond required hereinabove to insure that, upon final determination of
such claim, it shall immediately pay any judgment rendered against it with all
proper costs and charges, and have such lien released without cost to LANDLORD.
10. COVENANT AGAINST MORTGAGE. TENANT shall not grant any mortgage or
otherwise encumber the Leased Property without the prior written consent of
LANDLORD. The Landlord's Consent (the "1996 Landlord's Consent") dated as of
August 6, 1996 between LANDLORD, TENANT, the Guarantors and Fleet National Bank,
as Trustee, constitutes such consent.
11. SUBORDINATION TO FUTURE MORTGAGES BY LANDLORD. LANDLORD represents and
warrants to TENANT that, upon execution and delivery of the Lease, the Leased
Property will be free and clear of all mortgages, deeds of trust and other
similar instruments encumbering the Leased Property as caused by or created for
LANDLORD. TENANT will accept the Lease subject to any mortgages, deeds of trust
and other similar instruments hereinafter encumbering the Leased Property
("future mortgages") provided that the holder of any such future mortgage agrees
in such future mortgage or separate instrument not to disturb TENANT's occupancy
of the Leased Property so long as TENANT performs its obligations under the
Lease on the condition that TENANT, when requested by the future mortgagee,
shall execute an attornment agreement to the future mortgagee should the future
mortgagee succeed to the rights of LANDLORD under the Lease.
12. SUBLETTING AND ASSIGNMENT. (A) During the initial term of this Lease,
TENANT may not, without the prior written consent of LANDLORD, assign this Lease
or sublet the whole or any part of the Leased Property. For purposes of this
paragraph a conveyance or sale, regardless of how structured, of fifty-one
percent (51%) or greater of TENANT's interest in the
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<PAGE>
gaming operation conducted or to be conducted on the Leased Property shall be
considered as an assignment or subletting requiring the consent of LANDLORD.
LANDLORD specifically reserves its right to withhold consent. If requested by
TENANT's lender (the "Lender"), LANDLORD agrees to consent to the collateral
assignment to the Lender of TENANT's entire interest in the Lease, subject to
the terms of the Lease. The consent of LANDLORD is further conditioned upon
LANDLORD's approval of the terms and provisions of the instrument evidencing
such assignment which shall include, but not be limited to, the acceptance and
assumption by the Lender of each and every covenant and obligation of the TENANT
under this Lease, as well as the acknowledgment and acceptance of liability by
the Lender for the payment of the rent, and any arrearages, and any other
charges payable under this Lease.
(B) During any Renewal term of this Lease TENANT may not, without the
prior written consent of LANDLORD, assign the Lease or sublet the whole or any
part of the Leased Property. Notwithstanding the foregoing, LANDLORD shall not
unreasonably withhold its consent to any assignment of subletting of the Leased
Property during any Renewal term if:
(a) At the time of the proposed assignment or sublease, the assignee
or sublessee is financially capable of operating a casino and/or riverboat
gaming facility of the type located at the Leased Property;
(b) The proposed assignee or sublessee of or for the casino gaming
operation has casino gaming operating experience comparable to, or greater
than, TENANT's experience, or has contracted for the operation of the
riverboat gaming facility on the Leased Property with a casino and/or
riverboat gaming operator with experience comparable to, or greater than,
TENANT's, and/or the proposed assignee or sublessee for the hotel operation
has hotel management and operation experience comparable to, or greater
than, TENANT'S experience or has contracted for the operation of the hotel
on the Leased Property with a hotel operator with experience comparable to,
or greater than, TENANT'S experience;
(c) The proposed use of the Leased Property by such proposed assignee
or sublessee is as a gaming facility and hotel site of a similar type and
quality of TENANT's use under the terms of this Lease;
(d) The proposed assignee or sublessee, and any party with whom the
assignee or sublessee has contracted as provided in Paragraph 12(B)(b), has
all requisite licenses in the State of Louisiana to operate a gaming
facility and hotel, the proposed assignee or sublessee, and any party with
whom the assignee or sublessee has contracted as provided in Paragraph
12(B)(b), is not under current investigation or has not been suspended or
declined a similar license, in another state, and is of suitable moral
character reasonably satisfactory to LANDLORD; and
(e) The proposed assignee or sublessee executes an agreement in form
and substance satisfactory to LANDLORD assuming and agreeing to perform all
obligations of TENANT under this Lease which agreement shall include, but
not be limited to, the acceptance and assumption by the assignee or
sublessee of each and every covenant and obligation of the TENANT under
this Lease, as well as the acknowledgment and acceptance of liability by
the assignee or sublessee for the payment of the rent, and any arrearages,
and any other charges payable under this Lease;
(f) The TENANT, and/or present party TENANT, shall remain responsible
and liable for all of the obligations of TENANT under the Lease.
(C) Each and every assignee, sublessee and Lender, whether as assignee,
sublessee or Lender or as successor in interest of any assignee, sublessee and
Lender of TENANT, shall immediately be and become and remain liable for the
payment of the rent and other charges payable under this Lease, and for the due
performance of all the covenants, agreements, terms and provisions of this
lease, on TENANT's part to be performed, and each and every provision of this
Lease applicable to TENANT prior to such assignment shall also apply to and bind
every such assignee, sublessee and
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Lender with the same force and effect as though such assignee, sublessee and
Lender were the party named originally as TENANT in the Lease.
(D) If requested by TENANT'S lender (hereinafter the "Hotel Lender") which
is financing for TENANT the construction of a hotel on the Leased Property
(hereinafter the "Hotel
Construction"), LANDLORD agrees, subject the Hotel Lender's acceptance, as well
as the acceptance of TENANT and the Guarantors, of the conditions of consent
hereinafter provided, to negotiate in good faith a consent instrument for the
collateral assignment or mortgage by TENANT, for the sole purpose of providing
collateral for the Hotel Construction, in favor of the Hotel Lender of TENANT'S
entire interest in the Lease and in the hotel, which collateral assignment or
mortgage shall be subject to and subordinate to this Lease. LANDLORD'S
execution of any such consent instrument shall be conditioned upon such
instrument including, but not being limited to, the Hotel Lender's agreement, as
well as that of TENANT and the Guarantors, for the benefit of LANDLORD, that any
collateral assignment and/or mortgage shall affect and encumber not less than
the entire interest of TENANT in the Lease, and that any collateral assignment
and/or mortgage shall provide for the express assumption by the Hotel Lender,
at the earlier of the time of the Hotel Lender's taking ownership of the
TENANT'S interest in the Lease or the time of use, occupancy or possession in
any manner by the Hotel Lender of the TENANT'S interest in the Lease and/or the
Leased Property, of each and every covenant and obligation of TENANT under the
Lease, as well as the express acceptance of liability by the Hotel Lender for
the payment of rent under the Lease, and any arrearages, and any other charges
payable under the Lease. Additionally, LANDLORD'S execution of any such consent
instrument shall be conditioned upon LANDLORD'S approval of the collateral
assignment and/or mortgage in favor of the Hotel Lender.
The provisions of paragraph 12 (B) and (C ) shall apply to any assignment
or sublease by any Lender or Hotel Lender of TENANT's interest in the Lease,
however LANDLORD expressly reserves the right to approve any such assignment or
sublease which approval will not be unreasonably withheld.
LANDLORD has consented to the assignment by TENANT of fifty (50%) percent
of TENANT's capital stock to Louisiana Riverboat Gaming Partnership ("LRGP"), a
Louisiana partnership comprised of LRGP Holdings, Inc., a Louisiana corporation,
and CSNO, Inc., a Louisiana corporation, both of which are wholly owned by Isle
Of Capri Casinos, Inc. Additionally, LANDLORD has granted the 1996 Landlords'
Consent.
LRGP has joined TENANT as a party to this Lease, and LRGP has acknowledged
and faithfully guarantees all of the covenants, agreements, terms and provisions
of this Lease, on TENANT's part to be performed.
13. SUBORDINATION FOR LENDER OR HOTEL LENDER. Notwithstanding anything else in
this Lease or elsewhere, explicit or implied, to the contrary, LANDLORD has not,
and will not, subordinate this Lease in favor of or for the benefit of any
collateral assignment, mortgage or other security instrument or device, or in
favor of or for the benefit any present or future holder or owner of any such
collateral assignment, mortgage or other security instrument or device.
14. EMINENT DOMAIN.
(A) If all or part of the Leased Property or any improvements thereon are
taken by right of eminent domain, this Lease shall terminate as to the property
so taken and the rent and all other charges relating to the property so taken
which are TENANT's responsibility shall be proportionately reduced during the
unexpired portion of this Lease, effective as of the date of taking. If as a
result of the taking, the Leased Property is no longer suitable by reason of its
resulting size, shape or configuration for the purposes of this Lease, this
Lease shall terminate as to all of the Leased
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Property.
(B) TENANT shall only be entitled to share in the compensation awarded
expressly for the loss of its business and improvements. LANDLORD shall be
entitled to all other compensation. TENANT shall not assert or be entitled to
any leasehold advantage.
15. DEFAULT.
(A) If TENANT defaults in the performance of any of the covenants or
conditions on its part to be performed, LANDLORD may give TENANT written notice
of such default, and if TENANT does not cure such default within twenty (20)
days after receipt of such notice (or, if such default is of such a nature that
it cannot be cured within the twenty (20) days, if TENANT does not commence such
cure within said twenty (20) day period and thereafter proceed with diligence to
cure the default), or if TENANT enters into any transaction or series of
transactions in which any or substantially all of TENANT's assets are disposed
of, or if TENANT is adjudicated bankrupt, or a receiver of its property is
appointed, TENANT shall be in breach of this Lease and LANDLORD may at its
option elect either of the following remedies:
(i) LANDLORD may terminate this Lease on a date not less than five
(5) days after TENANT's receipt of written notice of such termination, and on
the date specified in said notice, this Lease shall terminate, and TENANT shall
quit and surrender the Leased Property to LANDLORD. In the event of such
termination, LANDLORD shall be entitled to damages equal to any sums owed and
unpaid as of the date of such default and TENANT shall also remain liable for
the annual rental to become due during the balance of the Lease term, the same
to be paid by TENANT to LANDLORD on the regular days stipulated for the payment
of rent; provided, however that LANDLORD shall be obligated to use commercially
reasonable efforts to relet the Leased Property, and if the Leased Property is
relet in whole or in part, TENANT shall be entitled to a credit in the net
amount of any rental payments received by LANDLORD as a result of such reletting
(after deducting reasonable expenses for reletting, including any necessary
costs of repair of the Leased Property). Further, in the event of termination of
this Lease as aforesaid, LANDLORD shall have the right to remove therefrom any
part of TENANT's personal property, equipment and trade fixtures located therein
and place the same in storage at the expense of TENANT; or
(ii) LANDLORD may cure such breach by performing the obligation(s) of
TENANT giving rise to the default and, in such event, the reasonable amount of
all expenses thereby incurred by LANDLORD shall be deemed payable by TENANT with
the next monthly installment(s) of rent.
(B) The full amount of the cost and expense incurred by LANDLORD,
together with the amount of any attorney's fees in instituting, prosecuting or
defending any action or proceeding by reason of any default of TENANT hereunder,
shall be paid by TENANT to LANDLORD with interest at the maximum permissible
legal rate thereon.
16. LANDLORD'S RIGHT OF ENTRY.
(A) LANDLORD has the right to enter the Leased Property at any reasonable
time for the purpose of inspection or to confirm compliance by TENANT with the
Lease or to perform other authorized acts; provided, however, that LANDLORD in
such inspections and confirmations shall not unduly interfere with the business
of TENANT on the Leased Property.
(B) LANDLORD may show the Leased Property to prospective purchasers and
mortgagees, and, during the sixty (60) days prior to expiration of this Lease or
applicable renewal or extension period LANDLORD may show the Leased Property to
prospective tenants.
17. TAXES. LANDLORD shall pay all real estate taxes on the unimproved value of
the Leased Property, however, LANDLORD shall never pay more than the amount of
said taxes in March 1995. TENANT shall pay that portion of the real estate taxes
on the unimproved value of the Leased
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<PAGE>
Property not paid by LANDLORD. TENANT shall pay any special assessments,
including paving, drainage or other assessments, assessed or payable during the
term of this Lease, or any renewal periods, levied upon the Leased Property.
TENANT shall pay any and all taxes on the buildings, improvements, alterations
or fixtures thereon, including TENANT's personal property or trade fixtures.
TENANT shall have the right to contest by appropriate legal proceedings,
diligently conducted in good faith, the validity or amount of any tax,
assessment or utility charge provided no civil or criminal penalty be incurred
by LANDLORD and no lien be imposed upon the Leased Property.
18. INSURANCE.
(A) Liability Insurance. TENANT, at its expense, shall obtain and keep in
force during the term of this Lease, for the protection of TENANT, LANDLORD and
LANDLORD's respective shareholder, directors, officers, employees, agents and
servants, as their interest may appear Commercial General Liability Insurance
with limits of not less than $50,000,000.00 combined single limit per occurrence
with an insurance company reasonably acceptable to LANDLORD. LANDLORD shall be
named as an additional named insured under such policy or policies and TENANT
shall supply to LANDLORD evidence of such insurance.
(B) Property Insurance. TENANT, at its expense, shall obtain and keep in
force during the term of this Lease a policy or policies of insurance covering
loss or damage to the Leased Property, in the amount of the full replacement
value of all improvements thereof, providing protection against all perils
included within the classifications of fire, flood, extended coverage,
vandalism, and malicious mischief.
19. INDEMNITY. This Lease is made upon the express condition that LANDLORD and
LANDLORD'S respective shareholders, directors, officers, employees, agents and
servants shall be free from any and all liabilities and claims for damages
and/or suits for or by reason of any injury or injuries or death to any person
or persons or damage to property or loss of property of any kind whatsoever,
whether the person or property of TENANT, its agents or employees, or third
persons from any cause or causes whatsoever while in, on, about, around or upon
the Leased Property, or any part thereof, or on any facility used as a result of
or in connection with TENANT's riverboat gaming operation, during the term of
this Lease, or any renewal thereof, or occasioned by any occupancy or use of the
Leased Property , or any activity carried on by TENANT in connection therewith.
TENANT hereby covenants and agrees to indemnify and save harmless LANDLORD and
LANDLORD'S respective shareholders, directors, officers, employees, agents and
servants from all losses, damages, liabilities, charges, expenses, fines,
penalties, attorney's fees and costs on account of or by reason of any such
injuries, liabilities, claims, suits or losses however occurring, or damages
growing out of same. This indemnity shall apply regardless of whether said
loss, damage, liability, claims, demands, fines, penalties, or suits are
occasioned, brought about or caused, in whole or in part, by the negligence of
LANDLORD and/or LANDLORD'S respective shareholders, directors, officers,
employees, agents and servants and regardless of whether such negligence be
active or passive, primary or secondary. This indemnity shall also apply
regardless of whether said loss, damage, liability, claims, demand or suits are
occasioned, brought about or caused, in whole or in part, by the strict
liability of LANDLORD and/or LANDLORD'S respective shareholders, directors,
officers, employees, agents and servants it being the intention of the parties
hereto that LANDLORD and LANDLORD'S respective shareholders, directors,
officers, employees, agents and servants be indemnified by TENANT against the
consequences of its strict liability. This indemnity shall inure, by
stipulation pour autrui, to the benefit of LANDLORD'S respective shareholders,
directors, officers, employees, agents and servants , and any one of them may
exercise this right of indemnity against TENANT independently of LANDLORD or of
others.
20. ENVIRONMENTAL POLLUTION AND HAZARDOUS SUBSTANCES.
(A) LANDLORD's Representations. Each party LANDLORD makes absolutely no
warranty nor representation as to the condition of the Leased Property,
including any environmental condition. TENANT assumes this Lease subject to the
conditions herein and specifically assumes all liability with respect thereto.
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(B) TENANT's Warranties and Representations. TENANT warrants that prior to
commencement of business, it shall have obtained all permits, licenses, and
other documentation required in connection with the development, improvement,
use, operation and maintenance of the property (movable or immovable) conducted
under this Lease, and that no such development, improvement, use, operations or
maintenance of the Leased Property shall give rise to any liability to LANDLORD.
TENANT shall not allow the placement, use or storage on the Leased Property
of any toxic, hazardous or harmful materials, substances, contaminants, or waste
products, as defined by any state, federal or local law or regulation. Any
liability which may be imposed upon LANDLORD as owner of the Leased Property ,
which arises out of the presence and/or release of any toxic, hazardous or
harmful material, waste, substance or product placed or knowingly permitted to
be put or placed on the Leased Property after the effective date of this Lease
is hereby specifically assumed by TENANT.
(C) TENANT's Indemnification. TENANT shall indemnify and hold harmless
LANDLORD and LANDLORD'S respective shareholders, directors, officers, employees,
agents, servants, successors, and assigns against any damages, claims, losses,
liabilities and expenses which may be imposed upon, incurred by, or assessed
against LANDLORD and/or LANDLORD'S respective shareholders, directors, officers,
employees, agents and servants by any other party, including a government
entity, relating in any way to any environmental condition or contamination on
the Leased Property arising out of, directly or indirectly, TENANT's presence
in, on, about, around or upon the Leased Property, even if not discovered until
after termination of the Lease. TENANT's indemnification shall include
reimbursement to LANDLORD for all costs or expenses, damages, claims, fines,
fees, including attorney and consultant fees, civil or criminal fines and
penalties, contract charges, government expenses, accounting, engineering or
other fees. Such indemnity shall survive the Lease term.
Should TENANT fail to promptly comply with any order or directive of any
governmental agency or court regarding corrective action or remediation of the
Leased Property, LANDLORD may take such action as has been ordered or directed
and TENANT shall promptly pay to LANDLORD all reasonable expenses and costs
incurred by LANDLORD, including those described above.
This indemnity shall also apply regardless of whether said loss, damage,
liability, claims, demand or suits are occasioned, brought about or caused, in
whole or in part, by the strict liability of LANDLORD and/or LANDLORD'S
respective shareholders, directors, officers, employees, agents and servants it
being the intention of the parties hereto that LANDLORD and LANDLORD'S
respective shareholders, directors, officers, employees, agents and servants be
indemnified by TENANT against the consequences of its strict liability. This
indemnity shall inure, by stipulation pour autrui, to the benefit of LANDLORD'S
respective shareholders, directors, officers, employees, agents and servants ,
and any one of them may exercise this right of indemnity against TENANT
independently of LANDLORD or of others.
21. WAIVER OF SUBROGATION. Whenever (I) any loss, cost, damage or expense
resulting from any peril covered by fire insurance, with standard extended
coverage, is incurred by any party to this Lease in connection with the Leased
Property, or any property located thereon, and (II) such party is then covered
in whole or in part by insurance with respect to such loss, cost, damage, or
expense, then the party so insured hereby releases the other party from any
liability it may have on account of such loss, cost, damage, or expense to the
extent of any amount recovered by reason of such insurance and waives any right
of subrogation which might otherwise exist in or accrue to any person or account
thereof.
22. HOLDING OVER. Should TENANT remain in possession of the Leased Property or
any part thereof, after the expiration of this Lease, without the execution of a
new Lease by LANDLORD and TENANT, TENANT shall become a tenant from month-to-
month of the property, or part thereof, under all the terms, conditions,
provisions and obligations of this Lease and such
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month-to-month tenancy may be terminated by either LANDLORD or TENANT as of the
end of any calendar month upon thirty (30) days prior written notice.
23. QUIET ENJOYMENT. Each party LANDLORD covenants that if and for so long
as TENANT pays the rent and performs the covenants and conditions hereof, TENANT
shall peaceably and quietly have, hold and enjoy the Leased Property for the
full term of this Lease and any renewals thereof.
24. LANDLORD'S REPRESENTATION. Each party LANDLORD represents and warrants
that it has full right, power and authority to execute and perform this Lease
and to grant the estate demised herein. The signatory on behalf of each party
LANDLORD represents and warrants that it has the authority to enter into this
Lease without the consent or approval of any other person or entity and makes
the representations included herein knowing that TENANT will rely thereon.
25. SURRENDER OF PREMISES. Upon termination of this Lease, TENANT shall
surrender the Leased Property in good order and condition, ordinary wear and
tear, alterations and improvements and the elements excepted.
26. ATTORNEY'S FEES. In the event LANDLORD institutes legal proceedings
against TENANT for breach of any of the terms, conditions or covenants of this
Lease, the TENANT shall pay all costs, charges and expenses relative thereto,
including reasonable attorney's fees.
27. NOTICES. Any notice by either party to the other shall be in writing and
shall be deemed to be duly given only if delivered personally or mailed by
registered or certified mail, return receipt requested or by overnight mail
(e.g. Federal Express, Airborne Express, etc.), and received or rejected by the
other party.
IF TO TENANT:
St. Charles Gaming Company, Inc.
2415 West Northwest Highway
Suite 103
Dallas, TX 75220-4446
And to
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
ATTN: Allan B. Solomon or Gregory D. Guida
IF TO LANDLORD:
Port Resources, Inc. and CRU, Inc.
Suite 1700 101 North Huntington
CM Tower Sulphur, Louisiana 70663-2601
One Lakeshore Drive
Lake Charles, Louisiana 70602
28. COMPLIANCE WITH LAWS. TENANT shall comply with all laws, ordinances,
rules and regulations in so far as they pertain solely to the particular manner
in which the TENANT shall use the Leased Property and TENANT represents and
warrants that its particular use and occupancy of the Leased Property (other
than as contemplated by this Lease) shall comply fully with all private
covenants, conditions and restrictions applicable to the Leased Property.
29. NO IMPLIED WAIVER. The failure of a party to insist upon the strict
performance of the Lease or to exercise any remedy for an event of default shall
not be construed as waiver. The waiver of any event of default shall not prevent
a subsequent similar event from being a default. No
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waiver shall be effective unless expressed in writing signed by the waiving
party. No waiver shall effect any condition other than the one specified in the
waiver, and then only for the time and the manner stated.
30. TIME IS OF THE ESSENCE. In all instances where either party is required to
pay any sum or do any other act at a particular time or within a specified
period, it is understood that time is of the essence.
31. SEVERABILITY. The headings or titles in this Lease are inserted for
convenience only and are not to be given any effect in its construction.
Wherever appropriate in this Lease, personal pronouns shall be deemed to include
the other genders and the singular to include the plural. If any provision of
this Lease is invalid or unenforceable, the remainder of this Lease shall not be
affected. Each separate provision of this Lease shall be valid and enforceable
to the fullest extent permitted by law.
If for any reason and at any time any law applicable to TENANT's operation
prohibits gaming or the operation of the contemplated riverboat hereunder, this
Lease shall nevertheless remain in full force and effect for its designated term
and all rights and obligations thereunder shall be complied with.
32. GUARANTY. And now unto these premises comes the Guarantors each of which
declares that in consideration of LANDLORD granting this Lease to TENANT, the
each of the Guarantors do hereby guarantee all and singular of the obligations
of TENANT under this Lease. All previous guaranties contained in the original
leases or amendments thereto remain in full force and effect.
33. CONFIDENTIALITY. LANDLORD shall not make any public announcement or
press release concerning this transaction unless it has received TENANT's
written consent. Notwithstanding anything herein to the contrary, LANDLORD is
entitled to take any and all steps necessary and/or prudent, in LANDLORD's sole
judgment and discretion, to protect LANDOWNER's interest in this Lease and/or in
the Leased Property, said steps including but not limited to inquiries,
investigations, reports, disclosures, communications, notices and/or filings as
the situation may require.
34. AMENDMENT AND RESTATEMENT; LANDLORD'S CONSENT. This Lease constitutes an
amendment and restatement of (1) the Agreement of Lease dated July 17, 1995
between LANDLORD and TENANT affecting the North Tract Property, as amended by
Amendment to Lease dated July 17, 1995 and by Second Amendment to Lease dated
July 25, 1995, and (2) the Agreement of Lease, dated March 24, 1995 between
LANDLORD and TENANT affecting the South Tract Property, as amended by Amendment
to Lease dated May 3, 1995, by the Second Amendment to Lease dated May 16, 1995
and by the Third Amendment to Lease dated June 6, 1995. The Lease is not a
novation of the North Tract Lease or of the South Tract Lease. The Lease is and
remains subject to the provisions of the 1996 Landlord's Consent.
35. RECORDABLE MEMORANDUM. LANDLORD and TENANT agree not to record this
Lease, but each party agrees, upon request by the other, to execute a memorandum
of this Lease in a recordable form and in compliance with applicable law.
36. SUCCESSORS AND ASSIGNS. The provisions of this Lease shall apply to, bind
and inure to the benefit of LANDLORD and TENANT, and their respective successors
and legal representatives.
37. LEGAL INTERPRETATION. This Lease and the right and obligations of the
parties hereto shall be interpreted, construed and enforced in accordance with
the laws of the State of Louisiana.
38. ENTIRE AGREEMENT. This Lease constitutes the entire agreement between the
parties, there being no other terms, oral or written, except as herein
expressed. No modification of this Lease shall be binding on the parties unless
it is in writing and signed by all parties hereto.
Page 12 of 13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of
the day and year first above written.
WITNESSES:
PORT RESOURCES, INC.
______________________________
BY:_________________________________
William B. Lawton, President
______________________________
CRU, Inc.
______________________________
BY:___________________________________
Thad D. Minaldi, Exec. Vice President
______________________________ & Counsel
ST. CHARLES GAMING COMPANY, INC.
______________________________
BY:_________________________________
Allan B. Solomon, Executive Vice
President and General Counsel
______________________________
LOUISIANA RIVERBOAT GAMING
PARTNERSHIP
______________________________
BY:________________________________
Allan B. Solomon, Executive Vice
President and General Counsel
______________________________
ISLE OF CAPRI CASINOS, INC.
______________________________
BY:________________________________
Allan B. Solomon, Executive Vice
President and General Counsel
_____________________________
Page 13 of 13
<PAGE>
[Page 4.b]
3. (C ) Second through all subsequent Renewal Terms (Continued). During the
second Renewal Term, the annual rent for each year of such Renewal Term shall be
not less than the rent for the last twelve (12) months of the preceding Renewal
Term and shall increase over the rent for the last twelve (12) months of the
preceding Renewal Term by an amount equal to the greater of (i) ten percent
(10%) or (ii) the percentage increase in the average consumer price index-all
urban consumers (i.e., the sum of the percentage increase in the CPI-U [All
Urban Consumers]) for the last year of the preceding Renewal Term as published
by the Chamber/Southwest Louisiana whose offices are in Lake Charles, Louisiana,
or such organization's successor, computed on the total annual rent due for the
last twelve (12) months of the preceding Renewal Term. If at any time in the
future the Chamber/Southwest Louisiana and its successor do not exist, the
parties shall negotiate to utilize another organization's published average CPI-
U for purposes of this provision.
Page 14 of 14
<PAGE>
EXHIBIT 10.38
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
--------- ----
corporation (the "Company") and John M. Gallaway ("Employee").
----------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of three (3) years from and after the
----- -
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of
President and Chief Operating Officer.
- -------------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $450,000 per year, payable in
-------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate in
any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee is
terminated for cause, there shall be no severance paid to
Employee.
(ii) Employee shall die or become disabled as determined in good
faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
---------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 24
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 24 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi, MS 39530
If to the Employee, to:
12938 Coles Cove
Gulfport MS 39503
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.39
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
--------- ----
corporation (the "Company") and Allan B. Solomon ("Employee").
----------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of
Executive Vice President, General Counsel and Secretary.
- -------------------------------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $321,000 per year, payable in
-------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate in
any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee is
terminated for cause, there shall be no severance paid to
Employee.
(ii) Employee shall die or become disabled as determined in good
faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 18 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
2200 Corporate Blvd. NW
Boca Raton FL 33431
If to the Employee, to:
7244 Valencia Drive
Boca Raton FL 33433
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.40
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
------- ----
corporation (the "Company") and Rexford A. Yeisley ("Employee").
------------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President, Chief Financial Officer, Assistant Secretary and Treasurer.
- ----------------------------------------------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $216,000 per year, payable in
-------
equal monthly, or
1
<PAGE>
more frequent payments, subject to increases, if any, as may be determined by
the Company's Board of Directors. Employee shall also be eligible to participate
in any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports,
2
<PAGE>
data, tables, compositions, articles, devices, apparatus, marketing plans,
customer lists and other items that disclose, describe or embody Confidential
Information including all copies of the confidential Information in his
possession, regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee
3
<PAGE>
benefits for a period of 12 months from and after such termination or until new
--
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 18 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
12883 Coles Cove
Gulfport MS 39503
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.46
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
--------- ----
corporation (the "Company") and Edward F. Reese ("Employee").
---------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof and replaces the employment agreement currently in place between the
"Company" and the "Employee".
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President - Construction and Design.
- -----------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered
1
<PAGE>
hereunder an aggregate base salary of $165,000 per year, payable in equal
--------
monthly, or more frequent payments, subject to increases, if any, as may be
determined by the Company's Board of Directors. Employee shall also be eligible
to participate in any stock option plans of the Company and/or its subsidiaries.
In addition to the base salary, any bonuses, and participation in stock option
plans, Employee shall be eligible to participate in an employee benefit plans or
programs of the Company and/or its subsidiaries as are or may be made generally
available to employees of the Company or of its subsidiaries. The Company and/or
its subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all
2
<PAGE>
software, records, manuals, books, forms, documents, notes, letters, memoranda,
reports, data, tables, compositions, articles, devices, apparatus, marketing
plans, customer lists and other items that disclose, describe or embody
Confidential Information including all copies of the confidential Information in
his possession, regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee is
terminated for cause, there shall be no severance paid to
Employee.
(ii) Employee shall die or become disabled as determined in good
faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be
3
<PAGE>
entitled to continue to receive his salary and, to the extent legally
permissible, employee benefits for a period of 12 months from and after such
--
termination or until new employment begins, which ever occurs first. In lieu of
monthly payments, a lump sum award may be authorized by the Board of Directors.
If Employee dies or becomes disabled, Employee shall also be entitled to a lump
sum payment equal to the average of the last 3 years bonus payment inclusive of
deferred amounts. In the event of termination of employment without "cause", any
payment of an amount based upon prior bonus payments shall be subject to the
discretion of the Board of Directors. Except as provided above, Employee shall
not be entitled to any compensation beyond the date of the termination of the
Term of Employment. Health and welfare benefits shall continue for Employee
(with employee contribution) ending with the later of salary continuation
payments or the end of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
4
<PAGE>
(iv) All deferred bonuses will be paid upon a change of
control.
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the
5
<PAGE>
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its expressed terms) possible under applicable laws.
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
9764 East Sutton Drive
Scottsdale AZ 85260
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.47
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
------- ----
corporation (the "Company") and Robert F. Boone ("Employee").
---------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof and replaces the employment agreement currently in place between the
"Company" and the "Employee".
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President - Human Resources and Risk Management.
- -----------------------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered
1
<PAGE>
hereunder an aggregate base salary of $161,000 per year, payable in equal
-------
monthly, or more frequent payments, subject to increases, if any, as may be
determined by the Company's Board of Directors. Employee shall also be eligible
to participate in any stock option plans of the Company and/or its subsidiaries.
In addition to the base salary, any bonuses, and participation in stock option
plans, Employee shall be eligible to participate in an employee benefit plans or
programs of the Company and/or its subsidiaries as are or may be made generally
available to employees of the Company or of its subsidiaries. The Company and/or
its subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all
2
<PAGE>
software, records, manuals, books, forms, documents, notes, letters, memoranda,
reports, data, tables, compositions, articles, devices, apparatus, marketing
plans, customer lists and other items that disclose, describe or embody
Confidential Information including all copies of the confidential Information in
his possession, regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be
3
<PAGE>
entitled to continue to receive his salary and, to the extent legally
permissible, employee benefits for a period of 12 months from and after such
--
termination or until new employment begins, which ever occurs first. In lieu of
monthly payments, a lump sum award may be authorized by the Board of Directors.
If Employee dies or becomes disabled, Employee shall also be entitled to a lump
sum payment equal to the average of the last 3 years bonus payment inclusive of
deferred amounts. In the event of termination of employment without "cause", any
payment of an amount based upon prior bonus payments shall be subject to the
discretion of the Board of Directors. Except as provided above, Employee shall
not be entitled to any compensation beyond the date of the termination of the
Term of Employment. Health and welfare benefits shall continue for Employee
(with employee contribution) ending with the later of salary continuation
payments or the end of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
4
<PAGE>
(iv) All deferred bonuses will be paid upon a change of
control.
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the
5
<PAGE>
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its expressed terms) possible under applicable laws.
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
3602 Fernwood Drive
Ocean Springs MS 39564
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.48
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
------- ----
corporation (the "Company") and James Guay ("Employee").
----------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof and replaces the employment agreement currently in place between the
"Company" and the "Employee".
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of three (3) years from and after the
-----
Effective Date of initial Agreement (the "Initial Term") of March 17, 1997 and,
unless either party gives written notice to the other party at least ninety (90)
days before the end of the Initial Term or of any Renewal Term, for successive
one-year periods (the "Renewal Terms"), unless terminated at an earlier date in
accordance with Section 5 of this Agreement (the Initial Term and the Renewal
Terms together referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President - Marketing.
- ---------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered
1
<PAGE>
hereunder an aggregate base salary of $165,000 per year, payable in equal
--------
monthly, or more frequent payments, subject to increases, if any, as may be
determined by the Company's Board of Directors. In addition, Employee will be
eligible to receive an annual bonus based upon his job performance and the
performance of the Company, which will be of such amount to bring his total
salaried compensation to at least $200,000 per year. Employee shall also be
eligible to participate in any stock option plans of the Company and/or its
subsidiaries. In addition to the base salary, any bonuses, and participation in
stock option plans, Employee shall be eligible to participate in an employee
benefit plans or programs of the Company and/or its subsidiaries as are or may
be made generally available to employees of the Company or of its subsidiaries.
The Company and/or its subsidiaries will pay or reimburse Employee for all
reasonable and necessary out-of-pocket expense incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with the Company's and/or its subsidiaries
policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is
2
<PAGE>
proprietary to the Company or any subsidiary, including all information that the
Company or any subsidiary treats as confidential, ("Confidential Information").
Upon termination of Employee's employment, Employee will promptly turn over to
the Company all software, records, manuals, books, forms, documents, notes,
letters, memoranda, reports, data, tables, compositions, articles, devices,
apparatus, marketing plans, customer lists and other items that disclose,
describe or embody Confidential Information including all copies of the
confidential Information in his possession, regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
---------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term)
3
<PAGE>
without "cause" (as defined above), then, providing that Employee signs a
General Release in a form acceptable to the Company that releases the Company
and its affiliated entities from any and all claims that Employee may have
against them, Employee shall be entitled to continue to receive his salary and,
to the extent legally permissible, employee benefits for a period of 12 months
--
from and after such termination or until new employment begins, which ever
occurs first. In lieu of monthly payments, a lump sum award may be authorized by
the Board of Directors. If Employee dies or becomes disabled, Employee shall
also be entitled to a lump sum payment equal to the average of the last 3 years
bonus payment inclusive of deferred amounts. In the event of termination of
employment without "cause", any payment of an amount based upon prior bonus
payments shall be subject to the discretion of the Board of Directors. Except as
provided above, Employee shall not be entitled to any compensation beyond the
date of the termination of the Term of Employment. Health and welfare benefits
shall continue for Employee (with employee contribution) ending with the later
of salary continuation payments or the end of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins new
employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control.
4
<PAGE>
Unexercised options will be cancelled on the ninety-first
calendar day following the end of salary continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
the benefit of the Company's successors and assigns. The Company may assign this
Agreement in connection with a merger, consolidation, assignment, sale or other
disposition of substantially all of its assets or business. This Agreement may
not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and
5
<PAGE>
enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
7B Gulfview
Ocean Springs MS 39564
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:______________________________________________
"EMPLOYEE"
_________________________________________________
6
<PAGE>
EXHIBIT 10.49
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware corporation
------- ----
(the "Company") and Timothy Hinkley ("Employee").
---------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof and replaces the employment agreement currently in place between the
"Company" and the "Employee".
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of three (3) years from and after the
-----
Effective Date of initial Agreement (the "Initial Term") of April 7, 1997 and,
unless either party gives written notice to the other party at least ninety (90)
days before the end of the Initial Term or of any Renewal Term, for successive
one-year periods (the "Renewal Terms"), unless terminated at an earlier date in
accordance with Section 5 of this Agreement (the Initial Term and the Renewal
Terms together referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of
Senior Vice President - Operations.
- ----------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered
1
<PAGE>
hereunder an aggregate base salary of $216,000 per year, payable in equal
--------
monthly, or more frequent payments, subject to increases, if any, as may be
determined by the Company's Board of Directors. Employee shall also be eligible
to participate in any stock option plans of the Company and/or its subsidiaries.
In addition to the base salary, any bonuses, and participation in stock option
plans, Employee shall be eligible to participate in an employee benefit plans or
programs of the Company and/or its subsidiaries as are or may be made generally
available to employees of the Company or of its subsidiaries. The Company and/or
its subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all
2
<PAGE>
software, records, manuals, books, forms, documents, notes, letters, memoranda,
reports, data, tables, compositions, articles, devices, apparatus, marketing
plans, customer lists and other items that disclose, describe or embody
Confidential Information including all copies of the confidential Information in
his possession, regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to any
other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee is
terminated for cause, there shall be no severance paid to
Employee.
(ii) Employee shall die or become disabled as determined in good
faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
---------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be
3
<PAGE>
entitled to continue to receive his salary and, to the extent legally
permissible, employee benefits for a period of 12 months from and after such
--
termination or until new employment begins, which ever occurs first. In lieu of
monthly payments, a lump sum award may be authorized by the Board of Directors.
If Employee dies or becomes disabled, Employee shall also be entitled to a lump
sum payment equal to the average of the last 3 years bonus payment inclusive of
deferred amounts. In the event of termination of employment without "cause", any
payment of an amount based upon prior bonus payments shall be subject to the
discretion of the Board of Directors. Except as provided above, Employee shall
not be entitled to any compensation beyond the date of the termination of the
Term of Employment. Health and welfare benefits shall continue for Employee
(with employee contribution) ending with the later of salary continuation
payments or the end of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 18 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated and
exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
4
<PAGE>
(iv) All deferred bonuses will be paid upon a change of control.
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This Agreement
may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure, or
delay in exercising any right, or partial exercise of any right, will not waive
any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the
5
<PAGE>
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its expressed terms) possible under applicable laws.
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
13709 Docena Circle
Ocean Springs MS 39564
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.64
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
------- ----
corporation (the "Company") and Bernard Goldstein ("Employee").
-----------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of three (3) years from and after the
----- -
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of
Chairman of the Board and Chief Executive Officer.
- -------------------------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $450,000 per year, payable in
--------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate in
any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 24
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 24 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi, MS 39530
If to the Employee, to:
4001 North Ocean Boulevard
Suite 801B
Boca Raton FL 33431
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.65
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 25th day
----
of January, 1999 between Isle of Capri Casinos, Inc., a Delaware corporation
-------
(the "Company") and Gregory D. Guida ("Employee").
----------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee
----
accepts such employment and agrees to perform services for the Company and/or
its subsidiaries, for an initial period of two (2) years from and after the
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment,
--------------------
Employee agrees to perform reasonable employment duties as the Board of
Directors of the Company and/or its subsidiaries shall assign to him from time
to time. Employee also agrees to serve, for any period for which he is elected
as an officer of the Company and/or its subsidiaries; provided, however, that
Employee shall not be entitled to any additional compensation for serving as an
officer of the Company and/or its subsidiaries. From and after the Effective
Date, Employee shall continue to be an executive officer of the Company with the
title of Vice President of Development.
-----------------------------
(c) Performance of Duties. Employee agrees to serve the
---------------------
Company and/or its subsidiaries faithfully and to the best of his ability and to
devote substantially all of his time, attention and efforts to the business and
affairs of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company
------------
and/or its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $135,000 per year, payable in
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate in
any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions,
---------
copyrightable material, business and/or technical information, marketing plans,
customer lists and trade secrets which arise out of the performance of this
Agreement are the property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following
---------------
covenant not to compete beginning on the effective date of this Agreement and
continuing until one year after termination of his employment relationship with
the Company:
Employee agrees not to compete, directly or
indirectly (including as an officer, director,
partner, employee, consultant, independent
contractor, or more than 5% equity holder of any
entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation
or facility within a 75-mile radius of any gaming
operation or facility with respect to which the
Company or any of its subsidiaries owns, renders
or proposes to render consulting or management
services.
(c) Confidentiality. Except as is consistent with
---------------
Employee's duties and responsibilities within the scope of his employment with
the Company and/or the subsidiaries, Employee agrees to keep confidential
indefinitely, and not to use or disclose to any unauthorized person, information
which is not generally known and which is proprietary to the Company or any
subsidiary, including all information that the Company or any subsidiary
treats as confidential, ("Confidential Information"). Upon termination of
Employee's employment, Employee will promptly turn over to the Company all
software, records, manuals, books, forms, documents, notes, letters, memoranda,
reports, data, tables, compositions, articles, devices, apparatus, marketing
plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to any
other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
-----------
(a) Grounds for Termination. The Term of Employment set
forth in Section 2(a) shall terminate prior to its expiration in the event that
at any time during such term:
(i) The Board of Directors of the Company delivers
notice of termination for "cause" to Employee.
For purposes of this section, "cause" shall mean
any dishonesty, disloyalty, material breach of
corporate policies, gross misconduct on the part
of Employee in the performance of Employee's
duties hereunder or a violation of the non-
competition or confidentiality provision of this
agreement. If Employee is terminated for cause,
there shall be no severance paid to Employee.
(ii) Employee shall die or become disabled as
determined in good faith by the Board of
Directors of the Company.
(iii) The Company for any reason terminates the Term
of Employment.
(b) Severance. If Employee dies or becomes disabled, or if
---------
the Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a
mutually agreed out-placement firm or service at the reasonable expense of the
Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company
-----------------
defined as its sale, acquisition, merger or buyout to an unaffiliated person
that has significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation
--
plus a lump sum payment equal to the average of
the previous 3 years bonus payment inclusive of
deferred amounts. Salary continuation shall
terminate if and when Employee begins new
employment during the period of salary
continuation.
(ii) Health and welfare benefits shall be fully paid
by the Company and run concurrently with salary
continuation.
(iii) Vesting of stock options shall become fully
accelerated and exercisable by the Employee at
the time of change of control. Unexercised
options will be cancelled on the ninety-first
calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change
of control.
