<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 19, 1997
CAPITAL GAMING INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
New Jersey 0-19128 22-3061189
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
Bayport One, Suite 250
8025 Black Horse Pike
W. Atlantic City, New Jersey 08232
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 383-3333
Not Applicable
(Former name or former address, if changed from last report)
<PAGE>2
Item 3. Bankruptcy or Receivership.
On December 23, 1996, Capital Gaming International, Inc., a New Jersey
corporation (the "Company"), filed a voluntary petition for reorganization under
Chapter 11 of Title 11 of the United States Bankruptcy Code (the "Bankruptcy
Code") in the United States Bankruptcy Court for the District of New Jersey (the
"Bankruptcy Court"), Case No. 96-19829. The Company's plan of reorganization
(the"Plan") was confirmed by order of the Bankruptcy Court dated March 19, 1997.
Capitalized terms not defined herein shall have the meanings set forth in the
Plan.
The Plan provides generally that creditors of the Company will receive
distributions as follows: (i) holders of Old Secured Notes will receive in the
aggregate (A) on account of their Allowed Secured Claims, their Pro Rata Share
of New Secured Notes having a principal face amount of $21.45 million and
1,225,000 shares of the New Common Stock of the Reorganized Company; and (B) on
account of their unsecured Deficiency Claims totaling $80,688,850, the same
treatment as is afforded to holders of General Unsecured Claims (see
subparagraph (iii) below); (ii) holders of Secured Claims that are not Claims
arising out of Old Secured Notes will receive, at the option of the Company: (X)
such treatment as will leave such holder unimpaired; (Y) payment in full, in
Cash; or (Z) return of such holder's collateral in the possession of the
Company; and (iii) holders of General Unsecured Claims against the Company will
receive (A) their Pro Rata share of 525,000 shares of New Common Stock; (B) the
right to receive the net proceeds of Avoidance Actions recovered pursuant to
Section 9.4 of the Plan; and (C) $1,100,000 in New Secured Notes. With respect
to Class 4 Claims, the Indenture Trustee shall receive no more than 375,000
shares of New Common Stock and $550,000 in New Secured Notes on account of its
allowed Class 4 Claim, and any shares the Indenture Trustee would otherwise
receive on account of its Class 4 Claim in excess of 375,000 shares and any New
Secured Notes the Indenture Trustee would otherwise receive on account of its
Class 4 Claim in excess of $550,000 in New Secured Notes shall be distributed
Pro Rata to all other holders of Allowed Class 4 Claims.
Holders of Old Common Stock of the Company will receive their Pro Rata
share of 50,000 shares of New Common Stock of the Reorganized Company. Existing
warrants, options and other rights to acquire Old Common Stock of the Company
(collectively, the "Old Options") will be canceled and holders of such rights
shall receive no distributions of property on account thereof.
The terms of the Plan provide for the discharge and/or release of
liability only of the Company, its wholly owned subsidiaries and their
respective present and former directors, officers and employees, the Indenture
Trustee and the Noteholders Steering Committee. In addition, a critical element
of the Plan is the release by the Indenture Trustee and each of the Noteholders
of all of their claims against subsidiaries of the Company arising out of
guaranties, pledges or otherwise, except for the treatment of their Claims
provided under the Plan.
A copy of the unaudited consolidated financial statements of the
Company which were filed with the Bankruptcy Court, which includes information
as to the assets and liabilities of the Company, the Plan and the press release
issued by the Company on March 20, 1997 in connection with the confirmation of
the Plan are being filed as Exhibits hereto and are incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
2.1 Plan of Reorganization of Capital Gaming International, Inc.,
along with Order of the United States Bankruptcy Court for
the District of New Jersey confirming the Plan, dated
March 19, 1997.
4.1 Amended and Restated Indenture, dated as of February 17, 1994
and amended and restated as of March 27, 1997 (Incorporated
by reference to Exhibit A of the Plan of Reorganization
attached hereto as Exhibit 2.1).
<PAGE>3
99.1 Press Release of Capital Gaming International, Inc.,
dated March 20, 1997.
99.2 Unaudited Consolidated Financial Statements of the Company
as furnished to the Bankruptcy Court on February 6, 1997.
<PAGE>4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
April 3, 1997 CAPITAL GAMING INTERNATIONAL, INC.
By: /s/ William S. Papazian
Name: William S. Papazian
Title: Senior Vice President
and General Counsel
<PAGE>5
EXHIBIT INDEX
Exhibit
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2.1 Plan of Reorganization of Capital Gaming International, Inc., along
with Order of the United States Bankruptcy Court for the District of
New Jersey confirming the Plan, dated March 19, 1997.
4.1 Amended and Restated Indenture, dated as of February 17, 1994 and
amended and restated as of March 27, 1997 (Incorporated by reference
to Exhibit A of the Plan of Reorganization attached hereto as Exhibit
2.1).
99.1 Press Release of Capital Gaming International, Inc., dated
March 20, 1997.
99.2 Unaudited Consolidated Financial Statements of the Company as
furnished to the Bankruptcy Court on February 6, 1997.
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW JERSEY
)
)
In re )
)
CAPITAL GAMING INTERNATIONAL, ) Chapter 11
INC., ) Case No. 96-19829 (JHW)
)
Debtor. )
)
)
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DEBTOR'S FIRST AMENDED AND MODIFIED PLAN OF REORGANIZATION
March 19, 1997
WILLKIE FARR & GALLAGHER
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4669
(212) 821-8000
Co-Counsel for Debtor
BNS-1945
CRUMMY, DEL DEO, DOLAN,
GRIFFINGER & VECCHIONE
A Professional Corporation
One Riverfront Plaza
Newark, New Jersey 07102-5497
(201) 596-4500
Co-Counsel for Debtor
FV-6343
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS....................................................1
1.1. Administrative Expense Claim...................................1
1.2. Affiliate......................................................1
1.3. Allowed........................................................2
1.4. Allowed Amount.................................................2
1.5. Allowed Noteholder Claims......................................3
1.6. Allowed Claim..................................................3
1.7. Allowed Interest...............................................3
1.8. Amended By-Laws................................................3
1.9. Amended Indenture..............................................3
1.10. Bankruptcy Code................................................4
1.11. Bankruptcy Court...............................................4
1.12. Bankruptcy Rules...............................................4
1.13. Business Day...................................................4
1.14. Cash...........................................................4
1.15. Chapter 11 Case................................................4
1.16. Claim..........................................................4
1.17. Class..........................................................5
1.18. Confirmation Account...........................................5
1.19. Confirmation Payments..........................................5
1.20. Confirmation Date..............................................5
1.21. Confirmation Hearing...........................................5
1.22. Confirmation Order.............................................5
1.23. Confirmation Valuation.........................................5
1.24. Covered Persons................................................6
1.25. Creditors' Committee...........................................6
1.26. Debtor.........................................................6
1.27. Debt Record Date...............................................6
1.28. Deficiency Claim...............................................6
1.29. Disputed Claim.................................................6
1.30. Disputed Interest..............................................6
1.31. Distribution Date..............................................6
1.32. Effective Date.................................................7
1.33. Face Amount....................................................7
1.34. Fee Request....................................................7
1.35. Filing Date....................................................7
1.36. Final Order....................................................8
1.37. Gaming License.................................................8
1.38. Gaming Jurisdiction............................................8
1.39. General Unsecured Claim........................................8
1.40. Guarantors....................................................10
(i)
<PAGE>
1.41. Indenture Trustee..............................................9
1.42. Interests......................................................9
1.43. Joint Trade Claims.............................................9
1.44. Key Officers...................................................9
1.45. New Certificate of Incorporation...............................9
1.46. New Common Stock...............................................9
1.47. New Secured Notes..............................................9
1.48. Nontax Priority Claim.........................................10
1.49. Noteholder....................................................10
1.50. Noteholder Claims.............................................10
1.51. Noteholder Secured Claims.....................................10
1.52. Noteholder Unsecured Claims...................................10
1.53. Noteholders Steering Committee................................11
1.54. Old Common Stock..............................................11
1.55. Old Equity Securities.........................................11
1.56. Old Guaranty..................................................11
1.57. Old Indenture.................................................11
1.58. Old Options...................................................11
1.59. Old Secured Notes.............................................12
1.60. Order.........................................................12
1.61. Ordinary Course Administrative Expense Class..................12
1.62. Person........................................................12
1.63. Plan..........................................................12
1.64. Plan Document(s)..............................................12
1.65. Plan Rate.....................................................12
1.66. Post-Confirmation Employee Stock Incentive Plan...............12
1.67. Prepetition...................................................13
1.68. Priority Status...............................................13
1.69. Priority Tax Claim............................................13
1.70. Pro Rata......................................................13
1.71. Regulatory Sale Option........................................13
1.72. Released Claim................................................13
1.73. Reorganized Debtor............................................13
1.74. Schedules.....................................................13
1.75. Secured Claim.................................................14
1.76. Special Administrative Expense Claims.........................14
1.77. Stock Record Date.............................................14
1.78. Stock Transfer Agent..........................................14
1.79. Subsequent Distribution Date..................................14
1.80. Total Class 3A Claims.........................................14
ARTICLE II. CLASSIFICATION OF CLAIMS AND INTERESTS........................15
2.1. Class 1 Claims................................................15
2.2. Class 2 Claims................................................15
2.3. Class 3 Claims................................................15
(ii)
<PAGE>
2.4. Class 4 Claims................................................15
2.5. Class 5 Interests.............................................15
2.6. Class 6 Interests.............................................15
ARTICLE III. TREATMENT OF UNCLASSIFIED CLAIMS..............................16
3.1. Administrative Expense Claims.................................16
3.2. Priority Tax Claims...........................................16
ARTICLE IV. TREATMENT OF CLAIMS AND INTERESTS CLASSIFIED UNDER THE PLAN...17
4.1. Class 1 Claims (Nontax Priority Claims).......................17
4.2. Class 2 Claims (Noteholder Secured Claims)....................17
4.3. Class 3 Claims (Secured Claims)...............................18
4.4. Class 4 Claims (General Unsecured Claims......................19
4.5. Class 5 Interests (Old Common Stock)..........................20
4.6. Class 6 Interests (Old Options)...............................20
ARTICLE V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.........20
ARTICLE VI. MEANS FOR IMPLEMENTING THE PLAN...............................21
6.1. Cash Distributions; Liquidity.................................21
6.2. Issuance and Distribution of New Secured Notes and
Cancellation of Old Secured Notes...........................22
6.3. Issuance and Distribution of New Common Stock and
Cancellation of Old Common Stock............................25
6.4. Assuring Management Continuity................................28
6.5. Manner of Payments Under the Plan.............................29
ARTICLE VII. CORPORATE ACTION INCIDENT TO PLAN IMPLEMENTATION..............29
7.1. New Certificate of Incorporation..............................29
7.2. Cancellation of Secured Notes and Old Indenture...............29
7.3. Cancellation of Equity Securities.............................30
7.4. Adoption of Post-Confirmation Employee Incentive Plan.........30
7.5. Board of Directors............................................30
7.6. NASDAQ Listing................................................31
7.7. Other Corporate Action........................................31
ARTICLE VIII. ALLOWANCE OF CLAIMS...........................................31
8.1. Claims of Noteholders.........................................31
8.2. Substantial Contribution Claim of Noteholder Steering
Committee's Counsel.........................................32
8.3. Bar Date for Objections to Claims.............................33
8.4. Reserves......................................................33
(iii)
<PAGE>
ARTICLE IX. EFFECT OF CONFIRMATION........................................34
9.1. Revesting of Property.........................................34
9.2. Discharge.....................................................34
9.3. Releases......................................................34
9.4. Survival and Assignment of Avoidance Actions..................37
9.5. Injunction....................................................37
9.6. Indemnification...............................................39
9.7. Limitation on Sale of New Common Stock........................39
1. Definitions..............................................40
2. Rules Applicable to 5% Holders...........................41
3. Rules Applicable to Non-5% Holders.......................43
4. Consent of the Gatekeeper................................43
5. Restriction Period.......................................46
ARTICLE X. CONDITIONS PRECEDENT..........................................47
10.1. Conditions to Confirmation....................................47
10.2. Conditions to the Occurrence of the Effective Date............48
10.3. Waiver of Conditions..........................................48
ARTICLE XI. RETENTION OF JURISDICTION.....................................48
ARTICLE XII. ADDITIONAL PROVISIONS.........................................50
12.1. Revocation....................................................50
12.2. Effect of Revocation..........................................50
12.3. Certain Administrative Expenses...............................51
12.4. Committees....................................................51
12.5. Headings......................................................52
12.6. Successors and Assigns........................................52
12.7. Governing Law.................................................52
12.8. Notices.......................................................52
12.9. Unclaimed Cash or Securities..................................53
12.11. Admissibility.................................................53
12.12. Time..........................................................53
12.13. Use of Pronouns...............................................55
(iv)
<PAGE>
DEBTOR'S FIRST AMENDED AND MODIFIED PLAN OF REORGANIZATION
----------------------------------------------------------
Capital Gaming International, Inc., the above captioned debtor,
proposes the following plan of reorganization pursuant to the provisions of
chapter 11 of Title 11, United States Code, 11 U.S.C. ss.1101 et seq.
ARTICLE I.
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings when used in initially capitalized form in this Plan.
Such meanings shall be equally applicable to both the singular and plural forms
of such terms. Any term used in initially capitalized form in this Plan that is
not defined herein but that is used in the Bankruptcy Code shall have the
meaning assigned to such term in the Bankruptcy Code.
1.1. Administrative Expense Claim means any Claim against the Debtor
(including a Fee Request), arising or accruing during the period commencing on
the Filing Date and ending on the Effective Date, which is entitled to priority
in accordance with sections 503(b) and 507(a)(1) of the Bankruptcy Code,
including, without limitation, all expenses of administration and amounts
necessary to cure defaults pursuant to section 365 of the Bankruptcy Code.
1.2. Affiliate shall have the meaning ascribed to such term in section
101(2) of the Bankruptcy Code.
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1.3. Allowed with respect to Claims (other than Administrative Expense
Claims) and Interests, means (a) any Claim against or Interest in the Debtor,
proof of which was timely filed or by order of the Bankruptcy Court was not
required to be filed or (b) any Claim or Interest that has been, or hereafter
is, listed in the Schedules filed by the Debtor as liquidated in amount and not
disputed or contingent and, in each such case in (a) and (b) above, as to which
either (i) no objection to the allowance thereof has been filed within the
applicable period of limitation fixed by this Plan, the Bankruptcy Code, the
Bankruptcy Rules, other applicable period of limitation fixed by this Plan, the
Bankruptcy Code, the Bankruptcy Rules, other applicable law or the Bankruptcy
Court, or (ii) an objection has been filed and the Claim or Interest has been
allowed by a Final Order (but only to the extent so allowed). "Allowed," with
respect to an Administrative Expense Claim, means all or that portion of an
Administrative Expense Claim which either (a) has been allowed by a Final Order,
or (b) was incurred by the Debtor in the ordinary course of business during the
Chapter 11 Case and is due and owing without defense, offset or counterclaim of
any kind. Unless otherwise specified in the Plan or by order of the Bankruptcy
Court, an Allowed Claim shall not include interest on such Claim for the period
from and after the Petition Date.
1.4. Allowed Amount means, with respect to a particular Claim: (a) if
the holder of such Claim has not filed a proof of claim as prescribed by the
Bankruptcy Court within the applicable period of limitation fixed by the
Bankruptcy Court pursuant to Bankruptcy Rule 3003, the amount, if any, of such
Claim that is listed in the Schedules as being not disputed, contingent or
unliquidated; (b) if the holder of such Claim has duly and timely filed a proof
of claim: (i) the amount stated in such proof of claim, if no objection to such
proof of claim is interposed within
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the applicable period of limitation fixed by the Bankruptcy Code, the Bankruptcy
Rules, the Bankruptcy Court or other applicable law; or (ii) such amount as
shall be fixed by a Final Order of the Bankruptcy Court, if an objection is
interposed within the applicable period of limitation fixed by the Bankruptcy
Code, the Bankruptcy Rules, the Bankruptcy Court or other applicable law; (c)
with respect to an Administrative Expense Claim, other than a Fee Request, the
amount of such Claim or such amount as shall be fixed by a Final Order of the
Bankruptcy Court; or (d) with respect to a Fee Request, such amount as shall be
fixed and allowed by a Final Order of the Bankruptcy Court.
1.5. Allowed Noteholder Claims shall mean the Claims allowed in favor
of the Indenture Trustee, for the benefit of the Noteholders, pursuant to
paragraph 8.1 of the Plan.
1.6. Allowed Claim means any Claim (including a Fee Request) for which
an Allowed Amount has been determined.
1.7. Allowed Interest means any Interest which is Allowed.
1.8. Amended By-Laws means the by-laws of the Reorganized Debtor, as
amended and restated as of the Effective Date, which shall be a Plan Document.
1.9. Amended Indenture means the Old Indenture, amended as of the
Effective Date, between the Reorganized Debtor, as issuer, and the Guarantor
thereunder, in substantially the form as attached hereto as Exhibit "A,"
governing, among other things, the New Secured Notes.
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<PAGE>
1.10. Bankruptcy Code means title I of the Bankruptcy Reform Act of
1978, Pub. L. No. 95-598, 92 Stat. 2549 (1978), as amended, and as set forth in
sections 101 et seq. of title 11, United States Code.
1.11. Bankruptcy Court means the United States Bankruptcy Court for the
District of New Jersey, or such other court that may have jurisdiction over the
Chapter 11 Case including any district court that may withdraw the reference of
the Debtor's Chapter 11 Case pursuant to 28 U.S.C. ss.157(d).
1.12. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure,
prescribed pursuant to 28 U.S.C. ss.2075, as amended from time to time.
1.13. Business Day means any day except Saturday, Sunday or any other
day on which commercial banks in New York City are authorized by law
to close.
1.14. Cash means cash, cash equivalents and other readily marketable
direct obligations of the United States of America and fully FDIC-insured
certificates of deposit issued by banks.
1.15. Chapter 11 Case means the case under chapter 11 of the Bankruptcy
Code concerning the Debtor, entitled In re Capital Gaming International, Inc.,
Chapter 11 Case No. 96-19829 (JHW).
1.16. Claim means (a) right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (b)
right to an equitable remedy for breach of
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<PAGE>
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
1.17. Class means a group of Claims or Interests, consisting of Claims
or Interests, as the case may be, which are substantially similar to each other
within the meaning of the Bankruptcy Code, as classified pursuant to Article II
of the Plan.
1.18. Confirmation Account means the segregated, interest bearing
account established by the Debtor on the Effective Date pursuant to paragraph
6.1 of the Plan.
1.19. Confirmation Payment means the sum of: (a) $250,000 in Cash; and
(b) New Secured Notes having a principal face amount of $550,000.
1.20. Confirmation Date means the date on which the Confirmation Order
is entered on the docket of the Bankruptcy Court.
1.21. Confirmation Hearing means the hearing held before the Bankruptcy
Court in which the Debtor requests confirmation of the Plan in accordance with
section 1129 of the Bankruptcy Code.
1.22. Confirmation Order means the Order entered by the Bankruptcy
Court confirming the Plan under chapter 11 of the Bankruptcy Code.
1.23. Confirmation Valuation means the value of the New Common Stock,
as determined by the Bankruptcy Court at the Confirmation Hearing.
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<PAGE>
1.24. Covered Persons means the Debtor and each of its wholly owned
subsidiaries as described in the Disclosure Statement related to this Plan,
together with their respective present and former directors, officers and
employees.
1.25. Creditors' Committee means the Official Committee of the
Unsecured Creditors of the Debtor appointed by the U.S. Trustee on January 8,
1997 pursuant to section 1102 of the Bankruptcy Code to represent the interests
of the unsecured creditors of the Debtor.
1.26. Debtor means Capital Gaming International, Inc., the debtor in
the Chapter 11 Case.
1.27. Debt Record Date means the Confirmation Date or such other date
fixed in the Confirmation Order for determining distributions to Noteholders.
1.28. Deficiency Claim means, with respect to a Claim that is partially
secured, the amount by which the Allowed Amount of such Claim exceeds the value
of the property owned by the Debtor which collateralizes such claim.
1.29. Disputed Claim means a Claim that has not become an Allowed
Claim.
1.30. Disputed Interest means an Interest that has not become an
Allowed Interest.
1.31. Distribution Date means the Effective Date and each Subsequent
Distribution Date, collectively.
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1.32. Effective Date means the Business Day selected by the Debtor that
is not more than five (5) Business Days after the date each of the conditions
precedent to consummation as provided in Article X of the Plan has been
satisfied or waived in accordance with the Plan.
1.33. Face Amount means, with respect to a particular Claim: (a) if the
Claim is listed in the Schedules and the holder of such Claim has not filed a
proof of Claim with the Bankruptcy Court within the applicable period of
limitation fixed by the Bankruptcy Court pursuant to the Bankruptcy Code, the
Bankruptcy Rules or other applicable law, the amount of such Claim that is
listed in the Schedules as not disputed, contingent or unliquidated; or (b) if
the holder of such Claim has filed a proof of Claim with the Bankruptcy Court
within the applicable period of limitation fixed by the Bankruptcy Court
pursuant to the Bankruptcy Code, Bankruptcy Rules or other applicable law, the
liquidated amount stated in such proof of claim, or such amount as is determined
by final order of the Bankruptcy Court; (c) in the case of an Administrative
Expense, the liquidated amount set forth in any application filed with the
Bankruptcy Court , the amount contained in the Debtor's books and records or
such amount as is determined by a Final Order of the Bankruptcy Court; or (d) in
all other cases, zero (0) or such amount as shall be fixed or estimated by a
Final Order of the Bankruptcy Court.
1.34. Fee Request means a request for compensation or reimbursement of
expenses pursuant to section 330 or 331 of the Bankruptcy Code in connection
with an application made to the Bankruptcy Court in the Chapter 11 Case.
1.35. Filing Date means December 23, 1996.
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<PAGE>
1.36. Final Order means an order or judgment of the Bankruptcy Court as
entered on the docket that (a) is not stayed, and (b) has not been reversed,
modified or amended, and (c) as to which the time to appeal, petition for
certiorari, or seek reargument or rehearing has expired and as to which no
appeal, reargument, petition for certiorari, or rehearing is pending or as to
which any right to appeal, reargue, petition for certiorari or seek rehearing
has been waived in writing in a manner satisfactory to the Debtor, or, if any
appeal, reargument, petition for certiorari, or rehearing has been sought, the
order or judgment of the Bankruptcy Court has been affirmed by the highest court
to which the order was appealed or from which the reargument or rehearing was
sought, or certiorari has been denied, and the time to take any further appeal
or to seek certiorari or further reargument or rehearing has expired.
1.37. Gaming License means any material license, certification,
franchise or other authorization or approval to own, lease, operate or otherwise
conduct, manage, finance, consult with respect to, operate or develop riverboat,
dockside, land-based or any other type of gaming in any Gaming Jurisdiction, and
applicable liquor licenses.
1.38. Gaming Jurisdiction means any Federal, state, tribal or
sovereign nation in which any entity in which the Debtor or Reorganized Debtor
has a direct or indirect beneficial, legal or voting interest, conducts or
intends to conduct, manage, finance, consult with respect to, operate or develop
riverboat, dockside, land-based or any other type of gaming (including, without
limitation, the rendering of services in respect thereof pursuant to a Native
American Casino Management Contract (as such term is defined in the Amended
Indenture) or otherwise).
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<PAGE>
1.39. General Unsecured Claim means any Prepetition Claim against
the Debtor which is not a Secured Claim and is not entitled to Priority Status.
1.40. Guarantor means Capital Gaming Management, Inc., a New Jersey
Corporation.
1.41. Indenture Trustee means First Trust National Association, as
Indenture Trustee under the Old Indenture, and any successor or assign thereof.
1.42. Interests means the rights of the holders and owners of the
issued and outstanding Old Equity Securities, including, without limitation, all
legal and equitable rights or entitlements evidenced by, arising under or
relating to any Old Equity Security.
1.43. Joint Trade Claims means any claim for goods or services as to
which the Debtor and a subsidiary are jointly and severally liable.
1.44. Key Officers means Edward M. Tracy and William S. Papazian,
collectively.
1.45. New Certificate of Incorporation means the amended Restated
Certificate of Incorporation of the Reorganized Debtor which shall become
effective on the Effective Date and which shall be substantially in the form of
the certificate attached hereto as Exhibit "B."
1.46. New Common Stock means the shares of common stock of the
Reorganized Debtor to be issued by the Reorganized Debtor on the Effective Date
in accordance with the terms of the Plan, having the terms set forth in the New
Certificate of Incorporation.
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<PAGE>
1.47. New Secured Notes means notes having a principal face amount of
$23.1 million which shall be issued by the Reorganized Debtor and guaranteed by
the Guarantor, under the Amended Indenture.
1.48. Nontax Priority Claim means any Prepetition Claim against the
Debtor (other than an Administrative Expense Claim or Priority Tax Claim)
entitled to Priority Status.
1.49. Noteholder means a holder of an Old Secured Note.
1.50. Noteholder Claims means Noteholder Secured Claims and Noteholder
Unsecured Claims,
collectively.
1.51. Noteholder Secured Claims means the Claims of Noteholders on
account of their ownership of Old Secured Notes, to the extent such Claims
constitute Secured Claims under section 506 of the Bankruptcy Code; provided,
however, that Noteholder Secured Claims shall not include any Claim arising from
recission of a purchase or sale of Old Secured Notes, for damages arising from
the purchase or sale of Old Secured Notes or for reimbursement or contribution
allowed under section 502 of the Bankruptcy Code on account of such Claim. As
provided in paragraph 8.1 of the Plan, the Indenture Trustee shall be deemed to
have filed a proof of claim, pursuant to Bankruptcy Rule 3003(c)(5), on behalf
of all Noteholders, which shall be allowed in the Chapter 11 Case as a Class 2
Claim for $24,000,000 and as a Class 4 Claim for $80,688,850.
1.52. Noteholder Unsecured Claims means the Claims of Noteholders on
account of their ownership of Old Secured Notes, to the extent such Claims
constitute Unsecured Claims
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; provided, however, that Noteholder Unsecured Claims shall not include any
Claim arising from recission of a purchase or sale of Old Secured Notes, for
damages arising from the purchase or sale of Old Secured Notes or for
reimbursement or contribution allowed under section 502 of the Bankruptcy Code
on account of such Claim. As provided in paragraph 8.1 of the Plan, the
Indenture Trustee shall be deemed to have filed a proof of claim, pursuant to
Bankruptcy Rule 3003(c)(5), on behalf of all Noteholders, which shall be allowed
in the Chapter 11 Case as a Class 2 Claim for $24,000,000 and as a Class 4 Claim
for $80,688,850.
1.53. Noteholders Steering Committee means that certain
unofficial committee of Noteholders consisting, as of the Filing Date, of
SunAmerica, Inc., DDJ Capital Management L.L.C., Loews Corporation and Grace
Brothers, Ltd.
1.54. Old Common Stock means any and all of the common equity
securities of the Debtor in respect of which any shares are presently issued and
outstanding, including, 19,329,574 shares of common stock, provided that Old
Common Stock shall not include any shares of New Common Stock.
1.55. Old Equity Securities means Old Common Stock and Old Options,
collectively.
1.56. Old Guaranty means the guaranty of the Guarantor, dated as of
February 17, 1994 in respect to the Old Secured Notes.
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1.57. Old Indenture means the Indenture governing the Old
Secured Notes, dated February 17, 1994, as amended, between the Debtor, as
Issuer, the guarantors thereunder and the Indenture Trustee.
1.58. Old Options means any and all rights, warrants and options
relating to Old Common Stock.
1.59. Old Secured Notes means, collectively, the 11-1/2%
Secured Notes due 2001, issued by the Debtor pursuant to the Old Indenture.
1.60. Order means an order of the Bankruptcy Court.
1.61. Ordinary Course Administrative Expense Claims means all
Administrative Expense Claims other than any Special Administrative Expense
Claims.
1.62. Person means an individual, a corporation, a partnership, an
association, a joint stock company, a joint venture, an estate, a trust, an
unincorporated organization, a government, or any political subdivision thereof,
or other entity.
1.63. Plan means this plan of reorganization of the Debtor under
chapter 11 of the Bankruptcy Code and all exhibits hereto, as it may be amended
or modified by the Debtor from time to time in accordance with the Plan, the
Bankruptcy Code and the Bankruptcy Rules.
1.64. Plan Document(s) means the document(s) that aid in
effectuating the Plan and that are specifically identified herein as Plan
Documents or which, in the view of the Debtor, become necessary or appropriate
to effectuate the Plan, which documents, to the extent feasible, shall be filed
on or before the Confirmation Hearing.
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1.65. Plan Rate means six percent (6%) per annum.
1.66. Post-Confirmation Employee Stock Incentive Plan means
the employee stock option plan substantially in the form of that annexed as
Exhibit "C" to the Plan.
1.67. Prepetition means arising or accruing or relating to the period
before the Filing Date.
1.68. Priority Status means the priority in distribution afforded to
certain Claims pursuant to section 507(a) of the Bankruptcy Code.
1.69. Priority Tax Claim means any Prepetition Claim against the Debtor
to the extent entitled to priority in payment under section 507(a)(8) of the
Bankruptcy Code.
1.70. Pro Rata means, as to any distribution provided for by this Plan
in respect of any Class of Claims, the allocation of the aggregate amount of
such distribution in accordance with that percentage of the total of Allowed
Claims in such Class that is represented by the Allowed Claim receiving the
distribution.
1.71. Regulatory Sale Option has the meaning set forth in paragraph
6.3(e) of the Plan.
1.72. Released Claim shall have the meaning ascribed to such term in
paragraph 9.3(a) hereof.
1.73. Reorganized Debtor means the Debtor on and after the Effective
Date.
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1.74. Schedules means the various schedules and lists filed by the
Debtor on December 23, 1996, pursuant to section 521 of the Bankruptcy Code, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the Bankruptcy Rules, Bankruptcy Code or other applicable law.
1.75. Secured Claim means any Prepetition Claim against the
Debtor (other than a Nontax Priority Claim or Tax Claim) which is secured or
collateralized by property of the Debtor.
1.76. Special Administrative Expense Claims means all Administrative
Expense Claims which, by law, rule, agreement or otherwise, must be allowed by
order of the Bankruptcy Court. Special Administrative Expense Claims include (i)
all professional fees to be awarded and expenses to be reimbursed under section
327 or 1103 of the Bankruptcy Code, (ii) reimbursement of expenses to committee
members in accordance with section 503(b)(3)(F) of the Bankruptcy Code, and
(iii) substantial contribution awards granted in accordance with section
503(b)(3)(D) and (b)(4) of the Bankruptcy Code.
1.77. Stock Record Date means the Confirmation Date or such other date
fixed in the Confirmation Order for determining distributions to holders of Old
Common Stock.
1.78. Stock Transfer Agent means American Stock Transfer Company.
1.79. Subsequent Distribution Date shall mean (a) the first (1st)
Business Day following January 15 and July 15 of each year; and (b) such other
dates as the Reorganized Debtor, in its discretion, may determine.
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1.80. Total Class 4 Claims means the sum of the Allowed Amounts of all
Allowed Class 4 Claims, plus the Face Amounts of all Disputed Class 4 Claims.
ARTICLE II.
CLASSIFICATION OF CLAIMS AND INTERESTS
The following is a designation of Classes of Claims and Interests. A
Claim or Interest is classified in a particular Class only to the extent that
the Claim or Interest qualifies within the description of the Class and is
classified in a different Class to the extent the Claim or Interest qualifies
within the description of that different Class. Administrative Expense Claims
and Priority Tax Claims are unclassified. For purposes of the Plan, Claims and
Interests are classified as follows:
2.1. "Class 1 Claims" shall consist of all Nontax Priority Claims.
2.2. "Class 2 Claims" shall consist of all Noteholder Secured Claims.
2.3. "Class 3 Claims" shall consist of all Secured Claims other than
Noteholder Secured Claims.
2.4. "Class 4 Claims" shall consist of all General Unsecured Claims.
Class 4 Claims include all Deficiency Claims.
2.5. "Class 5 Interests" shall consist of all Old Common Stock.
2.6. "Class 6 Interests" shall consist of all Old Options.
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ARTICLE III.
TREATMENT OF UNCLASSIFIED CLAIMS
3.1. Administrative Expense Claims.
(a) Ordinary Course Administrative Expense Claims. Each holder
of an Ordinary Course Administrative Expense Claim shall be paid in full, in
Cash, on account of such holder's Ordinary Course Administrative Expense Claim,
on the date such Claim becomes due and payable unless such claim is a Disputed
Claim, in which case payment shall be made (i) within three (3) Business Days of
the day that an Order determining the Allowed Amount of such Claim has become a
Final Order (unless the time of payment is otherwise prescribed in such order),
or (ii) or as otherwise agreed between the Debtor or Reorganized Debtor, as the
case may be, and such holder.
(b) Special Administrative Expense Claims. Each holder of a
Special Administrative Expense Claim shall be paid the Allowed Amount of such
Claim in full, in Cash, on or before the third (3rd) Business Day following the
day on which an Order is entered allowing such Claim, or on such other date as
the Bankruptcy Court may direct.
3.2. Priority Tax Claims. Each holder of an Allowed Priority Tax Claim
shall be paid the Allowed Amount of such Claim, at the sole option of the Debtor
or Reorganized Debtor, as the case may be, either (a) in Cash on the Effective
Date, or such other date as the Bankruptcy Court may determine, or (b) pursuant
to section 1129(a)(9)(C) of the Bankruptcy Code,
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in deferred cash payments to be made in equal semi-annual installments over the
six (6) years following the date of assessment of such Claim, with interest
thereon at the Plan Rate in the case of such deferred payments.
ARTICLE IV.
TREATMENT OF CLAIMS AND INTERESTS
CLASSIFIED UNDER THE PLAN
The Allowed Claims and Allowed Interests as classified in
Article II of the Plan shall be satisfied in the manner set forth in this
Article IV unless the holder of such Allowed Claim or Allowed Interest agrees to
accept less favorable treatment.
4.1. Class 1 Claims (Nontax Priority Claims). Class 1 Claims
may be impaired. Each holder of an Allowed Nontax Priority Claim shall be paid
the Allowed Amount of such Claim in full, in Cash, on the Effective Date or on
such other date as the Bankruptcy Court may determine, or, in the alternative,
if Class 1 Claims have accepted the Plan, the Debtor, at its option, may elect,
consistent with section 1129(a)(9)(B) of the Bankruptcy Code, to make deferred
Cash payments to any holder of a Class 1 Claim in equal semi-annual installments
over a three (3) year period following the Effective Date, with interest thereon
at the Plan Rate in the case of such deferred payments.