4
<PAGE>
(v) Employee shall be provided out-placement
services with a mutually agreed upon out-
placement firm or service at the reasonable
expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and
----------------------
inures to the benefit of the Company's successors and assigns. The Company may
assign this Agreement in connection with a merger, consolidation, assignment,
sale or other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or
---------------------
amended only by a writing signed by the Company, and Employee. The Company's
failure, or delay in exercising any right, or partial exercise of any right,
will not waive any provision of this Agreement or preclude the Company from
otherwise or further exercising any rights or remedies hereunder, or any other
rights or remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi
------------------------------
will govern the validity, construction, and performance of this Agreement. Any
legal proceeding related to this Agreement will be brought in a Mississippi
court. Both the Company and Employee hereby consent to the exclusive
jurisdiction of that court for this purpose.
(d) Captions. The headings in this Agreement are for
--------
convenience only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous
----------------
and contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
1006 Second Street
Gulfport MS 39507
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:_____________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.66
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
------- ----
corporation (the "Company") and William C. Kilduff Jr. ("Employee").
---------------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President and General Manager.
- -----------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $162,500 per year, payable in
-------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate
in any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's duties
hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee is
terminated for cause, there shall be no severance paid to
Employee.
(ii) Employee shall die or become disabled as determined in good
faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
---------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins new
employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
1211 Sunset Avenue
Ocean Springs MS 39564
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.67
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
------- ----
corporation (the "Company") and Roger W. Deaton ("Employee").
---------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President and General Manager.
- ------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $170,000 per year, payable in
--------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate in
any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
4828 Cypress Lake Drive
Lake Charles LA 70611
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.68
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
------- ----
corporation (the "Company") and Mark A. Fulton ("Employee").
--------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President and General Manager.
- -----------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $160,000 per year, payable in
--------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate
in any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct
on the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
1317 Division Street
Vicksburg MS 39180
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.69
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware corporation
------- ----
(the "Company") and Michael W. Howard ("Employee").
-----------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President and General Manager.
- ------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $170,000 per year, payable in
-------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate in
any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
---------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
327 Cross Creek Drive
Bossier City LA 71111
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.70
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware
-------- ----
corporation (the "Company") and Robert S. Fiore ("Employee").
---------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President and General Manager.
- ------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $155,000 per year, payable in
-------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate in
any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
768 Ridgeside Drive
Golden CO 80401
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.71
FORM EMPLOYMENT AGREEMENT
- ----
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 1st
---
day of March, 1999 between Isle of Capri Casinos, Inc., a Delaware corporation
------- ----
(the "Company") and Robert Griffin ("Employee").
--------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President and General Manager.
- ------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $140,000 per year, payable in
--------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the
1
<PAGE>
Company's Board of Directors. Employee shall also be eligible to participate in
any stock option plans of the Company and/or its subsidiaries. In addition to
the base salary, any bonuses, and participation in stock option plans, Employee
shall be eligible to participate in an employee benefit plans or programs of the
Company and/or its subsidiaries as are or may be made generally available to
employees of the Company or of its subsidiaries. The Company and/or its
subsidiaries will pay or reimburse Employee for all reasonable and necessary
out-of-pocket expense incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers in accordance
with the Company's and/or its subsidiaries policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists
2
<PAGE>
and other items that disclose, describe or embody Confidential Information
including all copies of the confidential Information in his possession,
regardless of who prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, Employee hereby consents to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by the
appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
--
months from and after such termination or until new
3
<PAGE>
employment begins, which ever occurs first. In lieu of monthly payments, a lump
sum award may be authorized by the Board of Directors. If Employee dies or
becomes disabled, Employee shall also be entitled to a lump sum payment equal to
the average of the last 3 years bonus payment inclusive of deferred amounts. In
the event of termination of employment without "cause", any payment of an amount
based upon prior bonus payments shall be subject to the discretion of the Board
of Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for Employee (with employee
contribution) ending with the later of salary continuation payments or the end
of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
--
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
4
<PAGE>
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This
Agreement may not be assigned by Employee.
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company, and Employee. The Company's failure,
or delay in exercising any right, or partial exercise of any right, will not
waive any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
5
<PAGE>
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi MS 39530
If to the Employee, to:
Vicksburg MS 39180
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:___________________________________
"EMPLOYEE"
______________________________________
6
<PAGE>
EXHIBIT 10.72
$175,000,000
CREDIT AGREEMENT
DATED AS OF APRIL 23, 1999
AMONG
ISLE OF CAPRI CASINOS, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent and Issuing Lender,
BANK ONE LOUISIANA, N.A.,
as Syndication Agent,
and
WELLS FARGO BANK, N.A.,
as Documentation Agent,
ARRANGED BY:
CIBC OPPENHEIMER CORP.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. DEFINITIONS................................................. 2
1.1 Certain Defined Terms....................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement................................ 33
1.3 Other Definitional Provisions and Rules of Construction..... 33
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.................. 33
2.1 Commitments; Making of Loans; the Register; Notes........... 33
2.2 Interest on the Loans....................................... 42
2.3 Fees........................................................ 45
2.4 Repayments, Prepayments and Reductions in Revolving Loan
Commitments; General Provisions Regarding Payments;
Application of Proceeds of Collateral and Payments Under
Subsidiary Guaranty......................................... 46
2.5 Use of Proceeds............................................. 54
2.6 Special Provisions Governing Eurodollar Rate Loans.......... 54
2.7 Increased Costs; Taxes; Capital Adequacy.................... 56
2.8 Obligation of Lenders and Issuing Lenders to Mitigate;
Replacement of Lender....................................... 60
Section 3. LETTERS OF CREDIT........................................... 62
3.1 Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein...................................... 62
3.2 Letter of Credit Fees....................................... 64
3.3 Drawings and Reimbursement of Amounts Paid Under Letters
of Credit................................................... 64
3.4 Obligations Absolute........................................ 67
3.5 Indemnification; Nature of Issuing Lenders' Duties.......... 68
3.6 Increased Costs and Taxes Relating to Letters of Credit..... 69
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT................... 70
4.1 Conditions to Term Loans, Revolving Loans and Swing Line
Loans....................................................... 70
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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4.2 Conditions to All Loans..................................... 79
4.3 Conditions to Letters of Credit............................. 79
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES.................... 80
5.1 Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries............................................ 80
5.2 Authorization of Borrowing, etc............................. 81
5.3 Financial Condition......................................... 82
5.4 No Material Adverse Change; No Restricted Junior Payments... 83
5.5 Title to Properties; Liens; Real Property................... 83
5.6 Litigation; Adverse Facts................................... 83
5.7 Payment of Taxes............................................ 84
5.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts.......................................... 84
5.9 Governmental Regulation..................................... 85
5.10 Securities Activities....................................... 85
5.11 Employee Benefit Plans...................................... 85
5.12 Certain Fees................................................ 86
5.13 Environmental Protection.................................... 86
5.14 Employee Matters............................................ 87
5.15 Solvency.................................................... 87
5.16 Matters Relating to Collateral.............................. 87
5.17 Related Agreements.......................................... 88
5.18 Disclosure.................................................. 88
5.19 Year 2000 Compliance........................................ 89
Section 6. COMPANY'S AFFIRMATIVE COVENANTS............................. 89
6.1 Financial Statements and Other Reports...................... 89
6.2 Corporate Existence, etc.................................... 95
6.3 Payment of Taxes and Claims; Tax Consolidation.............. 95
6.4 Maintenance of Properties; Insurance........................ 96
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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<S> <C>
6.5 Inspection Rights........................................... 96
6.6 Compliance with Laws, etc.; Maintenance of Gaming and
Liquor Licenses............................................. 97
6.7 Environmental Review and Investigation, Disclosure, Etc.;
Company's Actions Regarding Hazardous Materials
Activities, Environmental Claims and Violations of
Environmental Laws.......................................... 97
6.8 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and Future
Subsidiaries................................................ 99
6.9 Conforming Leasehold Interests; Matters Relating to
Additional Real Property Collateral; Additional Ship
Mortgages................................................... 100
6.10 Year 2000 Compliance........................................ 102
Section 7. COMPANY'S NEGATIVE COVENANTS................................ 103
7.1 Indebtedness................................................ 103
7.2 Liens and Related Matters................................... 104
7.3 Investments; Joint Ventures................................. 106
7.4 Contingent Obligations...................................... 106
7.5 Restricted Junior Payments.................................. 107
7.6 Financial Covenants......................................... 108
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions................................................ 110
7.8 Consolidated Capital Expenditures........................... 111
7.9 Restriction on Leases....................................... 113
7.10 Sales and Lease-Backs....................................... 113
7.11 Sale or Discount of Receivables............................. 114
7.12 Transactions with Shareholders and Affiliates............... 114
7.13 Disposal of Subsidiary Stock................................ 114
7.14 Conduct of Business......................................... 114
7.15 Amendments or Waivers of Certain Related Agreements;
Amendments of Documents Relating to Subordinated
Indebtedness; Designation of "Designated Senior
Indebtedness"............................................... 115
7.16 Fiscal Year................................................. 115
</TABLE>
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(continued)
<TABLE>
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Section 8. EVENTS OF DEFAULT........................................... 115
8.1 Failure to Make Payments When Due........................... 115
8.2 Default in Other Agreements................................. 116
8.3 Breach of Certain Covenants................................. 116
8.4 Breach of Warranty.......................................... 116
8.5 Other Defaults Under Loan Documents......................... 116
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc........ 116
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.......... 117
8.8 Judgments and Attachments................................... 117
8.9 Dissolution................................................. 117
8.10 Employee Benefit Plans...................................... 117
8.11 Change of Control........................................... 118
8.12 Invalidity of Subsidiary Guaranty; Failure of Security;
Repudiation of Obligations.................................. 118
8.13 Loss of Gaming Licenses..................................... 118
Section 9. ADMINISTRATIVE AGENT........................................ 119
9.1 Appointment................................................. 119
9.2 Powers and Duties; General Immunity......................... 120
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness............................... 122
9.4 Right to Indemnity.......................................... 122
9.5 Successor Administrative Agent and Swing Line Lender........ 123
9.6 Collateral Documents and Guaranties......................... 123
Section 10. MISCELLANEOUS............................................... 124
10.1 Assignments and Participations in Loans and Letters
of Credit................................................... 124
10.2 Expenses.................................................... 127
10.3 Indemnity................................................... 128
10.4 Set-Off; Security Interest in Deposit Accounts.............. 128
10.5 Ratable Sharing............................................. 129
</TABLE>
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(continued)
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10.6 Amendments and Waivers...................................... 130
10.7 Independence of Covenants................................... 131
10.8 Notices..................................................... 131
10.9 Survival of Representations, Warranties and Agreements...... 131
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative....... 132
10.11 Marshalling; Payments Set Aside............................. 132
10.12 Severability................................................ 132
10.13 Obligations Several; Independent Nature of Lenders' Rights.. 132
10.14 Headings.................................................... 132
10.15 Applicable Law.............................................. 133
10.16 Successors and Assigns...................................... 133
10.17 Consent to Jurisdiction and Service of Process.............. 133
10.18 Waiver of Jury Trial........................................ 134
10.19 Confidentiality............................................. 134
10.20 Counterparts; Effectiveness................................. 135
</TABLE>
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<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF TERM NOTE
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORM OF OPINION OF COMPANY COUNSEL
IX FORM OF OPINION OF O'MELVENY & MYERS LLP
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF CERTIFICATE RE NON-DOMESTIC BANK STATUS
XII [INTENTIONALLY OMITTED]
XIII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIV FORM OF COMPANY PLEDGE AGREEMENT
XV FORM OF COMPANY SECURITY AGREEMENT
XVI FORM OF SUBSIDIARY GUARANTY
XVII FORM OF SUBSIDIARY PLEDGE AGREEMENT
XVIII FORM OF SUBSIDIARY SECURITY AGREEMENT
i
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP; MANAGEMENT
4.1F OTHER REFINANCED INDEBTEDNESS
4.1I CLOSING DATE MORTGAGED PROPERTIES
4.1K SHIP MORTGAGES
5.1 SUBSIDIARIES OF COMPANY
5.2C GOVERNMENTAL CONSENTS
5.5 REAL PROPERTY
5.8 MATERIAL CONTRACTS
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
ii
<PAGE>
ISLE OF CAPRI CASINOS, INC.
$175,000,000
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of April 23, 1999 and entered into
by and among ISLE OF CAPRI CASINOS, INC., a Delaware corporation (the
"Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a "Lender" and collectively as
"Lenders"), CIBC INC. ("CIBC Inc."), as swing line lender (in such capacity, the
"Swing Line Lender"), CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"), as agent for
Lenders (in such capacity, the "Administrative Agent") and as issuing lender
with respect to any Letter of Credit (in such capacity, the "Issuing Lender"),
BANK ONE LOUISIANA, N.A., as syndication agent for Lenders (in such capacity,
the "Syndication Agent"), WELLS FARGO BANK, N.A., as documentation agent for
Lenders (in such capacity, the "Documentation Agent"), and CIBC OPPENHEIMER
CORP., as lead arranger (in such capacity, the "Lead Arranger").
R E C I T A L S
---------------
WHEREAS, Company will tender in the Offer and Consent Solicitation
(capitalized terms used herein without definition shall have the meanings set
forth therefor in subsection 1.1 of this Agreement) for the purchase of all of
the outstanding Existing Senior Secured Notes in an aggregate principal amount
equal to $315,000,000;
WHEREAS, on or before the Closing Date, Company will issue and sell
not less than $390,000,000 in aggregate principal amount of the Subordinated
Notes, and will have arranged and obtained not less than $565,000,000 in total
financing (including the Subordinated Notes and the Obligations hereunder) to
finance the Offer and Consent Solicitation and the other transactions
contemplated by the Loan Documents and Related Agreements, in each case on terms
and conditions satisfactory to Administrative Agent.;
WHEREAS, Lenders have agreed to extend certain credit facilities to
Company, the proceeds of which will be used (i) together with the proceeds of
the issuance and sale of the Subordinated Notes, to fund the Financing
Requirements, and (ii) to provide financing for working capital and other
general corporate purposes of Company and its Restricted Subsidiaries;
WHEREAS, Company desires to secure all of the Obligations hereunder
and under the other Loan Documents by granting to Administrative Agent, on
behalf of Lenders, a First Priority Lien on substantially all of its real,
personal and mixed property, including a pledge of all of the capital stock of
each of its domestic Restricted Subsidiaries; and
WHEREAS, all of the Restricted Subsidiaries have agreed to guarantee
the Obligations hereunder and under the other Loan Documents and to secure their
guaranties by granting to Administrative Agent, on behalf of Lenders, a First
Priority Lien on substantially all of their respective real, personal and mixed
property, including a pledge of all of the capital stock of each of their
respective domestic Restricted Subsidiaries owned by them:
<PAGE>
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Administrative
Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms.
---------------------
The following terms used in this Agreement shall have the following
meanings:
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination
Date with respect to any Interest Period for a Eurodollar Rate Loan, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) obtained
by dividing (x) the rate of interest equal to (a) the interest rate per annum
--------
for deposits in Dollars in an amount approximately equal to the amount of CIBC's
Eurodollar Rate Loan and for a period approximately equal to such Interest
Period which appears on page 3750 of the Dow Jones Telerate Screen as of 11:00
A.M. (London time) two (2) Business Days prior to the beginning of such Interest
Period for delivery on the first day of such Interest Period, or (b) if such a
rate does not appear on page 3750 of the Dow Jones Telerate Screen, the average
(rounded upwards, if necessary, to the nearest 1/100 of 1%) of the rates per
annum at which Dollar deposits in immediately available funds are offered to
CIBC in the interbank Eurodollar market as at or about 11:00 A.M. (New York City
time) two (2) Business Days prior to the beginning of such Interest Period for
delivery on the first day of such Interest Period, and in an amount
approximately equal to the amount of CIBC's Eurodollar Rate Loan and for a
period approximately equal to such Interest Period, by (y) a percentage equal to
--
100% minus the stated maximum rate (expressed as a percentage) of all reserve
-----
requirements (including any marginal, emergency, supplemental, special or other
reserves) applicable on such Interest Rate Determination Date to any member bank
of the Federal Reserve System in respect of "Eurocurrency liabilities" as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"Affected Lender" has the meaning assigned to that term in subsection
2.6C.
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Affiliated Fund" means, with respect to any Lender that is a fund
that invests (in whole or in part) in commercial loans, any other fund that
invests (in whole or in part) in commercial loans and is managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
2
<PAGE>
"Agreement" means this Credit Agreement dated as of April 23, 1999, as
it may be amended, supplemented or otherwise modified from time to time.
"Airplane" means the King Air 200 airplane owned by Company on the
Closing Date.
"Applicable Base Rate Margin" means, as at any date of determination,
a percentage per annum as set forth below opposite the applicable Consolidated
Total Leverage Ratio:
<TABLE>
<CAPTION>
Consolidated Total Leverage Ratio Applicable Base Rate
-------------------------------------------------------------------------------
<S> <C>
greater than or equal to 4.50:1.00 2.00%
less than 4.50:1.00 1.75%
but greater than or equal to 4.00:1.00
less than 4.00:1.00 1.50%
but greater than or equal to 3.50:1.00
less than 3.50:1.00 1.25%
but greater than or equal to 3.00:1.00
less than 3.00:1.00 1.00%
but greater than or equal to 2.50:1.00
less than 2.50:1.00 0.75%
</TABLE>
; provided that until the delivery of the first Margin Determination Certificate
--------
pursuant to subsection 6.1(xix) after the six-month anniversary of the Closing
Date, the Applicable Base Rate Margin for Term Loans and Revolving Loans that
are Base Rate Loans shall be 1.75% per annum.
"Applicable Eurodollar Rate Margin" means, as at any date of
determination, a percentage per annum as set forth below opposite the applicable
Consolidated Total Leverage Ratio:
3
<PAGE>
<TABLE>
<CAPTION>
Applicable Eurodollar Rate
Consolidated Total Leverage Margin
--------------------------------------------------------------------------------
<S> <C>
greater than or equal to 4.50:1.00 3.00%
less than 4.50:1.00 2.75%
but greater than or equal to 4.00:1.00
less than 4.00:1.00 2.50%
but greater than or equal to 3.50:1.00
less than 3.50:1.00 2.25%
but greater than or equal to 3.00:1.00
less than 3.00:1.00 2.00%
but greater than or equal to 2.50:1.00
less than 2.50:1.00 1.75%
</TABLE>
; provided that until the delivery of the first Margin Determination Certificate
--------
pursuant to subsection 6.1(xix) after the six-month anniversary of the Closing
Date, the Applicable Eurodollar Rate Margin for Term Loans and Revolving Loans
that are Eurodollar Rate Loans shall be 2.75% per annum.
"Asset Sale" means the sale by Company or any of its Restricted
Subsidiaries to any Person other than Company or any of its Restricted
Subsidiaries of (i) any of the stock or other equity or ownership interests of
any of Company's Subsidiaries, (ii) substantially all of the assets of any
division or line of business of Company or any of its Subsidiaries, or (iii) any
other assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) gaming equipment sold in the ordinary course of
business to the extent the proceeds of such sale are promptly reinvested in
other gaming equipment, and (b) any such other assets to the extent that the
aggregate value of such assets sold in any single transaction or related series
of transactions is equal to $2,000,000 or less).
"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.
"Assignment Agreement" means an Assignment Agreement in substantially
the form of Exhibit X annexed hereto.
---------
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, at any time, the higher of (x) the Reference Rate
or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
4
<PAGE>
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"Biloxi Casino Expansion Project" means the expansion or replacement
of the existing casino barge located at the Biloxi Gaming Facilities, either by
adding an additional barge to the existing barge or replacing the existing barge
with a larger barge.
"Biloxi Gaming Facilities" means the Gaming Facilities owned, leased,
operated or used by Company or its Restricted Subsidiaries in Biloxi,
Mississippi.
"Biloxi Leasehold Property" means the approximately 8 acres of
Leasehold Property leased from the City of Biloxi and the Biloxi Port Commission
in Harrison County, Mississippi, and used in connection with the Isle of Capri
Crowne Plaza Resort located at the Biloxi Gaming Facilities.
"Biloxi Podium Expansion Project" means the construction of a new
podium complex at the Biloxi Gaming Facilities to house an approximately 800-
space parking garage, a new sports/entertainment restaurant and retail space and
to serve as a base for either a timeshare facility or a hotel.
"Bossier City Gaming Facilities" means the Gaming Facilities owned,
leased, operated or used by Company or its Restricted Subsidiaries in Bossier
City, Louisiana.
"Bossier City Hotel Project" means the construction of an
approximately 305-room deluxe hotel located adjacent to the casino at the
Bossier City Gaming Facilities.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or the State of
Mississippi or is a day on which banking institutions located in such state are
authorized or required by law or other governmental action to close.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Equivalents" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of
5
<PAGE>
deposit or bankers' acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least "adequately capitalized" (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1 capital
(as defined in such regulations) of not less than $100,000,000; and (v) shares
of any money market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii)
above, (b) has net assets of not less than $500,000,000, and (c) has the highest
rating obtainable from either S&P or Moody's.
"Certificate re Non-Domestic Bank Status" means a certificate
substantially in the form of Exhibit XI annexed hereto delivered by a Lender to
----------
Administrative Agent pursuant to subsection 2.7B(iii).
"Change of Control" means
(i) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) is
or becomes the "beneficial owner" (as such term is used in Rules 13d-3 and
13d-5 promulgated pursuant to the Exchange Act), directly or indirectly, of
equity Securities representing the greater of (x) the percentage of the
combined voting power of the outstanding Voting Stock of Company held by
Permitted Equity Holders (including shares as to which Company or a
Permitted Equity Holder holds an effective proxy to vote) or (y) 35% or
more of the combined voting power of the outstanding Voting Stock of
Company, 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" so long as 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,
equity 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) any sale, transfer or other conveyance, whether direct or
indirect, of a majority of the fair market value of the assets of Company,
on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction, any
"person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable) (other than the
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")) is
or becomes the "beneficial owner" (as such term is used in Rules 13d-3 and
13d-5 promulgated pursuant to the Exchange Act), directly or indirectly, of
more than 35% of the equity Securities of the transferee;
(iii) during any period of 12 consecutive months after the date
hereof, individuals who at the beginning of any such 12-month period
constituted the Board of Directors of Company (together with any new
directors whose election by such Board or whose nomination for election by
the shareholders of Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning
6
<PAGE>
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the Board of
Directors of Company then in office; or
(iv) the occurrence of a "Change of Control" under the Subordinated
Note Indenture.
"CIBC" has the meaning assigned to that term in the introduction to
this Agreement.
"CIBC Inc." has the meaning assigned to that term in the introduction
to this Agreement.
"Closing Date" means the date on or before May 31, 1999, on which the
initial Loans are made.
"Coahoma Expansion Project" means the construction and development of
a casino and pavilion, a hotel with up to 250 rooms and related entertainment
complex as part of the Coahoma Gaming Facilities.
"Coahoma Gaming Facilities" means the Gaming Facilities owned, leased,
operated or used by Company or its Restricted Subsidiaries in Coahoma County,
Mississippi.
"Collateral" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations; provided,
--------
however, that "Collateral" shall not include Pompano Park or the Assets Held for
- -------
Sale or Development.
"Collateral Account" has the meaning assigned to that term in the
Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account Agreement
executed and delivered by Company and Administrative Agent on the Closing Date,
substantially in the form of Exhibit XIII annexed hereto, as such Collateral
------------
Account Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"Collateral Documents" means the Collateral Account Agreement, the
Company Pledge Agreement, the Company Security Agreement, the Subsidiary Pledge
Agreements, the Subsidiary Security Agreements, the Mortgages, the Ship
Mortgages and all other instruments or documents delivered by any Loan Party
pursuant to this Agreement or any of the other Loan Documents in order to grant
to Administrative Agent, on behalf of Lenders, a Lien on any real, personal or
mixed property of that Loan Party as security for the Obligations.
"Commitment Fee Percentage" means, as at any date of determination, a
percentage per annum as set forth below opposite the applicable Consolidated
Total Leverage Ratio:
7
<PAGE>
<TABLE>
<CAPTION>
Consolidated Total Leverage Ratio Commitment Fee Percentage
--------------------------------------------------------------------------------
<S> <C>
greater than or equal to 3.50:1.00 0.500%
less than 3.50:1.00 0.375%
</TABLE>
; provided that until the delivery of the first Margin Determination Certificate
--------
pursuant to subsection 6.1(xix) after the six-month anniversary of the Closing
Date, the Commitment Fee Percentage shall be 0.500% per annum.
"Commitments" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"Company" has the meaning assigned such term in the introduction to
this Agreement.
"Company Pledge Agreement" means the Company Pledge Agreement executed
and delivered by Company on the Closing Date, substantially in the form of
Exhibit XIV annexed hereto, as such Company Pledge Agreement may thereafter be
- -----------
amended, supplemented or otherwise modified from time to time.
"Company Security Agreement" means the Company Security Agreement
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit XV annexed hereto, as such Company Security Agreement may thereafter
----------
be amended, supplemented or otherwise modified from time to time.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit VII annexed hereto delivered to Administrative Agent and Lenders by
-----------
Company pursuant to subsection 6.1(iv).
"Confidential Information Memorandum" means that certain Confidential
Information Memorandum relating to Company dated March 1999.
"Conforming Leasehold Interest" means any Recorded Leasehold Interest
as to which the lessor has agreed in writing for the benefit of Administrative
Agent (which writing has been delivered to Administrative Agent), whether under
the terms of the applicable lease, under the terms of a Landlord Consent and
Estoppel, or otherwise, to the matters described in the definition of "Landlord
Consent and Estoppel," which interest, if a subleasehold or sub-subleasehold
interest, is not subject to any contrary restrictions contained in a superior
lease or sublease.
"Consolidated Capital Expenditures" means, for any period, the sum of
(i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and its
Restricted Subsidiaries) by Company and its Restricted Subsidiaries during that
period that, in conformity with GAAP, are included in "additions to property,
plant or equipment" or comparable items reflected in the consolidated statement
of
8
<PAGE>
cash flows of Company and its Restricted Subsidiaries plus (ii) to the extent
----
not covered by clause (i) of this definition, the aggregate of all expenditures
by Company and its Restricted Subsidiaries during that period to acquire (by
purchase or otherwise) the business, property or fixed assets of any Person, or
the stock or other evidence of beneficial ownership of any Person that, as a
result of such acquisition, becomes a Restricted Subsidiary of Company.
"Consolidated EBITDA" means, for any period, the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) Consolidated Interest
Expense, (iii) provisions for taxes based on income, (iv) total depreciation
expense, (v) total amortization expense, (vi) pre-opening expense, (vii) cash
dividends or other distributions actually paid to Company by its Unrestricted
Subsidiaries (but excluding any distributions made for the purpose of paying any
taxes arising from any equity ownership interests in such Unrestricted
Subsidiaries), (viii) management fees actually paid to Company by its
Unrestricted Subsidiaries, and (ix) other non-recurring items reducing
Consolidated Net Income but not requiring the expenditure of cash less the sum
----
of (x) interest income, and (y) other non-recurring items increasing
Consolidated Net Income but not constituting the receipt of cash, all of the
foregoing as determined on a consolidated basis for Company and its Restricted
Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charges" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Interest Expense
plus capitalized interest less interest income, and (ii) all mandatory principal
- ---- ----
payments required to be made by Company or any of its Restricted Subsidiaries
(whether or not such payments are actually made), all of the foregoing as
determined on a consolidated basis for Company and its Restricted Subsidiaries
in conformity with GAAP.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP) of Company and its Restricted Subsidiaries on a consolidated basis
with respect to all outstanding Indebtedness of Company and its Restricted
Subsidiaries, including all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing and net
costs under Interest Rate Agreements, but excluding, however, any amounts
referred to in subsection 2.3 payable to Administrative Agent and Lenders on or
before the Closing Date.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Company and its Restricted Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of any
--------
Person accrued prior to the date it becomes a Restricted Subsidiary of Company
or is merged into or consolidated with Company or any of its Restricted
Subsidiaries or that Person's assets are acquired by Company or any of its
Restricted Subsidiaries, and (ii) the income of any Restricted Subsidiary of
Company to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary.
"Consolidated Net Worth" means, as at any date of determination, the
sum of the capital stock and additional paid-in capital plus retained earnings
(or minus accumulated
9
<PAGE>
deficits) of Company and its Restricted Subsidiaries on a consolidated basis
determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Restricted Subsidiaries
on a consolidated basis during that period under all Operating Leases (other
than Excluded Leases) to which Company or any of its Restricted Subsidiaries is
a party as lessee.
"Consolidated Senior Debt" means, as at any date of determination,
Consolidated Total Debt less the aggregate amount of all unsecured Subordinated
----
Indebtedness of Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Senior Leverage Ratio" means, as at any date of
determination, the ratio of (a) Consolidated Senior Debt as of the last day of
the Fiscal Quarter for which such determination is being made, to (b)
Consolidated EBITDA, after giving effect on a pro forma basis to any
acquisitions of any assets or any Persons pursuant to Expansion Capital
Expenditures permitted under subsection 7.8(ii) and/or any Asset Sales permitted
under subsection 7.7(vi), for the consecutive four Fiscal Quarters ending on the
last day of the Fiscal Quarter for which such determination is being made.
"Consolidated Total Debt" means, as at any date of determination, the
aggregate amount of all Indebtedness of Company and its Restricted Subsidiaries
plus the Contingent Obligations of Company and its Restricted Subsidiaries where
- ----
the primary obligation of such Contingent Obligation constitutes Indebtedness or
a makewell, keepwell or other similar agreement, but excluding Contingent
Obligations under Hedge Agreements, in each case determined on a consolidated
basis in accordance with GAAP.
"Consolidated Total Leverage Ratio" means, as at any date of
determination, the ratio of (a) Consolidated Total Debt as of the last day of
the Fiscal Quarter for which such determination is being made, to (b)
Consolidated EBITDA, after giving effect on a pro forma basis to any
acquisitions of any assets or any Persons pursuant to Expansion Capital
Expenditures permitted under subsection 7.8(ii) and/or any Asset Sales permitted
under subsection 7.7(vi), for the consecutive four Fiscal Quarters ending on the
last day of the Fiscal Quarter for which such determination is being made.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Hedge Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the
10
<PAGE>
obligation of another, including, without limitation, any credit support
agreements, makewell agreements, keepwell agreements and any other agreements
evidencing similar obligations, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited. The obligations so guaranteed or otherwise supported (if
other than Indebtedness), including, without limitation, guarantees of minimum
room rates or occupancy levels, shall be in form and substance satisfactory to
Administrative Agent.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Cripple Creek Land" means the real estate owned or leased by Company
in Cripple Creek, Colorado, as of the Closing Date.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Discontinued Assets" means the following assets held for sale by
Company or its Subsidiaries as of the Closing Date: (i) the Emerald Lady
riverboat and the Diamond Lady riverboat; (ii) the Lucky Seven barge and one
other barge (vessel number 511360); and (iii) certain gaming equipment valued at
less than $250,000.
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Eligible Assignee" means a Person that is (I) to the extent required
under applicable Gaming Laws, registered with, approved by, or not disapproved
by (whichever may be required under applicable Gaming Laws), all applicable
Gaming Authorities, and (II) (A) (i) a commercial bank, savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; provided that such financial institution has a combined capital
-------
and surplus of at least $100,000,000; (ii) a commercial bank organized under the
laws of any other country or a political subdivision thereof; provided that (x)
--------
such bank is acting through a branch or agency located in the United States or
(y) such bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of such country; or (iii) any other entity which is an "accredited investor"
11
<PAGE>
(as defined in Regulation D under the Securities Act) which extends credit or
buys loans as one of its businesses including insurance companies, mutual funds,
lease financing companies and investment funds and any Affiliated Funds; or (B)
any Lender, any Affiliate of any Lender, or any Affiliated Fund of any Lender;
provided that no Affiliate of Company shall be an Eligible Assignee.
- --------
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was maintained or contributed to by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates.
"Environmental Claim" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of governmental
authorities relating to (i) environmental matters, including those relating to
any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to Company or any of its
Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (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 Federal
-- ---
Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42
-- ---
U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601
-- ---
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
- -- ---
(S)136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et
-- --- --
seq.), the Oil Pollution Act (33 U.S.C. (S) 2701 et seq) and the Emergency
- --- ------
Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), each as
-- ---
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former
12
<PAGE>
ERISA Affiliate of Company or any of its Subsidiaries shall continue to be
considered an ERISA Affiliate of Company or such Subsidiary within the meaning
of this definition with respect to the period such entity was an ERISA Affiliate
of Company or such Subsidiary and with respect to liabilities arising after such
period for which Company or such Subsidiary could be liable under the Internal
Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on Company, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on
Company, any of its Subsidiaries or any of their respective ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071
of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
13
<PAGE>
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Excluded Guarantors" means Isle of Capri Casino Colorado, Inc., a
Colorado corporation, and PPI, Inc., a Florida corporation.
"Excluded Leases" means (i) all leases existing as of the Closing Date
under which Company or any of its Restricted Subsidiaries is a lessee, (ii) all
leases arising from or relating to the Tunica Gaming Facilities and the Biloxi
Gaming Facilities under which Company or any of its Restricted Subsidiaries
enters into after the Closing Date and becomes a lessee, and (iii) all leases
replacing any of the foregoing. In the case of (ii) and (iii), such leases and
the rental payments in respect of such leases shall be reasonably satisfactory
to Administrative Agent.
"Existing Senior Secured Note Indenture" means the indenture pursuant
to which the Existing Senior Secured Notes were issued, as amended.
"Existing Senior Secured Notes" means the $315,000,000 in aggregate
principal amount of 12.5% Senior Secured Notes of Company due 2003.
"Expansion Capital Expenditures" means any Consolidated Capital
Expenditure by Company or any of its Subsidiaries which are made with respect to
any Related Business that is, or after giving effect to such expenditures will
be, (a) owned by Company or any of its Subsidiaries, or (b) which further
expands or enhances any Gaming Facility owned, leased, operated or used by
Company or any of its Subsidiaries existing or under construction as of the
Closing Date and which is not properly characterized as a Maintenance Capital
Expenditure.
"Facilities" means any and all real property (including all buildings,
fixtures or other improvements located thereon and all Gaming Facilities) now,
hereafter or heretofore owned, leased, operated or used by Company or any of its
Subsidiaries or any of their respective predecessors or Affiliates.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"FFC Preferred Stock" means all shares of preferred stock, $100 par
value, of Freedom Financial Corporation owned by Company.
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xiii).
14
<PAGE>
"Financing Requirements" means the aggregate of all amounts necessary
(i) to repurchase the outstanding Existing Senior Secured Notes pursuant to the
Offer and Consent Solicitation, (ii) to pay accrued and unpaid interest on such
Existing Senior Secured Notes, (iii) to pay not more than $46,000,000 in tender
offer premiums and consent fees, (iv) to refinance all of the Other Refinanced
Indebtedness, and (v) to pay Transactions Costs.
"First Priority" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i) such
Lien has priority over any other Lien on such Collateral (other than Permitted
Encumbrances which as a matter of statutory law have priority over any other
Lien irrespective of the prior perfection or filing of such other Lien and, with
respect to ships, barges and other vessels, Permitted Priority Maritime Liens)
and (ii) such Lien is the only Lien (other than Liens permitted pursuant to
subsection 7.2) to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its Subsidiaries as
determined on the basis of a four consecutive Fiscal Quarter period where (x) in
the case of every Fiscal Year other than a Fiscal Year ending during a leap
year, each such Fiscal Quarter consists of two four-week monthly periods and one
five-week monthly period or thirteen total weeks for each such Fiscal Quarter
and such Fiscal Year shall consist of a total of fifty-two weeks, and (y) in the
case of a Fiscal Year ending during a leap year, each of the first three such
Fiscal Quarters shall be for a period of thirteen total weeks and the last such
Fiscal Quarter shall be for a period of fourteen total weeks consisting of one
four-week monthly period and two five-week monthly periods and such Fiscal Year
shall consist of a total of fifty-three weeks; provided that Fiscal Year 1999
--------
shall end on April 25, 1999.
"Flood Hazard Property" means a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.
"Funding and Payment Office" means (i) the office of Administrative
Agent and Swing Line Lender located at CIBC, 425 Lexington Avenue, New York, NY
10017, or (ii) such other office of Administrative Agent and Swing Line Lender
as may from time to time hereafter be designated as such in a written notice
delivered by Administrative Agent and Swing Line Lender to Company and each
Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
15
<PAGE>
"Gaming Authority" means any governmental agency, authority, board,
bureau, commission, department, office or instrumentality that holds regulatory,
licensing or permit authority over gambling, gaming or Gaming Facility
activities conducted by Company or any of its Subsidiaries within its
jurisdiction.
"Gaming Facility" means any gaming establishment and other property or
assets directly ancillary thereto or used in connection therewith, including,
without limitation, any casinos, hotels, resorts, race tracks, theaters, parking
facilities, recreational vehicle parks, timeshare operations, retail shops,
restaurants, other buildings, land, golf courses and other recreation and
entertainment facilities, marinas, vessels, barges, ships and related equipment.
"Gaming Laws" means all statutes, rules, regulations, ordinances,
codes, administrative or judicial orders or decrees or other laws pursuant to
which any Gaming Authority possesses regulatory, licensing or permit authority
over gambling, gaming or Gaming Facility activities conducted by Company or any
of its Subsidiaries within its jurisdiction.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court or any Gaming Authority.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined in any Environmental Law or as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", acutely hazardous waste", "radioactive waste", "biohazardous
waste", "pollutant", "toxic pollutant", "contaminant", "restricted hazardous
waste", "infectious waste", "toxic substances", or any other term or expression
intended to define, list or classify substances by reason of properties harmful
to health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws); (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos-containing materials; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
the health and safety of the owners, occupants or any Persons in the vicinity of
any Facility or to the indoor or outdoor environment.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
16
<PAGE>
"Hedge Agreement" means (i) any Interest Rate Agreement designed to
hedge against fluctuations in interest rates, (ii) any foreign exchange
contract, currency swap agreement, futures contract, option contract, synthetic
cap or other similar agreement or arrangement to which Company or any of its
Subsidiaries is a party designed to hedge against fluctuations in currency
values, and (iii) any other agreement or arrangement to which Company or any of
its Subsidiaries is a party which hedges against or is based upon fluctuations
in the value of the equity Securities of any Person, or any equity forward
agreements or similar agreements or arrangements.
"ICBH" means Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements constitute
(X) in the case of Hedge Agreements, Contingent Obligations, and (Y) in all
other cases, Investments, and in neither case constitute Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Information Systems and Equipment" means all computer hardware,
firmware and software, as well as other information processing systems, or any
equipment containing embedded microchips, whether directly or indirectly owned,
licensed, leased, operated or otherwise controlled by Company or any of its
Subsidiaries, including through third-party service providers, and which, in
whole or in part, are used, operated, relied upon or integral to Company's or
any of its Subsidiaries' conduct of their businesses.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"Interest Payment Date" means (i) with respect to any Base Rate Loan,
the last Business Day of each March, June, September and December of each year
commencing on the first such date to occur after the Closing Date, and (ii) with
respect to any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided that in the case of each Interest Period of
--------
six months "Interest Payment Date" shall also include the date that is three
months after the commencement of such Interest Period.
17
<PAGE>
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Restricted Subsidiaries of, or of a
beneficial interest in, any Securities of any other Person (including any
Subsidiary of Company), (ii) any direct or indirect redemption, retirement,
purchase or other acquisition for value, by any Restricted Subsidiary of Company
from any Person other than Company or any of its Restricted Subsidiaries, of any
equity Securities of such Subsidiary, (iii) any direct or indirect loan, advance
(other than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or
capital contribution by Company or any of its Restricted Subsidiaries to any
other Person (other than a wholly-owned domestic Restricted Subsidiary of
Company), including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business, or (iv) Interest Rate Agreements not
constituting Hedge Agreements. The amount of any Investment shall be the excess
of (x) the original cost of such Investment plus (y) the cost of all additions
----
thereto, without any adjustments for increases or decreases in value, or write-
ups, write-downs or write-offs with respect to such Investment, over (z) the
aggregate amount of all distributions of Cash or Cash Equivalents constituting a
return of capital on such Investment.
"IP Collateral" means, collectively, the Collateral consisting of
Intellectual Property under the Company Security Agreement and the Subsidiary
Security Agreements.
"Issuing Lender" has the meaning assigned to that term in the
introduction to this Agreement and also means any Lender which agrees or is
otherwise obligated to issue a Letter of Credit, determined as provided in
subsection 3.1B(ii).
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
--------
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"Lake Charles Gaming Facilities" means the Gaming Facilities owned,
leased, operated or used by Company or its Restricted Subsidiaries in Westlake
(near Lake Charles), Louisiana.
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<PAGE>
"Lake Charles Leasehold Property" means the approximately 16.25 acres
of Leasehold Property leased in Calcasieu Parish, Louisiana, and used in
connection with the Isle of Capri Casino and Hotel located at the Lake Charles
Gaming Facilities.
"Lake Charles Project" means the construction of an approximately 250-
room waterfront deluxe hotel with convention space and restaurants located at
the Lake Charles Gaming Facilities.
"Landlord Consent and Estoppel" means (x) with respect to any
Leasehold Property (other than the Biloxi Leasehold Property and the Lake
Charles Leasehold Property), a letter, certificate or other instrument in
writing from the lessor under the related lease, satisfactory in form and
substance to Administrative Agent, pursuant to which such lessor agrees, for the
benefit of Administrative Agent, (i) that without any further consent of such
lessor or any further action on the part of the Loan Party holding such
Leasehold Property, such Leasehold Property may be encumbered pursuant to a
Mortgage and may be assigned to the purchaser at a foreclosure sale or in a
transfer in lieu of such a sale (and to a subsequent third party assignee if
Administrative Agent, any Lender, or an Affiliate of either so acquires such
Leasehold Property), (ii) that such lessor shall not terminate such lease as a
result of a default by such Loan Party thereunder without first giving
Administrative Agent notice of such default and at least 60 days (or, if such
default cannot reasonably be cured by Administrative Agent within such period,
such longer period as may reasonably be required) to cure such default, and
(iii) to such other matters relating to such Leasehold Property as
Administrative Agent may reasonably request, and (y) with respect to the Biloxi
Leasehold Property and the Lake Charles Leasehold Property, a letter,
certificate or other instrument in writing from the lessor under the related
lease, in each case in form and substance reasonably satisfactory to
Administrative Agent.
"Lead Arranger" has the meaning assigned to that term in the
introduction to this Agreement.
"Leasehold Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires.