4.2. Class 2 Claims (Noteholder Secured Claims). Class 2 Claims are
impaired. On the Effective Date, the Indenture Trustee shall receive, on behalf
of the
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Noteholders, on account of its Allowed Class 2 Claim: (a) New Secured Notes in
the principal face amount of $21.45 million; and (b) 1,225,000 shares of New
Common Stock.
4.3. Class 3 Claims (Secured Claims). Class 3 Claims are not impaired.
Each holder of an Allowed Class 3 Claim shall be treated, at the sole option of
the Reorganized Debtor, exercised on or within five (5) Business Days after the
Effective Date, or such other date as the Bankruptcy Court may determine,
pursuant to any of the following alternatives: (A) the Reorganized Debtor shall
execute a written undertaking in favor of the holder of such Claim, whereby the
Reorganized Debtor assumes such Claim and leaves unaltered such holder's legal,
equitable and contractual rights with respect to such Claim, or (B)
notwithstanding any contractual provision or applicable law that entitles the
holder of such Claim to demand or receive accelerated payment of such Claim
after the occurrence of a default, the Reorganized Debtor shall (1) cure any
such default that occurred before or after the Filing Date, other than a default
of a kind specified in section 365(b)(2) of the Bankruptcy Code, (2) reinstate
the maturity of such Claim as such maturity existed before such default, (3)
compensate the holder of such Claim for any damages incurred as a result of any
reasonable reliance by such holder on such contractual provision or such
applicable law, and (4) execute a written undertaking in favor of such holder,
whereby the Reorganized Debtor assumes such Claim and, except as permitted in
clauses (1), (2) and (3) hereof, does not otherwise alter the legal, equitable
or contractual rights of such holder with respect to such Claim; or (C) the
Reorganized Debtor shall; or (D) the Reorganized Debtor shall transfer title to
some or all of that property of the Reorganized Debtor which secures such
holder's Allowed Class 3 Claim with a concomitant reduction in the Allowed
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Amount thereof based upon the value of property transferred, with any resulting
Deficiency Claim being treated as a Class 4 Claim.
Notwithstanding the foregoing: (1) the Debtor, in its sole discretion,
may elect by sending written notice to the affected creditor on or before the
Confirmation Date to (x) pay the holder of such Allowed Class 3 Claim the
Allowed Amount thereof, in Cash; (y) distribute to the holder of an Allowed
Claim in Class 3 the property securing such holder's Claim, in which event such
holder shall be entitled within thirty (30) days of such election to file a
proof of claim for any deficiency entitled to treatment as a General Unsecured
Claim in Class 4, as applicable, or be forever barred from thereafter asserting
a Deficiency Claim against the Debtor or Reorganized Debtor; or (z) provide to
such holder such treatment, including deferred Cash payments, as shall be
consistent with section 1129(b) of the Bankruptcy Code; and (2) the holder of a
Class 3 Claim may receive such less favorable treatment as may be agreed upon by
such holder and the Debtor or Reorganized Debtor, as the case may be. In the
event the Debtor elects the treatment provided for in the preceding sentence,
such Claim shall be deemed impaired.
4.4. Class 4 Claims (General Unsecured Claims). Class 4 Claims are
impaired. Each holder of an Allowed Class 4 Claim, subject to paragraph 6.3(e)
of the Plan, shall receive on the Effective Date or such later date that a Class
4 Claim becomes an Allowed Claim its Pro Rata share of: (i) 525,000 shares of
New Common Stock; (ii) the right to receive the net proceeds of Avoidance
Actions recovered pursuant to Section 9.4 of the Plan; and (iii) $1,100,000 in
New Secured Notes. Notwithstanding the foregoing, the Indenture Trustee shall
receive no more than 375,000 shares of New Common Stock and $550,000 in New
Secured Notes on account of its Allowed Class 4 Claim, and any shares the
Indenture Trustee would
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otherwise receive on account of its Class 4 Claim in excess of 375,000 shares
and any New Secured Notes the Indenture Trustee would otherwise receive on
account of its Class 4 Claim in excess of $550,000 in New Secured Notes shall be
distributed Pro Rata to all other holders of Allowed Class 4 Claims.
4.5. Class 5 Interests (Old Common Stock). Class 5 Interests are
impaired. Subject to paragraphs 6.3(d) and (e) of the Plan, each holder of an
Allowed Class 5 Interest shall receive, on the Effective Date, its Pro Rata
share of 50,000 shares of New Common Stock.
4.6. Class 6 Interests (Old Options). Class 6 Interests are impaired.
Each holder of a Class 6 Interest shall not receive any distribution under the
Plan on account of such Interest. As provided in paragraph 7.3 of the Plan, all
Old Options shall be deemed canceled and void as of the Effective Date.
ARTICLE V.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Subject to the requirements of section 365 of the Bankruptcy Code, all
executory contracts or unexpired leases of the Debtor that have not been assumed
by order of the Bankruptcy Court, are not the subject of a motion to assume
pending on the Confirmation Date or are not listed on the Schedule of Assumed
Executory Contracts annexed hereto as Exhibit "D" shall be deemed rejected by
the Debtor on the Effective Date. The Debtor reserves all of its rights prior to
the Confirmation Date to assume any such contract or lease agreement, and, as to
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any contract determined by the Bankruptcy Court to constitute an executory
contract of the Debtor, which contract was not set forth on the Debtor's
Schedule G -- Executory Contracts and Unexpired Leases filed by the Debtor with
the Bankruptcy Court in connection with the Chapter 11 Case, as the same may
have been amended or modified by the Debtor from time to time, for a period of
five (5) Business Days after the date of any such determination. All payments to
cure defaults that may be required by section 365(b)(1) of the Bankruptcy Code
shall be made by the Debtor as an Ordinary Course Administrative Expense Claim.
In the event of a dispute regarding the amount of any such payments or the
ability of the Debtor to provide adequate assurance of future performance, the
Debtor will make any payments required by section 365(b)(1) of the Bankruptcy
Code after the entry of a Final Order resolving such dispute. All proofs of
claim with respect to Claims arising from the rejection of executory contracts
or unexpired leases must be filed with the Bankruptcy Court within thirty (30)
days from and after the date of entry of an Order authorizing such rejection,
unless the Bankruptcy Court shall fix a different period in any such Order, or
such Claims shall be barred.
ARTICLE VI.
MEANS FOR IMPLEMENTING THE PLAN
6.1. Cash Distributions; Liquidity. The Debtor anticipates that it will
have adequate liquidity on the Effective Date to satisfy its obligations under
the Plan and to operate its ongoing business. On the Effective Date the Debtor
shall establish a segregated, interest bearing account (the "Confirmation
Account") into which it shall deposit an amount equal to the Debtor's
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reasonable, good faith estimate of the Allowed Amounts of all then unsatisfied
Special Administrative Expense Claims. The Reorganized Debtor shall invest those
funds in the Confirmation Account subject to the provisions of section 345 of
the Bankruptcy Code, except as otherwise ordered by the Bankruptcy Court. Monies
shall be disbursed from the Confirmation Account only to satisfy Allowed Special
Administrative Expense Claims or as otherwise ordered by the Bankruptcy Court.
Neither the Debtor nor Reorganized Debtor shall have any interest in the cash
deposited in the Confirmation Account, such cash being deposited solely for the
benefit of holders of Allowed Special Administrative Claims. To the extent that
cash remains in the Confirmation Account after all Special Administrative
Expense Claims have been allowed and paid, the Bankruptcy Court, upon the
request of the Reorganized Debtor, may order the release of such cash balance to
the Reorganized Debtor.
6.2. Issuance and Distribution of New Secured Notes and Cancellation of
Old Secured Notes.
(a) On the Effective Date, the Reorganized Debtor shall issue New
Secured Notes in the principal face amount of $23.1 million, $21.45 million for
distribution to the Indenture Trustee for the benefit of holders of Class 2
Claims as hereinafter provided, $1,100,000 for distribution to holders of
Allowed Class 4 Claims and $550,000 for distribution to the Key Officers in
partial payment of their Confirmation Payment. For purposes of making
distributions to holders of Old Secured Notes under the Plan, the Indenture
Trustee shall be deemed to be the sole holder of all Allowed Claims evidenced by
the Old Secured Notes under the Old Indenture. Accordingly, all distributions on
account of such Old Secured Notes shall be distributed to the Indenture Trustee,
for further distribution to holders of the Old Secured Notes, pursuant to the
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terms of the Old Indenture (including, without limitation, any terms providing
rights and claims of the Indenture Trustee such as claims for fees and
reimbursement of expenses). Subject to this Section 6.2 and Section 12.9, the
provisions of the Old Indenture shall govern the holding of undeliverable
distributions and the delivery of distributions to holders of such Allowed
Claims. To the extent not satisfied pursuant to paragraph 12.3 hereof, any fees
and reimbursable expenses of the Indenture Trustee may be payable from the
distributions made to the Indenture Trustee as and to the extent specifically
provided by the Old Indenture.
(b) In accordance with the terms of the Amended Indenture, the
Guarantor will guaranty payment of the obligations under the New Secured Notes.
In addition, the pledge of collateral by the Guarantor of the Old Secured Notes
will secure the payment of all of the Reorganized Debtor's obligations under the
New Secured Notes. The Amended Indenture provides that the pledge of Collateral
by the Guarantor respecting the Old Secured Note shall, upon the Effective Date,
be released and fully subordinated to the pledge of collateral by the Guarantor
securing the New Secured Notes. Moreover, pursuant to Section 9.3 and 9.4 of the
Plan the Guarantor shall be released from the Old Guaranty and all holders of
Old Secured Notes and their transferees, successors and assigns shall, upon the
occurrence of the Effective Date, be permanently enjoined from taking any action
to enforce the Old Guaranty. It is possible that pursuant to Section 10.2 of the
Indenture respecting the Old Secured Notes, prior to the amendments contemplated
under this Plan (the "Old Indenture"), the holders of 66 2/3 % of the
outstanding Old Secured Notes may modify the Guaranty under Article XIII of the
Old Indenture. Accordingly, the acceptance of the Plan by 66 2/3 % of the
outstanding Old Secured Notes will be deemed an agreement and consent by the
holders of the Old Secured Notes to
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modify Article XIII of the Old Indenture to render the Old Guaranty satisfied
and unenforceable upon the Effective Date.
(c) No holder of Old Secured Notes shall be entitled to receive any
distribution from the Indenture Trustee respecting such Old Secured Note unless
and until such holder shall have first either (i) surrendered or caused to be
surrendered to the Indenture Trustee the original Old Secured Note held by such
holder, or (ii) if such holder is unable to surrender its original Old Secured
Note because the same has been lost, destroyed, stolen or mutilated, (A)
furnished the Indenture Trustee with an executed affidavit of loss, destruction,
theft or mutilation in a form that is reasonably acceptable to the Indenture
Trustee and the Reorganized Debtor, and (B) provided to the Indenture Trustee
such security or indemnity as may be reasonably required by the Indenture
Trustee and the Reorganized Debtor, Promptly upon surrender of the Old Secured
Notes or such affidavit and such security or indemnity to be deemed to have
surrendered such Old Secured Notes, the Indenture Trustee shall cancel such Old
Secured Notes and deliver such canceled Old Secured Notes to the Reorganized
Debtor or otherwise dispose of such securities in such manner as the Reorganized
Debtor may request. On the Effective Date, any default or Event of Default
existing under the Old Indenture or any related document that does not
constitute a continuing Event of Default under the Amended Indenture shall be
deemed waived by the Indenture Trustee and the Noteholders.
(d) Any holder of Old Secured Notes that fails to surrender
its securities or to provide an affidavit and adequate security or indemnity to
be deemed to have surrendered such securities within two years of the Effective
Date shall be conclusively deemed to have no further Claims against the Debtor
and all such property not claimed by such holder shall be distributed
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Pro Rata to all other holders of Old Secured Notes under the Old Indenture who
have complied with this Section 6.2.
(e) On the Effective Date, the obligations of the Debtor and the
Reorganized Debtor under the Old Secured Notes shall be deemed canceled,
discharged, terminated and of no further force or effect. Notwithstanding the
foregoing, such cancellation shall not impair the rights of holders of the Old
Secured Notes to receive distributions on account of such Claims as provided in
this Plan, nor shall such cancellation impair the rights of the Indenture
Trustee to compensation and indemnity under the applicable provisions of the Old
Indenture until all distributions are made to holders of Old Secured Notes as
provided herein.
(f) Upon entry of the Confirmation Order, the rights, liens, and
interests granted to recipients of the New Secured Notes shall be deemed valid
and perfected as to the amounts and priorities established under this Plan
without further order of the Bankruptcy Court, and without the need for any
documentation or filing with appropriate recording offices. Notwithstanding the
foregoing, the Reorganized Debtor shall prepare and deliver to the Indenture
Trustee under the Amended Indenture any and all documents or writings that the
Indenture Trustee may reasonably request to evidence and perfect the rights,
liens, and interests granted under this Plan, the Amended Indenture, or any
related security documents.
6.3. Issuance and Distribution of New Common Stock and Cancellation of
Old Common Stock.
(a) On the Effective Date, the Reorganized Debtor shall issue
the aggregate amount of 2,000,000 shares of New Common Stock in accordance with
the terms of the Plan.
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The New Common Stock shall be subject to the provisions and restrictions of the
New Certificate of Incorporation.
(b) On the Effective Date all Old Common Stock and all unexercised
rights to acquire shares of common stock or preferred stock of the Debtor by way
of option, warrant or other legal or contractual rights shall be automatically
canceled and deemed to be void.
(c) As of the close of business on the Stock Record Date, the transfer
ledgers for Old Common Stock shall be closed, and there shall be no further
changes in the record holders of any such securities. The Debtor shall have no
obligation to recognize any transfer of any of the Old Common Stock occurring on
or after the Stock Record Date. The Debtor and the Stock Transfer Agent shall be
entitled to recognize and deal for all purposes hereunder with only those record
holders stated on the transfer ledgers of the Stock Transfer Agent as of the
close of business on the Stock Record Date.
(d) The holder of each Class 5 Interest shall not be entitled to any
distribution under this Plan unless and until such holder shall have first
surrendered, or caused to be surrendered, to the Debtor or the Reorganized
Debtor, as the case may be (or any transfer agent designated by the Debtor or
Reorganized Debtor, as the case may be) the original such security held by it
or, in the event that such original security shall have been lost, destroyed,
stolen or mutilated, executed and delivered an affidavit of loss and indemnity
with respect thereto in form customarily utilized for such purposes that is
reasonably satisfactory to the Debtor or the Reorganized Debtor, as the case may
be, and, in the event the Debtor so requests, furnished a
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bond in form and substance (including, without limitation, amount) reasonably
satisfactory to the Debtor or the Reorganized Debtor, as the case may be.
(e) The Reorganized Debtor or the Debtor, as the case may be, shall
have the option (the "Regulatory Sale Option"), in its sole and absolute
discretion, to cause the purchase on or soon as practicable after the Effective
Date and on any applicable Distribution Date thereafter, from any Person
otherwise entitled to distribution of New Common Stock under the Plan, the
Common Stock allocated to such Person, in the event the Debtor believes, in its
sole and absolute discretion that ownership of New Common Stock by such Person
could have an adverse effect on the Debtor's ability to maintain its existing
Gaming Licenses or obtain new Gaming Licenses in the future. In order to
exercise the Regulatory Sale Option, the Debtor must send written notice to the
Person of the Debtor's intention to exercise the Regulatory Sale Option on or
before the later of (i) the Effective Date, and (ii) the tenth (10th) day
following the day on which such creditor's claim becomes an Allowed Claim. In
the event the Regulatory Sale Option is exercised, such holder shall have a
period of ten (10) Business Days in which to transfer its shares of New Common
Stock into a liquidating trust (each a "Liquidating Trust") administered by an
independent trustee appointed by the Board of Directors of the Reorganized
Debtor who shall, under the terms of the Liquidating Trust, be required to sell
or otherwise transfer within a period of twelve months all of the New Common
Stock required to be divested hereunder. All net cash proceeds derived from the
sale of the New Common Stock shall be delivered to the transferor. Failure to
divest itself of its shares prior to the expiration of such ten (10) Business
Day period shall result in the immediate forfeiture and cancellation of such
shares. Any shares forfeited or cancelled pursuant to this Section 6.3(e) shall
be delivered promptly to the
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Reorganized Debtor for cancellation. Any Liquidating Trust established hereunder
shall provide that, unless the prior written approval of the Board of Directors
of the Reorganized Debtor is obtained, which may be granted or denied in its
sole discretion, the independent trustee may only sell the New Common Stock in
open market transactions. Immediately upon the Debtor or the Reorganized Debtor
transmitting written notice to a shareholder of its intent to exercise the
Regulatory Sale Option, the New Common Stock in question shall no longer be
entitled to any voting, dividend or other rights, if any, until such time as the
New Common Stock has been appropriately transferred to the Liquidating Trust (in
which case the independent trustee will have the exclusive right to vote such
securities. The Reorganized Debtor shall be entitled to recover its attorneys
fees and costs incurred in connection with any proceeding brought by the
Reorganized Debtor for failure of a holder of New Common Stock to comply with
the provisions of this Section 6.3(e). The Regulatory Sale Option is not
intended to otherwise detract from or minimize the Debtor's and Reorganized
Debtor's rights under its Certificate or Incorporation and the New Certificate
of Incorporation.
6.4. Assuring Management Continuity. In order to induce the Key
Officers to remain with the Debtor during the restructuring process and to
reward them for maintaining and enhancing the value of the Debtor's assets and
business for the benefit of the Debtor's creditors and shareholders, the
Reorganized Debtor shall distribute to the Key Officers on the Effective Date,
the Confirmation Payment, in such proportion to each Key Officer as the Board of
Directors of the Debtor shall determine, provided, however, that the allocation
of such cash, notes and shares shall be consistent with any understandings
existing between and among the Debtor and its Key
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Officers. In addition, the Reorganized Debtor shall distribute to the Key
Officers 3.34% of the issued and outstanding shares of New Common Stock on the
Effective Date and 3.33% of the then issued and outstanding shares of common
stock of the Reorganized Debtor on each of the first and second year
anniversaries of the Effective Date. In the event either of the Key Officers is
deemed to have waived his entitlement to New Secured Notes, under such Key
Officers' Employment Agreement, such New Secured Notes shall immediately become
property of the Reorganized Debtor and shall be held in treasury and shall not
be redistributed except in accordance with the terms of the Amended Indenture.
6.5. Manner of Payments Under the Plan. At the option of the
Reorganized Debtor, any cash payment required to be made by the Debtor or
Reorganized Debtor, as the case may be, pursuant hereto may be made by a check
or wire transfer or as otherwise required or provided in applicable agreements.
ARTICLE VII.
CORPORATE ACTION
INCIDENT TO PLAN IMPLEMENTATION
7.1. New Certificate of Incorporation. On the Effective Date, the
Reorganized Debtor will amend its certificate of incorporation to adopt the New
Certificate of Incorporation, which certificate of incorporation shall comply
with section 1123(a)(6) of the Bankruptcy Code.
7.2. Cancellation of Old Secured Notes and Modification of Old
Indenture. On the Effective Date, any and all obligations of the Debtor
respecting each outstanding Old
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Secured Note shall, as against the Debtor and each of the guarantors thereunder,
be canceled, terminated and cease in their entirety, except for the obligation
to make distributions of property under the Plan. On the Effective Date, the Old
Indenture shall be modified and amended pursuant to the terms of this Plan and
shall continue in full force and effect respecting each New Secured Note.
7.3. Cancellation of Equity Securities. All Old Equity Securities shall
be automatically canceled and deemed to be void as of the Effective Date,
without further corporate authority or action.
7.4. Adoption of Post-Confirmation Employee Incentive Plan. On the
Effective Date, the Reorganized Debtor shall be deemed to have adopted the
Post-Confirmation Employee Incentive Plan, without further corporate authority
or action.
7.5. Board of Directors. As of the Effective Date, the Board of
Directors of the Reorganized Debtor shall consist of a minimum of three and a
maximum of seven members. Initially, the following individuals shall serve as
the Board of Directors of the Reorganized Debtor:
(a) Edward M. Tracy;
(b) Col. Clinton L. Pagano; and
(c) William S. Papazian.
The Noteholder Steering Committee will designate four additional
persons to serve on the Board of Directors of the Reorganized Debtor. The
Reorganized Debtor and the
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Noteholders Steering Committee designees will use their best efforts to seek and
obtain the appropriate licensing to allow the Noteholders Steering Committee
designees to serve on the Board of Directors. Once licensed, the Noteholder
designees shall be added to the Board of Directors. Except with the consent of a
majority of the Board of Directors, each of the Noteholders Steering Committee
designees must meet at all times the following minimum qualifications or shall
be disqualified from service on the Board of Directors of the Reorganized
Debtor:
1. The designee shall not (a) have any conflict of interest that would
impair such designee's ability to serve fairly and impartially, (b);
otherwise have a material equity interest in or relationship with an
entity that is in direct competition with the Reorganized Debtor, or (c)
currently serve as an officer or director of a gaming company; and
2. The designee generally shall be of good character and reputation.
7.6. NASDAQ Listing. The Reorganized Debtor shall use its best efforts
to obtain a listing for the New Common Stock on NASDAQ or on some comparable
stock exchange.
7.7. Other Corporate Action. On the Effective Date, by reason of the
entry of the Confirmation Order, the Debtor and Reorganized Debtor, as the case
may be, shall be deemed to have obtained all necessary corporate authority to
take such additional actions as may be reasonably necessary to implement the
Plan.
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ARTICLE VIII.
ALLOWANCE OF CLAIMS
8.1. Claims of Noteholders. The Debtor believes that, as of the Filing
Date, the Claims of the Noteholders, as evidenced by the Old Secured Notes, and
giving effect to distributions received by the Noteholders on account of the
guarantee executed by Crescent City Capital Development Corp. of the Old Secured
Notes, exceed $100 million. The Old Secured Notes are collateralized by
substantially all of the assets of the Debtor. As of the Filing Date, the amount
of principal and interest outstanding on the Old Secured Notes was $104,688,850,
and the value of the Noteholders' collateral for the Old Secured Notes was not
less than $24,000,000. Accordingly, on the Effective Date, the Indenture
Trustee, for the benefit of the Noteholders, shall be allowed a Class 2 Claim in
the Allowed Amount of $24 million, and a Class 4 Claim in the Allowed Amount of
$80,688,850 million. On the Effective Date, the Allowed Noteholder Claims shall
not be subject to, or the subject of, an objection, claim, counterclaim, set
off, defense, motion or proceeding by the Debtor, Reorganized Debtor, any
statutory committee, or of any other party in interest, whether in law or in
equity.
8.2. Substantial Contribution Claim of Noteholders Steering Committee's
Counsel. In recognition of the substantial contribution made to this Chapter 11
Case by the Noteholders Steering Committee, the Debtor has agreed that it will
support the allowance of a "substantial contribution" Claim under section
503(b)(4) of the Bankruptcy Code in favor of said committee's counsel, Andrews &
Kurth, L.L.P. of up to $175,000 provided, however, that the Debtor has reserved
its right to contest such claim on any basis other than that the Noteholders
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Steering Committee failed to make a substantial contribution in the Chapter 11
Case. Such "substantial contribution" claim shall constitute a Special
Administrative Expense Claim.
8.3. Bar Date for Objections to Claims. Unless additional time
is granted by Order of the Bankruptcy Court, all objections to Claims must be
filed prior to sixty (60) days following the Confirmation Date. The objecting
party shall be the Debtor or Reorganized Debtor, as the case may be, or any
creditor or creditor representative with the consent of the Debtor or
Reorganized Debtor, unless the Bankruptcy Court shall authorize another
party-in-interest to file an objection. Any objecting party shall serve a copy
of each objection upon the holder of the Claim or Interest to which it pertains,
upon the Debtor or Reorganized Debtor, as the case may be, and upon counsel
designated for such purpose by the Creditors' Committee.
8.4. Reserves. On or soon as practicable after the Effective
Date, the Reorganized Debtor shall reserve for the account of each holder of a
Disputed Claim or Disputed Interest, that property which would otherwise be
distributable to such holder on such date in accordance with the Plan or such
Disputed Claim or Disputed Interest and Allowed Claim or Allowed Interest, as
applicable on such date, in the Face Amount thereof. If and to the extent such
Disputed Claim or Disputed Interest becomes an Allowed Claim or Allowed
Interest, the property so reserved for the holder thereof, together with any
proceeds thereon shall be distributed to such holder in accordance with the
Plan. If, the Disputed Claim or Disputed Interest is disallowed by Final Order,
the property so reserved for the holder thereof, together with any proceeds
thereon, shall be distributed in accordance with the Plan to the holders of
Claims or Interests in the Class in which such Disputed Claim or Disputed
Interest would have been had it been an Allowed Claim or Allowed Interest on the
first to occur of (i) the first
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Subsequent Distribution Date thereafter in which the Reorganized Debtor
determines that sufficient property is available for distribution to make
meaningful distributions to the holders of Claims or Interests in such Class or
(ii) the last Distribution Date after all Disputed Claims in Class 4 have been
resolved.
ARTICLE IX.
EFFECT OF CONFIRMATION
9.1. Revesting of Property. Except as otherwise expressly provided
herein, on the Effective Date, title to all property of the Debtor's estate
shall revest in the Debtor (except as set forth in the Plan) free and clear of
all liens, Claims, charges and Interests arising on or before the Confirmation
Date and other rights and interests of holders of Claims and Interests. Subject
to the provisions of the Plan, the Reorganized Debtor may continue in existence
free of any restriction imposed by the Bankruptcy Code or the Bankruptcy Court.
9.2. Discharge. Except as otherwise provided herein or in the
Confirmation Order, the occurrence of the Effective Date shall operate as a
discharge, pursuant to section 1141(d)(1) of the Bankruptcy Code, effective as
of the Effective Date, of any and all debts of and Claims against the Debtor
that arose at any time prior to the Confirmation Date, including, but not
limited to, all principal and interest, whether accrued before, on or after the
Filing Date, any and all liabilities or obligations of the Debtor under the Old
Indenture. On and after the Effective Date, as to every discharged debt and
Claim, the Person that held such debt or Claim shall be precluded from asserting
against the Reorganized Debtor, or against the Reorganized Debtor's
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assets or properties, any other or further Claim based upon any document,
instrument or act, omission, transaction or other activity of any kind or nature
that occurred prior to the Confirmation Date.
9.3. Releases. Except as otherwise provided in the Plan, the Covered
Persons are released from any and all claims or liabilities (including claims by
the Debtor), arising from actions taken in their capacity as such, and from any
and all Claims, obligations, rights, causes of action and liabilities which any
holder of a Claim against or Interest in the Debtor may be entitled to assert,
whether known or unknown, foreseen or unforeseen, existing or hereafter arising
based in whole or in part upon any act or omission, transaction or other
occurrence taking place on or before the Effective Date in any way relating to
the Debtor, the Chapter 11 Case, or the Plan, including, without limitation, any
Claims of equitable subordination or similar assertions; provided that such
releases shall exclude claims arising from willful misconduct, gross negligence
or defalcation and Joint Trade Claims against any subsidiary of the Debtor.
(a) Except as otherwise expressly provided herein or the
Confirmation Order, on the Effective Date, each holder of any Claim against the
Debtor receiving, or entitled to receive, payments or distributions pursuant to
the Plan on account of such Claim, shall be deemed to have forever waived,
released and discharged all rights, causes of action and claims, in law or in
equity, whether based on tort, fraud, contract or otherwise, which they
heretofore or hereafter possessed or may possess against any Covered Person
arising in any manner from (i) the issuance, offering or sale of any interest in
any of the Old Secured Notes or the amendment of any term of the Old Indenture,
(ii) the disclosure made by any Covered Person in any document used in
connection with the issuance, offering or sale of any interest in any of the Old
Secured
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Notes, or the amendment of any term of the Old Indenture, (iii) the due
diligence undertaken by any Covered Person in connection with the issuance,
offering and sale of any interest in any of the Old Secured Notes or the
amendment of any term of the Old Indenture, or (iv) as against any Covered
Person, such holder's acquisition, ownership or disposition of any interest in
any of the Old Secured Notes (together, the "Released Claims"). From and after
the Effective Date, any such right, cause of action or Claim against any Covered
Person shall, without the necessity for any further action by, or notice to, any
holder, automatically be relinquished, conceded, extinguished, canceled and
terminated as a result of the waiver, release and discharge contained in this
paragraph 9.3 and the Confirmation Order shall provide that such holders, with
respect to any such rights, causes of action and Claims, will be permanently
enjoined on and after the Effective Date from acting or proceeding in any
manner, including without limitation, commencing, conducting or continuing in
any manner, directly or indirectly any suit, action or proceeding of any kind
(including, without limitation, any thereof in a judicial, arbitral,
administrative or other forum against any Covered Person) in derogation of the
release contemplated by this paragraph 9.3, provided that the foregoing, solely
as to any Covered Person, may be subject to review by the court having
jurisdiction in respect of such proceeding.
(b) Following the Effective Date, neither the Debtor, the
Reorganized Debtor, the Creditors' Committee, the Noteholders' Steering
Committee, the Indenture Trustee, nor any of the members of such committee, nor
any of their respective officers, directors, employees or agents (acting in such
capacity), nor any professional persons employed by any of them, shall have or
incur any liability or obligation to any Person for any action taken or omitted
to be taken in connection with or related to the formulation, preparation,
dissemination, implementation,
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confirmation or consummation of the Plan, the related Disclosure Statement, or
any contract, release, or other agreement or document created or entered into,
or any other action taken or omitted to be taken in connection with the Plan;
provided, however, that the provisions of this sentence shall have no effect on
the liability of any Person that would otherwise result from an action or
omission to the extent that such action or omission is determined in a Final
Order to have constituted gross negligence or willful misconduct. (c) In
consideration for, among other things, the guaranty by the Guarantor of the New
Secured Notes and the pledge of collateral securing the payment by the
Reorganized Debtor of all obligations under the New Secured Notes, each
Noteholder, and its transferees, successors and assignees shall be deemed to
have forever waived, released and discharged all rights, causes of action and
claims, in law or in equity, against the Guarantor arising out of the Old
Guaranty or the Old Secured Notes.
9.4. Survival and Assignment of Avoidance Actions. Except as expressly
provided herein, in accordance with section 1123(b) of the Bankruptcy Code, the
Reorganized Debtor shall retain and may enforce any claims, rights and causes of
action that the Debtor or its estate may hold, including, without limitation,
any claims, rights or causes of action, under section 544 through 550,
inclusive, of the Bankruptcy Code (collectively, "Avoidance Actions"). On the
Effective Date, the Reorganized Debtor shall transfer to the Creditors'
Committee all of the Avoidance Actions and with respect thereto, the Creditors'
Committee shall be deemed a representative of the Debtor's estate under section
1123(b)(3). Any net recoveries from the Avoidance Actions shall be distributed
by the Creditors' Committee Pro Rata to holders of Allowed Class 4 Claims. Such
distributions shall be made from time to time in the discretion of
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the Creditors' Committee. All Avoidance Actions must be commenced by no later
than sixty (60) days after the Effective Date, unless otherwise ordered by the
Bankruptcy Court, or shall be deemed waived.
9.5. Injunction. Except as otherwise expressly provided herein, the
Confirmation Order will provide that, following the Effective Date, all Persons
who have held, hold or may hold Claims or Interests, with respect to any such
Claim or Interest, shall be permanently enjoined on and after the Effective Date
from: (a) commencing, conducting or continuing in any manner any suit, action or
other proceeding of any kind (including, without limitation, any thereof in a
judicial, arbitral, administrative or other forum) against the Debtor or
Reorganized Debtor, any of its property, or any direct or indirect transferee of
any property of, or direct or indirect successor in interest to, any of the
foregoing Persons, or any property of any such transferee or successor, (b)
enforcing, levying, attaching (including, without limitation, any pre-judgment
attachment), collecting or otherwise recovering by any manner or means, of any
judgment, award, decree or order against the Debtor or Reorganized Debtor, any
of its property, or any direct or indirect transferee of any property of, or
direct or indirect successor in interest to, any of the foregoing, or any
property of any such transferee or successor, (c) creating, perfecting or
otherwise enforcing in any manner, directly or indirectly, any encumbrance of
any kind against the Debtor or Reorganized Debtor, any of its property, or any
direct or indirect transferee of any property of, or successor in interest to,
any of the foregoing, (d) asserting any setoff, right of subrogation or
recoupment of any kind, directly or indirectly, against any obligation due the
Debtor or Reorganized Debtor, any of the property of the Debtor or the
Reorganized Debtor, or any direct or indirect transferee of any property of, or
successor in interest to, any of the
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foregoing, or (e) acting or proceeding in any manner, in any place whatsoever,
that does not conform to or comply with the provisions of the Plan and the
Confirmation Order. Notwithstanding anything herein to the contrary, nothing in
this paragraph 9.4 or elsewhere in this Plan shall in any way affect or impair
any rights or causes of action against any Person other than any Covered Person.
Upon the Effective Date, all Noteholders and their respective transferees,
successors and assigns shall be permanently enjoined from the commencing,
conducting or continuing in any manner whatsoever any action to recover from the
Guarantor any amounts owing under the Old Guaranty or the Old Secured Notes.
9.6. Indemnification. To facilitate the expeditious and effective
reorganization of the Debtor, the Reorganized Debtor shall indemnify, hold
harmless and reimburse any present and former director, officer or employee
pursuant to the provisions of its certificate of incorporation and by-laws and
applicable provisions of the laws of New Jersey from and against any and all
losses, claims, damages, liabilities and actions, asserted or filed against such
persons for, by reason of, arising from, in connection with, involving, or
related to services rendered or acts or omissions to act in those capacities
relating to or arising out of the facts and claims alleged or asserted, or which
could have been alleged or asserted prior to the Confirmation Date. In addition,
the Reorganized Debtor shall indemnify the members of the Noteholders Steering
Committee for their participation in such capacity in the Debtor's chapter 11
case. The indemnifications provided hereunder shall survive confirmation of the
Plan and shall not be discharged pursuant to section 1141 of the Bankruptcy
Code. The Reorganized Debtor shall pay any legal or other expenses reasonably
incurred by such indemnified party in connection with this indemnification or
the enforcement thereof. In no event shall the indemnification provided
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hereunder extend to claims or liabilities asserted and found by a court of
competent jurisdiction to arise from willful misconduct, gross negligence or
defalcation by the Person seeking indemnification.