"Letter of Credit" or "Letters of Credit" means Standby Letters of
Credit issued or to be issued by Issuing Lenders for the account of Company
pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which may be drawn under all Letters of
Credit then outstanding plus (ii) the aggregate amount of all drawings under
----
Letters of Credit honored by Issuing Lenders and not theretofore reimbursed by
Company in any manner, either directly or out of the proceeds of Revolving Loans
pursuant to subsection 3.3B.
"License Revocation" means the revocation, failure to renew or
suspension of, or the appointment of a receiver, supervisor or similar official
with respect to, any casino, gambling
19
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or gaming license issued by any Gaming Authority covering any Gaming Facility or
other gaming facility owned, leased, operated or used by Company or any of its
Subsidiaries.
"Lien" means any lien, mortgage, ship mortgage, pledge, assignment,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Term Loans, Revolving Loans
or Swing Line Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates executed by Company in favor of an Issuing Lender relating to,
the Letters of Credit), the Subsidiary Guaranty and the Collateral Documents.
"Loan Party" means each of Company and any of Company's Subsidiaries
from time to time executing a Loan Document, and "Loan Parties" means all such
Persons, collectively.
"Maintenance Capital Expenditures" means any Consolidated Capital
Expenditures by Company or any of its Subsidiaries which are made to maintain,
restore or refurbish the condition or usefulness of property of Company or any
of its Subsidiaries, or otherwise to support the continuation of such Person's
day-to-day operations as then conducted, but which are not properly chargeable
to repairs and maintenance in accordance with GAAP; provided, however, that such
-------- -------
term shall not include any Consolidated Capital Expenditures to restore the
condition or usefulness of property to the extent funded from Net
Insurance/Condemnation Proceeds delivered to Company or any of its Subsidiaries
in accordance with the terms of the Loan Documents.
"Margin Determination Certificate" means an Officer's Certificate of
Company delivered (a) with respect to each Fiscal Quarter (other than each
fourth Fiscal Quarter), with the financial statements required pursuant to
subsection 6.1(ii), and (b) with respect to each fourth Fiscal Quarter, within
45 days of the last day of such fourth Fiscal Quarter, setting forth in
reasonable detail the Consolidated Total Leverage Ratio which is applicable as
of the last day of the fiscal period for which such financial statements and
Officer's Certificate are being delivered; provided that each Margin
--------
Determination Certificate to be delivered pursuant to subdivision (a) above
shall be included as part of the Compliance Certificate for each such Fiscal
Quarter.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries taken as a whole or (ii) the
impairment of the ability of Company and its
20
<PAGE>
Subsidiaries taken as a whole to perform, or of Administrative Agent or Lenders
to enforce, the Obligations.
"Material Contract" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could
reasonably be expected to have a Material Adverse Effect.
"Material Leasehold Property" means a Leasehold Property reasonably
determined by Administrative Agent to be of material value as Collateral or of
material importance to the operations of Company or any of its Subsidiaries.
"Material Subsidiary" means each Subsidiary of Company now existing or
hereafter acquired or formed by Company which, on a consolidated basis for such
Subsidiary and its Subsidiaries, (i) for the most recent Fiscal Year accounted
for more than 5.0% of the consolidated revenues of Company and its Subsidiaries
or (ii) as at the end of such Fiscal Year, was the owner of more than 5.0% of
the consolidated assets of Company and its Subsidiaries.
"Mortgage" means (i) a security instrument (whether designated as a
deed of trust or a mortgage or by any similar title) executed and delivered by
any Loan Party, substantially in such form as may be approved by Administrative
Agent in its reasonable discretion, in each case with such changes thereto as
may be reasonably recommended by Administrative Agent's or Company's local
counsel based on local laws or customary local mortgage or deed of trust
practices, or (ii) at Administrative Agent's option, in the case of an
Additional Mortgaged Property (as defined in subsection 6.9), an amendment to an
existing Mortgage, in form reasonably satisfactory to Administrative Agent,
adding such Additional Mortgaged Property to the Real Property Assets encumbered
by such existing Mortgage, in either case as such security instrument or
amendment may be amended, supplemented or otherwise modified from time to time.
"Mortgages" means all such instruments, including the Closing Date Mortgages (as
defined in subsection 4.1I(i)) and any Additional Mortgages (as defined in
subsection 6.9B(i)), collectively.
"Mortgaged Property" means a Closing Date Mortgaged Property (as
defined in subsection 4.1I(i)) or an Additional Mortgaged Property (as defined
in subsection 6.9B).
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of the date of such
Asset Sale as a result of any gain recognized in connection with such Asset
Sale, (ii) payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness (other than the Loans) that is secured
by a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale,
21
<PAGE>
and (iii) any reasonable brokerage fees, commissions and other similar expenses
relating to such Asset Sale.
"Net Insurance/Condemnation Proceeds" means any Cash payments or
proceeds received by Company or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Company or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Company or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Company or such Subsidiary in respect thereof.
"Non-Recourse Debt" means Indebtedness (i) as to which neither Company
nor any of its Restricted Subsidiaries (a) provides any guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, keepwell
or makewell agreement or instrument that would constitute Indebtedness) or (b)
is directly or indirectly liable (as a guarantor or otherwise), and (ii) no
default with respect to which (including any rights that the holders thereof may
have to take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of
Company or any of its Restricted Subsidiaries to declare a default under such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.
"Notes" means one or more of the Term Notes, Revolving Notes or Swing
Line Note or any combination thereof.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant
- ---------
to subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to Administrative
----------
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice substantially
in the form of Exhibit III annexed hereto delivered by Company to Administrative
-----------
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Administrative Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"Offer and Consent Solicitation" means, collectively, (i) the offer by
Company to the holders of outstanding Existing Senior Secured Notes to
repurchase for cash $315,000,000 in aggregate principal amount of such notes,
and (ii) the solicitation by Company from the holders of outstanding Existing
Senior Secured Notes of consents to certain amendments and waivers to the
Existing Senior Secured Note Indenture, in each case as described in and in
22
<PAGE>
accordance with the terms of the Offer and Consent Solicitation Materials, for
an aggregate payment which does not exceed the principal amount of the Existing
Senior Secured Notes so repurchased plus accrued and unpaid interest thereon,
----
and not more than $46,000,000 in tender offer premiums and consent fees.
"Offer and Consent Solicitation Materials" means, collectively, (i)
the Offer to Purchase and Consent Solicitation Statement distributed by Company
on March 15, 1999 to the holders of the Existing Senior Secured Notes, (ii) the
Consent and Letter of Transmittal, together with the substitute Form W-9, and
(iii) such other documents, transmittal letters and related materials provided
to the holders of outstanding Existing Senior Secured Notes and delivered to
Administrative Agent and Lenders prior to the Closing Date, as each such
document, letter or material may be amended from time to time thereafter to the
extent permitted under subsection 7.15A.
"Offering Memorandum" means that certain Offering Memorandum relating
to the Subordinated Notes dated April 20, 1999.
"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents or its chief
financial officer or its treasurer.
"Operating Lease" means, as applied to any Person, any lease
(including leases that may be terminated by the lessee at any time) of any
property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"Other Refinanced Indebtedness" means the Indebtedness of Company and
its Subsidiaries in an aggregate amount of up to $44,000,000 (including any
accrued but unpaid interest thereon and any premiums and penalties relating
thereto) to be refinanced with proceeds from the Subordinated Notes and the
initial Loans under this Agreement; provided that the Indebtedness selected by
--------
Company to be so refinanced shall be satisfactory to Lead Arranger and shall be
identified as "Other Refinanced Indebtedness" on Schedule 4.1F annexed hereto.
-------------
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks and rights
of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and
23
<PAGE>
materialmen, and other Liens imposed by law, in each case incurred in the
ordinary course of business (a) for amounts not yet overdue or (b) for
amounts that are overdue and that (in the case of any such amounts overdue
for a period in excess of 5 days) are being contested in good faith by
appropriate proceedings, so long as (1) such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for
any such contested amounts, and (2) in the case of a Lien with respect to
any portion of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral on account of
such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance with
any applicable terms of the Collateral Documents and not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries or resulting in a material diminution in the value
of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, navigational servitudes,
restrictions, encroachments, and other minor defects or irregularities in
title, in each case which do not and will not interfere in any material
respect with the ordinary conduct of the business of Company or any of its
Subsidiaries or result in a material diminution in the value of any
Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b),
so long as the holder of such restriction or encumbrance agrees to
recognize the rights of such lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
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<PAGE>
(xi) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business of
Company and its Subsidiaries;
(xii) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary; and
(xiii) Permitted Priority Maritime Liens.
"Permitted Equity Holders" means Bernard Goldstein and his three adult
sons.
"Permitted Priority Maritime Liens" means maritime Liens on ships,
barges or other vessels for wages of a stevedore, when employed directly by a
Person listed in 46 U.S.C. (S) 31341, crew's 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 such ships, barges or other
vessels 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 such
ships, barges or other vessels or judicially asserted.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"Pledged Collateral" means, collectively, the "Pledged Collateral" as
defined in the Company Pledge Agreement and the Subsidiary Pledge Agreements.
"Pompano Park" means the Gaming Facilities owned, leased, operated or
used by Company and its Subsidiaries in Pompano Beach, Florida.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Pro Rata Share" means (i) with respect to all payments, computations
and other matters relating to the Term Loan Commitment or the Term Loan of any
Lender, the percentage obtained by dividing (x) the Term Loan Exposure of that
--------
Lender by (y) the aggregate Term Loan Exposure of all Lenders, (ii) with respect
--
to all payments, computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans of any Lender or any Letters of Credit issued
or participations therein purchased by any Lender or any participations in any
Swing Line Loans purchased by any Lender, the percentage obtained by dividing
--------
(x) the Revolving Loan Exposure of that Lender by (y) the aggregate Revolving
--
Loan Exposure of all Lenders, and (iii) for all other purposes with respect to
each Lender, the percentage obtained by dividing (x) the sum of the Term Loan
--------
Exposure of that Lender plus the Revolving Loan
----
25
<PAGE>
Exposure of that Lender by (y) the sum of the aggregate Term Loan Exposure of
--
all Lenders plus the aggregate Revolving Loan Exposure of all Lenders, in any
----
such case as the applicable percentage may be adjusted by assignments permitted
pursuant to subsection 10.1. The initial Pro Rata Share of each Lender for
purposes of each of clauses (i), (ii) and (iii) of the preceding sentence is set
forth opposite the name of that Lender in Schedule 2.1 annexed hereto.
--------
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of Administrative Agent, desirable in order to create or perfect Liens on any IP
Collateral.
"Real Estate Options" means (i) all options held by Company, directly
or indirectly, on the Closing Date and (ii) all options acquired by Company,
directly or indirectly, after the Closing Date, in each case to purchase or
lease land with an aggregate cost to Company and its Restricted Subsidiaries not
to exceed $2,000,000.
"Real Property Asset" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
"Recorded Leasehold Interest" means a Leasehold Property with respect
to which a Record Document (as hereinafter defined) has been recorded in all
places necessary or desirable, in Administrative Agent's reasonable judgment, to
give constructive notice of such Leasehold Property to third-party purchasers
and encumbrancers of the affected real property. For purposes of this
definition, the term "Record Document" means, with respect to any Leasehold
Property, (a) the lease evidencing such Leasehold Property or a memorandum
thereof, executed and acknowledged by the owner of the affected real property,
as lessor, or (b) if such Leasehold Property was acquired or subleased from the
holder of a Recorded Leasehold Interest, the applicable assignment or sublease
document, executed and acknowledged by such holder, in each case in form
sufficient to give such constructive notice upon recordation and otherwise in
form reasonably satisfactory to Administrative Agent.
"Reference Rate" means the rate that CIBC announces from time to time
as its prime lending rate, as in effect from time to time.
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(iii).
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Related Agreements" means, collectively, Offer and Consent
Solicitation Materials, the Offering Memorandum, the Subordinated Notes and the
Subordinated Note Indenture.
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<PAGE>
"Related Businesses" means the gaming businesses (including pari-
mutuel betting) conducted by Company and its Subsidiaries as of the Closing Date
and any and all reasonably related businesses necessary for, in support or
anticipation of and ancillary to or in preparation for, the gaming businesses,
including without limitation, the development, expansion or operation of any
Gaming Facility (including any land-based, dockside, riverboat or other type of
Gaming Facility).
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), including the
movement of any Hazardous Materials through the air, soil, surface water or
groundwater.
"Requisite Lenders" means Lenders having or holding more than 50% of
the sum of the aggregate Term Loan Exposure of all Lenders plus the aggregate
----
Revolving Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness.
"Restricted Subsidiary" means any Subsidiary of Company other than an
Unrestricted Subsidiary.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(ii), and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means April 23, 2004.
"Revolving Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
----
the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage
in respect of all Letters of Credit issued by that Lender (in each case net of
any participations purchased by other Lenders in such Letters of Credit or any
unreimbursed drawings thereunder) plus (c) the aggregate amount of all
----
participations purchased by that
27
<PAGE>
Lender in any outstanding Letters of Credit or any unreimbursed drawings under
any Letters of Credit plus (d) in the case of Swing Line Lender, the aggregate
----
outstanding principal amount of all Swing Line Loans (net of any participations
therein purchased by other Lenders) plus (e) the aggregate amount of all
----
participations purchased by that Lender in any outstanding Swing Line Loans.
"Revolving Loans" means the Loans made by Lenders to Company pursuant
to subsection 2.1A(ii).
"Revolving Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i)(b) on the Closing Date, (ii) any promissory notes
of Company issued pursuant to the last paragraph of subsection 2.1E relating to
any increase in Revolving Loan Commitments made pursuant to subsection 2.1A(iv),
and (iii) any promissory notes issued by Company pursuant to the last sentence
of subsection 10.1B(i) in connection with assignments of the Revolving Loan
Commitments and Revolving Loans of any Lenders, in each case substantially in
the form of Exhibit V annexed hereto, as they may be amended, supplemented or
---------
otherwise modified from time to time.
"Securities" means any stock, shares, partnership interests,
membership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Ship Mortgage" means a security instrument (whether designated as a
first preferred ship mortgage or by any similar title) executed and delivered by
any Loan Party, substantially in such form as may be approved by Administrative
Agent in its reasonable discretion, in each case with such changes thereto as
may be reasonably recommended by Administrative Agent's or Company's local
counsel based on local laws or customary local first preferred ship mortgage
practices, as such security instrument may be amended, supplemented or otherwise
modified from time to time. "Ship Mortgages" means all such instruments,
collectively.
"Solvent" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the
28
<PAGE>
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Restricted Subsidiaries in respect of industrial revenue
or development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Restricted Subsidiaries, (iii) the obligations of third
party insurers of Company or any of its Restricted Subsidiaries arising by
virtue of the laws of any jurisdiction requiring third party insurers, (iv)
obligations with respect to Capital Leases or Operating Leases of Company or any
of its Restricted Subsidiaries, and (v) performance, payment, deposit or surety
obligations of Company or any of its Restricted Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry.
"Subordinated Indebtedness" means (i) the Indebtedness of Company
evidenced by the Subordinated Notes and (ii) any other Indebtedness of Company
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
reasonably satisfactory to Administrative Agent.
"Subordinated Note Indenture" means the indenture pursuant to which
the Subordinated Notes are issued, as such indenture may be amended from time to
time to the extent permitted under subsection 7.15B.
"Subordinated Notes" means the $390,000,000 in aggregate principal
amount of 8-3/4% Subordinated Notes due 2009 of Company issued pursuant to the
Subordinated Note Indenture.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Subsidiary Guarantor" means any domestic Restricted Subsidiary of
Company that executes and delivers a counterpart of the Subsidiary Guaranty on
the Closing Date or from time to time thereafter pursuant to subsection 6.8.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and
delivered by existing domestic Restricted Subsidiaries of Company on the Closing
Date and to be executed and delivered by additional domestic Restricted
Subsidiaries of Company from time to time
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thereafter in accordance with subsection 6.8, substantially in the form of
Exhibit XVI annexed hereto, as such Subsidiary Guaranty may hereafter be
- -----------
amended, supplemented or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means each Subsidiary Pledge Agreement
executed and delivered by an existing Subsidiary Guarantor (other than an
Excluded Guarantor) on the Closing Date or executed and delivered by any
additional Subsidiary Guarantor from time to time thereafter in accordance with
subsection 6.8, in each case substantially in the form of Exhibit XVII annexed
------------
hereto, as such Subsidiary Pledge Agreement may be amended, supplemented or
otherwise modified from time to time, and "Subsidiary Pledge Agreements" means
all such Subsidiary Pledge Agreements, collectively.
"Subsidiary Security Agreement" means each Subsidiary Security
Agreement executed and delivered by an existing Subsidiary Guarantor (other than
an Excluded Guarantor) on the Closing Date or executed and delivered by any
additional Subsidiary Guarantor from time to time thereafter in accordance with
subsection 6.8, in each case substantially in the form of Exhibit XVIII annexed
-------------
hereto, as such Subsidiary Security Agreement may be amended, supplemented or
otherwise modified from time to time, and "Subsidiary Security Agreements" means
all such Subsidiary Security Agreements, collectively.
"Supplemental Collateral Agent" has the meaning assigned to that term
in subsection 9.1B.
"Swing Line Lender" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor Swing
Line Lender appointed pursuant to subsection 9.5B.
"Swing Line Loan Commitment" means the commitment of Swing Line Lender
to make Swing Line Loans to Company pursuant to subsection 2.1A(iii).
"Swing Line Loans" means the Loans made by Swing Line Lender to
Company pursuant to subsection 2.1A(iii).
"Swing Line Note" means (i) the promissory note of Company issued
pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any promissory note
issued by Company to any successor Administrative Agent and Swing Line Lender
pursuant to the last sentence of subsection 9.5B, in each case substantially in
the form of Exhibit VI annexed hereto, as it may be amended, supplemented or
----------
otherwise modified from time to time.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person shall be
--------
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are
30
<PAGE>
considered to arise in or to relate to a particular jurisdiction, or otherwise)
of that Person (and/or, in the case of a Lender, its lending office).
"Term Loan Commitment" means the commitment of a Lender to make a Term
Loan to Company pursuant to subsection 2.1A(i), and "Term Loan Commitments"
means such commitments of all Lenders in the aggregate.
"Term Loan Exposure" means, with respect to any Lender as of any date
of determination (i) prior to the funding of the Term Loans, that Lender's Term
Loan Commitment and (ii) after the funding of the Term Loans, the outstanding
principal amount of the Term Loan of that Lender.
"Term Loans" means the Loans made by Lenders to Company pursuant to
subsection 2.1A(i).
"Term Notes" means (i) the promissory notes of Company issued pursuant
to subsection 2.1E(i)(a) on the Closing Date, (ii) any promissory notes of
Company issued pursuant to the last paragraph of subsection 2.1E relating to any
increase in Term Loans made pursuant to subsection 2.1A(iv), and (iii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Term Loan Commitments or Term
Loans of any Lenders, in each case substantially in the form of Exhibit IV
----------
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"Title Company" means, collectively, one or more title insurance
companies reasonably satisfactory to Administrative Agent.
"Total Utilization of Revolving Loan Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans plus (ii) the aggregate principal amount of all
----
outstanding Swing Line Loans plus (iii) the Letter of Credit Usage.
----
"Transaction Costs" means the fees, costs and expenses payable by
Company on or before the Closing Date in connection with the transactions
contemplated by the Loan Documents and the Related Agreements in an aggregate
amount not to exceed $17,000,000.
"Tunica Gaming Facilities" means the Gaming Facilities owned, leased,
operated or used by company or its Restricted Subsidiaries in Tunica County,
Mississippi.
"Tunica Project" means the renovation of the existing casino barge,
the construction of two multi-purpose theaters with a total of approximately
2,000 seats, and the construction of an approximately 200 to 250-room new hotel,
in each case as part of the Tunica Gaming Facilities.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; provided that such
--------
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Subsidiary: (i) has no Indebtedness other than Non-Recourse Debt; (ii) is not
party to any agreement, contract, arrangement or understanding with Company or
any Restricted Subsidiary of Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of Company; (iii) is a Person with respect to which
neither Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (1) to subscribe for additional equity Securities or other
equity or ownership interests, or (2) to maintain or preserve such Person's
financial condition or to cause such Person to achieve or maintain any specified
levels of profitability; (iv) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of Company or any of its
Restricted Subsidiaries; and (v) has no Subsidiaries other than Unrestricted
Subsidiaries; and provided further that, notwithstanding the foregoing, Company
may not designate as an Unrestricted Subsidiary (x) any then existing Subsidiary
that owns, leases, operates or uses any assets or function directly relating to
or necessary for the conduct of casino gaming at the Biloxi Gaming Facilities,
the Bossier City Gaming Facilities, the Coahoma Gaming Facilities, the Lake
Charles Gaming Facilities, the Tunica Gaming Facilities or the Vicksburg Gaming
Facilities, or (y) PPI, Inc. Any such designation by the Board of Directors
shall be evidenced to Administrative Agent by filing with Administrative Agent
resolutions of the Board of Directors giving effect to such designation and an
Officer's Certificate certifying that such designation complied with the
foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of Company as of such date. The Board of Directors may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under subsection 7.1 and (ii) no Event of Default or
Potential Event of Default would be in existence following such designation.
"Vicksburg Gaming Facilities" means the Gaming Facilities owned,
leased, operated or used by Company or its Restricted Subsidiaries in Vicksburg,
Mississippi.
"Voting Stock" means, with respect to any Person, the capital stock
(including any and all shares, interests (including partnership, membership and
other equity interests), participations, rights in, or other equivalents
(however designated and whether voting or nonvoting) of, such capital stock, and
any and all rights, warrants or options exchangeable for or convertible into
such 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.
"Year 2000 Compliant" means that all Information Systems and Equipment
accurately process date data (including without limitation calculating,
comparing and sequencing) in all material respects before, during and after the
year 2000, as well as same and multi-century dates, or between the years 1999
and 2000, taking into account all leap years, including the fact that the year
2000 is a leap year, and further, that when used in combination
32
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with or interfacing with, other Information Systems and Equipment, shall
accurately accept, release and exchange date data, and shall in all material
respects continue to function in the same manner as it performs today and shall
not otherwise materially impair the accuracy or functionality of Information
Systems and Equipment.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
------------------------------------------------------------------------
Agreement.
---------
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (other than the absence of footnotes
with respect to the financial statements and other information delivered
pursuant to clauses (i) and (ii) of subsection 6.1) and delivered together with
the reconciliation statements provided for in subsection 6.1(v). Calculations
in connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 Other Definitional Provisions and Rules of Construction.
-------------------------------------------------------
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use in any of the Loan Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
-------------------------------------------------
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to make the Loans described in subsections
2.1A(i) and 2.1A(ii) and Swing Line Lender hereby agrees to make the Loans
described in subsection 2.1A(iii):
(i) Term Loans. Each Lender severally agrees to lend to Company on
----------
the Closing Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the Term Loan Commitments to be used for the purposes
identified in subsection 2.5A. The amount of each Lender's Term Loan
Commitment is set forth opposite its name on
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Schedule 2.1 annexed hereto and the aggregate original amount of the Term
------------
Loan Commitments is $50,000,000; provided that the Term Loans of Lenders
--------
shall be adjusted to give effect to (1) any increase in Term Loans pursuant
to subsection 2.1A(iv), and (2) any assignments of the Term Loans pursuant
to subsection 10.1B. Each Lender's Term Loan Commitment shall expire
immediately and without further action on May 31, 1999 if the Term Loans
are not made on or before that date. Company may make only one borrowing
under the Term Loan Commitments. Amounts borrowed under this subsection
2.1A(i) and subsequently repaid or prepaid may not be reborrowed.
(ii) Revolving Loans. Each Lender severally agrees, subject to
---------------
the limitations set forth below with respect to the maximum amount of
Revolving Loans permitted to be outstanding from time to time, to lend to
Company from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the
Revolving Loan Commitments to be used for the purposes identified in
subsection 2.5B. The original amount of each Lender's Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed hereto
------------
and the aggregate original amount of the Revolving Loan Commitments is
$125,000,000; provided that the Revolving Loan Commitments of Lenders shall
--------
be adjusted to give effect to (1) any increase in Revolving Loan
Commitments pursuant to subsection 2.1A(iv), and (2) any assignments of the
Revolving Loan Commitments pursuant to subsection 10.1B; and provided
--------
further that the amount of the Revolving Loan Commitments shall be reduced
-------
from time to time by the amount of any reductions thereto made pursuant to
subsections 2.4B(ii) and 2.4B(iii). Each Lender's Revolving Loan Commitment
shall expire on the Revolving Loan Commitment Termination Date and all
Revolving Loans and all other amounts owed hereunder with respect to the
Revolving Loans and the Revolving Loan Commitments shall be paid in full no
later than that date; provided that each Lender's Revolving Loan Commitment
--------
shall expire immediately and without further action on May 31, 1999 if the
Term Loans are not made on or before that date. Amounts borrowed under this
subsection 2.1A(ii) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments
shall be subject to the limitation that in no event shall the Total
Utilization of Revolving Loan Commitments at any time exceed the Revolving
Loan Commitments then in effect.
(iii) Swing Line Loans. Swing Line Lender hereby agrees, subject to
----------------
the limitations set forth below with respect to the maximum amount of Swing
Line Loans permitted to be outstanding from time to time, to make a portion
of the Revolving Loan Commitments available to Company from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date by making Swing Line Loans to Company in an
aggregate amount not exceeding the amount of the Swing Line Loan Commitment
to be used for the purposes identified in subsection 2.5B, notwithstanding
the fact that such Swing Line Loans, when aggregated with Swing Line
Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share
of the Letter of Credit Usage then in effect, may exceed Swing Line
Lender's Revolving
34
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Loan Commitment. The original amount of the Swing Line Loan Commitment is
$10,000,000; provided that any reduction of the Revolving Loan Commitments
--------
made pursuant to subsection 2.4B(ii) or 2.4B(iii) which reduces the
aggregate Revolving Loan Commitments to an amount less than the then
current amount of the Swing Line Loan Commitment shall result in an
automatic corresponding reduction of the Swing Line Loan Commitment to the
amount of the Revolving Loan Commitments, as so reduced, without any
further action on the part of Company, Administrative Agent or Swing Line
Lender. The Swing Line Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Swing Line Loans and all other amounts
owed hereunder with respect to the Swing Line Loans shall be paid in full
no later than that date; provided that the Swing Line Loan Commitment shall
--------
expire immediately and without further action on May 31, 1999 if the Term
Loans are not made on or before that date. Amounts borrowed under this
subsection 2.1A(iii) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Loan Commitment
shall be subject to the limitation that in no event shall the Total
Utilization of Revolving Loan Commitments at any time exceed the Revolving
Loan Commitments then in effect.
With respect to any Swing Line Loans which have not been
voluntarily prepaid by Company pursuant to subsection 2.4B(i), Swing Line
Lender may, at any time in its sole and absolute discretion, deliver to
Administrative Agent (with a copy to Company), no later than 11:00 A.M.
(New York City time) on the first Business Day in advance of the proposed
Funding Date, a notice (which shall be deemed to be a Notice of Borrowing
given by Company) requesting Lenders to make Revolving Loans that are Base
Rate Loans on such Funding Date in an amount equal to the amount of such
Swing Line Loans (the "Refunded Swing Line Loans") outstanding on the date
such notice is given which Swing Line Lender requests Lenders to prepay.
Anything contained in this Agreement to the contrary notwithstanding, (i)
the proceeds of such Revolving Loans made by Lenders other than Swing Line
Lender shall be immediately delivered by Administrative Agent to Swing Line
Lender (and not to Company) and applied to repay a corresponding portion of
the Refunded Swing Line Loans and (ii) on the day such Revolving Loans are
made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line Loans
shall be deemed to be paid with the proceeds of a Revolving Loan made by
Swing Line Lender, and such portion of the Swing Line Loans deemed to be so
paid shall no longer be outstanding as Swing Line Loans and shall no longer
be due under the Swing Line Note of Swing Line Lender but shall instead
constitute part of Swing Line Lender's outstanding Revolving Loans and
shall be due under the Revolving Note of Swing Line Lender. Company hereby
authorizes Administrative Agent and Swing Line Lender to charge Company's
accounts with Administrative Agent and Swing Line Lender (up to the amount
available in each such account) in order to immediately pay Swing Line
Lender the amount of the Refunded Swing Line Loans to the extent the
proceeds of such Revolving Loans made by Lenders, including the Revolving
Loan deemed to be made by Swing Line Lender, are not sufficient to repay in
full the Refunded Swing Line Loans. If any portion of any such amount paid
(or deemed to be paid) to Swing Line Lender should be recovered by or on
behalf of Company from Swing
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Line Lender in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be ratably shared
among all Lenders in the manner contemplated by subsection 10.5.
If for any reason (a) Revolving Loans are not made upon the
request of Swing Line Lender as provided in the immediately preceding
paragraph in an amount sufficient to repay any amounts owed to Swing Line
Lender in respect of any outstanding Swing Line Loans or (b) the Revolving
Loan Commitments are terminated at a time when any Swing Line Loans are
outstanding, each Lender shall be deemed to, and hereby agrees to, have
purchased a participation in such outstanding Swing Line Loans in an amount
equal to its Pro Rata Share (calculated, in the case of the foregoing
clause (b), immediately prior to such termination of the Revolving Loan
Commitments) of the unpaid amount of such Swing Line Loans together with
accrued interest thereon. Upon one Business Day's notice from Swing Line
Lender, each Lender shall deliver to Swing Line Lender an amount equal to
its respective participation in same day funds at the Funding and Payment
Office. In order to further evidence such participation (and without
prejudice to the effectiveness of the participation provisions set forth
above), each Lender agrees to enter into a separate participation agreement
at the request of Swing Line Lender in form and substance reasonably
satisfactory to the parties thereto. In the event any Lender fails to make
available to Swing Line Lender the amount of such Lender's participation as
provided in this paragraph, Swing Line Lender shall be entitled to recover
such amount on demand from such Lender together with interest thereon at
the rate customarily used by Swing Line Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate. In
the event Swing Line Lender receives a payment of any amount in which other
Lenders have purchased participations as provided in this paragraph, Swing
Line Lender shall promptly distribute to each such other Lender its Pro
Rata Share of such payment.
Anything contained herein to the contrary notwithstanding, each
Lender's obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loans pursuant to the second preceding paragraph and
each Lender's obligation to purchase a participation in any unpaid Swing
Line Loans pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including (a) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against Swing Line Lender, Company or any other
Person for any reason whatsoever; (b) the occurrence or continuation of an
Event of Default or a Potential Event of Default; (c) any adverse change in
the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company or any of its Subsidiaries; (d) any
breach of this Agreement or any other Loan Document by any party thereto;
or (e) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing; provided that such obligations of each
--------
Lender are subject to the condition that (X) Swing Line Lender believed in
good faith that all conditions under Section 4 to the making of the
applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, as
the case may be, were satisfied at the time such Refunded Swing Line Loans
or unpaid Swing Line Loans were made or (Y) the satisfaction of any such
condition not satisfied had been waived in accordance with subsection 10.6
prior to
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<PAGE>
or at the time such Refunded Swing Line Loans or other unpaid Swing Line
Loans were made.
(iv) Increases of the Term Loans or Revolving Loan Commitments. At the
---------------------------------------------------------
mutual discretion of Company and Lead Arranger, Company may request in
writing at any time during the period from the Closing Date to and
including the second anniversary of the Closing Date that (x) the then
effective aggregate principal amount of Term Loans be increased, and/or (y)
the then effective aggregate principal amount of Revolving Loan Commitments
be increased; provided that (1) the aggregate principal amount of the
increases in Term Loans and/or Revolving Loan Commitments pursuant to this
subsection 2.1A(iv) shall not exceed $75,000,000, (2) Company may not make
more than two requests for such increases in Term Loans and/or Revolving
Loan Commitments, (3) no Event of Default or Potential Event of Default
shall have occurred and be continuing or occurs as a result of such
increases in Term Loans and/or Revolving Loan Commitments, (4) such
increases shall be subject to any prior approvals or exemptions required
under any applicable Gaming Laws, and (5) Company shall, and shall cause
its Restricted Subsidiaries to, execute and deliver such documents and
instruments and take such other actions (including, without limitation,
obtaining appropriate endorsements to title insurance policies) as may be
reasonably requested by Administrative Agent in connection with such
increases. Any request under this subsection 2.1A(iv) shall be submitted
by Company to Administrative Agent (which shall forward copies to Lenders),
specify the proposed effective date and amount of such increase and be
accompanied by an Officer's Certificate stating that no Event of Default or
Potential Event of Default exists or will occur as a result of such
increase. Company may also specify any fees offered to those Lenders (the
"Increasing Lenders") which agree to increase the principal amount of their
Term Loans or Revolving Loan Commitments, as the case may be, which fees
may be variable based upon the amount by which any such Lender is willing
to increase the principal amount of its Term Loan or Revolving Loan
Commitment, as the case may be. No Lender shall have any obligation,
express or implied, to offer to increase the aggregate principal amount of
its Term Loan or Revolving Loan Commitment, as the case may be. Only the
consent of each Increasing Lender shall be required for an increase in the
aggregate principal amount of Term Loans or Revolving Loan Commitments, as
the case may be, pursuant to this subsection 2.1A(iv). No Lender which
elects not to increase the principal amount of its Term Loan or Revolving
Loan Commitment, as the case may be, may be replaced in respect of its
existing Term Loan or Revolving Loan Commitment, as the case may be, as a
result thereof without such Lender's consent.
Each Increasing Lender shall as soon as practicable specify the
amount of the proposed increase which it is willing to assume. Company may
accept some or all of the offered amounts or designate new lenders who
qualify as Eligible Assignees and which are reasonably acceptable to
Administrative Agent as additional Lenders hereunder in accordance with
this subsection 2.1A(iv) (each such new lender being a "New Lender"), which
New Lender may assume all or a portion of the increase in the aggregate
principal amount of the Term Loans or Revolving Loan Commitments, as the
case may be. Company and Administrative Agent shall have discretion
jointly to adjust
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<PAGE>
the allocation of the increased aggregate principal amount of Term Loans or
Revolving Loan Commitments, as the case may be, among Increasing Lenders
and New Lenders.
Each New Lender designated by Company and reasonably acceptable
to Administrative Agent shall become an additional party hereto as a New
Lender concurrently with the effectiveness of the proposed increase in the
aggregate principal amount of the Term Loans or Revolving Loan Commitments,
as the case may be, upon its execution of an instrument of Joinder, in each
case in form and substance satisfactory to Administrative Agent.
Subject to the foregoing, any increase requested by Company shall
be effective as of the date proposed by Company and shall be in the
principal amount equal to (i) the principal amount which Increasing Lenders
are willing to assume as increases to the principal amount of their Term
Loans or Revolving Loan Commitments, as the case may be, plus (ii) the
----
principal amount offered by New Lenders with respect to Term Loans or
Revolving Loan Commitments, as the case may be, in either case as adjusted
by Company and Administrative Agent pursuant to this subsection 2.1A(iv).
All new Term Loans to be made under this subsection 2.1A(iv) shall be made
to Company on the same day as such increase in Term Loans under this
subsection 2.1A(iv) becomes effective. Upon effectiveness of any such
increase, the Pro Rata Share of each Lender will be adjusted to give effect
to the increase in Term Loans or Revolving Loan Commitments, as the case
may be, and Administrative Agent shall distribute to Lenders a revised
Schedule 2.1 reflecting the Term Loan, Revolving Loan Commitment and Pro
------------
Rata Share of each Lender after giving effect to such increase. To the
extent that the adjustment of Pro Rata Shares results in loss or expenses
to any Lender as a result of the prepayment of any Eurodollar Rate Loan on
a date other than the scheduled last day of the applicable Interest Period,
Company shall be responsible for such loss or expense pursuant to
subsection 2.6D.
B. Borrowing Mechanics. Term Loans or Revolving Loans made on any Funding
Date (other than Revolving Loans made pursuant to a request by Swing Line
Lender pursuant to subsection 2.1A(iii) for the purpose of repaying any
Refunded Swing Line Loans or Revolving Loans made pursuant to subsection
3.3B for the purpose of reimbursing any Issuing Lender for the amount of a
drawing under a Letter of Credit issued by it) shall be in an aggregate
minimum amount of $1,000,000 and multiples of $1,000,000 in excess of that
amount; provided that Term Loans or Revolving Loans made on any Funding
--------
Date as Eurodollar Rate Loans with a particular Interest Period shall be in
an aggregate minimum amount of $2,500,000 and integral multiples of
$1,000,000 in excess of that amount. Swing Line Loans made on any Funding
Date shall be in an aggregate minimum amount of $250,000 and integral
multiples of $250,000 in excess of that amount. Whenever Company desires
that Lenders make Term Loans or Revolving Loans it shall deliver to
Administrative Agent a Notice of Borrowing no later than 11:00 A.M. (New
York City time) at least three Business Days in advance of the proposed
Funding Date (in the case of a Eurodollar Rate Loan) or at least one
Business Day in advance of the proposed Funding Date (in the case of a Base
Rate Loan). Whenever Company desires that Swing Line Lender make a Swing
Line Loan, it shall deliver to Administrative Agent a Notice of Borrowing
no later than 11:00 A.M. (New York City time) on the proposed Funding Date.
The Notice of Borrowing shall specify (i) the proposed Funding Date (which
shall be a Business Day), (ii) the amount and
38
<PAGE>
type of Loans requested, (iii) in the case of Swing Line Loans and any
Loans made on the Closing Date, that such Loans shall be Base Rate Loans,
(iv) in the case of Term Loans and Revolving Loans not made on the Closing
Date, whether such Loans shall be Base Rate Loans or Eurodollar Rate Loans,
and (v) in the case of any Loans requested to be made as Eurodollar Rate
Loans, the initial Interest Period requested therefor. Term Loans and
Revolving Loans may be continued as or converted into Base Rate Loans and
Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of
delivering the above-described Notice of Borrowing, Company may give
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
--------
promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
C. Disbursement of Funds. All Term Loans and Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender or Swing Line
Lender, as the case may be, of the proposed borrowing. Each Lender shall make
the amount of its Loan available to Administrative Agent not later than 1:00
P.M. (New York City time) on the applicable Funding Date, and Swing Line Lender
shall make the amount of its Swing Line Loan available to Administrative Agent
not later than 1:00 P.M. (New York City time) on the applicable Funding Date, in
each case in same day funds in Dollars, at the Funding and Payment Office.
Except as provided in subsection 2.1A(iii) or subsection 3.3B with respect to
Revolving Loans used to repay Refunded Swing Line Loans or to reimburse any
Issuing Lender for the amount of a drawing under a Letter of Credit issued
39
<PAGE>
by it, upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Loans made on the Closing Date) and 4.2 (in the
case of all Loans), Administrative Agent shall promptly upon receipt make the
proceeds of such Loans available to Company on the applicable Funding Date by
causing an amount of same day funds in Dollars equal to the proceeds of all such
Loans received by Administrative Agent from Lenders or Swing Line Lender, as the
case may be, to be credited to the account of Company at the Funding and Payment
Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company and Company shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans. Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Company may
have against any Lender as a result of any default by such Lender hereunder.
D. The Register.
(i) Administrative Agent shall maintain, at its address referred to
in subsection 10.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from time
to time (the "Register"). The Register shall be available for inspection by
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Administrative Agent shall record in the Register the Term Loan
Commitment and Revolving Loan Commitment and the Term Loan and Revolving
Loans from time to time of each Lender, the Swing Line Loan Commitment and
the Swing Line Loans from time to time of Swing Line Lender, and each
repayment or prepayment in respect of the principal amount of the Term Loan
or Revolving Loans of each Lender or the Swing Line Loans of Swing Line
Lender. Any such recordation shall be conclusive and binding on Company and
each Lender, absent manifest error; provided that failure to make any such
--------
recordation, or any error in such recordation, shall not affect any
Lender's Commitments or Company's Obligations in respect of any applicable
Loans.
40
<PAGE>
(iii) Each Lender shall record on its internal records (including the
Notes held by such Lender) the amount of the Term Loan and each Revolving
Loan made by it and each payment in respect thereof. Any such recordation
shall be conclusive and binding on Company, absent manifest error; provided
--------
that failure to make any such recordation, or any error in such
recordation, shall not affect any Lender's Commitments or Company's
Obligations in respect of any applicable Loans; and provided further that
-------- -------
in the event of any inconsistency between the Register and any Lender's
records, the recordations in the Register shall govern.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
(v) Company hereby designates CIBC to serve as Company's agent
solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent CIBC serves
in such capacity, CIBC and its officers, directors, employees, agents and
affiliates shall constitute Indemnitees for all purposes under subsection
10.3.
E. Notes. Company shall execute and deliver on the Closing Date (i) to
each Lender (or to Administrative Agent for that Lender) (a) a Term Note
substantially in the form of Exhibit IV annexed hereto to evidence that Lender's
----------
Term Loan, in the principal amount of that Lender's Term Loan and with other
appropriate insertions, and (b) a Revolving Note substantially in the form of
Exhibit V annexed hereto to evidence that Lender's Revolving Loans, in the
- ---------
principal amount of that Lender's Revolving Loan Commitment and with other
appropriate insertions, and (ii) to Swing Line Lender (or to Administrative
Agent for Swing Line Lender) a Swing Line Note substantially in the form of
Exhibit VI annexed hereto to evidence Swing Line Lender's Swing Line Loans, in
- ----------
the principal amount of the Swing Line Loan Commitment and with other
appropriate insertions.
Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent as provided in subsection 10.1B(ii). Any request,
authorization or consent of any person or entity who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, assignee or transferee of that
Note or of any Note or Notes issued in exchange therefor.
41
<PAGE>
In the event Company increases the aggregate principal amount of the
Term Loans or Revolving Loan Commitments, as the case may be, pursuant to
subsection 2.1A(iv), Company shall issue replacement Term Notes or Revolving
Notes, as the case may be, to each Increasing Lender and new Term Notes or
Revolving Notes, as the case may be, to each New Lender.
2.2 Interest on the Loans.
---------------------
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate. Subject to the provisions of subsection 2.7, each
Swing Line Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable basis for determining
the rate of interest with respect to any Term Loan or any Revolving Loan shall
be selected by Company initially at the time a Notice of Borrowing is given with
respect to such Loan pursuant to subsection 2.1B, and the basis for determining
the interest rate with respect to any Term Loan or any Revolving Loan may be
changed from time to time pursuant to subsection 2.2D. If on any day a Term Loan
or Revolving Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day that Loan shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Term Loans
and the Revolving Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
----
Applicable Base Rate Margin; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
----
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line
Loans shall bear interest through maturity at the sum of the Base Rate plus the
----
Applicable Base Rate Margin.
Upon delivery of the Margin Determination Certificate by Company to
Administrative Agent pursuant to subsection 6.1(xix), the Applicable Base Rate
Margin and Applicable Eurodollar Rate Margin shall automatically be adjusted in
accordance with such Margin Determination Certificate, such adjustment to become
effective on the next succeeding Business Day following the receipt by
Administrative Agent of such Margin Determination Certificate; provided that (1)
--------
at any time a Margin Determination Certificate is not delivered at the time
required pursuant to subsection 6.1(xix), from the time such Margin
Determination Certificate was required to be delivered until delivery of such
Margin Determination Certificate, the Applicable Base Rate Margin shall be 2.00%
and the Applicable Eurodollar Rate Margin shall be 3.00%, and (2) if a Margin
Determination Certificate erroneously indicates an applicable margin (x) more
favorable to Company than should be afforded by the actual calculation of the
Consolidated Total Leverage Ratio, Company shall promptly pay additional
interest and letter of credit fees to correct for such error, and (y) less
favorable to Company than should be afforded by the actual calculation of the
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<PAGE>
Consolidated Total Leverage Ratio, Lenders shall promptly reimburse Company an
amount equal to such excess interest and letter of credit fees to correct for
such error.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period (or with
respect to clause (vi) below only, such shorter period acceptable to
Administrative Agent); provided that:
--------
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice
of Conversion/ Continuation, each successive Interest Period shall commence
on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
--------
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Term
Loans shall extend beyond April 23, 2004 and no Interest Period with
respect to any portion of the Revolving Loans shall extend beyond the
Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Term
Loans shall extend beyond a date on which Company is required to make a
scheduled payment of principal of the Term Loans unless the sum of (a) the
aggregate principal amount of Term Loans that are Base Rate Loans plus (b)
the aggregate principal amount of Term Loans that are Eurodollar Rate Loans
with Interest Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on the Term Loans on such date;
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<PAGE>
(vii) there shall be no more than ten (10) Interest Periods
outstanding at any time; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
--------
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Term Loans or Revolving Loans equal to $1,000,000 and integral
multiples of $1,000,000 in excess of that amount from Loans bearing interest at
a rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Loan equal to $2,500,000 and integral multiples of $1,000,000 in
excess of that amount as a Eurodollar Rate Loan; provided, however, that a
-------- -------
Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 11:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
--------
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in
44
<PAGE>
good faith to have been given by a duly authorized officer or other person
authorized to act on behalf of Company or for otherwise acting in good faith
under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Company
shall have effected a conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. Post-Maturity Interest. Any principal payments on the Loans (whether
Base Rate Loans or Eurodollar Rate Loans) not paid when due and, to the extent
permitted by applicable law, any interest payments on the Loans or any fees or
other amounts owed hereunder not paid when due, in each case whether at stated
maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand
at a rate which is 2.00% per annum in excess of the highest interest rate
otherwise payable under this Agreement for Base Rate Loans; provided that, in
--------
the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in
effect at the time any such increase in interest rate is effective such
Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is 2.00% per annum
in excess of the highest interest rate otherwise payable under this Agreement
for Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
--------
day on which it is made, one day's interest shall be paid on that Loan.
2.3 Fees.
----
A. Commitment Fees. Company agrees to pay to Administrative Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average of
the daily excess of the Revolving Loan
45
<PAGE>
Commitments over the Total Utilization of Revolving Loan Commitments (but not
any outstanding Swing Line Loans) multiplied by the Commitment Fee Percentage,
---------- --
such commitment fees to be calculated on the basis of a 360-day year and the
actual number of days elapsed and to be payable quarterly in arrears on the last
Business Day of each March, June, September and December of each year commencing
on the first such date to occur after the Closing Date, and on the Revolving
Loan Commitment Termination Date.
Upon delivery of the Margin Determination Certificate by Company to
Administrative Agent pursuant to subsection 6.1(xix), the Commitment Fee
Percentage shall automatically be adjusted in accordance with such Margin
Determination Certificate, such adjustment to become effective on the next
succeeding Business Day following the receipt by Administrative Agent of such
Margin Determination Certificate; provided that (1) at any time a Margin
--------
Determination Certificate is not delivered at the time required pursuant to
subsection 6.1(xix), from the time such Margin Determination Certificate was
required to be delivered until delivery of such Margin Determination
Certificate, the Commitment Fee Percentage shall be 0.500%, and (2) if a Margin
Determination Certificate erroneously indicates an applicable margin (x) more
favorable to Company than should be afforded by the actual calculation of the
Consolidated Total Leverage Ratio, Company shall promptly pay additional
commitment fees to correct for such error, and (y) less favorable to Company
than should be afforded by the actual calculation of the Consolidated Total
Leverage Ratio, Lenders shall promptly reimburse Company an amount equal to such
excess commitment fees to correct for such error.
B. Upfront Fee. Company agrees to pay to Lead Arranger an upfront fee on
the Closing Date as more particularly set forth in that certain fee letter dated
as of March 17, 1999.
C. Annual Administrative Fee. Company agrees to pay to Administrative
Agent an annual administrative fee as more particularly set forth in that
certain fee letter dated as of March 17, 1999.
D. Other Fees. Company agrees to pay to Administrative Agent such other
fees in the amounts and at the times separately agreed upon between Company and
Administrative Agent.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
---------------------------------------------------------------------
General Provisions Regarding Payments; Application of Proceeds of
-----------------------------------------------------------------
Collateral and Payments Under Subsidiary Guaranty.
-------------------------------------------------
A. Scheduled Payments of Term Loans. Company shall make principal
payments on the Term Loans in installments on the dates and in the amounts set
forth below:
Scheduled Repayment Date Scheduled Repayment
of Term Loans
----------------------------------------------------------------------
July 23, 1999 $ 833,333
October 22, 1999 $ 833,333
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<PAGE>
Scheduled Repayment Date Scheduled Repayment
of Term Loans
----------------------------------------------------------------------
January 21, 2000 $ 833,333
April 28, 2000 $ 833,333
July 28, 2000 $ 1,666,667
October 27, 2000 $ 1,666,667
January 26, 2001 $ 1,666,667
April 27, 2001 $ 1,666,667
July 27, 2001 $ 2,500,000
October 26, 2001 $ 2,500,000
January 25, 2002 $ 2,500,000
April 26, 2002 $ 2,500,000
July 26, 2002 $ 3,333,333
October 25, 2002 $ 3,333,333
January 24, 2003 $ 3,333,333
April 25, 2003 $ 3,333,333
July 25, 2003 $ 4,166,667
October 24, 2003 $ 4,166,667
January 23, 2004 $ 4,166,667
April 23, 2004 $ 4,166,667
----------------------------
Total $50,000,000
; provided that the scheduled installments of principal of the Term Loans
--------
set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term Loans in accordance with subsection
2.4B(iv); provided further that the Term Loans and all other amounts owed
-------- -------
hereunder with respect to the Term Loans shall be paid in full no later
than April 23, 2004, and the final installment payable by Company in
respect of the Term Loans on such date shall be in an amount, if such
amount is different from that specified above, sufficient to repay all
amounts owing by Company under this Agreement with respect to the Term
Loans; and provided further that in the event that the aggregate principal
-------- -------
amount of Term Loans is increased pursuant to subsection 2.1A(iv), then
each scheduled principal repayment to be made after such increase becomes
effective shall be increased by an amount equal to (a) the aggregate
principal amount of the increase in Term Loans pursuant to subsection
2.1A(iv) multiplied by (b) an amount equal to (x) such scheduled repayment
---------- --
amount divided by (y) the aggregate principal amount of Term Loans to be
------- --
repaid immediately prior to giving effect to the increase in Term Loans
made pursuant to subsection 2.1A(iv).
B. Prepayments and Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Company may, upon written or telephonic
---------------------
notice to Administrative Agent on or prior to 12:00 Noon (New York City
time) on the date of
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<PAGE>
prepayment, which notice, if telephonic, shall be promptly confirmed in
writing, at any time and from time to time prepay any Swing Line Loan on
any Business Day in whole or in part in an aggregate minimum amount of
$250,000 and integral multiples of $250,000 in excess of that amount.
Company may, upon not less than one Business Day's prior written or
telephonic notice, in the case of Base Rate Loans, and three Business Days'
prior written or telephonic notice, in the case of Eurodollar Rate Loans,
in each case given to Administrative Agent by 12:00 Noon (New York City
time) on the date required and, if given by telephone, promptly confirmed
in writing to Administrative Agent (which original written or telephonic
notice Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time prepay any
Term Loans or Revolving Loans on any Business Day in whole or in part in an
aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000
in excess of that amount; provided, however, that a Eurodollar Rate Loan
-------- -------
may only be prepaid on the expiration of the Interest Period applicable
thereto. Notice of prepayment having been given as aforesaid, the principal
amount of the Loans specified in such notice shall become due and payable
on the prepayment date specified therein. Any such voluntary prepayment
shall be applied as specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company
--------------------------------------------------
may, upon not less than three Business Days' prior written or telephonic
notice confirmed in writing to Administrative Agent (which original written
or telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to
time terminate in whole or permanently reduce in part, without premium or
penalty, the Revolving Loan Commitments in an amount up to the amount by
which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of the Revolving Loan
--------
Commitments shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $1,000,000 in excess of that amount. Company's notice
to Administrative Agent shall designate the date (which shall be a Business
Day) of such termination or reduction and the amount of any partial
reduction, and such termination or reduction of the Revolving Loan
Commitments shall be effective on the date specified in Company's notice
and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving Loan
----------------------------------------------------------------
Commitments. The Loans shall be prepaid and/or the Revolving Loan
-----------
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions to be
applied as set forth below or as more specifically provided in subsection
2.4B(iv):
(a) Prepayments and Reductions From Net Asset Sale Proceeds. No
-------------------------------------------------------
later than the first Business Day following the date of receipt by
Company or any of its Restricted Subsidiaries of any Net Asset Sale
Proceeds in respect of any Asset Sale, Company shall prepay the Loans
and/or the Revolving Loan Commitments shall be permanently reduced in
an aggregate amount equal to 100% of the amount of such Net Asset Sale
Proceeds; provided, however, that
-------- -------
48
<PAGE>
such Net Asset Sale Proceeds received by Company or any of its
Restricted Subsidiaries from any Asset Sales permitted under
subsection 7.7(vi) shall be excluded from the requirements of this
subsection 2.4B(iii)(a) to the extent such proceeds are reinvested or
committed in writing to be reinvested in a Related Business within 180
days after receipt of such proceeds.
(b) Prepayments and Reductions from Net Insurance/Condemnation
----------------------------------------------------------
Proceeds. No later than the first Business Day following the date of
--------
receipt by Administrative Agent or by Company or any of its Restricted
Subsidiaries of any Net Insurance/ Condemnation Proceeds, Company
shall prepay the Loans and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to 100% of the amount
of such Net Insurance/Condemnation Proceeds; provided, however, such
-------- -------
Net Insurance/Condemnation Proceeds received by Company or any of its
Restricted Subsidiaries shall be excluded from the requirements of
this subsection 2.4B(iii)(b) to the extent that (i) under the terms of
any lease or other agreement existing on the Closing Date such Net
Insurance/Condemnation Proceeds are required to be used to replace,
rebuild or repair the asset so damaged, destroyed or taken, or (ii)
Company or the applicable Restricted Subsidiary determines to utilize
such Net Insurance/Condemnation Proceeds to replace, rebuild or repair
the asset, damaged, destroyed or taken, and in each case referred to
in clauses (i) and (ii) above, Company or such Restricted Subsidiary
so utilizes or has committed in writing to so utilize such Net
Insurance/Condemnation Proceeds within 180 days of the receipt of such
proceeds.
(c) Prepayments and Reductions Due to Issuance of Debt
--------------------------------------------------
Securities. On the date of receipt by Company of the Cash proceeds
----------
(any such proceeds, net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith, including
reasonable legal fees and expenses, being "Net Debt Proceeds") from
the issuance of any debt Securities (other than the issuance of
Indebtedness permitted under subsection 7.1) of Company after the
Closing Date, Company shall prepay the Loans and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount equal
to 75% of such Net Debt Proceeds.
(d) Calculations of Net Proceeds Amounts; Additional Prepayments
------------------------------------------------------------
and Reductions Based on Subsequent Calculations. Concurrently with any
-----------------------------------------------
prepayment of the Loans and/or reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(c), Company shall
deliver to Administrative Agent an Officer's Certificate demonstrating
the calculation of the amount (the "Net Proceeds Amount") of the
applicable Net Asset Sale Proceeds or Net Insurance/Condemnation
Proceeds, the applicable Net Debt Proceeds (as such term is defined in
subsection 2.4B(iii)(c)), as the case may be, that gave rise to such
prepayment and/or reduction. In the event that Company shall
subsequently determine that the actual Net Proceeds Amount was greater
than the amount set forth in such Officer's Certificate, Company shall
promptly make an additional prepayment of the Loans (and/or, if
applicable, the Revolving Loan Commitments
49
<PAGE>
shall be permanently reduced) in an amount equal to the amount of such
excess, and Company shall concurrently therewith deliver to
Administrative Agent an Officer's Certificate demonstrating the
derivation of the additional Net Proceeds Amount resulting in such
excess.
(e) Prepayments Due to Reductions or Restrictions of Revolving
----------------------------------------------------------
Loan Commitments. Company shall from time to time prepay first the
---------------- -----
Swing Line Loans, and second the Revolving Loans to the extent
------
necessary so that the Total Utilization of Revolving Loan Commitments
shall not at any time exceed the Revolving Loan Commitments then in
effect.
(iv) Application of Prepayments.
--------------------------
(a) Application of Voluntary Prepayments by Type of Loans and
---------------------------------------------------------
Order of Maturity. Any voluntary prepayments pursuant to subsection
-----------------
2.4B(i) shall be applied as specified by Company in the applicable
notice of prepayment; provided that in the event Company fails to
--------
specify the Loans to which any such prepayment shall be applied, such
prepayment shall be applied first to repay outstanding Swing Line
-----
Loans to the full extent thereof, second to repay outstanding
------
Revolving Loans to the full extent thereof, and third to repay
-----
outstanding Term Loans to the full extent thereof. Any voluntary
prepayments of the Term Loans pursuant to subsection 2.4B(i) shall be
applied to reduce the scheduled installments of principal of the Term
Loans set forth in subsection 2.4A in inverse order of maturity;
provided, however, that Company, at its option, may apply such
-------- -------
voluntary prepayments first to reduce the immediately succeeding two
-----
scheduled installments of principal of Term Loans set forth in
subsection 2.4A, and second, to the extent of any remaining portion of
------
such voluntary prepayments, to reduce the scheduled installments of
principal of Term Loans set forth in subsection 2.4A in inverse order
of maturity.
(b) Application of Mandatory Prepayments by Type of Loans. Any
-----------------------------------------------------
amount (the "Applied Amount") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(c) shall be applied
first to prepay the Term Loans to the full extent thereof, second, to
----- ------
the extent of any remaining portion of the Applied Amount, to prepay
the Swing Line Loans to the full extent thereof and to permanently
reduce the Revolving Loan Commitments by the amount of such
prepayment, third, to the extent of any remaining portion of the
-----
Applied Amount, to prepay the Revolving Loans to the full extent
thereof and to further permanently reduce the Revolving Loan
Commitments by the amount of such prepayment, and fourth, to the
------
extent of any remaining portion of the Applied Amount, to further
permanently reduce the Revolving Loan Commitments to the full extent
thereof.
(c) Application of Mandatory Prepayments of Term Loans by Order
-----------------------------------------------------------
of Maturity. Any mandatory prepayments of the Term Loans pursuant to
-----------
subsection
50
<PAGE>
2.4B(iii) shall be applied to reduce the scheduled installments of
principal of the Term Loans set forth in subsection 2.4A in inverse
order of maturity.
(d) Application of Prepayments to Base Rate Loans and Eurodollar
------------------------------------------------------------
Rate Loans. Subject to the immediately following sentence, considering
----------
Term Loans and Revolving Loans being prepaid separately, any
prepayment thereof shall be applied first to Base Rate Loans to the
full extent thereof before application to Eurodollar Rate Loans, in
each case in a manner which minimizes the amount of any payments
required to be made by Company pursuant to subsection 2.6D. If on any
day on which Loans would otherwise be required to be prepaid pursuant
to subsection 2.4B(iii), but for the operation of this subsection
2.4B(iv)(d) (each a "Prepayment Date"), the amount of such required
prepayment exceeds the then outstanding aggregate principal amount of
the Loans which consist of Base Rate Loans, and no Event of Default or
Potential Event of Default has occurred and is continuing or would
occur as a result thereof, then on such Prepayment Date, Company may,
at its option, deposit Cash into an investment account with
Administrative Agent (the "Investment Account") in an amount equal to
such excess; provided that (x) Company shall grant to Administrative
--------
Agent, on behalf of Lenders, a perfected security interest in such
Investment Account and shall execute and deliver such agreements and
instruments as Administrative Agent may reasonably request in order to
perfect such security interest, and (y) Administrative Agent shall
invest such Cash in Cash Equivalents only. If Company makes such
deposit (a) only the outstanding Base Rate Loans shall be required to
be prepaid on such Prepayment Date, and (b) on the last day of each
Interest Period in effect after such Prepayment Date, Administrative
Agent is irrevocably authorized and directed to apply funds held in
the Investment Account (and liquidate investments held in the
Investment Account as necessary) to prepay the Eurodollar Rate Loans
for which the Interest Period is then ending until the aggregate of
such prepayments equals the prepayment which would have been required
on such Prepayment Date but for the operation of this subsection
2.4(iv)(d). So long as no Event of Default or Potential Event of
Default has occurred and is continuing or would occur as a result
thereof, at such time as the aggregate prepayments made pursuant to
the immediately preceding sentence equals the prepayment which would
have been required on such Prepayment Date but for the operation of
this subsection 2.4B(iv)(d) (and excluding any amounts which would
otherwise have been required to be paid under 2.6D), any amounts
remaining in the Investment Account after such prepayments, which
amounts are attributable to the deposit made on the applicable
Prepayment Date or to net income earned on such deposit, shall be
remitted to an account designated by Company.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of principal,
--------------------------
interest, fees and other Obligations hereunder and under the Notes shall be
made in Dollars in same day funds, without defense, setoff or counterclaim,
free of any restriction or condition, and delivered to Administrative Agent
not later than 1:00 P.M. (New York
51
<PAGE>
City time) on the date due at the Funding and Payment Office for the
account of Lenders; funds received by Administrative Agent after that time
on such due date shall be deemed to have been paid by Company on the next
succeeding Business Day. Company hereby authorizes Administrative Agent to
charge its accounts with Administrative Agent in order to cause timely
payment to be made to Administrative Agent of all principal, interest, fees
and expenses due hereunder (subject to sufficient funds being available in
its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
-------------------------------------------------
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is
due and payable with respect to such Loan) shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments in respect of Term Loans and Revolving Loans shall be apportioned
among all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all such
payments received by Administrative Agent and the commitment fees of such
Lender when received by Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of
-------------------
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
--------
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
52
<PAGE>
D. Application of Proceeds of Collateral and Payments Under Subsidiary
Guaranty.
(i) Application of Proceeds of Collateral. Except as provided in
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds received by Administrative Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral under any Collateral Document may, in the discretion of
Administrative Agent, be held by Administrative Agent as Collateral for,
and/or (then or at any time thereafter) applied in full or in part by
Administrative Agent against, the applicable Secured Obligations (as
defined in such Collateral Document) in the following order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Administrative Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by Administrative
Agent in connection therewith, and all amounts for which
Administrative Agent is entitled to indemnification under such
Collateral Document and all advances made by Administrative Agent
thereunder for the account of the applicable Loan Party, and to the
payment of all costs and expenses paid or incurred by Administrative
Agent in connection with the exercise of any right or remedy under
such Collateral Document, all in accordance with the terms of this
Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
(ii) Application of Payments Under Subsidiary Guaranty. All payments
-------------------------------------------------
received by Administrative Agent under the Subsidiary Guaranty shall be
applied promptly from time to time by Administrative Agent in the following
order of priority:
(a) To the payment of the costs and expenses of any collection
or other realization under the Subsidiary Guaranty, including
reasonable compensation to Administrative Agent and its agents and
counsel, and all expenses, liabilities and advances made or incurred
by Administrative Agent in connection therewith, all in accordance
with the terms of this Agreement and the Subsidiary Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Guarantied Obligations (as defined in the
Subsidiary Guaranty for the ratable benefit of the holders thereof;
and
(c) thereafter, to the extent of any excess such payments, to
the payment to the applicable Subsidiary Guarantor or to whosoever may
be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
53
<PAGE>
2.5 Use of Proceeds.
---------------
A. Term Loans. The proceeds of the Term Loans, together with the proceeds
of the debt capitalization of Company described in subsection 4.1D, shall be
applied by Company to fund the Financing Requirements.
B. Revolving Loans; Swing Line Loans. The proceeds of any Revolving Loans
and any Swing Line Loans shall be applied by Company for working capital and
general corporate purposes, which may include the making of intercompany loans
to any of Company's wholly-owned Restricted Subsidiaries, in accordance with
subsection 7.1(iii), for their own working capital and general corporate
purposes.
C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
54
<PAGE>
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the interbank Eurodollar market or the position
of such Lender in that market, then, and in any such event, such Lender shall be
an "Affected Lender" and it shall on that day give notice (by telefacsimile or
by telephone confirmed in writing) to Company and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to each
other Lender). Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until
such notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected
Loans") shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Administrative
Agent of such rescission on the date on which the Affected Lender gives notice
of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any prepayment
pursuant to
55
<PAGE>
subsection 2.4B(i)) or other principal payment or any conversion of any of its
Eurodollar Rate Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar
Rate Loans is not made on any date specified in a notice of prepayment given by
Company, or (iv) as a consequence of any other default by Company in the
repayment of its Eurodollar Rate Loans when required by the terms of this
Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
- -------- -------
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
----------------------------------------
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its
56
<PAGE>
applicable lending office) of principal, interest, fees or any other amount
payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that
are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error; provided, however, that Company shall be liable for such
-------- -------
additional amounts only if such Lender shall have delivered such written
statement to Company within 90 days after such Lender shall have made such
determination of any such increased costs; and provided further that if such
-------- -------
Lender delivers such written statement after such 90 day period, then Company
shall be liable only for such additional amounts arising after delivery to
Company of such written statement.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under
-----------------------------
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from or to which
a payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
-----------------------
required by law to make any deduction or withholding on account of any such
Tax from any sum paid
57
<PAGE>
or payable by Company to Administrative Agent or any Lender under any of
the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Administrative Agent or such
Lender, as the case may be, receives on the due date a net sum equal
to what it would have received had no such deduction, withholding or
payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b) above to pay, Company shall deliver to Administrative Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
--------
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
-----------------------------------------------
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it
becomes a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue
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Service Form 1001 or 4224 (or any successor forms), properly completed
and duly executed by such Lender, together with any other certificate
or statement of exemption required under the Internal Revenue Code or
the regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Domestic Bank Status together
with two original copies of Internal Revenue Service Form W-8 (or any
successor form), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder
to establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to any
payments to such Lender of interest payable under any of the Loan
Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such
Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Domestic Bank
Status and two original copies of Internal Revenue Service Form W-8,
as the case may be, properly completed and duly executed by such
Lender, together with any other certificate or statement of exemption
required in order to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to payments to such Lender under the Loan Documents
or (2) notify Administrative Agent and Company of its inability to
deliver any such forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii); provided that if such Lender
--------
shall have satisfied the requirements of subsection 2.7B(iii)(a) on
the Closing Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause (c) of
subsection 2.7B(ii) in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
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certificates or other evidence at a subsequent date establishing the
fact that such Lender is not subject to withholding as described in
subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Company from
such Lender of the statement referred to in the next sentence, Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction. Such
Lender shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate; Replacement of
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Lender.
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A. Mitigation. Each Lender and Issuing Lender agrees that, as
promptly as practicable after the officer of such Lender or Issuing Lender
responsible for administering the Loans or Letters of Credit of such Lender or
Issuing Lender, as the case may be, becomes aware of the occurrence of an event
or the existence of a condition that would cause such Lender to become an
Affected Lender or that would entitle such Lender or Issuing Lender to receive
payments under subsection 2.7 or subsection 3.6, it will, to the extent not
inconsistent with the internal policies of such Lender or Issuing Lender and any
applicable legal or regulatory restrictions, use reasonable efforts (i) to make,
issue, fund or maintain the Commitments of such Lender or the affected Loans or
Letters of Credit of such Lender or Issuing Lender through another lending or
letter of credit office of such Lender or Issuing Lender, or (ii) take such
other measures as such Lender or Issuing Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would otherwise be
required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7
or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding or
maintaining of such Commitments or Loans or Letters of Credit through such other
lending or letter of credit office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely affect such
Commitments or Loans or Letters of Credit or the interests of such Lender or
Issuing Lender; provided that such Lender or Issuing Lender will not be
--------
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8
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unless Company agrees to pay all incremental expenses incurred by such Lender or
Issuing Lender as a result of utilizing such other lending or letter of credit
office as described in clause (i) above. A certificate as to the amount of any
such expenses payable by Company pursuant to this subsection 2.8 (setting forth
in reasonable detail the basis for requesting such amount) submitted by such
Lender or Issuing Lender to Company (with a copy to Administrative Agent) shall
be conclusive absent manifest error.
B. Replacement of Lender. If Company receives a notice pursuant to
subsection 2.7A, 2.7C or 3.6, Company shall have the right, if no Potential
Event of Default or Event of Default then exists, to replace such Lender (a
"Replaced Lender") with one or more Eligible Assignees (collectively, the
"Replacement Lender") acceptable to Administrative Agent; provided that (i) at
--------
the time of any replacement pursuant to this subsection 2.8B, the Replacement
Lender shall enter into one or more Assignment Agreements pursuant to subsection
10.1B (and with all fees payable pursuant to such subsection 10.1B to be paid by
the Replacement Lender) pursuant to which the Replacement Lender shall acquire
all of the outstanding Loans and Commitments of, and in each case participations
in Letters of Credit and Swing Line Loans by, the Replaced Lender and, in
connection therewith, shall pay to (x) the Replaced Lender in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of all
outstanding Loans of the Replaced Lender and (B) an amount equal to all unpaid
drawings with respect to Letters of Credit that have been funded by (and not
reimbursed to) such Replaced Lender, (y) the appropriate Issuing Lender an
amount equal to such Replaced Lender's Pro Rata Share of any unpaid drawings
with respect to Letters of Credit (which at such time remains an unpaid drawing)
issued by it to the extent such amount was not theretofore funded by such
Replaced Lender, and (z) Swing Line Lender an amount equal to such Replaced
Lender's Pro Rata Share of any Refunded Swing Line Loans to the extent such
amount was not theretofore funded by such Replaced Lender, and (ii) all
obligations (including, without limitation, all such amounts, if any, owing
under subsection 2.6D) of Company owing to the Replaced Lender (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid), shall be paid in full
to such Replaced Lender concurrently with such replacement. All accrued but
unpaid interest, commitment fees and letter of credit fees and other amounts
payable to the Replaced Lender shall be paid in accordance with the terms set
forth in the respective Assignment Agreement. Upon the execution and delivery
of the respective Assignment Agreements, the payment of amounts referred to in
clauses (i) and (ii) above and delivery to the Replacement Lender of the
appropriate Note or Notes executed by Company, the Replacement Lender shall
become a Lender hereunder and the Replaced Lender shall cease to constitute a
Lender hereunder except with respect to indemnification and confidentiality
provisions under this Agreement which by the terms of this Agreement survive the
termination of this Agreement, which indemnification and confidentiality
provisions shall survive as to such Replaced Lender. Notwithstanding anything
to the contrary contained above, no Issuing Lender may be replaced hereunder at
any time while it has Letters of Credit outstanding hereunder unless
arrangements satisfactory to such Issuing Lender (including the furnishing of a
Standby Letter of Credit in form and substance, and issued by an issuer,
satisfactory to such Issuing Lender or the furnishing of cash collateral in
amounts and pursuant to arrangements satisfactory to such Issuing Lender or the
cancellation and return of such outstanding Letter of Credit) have been made
with respect to such outstanding Letters of Credit.
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Section 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
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Therein.
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A. Letters of Credit. In addition to Company requesting that Lenders make
Revolving Loans pursuant to subsection 2.1A(ii) and that Swing Line Lender make
Swing Line Loans pursuant to subsection 2.1A(iii), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date, that one or more Lenders issue Letters of Credit for the
account of Company for the purposes specified in the definition of Standby
Letters of Credit. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company herein set forth,
any one or more Lenders may, but (except as provided in subsection 3.1B(ii))
shall not be obligated to, issue such Letters of Credit in accordance with the
provisions of this subsection 3.1; provided that Company shall not request that
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any Lender issue (and no Lender shall issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Revolving Loan Commitments would exceed the
Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $15,000,000;
(iii) any Standby Letter of Credit having an expiration date later
than the earlier of (a) the Revolving Loan Commitment Termination Date and
(b) the date which is one year from the date of issuance of such Standby
Letter of Credit; provided that the immediately preceding clause (b) shall
--------
not prevent any Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more successive periods
not to exceed one year each unless such Issuing Lender elects not to extend
for any such additional period; and provided further that such Issuing
-------- -------
Lender shall elect not to extend such Standby Letter of Credit if it has
knowledge that an Event of Default or Potential Event of Default has
occurred and is continuing (and has not been waived in accordance with
subsection 10.6) at the time such Issuing Lender must elect whether or not
to allow such extension;
(iv) any Standby Letter of Credit for the purpose of supporting (a)
trade payables or (b) any Indebtedness constituting "antecedent debt" (as
that term is used in Section 547 of the Bankruptcy Code); and
(v) any Letter of Credit denominated in a currency other than
Dollars.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance of a
------------------
Letter of Credit, it shall deliver to Administrative Agent a Notice of
Issuance of Letter of Credit substantially in the form of Exhibit III
-----------
annexed hereto no later than 11:00 A.M. (New York City time) at least three
Business Days, or such shorter period as may be agreed to by the Issuing
Lender in any particular instance, in advance of the proposed date of
issuance. The Notice of Issuance of Letter of Credit shall specify (a) the
proposed date of
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issuance (which shall be a Business Day), (b) the face amount of the
Letter of Credit, (c) the expiration date of the Letter of Credit, (d) the
name and address of the beneficiary, and (e) either the verbatim text of
the proposed Letter of Credit or the proposed terms and conditions thereof,
including a precise description of any documents to be presented by the
beneficiary which, if presented by the beneficiary prior to the expiration
date of the Letter of Credit, would require the Issuing Lender to make
payment under the Letter of Credit and in the event CIBC is the Issuing
Lender, such Notice of Issuance of Letter of Credit shall attach a current
application form from CIBC with respect to the issuance of such Letter of
Credit; provided that the Issuing Lender, in its reasonable discretion, may
--------
require changes in the text of the proposed Letter of Credit or any such
documents; and provided further that no Letter of Credit shall require
-------- -------
payment against a conforming draft to be made thereunder on the same
business day (under the laws of the jurisdiction in which the office of the
Issuing Lender to which such draft is required to be presented is located)
that such draft is presented if such presentation is made after 10:00 A.M.
(in the time zone of such office of the Issuing Lender) on such business
day.
Company shall notify the applicable Issuing Lender (and Administrative
Agent, if Administrative Agent is not such Issuing Lender) prior to the
issuance of any Letter of Credit in the event that any of the matters to
which Company is required to certify in the applicable Notice of Issuance
of Letter of Credit is no longer true and correct as of the proposed date
of issuance of such Letter of Credit, and upon the issuance of any Letter
of Credit Company shall be deemed to have re-certified, as of the date of
such issuance, as to the matters to which Company is required to certify in
the applicable Notice of Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Administrative
-------------------------------
Agent of a Notice of Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit, in the event
Administrative Agent elects to issue such Letter of Credit, Administrative
Agent shall promptly so notify Company, and Administrative Agent shall be
the Issuing Lender with respect thereto. In the event that Administrative
Agent, in its sole discretion, elects not to issue such Letter of Credit,
Administrative Agent shall promptly so notify Company, whereupon Company
may request any other Lender to issue such Letter of Credit by delivering
to such Lender a copy of the applicable Notice of Issuance of Letter of
Credit. Any Lender so requested to issue such Letter of Credit shall
promptly notify Company and Administrative Agent whether or not, in its
sole discretion, it has elected to issue such Letter of Credit, and any
such Lender which so elects to issue such Letter of Credit shall be the
Issuing Lender with respect thereto. In the event that all other Lenders
shall have declined to issue such Letter of Credit, notwithstanding the
prior election of Administrative Agent not to issue such Letter of Credit,
Administrative Agent shall be obligated to issue such Letter of Credit and
shall be the Issuing Lender with respect thereto, notwithstanding the fact
that the Letter of Credit Usage with respect to such Letter of Credit and
with respect to all other Letters of Credit issued by Administrative Agent,
when aggregated with Administrative Agent's outstanding Revolving Loans and
Swing Line Loans, may exceed Administrative Agent's Revolving Loan
Commitment then in effect.
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(iii) Issuance of Letter of Credit. Upon satisfaction or waiver
----------------------------
(in accordance with subsection 10.6) of the conditions set forth in
subsection 4.3, the Issuing Lender shall issue the requested Letter of
Credit in accordance with the Issuing Lender's standard operating
procedures.
C. Lenders' Purchase of Participations in Letters of Credit. Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby agrees to, have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and any drawings honored thereunder in an
amount equal to such Lender's Pro Rata Share of the maximum amount which is or
at any time may become available to be drawn thereunder.
3.2 Letter of Credit Fees.
---------------------
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a fronting
fee, payable directly to the applicable Issuing Lender for its own account,
equal to 0.25% per annum of the daily amount available to be drawn under
such Standby Letter of Credit, and (b) a letter of credit fee, payable to
Administrative Agent for the account of Lenders, equal to the daily amount
available to be drawn under such Standby Letter of Credit multiplied by the
-------------
Applicable Eurodollar Margin, each such fronting fee or letter of credit
fee to be payable in arrears on and to (but excluding) the last Business
Day of each March, June, September and December of each year commencing on
the first such date to occur after the Closing Date, and computed on the
basis of a 360-day year for the actual number of days elapsed; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clauses (i) and (ii) above),
documentary and processing charges payable directly to the applicable
Issuing Lender for its own account in accordance with such Issuing Lender's
standard schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clause (i) of this subsection
3.2, the daily amount available to be drawn under any Letter of Credit shall be
determined as of the close of business on any date of determination. Promptly
upon receipt by Administrative Agent of any amount described in clause (i)(b) of
this subsection 3.2, Administrative Agent shall distribute to each Lender its
Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit.
------------------------------------------------------------------
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
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B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "Reimbursement Date") in an amount in Dollars and in same day funds
equal to the amount of such honored drawing; provided that, anything contained
--------
in this Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent and such Issuing Lender prior to 10:00 A.M. (New
York City time) on the date such drawing is honored that Company intends to
reimburse such Issuing Lender for the amount of such honored drawing with funds
other than the proceeds of Revolving Loans, Company shall be deemed to have
given a timely Notice of Borrowing to Administrative Agent requesting Lenders to
make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an
amount in Dollars equal to the amount of such honored drawing and (ii) subject
to satisfaction or waiver of the conditions specified in subsection 4.2B,
Lenders shall, on the Reimbursement Date, make Revolving Loans that are Base
Rate Loans in the amount of such honored drawing, the proceeds of which shall be
applied directly by Administrative Agent to reimburse such Issuing Lender for
the amount of such honored drawing; and provided further that if for any reason
-------- -------
proceeds of Revolving Loans are not received by such Issuing Lender on the
Reimbursement Date in an amount equal to the amount of such honored drawing,
Company shall reimburse such Issuing Lender, on demand, in an amount in same day
funds equal to the excess of the amount of such honored drawing over the
aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make Revolving Loans on the terms and conditions set forth in this
Agreement, and Company shall retain any and all rights it may have against any
Lender resulting from the failure of such Lender to make such Revolving Loans
under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of
Credit.
(i) Payment by Lenders. In the event that Company shall fail for
------------------
any reason to reimburse any Issuing Lender as provided in subsection 3.3B
in an amount equal to the amount of any drawing honored by such Issuing
Lender under a Letter of Credit issued by it, such Issuing Lender shall
promptly notify each other Lender of the unreimbursed amount of such
honored drawing and of such other Lender's respective participation therein
based on such Lender's Pro Rata Share. Each Lender shall make available to
such Issuing Lender an amount equal to its respective participation, in
Dollars and in same day funds, at the office of such Issuing Lender
specified in such notice, not later than 12:00 Noon (New York City time) on
the first business day (under the laws of the jurisdiction in which such
office of such Issuing Lender is located) after the date notified by such
Issuing Lender. In the event that any Lender fails to make available to
such Issuing Lender on such business day the amount of such Lender's
participation in such Letter of Credit as provided in this subsection 3.3C,
such Issuing Lender shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the rate customarily used by
such Issuing Lender for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Nothing in this subsection
3.3C shall be deemed to prejudice the right of any Lender to recover from
any Issuing Lender
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any amounts made available by such Lender to such Issuing Lender pursuant
to this subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with respect
to a Letter of Credit by such Issuing Lender in respect of which payment
was made by such Lender constituted gross negligence or willful misconduct
on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From Company.
---------------------------------------------------------------
In the event any Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of any drawing
honored by such Issuing Lender under a Letter of Credit issued by it, such
Issuing Lender shall distribute to each other Lender which has paid all
amounts payable by it under subsection 3.3C(i) with respect to such honored
drawing such other Lender's Pro Rata Share of all payments subsequently
received by such Issuing Lender from Company in reimbursement of such
honored drawing when such payments are received. Any such distribution
shall be made to a Lender at its primary address set forth below its name
on the appropriate signature page hereof or at such other address as such
Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to each
------------------------------
Issuing Lender, with respect to drawings honored under any Letters of
Credit issued by it, interest on the amount paid by such Issuing Lender in
respect of each such honored drawing from the date such drawing is honored
to but excluding the date such amount is reimbursed by Company (including
any such reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date such
drawing is honored to but excluding the Reimbursement Date, the rate then
in effect under this Agreement with respect to Revolving Loans that are
Base Rate Loans and (b) thereafter, a rate which is 2.00% per annum in
excess of the rate of interest otherwise payable under this Agreement with
respect to Revolving Loans that are Base Rate Loans. Interest payable
pursuant to this subsection 3.3D(i) shall be computed on the basis of a 36
day or 366-day year, as the case may be, for the actual number of days
elapsed in the period during which it accrues and shall be payable on
demand or, if no demand is made, on the date on which the related drawing
under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
---------------------------------------------------
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing honored under a Letter of
Credit issued by it, (a) such Issuing Lender shall distribute to each other
Lender, out of the interest received by such Issuing Lender in respect of
the period from the date such drawing is honored to but excluding the date
on which such Issuing Lender is reimbursed for the amount of such drawing
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B), the amount that such other Lender would have
been entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been honored under such Letter
of Credit, and (b) in the event such Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any
portion of such honored drawing, such Issuing Lender shall distribute to
each other Lender which has
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paid all amounts payable by it under subsection 3.3C(i) with respect to
such honored drawing such other Lender's Pro Rata Share of any interest
received by such Issuing Lender in respect of that portion of such honored
drawing so reimbursed by other Lenders for the period from the date on
which such Issuing Lender was so reimbursed by other Lenders to but
excluding the date on which such portion of such honored drawing is
reimbursed by Company. Any such distribution shall be made to a Lender at
its primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request.
3.4 Obligations Absolute.
--------------------
The obligation of Company to reimburse each Issuing Lender for
drawings honored under the Letters of Credit issued by it and to repay any
Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations
of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right
which Company or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a draft or other document which does not
substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
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provided, in each case, that payment by the applicable Issuing Lender under the
- --------
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 Indemnification; Nature of Issuing Lenders' Duties.
--------------------------------------------------
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"Governmental Acts").
B. Nature of Issuing Lenders' Duties. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
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Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
-------------------------------------------------------
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by any
Issuing Lender or Lender with any guideline, request or directive issued or made
after the date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than any
Tax on the overall net income of such Issuing Lender or Lender) with
respect to the issuing or maintaining of any Letters of Credit or the
purchasing or maintaining of any participations therein or any other
obligations under this Section 3, whether directly or by such being imposed
on or suffered by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement in respect
of any Letters of Credit issued by any Issuing Lender or participations
therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error; provided, however, that Company shall be liable
-------- -------
for such additional amounts only if such Lender shall have delivered such
written statement to Company within 90 days after such Lender shall have
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made such determination of any such increased costs; and provided further that
-------- -------
if such Lender delivers such written statement after such 90 day period, then
Company shall be liable only for such additional amounts arising after delivery
to Company of such written statement.
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters
of Credit hereunder are subject to the prior or concurrent satisfaction of the
following conditions.
4.1 Conditions to Term Loans, Revolving Loans and Swing Line Loans.
--------------------------------------------------------------
The obligations of Lenders to make the Loans to be made on the
Closing Date are, in addition to the conditions precedent specified in
subsection 4.2, subject to prior or concurrent satisfaction of the following
conditions:
A. Loan Party Documents. On or before the Closing Date, Company shall,
and shall cause each other Loan Party to, deliver to Lenders (or to
Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following with respect
to Company or such Loan Party, as the case may be, each, unless otherwise noted,
dated the Closing Date:
(i) Certified copies of the Certificate or Articles of
Incorporation or other comparable formation documents, as the case may be,
of such Person, together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation or formation and
each other state in which such Person is qualified as a foreign corporation
or other entity to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority
of each of such jurisdictions, each dated a recent date prior to the
Closing Date;
(ii) Copies of the Bylaws or other comparable charter documents, as
the case may be, of such Person, certified as of the Closing Date by such
Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors, General Partner or
other comparable governing body or entity, as the case may be, of such
Person approving and authorizing the execution, delivery and performance of
the Loan Documents and Related Agreements to which it is a party, certified
as of the Closing Date by the corporate secretary or an assistant secretary
of such Person as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of the officers or
entities, as the case may be, of such Person executing the Loan Documents
to which it is a party;
(v) Executed originals of the Loan Documents to which such Person
is a party; and
(vi) Such other documents as Administrative Agent may reasonably
request.
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B. No Material Adverse Effect. Since April 26, 1998, no Material Adverse
Effect (in the sole opinion of Administrative Agent) shall have occurred.
C. Corporate and Capital Structure, Ownership, Management, Etc.
(i) Corporate Structure. The corporate organizational structure and
-------------------
capital structure of Company and its Subsidiaries shall be as set forth on
Schedule 4.1C annexed hereto.