9.7. Limitation on Transfer of New Common Stock.
(a) Subject to further review of federal securities laws and
regulations in conjunction with the securities law exemptions under
Bankruptcy Code ss. 1145, New Jersey corporate laws and federal income tax
law, the by-laws and articles of incorporation of the Reorganized Debtor
will be amended, (or, if New Jersey law prohibits the inclusion of part or
all of the following restrictions in the by-laws or articles of
incorporation of the Reorganized Debtor, creditor Parties and the
Reorganized Debtor this Plan shall constitute a contractual agreement
between the Reorganized Debtor and each holder of New Common Stock and their
respective successors and assigns with respect to the restrictions which
cannot under Delaware law be included in the by-laws or articles of
incorporation), to provide for the restrictions on transfers of the common
stock of the Reorganized Debtor hereinafter set forth.
The Reorganized Debtor's certificate of incorporation shall also
provide that sales or other transfers made in violation of such restrictions
shall be null and void.
1. Definitions
(a) The term "5% Holder" means any persons or entity that owns, or that
is treated as owning after application of the constructive stock ownership
rules of Section
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382(1)(3) of the Code five (5%) percent or more of the New Common Stock of
Reorganized Debtor immediately following the Effective Date of the Proposed
Plan.
(b) The term "Non-5% Holder" means any person that is not a 5% Holder.
(c) The term "the Code" mean the Internal Revenue Code of 1986, as
1986, as amended and the Treasury Regulations (final, temporary and
proposed) issued thereunder.
(d) The term "Transfer", when applied to any of the New Common Stock,
Stock, means to issue, sell, transfer, pledge, encumber, grant an option
with respect to, or otherwise dispose of an interest in such stock, but only
if such transaction would result in a change in the ownership of such stock
after application of the constructive stock ownership rules of section
382(1)(3) of the Code.
(e) The term "Gatekeeper" means the person or persons appointed by the
appointed by the Board of Directors of the Reorganized Debtor to exercise
the powers set forth below.
(f) The term "Restriction Period" means the time period beginning on
beginning on the Effective Date and ending on the date determined under
paragraph (5), below.
(g) The term "Initial Allotment" means that number of shares of New of
New Common Stock owned by a person immediately following the Effective Date.
(h) The term "Acquire", when applied to any shares of the New Common
Common Stock, means to purchase or otherwise acquire such stock. The term
"Acquire" includes any acquisition of an interest in stock, including
acquisition of an option to acquire stock,
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if such acquisition would result in a change in the ownership of such stock
after application of the constructive stock owner ship rules of Section
382(1)(3) of the Code.
(i) The term "person" includes both entities and natural persons.
2. Rules Applicable to 5% Holders
During the Restriction Period, each 5% Holder may Transfer up to five (5%)
percent of its Initial Allotment to any person, without the consent of the
Gatekeeper (hereinafter, such 5% Holder's "Unrestricted Shares"). A 5% Holder
that Transfers any of its Unrestricted Shares shall, however, notify the
Gatekeeper in writing of such Transfer within 10 days of the Transfer. During
the Restriction Period, no 5% Holder may Transfer any part of its Initial
Allotment in excess of its Unrestricted Shares without the consent of the
Gatekeeper, which consent is to be granted or denied as set forth in paragraph
(4) below.
At any time during the Restriction Period, any 5% Holder (hereinafter, the
"Assignor") may assign to any other 5% Holder (hereinafter, the "Assignee") the
right to Transfer, without the consent of the Gatekeeper, an amount of shares
equal to or less than the Assignor's Unrestricted Shares that have not, as of
the date of the assignment, been Transferred. In the event of such as
assignment, the Assignor's Unrestricted Shares shall be reduced, and the
Assignee's Unrestricted Shares shall be increased, for all purposed of this
agreement, by the amount of shares the right to the Transfer of which has been
assigned. The Assignor shall give notice to the Gatekeeper of any assignment
under this paragraph within 10 days of such assignment.
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If any 5% Holder reduces its ownership of stock at any time during the
Restriction Period to any amount that is less than its Initial Allotment, such
5% Holder shall not thereafter Acquire any shares of the common stock of the
Reorganized Debtor during the Restriction Period.
In order to ensure compliance with the restrictions on 5% Holders, unless
otherwise waived by the Reorganized Debtor, all shares of New Common Stock
issuable to any 5% Holder in excess of such 5% Holder's Unrestricted Shares,
shall be issued to and may be voted by such 5% Holders but shall be held in
escrow by an escrow agent. Such shares shall continue to be held in escrow until
released to such 5% Holder at the end of the Restriction Period, or, if sooner,
upon consent of the Gatekeeper.
3. Rules Applicable to Non-5% Holders
No restrictions shall apply to any Transfer of the New Common Stock by a
Non-5% Holder.
4. Consent of the Gatekeeper
The Board of Directors of the Reorganized Debtor shall appoint a person or
persons to serve as Gatekeeper. The Gatekeeper shall be responsible for
considering requests for the Transfer of stock by 5% Holders in excess of their
Unrestricted Shares, as provided in this paragraph (4). The Reorganized Debtor
shall indemnify the Gatekeeper against any liability to any person for any
action taken in the exercise of its discretion under this paragraph (4).
Neither the Reorganized Debtor nor any 5% Holder shall issue, sell,
transfer, pledge, encumber, receive a pledge or encumbrance of, grant or acquire
an option with respect to, or
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otherwise dispose of or acquire an interest in any common stock of the
Reorganized Debtor (other than, in the case of a 5% Holder, its Unrestricted
Shares and, in the case of the Reorganized Debtor, securities issued under the
Post-Confirmation Employee Incentive Plan and securities issued pursuant to this
Plan) without obtaining a prior determination from the Gatekeeper as to whether
such transaction constitutes a Transfer of such stock within the meaning of
paragraph (1)(d). If the Gatekeeper determines that such transaction constitutes
a Transfer of such stock, in the case of a proposed transaction by the
Reorganized Debtor, the Gatekeeper shall notify the Board of Directors of such
determination, and in the case of a proposed transaction by a 5% Holder, the
restrictions of this paragraph (4) shall apply.
Upon application (hereinafter, the "Application") by any 5% Holder
(hereinafter, the "Applicant") for the Gatekeeper's consent to the Transfer of
any shares of New Common Stock held by such 5% Holder in excess of such 5%
Holder's Unrestricted Shares, the Gatekeeper shall send notice to all 5% Holders
(including the Applicant) of the Application (hereinafter a "Notice of
Application"). Such Notice of Application shall specify the number of shares for
which the Applicant seeks approval. Within 10 days of the Notice Effective Date
(as hereinafter defined) of such Notice of Application, any other 5% Holder may
notify (hereinafter a "Notification") the Gatekeeper that it requests the right
to Transfer a specified amount of its Initial Allotment, which shall not exceed
its Initial Allotment multiplied by a fraction. The numerator of such fraction
shall be the number of shares specified in the Application and the denominator
of such fraction shall be the Initial Allotment of the Applicant.
Following the expiration of such 10-day period, the Gatekeeper shall
make a determination as to whether the Transfer of all of the shares specified
in the Application and all
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Notifications would create an unreasonable risk of loss of, or material
limitation on, the Reorganized Debtor's use of its net operating loss
carryforwards. Such determination shall be made in the Gatekeeper's sole
discretion after reviewing all information available to it, including, but not
limited to, all Form 13-d's filed with the Securities and Exchange Commission.
If the Gatekeeper determines that the Transfer of all such shares would not
create an unreasonable risk of loss of, or material limitation on, the
Reorganized Debtor's use of its net operating loss carryforwards, it shall
notify the Applicant and all other 5% Holders of its consent to such Transfers
(hereinafter a "Notice of Final Consent"). If the Gatekeeper determines that it
cannot consent to all proposed Transfers, it shall determine the maximum number
of shares the Transfer of which it can approve (hereinafter, the "Maximum
Amount") without creating an unreasonable risk of loss of, or material
limitation on, the Reorganized Debtor's use of its net operating loss
carryforwards. The Maximum Amount shall be allocated among the Applicant and the
other 5% Holders that submitted Notifications to the Gatekeeper in accordance
with this paragraph (4), if any, as follows. The Applicants shall be permitted
to sell that proportion of the Maximum Amount Equal to the ratio that the number
of shares specified in the Application bears to the sum of the number of shares
specified in such Application and all of the Notifications submitted to the
Gatekeeper in accordance with this paragraph (4), if any, shall be permitted to
sell that proportion of the Maximum Amount equal to the ratio that the number of
shares specified in such Notification bears to the sum described in the
preceding sentence. The Gatekeeper shall send Notice of Final Consent to the
Applicant and such other 5% Holder or 5% Holders, if any, of the number of
shares that each may sell based on the foregoing calculations, which Notice
shall constitute final consent to the Transfer of such shares.
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The Transfer of any shares of stock pursuant to a Notice of Final Consent
shall be completed, (i) in the case of a 5% Holder that has submitted a
Notification not later than the later of (a) 35 days after the Notice Effective
Date of the relevant Notice of Final Consent and (b) 45 days after the Notice
Effective Date of the relevant Notice of Application and (ii) in the case of the
Applicant, not later than 35 days after the Notice Effective Date of the
relevant Notice of Final Consent. Each 5% Holder that Transfers shares pursuant
to a Notice of Final Consent shall give notice to the Gatekeeper that such
Transfer has been completed within 5 days after the Transfer has been completed.
If any such Transfer has not been completed by the end of the relevant time
period (as determined under the first sentence of this paragraph), final consent
shall be deemed to have been withdrawn as to such Transfer. If a 5% Holder that
submitted a Notification does not complete such a Transfer by the end of the
relevant time period, the Gatekeeper shall consent to the Transfer by the
Applicant pursuant to the relevant Notice of Final Consent) equal to the number
of shares the Transfer of which was not completed. In no event, however, shall
the Gatekeeper consent to the Transfer by the Applicant of a number of shares
that, in the aggregate, exceeds the number of shares specified in the
Application. The Gatekeeper shall notify the Applicant and all other 5% Holders
that it has consented to the Transfer of such additional shares (hereinafter, an
"Amended Notice of Final Consent"). The Applicant shall complete the Transfer of
such additional shares within 10 days after the Notice Effective Date of the
Amended Notice of Final Consent, and if it does not do so, consent to the
Transfer of such additional shares shall be deemed to be withdrawn.
The Gatekeeper shall use its best efforts to take all actions required
under this paragraph (4) as promptly as practicable.
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5. Restriction Period
Except as otherwise provided in this paragraph (5), the Restriction Period
shall end on the date that is two years after the Effective Date.
If the Reorganized Debtor determines either that (A) the Plan does not
qualify under Section 382(1)(5) of the Code (the "Bankruptcy Exception") or (B)
chooses to make an election under Section 382(1)(5)(H) of the Code not to have
the Bankruptcy Exception apply to the Plan, then the Restriction Period shall
end immediately upon notification thereof by the Gatekeeper to all 5% Holders.
The Board of Directors may, in its sole discretion, determine that the
Restriction Period shall end prior to the date that is two years after the
Effective Date if it determines (A) the restrictions are no longer necessary to
avoid a loss of the Reorganized Debtor's net operating loss carryforwards, (B)
significant net operating loss carryforwards are no longer available to, or
reasonably usable by, the Reorganized Debtor for any reason, including through
passage of time, usage, restriction or disallowance, or (C) preservation of the
net operating loss carryforwards is no longer in the best interests of the
Reorganized Debtor and its shareholders.
The Board of Directors may, in its sole discretion, determine that the
Restriction Period is to extend beyond the date that is two years after the
Effective Date, if the Board determines that such extension of the Restriction
Period would be in the best interests of the Reorganized Debtor and its
shareholders. In no event, however, will the Restriction Period end later than
the date that is three years after the Effective Date.
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ARTICLE X.
CONDITIONS PRECEDENT
10.1. Conditions to Confirmation. The following conditions must be
satisfied or waived pursuant to Section 10.3 hereof prior to confirmation of the
Plan:
(a) the Confirmation Order shall be in form and substance reasonably
satisfactory to the Debtor; and
(b) the Confirmation Order shall be in form and substance reasonably
satisfactory to the Noteholders Steering Committee;
(c) the Debtor has extended the terms of the Key Officers' existing
employment agreements with the Debtor, as modified, for terms of three (3) years
from the Effective Date.
10.2. Conditions to the Occurrence of the Effective Date. It is a
condition precedent to the occurrence of the Effective Date, that the
Confirmation Order shall have become a Final Order.
10.3. Waiver of Conditions. Without limiting any benefits to the Debtor
of the doctrine of mootness, the Debtor may at any time, without any notice to
any Person, without leave or Order and without any other formal action, waive
any condition set forth in Section 10.1(a) or 10.2 hereof. The Noteholders
Steering Committee may at any time, without leave or Order and without any other
action, waive any condition set forth in Section 10.1(b) hereof.
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ARTICLE XI.
RETENTION OF JURISDICTION
Notwithstanding the confirmation of the Plan or the occurrence of the
Effective Date, the Bankruptcy Court shall retain jurisdiction of the chapter 11
case with respect to the following matters:
(a) to determine the Allowed amount of any Disputed Claims;
(b) to determine requests for payment of Claims entitled to
priority under section 507(a)(1) of the Bankruptcy Code,
including compensation of and reimbursement of expenses of
parties entitled thereto;
(c) to resolve controversies and disputes regarding
interpretation and implementation of the Plan including,
without limitation, the determination of the status of any
contract of the Debtor claimed by any Person to constitute an
executory contract thereof as of the Filing Date and the
resolution of any disputes concerning whether any Person had
sufficient notice of the chapter 11 case, any applicable
claims bar date, the hearing on the approval of the
Disclosure Statement as containing adequate information, the
hearing on the confirmation of this Plan for the purpose of
determining whether a Claim or Interest is discharged
hereunder or for any other purposes;
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(d) to enter orders in aid of the Plan, including, without
limitation, appropriate orders (which may include contempt or
other sanctions) to protect the Debtor and Reorganized
Debtor;
(e) to modify the Plan or remedy any apparent defect or omission
in the Plan;
(f) to determine any and all applications, objections to, claims,
adversary proceedings and contested or litigated maters
pending on the confirmation Date or as filed pursuant to the
Bankruptcy Code or order of the Bankruptcy Court, including,
without limitation, proceedings and matters filed subsequent
to the Confirmation Date that could have been filed prior to
the Confirmation Date and which are authorized to be
commenced under section 1123(b) of the Bankruptcy Code;
(g) to allow, disallow, estimate, liquidate or determine any
Claim and to enter or enforce any order requiring the filing
of any such Claim before a particular date;
(h) to determine any and all pending applications for the
rejection or disaffirmance of executory contracts or leases,
or for the assignment of assumed executory contracts and
leases, and to hear and determine, and if need be to
liquidate, any and all Claims arising therefrom; and
(i) to enter a final decree closing the Chapter 11 Case.
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ARTICLE XII.
ADDITIONAL PROVISIONS
12.1. Revocation. The Debtor reserves the right to revoke and withdraw
this Plan at any time prior to the Effective Date.
12.2. Effect of Revocation. If the Debtor revokes or withdraws the Plan
prior to the Effective Date, or if the Effective Date does not occur, then the
Plan shall be deemed null and void. In such event, nothing contained in this
Plan shall be deemed to constitute a waiver or release of any Claims by or
against the Debtor or any other Person or to prejudice in any manner the right
of the Debtor or any Person in any further proceedings involving the Debtor.
12.3. Certain Administrative Expenses. As more fully set forth in a
stipulation filed with the Bankruptcy Court, the Debtor has agreed to pay to the
Indenture Trustee under the Old Indenture, in full and complete satisfaction of
all Administrative Expense Claims which could be asserted thereby in respect of
the Debtor's Chapter 11 case, the amount of $125,000, subject to the receipt by
the Debtor of adequate documentation therefor. In consideration of the
foregoing, the Indenture Trustee under the Old Indenture has agreed to (i) limit
claims in respect of all such Administrative Expenses to an amount not to exceed
$125,000; and (ii) waive any and all claims for indemnity, contribution or
reimbursement (whether pre- or post-Effective Date) against the Debtor in excess
of $125,000; provided, however, that nothing herein shall be deemed to waive the
Indenture Trustee's charging lien or any other right to reimbursement of its
expenses out of Plan Distributions or funds held by the Indenture.
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12.4. Committees. All officially appointed committees shall terminate
on the Effective Date except that the Creditors' Committee shall remain in
existence with respect to the commencement and prosecution of any Avoidance
Actions assigned to the Creditors' Committee pursuant to Section 9.4 of the
Plan; provided, that, unless otherwise approved by the Advisory Committee (as
such term is defined in the Amended Indenture), the Reorganized Debtor shall not
be obligated to pay more than $35,000 in the aggregate for the reasonable costs
and expenses, including professional fees, incurred by the Creditors' Committee
after the Effective Date with respect to the commencement and prosecution of the
Avoidance Actions and the distribution of proceeds therefrom. The Debtor shall
pay such reasonable costs and expenses up to the limits set forth herein without
the need for further Bankruptcy Court Order upon presentment of invoices by the
Creditors' Committee.
12.5. Headings. The headings used in the Plan are inserted for
convenience only and neither constitute a portion of this Plan nor in any manner
affect the provisions of this Plan.
12.6. Successors and Assigns. The rights and obligations of any Person
named or referred to in the Plan shall be binding upon and inure to the benefit
of the successors and assigns of such Person.