-------------
(ii) Management; Employment Contracts. The management structure of
--------------------------------
Company shall be as set forth on Schedule 4.1C annexed hereto, and
-------------
Administrative Agent shall have received copies of, and shall be satisfied
with the form and substance of, any and all employment contracts with
senior management of Company.
D. Issuance of Subordinated Notes.
(i) Issuance of Subordinated Notes. On or before the Closing Date,
------------------------------
Company shall have (x) issued and sold not less than $390,000,000 in
aggregate principal amount of Subordinated Notes having an interest rate
not in excess of 10%, and (y) arranged and obtained not less than
$565,000,000 in total financing (including the Subordinated Notes and the
Obligations hereunder) to finance the Offer and Consent Solicitation and
the other transactions contemplated by the Loan Documents and Related
Agreements, in each case on terms and conditions satisfactory to
Administrative Agent.
(ii) Use of Proceeds by Company. Company shall have provided evidence
--------------------------
satisfactory to Administrative Agent that the proceeds of the debt
capitalization of Company described in the immediately preceding clause (i)
have been irrevocably committed, prior to or concurrent with the
application of the proceeds of the Term Loans, to the payment of a portion
of the Financing Requirements.
E. Related Agreements.
(i) Form of Related Agreements. The Subordinated Note Indenture,
--------------------------
the Offer and Consent Solicitation Materials and each other Related
Agreement shall be in form and substance satisfactory to Administrative
Agent.
(ii) Related Agreements in Full Force and Effect. Administrative
-------------------------------------------
Agent shall have received a fully executed or conformed copy of each
Related Agreement and any documents executed in connection therewith, and
each Related Agreement shall be in full force and effect and no provision
thereof shall have been modified or waived in any respect determined by
Administrative Agent to be material, in each case without the consent of
Administrative Agent.
F. Matters Relating to Existing Indebtedness of Company and its
Subsidiaries.
(i) Termination of Existing Indebtedness and Related Liens; Existing
----------------------------------------------------------------
Letters of Credit. Each of the Other Refinanced Indebtedness of Company or
-----------------
any of its Subsidiaries is identified as "Other Refinanced Indebtedness" on
Schedule 4.1F annexed
-------------
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hereto. On the Closing Date, Company and its Subsidiaries shall have (a)
repaid in full or otherwise refinanced all of the Other Refinanced
Indebtedness (the aggregate principal amount of which Indebtedness shall
not exceed $44,000,000), (b) terminated any commitments to lend or make
other extensions of credit thereunder, (c) delivered to Administrative
Agent all documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Company and its Subsidiaries
thereunder, and (d) made arrangements satisfactory to Administrative Agent
with respect to the cancellation of any letters of credit outstanding
thereunder or the issuance of Letters of Credit to support the obligations
of Company and its Subsidiaries with respect thereto.
(ii) Redemption of Existing Senior Secured Notes. Company shall have
-------------------------------------------
(a) redeemed or defeased all of the Existing Senior Secured Notes for an
aggregate consideration not to exceed the outstanding principal thereof,
together with any accrued and unpaid interest thereon and any tender
premiums and consent fees relating thereto, and (b) delivered to
Administrative Agent all documents or instruments necessary to release all
Liens securing the Indebtedness or other obligations of Company and its
Subsidiaries under the Existing Senior Secured Notes and the Existing
Senior Secured Note Indenture.
(iii) Existing Indebtedness to Remain Outstanding. Administrative
-------------------------------------------
Agent shall have received an Officer's Certificate of Company stating that,
after giving effect to the transactions described in this subsection 4.1F,
the Indebtedness of Loan Parties (other than Indebtedness under the Loan
Documents and the Subordinated Notes) shall consist of approximately
$15,500,000 in aggregate principal amount of outstanding Indebtedness and
Capital Leases described in Schedule 7.1 annexed hereto. The terms and
------------
conditions of all such Indebtedness shall be in form and in
substance satisfactory to Administrative Agent and Requisite Lenders.
G. Necessary Governmental Authorizations and Consents; Expiration of
Waiting Periods, Etc. Company shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the Offer and Consent Solicitation,
the other transactions contemplated by the Loan Documents and the Related
Agreements, and the continued operation of the business conducted by Company and
its Subsidiaries in substantially the same manner as conducted prior to the
consummation of the Offer and Consent Solicitation, and each of the foregoing
shall be in full force and effect, in each case other than those the failure to
obtain or maintain which, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. All applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose adverse
conditions on the Offer and Consent Solicitation or the financing thereof. No
action, request for stay, petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable agency to take action to set aside its consent on its own motion
shall have expired.
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H. Consummation of the Offer and Consent Solicitation.
(i) pursuant to the Offer and Consent Solicitation,
(a) contemporaneously with the application of the debt proceeds
described in subsection 4.1D and the initial Loans made on the Closing
Date, the Offer and Consent Solicitation shall have been consummated
in all respects in accordance with the Offer and Consent Solicitation
Materials and no term or condition of the Offer and Consent
Solicitation shall have been amended, supplemented, waived or
otherwise modified in any respect determined by Administrative Agent
to be material without the consent of Administrative Agent;
(b) $315,000,000 in aggregate principal amount of the Existing
Senior Secured Notes shall have been (1) tendered in exchange for an
aggregate Cash payment not exceeding the sum of (x) the principal
amount thereof plus (y) accrued and unpaid interest thereon plus (z)
tender offer premiums and consent fees not exceeding $46,000,000 in
the aggregate, or (2) otherwise defeased in accordance with the terms
and conditions of the Consent and Solicitation Materials; and
(c) Company shall have obtained all such consents, amendments
and waivers with respect to the Existing Senior Secured Note Indenture
as may be required to permit the consummation of the Offer and Consent
Solicitation, the related financings (including the incurrence of the
Obligations hereunder and the Subordinated Notes) and the other
transactions contemplated by the Loan Documents and the Related
Agreements;
(ii) Transaction Costs shall not exceed $17,000,000; and
(iii) Administrative Agent shall have received an Officer's
Certificate of Company to the effect set forth in clauses (i)-
(ii) above.
I. Closing Date Mortgages; Closing Date Mortgage Policies; Etc.
Administrative Agent shall have received from Company and each applicable
Subsidiary Guarantor:
(i) Closing Date Mortgages. Fully executed and notarized Mortgages
----------------------
(each a "Closing Date Mortgage" and, collectively, the "Closing Date
Mortgages") in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each Real Property Asset listed in
Schedule 4.1I annexed hereto (each a "Closing Date Mortgaged Property" and,
collectively, the "Closing Date Mortgaged Properties");
(ii) Opinions of Local Counsel. An opinion of counsel (which counsel
-------------------------
shall be reasonably satisfactory to Administrative Agent) in each state in
which a Closing Date Mortgaged Property is located with respect to the
enforceability of the form(s) of Closing Date Mortgages to be recorded in
such state and such other matters as Administrative Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Administrative Agent;
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(iii) Landlord Consents and Estoppels; Recorded Leasehold Interests.
-------------------------------------------------------------
In the case of each Closing Date Mortgaged Property consisting of a
Material Leasehold Property, (a) a Landlord Consent and Estoppel with
respect thereto and (b) evidence that such Material Leasehold Property is a
Recorded Leasehold Interest;
(iv) Title Insurance. (a) ALTA extended coverage title insurance
---------------
policies or unconditional commitments therefor (the "Closing Date Mortgage
Policies") issued by the Title Company with respect to the Closing Date
Mortgaged Properties listed in Part A of Schedule 4.1I annexed hereto, in
-------------
amounts not less than the respective amounts designated therein with
respect to any particular Closing Date Mortgaged Properties, insuring fee
simple title to, or a valid leasehold interest in, each such Closing Date
Mortgaged Property vested in such Loan Party and assuring Administrative
Agent that the applicable Closing Date Mortgages create valid and
enforceable First Priority mortgage Liens on the Closing Date Mortgaged
Properties encumbered thereby, subject only to Permitted Encumbrances,
which Closing Date Mortgage Policies (1) shall include an endorsement for
mechanics' liens, for future advances under this Agreement and for any
other matters reasonably requested by Administrative Agent and (2) shall
provide for affirmative insurance and such reinsurance as Administrative
Agent may reasonably request, all of the foregoing in form and substance
reasonably satisfactory to Administrative Agent; and (b) evidence
satisfactory to Administrative Agent that such Loan Party has (i) delivered
to the Title Company all certificates and affidavits required by the Title
Company in connection with the issuance of the Closing Date Mortgage
Policies and (ii) paid to the Title Company or to the appropriate
governmental authorities all expenses and premiums of the Title Company in
connection with the issuance of the Closing Date Mortgage Policies and all
recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Closing Date Mortgages in
the appropriate real estate records;
(v) Title Reports. With respect to each Closing Date Mortgaged
-------------
Property listed in Part B of Schedule 4.1I annexed hereto, a
-------------
title report issued by the Title Company with respect thereto,
dated not more than 30 days prior to the Closing Date and satisfactory in
form and substance to Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies of all
------------------------------------------------
recorded documents listed as exceptions to title or otherwise referred to
in the Closing Date Mortgage Policies or in the title reports delivered
pursuant to subsection 4.1I(v);
(vii) Matters Relating to Flood Hazard Properties. (a) Evidence, which
-------------------------------------------
may be in the form of a letter from an insurance broker or a municipal
engineer, as to whether (1) any Closing Date Mortgaged Property is a Flood
Hazard Property and (2) the community in which any such Flood Hazard
Property is located is participating in the National Flood Insurance
Program, (b) if there are any such Flood Hazard Properties, such Loan
Party's written acknowledgement of receipt of written notification from
Administrative Agent (1) as to the existence of each such Flood Hazard
Property and (2) as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood Insurance
Program, and (c) in the event any such Flood Hazard Property is located in
a community that participates in the National Flood
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Insurance Program, evidence that Company has obtained flood insurance in
respect of such Flood Hazard Property to the extent required under the
applicable regulations of the Board of Governors of the Federal Reserve
System; and
(viii) Environmental Indemnity. One or more environmental indemnity
-----------------------
agreements, satisfactory in form and substance to Administrative Agent and
its counsel, with respect to the indemnification of Administrative Agent
and Lenders for any liabilities that may be imposed on or incurred by any
of them as a result of any Hazardous Materials Activity.
J. Security Interests in Personal and Mixed Property. To the extent not
otherwise satisfied pursuant to subsection 4.1I, Administrative Agent shall have
received evidence satisfactory to it that Company and Subsidiary Guarantors
shall have taken or caused to be taken all such actions, executed and delivered
or caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Administrative Agent,
desirable in order to create in favor of Administrative Agent, for the benefit
of Lenders, a valid and (upon such filing and recording) perfected First
Priority security interest in the entire personal and mixed property Collateral.
Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Administrative
---------------------------------
Agent of accurate and complete schedules to all of the applicable
Collateral Documents;
(ii) Stock Certificates and Instruments. Delivery to Administrative
----------------------------------
Agent of (a) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank and otherwise
satisfactory in form and substance to Administrative Agent) representing
all capital stock pledged pursuant to the Company Pledge Agreement and the
Subsidiary Pledge Agreements and (b) all promissory notes or other
instruments (duly endorsed, where appropriate, in a manner satisfactory to
Administrative Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to
--------------------------------------------
Administrative Agent of (a) the results of a recent search, by a Person
satisfactory to Administrative Agent, of all effective UCC financing
statements and fixture filings and all judgment and tax lien filings which
may have been made with respect to any personal or mixed property of any
Loan Party, together with copies of all such filings disclosed by such
search, and (b) UCC termination statements duly executed by all applicable
Persons for filing in all applicable jurisdictions, and/or pay-off letters,
each in form and substance satisfactory to Administrative Agent, in each
case as may be necessary to terminate any effective UCC financing
statements or fixture filings disclosed in such search (other than any such
financing statements or fixture filings in respect of Liens permitted to
remain outstanding pursuant to the terms of this Agreement);
(iv) UCC Financing Statements and Fixture Filings. Delivery to
--------------------------------------------
Administrative Agent of UCC financing statements and, where appropriate,
fixture filings, duly executed by each applicable Loan Party with respect
to all personal and
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mixed property Collateral of such Loan Party, for filing in all
jurisdictions as may be necessary or, in the opinion of Administrative
Agent, desirable to perfect the security interests created in such
Collateral pursuant to the Collateral Documents;
(v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of all
---------------------
cover sheets or other documents or instruments required to be filed with
the PTO in order to create or perfect Liens in respect of any IP
Collateral; and
(vi) Opinions of Local Counsel. Delivery to Administrative Agent of
-------------------------
an opinion of counsel (which counsel shall be reasonably satisfactory to
Administrative Agent) under the laws of each jurisdiction in which any Loan
Party or any personal or mixed property Collateral is located with respect
to the creation and perfection of the security interests in favor of
Administrative Agent in such Collateral and such other matters governed by
the laws of such jurisdiction regarding such security interests as
Administrative Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Administrative Agent.
K. Ship Mortgages. Administrative Agent shall have received from Company
and each applicable Subsidiary Guarantor fully executed and notarized Ship
Mortgages in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each ship, barge or other vessel listed in
Schedule 4.1K annexed hereto, and such other approvals, opinions or documents in
- -------------
connection with the foregoing as Administrative Agent may reasonably request.
L. Real Estate and Other Appraisals. Administrative Agent shall have
received appraisals from one or more independent real estate and other
appraisers satisfactory to Administrative Agent, in form, scope and substance
satisfactory to Administrative Agent (including a determination that the
appraised value (on a going concern basis) of the Biloxi Gaming Facilities, the
Vicksburg Gaming Facilities, the Bossier City Gaming Facilities and the Lake
Charles Gaming Facilities, collectively, is not less than $500,000,000) and
satisfying the requirements of any applicable laws and regulations, concerning
any Closing Date Mortgaged Properties (as defined in subsection 4.1I) and ships
or barges subject to Ship Mortgages, in each case to the extent required under
such laws and regulations as determined by Administrative Agent in its
discretion.
M. Environmental Reports. Administrative Agent shall have received
reports and other information, in form, scope and substance satisfactory to
Administrative Agent, regarding environmental matters relating to Company and
its Subsidiaries and the Facilities, which reports shall include a Phase I
environmental assessment for each of the Facilities currently owned, leased,
operated or used by Company or any of its Subsidiaries (collectively, the "Phase
I Report") which (a) conforms to the current version of ASTM Standard Practice
for Environmental Site Assessments: Phase I Environmental Site Assessment
Process, E 1527, (b) was conducted no more than six months prior to the Closing
Date by one or more environmental consulting firms reasonably satisfactory to
Administrative Agent, (c) includes an assessment of asbestos-containing
materials at such Facilities, and (d) includes an estimate of the reasonable
worst-case cost of investigating and remediating any Hazardous Materials
Activity identified in
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the Phase I Report as giving rise to an actual or potential material violation
of any Environmental Law or as presenting a material risk of giving rise to a
material Environmental Claim.
N. Financial Statements; Pro Forma Balance Sheet. On or before the
Closing Date, Lenders shall have received from Company (i) audited financial
statements of Company and its Subsidiaries for Fiscal Years 1998, 1997 and 1996,
consisting of balance sheets and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows for such Fiscal Years,
(ii) unaudited financial statements of Company and its Subsidiaries as at
January 24, 1999, consisting of a balance sheet and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows for the
nine-month period ending on such date, all in reasonable detail and certified by
the chief financial officer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and
(iii) pro forma consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the Closing Date, prepared in accordance with GAAP (other
than the absence of footnotes) and reflecting the consummation of the Offer and
Consent Solicitation, the related financings and the other transactions
contemplated by the Loan Documents and the Related Agreements, which pro forma
financial statements shall be in form and substance satisfactory to Lenders.
O. [INTENTIONALLY OMITTED]
P. Evidence of Insurance. Administrative Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that all insurance required to be maintained pursuant to subsection 6.4 is in
full force and effect and that Administrative Agent on behalf of Lenders has
been named as additional insured and/or loss payee thereunder to the extent
required under subsection 6.4.
Q. Opinions of Counsel to Loan Parties. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of Allan B. Solomon, General Counsel of Loan Parties,
Mayer, Brown & Platt, special counsel for Loan Parties, and Phelps Dunbar
L.L.P., counsel for Loan Parties, each in form and substance reasonably
satisfactory to Administrative Agent and its counsel, dated as of the Closing
Date and setting forth substantially the matters in the opinions designated in
Exhibit VIII annexed hereto and as to such other matters as Administrative Agent
- ------------
acting on behalf of Lenders may reasonably request, and (ii) evidence
satisfactory to Administrative Agent that Loan Parties have requested such
counsel to deliver such opinions to Lenders.
R. Opinions of Administrative Agent's Counsel. Lenders shall have
received originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, counsel to Administrative Agent, dated as of the Closing
Date, substantially in the form of Exhibit IX annexed hereto and as to such
----------
ther matters as Administrative Agent acting on behalf of Lenders may reasonably
request.
S. Opinions of Counsel Delivered Under Related Agreements. Administrative
Agent and its counsel shall have received copies of each of the opinions of
counsel delivered to the parties under the Related Agreements, together with a
letter from each such counsel (to the
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extent not inconsistent with such counsel's established internal policies)
authorizing Lenders to rely upon such opinion to the same extent as though it
were addressed to Lenders.
T. Fees. Company shall have paid to Administrative Agent, for
distribution (as appropriate) to Administrative Agent and Lenders, the fees
payable on the Closing Date referred to in subsection 2.3.
U. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Administrative Agent an Officer's Certificate, in form
and substance satisfactory to Administrative Agent, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Company shall have performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent and Requisite Lenders.
V. No Litigation. There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed by
Company in writing pursuant to subsection 5.6 or 6.1(x) prior to the execution
of this Agreement, and there shall have occurred no development not so disclosed
in any such action, suit, proceeding, governmental investigation or arbitration
so disclosed, that, in either event, in the opinion of Administrative Agent or
of Requisite Lenders, could reasonably be expected to have a Material Adverse
Effect; and no injunction or other restraining order shall have been issued and
no hearing to cause an injunction or other restraining order to be issued shall
be pending or noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, the transactions contemplated by this Agreement or
the making of Loans hereunder.
W. No Disruption of Financial and Capital Markets. There shall have been
no material adverse change after March 17, 1999 in the syndication markets for
credit facilities similar in nature to the credit facilities provided under this
Agreement and the other Loan Documents, and there shall not have occurred and be
continuing a material disruption of or material adverse change in the financial,
banking or capital markets that would have an adverse effect on such syndication
markets, in each case as determined by Administrative Agent in its sole
discretion.
X. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Administrative Agent and such counsel, and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.
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4.2 Conditions to All Loans.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Company or by any employee of Company
designated by any of the above-described officers on behalf of Company in a
writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing and the application of the proceeds thereof that would constitute
an Event of Default or a Potential Event of Default; and
(iii) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date.
4.3 Conditions to Letters of Credit.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Company or by any employee of Company designated by
any of the above-described officers on behalf of Company in a writing delivered
to Administrative Agent, together with all other information specified in
subsection 3.1B(i) and such other documents or information as the applicable
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
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C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
the Loans, to induce Issuing Lenders to issue Letters of Credit and to induce
other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the following statements
are true, correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business and
----------------------------------------------------------------
Subsidiaries.
------------
A. Organization and Powers. Each Loan Party is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or formation
as specified in Schedule 5.1 annexed hereto. Each Loan Party has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into the
Loan Documents and Related Agreements to which it is a party and to carry out
the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing could not
reasonably be expected to have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only
in the businesses permitted to be engaged in pursuant to subsections 7.14.
D. Subsidiaries. All of the Subsidiaries of Company as of the Closing
Date are identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xvi). Schedule 5.1 identifies which Subsidiaries of Company are Restricted
Subsidiaries and Unrestricted Subsidiaries. The capital stock of each of the
Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
supplemented) is duly authorized, validly issued, fully paid and nonassessable
and none of such capital stock constitutes Margin Stock. Each of the
Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
supplemented) is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or formation set forth therein, has all
requisite corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, in each case except where failure to be so qualified or in good
standing or a lack of such corporate power and authority could not reasonably be
expected to have a Material Adverse Effect. Schedule 5.1 annexed hereto (as so
supplemented) correctly sets forth, as of the
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Closing Date, the ownership interest of Company and each of its Subsidiaries in
each of the Subsidiaries of Company identified therein. As of the Closing Date,
there exists no Indebtedness nor Contingent Obligations of the Unrestricted
Subsidiaries owed to Company or any of its Restricted Subsidiaries (other than
approximately $3,300,000 of Indebtedness owing by ICBH to Company) or for which
Company or any of its Restricted Subsidiaries is or may become liable.
5.2 Authorization of Borrowing, etc.
--------------------------------
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements have been duly authorized by all
necessary corporate action on the part of each Loan Party that is a party
thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties
of the Loan Documents and the Related Agreements to which they are parties and
the consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not and will not (i) violate any provision of any law or
any governmental rule or regulation or any Gaming Law applicable to Company or
any of its Subsidiaries, the Certificate or Articles of Incorporation or other
formation or charter document or Bylaws of Company or any of its Subsidiaries or
any order, judgment or decree of any court or other agency of government or
Gaming Authority binding on Company or any of its Subsidiaries (other than any
violation of any such law, governmental rule or regulation, or Gaming Law or any
such order, judgment or decree, in each case which could not reasonably be
expected to have a Material Adverse Effect), (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Company or any of its Subsidiaries (other
than any such conflict, breach or default which could not reasonably be expected
to have a Material Adverse Effect), (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of Company or any of
its Subsidiaries (other than any Liens created under any of the Loan Documents
in favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date and
disclosed in writing to Lenders.
C. Governmental Consents. Except for such authorizations, approvals,
consents or notices (a) obtained or delivered as of the Closing Date, (b)
subsequently required in connection with the addition of any Subsidiary
Guarantor pursuant to subsection 6.8, or (c) set forth on Schedule 5.2C annexed
-------------
hereto, the execution, delivery and performance by Loan Parties of the Loan
Documents and the Related Agreements to which they are parties and the
consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not and will not result in any License Revocation or
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body or any Gaming Authority. Other than the filings or recordings
contemplated by subsection 5.16A, all authorizations, approvals, consents,
notices, registrations or filings required to be obtained, delivered, filed or
made as of the Closing Date for the execution, delivery and performance by Loan
Parties of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and
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such Related Agreements have been obtained from or registered or filed with the
applicable federal, state or other governmental authorities or regulatory bodies
or Gaming Authorities.
D. Binding Obligation. Each of the Loan Documents and Related Agreements
has been duly executed and delivered by each Loan Party that is a party thereto
and is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
E. Valid Issuance of Subordinated Notes. Company has the corporate power
and authority to issue the Subordinated Notes. The Subordinated Notes, when
issued and paid for, will be the legally valid and binding obligations of
Company, enforceable against Company in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability. The
subordination provisions of the Subordinated Notes will be enforceable against
the holders thereof and the Loans and all other monetary Obligations hereunder
are and will be within the definition of "Senior Indebtedness" included in such
provisions. The Subordinated Notes, when issued and sold, will either (a) have
been registered or qualified under applicable federal and state securities laws
or (b) be exempt therefrom.
F. Compliance with Laws. Company and its Subsidiaries are in compliance
with all presently existing applicable statutes, laws, regulations, rules,
ordinances and orders of any kind whatsoever (including, without limitation, any
zoning and building laws or ordinances, subdivision laws or ordinances, any
Environmental Laws or Gaming Laws, or any presently existing rules, regulations
or orders of any governmental entity, authority or agency or any Gaming
Authority), and with all present existing covenants and restrictions of record
relating to the use and occupancy of any of their respective properties, except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.
5.3 Financial Condition.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated and
consolidating balance sheets of Company and its Subsidiaries as at April 26,
1998 and the related consolidated and consolidating statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for the
Fiscal Year then ended and (ii) the unaudited consolidated and consolidating
balance sheets of Company and its Subsidiaries as at January 24, 1999 and the
related unaudited consolidated and consolidating statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for the nine
months then ended. All such statements were prepared in conformity with GAAP
and fairly present, in all material respects, the financial position (on a
consolidated and, where applicable, consolidating basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
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Company does not (and will not following the funding of the initial Loans) have
any Contingent Obligation, contingent liability or liability for taxes, long-
term lease or unusual forward or long-term commitment that is not reflected in
the foregoing financial statements or the notes thereto and which in any such
case is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries.
5.4 No Material Adverse Change; No Restricted Junior Payments.
---------------------------------------------------------
Since April 26, 1998, no event or change has occurred that has caused
or evidences, either in any case or in the aggregate, a Material Adverse Effect.
During the period from April 26, 1998 through and including the Closing Date,
neither Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 7.5.
5.5 Title to Properties; Liens; Real Property.
-----------------------------------------
A. Title to Properties; Liens. Company and its Subsidiaries have (i)
good, sufficient and legal title to (in the case of fee interests in real
property), (ii) valid leasehold interests in (in the case of leasehold interests
in real or personal property), or (iii) good title to (in the case of all other
personal property), all of their respective properties and assets reflected in
the financial statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in each case except
for assets disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted under subsection 7.7.
Except as permitted by this Agreement, all such properties and assets are free
and clear of Liens.
B. Real Property. As of the Closing Date, Schedule 5.5 annexed hereto
------------
contains a true, accurate and complete list of (i) all Real Property Assets
constituting fee properties and (ii) all leases, subleases or assignments of
leases (together with all amendments, modifications, supplements, renewals or
extensions of any thereof) affecting each Real Property Asset of any Loan Party,
regardless of whether such Loan Party is the landlord or tenant (whether
directly or as an assignee or successor in interest) under such lease, sublease
or assignment. Except as specified in Schedule 5.5 annexed hereto, each
------------
agreement listed in clause (ii) of the immediately preceding sentence is in full
force and effect and there is no default by any Loan Party thereunder. Company
does not have knowledge of any default by any other party thereto that has
occurred and is continuing thereunder, and each such agreement constitutes the
legally valid and binding obligation of each applicable Loan Party, enforceable
against such Loan Party in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles.
5.6 Litigation; Adverse Facts.
-------------------------
A. Proceedings, Investigations and Violations. There are no actions,
suits, proceedings, arbitrations or governmental investigations (whether or not
purportedly on behalf of Company or any of its Subsidiaries) at law or in
equity, or before or by any federal, state,
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municipal or other governmental department, commission, board, bureau, agency or
instrumentality or Gaming Authority, domestic or foreign (including any
Environmental Claims) that are pending or, to the knowledge of Company,
threatened against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries and that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither Company nor any of its Subsidiaries (i) is in violation of any
applicable laws (including Environmental Laws) that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, or
(ii) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
B. Land Use Proceedings. As of the Closing Date, there are no pending
condemnation, zoning or other land use proceedings or special assessment
proceedings with respect to the Closing Date Mortgaged Properties or the use
thereof, and Seller has not received written notice from any Governmental
Authority threatening any such proceeding. After the Closing Date, there are no
material pending condemnation, zoning or other land use proceedings or special
assessment proceedings with respect to the Closing Date Mortgaged Properties or
the use thereof, and Seller has not received written notice from any
Governmental Authority threatening any such proceeding. Seller has not entered
into any agreements or commitments with Governmental Authorities that will be
binding on the Closing Date Mortgaged Properties after the Closing Date and
which would (i) materially affect the operations of or the entitlements
applicable to such properties, (ii) require the owner of any such property to
make improvements to such property or make dedications or off-site improvements
for the benefit of adjoining properties, or (iii) make additional expenditures
with respect to the operation of the Closing Date Mortgaged Properties.
5.7 Payment of Taxes.
----------------
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes shown on such tax returns to be due and payable
and all assessments, fees and other governmental charges upon Company and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Company knows of no proposed tax assessment against Company or any of its
Subsidiaries which is not being actively contested by Company or such Subsidiary
in good faith and by appropriate proceedings; provided that such reserves or
--------
other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
------------------------------------------------------------------
Contracts.
- ---------
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect,
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of such default or defaults, if any, could not reasonably be expected to have a
Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of all the
------------
Material Contracts in effect on the Closing Date. Except as described on
Schedule 5.8, all such Material Contracts are in full force and effect and no
- ------------
material defaults currently exist thereunder.
D. Neither Company nor any of its Subsidiaries has entered into any
currently effective contracts for the sale of the Closing Date Mortgaged
Properties, nor do there exist any currently effective rights of first refusal
or options to purchase such properties.
5.9 Governmental Regulation.
-----------------------
Except for the Gaming Laws described in Schedule 5.2C annexed hereto,
-------------
neither Company nor any of its Subsidiaries is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 Securities Activities.
---------------------
A. Neither Company nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than 25%
of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 Employee Benefit Plans.
----------------------
A. Company, each of its Subsidiaries and each of their respective ERISA
Affiliates are in compliance with all applicable provisions and requirements of
ERISA and the regulations and published interpretations thereunder with respect
to each Employee Benefit Plan, and have performed all their obligations under
each Employee Benefit Plan. Each Employee Benefit Plan which is intended to
qualify under Section 401(a) of the Internal Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code, or except as set forth in Schedule 5.11 annexed hereto, no
-------------
Employee Benefit Plan provides
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health or welfare benefits (through the purchase of insurance or otherwise) for
any retired or former employee of Company, any of its Subsidiaries or any of
their respective ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, the amount
of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), does not exceed $5,000,000.
E. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Company, its
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $5,000,000.
5.12 Certain Fees.
------------
Except for fees disclosed to Administrative Agent prior to the
Closing Date, no broker's or finder's fee or commission will be payable with
respect to this Agreement or any of the transactions contemplated hereby, and
Company hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any non-disclosed broker's or
finder's fees alleged to have been incurred in connection herewith or therewith
and any expenses (including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or liability.
5.13 Environmental Protection.
------------------------
(i) neither Company nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order, consent decree or settlement agreement with any Person relating to
(a) any Environmental Law, (b) any Environmental Claim, or (c) any
Hazardous Materials Activity that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(ii) neither Company nor any of its Subsidiaries has received any
letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S)
9604) or any comparable state law;
(iii) there are and, to Company's knowledge, have been no conditions,
occurrences, or Hazardous Materials Activities which could reasonably be
expected to form the basis of an Environmental Claim against Company or
any of its Subsidiaries that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(iv) neither Company nor any of its Subsidiaries nor, to Company's
knowledge, any predecessor of Company or any of its Subsidiaries has filed
any notice under any Environmental Law indicating past or present
treatment of Hazardous
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Materials at any Facility, and none of Company's or any of its
Subsidiaries' operations involves the generation, transportation,
treatment, storage or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent; and
(v) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no
event or condition has occurred or is occurring with respect to Company or any
of its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity which individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect.
5.14 Employee Matters.
----------------
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 Solvency.
--------
Each Loan Party is and, upon the incurrence of any Obligations by such
Loan Party on any date on which this representation is made, will be, Solvent.
5.16 Matters Relating to Collateral.
------------------------------
A. Creation, Perfection and Priority of Liens. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1I, 4.1J,
6.8 and 6.9 and (ii) the delivery to Administrative Agent of any Pledged
Collateral not delivered to Administrative Agent at the time of execution and
delivery of the applicable Collateral Document (all of which Pledged Collateral
has been so delivered) are effective to create in favor of Administrative Agent
for the benefit of Lenders, as security for the respective Secured Obligations
(as defined in the applicable Collateral Document in respect of any Collateral),
a valid and perfected First Priority Lien on all of the Collateral, and all
filings and other actions necessary or desirable to perfect and maintain the
perfection and First Priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing or recording of the
Closing Date Mortgages (as defined in subsection 4.1I) and the Ship Mortgages,
the filing of any UCC financing statements delivered to Administrative Agent for
filing (but not yet filed) and the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on behalf of
Administrative Agent.
B. Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for such authorizations, approvals or
other actions set forth on Schedule
--------
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5.2C annexed hereto and filings or recordings contemplated by subsection 5.16A
- ----
and except as may be required, in connection with the disposition of any Pledged
Collateral, by laws generally affecting the offering and sale of securities.
C. Absence of Third-Party Filings. Except (x) such as may have been
filed in favor of Administrative Agent as contemplated by subsection 5.16A, (y)
for Permitted Encumbrances, and (z) for Liens which shall be terminated pursuant
to UCC termination statements delivered pursuant to subsection 4.1J to
Administrative Agent for filing (but not yet filed), such Liens to be terminated
upon the filing or recording of such UCC termination statements, (i) no
effective UCC financing statement, fixture filing or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office and (ii) no effective filing covering all or any part of the IP
Collateral is on file in the PTO.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
F. Conditions Affecting the Closing Date Mortgaged Properties. There are
no defects, facts or conditions affecting the Closing Date Mortgaged Properties
that would make them unsuitable for the current use of such properties or of any
abnormal hazards (including earth movement, slippage or flood damage) affecting
the Closing Date Mortgaged Properties, except for defects, facts or conditions
which could not reasonably be expected to have a Material Adverse Effect.
G. Permits and Approvals for the Closing Date Mortgaged Properties.
Company has obtained, or caused its Subsidiaries to obtain, all permits,
authorizations, and approvals, including, without limitation, all sewer and
water permits, elevator permits, certificates of occupancy, subdivision
approvals, environmental approvals, zoning and land use entitlements which are
necessary for the current operation of the Closing Date Mortgaged Properties,
and there are no uncured violations thereof, except for permits, authorizations
and approvals where the failure to obtain, and violations thereof, could not
reasonably be expected to have a Material Adverse Effect.
5.17 Related Agreements.
------------------
Company has delivered to Lenders complete and correct copies of each
Related Agreement and of all exhibits and schedules thereto.
5.18 Disclosure.
----------
No representation or warranty of Company or any of its Subsidiaries
contained in the Confidential Information Memorandum or in any Loan Document or
Related Agreement or in any other document, certificate or written statement
(taken as a whole) furnished to Lenders
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by or on behalf of Company or any of its Subsidiaries for use in connection with
the transactions contemplated by this Agreement contains any untrue statement of
a material fact or omits to state a material fact (known to Company, in the case
of any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by Company to be reasonable at the time made, it being recognized by
Lenders that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may materially differ from the projected results. There are no facts
known (or which should upon the reasonable exercise of diligence be known) to
Company (other than matters of a general economic nature) that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect
and that have not been disclosed herein or in such other documents, certificates
and statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
5.19 Year 2000 Compliance.
--------------------
All Information Systems and Equipment are either Year 2000
Compliant, or any reprogramming, remediation or any other corrective action,
including the internal testing of all such Information Systems and Equipment,
will be completed by August 31, 1999. To the extent that such
reprogramming/remediation and testing action is required, the cost thereof, as
well as the cost of the reasonably foreseeable consequences of failure to become
Year 2000 Compliant, to Company and its Subsidiaries (including without
limitation reprogramming errors and the failure or other systems or equipment)
will not result in an Event of Default or could not reasonably be expected to
have a Material Adverse Effect.
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 Financial Statements and Other Reports.
--------------------------------------
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Administrative Agent (with copies
for each Lender, which copies shall be promptly distributed to Lenders by
Administrative Agent):
(i) Monthly Financials: as soon as available and in any event
within 35 days after the end of each month ending after the Closing Date,
the consolidated statements of income of Company and its Subsidiaries and
separate statements of income of each Gaming Facility of Company and its
Subsidiaries, in each case for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month,
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setting forth in each case in comparative form the corresponding figures
for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year,
to the extent prepared on a monthly basis, all in reasonable detail,
subject to changes resulting from audit and normal year-end adjustments;
(ii) Quarterly Financials: as soon as available and in any event
--------------------
within (x) 50 days after the end of each Fiscal Quarter, (other than each
fourth Fiscal Quarter), or (y) 95 days after the end of each fourth Fiscal
Quarter, (a) the consolidated and consolidating balance sheets of Company
and its Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated and consolidating statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for such Fiscal Quarter and
for the period from the beginning of the then current Fiscal Year to the
end of such Fiscal Quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous
Fiscal Year and the corresponding figures from the Financial Plan for the
current Fiscal Year, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, and (b) a narrative report describing the
operations of Company and its Subsidiaries in the form prepared for
presentation to senior management for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
-------------------
within 95 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year and
the corresponding figures from the Financial Plan for the Fiscal Year
covered by such financial statements, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) a narrative
report describing the operations of Company and its Subsidiaries in the
form prepared for presentation to senior management for such Fiscal Year,
and (c) in the case of such consolidated financial statements, a report
thereon of Ernst & Young LLP or other independent certified public
accountants of recognized national standing selected by Company and
satisfactory to Administrative Agent, which report shall be unqualified,
shall express no doubts about the ability of Company and its Subsidiaries
to continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such
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accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
(iv) Officer's and Compliance Certificates: together with each
-------------------------------------
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (a) an Officer's Certificate of
Company stating that the signer has reviewed the terms of this Agreement
and has made, or caused to be made under the signer's supervision, a review
in reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signer does not have
knowledge of the existence as at the date of such Officer's Certificate, of
any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto; and
(b) a Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
restrictions contained in Section 7, in each case to the extent compliance
with such restrictions is required to be tested at the end of the
applicable accounting period, together with a description (including
amounts) of all Investments and Consolidated Capital Expenditures made
during such period, and with respect to each construction or expansion
project of Company and its Restricted Subsidiaries, a report setting forth
the budgeted and/or projected total cost of such project, the costs
incurred to date for such project and the expenditures made to date for
such project;
(v) Reconciliation Statements: if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivisions (i), (ii), (iii) or (xiii) of this subsection 6.1
will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subdivisions had
no such change in accounting principles and policies been made, then (a)
together with the first delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following
such change, consolidated financial statements of Company and its
Subsidiaries for (y) the current Fiscal Year to the effective date of such
change and (z) the two full Fiscal Years immediately preceding the Fiscal
Year in which such change is made, in each case prepared on a pro forma
basis as if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to subdivision
(i), (ii), (iii) or (xiii) of this subsection 6.1 following such change, a
written statement of the chief accounting officer or chief financial
officer of Company setting forth the differences (including any differences
that would affect any calculations relating to the financial covenants set
forth in subsection 7.6) which would have resulted if such financial
statements had been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
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Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
--------
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith
pursuant to clause (b) of subdivision (iv) above for the applicable Fiscal
Year are not stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including any comment letter submitted by such accountants to management in
connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
------------------------------
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally by
Company or any of its Subsidiaries to the public concerning material
developments in the business of Company or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
-----------------------
obtaining knowledge (a) of any condition or event that constitutes an Event
of Default or Potential Event of Default, or becoming aware that any Lender
has given any notice to Company (other than to Administrative Agent) or
taken any other action with respect to a claimed Event of Default or
Potential Event of Default, (b) that any Person has given any notice to
Company or any of its Subsidiaries or taken any other action with respect
to a claimed default or event or condition of the type referred to in
subsection 8.2, (c) of any condition or event that would be required to be
disclosed in a current report filed by Company with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
effect on the date hereof) if Company were required to file such reports
under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect, an Officer's Certificate specifying the nature and
period of existence of such condition, event or change, or specifying the
notice given or action taken by any such Person and the nature
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of such claimed Event of Default, Potential Event of Default, default,
event or condition, and what action Company has taken, is taking and
proposes to take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any officer
-------------------------------
of Company obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries (collectively, "Proceedings") not previously
disclosed in writing by Company to Lenders or (Y) any material development
in any Proceeding that, in any case:
(1) if adversely determined, could reasonably be expected to
have a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a schedule of all Proceedings not covered by insurance
involving an alleged liability of, or claims against or affecting, Company
or any of its Subsidiaries equal to or greater than $5,000,000, and
promptly after request by Administrative Agent such other information as
may be reasonably requested by Administrative Agent to enable
Administrative Agent and its counsel to evaluate any of such Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the occurrence
------------
of or forthcoming occurrence of any ERISA Event, a written notice
specifying the nature thereof, what action Company, any of its Subsidiaries
or any of their respective ERISA Affiliates has taken, is taking or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the
PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) each
-------------
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each Pension
Plan; (b) all notices received by Company, any of its Subsidiaries or any
of their respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
---------------
later than 30 days following the beginning of each Fiscal Year, a
consolidated plan and financial forecast for such Fiscal Year and the next
succeeding Fiscal Year (the "Financial Plan" for such Fiscal Years),
including (a) forecasted consolidated and consolidating balance
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sheets and forecasted consolidated and consolidating statements of income
and cash flows of Company and its Subsidiaries for each such Fiscal Year,
(b) forecasted consolidated and consolidating statements of income and cash
flows of Company and its Subsidiaries for each month of each such Fiscal
Year, together with an explanation of the assumptions on which such
forecasts are based, and (c) such other information and projections as any
Lender may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the
---------
last day of each Fiscal Year, a report in form and substance satisfactory
to Administrative Agent outlining all material insurance coverage
maintained as of the date of such report by Company and its Restricted
Subsidiaries and all material insurance coverage planned to be maintained
by Company and its Restricted Subsidiaries in the immediately succeeding
Fiscal Year;
(xv) Board of Directors: with reasonable promptness, written
------------------
notice of any change in the Board of Directors of Company;
(xvi) New Subsidiaries: promptly upon any Person becoming a
----------------
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1 annexed hereto
------------
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1 annexed hereto
------------
for all purposes of this Agreement);
(xvii) Material Contracts: promptly, and in any event within ten
------------------
Business Days after any Material Contract of Company or any of its
Restricted Subsidiaries is terminated or amended in a manner that is
materially adverse to Company or such Restricted Subsidiary, as the case
may be, or any new Material Contract is entered into, a written statement
describing such event with copies of such material amendments or new
contracts, and an explanation of any actions being taken with respect
thereto;
(xviii) UCC Search Report: as promptly as practicable (depending on
-----------------
the jurisdiction) after the date of filing of any UCC financing statement
executed by any Loan Party pursuant to subsection 4.1J(iv) or 6.8A, copies
of completed UCC searches evidencing the proper filing, recording and
indexing of all such UCC financing statement and listing all other
effective financing statements that name such Loan Party as debtor,
together with copies of all such other financing statements not previously
delivered to Administrative Agent by or on behalf of Company or such Loan
Party;
(xix) Margin Determination Certificate: together with each
--------------------------------
delivery of financial statements for each Fiscal Quarter (other than each
fourth Fiscal Quarter) pursuant to subdivision (ii) above, and within 45
days of the last day of each fourth Fiscal Quarter, a Margin Determination
Certificate demonstrating in reasonable detail the calculation of the
Consolidated Total Leverage Ratio for the four consecutive Fiscal Quarters
ending on the day of the accounting period covered by such financial
statements;
(xx) License Revocation: promptly upon any officer of Company
------------------
obtaining knowledge of a License Revocation, written notice thereof
together with such other
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information as may be reasonably available to Company to enable Lenders and
their counsel to evaluate such License Revocation, and such other
information as may be reasonably requested by Administrative Agent;
(xxi) Specified Projects Carryover Amount: in the event Company
-----------------------------------
elects to add any Specified Projects Carryover Amount (as defined in
subsection 7.8(ii)) to the Total Expansion CapEx Carryover Amount (as
defined in subsection 7.8(ii)), promptly after full completion of any of
the projects described in subsection 7.8(i), the Officer's Certificate
described in subsection 7.8(ii), which certificate shall state that the
applicable construction or expansion projects have been fully completed,
demonstrate the calculation of the Specified Projects Carryover Amount,
such calculation to be reasonably satisfactory to Administrative Agent,
and, subject to the provisos contained in subsection 7.8(ii), request such
Specified Projects Carryover Amount be included in the Total Expansion
CapEx Carryover Amount; and
(xxii) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 Corporate Existence, etc.