12.7. Governing Law. Except to the extent the Bankruptcy Code or
Bankruptcy Rules are applicable, the rights and obligations arising under the
Plan shall be governed by, and construed and enforced in accordance with, the
laws of the State of New Jersey without regard to the principles of conflict of
law thereof.
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12.8. Notices. Any notice, demand, claim or other communication under
this Plan shall be in writing and shall be deemed to have been given upon
personal delivery thereof, or upon the fifth (5th) day following mailing
thereof, if sent by registered mail, return receipt requested, postage prepaid,
to the last known address of the party to whom such notice is given.
12.9. Unclaimed Cash or Securities. Except as otherwise expressly
provided herein and subject to Section 6.2 of the Plan, if any Person entitled
to receive cash or securities under the Plan cannot be located, or has not
provided the Debtor with the documents required as a condition precedent to
receiving distributions under the Plan, within two (2) years after the Effective
Date, such cash or securities and accrued interest or dividends thereon will
become the property of and shall be released to the Debtor. Nothing contained in
this Plan shall require the Debtor or Reorganized Debtor to attempt to locate
any such Person.
12.10. Rounding. Whenever any payment of a fraction of a cent would
otherwise be called for, the actual payment shall reflect a rounding of such
fraction to the nearest whole cent, with one-half cent being rounded up to the
nearest whole cent. To the extent Cash remains undistributed as a result of the
rounding of such fraction to the nearest whole cent, such Cash shall be treated
as unclaimed property under Section 12.9 of the Plan. Whenever any distribution
of a fraction of a share of New Common Stock would otherwise be called for, the
actual distribution will reflect a rounding of such fraction down to the nearest
whole number of shares. Whole shares of New Common Stock not distributed because
of this provision of the Plan will be treated as unclaimed securities under
Section 12.9 of the Plan. In addition, any amount of New Secured Notes issuable
upon the Effective Date in denominations below $100 shall be rounded down to the
nearest $100.
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12.11. Admissibility. In the event the Confirmation Order is not
entered or the Plan is not confirmed, the provisions of this Plan shall be of no
force or effect. Any statement made herein by the Debtor shall be deemed to be a
statement made in connection with a settlement or compromise and, as provided in
Rule 408 of the Federal Rules of Evidence, shall not be admissible in any
subsequent proceeding.
12.12. Time. In computing any period of time prescribed or allowed by
this Plan, the day of the act or event from which the designated period begins
to run shall not be included. The last day of the period so computed shall be
included, unless it is a Saturday, a Sunday or a legal holiday, in which event
the period runs until the end of the next succeeding day which is not one of the
aforementioned days. With respect to any distribution to be made on the
Effective Date, such distribution shall be deemed timely made if made within
five (5) Business Days of the Effective Date.
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12.13. Use of Pronouns. As used in the Plan, singular terms shall
include the plural, plural terms shall include the singular and masculine
pronouns shall include all pronouns.
CAPITAL GAMING INTERNATIONAL, INC.
By: /s/ William S. Papazian
----------------------------------
William S. Papazian
Vice President and General Counsel
Dated: March 19, 1997
Atlantic City, New Jersey
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CAPITAL GAMING INTERNATIONAL, INC.
Exhibit "A" To Plan Of Reorganization
Amended and Restated Indenture
<PAGE>
===============================================================================
CAPITAL GAMING INTERNATIONAL, INC.
Issuer
and
THE GUARANTOR NAMED HEREIN
and
FIRST TRUST NATIONAL ASSOCIATION
Trustee
------------------------
AMENDED AND RESTATED INDENTURE
Dated as of February 17, 1994
and
Amended and Restated as of March 27, 1997
------------------------
$23,100,000
12.0% Senior Secured Notes due 2001
===============================================================================
<PAGE>
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
ss. 310(a)(1)........................................................8.10
(a)(2)......................................................8.10
(a)(3)......................................................N.A.
(a)(4)......................................................N.A.
(a)(5)......................................................8.10
(b)..............................................8.8; 8.10; 14.2
(c).........................................................N.A.
ss. 311(a) 8.11
(b).........................................................8.11
(c).........................................................N.A.
ss. 312(a) 2.5
(b).........................................................14.3
(c).........................................................14.3
ss. 313(a) 8.6
(b)(1)......................................................N.A.
(b)(2).......................................................8.6
(c)....................................................8.6; 14.2
(d)..........................................................8.6
ss. 314(a) 5.8; 13.2
(b)..........................................................4.2
(c)(1)............................................2.2; 8.2; 14.4
(c)(2).......................................................8.2
(c)(3).......................................................4.2
(d)..........................................................4.2
(e).........................................................14.5
(f).........................................................N.A.
ss. 315(a) 8.1
(b)...............................................8.5; 8.6; 14.2
(c).......................................................8.1(a)
(d)...............................................2.8; 7.12; 8.1
(e).........................................................7.14
ss. 316(a)(last sentence)...............................................2.9
(a)(1)(A)...................................................7.12
(a)(1)(B)...................................................7.13
(a)(2)......................................................N.A.
(b)....................................................7.13; 7.8
ss. 317(a)(1)...........................................................7.3
(a)(2).......................................................7.4
(b)..........................................................2.4
ss. 318(a) 14.1
- ---------------
N.A. means Not Applicable.
This Cross-Reference Table shall not, for any purpose, be deemed to be a part of
the Indenture.
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TABLE OF CONTENTS
-----------------
Page
Article I. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS........................................2
SECTION 1.2. INCORPORATION BY REFERENCE OF TIA.................28
SECTION 1.3. RULES OF CONSTRUCTION.............................28
Article II. THE SECURITIES
SECTION 2.1. FORM AND DATING...................................29
SECTION 2.2. EXECUTION AND AUTHENTICATION......................29
SECTION 2.3. REGISTRAR AND PAYING AGENT........................30
SECTION 2.4. PAYING AGENT TO HOLD ASSETS IN TRUST..............31
SECTION 2.5. SECURITYHOLDER LISTS..............................31
SECTION 2.6. TRANSFER AND EXCHANGE.............................32
SECTION 2.7. REPLACEMENT SECURITIES............................32
SECTION 2.8. OUTSTANDING SECURITIES............................33
SECTION 2.9. TREASURY SECURITIES...............................33
SECTION 2.10. TEMPORARY SECURITIES.............................33
SECTION 2.11. CANCELLATION.....................................34
SECTION 2.12. DEFAULTED INTEREST...............................34
Article III. REDEMPTION
SECTION 3.1. RIGHT OF REDEMPTION...............................34
SECTION 3.2. MANDATORY SINKING FUND; PAYMENTS AND CREDITS......35
SECTION 3.3. REDEMPTION PURSUANT TO GAMING LAWS................35
SECTION 3.4. NOTICES TO TRUSTEE................................36
SECTION 3.5. SELECTION OF SECURITIES TO BE REDEEMED............36
SECTION 3.6. NOTICE OF REDEMPTION..............................37
SECTION 3.7. EFFECT OF NOTICE OF REDEMPTION....................38
SECTION 3.8. DEPOSIT OF REDEMPTION PRICE.......................38
SECTION 3.9. SECURITIES REDEEMED IN PART.......................39
Article IV. SECURITY
SECTION 4.1. SECURITY INTEREST.................................39
SECTION 4.2. RECORDING; OPINIONS OF COUNSEL....................39
SECTION 4.3. DISPOSITION OF THE COLLATERAL.....................40
SECTION 4.4. NET CASH PROCEEDS ACCOUNT.........................42
SECTION 4.5. CERTAIN RELEASES OF COLLATERAL....................42
SECTION 4.6. PAYMENT OF EXPENSES...............................43
SECTION 4.7. SUITS TO PROTECT THE COLLATERAL...................43
SECTION 4.8. TRUSTEE'S DUTIES..................................44
SECTION 4.9. EXCESS CASH COLLATERAL ACCOUNT....................44
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Article V. COVENANTS
SECTION 5.1. PAYMENT OF SECURITIES.............................45
SECTION 5.2. MAINTENANCE OF OFFICE OR AGENCY...................45
SECTION 5.3. LIMITATION ON RESTRICTED PAYMENTS.................46
SECTION 5.4. CORPORATE EXISTENCE...............................47
SECTION 5.5. PAYMENT OF TAXES AND OTHER CLAIMS.................47
SECTION 5.6. MAINTENANCE OF INSURANCE..........................48
SECTION 5.7. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.........48
SECTION 5.8. REPORTS...........................................48
SECTION 5.9. WAIVER OF STAY, EXTENSION OR USURY LAWS...........49
SECTION 5.10. LIMITATION ON TRANSACTIONS WITH AFFILIATES.......49
SECTION 5.11. LIMITATION ON INCURRENCE OF ADDITIONAL
INDEBTEDNESS....................................50
SECTION 5.12. LIMITATION ON DIVIDENDS AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES.............51
SECTION 5.13. LIMITATION ON LIENS..............................52
SECTION 5.14. LIMITATION ON SALES OF ASSETS AND
SUBSIDIARY STOCK; EVENT OF LOSS.................53
SECTION 5.15. MAINTENANCE OF CONSOLIDATED COVERAGE RATIO.......57
SECTION 5.16. CONDUCT OF BUSINESS..............................57
SECTION 5.17. LIMITATION ON STATUS AS INVESTMENT COMPANY.......57
SECTION 5.18. AUTHORIZED TRANSACTIONS..........................57
SECTION 5.19. BANK ACCOUNTS....................................58
SECTION 5.20. EXCESS CASH......................................58
SECTION 5.21. ISSUANCE OF COMMON STOCK.........................60
Article VI. SUCCESSOR CORPORATION
SECTION 6.1. LIMITATION ON MERGER, SALE OR
SECURITIES CONSOLIDATION.........................61
SECTION 6.2. SUCCESSOR CORPORATION SUBSTITUTED.................62
Article VII. EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. EVENTS OF DEFAULT.................................62
SECTION 7.2. ACCELERATION OF MATURITY DATE; RESCISSION
AND ANNULMENT....................................65
SECTION 7.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE...........................66
SECTION 7.4. TRUSTEE MAY FILE PROOFS OF CLAIM..................67
SECTION 7.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF SECURITIES.........................68
SECTION 7.6. PRIORITIES........................................68
SECTION 7.7. LIMITATION ON SUITS...............................69
SECTION 7.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST..................70
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<PAGE>
SECTION 7.9. RIGHTS AND REMEDIES CUMULATIVE....................70
SECTION 7.10. DELAY OR OMISSION NOT WAIVER.....................70
SECTION 7.11. CONTROL BY HOLDERS...............................70
SECTION 7.12. WAIVER OF PAST DEFAULT...........................71
SECTION 7.13. UNDERTAKING FOR COSTS............................71
SECTION 7.14. RESTORATION OF RIGHTS AND REMEDIES...............72
SECTION 7.15. CASH PROCEEDS FROM COLLATERAL....................72
Article VIII. TRUSTEE
SECTION 8.1. DUTIES OF TRUSTEE.................................72
SECTION 8.2. RIGHTS OF TRUSTEE.................................73
SECTION 8.3. INDIVIDUAL RIGHTS OF TRUSTEE......................74
SECTION 8.4. TRUSTEE'S DISCLAIMER..............................74
SECTION 8.5. NOTICE OF DEFAULT.................................75
SECTION 8.6. REPORTS BY TRUSTEE TO HOLDERS.....................75
SECTION 8.7. COMPENSATION AND INDEMNITY........................75
SECTION 8.8. REPLACEMENT OF TRUSTEE............................76
SECTION 8.9. SUCCESSOR TRUSTEE BY MERGER, ETC..................77
SECTION 8.10. ELIGIBILITY; DISQUALIFICATION....................78
SECTION 8.11. PREFERENTIAL COLLECTION OF CLAIMS
AGAINST COMPANY.................................78
Article IX. SATISFACTION AND DISCHARGE
SECTION 9.1. SATISFACTION AND DISCHARGE OF THE INDENTURE.......78
SECTION 9.2. TERMINATION OF OBLIGATIONS UPON CANCELLATION
OF THE SECURITIES................................80
SECTION 9.3. SURVIVAL OF CERTAIN OBLIGATIONS...................80
SECTION 9.4. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE............81
SECTION 9.5. APPLICATION OF TRUST ASSETS.......................81
SECTION 9.6. REPAYMENT TO THE COMPANY..........................81
SECTION 9.7. REINSTATEMENT.....................................82
Article X. AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT
OF HOLDERS......................................82
SECTION 10.2. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS
WITH CONSENT OF HOLDERS.........................83
SECTION 10.3. COMPLIANCE WITH TIA..............................85
SECTION 10.4. REVOCATION AND EFFECT OF CONSENTS................85
SECTION 10.5. NOTATION ON OR EXCHANGE OF SECURITIES............86
SECTION 10.6. TRUSTEE TO SIGN AMENDMENTS, ETC..................86
Article XI. MEETINGS OF SECURITYHOLDERS
SECTION 11.1. PURPOSES FOR WHICH MEETINGS MAY BE CALLED........86
SECTION 11.2. MANNER OF CALLING MEETINGS.......................87
iv
<PAGE>
SECTION 11.3. CALL OF MEETINGS BY COMPANY OR HOLDERS...........87
SECTION 11.4. WHO MAY ATTEND AND VOTE AT MEETINGS..............88
SECTION 11.5. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT
OF THE MEETING; VOTING RIGHTS; ADJOURNMENT......88
SECTION 11.6. VOTING AT THE MEETING AND RECORD TO BE KEPT......89
SECTION 11.7. EXERCISE OF RIGHTS OF TRUSTEE OR
SECURITYHOLDERS MAY NOT BE HINDERED OR
DELAYED BY CALL OF MEETING......................89
ARTICLE XII.INDEMNIFICATION OF ADVISORY COMMITTEE; EXPENSES
SECTION 12.1. INDEMNITY........................................90
Article XIII. GUARANTIES
SECTION 13.1. AMENDED ORIGINAL GUARANTY........................91
SECTION 13.2. GUARANTY.........................................92
SECTION 13.3. EXECUTION AND DELIVERY OF GUARANTY...............93
SECTION 13.4. FUTURE GUARANTORS................................94
SECTION 13.5. CERTAIN BANKRUPTCY EVENTS........................94
Article XIV. MISCELLANEOUS
SECTION 14.1. TIA CONTROLS.....................................94
SECTION 14.2. NOTICES..........................................94
SECTION 14.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.....95
SECTION 14.4. CERTIFICATE AND OPINION AS TO
CONDITIONS PRECEDENT............................95
SECTION 14.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION....96
SECTION 14.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR........96
SECTION 14.7. LEGAL HOLIDAYS...................................96
SECTION 14.8. GOVERNING LAW....................................97
SECTION 14.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS....97
SECTION 14.10. NO RECOURSE AGAINST OTHERS......................97
SECTION 14.11. SUCCESSORS......................................97
SECTION 14.12. DUPLICATE ORIGINALS.............................98
SECTION 14.13. SEVERABILITY....................................98
SECTION 14.14. TABLE OF CONTENTS, HEADINGS, ETC................98
EXHIBITS
Exhibit A -- Form of Security
Exhibit B -- Form of Guaranty
Exhibit C -- Form of Pledge Agreement
v
<PAGE>
AMENDED AND RESTATED INDENTURE, dated as of February 17, 1994 and
amended and restated as of March 27, 1997, among Capital Gaming International
Inc., a New Jersey corporation (the "Company"), the Guarantor referred to below
and First Trust National Association, as Trustee.
W I T N E S S E T H
WHEREAS the Company, its Subsidiaries (as guarantors) and First
National Trust Association (as trustee) are parties to an Indenture, dated as of
February 14, 1994 (the "Original Indenture"); and
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Company, the Guarantor and the Trustee desire to amend and restate in
its entirety the Original Indenture in the form of this Indenture.
NOW, THEREFORE, each party hereto agrees as follows for the benefit of
each other party and for the equal and ratable benefit of the Holders of the
Securities:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"Acceleration Notice" shall have the meaning specified in Section 7.1.
"Acceptance Amount" shall have the meaning specified in Section 5.14.
"Accumulated Amount" shall have the meaning specified in Section 5.14.
"Acquired Indebtedness" means Indebtedness of any person existing at
the time such person becomes a Subsidiary of such person or is merged or
consolidated into or with such person or one of its subsidiaries, and not
incurred in connection with or in anticipation of, such merger or consolidation
or such person becoming a Subsidiary of such person.
"Acquisition" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.
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<PAGE>
"Additional Transaction" shall have the meaning specified in Section
5.20(c).
"Adjusted Consolidated Fixed Charges" means (i) in the case of the
Company and its Subsidiaries, Consolidated Fixed Charges less Consolidated Fixed
Charges in respect of Permitted Indebtedness, in each case, of the Company and
its Subsidiaries and (ii) in all other cases, the Consolidated Fixed Charges of
a person and its Consolidated Subsidiaries.
"Advisory Committee" means the advisory committee of the Company
consisting initially of members who shall be Holders or nominees of Holders
whose appointment is approved by the Bankruptcy Court (the "Approved Members")
and, after the Issue Date, having such other replacement or additional members
as Holders of a majority in principal amount of Securities (other than in
respect of the Amended Original Guaranty) outstanding may determine in
accordance with the terms hereof; provided, that such other replacement or
additional members shall be reasonably acceptable to the Company and that each
replacement or additional member of the Advisory Committee must meet at all
times the following minimum qualifications or shall be disqualified from service
on the Advisory Committee (unless the Company waives the following requirements
and approves such member, in which case such member shall also be an Approved
Member):
1. the replacement or additional member shall not (a) have any conflict
of interest that would impair such member's ability to serve fairly and
impartially, (b) otherwise have a material equity interest in or relationship
with an entity that is in direct competition with the Company or (c) currently
serve as an officer or director of a gaming company; and
2. the replacement or additional member generally shall be of good
character and reputation.