-------------------------
Except as permitted under subsection 7.7, Company will, and will cause
each of its Restricted Subsidiaries to, at all times preserve and keep in full
force and effect its corporate existence and all rights and franchises material
to its business; provided, however, that neither Company nor any of its
-------- -------
Restricted Subsidiaries shall be required to preserve any such right or
franchise if the Board of Directors of Company or such Restricted Subsidiary
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of Company or such Restricted Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any material respect
to Company, such Restricted Subsidiary or Lenders.
6.3 Payment of Taxes and Claims; Tax Consolidation.
----------------------------------------------
A. Company will, and will cause each of its Restricted Subsidiaries to,
pay all taxes, assessments and other governmental charges imposed upon it or any
of its properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if it is
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as (1) such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor and (2) in the case of a charge or claim which has or may become a
Lien against any of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such charge
or claim.
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B. Company will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance.
------------------------------------
A. Maintenance of Properties. Company will, and will cause each of its
Restricted Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties (including, without limitation, all Gaming Facilities) used or useful
in the business of Company and its Restricted Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof.
B. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Restricted Subsidiaries as
may customarily be carried or maintained under similar circumstances by
corporations of established reputation engaged in similar businesses, in each
case in such amounts (giving effect to self-insurance), with such deductibles,
covering such risks and otherwise on such terms and conditions as shall be
customary for corporations similarly situated in the industry. Without limiting
the generality of the foregoing, Company will maintain or cause to be maintained
(i) flood insurance with respect to each Flood Hazard Property that is located
in a community that participates in the National Flood Insurance Program, in
each case in compliance with any applicable regulations of the Board of
Governors of the Federal Reserve System, and (ii) replacement value casualty
insurance on the Collateral under such policies of insurance, with such
insurance companies, in such amounts, with such deductibles, and covering such
risks as are at all times satisfactory to Administrative Agent in its
commercially reasonable judgment. Each such policy of insurance shall (a) name
Administrative Agent for the benefit of Lenders as an additional insured
thereunder as its interests may appear and (b) in the case of each business
interruption and casualty insurance policy, contain a loss payable clause or
endorsement, satisfactory in form and substance to Administrative Agent, that
names Administrative Agent for the benefit of Lenders as the loss payee
thereunder for any covered loss in excess of $10,000,000 and provides for at
least 30 days prior written notice to Administrative Agent of any modification
or cancellation of such policy.
6.5 Inspection Rights.
-----------------
Company shall, and shall cause each of its Restricted Subsidiaries to,
permit any authorized representatives designated by any Lender to visit and
inspect any of the properties of Company or of any of its Restricted
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
- ---------
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
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6.6 Compliance with Laws, etc.; Maintenance of Gaming and Liquor Licenses.
---------------------------------------------------------------------
A. Compliance with Laws. Company shall comply, and shall cause each of
its Subsidiaries to comply, with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority or Gaming Authority
(including all Environmental Laws and Gaming Laws), noncompliance with which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
B. Maintenance of Licenses. Company shall, and shall cause each of its
Restricted Subsidiaries to, maintain (i) such valid gaming licenses,
registrations and findings of suitability in all jurisdictions as may be
necessary to operate each of its Gaming Facility businesses and (ii) all liquor
licenses and registrations as may be necessary to sell alcoholic beverages from
and in its Gaming Facilities.
6.7 Environmental Review and Investigation, Disclosure, Etc.; Company's Actions
---------------------------------------------------------------------------
Regarding Hazardous Materials Activities, Environmental Claims and
------------------------------------------------------------------
Violations of Environmental Laws.
------------------
A. Environmental Review and Investigation. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain, at Company's expense, an independent professional consultant to
review any environmental audits, investigations, analyses and reports relating
to Hazardous Materials prepared by or for Company, and (ii) conduct its own
investigation of any Facility; provided that, in the case of any Facility no
--------
longer owned, leased, operated or used by Company or any of its Subsidiaries,
Company shall only be obligated to use all commercially reasonable efforts to
obtain permission for Administrative Agent's professional consultant to conduct
an investigation of such Facility. For purposes of conducting such a review
and/or investigation, Company hereby grants to Administrative Agent and its
agents, employees, consultants and contractors the right to enter into or onto
any Facilities currently owned, leased, operated or used by Company or any of
its Subsidiaries and to perform such tests on such property (including taking
samples of soil, groundwater and suspected asbestos-containing materials) as are
reasonably necessary in connection therewith. Any such review and/or
investigation of any Facility shall be conducted, unless otherwise agreed to by
Company and Administrative Agent, upon reasonable notice during normal business
hours and, to the extent reasonably practicable, shall be conducted so as not to
interfere with the ongoing operations at such Facility or to cause any damage or
loss to any property at such Facility. Company and Administrative Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Administrative Agent pursuant to this subsection 6.7A will be
obtained and shall be used by Administrative Agent and Lenders for the purposes
of Lenders' internal credit decisions, to monitor and police the Loans and to
protect Lenders' security interests, if any, created by the Loan Documents.
Administrative Agent agrees to deliver a copy of any such report to Company with
the understanding that Company acknowledges and agrees that (x) it will
indemnify and hold harmless Administrative Agent and each Lender from any costs,
losses or liabilities relating to Company's use of or reliance on such report,
(y) neither Administrative Agent nor any Lender makes any representation or
warranty with respect to such report, and (z) by delivering such report to
Company, neither Administrative Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations contained
in such report.
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B. Environmental Disclosure. Company will deliver to Administrative
Agent and Lenders:
(i) Environmental Audits and Reports. As soon as practicable
--------------------------------
following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons,
with respect to significant environmental matters at any Facility which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or with respect to any Environmental Claims which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly
--------------------------------------------------
upon the occurrence thereof, written notice describing in reasonable detail
(a) any Release required to be reported to any federal, state or local
governmental or regulatory agency under any applicable Environmental Laws,
and (b) any remedial action taken by Company or any other Person in
response to (1) any Hazardous Materials Activities the existence of which
has a reasonable possibility of resulting in one or more Environmental
Claims having, individually or in the aggregate, a Material Adverse Effect,
or (2) any Environmental Claims that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(iii) Written Communications Regarding Environmental Claims, Releases,
----------------------------------------------------------------
Etc. As soon as practicable following the sending or receipt thereof by
---
Company or any of its Subsidiaries, a copy of any and all written
communications with respect to (a) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (b) any Release required to be reported
to any federal, state or local governmental or regulatory agency, and (c)
any request for information from any governmental agency that suggests such
agency is investigating whether Company or any of its Subsidiaries may be
potentially responsible for any Hazardous Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental Impact.
---------------------------------------------------------------
Prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Company or any of its
Subsidiaries that could reasonably be expected to (1) expose Company or any
of its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or (2) affect the ability of Company or any of its
Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (b) any proposed action to be taken by Company or any of its
Subsidiaries to commence manufacturing or other industrial operations or to
modify current operations in a manner that could reasonably be expected to
subject Company or any of its Subsidiaries to any material additional
obligations or requirements under any Environmental Laws that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
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(v) Other Information. With reasonable promptness, such other
-----------------
documents and information as from time to time may be reasonably requested
by Administrative Agent in relation to any matters disclosed pursuant to
this subsection 6.7.
C. Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws.
(i) Remedial Actions Relating to Hazardous Materials Activities.
-----------------------------------------------------------
Company shall promptly undertake, and shall cause each of its Subsidiaries
promptly to undertake, any and all investigations, studies, sampling,
testing, abatement, cleanup, removal, remediation or other response actions
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity on, under or about any Facility that is in violation of any
Environmental Laws or that presents a material risk of giving rise to an
Environmental Claim. In the event Company or any of its Subsidiaries
undertakes any such action with respect to any Hazardous Materials, Company
or such Subsidiary shall conduct and complete such action in compliance
with all applicable Environmental Laws and in accordance with the policies,
orders and directives of all federal, state and local governmental
authorities except when, and only to the extent that, Company's or such
Subsidiary's liability with respect to such Hazardous Materials Activity is
being contested in good faith by Company or such Subsidiary.
(ii) Actions with Respect to Environmental Claims and Violations of
--------------------------------------------------------------
Environmental Laws. Company shall promptly take, and shall cause each of
------------------
its Subsidiaries promptly to take, any and all actions necessary to (1)
cure any material violation of applicable Environmental Laws by Company or
its Subsidiaries that could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect and (2) make an appropriate
response to any Environmental Claim against Company or any of its
Subsidiaries and discharge any obligations it may have to any Person
thereunder where failure to do so could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
6.8 Execution of Subsidiary Guaranty and Personal Property Collateral Documents
---------------------------------------------------------------------------
by Certain Subsidiaries and Future Subsidiaries.
-----------------------------------------------
A. Execution of Subsidiary Guaranty and Personal Property Collateral
-----------------------------------------------------------------
Documents. In the event that any Subsidiary of Company existing on the Closing
- ---------
Date that has not previously executed the Subsidiary Guaranty hereafter becomes
a domestic Restricted Subsidiary, or in the event that any Person becomes a
domestic Restricted Subsidiary after the date hereof, Company will (i) promptly
notify Administrative Agent of that fact, (ii) execute, or cause the appropriate
Restricted Subsidiary to execute, a Pledge Amendment (as defined in the Company
Pledge Amendment and Subsidiary Pledge Amendment), (iii) cause such Restricted
Subsidiary to execute and deliver to Administrative Agent a counterpart of the
Subsidiary Guaranty and a Subsidiary Pledge Agreement and a Subsidiary Security
Agreement and (iv) to take all such further actions and execute all such further
documents and instruments (including actions, documents and instruments
comparable to those described in subsection 4.1J) as may be necessary or, in the
opinion of Administrative Agent, desirable to create in favor of Administrative
Agent, for the benefit of Lenders, a valid and perfected First Priority Lien on
all
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<PAGE>
of the personal and mixed property assets of such Restricted Subsidiary
described in the applicable forms of Collateral Documents.
B. Subsidiary Charter Documents, Legal Opinions, Etc. Company shall
deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of such Restricted Subsidiary's Certificate or Articles of
Incorporation or equivalent charter or formation documents, together with a good
standing certificate from the Secretary of State of the jurisdiction of its
incorporation and each other state in which such Person is qualified as a
foreign corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to
Administrative Agent, (ii) a copy of such Restricted Subsidiary's Bylaws, if
any, certified by its corporate secretary or an assistant secretary as of a
recent date prior to their delivery to Administrative Agent, (iii) a certificate
executed by the secretary or an assistant secretary of such Restricted
Subsidiary as to (a) the fact that the attached resolutions of the Board of
Directors of such Restricted Subsidiary approving and authorizing the execution,
delivery and performance of such Loan Documents are in full force and effect and
have not been modified or amended and (b) the incumbency and signatures of the
officers of such Restricted Subsidiary executing such Loan Documents, and (iv) a
favorable opinion of counsel to such Restricted Subsidiary, in form and
substance satisfactory to Administrative Agent and its counsel, as to (a) the
due organization and good standing of such Restricted Subsidiary, (b) the due
authorization, execution and delivery by such Restricted Subsidiary of such Loan
Documents, (c) the enforceability of such Loan Documents against such Restricted
Subsidiary, (d) such other matters (including matters relating to the creation
and perfection of Liens in any Collateral pursuant to such Loan Documents) as
Administrative Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to Administrative Agent and its counsel.
6.9 Conforming Leasehold Interests; Matters Relating to Additional Real
-------------------------------------------------------------------
Property Collateral; Additional Ship Mortgages.
----------------------------------------------
A. Conforming Leasehold Interests. If Company or any of its Restricted
Subsidiaries acquires any Material Leasehold Property, Company shall, or shall
cause such Restricted Subsidiary to, use commercially reasonable good faith best
efforts (without requiring Company or such Restricted Subsidiary to relinquish
any material rights or incur any material obligations or to expend more than a
nominal amount of money over and above the reimbursement, if required, of the
landlord's out-of-pocket costs, including attorneys fees) to cause such Material
Leasehold Property to be a Conforming Leasehold Interest.
B. Additional Mortgages, Etc. From and after the Closing Date, (x) after
the completion of the Coahoma Expansion Project, or (y) in the event that (i)
Company or any Subsidiary Guarantor acquires any fee interest in real property
or any Material Leasehold Property or (ii) at the time any Person becomes a
Subsidiary Guarantor, such Person owns or holds any fee interest in real
property or any Material Leasehold Property, in either case of this clause (y)
excluding any such Real Property Asset the encumbrancing of which requires the
consent of any applicable lessor or (in the case of clause (ii) above) then-
existing senior lienholder, where Company and its Subsidiaries are unable to
obtain such lessor's or senior lienholder's consent (any such non-excluded Real
Property Asset described in the foregoing
100
<PAGE>
clause (x), (y)(i) or (y)(ii) being an "Additional Mortgaged Property"), Company
or such Subsidiary Guarantor shall deliver to Administrative Agent, as soon as
practicable after (a) the completion of the Coahoma Expansion Project or (b)
such Person acquires such Additional Mortgaged Property or becomes a Subsidiary
Guarantor, as the case may be, the following:
(i) Additional Mortgage. A fully executed and notarized Mortgage
-------------------
(an "Additional Mortgage"), in proper form for recording in all appropriate
places in all applicable jurisdictions, encumbering the interest of such
Loan Party in such Additional Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel to such
-------------------
Loan Party, in form and substance satisfactory to Administrative Agent and
its counsel, as to the due authorization, execution and delivery by such
Loan Party of such Additional Mortgage and such other matters as
Administrative Agent may reasonably request, and (b) if required by
Administrative Agent, an opinion of counsel (which counsel shall be
reasonably satisfactory to Administrative Agent) in the state in which such
Additional Mortgaged Property is located with respect to the enforceability
of the form of Additional Mortgage to be recorded in such state and such
other matters (including any matters governed by the laws of such state
regarding personal property security interests in respect of any
Collateral) as Administrative Agent may reasonably request, in each case in
form and substance reasonably satisfactory to Administrative Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold Interest.
----------------------------------------------------------
In the case of an Additional Mortgaged Property consisting of a Material
Leasehold Property, (a) a Landlord Consent and Estoppel, unless otherwise
waived by Administrative Agent in its reasonable discretion, such waiver
not to be unreasonably withheld, and (b) evidence that such Material
Leasehold Property is a Recorded Leasehold Interest;
(iv) Title Insurance. (a) If required by Administrative Agent, an
---------------
ALTA mortgagee title insurance policy or an unconditional commitment
therefor (an "Additional Mortgage Policy") issued by the Title Company with
respect to such Additional Mortgaged Property, in an amount satisfactory to
Administrative Agent, insuring fee simple title to, or a valid leasehold
interest in, such Additional Mortgaged Property vested in such Loan Party
and assuring Administrative Agent that such Additional Mortgage creates a
valid and enforceable First Priority mortgage Lien on such Additional
Mortgaged Property, subject only to a standard survey exception, which
Additional Mortgage Policy (1) shall include an endorsement for mechanics'
liens, for future advances under this Agreement and for any other matters
reasonably requested by Administrative Agent and (2) shall provide for
affirmative insurance and such reinsurance as Administrative Agent may
reasonably request, all of the foregoing in form and substance reasonably
satisfactory to Administrative Agent; and (b) evidence satisfactory to
Administrative Agent that such Loan Party has (i) delivered to the Title
Company all certificates and affidavits required by the Title Company in
connection with the issuance of the Additional Mortgage Policy and (ii)
paid to the Title Company or to the appropriate governmental authorities
all expenses and premiums of the Title Company in connection with the
issuance of the Additional Mortgage Policy and all
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<PAGE>
recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Additional Mortgage in the
appropriate real estate records;
(v) Title Report. If no Additional Mortgage Policy is required
------------
with respect to such Additional Mortgaged Property, a title report issued
by the Title Company with respect thereto, dated not more than 30 days
prior to the date such Additional Mortgage is to be recorded and
satisfactory in form and substance to Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies of
------------------------------------------------
all recorded documents listed as exceptions to title or otherwise referred
to in the Additional Mortgage Policy or title report delivered pursuant to
clause (iv) or (v) above;
(vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
-------------------------------------------
which may be in the form of a letter from an insurance broker or a
municipal engineer, as to (1) whether such Additional Mortgaged Property is
a Flood Hazard Property and (2) if so, whether the community in which such
Flood Hazard Property is located is participating in the National Flood
Insurance Program, (b) if such Additional Mortgaged Property is a Flood
Hazard Property, such Loan Party's written acknowledgement of receipt of
written notification from Administrative Agent (1) that such Additional
Mortgaged Property is a Flood Hazard Property and (2) as to whether the
community in which such Flood Hazard Property is located is participating
in the National Flood Insurance Program, and (c) in the event such
Additional Mortgaged Property is a Flood Hazard Property that is located in
a community that participates in the National Flood Insurance Program,
evidence that Company has obtained flood insurance in respect of such Flood
Hazard Property to the extent required under the applicable regulations of
the Board of Governors of the Federal Reserve System; and
(viii) Environmental Audit. If required by Administrative Agent,
-------------------
reports and other information, in form, scope and substance reasonably
satisfactory to Administrative Agent and prepared by environmental
consultants reasonably satisfactory to Administrative Agent, concerning any
environmental hazards or liabilities to which Company or any of its
Subsidiaries may be subject with respect to such Additional Mortgaged
Property.
C. Additional Ship Mortgages, Etc. From and after the Closing Date, in
the event that Company or any Subsidiary Guarantor acquires any ship, barge or
other vessel as part of a Gaming Facility, Company or such Subsidiary Guarantor
shall deliver to Administrative Agent, as soon as practicable after such Person
acquires such additional ship, barge or other veseel, either (x) a Ship Mortgage
with respect to such acquired ship, barge or other vessel or (y) an assignment
of an existing Ship Mortgage, in form and substance satisfactory to
Administrative Agent, and such other approvals, opinions or documents in
connection with the foregoing as Administrative Agent may reasonably request.
6.10 Year 2000 Compliance.
--------------------
Company will take all reasonable steps to ensure that its Information
Systems and Equipment are at all times after August 31, 1999 Year 2000
Compliant, except insofar as the
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<PAGE>
failure to do so could not reasonably be expected to have a Material Adverse
Effect, and Company shall notify Administrative Agent and any Lender promptly
upon detecting any failure of the Information Systems and Equipment to be Year
2000 Compliant. In addition, Company shall provide Administrative Agent and any
Lender with such information about its year 2000 computer readiness (including
without limitation information as to contingency plans, budgets and testing
results) as Administrative Agent or such Lender shall reasonably request.
SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Restricted Subsidiaries to
perform, all covenants in this Section 7.
7.1 Indebtedness.
------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Restricted Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection 7.4
and, upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished;
(iii) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned domestic Restricted Subsidiaries,
and any wholly-owned domestic Restricted Subsidiary of Company may become
and remain liable with respect to Indebtedness to Company or any other
wholly-owned domestic Restricted Subsidiary of Company; provided that (a)
--------
all such intercompany Indebtedness shall be evidenced by promissory notes,
(b) all such intercompany Indebtedness owed by Company to any of its
domestic Restricted Subsidiaries shall be subordinated in right of payment
to the payment in full of the Obligations pursuant to the terms of the
applicable promissory notes or an intercompany subordination agreement, and
(c) any payment by any domestic Restricted Subsidiary of Company under any
guaranty of the Obligations shall result in a pro tanto reduction of the
--- -----
amount of any intercompany Indebtedness owed by such domestic Restricted
Subsidiary to Company or to any of its domestic Restricted Subsidiaries for
whose benefit such payment is made;
(iv) Company and its Restricted Subsidiaries, as applicable, may
remain liable with respect to Indebtedness described in Schedule 7.1
------------
annexed hereto;
(v) Company and its Restricted Subsidiaries may become and remain
liable with respect to unsecured lines of credit with local financial
institutions in an aggregate principal amount not to exceed $10,000,000;
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<PAGE>
(vi) Company may become and remain liable with respect to
Indebtedness evidenced by the Subordinated Notes in an aggregate principal
amount not to exceed $390,000,000;
(vii) Company may become and remain liable with respect to other
unsecured Subordinated Indebtedness in an aggregate principal amount not to
exceed $200,000,000; provided that after giving effect to the incurrence of
--------
such Subordinated Indebtedness and the application of the proceeds thereof,
Company is in pro forma compliance with subsection 7.6 and no Potential
Event of Default or Event of Default has occurred and is continuing or
would arise as a result of the incurrence of such Subordinated
Indebtedness;
(viii) Company and its Restricted Subsidiaries may remain liable with
respect to Indebtedness incurred to refinance the then outstanding
aggregate principal amount of any Indebtedness permitted under this
subsection 7.1; provided that such refinancing Indebtedness (a) shall be in
--------
an aggregate principal amount not to exceed the then outstanding aggregate
principal amount of such Indebtedness to be so refinanced plus the amount
of accrued and unpaid interest thereon; (b) shall have a maturity no
earlier and an average life no longer than the Indebtedness being so
refinanced; and (c) shall contain terms and conditions no less favorable to
Company and Lenders and such other terms and conditions as are satisfactory
to Administrative Agent; provided further that to the extent that any
-------- -------
Indebtedness permitted under subsection 7.1 is refinanced pursuant to this
subsection 7.1(viii), then the maximum aggregate principal amount of such
Indebtedness permitted to be incurred pursuant to the applicable provision
of subsection 7.1 shall be reduced by an amount equal to the aggregate
principal amount of such permitted refinancing Indebtedness; and
(ix) Company and its Restricted Subsidiaries may become and remain
liable with respect to Capital Leases, other Indebtedness and other
Contingent Obligations permitted under subsection 7.4(x) in an aggregate
principal amount not to exceed $25,000,000 at any time outstanding;
provided that any Liens securing such Capital Leases, other Indebtedness or
--------
other Contingent Obligations shall be limited only to those assets that are
purchased, leased or financed by such Capital Leases, other Indebtedness or
other Contingent Obligations.
7.2 Liens and Related Matters.
-------------------------
A. Prohibition on Liens. Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Restricted Subsidiaries, whether now owned
or hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
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<PAGE>
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens constituting a second Ship Mortgage granted in
connection with the financing of equipment or other appurtenances on the
ship, barge or other vessel so secured by such second Ship Mortgage;
provided that prior to granting such second Ship Mortgage, the Person to
--------
which is granted such Lien shall have entered into an intercreditor
agreement with Administrative Agent and Lenders and executed and delivered
such other related agreements and instruments as reasonably requested by
Administrative Agent in connection with such intercreditor agreement, in
each case in form and substance satisfactory to Administrative Agent;
(iv) Liens described in Schedule 7.2 annexed hereto; and
------------
(v) Liens securing Capital Leases, other Indebtedness and other
Contingent Obligations permitted under subsections 7.1(ix) and 7.4(x).
B. Equitable Lien in Favor of Lenders. If Company or any of its
Restricted Subsidiaries shall create or assume any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than Liens
excepted by the provisions of subsection 7.2A, it shall make or cause to be made
effective provision whereby the Obligations will be secured by such Lien equally
and ratably with any and all other Indebtedness secured thereby as long as any
such Indebtedness shall be so secured; provided that, notwithstanding the
--------
foregoing, this covenant shall not be construed as a consent by Requisite
Lenders to the creation or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Company nor any
of its Restricted Subsidiaries shall enter into any agreement (other than the
Subordinated Note Indenture or any other agreement evidencing Subordinated
Indebtedness and containing similar terms to the Subordinated Note Indenture or
prohibiting only the creation of Liens securing such Subordinated Indebtedness)
prohibiting the creation or assumption of any Lien upon any of its properties or
assets, whether now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein or in the Subordinated Note Indenture
or in any other agreement evidencing Subordinated Indebtedness and containing
similar terms to the Subordinated Note Indenture, Company will not, and will not
permit any of its Restricted Subsidiaries to, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any such Restricted Subsidiary to (i) pay dividends
or make any other distributions on any of such Restricted Subsidiary's capital
stock owned by Company or any other Restricted Subsidiary of Company, (ii) repay
or prepay any Indebtedness owed by such Restricted Subsidiary to Company or any
other Restricted Subsidiary of Company, (iii) make loans or advances to Company
or any other Restricted Subsidiary of Company, or (iv) otherwise transfer any of
its property or assets to Company or any other Restricted Subsidiary of Company.
105
<PAGE>
7.3 Investments; Joint Ventures.
---------------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture, except:
(i) Company and its Restricted Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Company and its Restricted Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries of
Company;
(iii) Company and its Restricted Subsidiaries may make intercompany
loans to the extent permitted under subsection 7.1(iii);
(iv) Company and its Restricted Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.8;
(v) Company and its Restricted Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed hereto;
------------
(vi) Company and its Restricted Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in ICBH, and may make
additional Investments in ICBH of up to $10,000,000 in the aggregate; and
(vii) Company and its Restricted Subsidiaries may make and own other
Investments (including, without limitation, Investments in Unrestricted
Subsidiaries) in an aggregate amount outstanding not to exceed (x) with
respect to Fiscal Year 2000, $10,000,000, (y) with respect to Fiscal Year
2001, $15,000,000, and (z) with respect to Fiscal Year 2002 and thereafter,
$25,000,000.
7.4 Contingent Obligations.
----------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) Restricted Subsidiaries of Company may become and remain liable
with respect to Contingent Obligations in respect of the Subsidiary
Guaranty;
(ii) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit;
(iii) Company may become and remain liable with respect to Contingent
Obligations under Interest Rate Agreements constituting Hedge Agreements
with respect to Indebtedness in an aggregate notional principal amount not
to exceed at any time $100,000,000;
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<PAGE>
(iv) Company and its Restricted Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets;
(v) Company and its Restricted Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of any
Indebtedness of Company or any of its Restricted Subsidiaries permitted by
subsection 7.1;
(vi) Company and its Restricted Subsidiaries, as applicable, may
remain liable with respect to Contingent Obligations described in Schedule
--------
7.4 annexed hereto;
---
(vii) Company and its Restricted Subsidiaries may become and remain
liable with respect to guaranties of the Indebtedness in respect of the
unsecured lines of credit permitted under subsection 7.1(v);
(viii) Restricted Subsidiaries may become and remain liable with
respect to Contingent Obligations arising under their subordinated
guaranties of the Subordinated Notes as set forth in the Subordinated Note
Indenture;
(ix) Restricted Subsidiaries may become and remain liable with
respect to Contingent Obligations arising under any subordinated guaranties
in respect of any other Subordinated Indebtedness permitted by subsection
7.1(vii); and
(x) Company and its Restricted Subsidiaries may become and remain
liable with respect to other Contingent Obligations, Capital Leases
permitted under subsection 7.1(ix), and other Indebtedness permitted under
subsection 7.1(ix) in an aggregate principal amount not to exceed
$25,000,000 at any time outstanding; provided that any Liens securing such
--------
Capital Leases, other Indebtedness or other Contingent Obligations shall be
limited only to those assets that are purchased, leased or financed by such
Capital Leases, other Indebtedness or other Contingent Obligations.
7.5 Restricted Junior Payments.
--------------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that (i) Company may make
--------
regularly scheduled payments of interest in respect of the Subordinated Notes,
in accordance with the terms of and to the extent required by, and subject to
the subordination provisions contained in, the Subordinated Note Indenture; (ii)
Company may make regularly scheduled payments of interest in respect of any
other Subordinated Indebtedness in accordance with the terms of, and only to the
extent required by, and subject to the subordination provisions contained in,
the indenture or other agreement pursuant to which such Subordinated
Indebtedness was issued, as such indenture or other agreement may be amended
from time to time to the extent permitted under subsection 7.15B; and (iii)
Company may make a "Change of Control Offer" (as defined in the Subordinated
Note Indenture) with respect to the Subordinated Notes; provided, however, that
-------- -------
prior to making any such "Change of Control Offer", either (x) Company shall (1)
repay in full all Obligations (including, without limitation, any unpaid
principal, interest, fees, costs and expenses owed by
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<PAGE>
Company under this Agreement or any other Loan Document) and terminate all
outstanding Commitments under this Agreement or (2) offer to repay in full all
Obligations (including, without limitation, any unpaid principal, interest,
fees, costs and expenses owed by Company under this Agreement or any other Loan
Document) and terminate all outstanding Commitments under this Agreement and to
repay such Obligations owed to each Lender which has accepted such offer, or (y)
Administrative Agent and Requisite Lenders shall otherwise approve such "Change
of Control Offer" with respect to the Subordinated Notes.
7.6 Financial Covenants.
----------------------
A. Maximum Consolidated Total Leverage Ratio. Company shall not permit
the Consolidated Total Leverage Ratio as of the last day of any Fiscal Quarter
ending during any of the periods set forth below to exceed the correlative ratio
indicated:
<TABLE>
<CAPTION>
Maximum Consolidated Total
Period Leverage Ratio
--------------------------------------------- ---------------------------
<S> <C>
1st Fiscal Quarter, Fiscal Year 2000 4.75:1.00
2nd Fiscal Quarter, Fiscal Year 2000 4.75:1.00
3rd Fiscal Quarter, Fiscal Year 2000 5.00:1.00
4th Fiscal Quarter, Fiscal Year 2000 5.25:1.00
1st Fiscal Quarter, Fiscal Year 2001 5.25:1.00
2nd Fiscal Quarter, Fiscal Year 2001 5.25:1.00
3rd Fiscal Quarter, Fiscal Year 2001 5.25:1.00
4th Fiscal Quarter, Fiscal Year 2001 5.25:1.00
1st Fiscal Quarter, Fiscal Year 2002 5.25:1.00
2nd Fiscal Quarter, Fiscal Year 2002 5.25:1.00
3rd Fiscal Quarter, Fiscal Year 2002 5.00:1.00
4th Fiscal Quarter, Fiscal Year 2002 4.75:1.00
1st Fiscal Quarter, Fiscal Year 2003 4.75:1.00
2nd Fiscal Quarter, Fiscal Year 2003 4.50:1.00
3rd Fiscal Quarter, Fiscal Year 2003 4.50:1.00
4th Fiscal Quarter, Fiscal Year 2003 4.50:1.00
1st Fiscal Quarter, Fiscal Year 2004 4.00:1.00
2nd Fiscal Quarter, Fiscal Year 2004 4.00:1.00
3rd Fiscal Quarter, Fiscal Year 2004 4.00:1.00
4th Fiscal Quarter, Fiscal Year 2004 4.00:1.00
</TABLE>
B. Maximum Consolidated Senior Leverage Ratio. Company shall not permit
the Consolidated Senior Leverage Ratio as of the last day of any Fiscal Quarter
ending during any of the periods set forth below to exceed the correlative ratio
indicated:
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<PAGE>
<TABLE>
<CAPTION>
Maximum Consolidated
Period Senior Leverage Ratio
--------------------------------------------- -----------------------------
<S> <C>
1st Fiscal Quarter, Fiscal Year 2000 2.00:1.00
2nd Fiscal Quarter, Fiscal Year 2000 2.00:1.00
3rd Fiscal Quarter, Fiscal Year 2000 2.25:1.00
4th Fiscal Quarter, Fiscal Year 2000 2.50:1.00
1st Fiscal Quarter, Fiscal Year 2001 2.50:1.00
2nd Fiscal Quarter, Fiscal Year 2001 2.50:1.00
3rd Fiscal Quarter, Fiscal Year 2001 2.50:1.00
4th Fiscal Quarter, Fiscal Year 2001 2.50:1.00
1st Fiscal Quarter, Fiscal Year 2002 2.50:1.00
2nd Fiscal Quarter, Fiscal Year 2002 2.50:1.00
3rd Fiscal Quarter, Fiscal Year 2002 2.50:1.00
4th Fiscal Quarter, Fiscal Year 2002 2.50:1.00
1st Fiscal Quarter, Fiscal Year 2003 2.50:1.00
2nd Fiscal Quarter, Fiscal Year 2003 2.25:1.00
3rd Fiscal Quarter, Fiscal Year 2003 2.25:1.00
4th Fiscal Quarter, Fiscal Year 2003 2.25:1.00
1st Fiscal Quarter, Fiscal Year 2004 2.25:1.00
2nd Fiscal Quarter, Fiscal Year 2004 2.25:1.00
3rd Fiscal Quarter, Fiscal Year 2004 2.25:1.00
4th Fiscal Quarter, Fiscal Year 2004 2.25:1.00
</TABLE>
C. Minimum Fixed Charge Coverage Ratio. Company shall not permit the
ratio of (i) Consolidated EBITDA less Maintenance Capital Expenditures to (ii)
----
Consolidated Fixed Charges for any four consecutive Fiscal Quarter period ending
during any of the periods set forth below to be less than the correlative ratio
indicated:
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<PAGE>
<TABLE>
<CAPTION>
Minimum Fixed Charge
Period Coverage Ratio
--------------------------------------------- -----------------------------
<S> <C>
1st Fiscal Quarter, Fiscal Year 2000 1.50:1.00
2nd Fiscal Quarter, Fiscal Year 2000 1.50:1.00
3rd Fiscal Quarter, Fiscal Year 2000 1.50:1.00
4th Fiscal Quarter, Fiscal Year 2000 1.50:1.00
1st Fiscal Quarter, Fiscal Year 2001 1.50:1.00
2nd Fiscal Quarter, Fiscal Year 2001 1.50:1.00
3rd Fiscal Quarter, Fiscal Year 2001 1.50:1.00
4th Fiscal Quarter, Fiscal Year 2001 1.50:1.00
1st Fiscal Quarter, Fiscal Year 2002 1.50:1.00
2nd Fiscal Quarter, Fiscal Year 2002 1.60:1.00
3rd Fiscal Quarter, Fiscal Year 2002 1.60:1.00
4th Fiscal Quarter, Fiscal Year 2002 1.60:1.00
1st Fiscal Quarter, Fiscal Year 2003 1.70:1.00
2nd Fiscal Quarter, Fiscal Year 2003 1.70:1.00
3rd Fiscal Quarter, Fiscal Year 2003 1.70:1.00
4th Fiscal Quarter, Fiscal Year 2003 1.70:1.00
1st Fiscal Quarter, Fiscal Year 2004 1.70:1.00
2nd Fiscal Quarter, Fiscal Year 2004 1.70:1.00
3rd Fiscal Quarter, Fiscal Year 2004 1.70:1.00
4th Fiscal Quarter, Fiscal Year 2004 1.70:1.00
</TABLE>
D. Minimum Consolidated Net Worth. Company shall not permit Consolidated
Net Worth as of the last day of any given Fiscal Quarter in any given Fiscal
Year to be less than the sum of (i) 75% of Consolidated Net Worth as of the last
day of Fiscal Year 1999 plus (ii) 75% of Consolidated Net Income for each Fiscal
Quarter ending after the end of Fiscal Year 1999, plus (iii) an amount equal to
50% the net cash proceeds from any sales and issuances of Company's equity
Securities after the Closing Date.
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
----------------------------------------------------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, alter the corporate, capital or legal structure of Company or
any of its Restricted Subsidiaries, or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) any Restricted Subsidiary of Company may be merged with or into
Company or any wholly-owned Subsidiary Guarantor, or be liquidated, wound
up or
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dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary Guarantor; provided that, in the case of such a merger, Company
--------
or such wholly-owned Subsidiary Guarantor shall be the continuing or
surviving corporation;
(ii) Company and its Restricted Subsidiaries may make Consolidated
Capital Expenditures permitted under subsection 7.8;
(iii) Company and its Restricted Subsidiaries may dispose of
obsolete, worn out or surplus property in the ordinary course of business;
(iv) Company and its Restricted Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales;
provided that the consideration received for such assets shall be in an
--------
amount at least equal to the fair market value thereof;
(v) Company and its Restricted Subsidiaries may make Asset Sales of
the Assets Held for Sale or Development; provided that the consideration
--------
received for such assets shall be in an amount at least equal to the fair
market value thereof; and
(vi) Company and its Restricted Subsidiaries may make Asset Sales of
assets having a fair market value not in excess of $20,000,000; provided
--------
that (x) the consideration received for such assets shall be in an amount
at least equal to the fair market value thereof; (y) the consideration
received for such assets shall be in the form of Cash and/or promissory
notes, which notes shall be pledged to Administrative Agent pursuant to the
applicable Collateral Documents; and (z) the Net Asset Sale Proceeds of
such Asset Sales shall be applied as required by subsection 2.4B(iii)(a).
7.8 Consolidated Capital Expenditures.
---------------------------------
Company shall not, and shall not permit its Restricted Subsidiaries
to, make or incur Consolidated Capital Expenditures, except:
(i) Company and its Restricted Subsidiaries may make Expansion
Capital Expenditures in respect of:
(a) the completion of the Bossier City Hotel Project in an
aggregate amount not to exceed $45,000,000;
(b) the Biloxi Casino Expansion Project and the Coahoma
Expansion Project in an aggregate amount not to exceed $90,000,000;
provided that Company and its Restricted Subsidiaries shall not make
--------
Expansion Capital Expenditures in respect of (1) the Biloxi Casino
Expansion Project in an aggregate amount in excess of $45,000,000, and
(2) the Coahoma Expansion Project in an aggregate amount in excess of
$70,000,000;
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<PAGE>
(c) the Biloxi Podium Expansion Project in an aggregate amount
not to exceed $25,000,000;
(d) the Tunica Project in an aggregate amount not to exceed
$75,000,000; and
(e) the Lake Charles Project in an aggregate amount not to
exceed $35,000,000; and
(ii) Company and its Restricted Subsidiaries may make other Expansion
Capital Expenditures, in any Fiscal Year indicated below, in an aggregate
amount not to exceed the corresponding amount (the "Maximum Expansion
Capital Expenditures Amount") set forth below opposite such Fiscal Year:
<TABLE>
<CAPTION>
Maximum Expansion
Fiscal Year Capital Expenditures
----------- --------------------
<S> <C>
Fiscal Year 2000 $ 10,000,000
Fiscal Year 2001 $ 25,000,000
Fiscal Year 2002 and each
Fiscal Year thereafter $ 50,000,000
</TABLE>
; provided that:
(a) no single Expansion Capital Expenditure permitted under this
subsection 7.8(ii) shall exceed $50,000,000;
(b) the Maximum Expansion Capital Expenditures Amount for any
Fiscal Year after Fiscal Year 2000 shall be increased by an amount
equal to the sum of (1) the excess, if any, of the Maximum Expansion
Capital Expenditures Amount for the previous Fiscal Year (as adjusted
in accordance with this proviso) over the actual amount of Expansion
Capital Expenditures for such previous Fiscal Year (the "Expansion
CapEx Carryover Amount"), plus (2) the excess, if any, of any of the
----
maximum Expansion Capital Expenditures amounts set forth in subsection
7.8(i) over the actual amounts of Expansion Capital Expenditures
expended with respect to the corresponding construction and expansion
projects identified in subsection 7.8(i) (the "Specified Projects
Carryover Amount"; and together with the Expansion CapEx Carryover
Amount, the "Total Expansion CapEx Carryover Amount"); provided,
--------
however, that the Total Expansion CapEx Carryover Amount shall not
-------
exceed $10,000,000 in any given Fiscal Year; and provided further that
-------- -------
(x) with respect to any Specified Projects Carryover Amount, Company
shall deliver to Administrative Agent an Officer's Certificate stating
that the applicable construction or expansion projects have been fully
completed, demonstrating the calculation of the Specified Projects
Carryover Amount, such calculation to be reasonably satisfactory to
Administrative Agent, and, subject to the immediately preceding
proviso, requesting such Specified Projects Carryover Amount be
included in the Total Expansion CapEx Carryover Amount, and (y) after
Company delivers to Administrative Agent the Officer's
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Certificate described in the immediately preceding clause (x) and
determines the Specified Projects Carryover Amount for any of the
projects described in subsection 7.8(i), Company may not reallocate,
reapply or otherwise use such Specified Projects Carryover Amount for
any of the Expansion Capital Expenditures described in subsection
7.8(i); and
(c) Company and its Restricted Subsidiaries may use not more
than $5,000,000 of such other Expansion Capital Expenditures in any
given Fiscal Year beginning with the Fiscal Year 2000 for purposes of
covering any cost overruns with respect to the construction and
expansion projects identified in subsection 7.8(i); and
(iii) Company and its Restricted Subsidiaries may make $5,000,000, and
(y) the excess, if any, of the Maintenance Capital Expenditures in an
aggregate Maximum Maintenance Capital Expenditures Amount amount not to
exceed $20,000,000 in any Fiscal for the previous Fiscal Year (as adjusted
in Year beginning in the Fiscal Year 2000 (the accordance with this
proviso) over the actual "Maximum Maintenance Capital Expenditures amount
of Maintenance Capital Expenditures for Amount"); provided that the Maximum
Maintenance such previous Fiscal Year. Capital Expenditures Amount for any
Fiscal Year after Fiscal Year 2000 shall be increased by an amount equal to
the lesser of (x) $5,000,000, and (y) the excess, if any, of the Maximum
Maintenance Capital Expenditures Amount for the previous Fiscal Year (as
adjusted in accordance with this provios) over the actual amount of
Maintenance Capital Expenditures for such previous Fiscal Year.
7.9 Restriction on Leases.
---------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, become liable in any way, whether directly or by assignment or
as a guarantor or other surety, for the obligations of the lessee under any
lease (other than the Excluded Leases and intercompany leases between Company
and its wholly-owned Subsidiaries), unless, immediately after giving effect to
the incurrence of liability with respect to such lease, the Consolidated Rental
Payments at the time in effect during the then current Fiscal Year shall not
exceed $2,000,000.
7.10 Sales and Lease-Backs.
---------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, become or remain liable as lessee or as
a guarantor or other surety with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) which Company or any of its
Restricted Subsidiaries has sold or transferred or is to sell or transfer to any
other Person (other than Company or any of its Restricted Subsidiaries) or (ii)
which Company or any of its Restricted Subsidiaries intends to use for
substantially the same purpose as any other property which has been or is to be
sold or transferred by Company or any of its Restricted Subsidiaries to any
Person (other than Company or any of its Restricted Subsidiaries) in connection
with such lease; provided that Company and its Restricted Subsidiaries may
--------
become and remain liable as lessee, guarantor or other surety with respect to
any such lease if and to the extent that Company or any of its Restricted
Subsidiaries would be permitted to enter into, and remain liable under, such
lease under subsection 7.1 (ix), 7.4(x) or 7.9.
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<PAGE>
7.11 Sale or Discount of Receivables.
-------------------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, sell with recourse, or discount (except
discounts with the primary obligor of any accounts receivable) or otherwise sell
for less than the face value thereof, any of its notes or accounts receivable.
7.12 Transactions with Shareholders and Affiliates.
---------------------------------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any holder of 5% or more of any class of
equity Securities of Company or with any Affiliate of Company or of any such
holder, on terms that are less favorable to Company or that Restricted
Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such a holder or Affiliate; provided that the foregoing
--------
restriction shall not apply to (i) any transaction between Company and any of
its wholly-owned Restricted Subsidiaries or between any of its wholly-owned
Restricted Subsidiaries otherwise permitted hereunder or (ii) reasonable and
customary fees paid to members of the Boards of Directors of Company and its
Restricted Subsidiaries.
7.13 Disposal of Subsidiary Stock.
----------------------------
Except for (x) any pledge or encumbrance of the capital stock or other
equity Securities of any of its Restricted Subsidiaries required under this
Agreement and the applicable Collateral Documents and (y) any sale of 100% of
the capital stock or other equity Securities of any of its Restricted
Subsidiaries in compliance with the provisions of subsection 7.7(i) or 7.7(vi),
Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of
any of its Restricted Subsidiaries, except to qualify directors if
required by applicable law; or
(ii) permit any of its Restricted Subsidiaries directly or indirectly
to sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Restricted
Subsidiaries (including such Restricted Subsidiary), except to Company,
another Restricted Subsidiary of Company, or to qualify directors if
required by applicable law.
7.14 Conduct of Business.
-------------------
From and after the Closing Date, Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than the Related
Businesses.
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<PAGE>
7.15 Amendments or Waivers of Certain Related Agreements; Amendments of
------------------------------------------------------------------
Documents Relating to Subordinated Indebtedness; Designation of
----------------------------------------------------------------
"Designated Senior Indebtedness".
-------------------------------
A. Amendments or Waivers of Certain Related Agreements. Neither Company
nor any of its Restricted Subsidiaries will agree to any material amendment to,
or waive any of its material rights under, any Related Agreement (other than any
Related Agreement evidencing or governing any Subordinated Indebtedness) after
the Closing Date without in each case obtaining the prior written consent of
Requisite Lenders to such amendment or waiver.
B. Amendments of Documents Relating to Subordinated Indebtedness. Company
shall not, and shall not permit any of its Restricted Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or a
trustee or other representative on their behalf) which would be adverse to
Company or Lenders.
C. Designation of "Designated Senior Indebtedness". Company shall not
designate any Indebtedness as "Designated Senior Indebtedness" (as defined in
the Subordinated Note Indenture) for purposes of the Subordinated Note Indenture
without the prior written consent of Requisite Lenders.
7.16 Fiscal Year.
-----------
Company shall not change its Fiscal Year-end as determined as of the
Closing Date without the consent of Administrative Agent.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 Failure to Make Payments When Due.
---------------------------------
Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Company to pay any interest on any Loan
or any fee or any other amount due under this Agreement within five days after
the date due; or
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<PAGE>
8.2 Default in Other Agreements.
---------------------------
(i) Failure of Company or any of its Restricted Subsidiaries to pay
when due any principal of or interest on or any other amount payable in respect
of one or more items of Indebtedness (other than Indebtedness referred to in
subsection 8.1) or Contingent Obligations in an individual principal amount of
$7,500,000 or more or with an aggregate principal amount of $7,500,000 or more,
in each case beyond the end of any grace period provided therefor; or (ii)
breach or default by Company or any of its Restricted Subsidiaries with respect
to any other material term of (a) one or more items of Indebtedness or
Contingent Obligations in the individual or aggregate principal amounts referred
to in clause (i) above or (b) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness or Contingent Obligation(s),
if the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf
of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
---------------------------
Failure of Company to perform or comply with any term or condition
contained in subsections 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 Breach of Warranty.
------------------
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
-----------------------------------
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within 30 days after receipt
by Company and such Loan Party of notice from Administrative Agent or any Lender
of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Company or any of its Material Subsidiaries in
an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Material Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order
116
<PAGE>
of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Company or any of its Material Subsidiaries, or over all or
a substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of Company or any of its Material Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Material Subsidiaries, and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
---------------------------------------------------
(i) Company or any of its Material Subsidiaries shall have an order
for relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Material Subsidiaries
shall make any assignment for the benefit of creditors; or (ii) Company or any
of its Material Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the Board of Directors of Company or any of its Material Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 Judgments and Attachments.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $7,500,000 or (ii)
in the aggregate at any time an amount in excess of $7,500,000 (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Restricted Subsidiaries or any of their respective assets
and shall remain undischarged, unvacated, unbonded or unstayed for a period of
60 days (or in any event later than five days prior to the date of any proposed
sale thereunder); or
8.9 Dissolution.
-----------
Any order, judgment or decree shall be entered against Company or any
of its Material Subsidiaries decreeing the dissolution or split up of Company or
that Material Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of 30 days; or
8.10 Employee Benefit Plans.
----------------------
There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Company, any of its Restricted Subsidiaries or any of their respective ERISA
Affiliates in excess of $5,000,000 during the term of this Agreement; or there
shall exist an amount of unfunded benefit liabilities
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<PAGE>
(as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate
for all Pension Plans (excluding for purposes of such computation any Pension
Plans with respect to which assets exceed benefit liabilities), which exceeds
$5,000,000; or
8.11 Change of Control.
-----------------
There shall occur a Change of Control; or
8.12 Invalidity of Subsidiary Guaranty; Failure of Security; Repudiation of
----------------------------------------------------------------------
Obligations.
-----------
At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms or as otherwise permitted under this Agreement) or
shall be declared to be null and void, (ii) any Collateral Document shall cease
to be in full force and effect (other than by reason of a release of Collateral
thereunder in accordance with the terms hereof or thereof, the satisfaction in
full of the Obligations or any other termination of such Collateral Document in
accordance with the terms hereof or thereof) or shall be declared null and void,
or Administrative Agent shall not have or shall cease to have a valid and
perfected First Priority Lien in any material Collateral purported to be covered
thereby, in each case for any reason other than the failure of Administrative
Agent or any Lender to take any action within its control, or (iii) any Loan
Party shall contest the validity or enforceability of any Loan Document in
writing or deny in writing that it has any further liability, including with
respect to future advances by Lenders, under any Loan Document to which it is a
party; or
8.13 Loss of Gaming Licenses.
-----------------------
The occurrence of a License Revocation by any Gaming Authority in a
jurisdiction in which Company or any of its Subsidiaries owns or operates a
Gaming Facility (other than with respect to Pompano Park); provided that such
--------
License Revocation continues for at least fifteen (15) calendar days:
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Administrative Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit
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<PAGE>
hereunder shall thereupon terminate; provided that the foregoing shall not
--------
affect in any way the obligations of Lenders under subsection 3.3C(i) or the
obligations of Lenders to purchase participations in any unpaid Swing Line Loans
as provided in subsection 2.1A(iii).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Collateral Account Agreement and shall be applied as therein
provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
clause (ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than non-
payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude Administrative Agent or
Lenders from exercising any of the rights or remedies available to them under
any of the Loan Documents, even if the conditions set forth in this paragraph
are met. Lenders hereby acknowledge that any foreclosure under this Agreement
or any other Loan Document of any Gaming Facility, any Persons owning, leasing,
operating or using such Gaming Facility or any gaming equipment may be subject
to any prior approvals or exemptions required under any applicable Gaming Laws.
SECTION 9. ADMINISTRATIVE AGENT
9.1 Appointment.
-----------
A. Appointment of Administrative Agent. CIBC is hereby appointed
Administrative Agent hereunder and under the other Loan Documents and each
Lender hereby authorizes Administrative Agent to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents. Administrative
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Administrative Agent and Lenders and Company shall
have no rights as a third party beneficiary of any of the provisions thereof.
In performing its functions and duties under this Agreement, Administrative
Agent shall act solely as an agent of Lenders and does not assume and shall not
be deemed to have assumed any obligation towards or relationship of agency or
trust with or for Company or any of its Subsidiaries.
B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any
119
<PAGE>
jurisdiction denying or restricting the right of banking corporations or
associations to transact business as agent or trustee in such jurisdiction. It
is recognized that in case of litigation under this Agreement or any of the
other Loan Documents, and in particular in case of the enforcement of any of the
Loan Documents, or in case Administrative Agent deems that by reason of any
present or future law of any jurisdiction it may not exercise any of the rights,
powers or remedies granted herein or in any of the other Loan Documents or take
any other action which may be desirable or necessary in connection therewith, it
may be necessary that Administrative Agent appoint (with notice to Company) an
additional individual or institution as a separate trustee, co-trustee,
collateral agent or collateral co-agent (any such additional individual or
institution being referred to herein individually as a "Supplemental Collateral
Agent" and collectively as "Supplemental Collateral Agents").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral
Agent, or a successor thereto, shall die, become incapable of acting, resign or
be removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 Powers and Duties; General Immunity.
-----------------------------------
A. Powers; Duties Specified. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to Administrative Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto. Administrative Agent shall have only those duties
and responsibilities that are expressly specified in this Agreement and the
other Loan Documents. Administrative Agent may exercise such powers, rights and
remedies and perform such duties by or through its agents or employees.
Administrative Agent shall not have, by
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reason of this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Administrative Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. Administrative Agent shall not
be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Administrative Agent to Lenders or by
or on behalf of Company to Administrative Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Administrative Agent be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the use of the
Letters of Credit or as to the existence or possible existence of any Event of
Default or Potential Event of Default. Anything contained in this Agreement to
the contrary notwithstanding, Administrative Agent shall not have any liability
arising from confirmations of the amount of outstanding Loans or the Letter of
Credit Usage or the component amounts thereof.
C. Exculpatory Provisions. Neither Administrative Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Administrative Agent under or in connection with any
of the Loan Documents except to the extent caused by Administrative Agent's
gross negligence or willful misconduct. Administrative Agent shall be entitled
to refrain from any act or the taking of any action (including the failure to
take an action) in connection with this Agreement or any of the other Loan
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until Administrative Agent shall have
received instructions in respect thereof from Requisite Lenders (or such other
Lenders as may be required to give such instructions under subsection 10.6) and,
upon receipt of such instructions from Requisite Lenders (or such other Lenders,
as the case may be), Administrative Agent shall be entitled to act or (where so
instructed) refrain from acting, or to exercise such power, discretion or
authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be
attorneys for Company and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against Administrative Agent as a result of Administrative
Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
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D. Administrative Agent Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Administrative Agent in its individual
capacity as a Lender hereunder. With respect to its participation in the Loans
and the Letters of Credit, Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Administrative Agent in its individual capacity.
Administrative Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
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Creditworthiness.
----------------
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries.
Administrative Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and Administrative Agent
shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 Right to Indemnity.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent, to the extent that Administrative Agent shall
not have been reimbursed by Company, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent in exercising its powers, rights and remedies or performing
its duties hereunder or under the other Loan Documents or otherwise in its
capacity as Administrative Agent in any way relating to or arising out of this
Agreement or the other Loan Documents; provided that no Lender shall be liable
--------
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Administrative Agent's gross negligence or willful misconduct. If any indemnity
furnished to Administrative Agent for any purpose shall, in the opinion of
Administrative Agent, be insufficient or become impaired, Administrative Agent
may call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.
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9.5 Successor Administrative Agent and Swing Line Lender.
----------------------------------------------------
A. Successor Administrative Agent. Administrative Agent may resign at any
time by giving 30 days' prior written notice thereof to Lenders and Company, and
Administrative Agent may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to Company and
Administrative Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Administrative
Agent. Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of CIBC or its successor as Swing Line Lender, and any
successor Administrative Agent appointed pursuant to subsection 9.5A shall, upon
its acceptance of such appointment, become the successor Swing Line Lender for
all purposes hereunder. In such event (i) Company shall prepay any outstanding
Swing Line Loans made by the retiring or removed Administrative Agent in its
capacity as Swing Line Lender, (ii) upon such prepayment, the retiring or
removed Administrative Agent and Swing Line Lender shall surrender the Swing
Line Note held by it to Company for cancellation, and (iii) Company shall issue
a new Swing Line Note to the successor Administrative Agent and Swing Line
Lender substantially in the form of Exhibit VI annexed hereto, in the principal
amount of the Swing Line Loan Commitment then in effect and with other
appropriate insertions.
9.6 Collateral Documents and Guaranties.
-----------------------------------
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into each Collateral Document as
secured party and to be the agent for and representative of Lenders under the
Subsidiary Guaranty, and each Lender agrees to be bound by the terms of each
Collateral Document and the Subsidiary Guaranty; provided that Administrative
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Agent shall not (i) enter into or consent to any material amendment,
modification, termination or waiver of any provision contained in any Collateral
Document or the Subsidiary Guaranty or (ii) release any Collateral (except as
otherwise expressly permitted or required pursuant to the terms of this
Agreement or the applicable Collateral Document), in each case without the prior
consent of Requisite Lenders (or, if required pursuant to subsection 10.6, all
Lenders); provided further, however, that, without further written consent or
-------- ------- -------
authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the capital
stock of such Subsidiary Guarantor is sold to any Person (other than an
Affiliate of
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Company) pursuant to a sale or other disposition permitted hereunder or to which
Requisite Lenders have otherwise consented. Anything contained in any of the
Loan Documents to the contrary notwithstanding, Company, Administrative Agent
and each Lender hereby agree that (X) no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
or to enforce the Subsidiary Guaranty, it being understood and agreed that all
powers, rights and remedies under the Collateral Documents and the Subsidiary
Guaranty may be exercised solely by Administrative Agent for the benefit of
Lenders in accordance with the terms thereof, and (Y) in the event of a
foreclosure by Administrative Agent on any of the Collateral pursuant to a
public or private sale, Administrative Agent or any Lender may be the purchaser
of any or all of such Collateral at any such sale and Administrative Agent, as
agent for and representative of Lenders (but not any Lender or Lenders in its or
their respective individual capacities unless Requisite Lenders shall otherwise
agree in writing) shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by
Administrative Agent at such sale.
SECTION 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit.
-------------------------------------------------------------
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or its Letters of Credit or participations therein or
any other interest herein or in any other Obligations owed to it; provided that
--------
no such sale, assignment, transfer or participation shall, without the consent
of Company, require Company to file a registration statement with the Securities
and Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided further that no
-------- -------
such sale, assignment, transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Revolving Loan Commitment
and the Revolving Loans of the Lender effecting such sale, assignment, transfer
or participation; and provided further that, anything contained herein to the
-------- -------
contrary notwithstanding, the Swing Line Loan Commitment and the Swing Line
Loans of Swing Line Lender may not be sold, assigned or transferred as described
in clause (i) above to any Person other than a successor Administrative Agent
and Swing Line Lender to the extent contemplated by subsection 9.5. Except as
otherwise provided in this subsection 10.1, no Lender shall, as between Company
and such Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment or transfer of, or any granting of participations in, all
or any part of its Commitments or the Loans, the Letters of Credit or
participations therein, or the other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
--------------------------------
of Credit or participation therein, or other Obligation may (a) be assigned
in any amount to another Lender, or to an Affiliate or Affiliated Fund of
the assigning Lender or another Lender, with the giving of notice to
Company and Administrative Agent or (b) be assigned in an aggregate amount
of not less than $5,000,000 (or such lesser amount as
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shall constitute the aggregate amount of the Commitments, Loans, Letters of
Credit and participations therein, and other Obligations of the assigning
Lender) to any other Eligible Assignee with the prior written consent of
Company (which consent shall only be required if no Potential Event of
Default or Event of Default has occurred and is continuing) and
Administrative Agent (which consent of Company and Administrative Agent
shall not be unreasonably withheld or delayed). To the extent of any such
assignment in accordance with either clause (a) or (b) above, the assigning
Lender shall be relieved of its obligations with respect to its
Commitments, Loans, Letters of Credit or participations therein, or other
Obligations or the portion thereof so assigned. The parties to each such
assignment shall execute and deliver to Administrative Agent, for its
acceptance, an Assignment Agreement, together with a processing fee of
$3,500 and such forms, certificates or other evidence, if any, with respect
to United States federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery and acceptance, from and after the effective date
specified in such Assignment Agreement, (y) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights (other than any rights which survive the termination
of this Agreement under subsection 10.9B) and be released from its
obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto; provided that, anything contained in any of the Loan
--------
Documents to the contrary notwithstanding, if such Lender is the Issuing
Lender with respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of an Issuing Lender with
respect to such Letters of Credit until the cancellation or expiration of
such Letters of Credit and the reimbursement of any amounts drawn
thereunder). The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment of such assigning
Lender and, if any such assignment occurs after the issuance of the Notes
hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its
applicable Notes to Administrative Agent for cancellation, and thereupon
new Notes shall be issued to the assignee and to the assigning Lender,
substantially in the form of Exhibit IV or Exhibit V annexed hereto, as the
---------- ------- -
case may be, with appropriate insertions, to reflect the new Commitments
and/or outstanding Term Loans, as the case may be, of the assignee and the
assigning Lender.
(ii) Acceptance by Administrative Agent. Upon its receipt of an
----------------------------------
Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the processing
fee referred to in subsection 10.1B(i) and any forms, certificates or other
evidence with respect to United States federal income tax withholding
matters that such assignee may be required to deliver to Administrative
Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
Administrative Agent and Company have consented to the assignment evidenced
thereby (in each case to the extent such consent is required pursuant to
subsection 10.1B(i)), (a) accept such
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Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of Administrative
Agent to such assignment) and (b) give prompt notice thereof to Company.
Administrative Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate or Affiliated Fund of the Lender granting such participation, shall
not be entitled to require such Lender to take or omit to take any action
hereunder except action directly affecting (i) the extension of the scheduled
final maturity date of any Loan allocated to such participation or (ii) a
reduction of the principal amount of or the rate of interest payable on any Loan
allocated to such participation, and all amounts payable by Company hereunder
(including amounts payable to such Lender pursuant to subsections 2.6D, 2.7 and
3.6) shall be determined as if such Lender had not sold such participation;
provided that Company shall continue to deal solely and directly with the
- --------
Lender which sold such participation in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents. Company
and each Lender hereby acknowledge and agree that, solely for purposes of
subsections 10.4 and 10.5, (a) any participation will give rise to a direct
obligation of Company to the participant and (b) the participant shall be
considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
--------
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder. Any Lender which is an investment fund may pledge
all or any portion of its Loans and Notes to its trustee in support of such
investment fund's fees, expenses and indemnity obligations to such trustee;
provided that no Lender shall, as between Company and such Lender, be relieved
- --------
of any of its obligations hereunder as a result of any such pledge.
E. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of
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such Lender contained in Section 2(c) of such Assignment Agreement are
incorporated herein by this reference.
10.2 Expenses.
--------
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of Administrative Agent in connection with the preparation of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto; (ii) all the costs of furnishing all opinions by counsel for Company
(including any opinions requested by Lenders as to any legal matters arising
hereunder) and of Company's performance of and compliance with all agreements
and conditions on its part to be performed or complied with under this Agreement
and the other Loan Documents including with respect to confirming compliance
with environmental, insurance and solvency requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to Administrative Agent (including
allocated costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Company; (iv) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Administrative
Agent on behalf of Lenders pursuant to any Collateral Document, including filing
and recording fees, expenses and taxes, stamp or documentary taxes, search fees,
title insurance premiums, and reasonable fees, expenses and disbursements of
counsel to Administrative Agent and of counsel providing any opinions that
Administrative Agent or Requisite Lenders may request in respect of the
Collateral Documents or the Liens created pursuant thereto; (v) all the actual
costs and reasonable expenses (including the reasonable fees, expenses and
disbursements of any auditors, accountants or appraisers and any environmental
or other consultants, advisors and agents employed or retained by Administrative
Agent or its counsel) of obtaining and reviewing any appraisals provided for
under subsection 4.1L and any environmental audits or reports provided for under
subsection 4.1M or 6.9B(viii); (vi) the custody or preservation of any of the
Collateral; (vii) all other actual and reasonable costs and expenses incurred by
Administrative Agent in connection with the syndication of the Commitments and
the negotiation, preparation and execution of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; and (viii) after the occurrence and during
the continuation of an Event of Default and an acceleration of the Obligations,
all costs and expenses, including reasonable attorneys' fees (including
allocated costs of internal counsel) and costs of settlement, incurred by
Administrative Agent and Lenders in enforcing any Obligations of or in
collecting any payments due from any Loan Party hereunder or under the other
Loan Documents by reason of such acceleration (including in connection with the
sale of, collection from, or other realization upon any of the Collateral or the
enforcement of the Subsidiary Guaranty) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings;
provided that Company shall not be responsible for expenses relating to
- --------
assignments between Lenders made pursuant to subsection 10.1.
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10.3 Indemnity.
---------
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Administrative Agent and Lenders, and the
officers, directors, employees, agents and affiliates of Administrative Agent
and Lenders (collectively called the "Indemnitees"), from and against any and
all Indemnified Liabilities (as hereinafter defined); provided that Company
--------
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise from
the gross negligence or willful misconduct of that Indemnitee as determined by a
final judgment of a court of competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct or indirect
and whether based on any federal, state or foreign laws, statutes, rules or
regulations (including securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of (i) this
Agreement or the other Loan Documents or the Related Agreements or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of the Subsidiary Guaranty), (ii) the statements contained in the
commitment letter delivered by any Lender to Company with respect thereto, or
(iii) any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of Company or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
----------------------------------------------
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
continuance of any Event of Default each Lender is hereby authorized by Company
at any time or from time to time, without
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prior notice to Company or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by that Lender to or for the
credit or the account of Company against and on account of the obligations and
liabilities of Company to that Lender under this Agreement, the Letters of
Credit and participations therein and the other Loan Documents, including all
claims of any nature or description arising out of or connected with this
Agreement, the Letters of Credit and participations therein or any other Loan
Document, irrespective of whether or not (i) that Lender shall have made any
demand hereunder or (ii) the principal of or the interest on the Loans or any
amounts in respect of the Letters of Credit or any other amounts due hereunder
shall have become due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
Company hereby further grants to Administrative Agent and each Lender a security
interest in all deposits and accounts maintained with Administrative Agent or
such Lender as security for the Obligations.
10.5 Ratable Sharing.
---------------
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such proportionately
--------
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
129
<PAGE>
10.6 Amendments and Waivers.
----------------------
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
--------
waiver or consent which:
(a) increases the amount of any of the Commitments (other than as
provided under subsection 2.1A(iv)) or reduces the principal amount of any
of the Loans;
(b) changes in any manner the definition of "Pro Rata Share" or the
definition of "Requisite Lenders";
(c) changes in any manner any provision of this Agreement which, by
its terms, expressly requires the approval or concurrence of all Lenders;
(d) postpones the date or reduces the amount of any scheduled payment
(but not prepayment) of principal of any of the Loans ;
(e) postpones the date on which any interest or any fees are payable;
decreases the interest rate borne by any of the Loans (other than any
waiver of any increase in the interest rate applicable to any of the Loans
pursuant to subsection 2.2E) or the amount of any fees payable hereunder;
(f) increases the maximum duration of Interest Periods permitted
hereunder;
(g) reduces the amount or postpones the due date of any amount
payable in respect of, or extends the required expiration date of, any
Letter of Credit;
(h) changes in any manner the obligations of Lenders relating to the
purchase of participations in Letters of Credit;
(i) releases any Lien granted in favor of Administrative Agent with
respect to all or substantially all of the Collateral;
(j) releases all or substantially all of the Subsidiary Guarantors
from their obligations under the Subsidiary Guaranty, in each case other
than in accordance with the terms of the Loan Documents; or
(k) changes in any manner the provisions contained in subsection 8.1
or this subsection 10.6
shall be effective only if evidenced by a writing signed by or on behalf of all
Lenders. In addition, (i) any amendment, modification, termination or waiver of
any of the provisions contained in Section 4 shall be effective only if
evidenced by a writing signed by or on behalf of Administrative Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver
130
<PAGE>
of any provision of any Note shall be effective without the written concurrence
of the Lender which is the holder of that Note, (iii) no amendment,
modification, termination or waiver of any provision of subsection 2.1A(iii) or
of any other provision of this Agreement relating to the Swing Line Loan
Commitment or the Swing Line Loans shall be effective without the written
concurrence of Swing Line Lender, and (iv) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent shall be effective without the written
concurrence of Administrative Agent. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
10.7 Independence of Covenants.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Notices.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile, or three Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Administrative Agent shall not be effective
--------
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and Administrative Agent, such other address as shall be designated
by such Person in a written notice delivered to the other parties hereto and
(ii) as to each other party, such other address as shall be designated by such
party in a written notice delivered to Administrative Agent.
10.9 Survival of Representations, Warranties and Agreements.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the cancellation or
expiration of the Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination of this Agreement.
131
<PAGE>
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
-------------------------------
Neither Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 Severability.
------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 Headings.
--------
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
132
<PAGE>
10.15 Applicable Law.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
10.16 Successors and Assigns.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 Consent to Jurisdiction and Service of Process.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION; AND
133
<PAGE>
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING
TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
10.18 Waiver of Jury Trial.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 Confidentiality.
---------------
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that in any event a
Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide prospective assignee, transferee or
participant that agrees to be bound by this subsection 10.19 in connection with
the contemplated assignment or transfer by such Lender of any Loans or any
participations therein or disclosures required or requested by any governmental
agency or representative thereof or pursuant to court order, subpoena or other
legal process; provided that, unless specifically prohibited by applicable law,
--------
regulation or court order, each Lender shall notify Company of any request by
any governmental agency or representative thereof (other than any such request
in connection with any examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information; and
134
<PAGE>
provided further that in no event shall any Lender be obligated or required to
- -------- -------
return any materials furnished by or on behalf of Company or any of its
Subsidiaries.
10.20 Counterparts; Effectiveness.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
135
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
ISLE OF CAPRI CASINOS, INC.
By: __________________________________________
Title: __________________________________________
Notice Address:
711 Washington Loop
Biloxi, Mississippi 39530
Facsimile: (228) 436-5998
Attention: Rexford A. Yeisley
S-1
<PAGE>
LENDERS:
CANADIAN IMPERIAL BANK OF COMMERCE, as
Administrative Agent and Issuing Lender
By: _______________________________________
Paul J. Chakmak
Managing Director
CIBC Oppenheimer Corp., AS AGENT
Notice Address:
425 Lexington Avenue
New York, NY 10017
Facsimile No.: (212) 856-3799
Attention: Agency Services Department
S-2
<PAGE>
CIBC INC., as Lender and Swing Line Lender
By: _______________________________________
Paul J. Chakmak
Managing Director
CIBC Oppenheimer Corp., AS AGENT
Notice Address:
350 South Grand Avenue
Suite 2600
Los Angeles, CA 90071
Facsimile No.: (213) 346-0157
Attention: Mr. Paul J. Chakmak
Domestic Office:
Eurodollar Office:
S-3
<PAGE>
EXHIBIT 10.73
EXECUTION COPY
================================================================================
ISLE OF CAPRI CASINOS, INC.
(formerly Casino America, Inc.)
(a Delaware corporation)
8 3/4 % Senior Subordinated Notes Due 2009
PURCHASE AGREEMENT
Dated: April 20, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PURCHASE AGREEMENT
<S> <C>
SECTION 1. Representations and Warranties by the Company and Subsidiary Guarantors. 3
SECTION 2. Sale and Delivery to Initial Purchasers; Closing........................ 16
SECTION 3. Covenants of the Company................................................ 17
SECTION 4. Payment of Expenses..................................................... 19
SECTION 5. Conditions of Initial Purchasers' Obligations........................... 20
SECTION 6. Subsequent Offers and Resales of the Securities......................... 22
SECTION 7. Indemnification......................................................... 25
SECTION 8. Contribution............................................................ 28
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.......... 29
SECTION 10. Termination of Agreement................................................ 29
SECTION 11. Default by One or More of the Initial Purchasers........................ 30
SECTION 12. Notices................................................................. 31
SECTION 13. Parties................................................................. 31
SECTION 14. Governing Law and Time.................................................. 31
SECTION 15. Effect of Headings...................................................... 31
</TABLE>
-i-
<PAGE>
SCHEDULES
Schedule A - List of Initial Purchasers...................... Sch A-1
Schedule B - Pricing Information............................. Sch B-1
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel
-ii-
<PAGE>
ISLE OF CAPRI CASINOS, INC.
(formerly Casino America, Inc.)
(a Delaware corporation)
$390,000,000
8 3/4 % Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
April 20, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
WASSERSTEIN PERELLA SECURITIES, INC.
as Representatives of the several Initial Purchasers
c/o
Merrill Lynch & Co. Wasserstein Perella Securities, Inc.
Merrill Lynch, Pierce, Fenner & Smith 31 West 52nd Street
Incorporated New York, New York 10019-6163
North Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Isle of Capri Casinos, Inc. (formerly Casino America, Inc.), a
Delaware corporation (the "Company"), Riverboat Corporation of Mississippi, a
Mississippi corporation ("RCM"), Riverboat Corporation of Mississippi-Vicksburg,
a Mississippi corporation ("RCM-Vicksburg"), Riverboat Services, Inc., an Iowa
corporation ("RSI"), CSNO, Inc., a Louisiana corporation ("CSNO"), Louisiana
Riverboat Gaming Partnership, a Louisiana general partnership ("LRGP"), St.
Charles Gaming Company, Inc., a Louisiana corporation ("SCGC"), LRG Hotels,
L.L.C., a Louisiana limited liability company ("LRGH"), Grand Palais Riverboat,
Inc., a Louisiana corporation ("GPRI"), LRGP Holdings, Inc., a Louisiana
corporation ("LRGP Holdings"), P.P.I., Inc., a Florida corporation ("PPI"), Isle
of Capri Casino Colorado, Inc., a Colorado corporation ("Isle Colorado"), Isle
of Capri Casino-Tunica, Inc., a Mississippi corporation ("Isle-Tunica"), Isle of
Capri Hotels-Bossier City, L.L.C., a Louisiana limited
<PAGE>
liability company ("Isle Bossier Hotel"), and IOC-Coahoma, Inc., a Mississippi
corporation ("IOC - Coahoma" and together with RCM, RCM-Vicksburg, RSI, CSNO,
LRGP, SCGC, LRGH, GPRI, LRGP Holdings, PPI, Isle Colorado, Isle-Tunica and Isle
Bossier Hotel, the "Subsidiary Guarantors"), confirm their agreement with
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Wasserstein Perella Securities, Inc. ("Wasserstein Perella")
and each of the other Initial Purchasers named in Schedule A hereto (together
with Merrill Lynch and Wasserstein Perella, the "Initial Purchasers," which term
shall also include any initial purchaser substituted as hereinafter provided in
Section 11 hereof), for whom Merrill Lynch and Wasserstein Perella are acting as
representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Company and the purchase by the Initial Purchasers, acting
severally and not jointly, of the respective principal amounts set forth in said
Schedule A of $390,000,000 aggregate principal amount of the Company's Senior
Subordinated Notes due 2009 (the "Notes").
The Notes are to be issued pursuant to an indenture to be dated as of
April 23, 1999 (the "Indenture") among the Company, the Subsidiary Guarantors
and State Street Bank & Trust Company, as trustee (the "Trustee"). The Notes
will be unconditionally guaranteed by the Subsidiary Guarantors on a senior
subordinated basis pursuant to the terms of the Indenture (the "Subsidiary
Guarantees"). As used herein, the term "Securities" shall include the Notes and
the Subsidiary Guarantees. Notes issued in book-entry form will be issued to
Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to a
letter agreement, to be dated as of the Closing Time (as defined in Section
2(b)) (the "DTC Agreement"), among the Company, the Trustee and DTC. As used
herein, the term "Operative Documents" refers to this Agreement, the Notes, the
Subsidiary Guarantees, the Indenture, that certain Registration Rights Agreement
among the parties hereto (the "Registration Rights Agreement"), and the notes
and the subsidiary guarantees to be issued in exchange for the Securities
pursuant to the Registration Rights Agreement.
The Company and the Subsidiary Guarantors understand that the Initial
Purchasers propose to make an offering of the Securities on the terms and in the
manner set forth herein and agree that the Initial Purchasers may resell,
subject to the conditions set forth herein, all or a portion of the Securities
to purchasers ("Subsequent Purchasers") at any time after this Agreement has
been executed and delivered. The Securities are to be offered and sold through
the Initial Purchasers without being registered under the Securities Act of
1933, as amended (the "1933 Act"), in reliance upon exemptions therefrom.
Pursuant to the terms of the Securities and the Indenture, investors that
acquire Securities may resell or otherwise transfer such Securities only if such
Securities are hereafter registered under the 1933 Act or if an exemption from
the registration requirements of the 1933 Act is available (including the
exemption afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation S")
of the rules and regulations promulgated under the 1933 Act by the Securities
and Exchange Commission (the "Commission")).
The Company has prepared and delivered to each Initial Purchaser
copies of a preliminary offering memorandum dated April 5, 1999 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to each
Initial Purchaser, on the date hereof or the next succeeding day, copies of a
final offering memorandum dated April 20, 1999 (the "Final
-2-
<PAGE>
Offering Memorandum"), each for use by such Initial Purchaser in connection with
its solicitation of purchases of, or offering of, the Securities. "Offering
Memorandum" means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum (whether the Preliminary Offering
Memorandum or the Final Offering Memorandum, or any amendment or supplement to
either such document), including any documents incorporated therein by
reference, which has been prepared and delivered by the Company to the Initial
Purchasers in connection with their solicitation of purchases of, or offering
of, the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Offering Memorandum.
SECTION 1. Representations and Warranties by the Company and
-------------------------------------------------
Subsidiary Guarantors. The Company and the Subsidiary Guarantors represent and
- ---------------------
warrant to each Initial Purchaser as of the date hereof and as of the Closing
Time referred to in Section 2(b) hereof, and agree with each Initial Purchaser,
as follows:
(i) Offering Memorandum. The Offering Memorandum does not,
-------------------
and at the Closing Time will not, include an untrue statement of a material
fact or 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; provided that this representation, warranty and
agreement shall not apply to statements in or omissions from the Offering
Memorandum made in reliance upon and in conformity with information
furnished to the Company in writing by any Initial Purchaser through
Merrill Lynch or Wasserstein Perella expressly for use in the Offering
Memorandum.
(ii) Incorporated Documents. The Offering Memorandum as
----------------------
delivered from time to time shall incorporate by reference the most recent
Annual Report of the Company on Form 10-K filed with the Commission and
each Quarterly Report of the Company on Form 10-Q and each Current Report
of the Company on Form 8-K filed with the Commission since the end of the
fiscal year to which such Annual Report relates. The documents incorporated
or deemed to be incorporated by reference in the Offering Memorandum 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 1934 Act and
the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), and, when read together with the other information in the
Offering Memorandum, at the time the Offering Memorandum was issued and at
the Closing Time, did not and will not include 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, in light of the
circumstances under which they were made, not misleading.
-3-
<PAGE>
(iii) Independent Accountants. The accountants who certified
-----------------------
the financial statements and supporting schedules included in the Offering
Memorandum are independent public accountants with respect to the Company
and its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants and its interpretations and rulings thereunder. As used herein,
"subsidiaries" has the meaning ascribed thereto in Regulation S-X under the
1933 Act.
(iv) Financial Statements. The financial statements,
--------------------
together with the related notes, included in the Offering Memorandum
present fairly in all material respects the financial condition of the
Company and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries 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, except (in the case of those supplying quarterly
information) as to the absence of footnotes and subject to normal year-end
adjustments. The selected historical financial data and the summary
financial information included in the Offering Memorandum present fairly,
in all material respects, the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements included in the Offering Memorandum. The pro forma financial
data of the Company and its subsidiaries and the related notes thereto
included in the Offering Memorandum present fairly, in all material
respects, the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases described
therein, the assumptions used in the preparation thereof were made in good
faith and are believed by the Company to be reasonable and the adjustments
used therein are believed by the Company to be appropriate to give effect
to the transactions and circumstances referred to therein. Except as set
forth in the Offering Memorandum, the historical consolidated financial
statements of the Company together with the notes thereto forming part of
the Offering Memorandum comply as to form in all material respects with the
requirements applicable to financial statements required to be included in
registration statements on Form S-3 under the 1933 Act. The forward-looking
statements contained in the Offering Memorandum are based upon good faith
estimates and assumptions believed by the Company and the Subsidiary
Guarantors to be reasonable at the time made.
(v) No Material Adverse Change. Since the respective dates
--------------------------
as of which information is given in the Offering Memorandum, except as
otherwise stated therein, (A) there has been no event or condition that
could be reasonably expected to result in a material adverse change in the
condition, financial or otherwise, or in the results of operations,
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
-4-
<PAGE>
business, which 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 Final Offering Memorandum 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 Designated Subsidiaries. Each
----------------------------------------
Subsidiary Guarantor and each other "significant subsidiary" of the Company
(as such term is defined in Rule 1-02 of Regulation S-X) (collectively, the
"Designated Subsidiaries") has been duly organized and is validly existing
as an entity in good standing under the laws of the jurisdiction of its
incorporation, has all requisite power (corporate or otherwise) and
authority to own, lease and operate its properties and to conduct its
business as described in the Final Offering Memorandum and is duly
qualified as a foreign entity 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 to so qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Offering Memorandum, all of the issued and outstanding capital stock of
each Designated Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or
through wholly-owned subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of the Designated Subsidiaries was
issued in violation of any preemptive or similar rights of any
securityholder of such Designated Subsidiary.
(viii) Capitalization. The authorized, issued and outstanding
--------------
capital stock of the Company is as set forth in the Offering Memorandum in
the column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to reservations, agreements or
employee benefit plans referred to in the Offering Memorandum or pursuant
to the exercise of convertible securities or options referred to in the
Offering Memorandum). The shares of issued and outstanding capital stock of
the Company and each of its subsidiaries 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 or any of its
subsidiaries was issued in violation of the preemptive or other similar
rights of any securityholder of the Company or any of its subsidiaries.
-5-
<PAGE>
(ix) Authorization of Agreements. This Agreement has been
---------------------------
duly authorized, executed and delivered by the Company and the Subsidiary
Guarantors and is a legal, 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 hereof may be limited by (A)
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally, (B) general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and (C) with respect to rights of indemnification or
contribution, federal or state securities laws or principles of public
policy. The Registration Rights Agreement has been duly authorized and,
when duly executed and delivered in accordance with its terms by each of
the parties thereto, will constitute a legal, 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 (A) bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally, (B)
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and (C) with respect to
rights of indemnification or contribution, federal or state securities laws
or principles of public policy.
(x) Authorization of the Indenture. The Indenture has been
------------------------------
duly authorized by the Company and the Subsidiary Guarantors and, when
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 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 Notes and the
-------------------------------
Subsidiary Guarantees have been duly authorized and, at the Closing Time,
will have been duly executed by the Company and the Subsidiary Guarantors,
respectively, 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 and the Subsidiary Guarantors,
respectively, enforceable against them in accordance with their terms, and
the notes and subsidiary guarantees to be issued in exchange for the
Securities pursuant to the Registration Rights Agreement have been duly and
validly authorized by the Company and the Subsidiary Guarantors,
respectively, and if and when duly authenticated in accordance with the
terms of the Indenture and delivered in accordance with the exchange offer
provided for in the Registration Rights Agreement, will constitute valid
and binding obligations of the Company and the Subsidiary Guarantors,
respectively, enforceable
-6-
<PAGE>
against them in accordance with their terms, except in each case 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.
(xii) Description of Certain Operative Agreements. The
-------------------------------------------
Securities, the Indenture and the Registration Rights Agreement will
conform in all material respects to the respective statements relating
thereto contained in the Final Offering Memorandum.
(xiii) Absence of Defaults and Conflicts. None of the Company
---------------------------------
or any of its subsidiaries is in violation of its charter or by-laws 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 of its subsidiaries is a party or by
which any of them may be bound, or to which any of the property or assets
of the Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Indenture, the Registration Rights
Agreement, the Securities and any other agreement or instrument entered
into or issued or to be entered into or issued by the Company or any
Subsidiary Guarantor in connection with the transactions contemplated
hereby or and the consummation of the transactions contemplated herein and
therein (including the tender offer (the "Tender Offer") and consent
solicitation (the "Consent Solicitation") with respect to the Company's 12
1/2% Senior Secured Notes due 2003 (the "Senior Secured Notes"), the
execution and delivery of the First Supplemental Indenture pursuant to the
terms of the Consent Solicitation (the "First Supplemental Indenture"), the
defeasance of any Senior Secured Notes not tendered for repurchase by the
Company in the Tender Offer (the "Defeasance"), the execution of that
certain Credit Agreement between the Company, the Subsidiary Guarantors and
CIBC Oppenheimer Corp. (the "Bank Facility") and the incurrence of
indebtedness thereunder by the Company upon the initial funding under the
Bank Facility (the Tender Offer, the Consent Solicitation, the execution
and delivery of the First Supplemental Indenture, the Defeasance and the
execution and delivery of, and the incurrence of such indebtedness under,
the Bank Facility are collectively referred to herein as the "Related
Transactions"), the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Offering
Memorandum under the caption "Use of Proceeds") and compliance by the
Company and the Subsidiary Guarantors with their obligations hereunder and
under the Operative Agreements have been duly authorized by all necessary
action (corporate or otherwise) and 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 a Repayment
-7-
<PAGE>
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to the Agreements and Instruments,
except for such conflicts, breaches or defaults or liens, charges or
encumbrances that are disclosed in the Offering Memorandum or that, singly
or in the aggregate, 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 of the Company or any of its subsidiaries 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 of its subsidiaries 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 of its
subsidiaries.
(xiv) Absence of Labor Dispute. No labor dispute with the
------------------------
employees of the Company or any subsidiary exists or, to the knowledge of
the Company, is threatened, and the Company is not aware of any existing or
threatened labor disturbance by the employees of its or any subsidiary's
principal suppliers, manufacturers or contractors, which, in either case,
may reasonably be expected to result in a Material Adverse Effect. None of
the Company and its subsidiaries has violated (i) any federal, state or
local law or foreign law relating to discrimination in hiring, promotion or
pay of employees, (ii) any applicable wage or hour laws or (iii) any
provision of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules and regulations thereunder, which in any
-----
such event could be reasonably expected to have a Material Adverse Effect.