Members of the Advisory Committee shall serve as fiduciaries to the Holders.
Members of the Advisory Committee may rely on information provided by the
Company with respect to any transaction without further investigation or
inquiry. Each member of the Advisory Committee shall execute, prior to becoming
a member thereof, a confidentiality agreement with the Company in form and
substance reasonably satisfactory to the Company. Members of the Advisory
Committee may be removed at any time, with or without cause, by action of
Holders of 66 2/3% in principal amount of Securities (other than in respect of
the Amended Original Guaranty) outstanding excluding any Securities held
beneficially or of record by directors or officers of the Company, in accordance
with the terms hereof.
2
<PAGE>
The Company may, from time to time, submit for the approval of the Advisory
Committee any transaction to be entered into by the Company and/or its
Subsidiaries, including any contract, agreement, understanding, loan, advance or
guarantee, and including any series of related transactions, such submission to
be deemed made if sent by overnight courier or hand delivered to all members of
the Advisory Committee at their last known address and to the Trustee as set
forth in Section 14.2 hereof.
If the Advisory Committee fails to disapprove of any such transaction within
five Business Days after the date on which the proposal in respect thereof was
submitted thereto, such transaction shall be deemed approved and shall for all
purposes of this Indenture be deemed to be an Authorized Transaction. If the
Advisory Committee shall disapprove any such transaction submitted to it by the
Company, it shall provide to the Company, by overnight courier or hand delivery,
within fifteen (15) Business Days after the date on which such proposal was
submitted, an affidavit setting forth the reasons for such disapproval and a
certificate which certifies that such disapproval was made in good faith and, in
the Advisory Committee's opinion, in the best interests of the Company and in
the best interests of the Holders and that such decision was not influenced in
any way by interests of the members of the Advisory Committee which are adverse
to the interests of the Company; provided, however if the Advisory Committee
disapproves a transaction and fails to provide the affidavit and certificate
within 15 Business Days, the Advisory Committee shall provide any such affidavit
and certificate within ten (10) calendar days after the date on which a proposal
is submitted. If the Advisory Committee fails to provide such affidavit and
certificate within the required time, such transaction shall be deemed approved
and shall for all purposes of this Indenture be deemed to be an Authorized
Transaction. All actions of the Advisory Committee shall require the affirmative
vote of a majority of its members.
If the Advisory Committee disapproves a transaction and it is later determined
that a member of the Advisory Committee has not met the minimum requirements in
paragraphs 1 through 4 above, if such member is not an Approved Member, such
member's vote shall be deemed to have been void with respect to such
disapproval. If the Advisory Committee fails to disapprove a transaction and it
is later determined that a member of the Advisory Committee has not met the
minimum requirements in paragraphs 1 through 4 above, such transaction shall
continue to be an Authorized Transaction.
Subject in all respects to the terms of this Indenture, the Advisory Committee
may adopt by-laws which would govern the election of Advisory Committee members
and set forth the rules and operating procedures of the Advisory Committee. The
Advisory
3
<PAGE>
Committee shall promptly deliver a copy of its adopted by-laws to the Company.
The Advisory Committee shall be disbanded and cease to exist on the Termination
Date.
"Affiliate" means (i) any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or its
Subsidiaries, (ii) any spouse, immediate family member, or other relative who
has the same principal residence of any person described in clause (i) above,
and (iii) any trust in which any person described in clause (i) or (ii) above
has a beneficial interest. For purposes of this definition, the term "control"
means (a) the power to direct the management and policies of a person, directly
or through one or more intermediaries, whether through the ownership of voting
securities, by contract, or otherwise, or (b) the beneficial ownership of 10% or
more of any class of voting Capital Stock of a person (on a fully diluted basis)
or of warrants or other rights to acquire such class of Capital Stock (whether
or not presently exercisable).
"Affiliate Transaction" shall have the meaning specified in Section
5.10.
"Agency Agreement" means an agreement between the Company or a
Subsidiary of the Company, whichever of such persons holds the relevant account,
the Collateral Agent (or an Affiliate thereof) and a bank described in clause
(ii) of the definition of Cash Equivalent (except that the capital and surplus
thereof need only be in excess of $250,000,000), substantially in the form of
Exhibit A to the Cash Collateral and Disbursement Agreement.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Amended Budget" shall have the meaning specified in Section 5.20(b).
"Amended Original Guaranty" shall have the meaning specified in Section
13.1.
"Amended Original Guaranty Obligations" means the obligations of the
Original Guarantor, now or hereafter existing, to pay principal of and premium,
if any, and interest on the Amended Original Guaranty when due and payable, by
acceleration, call for redemption or otherwise, and interest on the overdue
principal and premium, if any, of, and (to the extent lawful) interest, if any,
thereon, and all other amounts due or to become due in connection with the
Amended Original Guaranty, including
4
<PAGE>
any and all extensions, renewals or other modifications thereof, in whole or in
part, and the performance of all other obligations of the Original Guarantor,
including all costs and expenses incurred by the Trustee or the Holders in the
collection or enforcement of any such obligations.
"Approvals" means all approvals, licenses (including Gaming Licenses),
permits, authorizations, findings and other filings necessary under applicable
Gaming Laws; provided, however, that with respect to any Native American Casino,
"Approval" shall mean all approvals of the National Indian Gaming Commission or
any successor entity thereof to be obtained or made by the Company or any of its
Subsidiaries, as applicable, with respect to a Native American Casino Management
Contract.
"Asset Sale" shall have the meaning specified in Section 5.14.
"Asset Sale Offer" shall have the meaning specified in Section 5.14.
"Asset Sale Offer Amount" shall have the meaning specified in Section
5.14.
"Asset Sale Offer Period" shall have the meaning specified in Section
5.14.
"Asset Sale Offer Price" shall have the meaning specified in Section
5.14.
"Asset Sale Purchase Date" shall have the meaning specified in Section
5.14.
"Asset Sale Put Date" shall have the meaning specified in Section 5.14.
"Assignment of Rights" means the Assignment of Rights Pursuant to
Native American Casino Management Contract, dated as of February 17, 1994, with
respect to the Native American Casinos owned by the Umatilla, Muckleshoot and
Tonto Apache Native American Tribes in Auburn, Washington, Pendleton, Oregon and
Payson, Arizona, respectively, from CGMI, as Assignor, to the Trustee for the
benefit of the Holders (other than in respect of the Amended Original Guaranty),
as the same may be amended from time to time in accordance with the terms
thereof.
"Authorized Transaction" means any transaction, including any contract,
agreement, understanding, loan, advance or guarantee, and including any series
of related transactions,
5
<PAGE>
approved (or deemed approved in accordance with Section 5.18 hereof) by the
Advisory Committee.
"Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the dates of
each successive scheduled principal (or redemption) payment of such security or
instrument multiplied by the amount of such principal (or redemption) payment by
(ii) the sum of all such principal (or redemption) payments.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of New Jersey.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capital Stock" means, (i) with respect to any corporation, any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests (however designated) in stock issued by that
corporation, and (ii) with respect to any other person, any ownership interest
therein.
"Capitalized Lease Obligation" means obligations under a lease, entered
into on or after the Issue Date, that are required to be capitalized for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligations shall be the capitalized amount of
such obligations, as determined in accordance with GAAP.
"Cash" means U.S. Legal Tender or U.S. Government Obligations.
"Cash Collateral" shall have the meaning specified in Section 4.4(a).
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"Cash Collateral and Disbursement Agreement" means the Cash (and Excess
Cash) Collateral and Disbursement Agreement, dated the date hereof, among the
Trustee, the Company, each Guarantor and First Trust National Association, as
Collateral Agent, as the same may be amended from time to time in accordance
with the terms thereof.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank, of recognized standing having capital and surplus
in excess of $500,000,000, and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition and (iii) investments in
money market funds substantially all of whose assets comprise securities of the
types described in clauses (i) and (ii) above.
"Casino" means a gaming establishment owned, operated or managed by the
Company or a Subsidiary of the Company dedicated to the operation of games of
chance, and any hotel, building, restaurant, theater, parking facilities, retail
shops, land, equipment and other property or asset directly ancillary thereto or
used in connection therewith. Notwithstanding the foregoing, each Native
American Casino operated by the Company or any Subsidiary of the Company
pursuant to a Native American Casino Management Contract shall constitute a
"Casino" for purposes of this definition.
"CDGC" means Capital Development Gaming Corp., a Rhode Island
corporation and wholly owned Subsidiary of the Company.
"CDGC Notes" means Indebtedness of CDGC and its Subsidiaries
(determined without regard to clause (i) of the second proviso to the definition
of Indebtedness or clause (iv) of such proviso, insofar as it applies to each
clause (i)), which Indebtedness is (a) secured by a Lien (senior to all other
volitional Liens) in favor of the person holding the same on all the assets,
tangible or intangible, then or thereafter existing and all proceeds thereof, of
CDGC and its Subsidiaries; provided that the Lien in favor of such holder shall
be pari passu with the Liens in favor of holders of all other CDGC Notes,
whether outstanding at the time of the issuance of such note or thereafter
outstanding, and (b) pledged to the Trustee for the
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benefit of the Holders of Securities (other than in respect of the Amended
Original Guaranty) pursuant to the Pledge Agreement.
"CDGC Project" means the proposed project of the Narragansett Native
American Tribe to develop a Class II and/or Class III Native American Casino.
"CGMI" means Capital Gaming Management, Inc., a New Jersey corporation
and wholly owned Subsidiary of the Company.
"Collateral" means the Property and assets (including, without
limitation, notes evidencing loans permitted pursuant to Section 5.3(b)(vii)
hereof) of the Company and the Guarantor which is subject to the Liens created
by the Mortgage.
"Common Stock" shall mean the Common Stock, no par value, of the
Company now or hereafter issued.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the Indenture and thereafter means such
successor.
"Consolidated Coverage Ratio" of any person on any date of
determination (the "Transaction Date") means, the ratio, on a pro forma basis,
of (a) the aggregate amount of Consolidated EBITDA of such person attributable
to continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of, for the
Reference Period) to (b) the aggregate Adjusted Consolidated Fixed Charges of
such person (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of but only to the extent that the
obligations giving rise to such Adjusted Consolidated Fixed Charges would no
longer be obligations contributing to such person's Adjusted Consolidated Fixed
Charges subsequent to the Transaction Date) during the Reference Period;
provided, that for purposes of such calculation, (i) Acquisitions which occurred
during the Reference Period or subsequent to the Reference Period and on or
prior to the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio shall be assumed to have occurred on the first day
of the Reference Period, (ii) transactions giving rise to the need to calculate
the Consolidated Coverage Ratio shall be assumed to have occurred on the first
day of the Reference Period, (iii) the incurrence of any Indebtedness or
issuance of any Disqualified Capital Stock during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date (and
the application of the proceeds therefrom to the extent used to refinance or
retire other Indebtedness) shall be assumed to have occurred on the first day of
such Reference Period, and (iv) the Adjusted Consolidated
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Fixed Charges of such person attributable to interest on any Indebtedness or
dividends on any Disqualified Capital Stock bearing a floating interest (or
dividend) rate shall be computed on a pro forma basis as if the average rate in
effect from the beginning of the Reference Period to the Transaction Date had
been the applicable rate for the entire period, unless such person or any of its
Consolidated Subsidiaries is a party to an Interest Swap Obligation (which shall
remain in effect for the 12-month period immediately following the Transaction
Date) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used.
"Consolidated Depreciation and Amortization" for any person means the
total depreciation and amortization for such person and its Consolidated
Subsidiaries, as determined in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) Consolidated
Income Tax expense, (ii) Consolidated Depreciation and Amortization expense and
(iii) Adjusted Consolidated Fixed Charges.
"Consolidated Fixed Charges" of any person means, for any period, the
aggregate amount (without duplication) of (a) interest expensed or capitalized,
paid, accrued, or scheduled to be paid or accrued in accordance with GAAP
(including, in accordance with the following sentence, interest attributable to
Capitalized Lease Obligations) during such period in respect of all Indebtedness
of such person and its Consolidated Subsidiaries, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness other
than with respect to the Securities, (ii) the interest portion of all deferred
payment obligations, calculated in accordance with GAAP, (iii) all commissions,
discounts and other fees and charges owed with respect to bankers' acceptance
financings and currency and Interest Swap Obligations, in each case to the
extent attributable to such period and determined on a consolidated basis in
accordance with GAAP, (b) the rental expense for such period attributable to
operating leases of such person and its Consolidated Subsidiaries, and (c) the
amount of dividends payable by such person or any of its Consolidated
Subsidiaries in respect of Disqualified Capital Stock (other than by
Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate
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of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP and (y) interest expense attributable to any Indebtedness represented by
the guaranty by such person or a Subsidiary of such person of an obligation of
another person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
"Consolidated Income Tax Expense" for any person means the total net
income tax expenses for such person and its Consolidated Subsidiaries, as
determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (other than CDGC and its Subsidiaries), determined in accordance
with GAAP, for such period, adjusted to exclude (only to the extent included in
computing such net income (or loss) and without duplication): (a) all gains
which are either extraordinary (as determined in accordance with GAAP) or are
either unusual or nonrecurring (including, without limitation, from the sale of
assets outside the ordinary course of business or from the issuance or sale of
Capital Stock), (b) the net income, if positive, of any person, other than a
Consolidated Subsidiary, in which such person or any of its Consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in Cash to such person or a
Consolidated Subsidiary of such person during such period, but not in excess of
such person's pro rata share of such person's net income for such period, (c)
the net income, if positive, of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition and (d) the net
income, if positive, of any of such person's Consolidated Subsidiaries to the
extent that the declaration or payment of dividends or similar distributions is
not at the time permitted by operation of the terms of its charter or bylaws or
any other agreement, instrument, judgment, decree, order, law, statute, rule or
governmental regulation applicable to such Consolidated Subsidiary.
"Consolidated Net Worth" of a person means the aggregate of capital,
surplus and retained earnings of such person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries (other than
in the case of the Company, CDGC and its Subsidiaries), as would be shown on the
consolidated balance sheet of such person prepared in accordance with GAAP,
adjusted to exclude (to the extent included in calculating such equity), (a) the
amount of capital, surplus and accrued but unpaid dividends attributable to any
Disqualified Capital Stock, (b) all upward revaluations and other write-ups in
the book value of any asset of such person or a Consolidated Subsidiary of such
person subsequent to the Issue Date, (c) all
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investments in persons that are not Consolidated Subsidiaries and (d) all
Amended Original Guaranty Obligations.
"Consolidated Subsidiary" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated for
financial statement reporting purposes with the financial statements of such
person in accordance with GAAP.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Definitive Budget" shall have the meaning specified in Section
5.20(a).
"Designated Director" means any Person designated by the Noteholders
Steering Committee (as defined in the Plan) as a member of the Board of
Directors.
"Developmental Expenses" means all expenses (other than overhead
expenses) incurred by the Company and its Subsidiaries in connection with a New
Project other than: (i) expenses incurred in connection with an Authorized
Transaction or an Additional Transaction and (ii) expenses incurred in
connection with the CDGC Project.
"Disqualified Capital Stock" means (a) except as provided in (b), with
respect to any person, Capital Stock of such person (including any Subsidiary of
the Company), that, by its terms or by the terms of any security into which it
is convertible, exercisable or exchangeable, is, or upon the happening of an
event or the passage of time would be, required to be redeemed or repurchased
(including at the option of the holder thereof) by such person or any of its
Subsidiaries, in whole or in part, on or prior to the Stated Maturity of the
Securities and (b) with respect to any Subsidiary of such person (including any
Subsidiary of the Company), any Capital Stock (other than any common stock with
no special rights and no preference, privilege or redemption or repayment
provisions).
"Event of Default" shall have the meaning specified in Section 6.1.
"Event of Loss" means, with respect to any Property or asset, any (i)
loss, destruction or damage of such Property or asset, or (ii) any actual
condemnation, seizure or taking, by
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exercise of the power of eminent domain or otherwise, of such Property or asset,
or confiscation or requisition of the use of such Property or asset.
"Event of Loss Amount" shall have the meaning specified in Section
5.20(d).
"Excess Cash" shall have the meaning specified in Section 5.20(b).
"Excess Cash Collateral Account" shall have the meaning specified in
Section 4.9(a).
"GAAP" means United States generally accepted accounting principles as
in effect on the Issue Date.
"Gaming Authority" means any Governmental Authority with the power to
regulate gaming in any Gaming Jurisdiction, and the corresponding Governmental
Authorities with responsibility to interpret and enforce the laws and
regulations application to gaming in any Gaming Jurisdiction.
"Gaming Jurisdiction" means any Federal, state, tribal or sovereign
nation in which any entity in which the Debtor or Reorganized Debtor has a
direct or indirect beneficial, legal or voting interest, conducts or intends to
conduct, manage, finance, consult with respect to, operate or develop riverboat,
dockside, land-based or any other type of gaming (including, without limitation,
the rendering of services in respect thereof pursuant to a Native American
Casino Management Contract (as such term is defined in the Original Indenture)
or otherwise)
"Gaming Law" means any law, rule, regulation or ordinance governing
gaming activities, including the Indian Gaming Regulatory Act, 25 U.S.C. ss.