(xv) Absence of Proceedings. Except as disclosed in the
----------------------
Offering Memorandum, there is no (a) 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, threatened, against or affecting the Company or any of its
subsidiaries, (b) statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency or that has, to the Company's
knowledge, been proposed by any governmental body and that could be
reasonably expected to be enacted, adopted or issued or (c) injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction that has been issued in each case which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets of the Company or any of its subsidiaries or the
consummation of the transactions contemplated by the Operative Documents or
the consummation of the Related Transactions or the performance by the
Company and the Subsidiary Guarantors of their obligations hereunder. The
aggregate of all pending legal or governmental proceedings to which the
Company or any of its subsidiaries is a party or of which any of their
respective property or assets is the subject which are not described in the
Offering Memorandum, including
-8-
<PAGE>
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(xvi) Possession of Intellectual Property. The Company and
-----------------------------------
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate licenses, 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 them, and neither the Company nor any
of its subsidiaries 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 of its subsidiaries therein, which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would result in a Material Adverse Effect.
(xvii) 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
(including without limitation the Louisiana Gaming Control Board, the
Louisiana Riverboat Gaming Enforcement Division of the Louisiana State
Police, the Mississippi Gaming Commission, the Florida Department of
Business and Professional Regulation Division of Pari-Mutuel Wagering and
the Colorado Department of Revenue Division of Gaming (collectively the
"Gaming Authorities")) or any other person is necessary or required for the
performance by the Company and the Subsidiary Guarantors of their
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement or for the due execution, delivery or
performance of the Indenture by the Company and the Subsidiary Guarantors,
or the consummation of the Related Transactions, except such as have been
already obtained or made prior to the Closing Date or as may be required to
be obtained under the 1933 Act and state securities laws as provided in the
Registration Rights Agreement.
(xviii) Possession of Licenses and Permits. The Company and its
----------------------------------
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies,
including without limitation the Gaming Authorities, necessary to conduct
the business now operated by them, except where failure to possess such
Governmental Licenses would not, individually or in the aggregate, have a
Material Adverse Effect; the Company and its subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, individually or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are valid
and in full force and effect, except where 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
-9-
<PAGE>
Effect; and no event has occurred which would allow, after notice or
passage of time or both, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to, the
revocation or modification of any such Governmental Licenses which,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect. To
the knowledge of the Company no facts or circumstances exist that could be
reasonably expected to prevent the renewal of the existing Governmental
Licenses of the Company and its subsidiaries or result in a materially
adverse modification of such existing Governmental Licenses in connection
with the annual or other periodic gaming license renewal process undertaken
by the Louisiana Gaming Control Board and the Louisiana Riverboat Gaming
Enforcement Division of the Louisiana State Police or the renewal process
of any other Gaming Authority. Neither the Company nor any of its
subsidiaries has any reason to believe that any Governmental License
necessary to conduct their business as described in the Offering Memorandum
will not be granted or renewed upon application or that any relevant Gaming
Authority.
(xviii) Title to Property. The Company and its subsidiaries
-----------------
have good and marketable title to all real property owned by the Company
and its subsidiaries and good title to all other properties owned by them,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such as
(a) are described in the Offering Memorandum or (b) do not, individually or
in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries; and all of the leases and subleases
material to the business of the Company and its subsidiaries, considered as
one enterprise, and under which the Company or any of its subsidiaries
holds properties described in the Offering Memorandum, are in full force
and effect, and neither the Company nor any of its subsidiaries has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any of its subsidiaries under any
of the leases or subleases mentioned above, or affecting or questioning the
rights of the Company or any subsidiary thereof to the continued possession
of the leased or subleased premises under any such lease or sublease.
(xix) Environmental Laws. Except as described in the Offering
------------------
Memorandum and except such matters as would not, individually or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, legally binding
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, safety or 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,
-10-
<PAGE>
"Hazardous Materials") or to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and its subsidiaries have all Governmental Licenses required under any or
all applicable Environmental Laws and are each in compliance with their
requirements or such Governmental Licenses, (C) there are no pending or, to
the Company's knowledge, threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating to or
arising out of any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be 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 its
subsidiaries relating to Hazardous Materials or Environmental Laws.
(xx) Investment Company Act. The Company is not, and upon
----------------------
the issuance and sale of the Notes as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not 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").
(xxi) Similar Offerings. Neither the Company nor any of its
-----------------
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
(each, an "Affiliate"), has, directly or indirectly through any agent
(provided no representation is made as to the Initial Purchasers or any
person acting on their behalf), solicited any offer to buy, sold or offered
to sell or otherwise negotiated in respect of, or will solicit any offer to
buy, sell or offer to sell or otherwise negotiate in respect of, in the
United States or to any United States citizen or resident, any security
which is or would be integrated with the sale of the Securities in a manner
that would require the Securities to be registered under the 1933 Act.
(xxii) Rule 144A Eligibility. To the Company's knowledge, the
---------------------
Securities are eligible for resale pursuant to Rule 144A and will not be,
at the Closing Time, of the same class as securities listed on a national
securities exchange registered under Section 6 of the 1934 Act, or quoted
in a U.S. automated interdealer quotation system.
(xxiii) No General Solicitation. None of the Company, its
-----------------------
Affiliates or any person acting on its or any of their behalf (other than
the Initial Purchasers, as to whom the Company makes no representation) has
engaged or will engage, in connection with the offering of the Securities,
in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the 1933 Act.
(xxiv) No Registration Required. Subject to compliance by the
------------------------
Initial Purchasers with the representations and warranties set forth in
Section 2 and the
-11-
<PAGE>
procedures set forth in Section 6 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial
Purchasers and to each Subsequent Purchaser in the manner contemplated by
this Agreement and the Offering Memorandum to register the Securities under
the 1933 Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Indenture complies as to
form, in all material respects, with the requirements of the Trust
Indenture Act and the rules and regulations of the Commission promulgated
thereunder. No stop order or similar order or decree preventing the use of
the Offering Memorandum or any order or decree asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the 1933 Act has been issued or, to the knowledge of the
Company, is threatened.
(xxv) Reporting Company. The Company is subject to the
-----------------
reporting requirements of Section 13 or Section 15(d) of the 1934 Act.
(xxvi) No Directed Selling Efforts. With respect to those
---------------------------
Securities sold in reliance on Regulation S, (A) none of the Company, its
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation) has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S and (B) each of the Company and its Affiliates and any
person acting on its or their behalf (other than the Initial Purchasers, as
to whom the Company makes no representation) has complied and will comply
with the offering restrictions requirement of Regulation S.
(xxvii) Taxes and Tax Returns. All United States federal income
---------------------
tax returns of the Company and its subsidiaries required by law to be filed
on or prior to the date hereof and, at the Closing Time, on or prior to the
Closing Time, have been filed and all taxes due pursuant to 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 United States federal
income tax returns of the Company through the Company's 1996 fiscal year
have been settled and no assessment in connection therewith has been made
against the Company. The Company and its subsidiaries have filed all other
tax returns that are required to have been filed by them pursuant to any
applicable foreign, state, local or other law except insofar as the failure
to file such returns would not result in a Material Adverse Effect, and has
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company or its subsidiaries, except for such taxes, if any,
as are being contested in good faith and as to which adequate reserves have
been provided.
(xxviii) Internal Accounting. The Company and its subsidiaries
-------------------
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
-12-
<PAGE>
maintain accountability for assets, (C) access to assets is permitted only
in accordance with management's general or specific authorization and (D)
the recorded accounting for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxix) Insurance. The Company and its subsidiaries carry or
---------
are entitled to the benefits of insurance in such amounts and covering such
risks as the Company reasonably believes to be prudent for the business and
operations of the Company and its subsidiaries. All such insurance is in
full force and effect. None of the Company or its subsidiaries has received
notice from any insurer or agent of any insurer that substantial capital
improvements or other expenditures will be required in order to continue
such insurance coverage.
(xxx) Registration Rights. Except for those certain rights
-------------------
granted in connection with the Company's acquisition of a 100% interest in
the Isle-Bossier City and the rights granted pursuant to the Registration
Rights Agreement, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
registration statement to be filed pursuant to the Registration Rights
Agreement or otherwise registered by the Company under the 1933 Act.
(xxxi) Solvency. The Company and the Subsidiary Guarantors
--------
are, and immediately after the Closing Time will be, Solvent. As used
herein, the term "Solvent" means, with respect to any person on a
particular date, that on such date (A) the fair market value of the assets
of such person is greater than the total amount of liabilities (including
contingent liabilities) of such person, (B) the present fair salable value
of the assets of such person is greater than the amount that will be
required to pay the probable liabilities of such person on its debts as
they become absolute and matured, (C) such person is able to realize upon
its assets and pay its debts and other liabilities, including contingent
obligations, as they mature and (D) such person does not have unreasonably
small capital. Upon the issuance of the Securities, the assets of the
Company and the Subsidiary Guarantors will not constitute unreasonably
small capital to carry out their respective businesses as described in the
Offering Memorandum, including capital needs of the Company and the
Subsidiary Guarantors taking into account projected capital requirements
and capital availability.
(xxxii) No Default on Senior Indebtedness. No event of default
---------------------------------
exists under any contract, indenture, mortgage, loan agreement, note, lease
or other agreement or instrument constituting Senior Indebtedness (as
defined in the Indenture).
(xxxiii) Market Manipulation. None of the Company, its
-------------------
subsidiaries or any of their respective officers, directors or controlling
persons has taken, directly or indirectly, any action designed to cause or
to result in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities.
-13-
<PAGE>
(xxxiv) Affiliate Transaction. No relationship, direct or
---------------------
indirect, exists between or among any of the Company or any Affiliate of
the Company, on the one hand, and any director, officer, stockholder,
customer or supplier of any of them, on the other hand, that would be
required to be disclosed in a registration statement on Form S-3 pursuant
to the 1933 Act or by rules and regulations promulgated thereunder by the
Commission which is not described in the Offering Memorandum or is not
described as would be so required.
(xxxv) Information. The Company has not distributed and, prior
-----------
to the later to occur of (i) the Closing Time and (ii) completion of the
distribution of the Securities, will not distribute any offering material
in connection with the offering and sale of the Securities other than the
Final Offering Memorandum, the Preliminary Offering Memorandum or other
materials, if any, permitted by the 1933 Act and approved by the
Representatives.
(xxxvi) Regulations T, U and X. None of the execution, delivery
----------------------
and performance of this Agreement, the issuance and sale of the Securities,
the application of the proceeds from the issuance and sale of the
Securities and the consummation of the transactions contemplated thereby as
set forth in the Offering Memorandum, will violate Regulations T, U or X
promulgated by the Board of Governors of the Federal Reserve System.
(xxxvii) Events of Default. Assuming that the Indenture had been
-----------------
executed and delivered prior to or as of the date hereof, there exist no
conditions that would constitute a default (or an event which with notice
or the lapse of time, or both, would constitute a default) under the
Indenture.
(xxxviii) Brokerage. Except pursuant to this Agreement, there are
---------
no contracts, agreements or understandings between either of the Company or
any of its subsidiaries and any other person that would give rise to a
valid claim against the Initial Purchasers for a brokerage commission,
finder's fee or like payment in connection with the issuance, purchase and
sale of the Securities. The Company and the Subsidiary Guarantor will hold
harmless and indemnify each of the Initial Purchasers and each person
affiliated with or under common control with Initial Purchaser for all
losses, liabilities, claims, damages and expenses incurred by the Initial
Purchasers as a result of the incurrence of a breach of the representation
contained in this paragraph (xxxviii).
(xxxix) Construction and Expansion. (a) Except as otherwise set
--------------------------
forth in the Offering Memorandum or to the extent that the failure to have
or obtain any such license, certificate, permit, authorization, approval,
franchise or other right would not have a Material Adverse Effect on the
timely completion of such Project, the Company and its subsidiaries have
all governmental licenses, certificates, permits, authorizations,
approvals, franchises or other rights (including all building permits and
all authorizations from the Gaming Authorities) necessary to permit the
construction and expansion of the Company's Bossier City hotel and the
Company's planned Tunica County casino
-14-
<PAGE>
described in the Offering Memorandum (each a "Project"), in each case as
construction has progressed through the Closing Time. Construction of the
Projects is expected to be completed within the time frame set forth in the
Offering Memorandum and within the budgets set forth in the Offering
Memorandum, subject to such changes as the Company does not reasonably
foresee as of the date hereof.
(b) Neither the Company nor any of its subsidiaries has any
knowledge of any factor or condition that could reasonably be expected to
result in the termination or material impairment of the completion of
either Project or the beginning of operations of either Project other than
such factors as are described in the Offering Memorandum.
(xl) Public Officials. None of the Company, any of its
----------------
subsidiaries or, to the Company's knowledge, any affiliate or
representative acting on behalf of the Company or any of its subsidiaries
has at any time (A) made any unlawful contribution relating to political
activity or (B) made any payment to any federal, state or local government
officer or official, or any other person charged with similar public or
quasi-public duties, or customers or suppliers other than payments which do
not constitute a violation of the law of the United States or any
jurisdiction thereof.
(xli) Year 2000. Except as disclosed in the Offering
---------
Memorandum, neither the Company nor any Subsidiary Guarantor has any
knowledge of any reason that the Company and the subsidiaries will fail to
timely achieve Year 2000 Compliance before the end of 1999. Except as
disclosed in the Offering Memorandum, the costs of achieving Year 2000
Compliance (as hereinafter defined) are not reasonably expected to have a
Material Adverse Effect on the results of operations or financial condition
of the Company and its subsidiaries considered as a single enterprise. As
used herein, "Year 2000 Compliance" means that the information technology
of the Company and its subsidiaries will accurately receive, provide and
process date/time data from, into and between the twentieth and twenty-
first centuries, including the years 1999 and 2000, and leap year
calculations and will not malfunction, cease to function, or provide
invalid or incorrect results as a result of date/time data. As used herein,
"Information Technology" means computer software, computer hardware
(whether general or specific purpose) or other similar or related automated
or computerized items (including such items embedded in gaming equipment)
that are owned, leased or used on by the Company and any of its
subsidiaries in their business and operations.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing
------------------------------------------------
(a) Notes. 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 Initial Purchaser, severally and not jointly, and each
Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Notes set forth in Schedule A opposite the name of such Initial Purchaser, plus
any additional principal amount of Notes which such Initial Purchaser may become
obligated to
-15-
<PAGE>
purchase pursuant to the provisions of Section 11 hereof, and the Subsidiary
Guarantors agree to execute and deliver the Subsidiary Guarantees of such Notes.
(b) Payment. Payment of the purchase price for, and delivery of
-------
certificates for, the Notes shall be made at the office of Milbank, Tweed,
Hadley & McCloy LLP, 601 South Figueroa Street, Los Angeles, California 90017,
or at such other place as shall be agreed upon by the Representatives and the
Company, at 10:00 A.M. (eastern time) on April 23, 1999 (unless postponed in
accordance with the provisions of Section 11), or such other time not later than
ten business days after such date as shall be agreed upon by the Representatives
and the Company (such time and date of payment and delivery being herein called
the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account or accounts designated by the Company, against
delivery to the Representatives for the respective accounts of the Initial
Purchasers of certificates for the Securities to be purchased by them. It is
understood that each Initial Purchaser has authorized the Representatives, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Securities which it has agreed to purchase. Merrill
Lynch or Wasserstein Perella, individually and not as representatives of the
Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Initial Purchaser whose
funds have not been received by the Closing Time, but such payment shall not
relieve such Initial Purchaser from its obligations hereunder.
(c) Denominations; Registration. Certificates for the Notes shall be
---------------------------
in definitive form, registered in the name of Cede & Co., as nominee of DTC, or
in such denominations and registered in such names as the Representatives may
request in writing at least one full business day before the Closing Time. The
certificates representing the Securities shall be made available for examination
by the Initial Purchasers not later than 3:00 P.M. on the last business day
prior to the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will,
-------------------
during the period prior to the completion of the resale of the Securities by the
Initial Purchasers, furnish to each Initial Purchaser, without charge, such
number of copies of the Preliminary Offering Memorandum, the Final Offering
Memorandum and any amendments and supplements thereto and documents incorporated
by reference therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will
------------------------------------
immediately notify each Initial Purchaser, confirm each such notice in writing,
of (x) except for the filings made in connection with the transactions
contemplated by the Registration Rights Agreement, any filing made by the
Company of information relating to the offering of the Securities with any
securities exchange or any other securities regulatory body in the United States
or any other jurisdiction, and (y) prior to the completion of the placement of
the Securities by the Initial Purchasers as evidenced by a notice in writing
from Merrill Lynch to the Company, any material
-16-
<PAGE>
changes in or affecting the condition, financial or otherwise, or the results of
operations, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise which (i) make any statement in the
Offering Memorandum false or misleading in any material respect or (ii) if not
disclosed in the Offering Memorandum would constitute a material omission
therefrom. In such event or if during such time any event shall occur as a
result of which it is necessary, in the reasonable opinion of any of the
Company, its counsel, the Initial Purchasers or counsel for the Initial
Purchasers, to amend or supplement the Final Offering Memorandum in order that
the Final Offering Memorandum not include any untrue statement 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 then existing, the
Company will forthwith amend or supplement the Final Offering Memorandum by
preparing and furnishing to each Initial Purchaser an amendment or amendments
of, or a supplement or supplements to, the Final Offering Memorandum (in form
and substance satisfactory in the reasonable opinion of counsel for the Initial
Purchasers) so that, as so amended or supplemented, the Final Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
------------------------------------------------
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Final Offering Memorandum and will not effect such amendment or supplement
without the consent of the Initial Purchasers, which consent shall not be
unreasonably withheld or delayed. Neither the consent of the Initial Purchasers,
nor the Initial Purchaser's delivery of any such amendment or supplement, shall
constitute a waiver of any of the conditions set forth in Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will
----------------------------------------------
use its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Representatives may designate and will
maintain such qualifications in effect as long as required for the sale of the
Securities; provided, however, that the Company shall not 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.
(e) Rating of Securities. The Company shall take all reasonable
--------------------
action necessary to enable Standard & Poor's Ratings Services, a division of
McGraw Hill, Inc. ("S&P"), and Moody's Investors Service Inc. ("Moody's") to
provide their respective credit ratings of the Notes.
(f) DTC. The Company will cooperate with the Representatives and use
---
its best efforts to permit the Notes to be eligible for clearance and settlement
through the facilities of DTC.
-17-
<PAGE>
(g) Use of Proceeds. The Company will use the net proceeds received
---------------
by it from the sale of the Notes in the manner specified in the Final Offering
Memorandum under "Use of Proceeds".
(h) Restriction on Sale of Securities. During a period of ninety (90)
---------------------------------
days from the date of the Offering Memorandum, the Company will not, without the
prior written consent of Merrill Lynch, directly or indirectly, issue, sell,
offer or agree to sell, grant any option for the sale of, or otherwise dispose
of, any other debt securities of the Company or securities of the Company that
are convertible into, or exchangeable for, the Notes or such other debt
securities, other than the Bank Facility and the notes to be issued pursuant to
the terms of the Registration Rights Agreement.
(i) PORTAL Designation. The Company will use its best efforts to
------------------
permit the Notes to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market.
(j) Reporting Requirements. The Company, during the period when the
----------------------
Final Offering Memorandum is required to be delivered pursuant to Section
6(a)(vii) hereof, 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
-------------------
(a) Expenses. The Company will pay all expenses (other than fees and
--------
expenses of counsel for the Initial Purchasers, except for such fees and
expenses as are described in clause (iv) below which shall be paid by the
Company) incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing, delivery to the Initial Purchasers and
any filing of the Offering Memorandum (including financial statements and any
schedules or exhibits and any document incorporated therein by reference) and of
each amendment or supplement thereto, (ii) the preparation, issuance and
delivery of the certificates for the Securities to the Initial Purchasers,
including any transfer taxes, any stamp or other duties payable upon the sale,
issuance and delivery of the Securities to the Initial Purchasers and any
charges of DTC in connection therewith, (iii) the fees and disbursements of the
Company's counsel, accountants and other advisors, (iv) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(d) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Initial Purchasers in connection therewith and in connection
with the preparation of the Blue Sky Survey, any supplement thereto, (v) 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,
(vi) any fees payable in connection with the rating of the Notes and (vii) any
fees and expenses payable in connection with the initial and continued
designation of the Notes as PORTAL securities under the PORTAL Market Rules
pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
------------------------
Representatives in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the
-18-
<PAGE>
Company shall reimburse the Initial Purchasers for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
---------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof, to the performance by the Company of its covenants and other
obligations hereunder, and to the following further conditions.
(a) Opinion of Counsel for Company. At the Closing Time, the
------------------------------
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of Mayer, Brown & Platt, counsel for the Company, and Phelps
Dunbar, L.L.P., Brownstein, Hyatt, Farber & Strickland, P.C. and Allan B.
Solomon, Esq. in form and substance satisfactory to counsel for the Initial
Purchasers, together with signed or reproduced copies of such letter for each of
the other Initial Purchasers substantially to the effect set forth in Exhibit A
hereto, and the opinion of Becker & Poliakoff, P.A. as to such matters of
Florida law as the Initial Purchasers may reasonably request and the opinion of
Boles, Boles & Ryan as to such Louisiana gaming regulation matters as the
Initial Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time,
-----------------------------------------
the Representatives shall have received the favorable opinion, dated as of the
Closing Time, of Milbank, Tweed, Hadley & McCloy LLP, counsel for the Initial
Purchasers, together with signed or reproduced copies of such letter for each of
the other Initial Purchasers with respect to the matters set forth in paragraphs
(i), (ii), (iii), (v), (vi), (vii), (xiv) and the penultimate paragraph of
Exhibit A-1 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 State of
New York and the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
Representatives. 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 its subsidiaries and certificates of
public officials.
(c) Officers' Certificate. At the Closing Time, there shall not have
---------------------
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the results of operations, 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 Representatives shall have received a certificate of the President or a Vice
President of the Company and the Subsidiary Guarantors and of the chief
financial or chief accounting officer of the Company, 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 hereof are true and correct
with the same force and effect as though expressly made at and as of the Closing
Time, and (iii) the Company and the Subsidiary Guarantors have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Time.
(d) Accountants' Comfort Letter. On the date hereof, the
---------------------------
Representatives shall have received from Ernst & Young LLP a letter dated such
date, in form and substance
-19-
<PAGE>
satisfactory to the Representatives, together with signed or reproduced copies
of such letter for each of the other Initial Purchasers containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to Initial Purchasers with respect to the financial statements and
certain financial information contained in the Final Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the
-------------------------
Representatives shall have received from Ernst & Young LLP a letter, dated as of
the Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section, except that the
date as to when such accounting procedures have been performed shall be a date
not more than three business days prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Notes shall be
---------------------
rated at least B3 by Moody's and B by S&P, and the Company shall have delivered
to the Representatives a letter dated the Closing Time, from each such rating
agency, or other evidence satisfactory to the Representatives, confirming that
the Notes have such ratings; and since the date of this Agreement, there shall
not have occurred a downgrading in the rating assigned to the Notes or any of
the Company's other debt securities by any "nationally recognized statistical
rating agency", as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act, and no such securities rating agency shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Notes or any of the Company's other
debt securities.
(g) PORTAL. At the Closing Time, the Notes shall have been designated
------
for trading on PORTAL.
(h) Related Transactions. At the Closing Time, the Company and its
--------------------
subsidiaries shall have consummated the Related Transactions upon terms and
conditions satisfactory to the Initial Purchasers.
(i) Additional Documents. At the Closing Time, counsel for the
--------------------
Initial Purchasers 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 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 reasonably satisfactory in form and
substance to the Representatives and counsel for the Initial Purchasers.
(j) Termination of Agreement. If any condition specified in this
------------------------
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to the 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, 7, 8 and 9 shall survive any such termination and remain
in full force and effect.
-20-
<PAGE>
SECTION 6. Subsequent Offers and Resales of the Securities.
-----------------------------------------------
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
-------------------------
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Qualified Institutional Buyers. Offers
-------------------------------------------------------
and sales of the Securities shall only be made (A) to persons whom the
offeror or seller reasonably believes to be qualified institutional buyers,
as defined in Rule 144A under the 1933 Act ("Qualified Institutional
Buyers") or (B) to non-U.S. persons outside the United States, as defined
in Regulation S under the 1933 Act, to whom the offeror or seller
reasonably believes offers and sales of the Securities may be made in
reliance upon Regulation S under the 1933 Act. Each Initial Purchaser
severally agrees that it will not offer, sell or deliver any of the
Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws
thereof, and that it will take at its own expense whatever action is
required to permit its purchase and resale of the Securities in such
jurisdictions.
(ii) No General Solicitation. No general solicitation or general
-----------------------
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be
used in the United States in connection with the offering or sale of the
Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
---------------------------------
Subsequent Purchaser of Securities acting as a fiduciary for one or more
third parties, each third party shall, in the judgment of the applicable
Initial Purchaser, be a Qualified Institutional Buyer or a non-U.S. person
outside the United States.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
---------------------------------
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933
Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except (1) to the Company, (2)
outside the United States in accordance with Regulation S, or (3) inside
the United States in accordance with (x) Rule 144A to a person whom the
seller reasonably believes is a Qualified Institutional Buyer that is
purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer, sale
or transfer is being made in reliance on Rule 144A or (y) pursuant to
another available exemption from registration under the 1933 Act.
(v) Restrictions on Transfer. The transfer restrictions and the
------------------------
other provisions set forth in the Final Offering Memorandum under the
heading
-21-
<PAGE>
"Notice to Investors", including the legend required thereby, shall apply
to the Securities except as otherwise agreed by the Company and the Initial
Purchasers.
(vi) Delivery of Final Offering Memorandum. Each Initial
-------------------------------------
Purchaser will, prior or simultaneously with the confirmation of the sale
of the Securities, deliver to each purchaser of the Securities from such
Initial Purchaser, in connection with its original distribution of the
Securities, a copy of the Final Offering Memorandum, as amended and
supplemented at the date of such delivery.
(b) Covenants of the Company. The Company covenants with each
------------------------
Initial Purchaser as follows:
(i) Integration. The Company agrees that it will not and will
-----------
cause its Affiliates not to, directly or indirectly, solicit any offer to
buy, sell or make any offer or sale of, or otherwise negotiate in respect
of, securities of the Company of any class if, as a result of the doctrine
of "integration" referred to in Rule 502 under the 1933 Act, such offer or
sale would render invalid (for the purpose of (i) the sale of the
Securities by the Company to the Initial Purchasers, (ii) the resale of the
Securities by the Initial Purchasers to Subsequent Purchasers or (iii) the
resale of the Securities by such Subsequent Purchasers to others) the
exemption from the registration requirements of the 1933 Act provided by
Section 4(2) thereof or by Rule 144A or by Regulation S thereunder or
otherwise.
(ii) Rule 144A Information. The Company agrees that, in order
---------------------
to render the Securities eligible for resale pursuant to Rule 144A under
the 1933 Act, while any of the Securities remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act.
(iii) Restriction on Repurchases. Until the expiration of two
--------------------------
years after the original issuance of the Securities, the Company will not,
and will cause its Affiliates not to, resell any Securities which are
"restricted securities" (as such term is defined under Rule 144(a)(3) under
the 1933 Act), whether as beneficial owner or otherwise (except as agent
acting as a securities broker on behalf of and for the account of customers
in the ordinary course of business in unsolicited broker's transactions).
(c) Qualified Institutional Buyer. Each Initial Purchaser severally
-----------------------------
and not jointly represents and warrants to, and agrees with, the Company that it
is a Qualified Institutional Buyer within the meaning of Rule 144A under the
1933 Act and an "accredited investor" within the meaning of Rule 501(a) under
the 1933 Act (an "Accredited Investor").
(d) Resale Pursuant to Rule 903 of Regulation S or Rule 144A. Each
--------------------------------------------------------
Initial Purchaser understands that the Securities have not been and will not be
registered under the 1933
-22-
<PAGE>
Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the 1933 Act or pursuant to an exemption from the registration requirements of
the 1933 Act. Each Initial Purchaser severally represents and agrees, that,
except as permitted by Section 6(a) above, it has offered and sold Securities
and will offer and sell Securities (i) as part of their distribution at any time
and (ii) otherwise until forty days after the later of the date upon which the
offering of the Securities commences and the Closing Time, only in accordance
with Rule 903 of Regulation S, Rule 144A under the 1933 Act or another
applicable exemption from the registration requirements of the 1933 Act.
Accordingly, neither the Initial Purchasers, their affiliates nor any persons
acting on their behalf have engaged or will engage in any directed selling
efforts with respect to Securities sold hereunder pursuant to Regulation S, and
the Initial Purchasers, their affiliates and any person acting on their behalf
have complied and will comply with the offering restriction requirements of
Regulation S. Each Initial Purchaser severally agrees that, at or prior to
confirmation of a sale of Securities pursuant to Regulation S, it will have sent
to each distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Securities from it or through it during the
restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to or for the
account or benefit of U.S. persons (i) as part of their distribution
at any time and (ii) otherwise until forty days after the later of the
date upon which the offering of the Securities commenced and the date
of closing, except in either case in accordance with Regulation S or
Rule 144A under the Securities Act. Terms used above have the meaning
given to them by Regulation S."
Terms used in the above paragraph have the meanings given to them by
Regulation S.
-23-
<PAGE>
(e) Each Initial Purchaser, severally and not jointly, represents and
warrants to and agrees with the Company that (i) it has not offered or
sold, and prior to the date six months after the Closing Date will not
offer or sell, any Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995; (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 and the Public Offers of Securities
Regulations 1995 with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom; and (iii) it
has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom such document may otherwise lawfully be issued
or passed on.
(f) Additional Representations and Warranties of Initial Purchasers.
---------------------------------------------------------------
Each Initial Purchaser severally represents and agrees that it has not entered
and will not enter into any contractual arrangements with respect to the
distribution of the Securities, except with its affiliates or with the prior
written consent of the Company.
SECTION 7. Indemnification.
---------------
(a) Indemnification of Initial Purchasers. The Company and the
-------------------------------------
Subsidiary Guarantors, jointly and severally, agree to indemnify and hold
harmless each Initial Purchaser and each person, if any, who controls any
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act, and each person who is an affiliate of or under common control
with an Initial Purchaser, 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 any
Preliminary Offering Memorandum or the Final Offering Memorandum (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 7(d) below) any such
settlement is effected with the written consent of the Company; and
-24-
<PAGE>
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch) reasonably in investigating, preparing to defend 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;
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 Initial Purchaser through Merrill Lynch or Wasserstein Perella
expressly for use in the Offering Memorandum (or any amendment thereto); and
provided, further, that neither the Company nor any Subsidiary Guarantor shall
- -------- -------
be liable to any Initial Purchaser or any person who controls an Initial
Purchaser under this subsection (a) with respect to any loss, liability, claim,
damage or expense resulting from any such untrue statement or alleged untrue
statement or omission or alleged omission if such Initial Purchaser did not send
or give to the person to whom it sold Securities, at or prior to the written
confirmation of such sale, a Final Offering Memorandum or revised Final Offering
Memorandum (in each case excluding documents incorporated by reference), as the
case may be, if such Final Offering Memorandum or revised Final Offering
Memorandum contained a correction of such untrue statement or alleged untrue
statement or omission or alleged omission and if the Company has made available
copies thereof to such Initial Purchaser prior to the confirmation of such sale.
(b) Indemnification of Company. Each Initial Purchaser severally
--------------------------
agrees to indemnify and hold harmless the Company, the Subsidiary Guarantors 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 against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Offering Memorandum in reliance upon and in conformity
with written information furnished to the Company by such Initial Purchaser
through Merrill Lynch or Wasserstein Perella expressly for use in the Offering
Memorandum.
(c) 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 7(a)
above, counsel to the indemnified parties shall be selected by Merrill Lynch,
and, in the case of parties indemnified pursuant to Section 7(b) 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
-25-
<PAGE>
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 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. 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 or Section 8 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.
(d) 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 7(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 8. Contribution. If the indemnification provided for in Section 7
------------
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 and the
Subsidiary Guarantors on the one hand and the Initial Purchasers on the other
hand 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 and
the Subsidiary Guarantors on the one hand and of the Initial Purchasers on the
other hand 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.
The relative benefits received by the Company and the Subsidiary
Guarantors on the one hand and the Initial Purchasers on the other hand 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
-26-
<PAGE>
underwriting discount received by the Initial Purchasers, bear to the aggregate
initial offering price of the Securities.
The relative fault of the Company and the Subsidiary Guarantors on the
one hand and the Initial Purchasers on the other hand 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 or a Subsidiary Guarantor or
by the Initial Purchasers 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 Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to this
Section were determined by pro rata allocation (even if the Initial Purchasers
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. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing to defend 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, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased and sold by it hereunder exceeds
the amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act, and each person who is an affiliate of or under common control
with an Initial Purchaser, shall have the same rights to contribution as such
Initial Purchaser, 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
such Subsidiary Guarantor. The Initial Purchasers' respective obligations to
contribute pursuant to this Section are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
- --------
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
-27-
<PAGE>
Initial Purchaser or controlling person, or by or on behalf of the Company, and
shall survive delivery of the Securities to the Initial Purchasers.
SECTION 10. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this
--------------------
Agreement, by notice to the Company, at any time at or prior to the 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 Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the results of operations, 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, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, 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 Representatives, 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 materially 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 materially 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, 7, 8 and 9 shall survive such termination and remain in full force and
effect.
SECTION 11. Default by One or More of the Initial Purchasers. If
------------------------------------------------
one or more of the Initial Purchasers shall fail at the Closing Time to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Initial Purchasers, or any other initial purchasers, 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 Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the aggregate principal amount of the Notes to be
purchased hereunder, each of the non-defaulting Initial
Purchasers shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Initial
Purchasers, or
-28-
<PAGE>
(b) if the number of Defaulted Securities exceeds 10% of
the aggregate principal amount of the Notes to be purchased
hereunder, this Agreement shall terminate without liability on
the part of any non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser 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 Representatives or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Offering Memorandum or in
any other documents or arrangements. As used herein, the term "Initial
Purchaser" includes any person substituted for an Initial Purchaser under this
Section.
-29-
<PAGE>
SECTION 12. 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 Initial
Purchasers shall be directed to Merrill Lynch at North Tower, World Financial
Center, New York, New York 10281, attention of General Counsel and to
Wasserstein Perella at 31 West 52nd Street, New York, New York 10019-6163,
attention of General Counsel, with a copy to Milbank, Tweed, Hadley & McCloy LLP
at 601 South Figueroa St, 31st Floor, Los Angeles, California 90017, attention
of Kenneth J. Baronsky. Notices to the Company and the Subsidiary Guarantors
shall be directed to it at 711 Washington Loop, Second Floor, Biloxi,
Mississippi, attention of Rexford A. Yeisley, with a copy to Mayer, Brown &
Platt, 190 LaSalle Street, Chicago, Illinois 60602, attention of Paul W. Theiss.
SECTION 13. Parties. This Agreement shall inure to the benefit of
-------
and be binding upon the Initial Purchasers, the Company and the Subsidiary
Guarantors 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 Initial Purchasers, the Company and the Subsidiary
Guarantors and their respective successors and the controlling persons and
officers and directors referred to in Sections 7 and 8 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 Initial Purchasers, 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 Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. Governing Law and Time. THIS AGREEMENT SHALL BE GOVERNED
----------------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. 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.
-30-
<PAGE>
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 other counterparts, will become a binding
agreement between the Initial Purchasers and the Company and Subsidiary
Guarantors in accordance with its terms.
Very truly yours,
ISLE OF CAPRI CASINOS, INC.
By: ____________________________________
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI
By: ____________________________________
Title:
RIVERBOAT CORPORATION OF MISSISSIPPI-VICKSBURG
By: ____________________________________
Title:
RIVERBOAT SERVICES, INC.
By: ____________________________________
Title:
CSNO, INC.
By: ____________________________________
Title:
LOUISIANA RIVERBOAT GAMING PARTNERSHIP
By: ____________________________________
Title:
<PAGE>
ST. CHARLES GAMING COMPANY, INC.
By: ____________________________________
Title:
LRG HOTELS, L.L.C.
By: ____________________________________
Title:
GRAND PALAIS RIVERBOAT, INC.
By: ____________________________________
Title:
LRGP HOLDINGS, INC.
By: ____________________________________
Title:
PPI, INC.
By: ____________________________________
Title:
ISLE OF CAPRI CASINO COLORADO, INC.
By: ____________________________________
Title:
ISLE OF CAPRI CASINO-TUNICA, INC.
By: ____________________________________
Title:
-2-
<PAGE>
IOC-COAHOMA, INC.
By: ____________________________________
Title:
ISLE OF CAPRI HOTELS-BOSSIER CITY, L.L.C.
By: ____________________________________
Title:
-3-
<PAGE>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _________________________________
Authorized Signatory
BY: WASSERSTEIN PERELLA SECURITIES, INC.
By: _________________________________
For themselves and as Representatives of the other Initial
Purchasers named in Schedule A hereto.
-4-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Principal
Amount of
Name of Initial Purchaser Notes
----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated $146,250,000
Wasserstein Perella Securities, Inc. $146,250,000
CIBC Oppenheimer Corp. $ 78,000,000
Jefferies & Company, Inc. $ 19,500,000
------------
Total $390,000,000
============
</TABLE>
Sch A-1
<PAGE>
SCHEDULE B
ISLE OF CAPRI CASINOS, INC.
$390,000,000 Senior Subordinated Notes due 2009
1. The initial public offering price of the Securities shall be 100%
of the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97.50% of the principal amount thereof.
3. The interest rate on the Securities shall be 8 3/4% per annum.
4. The Notes are redeemable, in whole in part, at the option of the
Company, at any time on or after April 15, 2004 at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest to the applicable redemption date, if redeemed during the 12-
month period beginning on April 15 of the years indicated below.
Year Percentage
---- ----------
2004 104.375%
2005 102.917%
2006 101.458%
2007 100.000%
5. On or before April 15, 2002, the Company may, at its option, use
the net proceeds of a Public Equity Offering to redeem up to 35% of the Notes at
108.750% of the principal amount thereof.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF ISLE OF CAPRI CASINOS, INC.
<TABLE>
<CAPTION>
STATE OF
INCORPORATION OR OTHER NAME(S) UNDER
NAME ORGANIZATION WHICH IT DOES BUSINESS
---- ---------------- ----------------------
<S> <C> <C>
Riverboat Corporation of Mississippi Mississippi Isle of Capri Casino - Biloxi
Riverboat Corporation of Mississippi - Vicksburg Mississippi Isle of Capri Casino - Vicksburg
Riverboat Services, Inc. Iowa None
CSNO, Inc. Iowa None
Louisiana Riverboat Gaming Partnership Louisiana Isle of Capri Casino - Bossier City
St. Charles Gaming Company, Inc. Louisiana Isle of Capri Casino - Lake Charles
PPI, Inc. Florida Pompano Park Harness Track
LRGP Holdings, Inc. Louisiana None
ASMI Management, Inc. Florida None
Isle of Capri Casino Colorado, Inc. Colorado None
Capri Air, Inc. Mississippi None
Grand Palais Riverboat, Inc. Louisiana None
Isle of Capri Entertainment - Elkton, Inc. Maryland None
Pompano Park Gaming School, Inc. Florida None
LRG Hotels, L.L.C. Louisiana None
Isle of Capri Hotels on Lake Charles, L.L.C. Louisiana None
Isle of Capri Hotels - Bossier City, L.L.C. Louisiana None
Casino America of Colorado, Inc. Colorado None
Isle of Capri Black Hawk, L.L.C. Colorado None
Isle of Capri Black Hawk Capital Corporation Colorado None
Casino Parking, Inc. Mississippi None
Isle of Capri Corporation Mississippi None
ICH, L.L.C. Louisiana None
Casino America, Inc. Delaware None
Isle of Capri - Iowa Iowa None
Capri Cruises Florida None
Isle of Capri Casino - Tunica, Inc. Mississippi None
IOC-Coahoma, Inc. Mississippi None
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the following Registration
Statements of Isle of Capri Casinos, Inc. (f/k/a Casino America, Inc.) of our
report dated June 10, 1999, with respect to the consolidated financial
statements of Isle of Capri Casinos, Inc. included in Isle of Capri Casinos,
Inc. Annual Report (Form 10-K) for the year ended April 25, 1999:
. Post-Effective Amendment No. 1 to the Form S-8 No. 33-61752 (the 1992 Stock
Option Plan as amended);
. Form S-8 No. 33-80918 (the 1993 Stock Option Plan; the Director's Plan; and
the Stock Bonus Plan);
. Form S-8 No. 33-86940 (the Employee Stock Purchase Plan; the 1993 Stock
Option Plan; the Consulting Agreement, dated October 1, 1993, with Theodore
E. Deutch; the Consulting Agreement, dated October 1, 1993, with Scott
Crawford; and the Consulting Agreement, dated November 10, 1994, with
Becker & Poliakoff, P.A.);
. Form S-8 No. 33-93088 (the Retirement Trust and Savings Plan); and
. Form S-8 No. 33-77233 (the 1992 Stock Option Plan and the 1993 Stock Option
Plan).
/s/ Ernst & Young LLP
New Orleans, Louisiana
June 28, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-25-1999 APR-26-1998
<PERIOD-START> APR-27-1998 APR-28-1997
<PERIOD-END> APR-25-1999 APR-26-1998
<CASH> 85,117 52,460
<SECURITIES> 0 0
<RECEIVABLES> 5,935 5,715
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 109,016 69,257
<PP&E> 411,176 333,811
<DEPRECIATION> 110,008 84,194
<TOTAL-ASSETS> 676,484 615,735
<CURRENT-LIABILITIES> 78,824 77,995
<BONDS> 526,873 429,642
0 0
0 0
<COMMON> 236 236
<OTHER-SE> 61,719 85,895
<TOTAL-LIABILITY-AND-EQUITY> 676,484 615,735
<SALES> 0 0
<TOTAL-REVENUES> 480,377 440,816
<CGS> 0 0
<TOTAL-COSTS> 198,393 187,623
<OTHER-EXPENSES> 213,238 192,091
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 48,638 51,579
<INCOME-PRETAX> 23,884 15,044
<INCOME-TAX> 11,775 7,497
<INCOME-CONTINUING> 12,109 7,547
<DISCONTINUED> 0 0
<EXTRAORDINARY> (36,285) 0
<CHANGES> 0 0
<NET-INCOME> (24,176) 7,547
<EPS-BASIC> (1.03) 0.32
<EPS-DILUTED> (1.01) 0.32
</TABLE>