2701 et seq., any administrative rules or regulations promulgated thereunder,
and any of the corresponding statutes, rules and regulations in each Gaming
Jurisdiction.
"Gaming Licenses" means any material license, certification, franchise
or other authorization or approval to own, lease, operate or otherwise conduct,
manage, finance, consult with respect to, operate or develop riverboat,
dockside, land-based or any other type of gaming in any Gaming Jurisdiction, and
applicable liquor licenses.
"Governmental Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or a tribal or foreign government, any sovereign nation where
the Company or any Subsidiary of the Company conducts business (including the
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rendering of management services in respect thereof pursuant to a Native
American Casino Management Contract or otherwise), 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, and any maritime authority.
"Guarantor" means each Subsidiary of the Company (other than CDGC and
its Subsidiaries), whether now or hereafter existing.
"Guaranty" shall have the meaning specified in Section 13.2.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"incur" shall have the meaning specified in Section 5.11.
"Incurrence Date" shall have the meaning specified in Section 5.11.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any Property or services,
except such as would constitute accounts payable or other obligations to trade
creditors arising in the ordinary course of business and are not more than
thirty (30) days past their respective original due dates unless such payable is
being contested in good faith and for which adequate reserves have been
established in accordance with GAAP, (iv) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks, (v) for the payment of money
relating to a Capitalized Lease Obligation, or (vi) evidenced by a letter of
credit or a reimbursement obligation of such person with respect to any letter
of credit; (b) all net obligations of such person under Interest Swap
Obligations and foreign currency hedges; (c) all liabilities of others of the
kind described in the preceding clause (a) or (b) that such person has
guaranteed or that is otherwise its legal liability and all obligations to
purchase, redeem or acquire any Capital Stock; (d) all obligations secured by a
Lien to which the Property or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights) of such person
are subject, whether or not the obligations secured thereby shall have been
assumed by or shall otherwise be
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such person's legal liability, provided, that the amount of such obligations
shall be limited to the lesser of the fair market value of the assets or
Property to which such Lien attaches and the amount of the obligation so
secured; and (e) any and all deferrals, renewals, extensions, refinancings and
refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b), (c) or (d), or this clause (e), whether or not between or
among the same parties; provided that obligations in respect of (i) of
Indebtedness (assuming that such obligations were Indebtedness for purposes of
applying this clause (i)) of CDGC and its Subsidiaries, which obligations are
incurred in respect of the CDGC Project, and which obligations, whether pursuant
to the terms thereof or pursuant to applicable law, do not provide for personal
recourse against the Company or any Subsidiary thereof (other than CDGC or its
Subsidiaries), (ii) each Authorized Transaction or Additional Transaction so
long as such obligations are described in the materials submitted to the
Advisory Committee in connection with its approval thereof, (iii) the Amended
Original Guaranty and (iv) Refinancing Indebtedness in respect of the
obligations described in clause (i), (ii) and (iii) and this clause (iv)
(assuming that such obligations were Indebtedness for purposes of applying this
clause (iv)), shall not be deemed Indebtedness for purposes of Section 5.11, the
definitions herein as they apply thereto and any other provision of this
Indenture or the Securities referring, directly or indirectly, to Section 5.11
(or any part thereof) but only in respect of such reference.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Indenture Obligations" means the obligations of the Company and the
Guarantor pursuant to this Indenture and the Securities (and any other obligor
hereunder or under the Securities) now or hereafter existing, to pay principal
of and premium, if any, and interest on the Securities when due and payable,
whether on the Maturity Date or an Interest Payment Date, by acceleration, call
for redemption, acceptance Asset Sale Offer or otherwise, and interest on the
overdue principal and premium, if any, of, and (to the extent lawful) interest,
if any, on, the Securities and all other amounts due or to become due in
connection with this Indenture, the Mortgage and the Securities, including any
and all extensions, renewals or other modifications thereof, in whole or in
part, and the performance of all other obligations of the Company and the
Guarantor (and any other obligor hereunder or under the Securities), including
all costs and expenses incurred by the Trustee or the Holders in the collection
or enforcement of any
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such obligations or realization upon the Collateral or the security of the
Mortgage; provided that Indenture Obligations shall not include Amended Original
Guaranty Obligations.
"Insurance Proceeds" means the Company's and the Guarantor's interest
in and to (a) all proceeds which now or hereafter may be paid under any
insurance policies now or hereafter obtained by or on behalf of the Company or
the Guarantor in connection with the conversion of the Property subject to the
Mortgage into Cash or liquidated claims, together with the interest payable
thereon and the right to collect and receive the same, including, but without
limiting the generality of the foregoing, proceeds of casualty insurance, title
insurance, business interruption insurance and any other insurance now or
hereafter maintained with respect to such Property and (b) all amounts
attributable to Events of Loss. Notwithstanding the foregoing, Insurance
Proceeds shall not include the first $500,000 of proceeds per occurrence
received by the Company or the Guarantor pursuant to any such insurance policy
and the first $500,000 of proceeds paid per Event of Loss, which proceeds (i)
shall be available for use in the operations of the Company or the Guarantor,
provided that such use is determined in good faith, and (ii) shall not be
subject to the provisions of Section 4.4 hereof.
"Interest Payment Date" means the stated due date of an installment of
interest on the Securities (other than in respect of the Amended Original
Guaranty).
"Interest Swap Obligation" means, when used with reference to any
person, the obligations of such person pursuant to any arrangement with any
other person whereby, directly or indirectly, such person is entitled to receive
from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for periodic
payments made by such person calculated by applying a fixed or a floating rate
of interest on the same notional amount.
"Investment" by any person in any other person means (without
duplication) (a) the acquisition by such person (whether for cash, property,
services, securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities, including any
options or warrants, of such other person or any agreement to make any such
acquisition; (b) the making by such person of any deposit with, or advance, loan
or other extension of credit to, such other person (including the purchase of
property from another person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such other person) or any
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commitment to make any such advance, loan or extension (but excluding accounts
receivable arising in the ordinary course of business); (c) the entering into by
such person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
person; or (d) the making of any capital contribution by such person to such
other person. The Company shall be deemed to make an "Investment" in an amount
equal to the fair market value, as reasonably determined by the Board of
Directors of the Company, of the net assets of any Subsidiary of the Company and
any Property transferred to such Subsidiary from the Company, the Guarantor or
any of their respective Subsidiaries shall be deemed an Investment valued at its
fair market value, as reasonably determined by the Board of Directors of the
Company, at the time of such transfer.
"Issue Date" means the date on which the Plan is declared effective.
"Joint Venture" shall have the meaning provided in Section 5.3(b).
"Legal Holiday" shall have the meaning provided in Section 12.7.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest, and
any option or other agreement to give any security interest).
"Maturity Date" when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or
herein provided, whether at Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.
"Minimum Accumulation Date" shall have the meaning specified in Section
5.14.
"Mortgage" means the Assignment of Rights, the Security Agreement, the
Cash Collateral and Disbursement Agreement and the Pledge Agreement and any
other agreement purporting to convey to the Trustee for the benefit of Holders
of Securities (other than the Amended Original Guaranty), a security interest in
the Property pursuant to the requirements of this Indenture executed by the
Company and the Guarantor in favor of the Trustee for the benefit of such
Securityholders, as the same may be amended from time to time. Any references to
the "Guarantor" or the
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"Securities" in these agreements, shall be deemed to have the same meaning as
set forth in this Indenture.
"Native American Casino" means a Casino which conducts gaming pursuant
to, and in accordance with the Indian Gaming Regulatory Act, 25 U.S.C. ss. 2701
et seq. or any successors thereto, and the rules and regulations promulgated
thereunder by the National Indian Gaming Commission or any successor entity
thereof and with respect to which the Company or any Subsidiary of the Company
has a Native American Casino Management Contract.
"Native American Casino Management Contract" means an active contract
to operate and/or manage one or more Native American Casinos, or any Casino
operated on Native American land; provided that, (i) jurisdiction to rule on
disputes over such contract's terms is properly exercised by a United States
federal or state court, (ii) such contract by its terms is enforceable in a
United States federal or state court and (iii) all necessary Governmental
Authorities with jurisdiction over such matters have approved such contract.
"Net Cash Proceeds" means the aggregate amount of U.S. Legal Tender or
Cash Equivalents received by the Company in the case of a sale of Qualified
Capital Stock, and by the Company and the Guarantor in respect of an Asset Sale,
less, in each case, the sum of all fees, commissions and other expenses incurred
in connection with such sale of Qualified Capital Stock.
"Net Cash Proceeds Account" shall have the meaning as specified in
Section 4.4(a).
"Net Proceeds" means the aggregate Net Cash Proceeds and fair market
value of Property (valued at the fair market value thereof at the time of
receipt in good faith by the Board of Directors of the Company), other than
securities of the Company or the Guarantor in connection with an Asset Sale
pursuant to Section 5.14.
"New Project" means any Project in respect of which no Authorized
Transaction or Additional Transaction has occurred.
"Non-recourse Indebtedness" means Indebtedness of a person to the
extent that under the terms thereof or pursuant to applicable law (i) no
personal recourse shall be had against such person for the payment of the
principal of or interest or premium on such Indebtedness, and (ii) enforcement
of obligations on such Indebtedness is limited only to recourse against
interests in Property and assets purchased with the proceeds of the incurrence
of such Indebtedness and as to which neither the Company nor the Guarantor
provides any credit support and is not liable.
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"Offer to Purchase" means any Asset Sale Offer (including in connection
with an Event of Loss). Any such Offer shall comply with all applicable
provisions of Federal and state laws regulating such offers, and any provisions
of this Indenture which conflict with such laws shall be deemed to be superseded
by the provisions of such laws.
"Offer to Purchase Price" means any Asset Sale Offer Price (including
in connection with an Event of Loss).
"Officer" means, with respect to the Company, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary or Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers of
the Company and otherwise complying with the requirements of Sections 14.4 and
14.5.
"Opinion of Counsel" means a written opinion from legal counsel to the
Company complying with the requirements of Sections 14.4 and 14.5. Unless
otherwise required by this Indenture, the counsel may be in-house counsel to the
Company.
"Original Guarantor" means CGMI.
"Original Indenture" shall have the meaning specified in the first
Recital hereto.
"Original Securities" means the 11-1/2% Senior Secured Notes due 2001
of the Company issued under the Original Indenture.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permitted FF&E Financing" means (i) Non-recourse Indebtedness
incurred to finance the acquisition or lease after the Issue Date of newly
acquired or leased furniture, fixtures or equipment ("FF&E") which is used
directly in the operation of Casinos and which is secured by a Lien on such
FF&E, and (ii) any guarantee by the Company or any of its Subsidiaries of
Indebtedness of any Native American Tribe for so long as a Native American
Casino Management Contract with respect to such Native American Tribe shall be
in effect; provided, that, in the case of clause (ii) of this definition, such
Indebtedness is incurred to finance the acquisition or lease after the Issue
Date of FF&E directly used or to be directly used, in a Native American Casino,
which Indebtedness is secured by a Lien on such FF&E. The Lien described in this
definition may be exclusive of any
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Lien on such FF&E purported to be created hereunder or under the Mortgage.
"Permitted Indebtedness" means any of the following:
(a) The Company and any of its Subsidiaries may incur Indebtedness
solely in respect of bankers acceptances, letters of credit and performance
bonds (to the extent that such incurrence does not result in the incurrence of
any obligation for the payment of borrowed money of any person other than the
Company or any of its Subsidiaries), all in the ordinary course of business, in
amounts and for the purposes customary in the Company's or such Subsidiary's
industry for gaming operations similar to those of the Company or such
Subsidiary, provided, that the aggregate principal amount outstanding of such
Indebtedness (including any Indebtedness issued to refinance, refund or replace
such Indebtedness) shall at no time exceed $1.5 million;
(b) The Company may incur Indebtedness to a Subsidiary of the Company,
and a Subsidiary of the Company may incur Indebtedness to any other Subsidiary
of the Company or to the Company.
(c) The Company and any Subsidiary of the Company may incur
Indebtedness representing the balance deferred and unpaid of the purchase price
of any property or services used in the ordinary course of their business that
would constitute ordinarily a trade payable to trade creditors (other than
accounts payable or other obligations to trade creditors arising in the ordinary
course of business which have remained unpaid for greater than 30 days from
their respective original due dates unless such payable is being contested in
good faith and for which adequate reserves have been established in accordance
with GAAP); and
(d) The Company and any Subsidiary of the Company may post a bond or
surety obligation (or incur an indemnity or similar obligation) in order to
prevent the impairment or loss of or to obtain a Gaming License, to the extent
required by applicable law and consistent in character and amount with customary
industry practice.
"Permitted Liens" means any of the following:
(a) Liens for taxes, assessments or other governmental charges not yet
due or which are being contested in good faith and by appropriate proceedings by
the Company or any of its Subsidiaries if adequate reserves with respect thereto
are
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maintained on the books of the Company or such Subsidiary in accordance with
GAAP;
(b) statutory Liens of carriers, warehousemen, mechanics, landlords,
materialmen, repairmen or other like Liens arising by operation of law in the
ordinary course of business and consistent with industry practices and Liens on
deposits made to obtain the release of such Liens if (i) the underlying
obligations are not overdue for a period of more than sixty (60) days or (ii)
such Liens are being contested in good faith and by appropriate proceedings by
the Company or any of its Subsidiaries and adequate reserves with respect
thereto are maintained on the books of the Company or such Subsidiary in
accordance with GAAP;
(c) easements, rights-of-way, zoning and similar restrictions and other
similar encumbrances or title defects incurred or imposed, as applicable, in the
ordinary course of business and consistent with industry practices which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto (as such
property is used by the Company or any of its Subsidiaries) or interfere with
the ordinary conduct of the business of the Company or such Subsidiary;
provided, that any such Liens are not incurred in connection with any borrowing
of money or any commitment to loan any money or to extend any credit;
(d) Liens existing on the Issue Date;
(e) Liens created by the Indenture and the Mortgage; and
(f) Liens that secure Acquired Indebtedness or Liens on acquired
assets, provided, in each case, that such Liens do not secure any other property
or assets and were not put in place in connection with or in anticipation of
such acquisition, merger or consolidation.
"Permitted Regulatory Redemption" means a redemption by the Company or
any of its Subsidiaries of such person's securities pursuant to, and in
accordance with, any order of any Governmental Authority with appropriate
jurisdiction and authority relating to a Gaming License, or to the extent
necessary in the reasonable, good faith judgment of the Board of Directors of
the Company to prevent the loss, failure to obtain or material impairment or to
secure the reinstatement of, any material Gaming License, where in any such case
such redemption or acquisition is required because the holder or beneficial
owner of such security is required to be found suitable or to otherwise
20
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qualify under any Gaming Laws and is not found suitable or so qualified within a
reasonable period of time.
"person" means any individual, limited liability company, corporation,
partnership, joint venture, association, joint-venture company, Native American
Tribe, trust, unincorporated organization or government or other agency or
political subdivision thereof.
"Plan" means the Company's Plan of Reorganization, dated December 22,
1996, as amended, filed in the Bankruptcy Court and confirmed on March 19, 1997.
"Pledge Agreement" means the Amended and Restated Pledge Agreement,
dated February 17, 1994 and amended and restated on the date hereof, from the
Company and CGMI, as Pledgor, to the Trustee for the benefit of Holders (other
than in respect of the Amended Original Guaranty), as the same may be amended
from time to time in accordance with the terms thereof.
"principal" of any Indebtedness (including the Securities) means the
principal of such Indebtedness plus any applicable premium, if any, on such
Indebtedness.
"Project" means any project to build, construct, develop, refurbish or
expand any Casino, whether owned or operated by the Company, a Native American
Tribe or band or any other person.
"Projected Expenditures" shall have the meaning specified in Section
5.20(a).
"Property" or "property" means any right or interest in or to property
or assets of any kind whatsoever, whether real, personal or mixed and whether
tangible, intangible, contingent, indirect or direct.
"Proposed Budget" shall have the meaning specified in Section 5.20(a).
"Qualified Capital Stock" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
"Qualified Exchange" means any defeasance, redemption, repurchase or
other acquisition of Capital Stock or Subordinated Indebtedness of the Company
to the extent funded with the Net Proceeds received by the Company from the
substantially concurrent sale of Qualified Capital Stock or to the extent
effected in exchange for Qualified Capital Stock.
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"Qualified Restricted Investment" means any Restricted Investment to
the extent funded with the Net Proceeds received by the Company from the
substantially concurrent sale of Qualified Capital Stock or to the extent
effected in exchange for Qualified Capital Stock.
"Record Date" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"Redemption Date" when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and, in the case of Securities (other than the Amended Original
Guaranty), Paragraph 5 in the form of Security.
"Redemption Price" when used with respect to any Security to be
redeemed, means the redemption price for such redemption set forth in Paragraph
5 in the form of Security, which shall include in each case accrued and unpaid
interest with respect to such Security to the applicable Redemption Date.
"Reference Period" with regard to any person means the four full fiscal
quarters (or (i) such lesser period during which such person has been in
existence or (ii) in the case of the Company and its Subsidiaries, such lesser
period commencing with the beginning of the first full final quarter commencing
on, or immediately after, the Issue Date) ended immediately preceding any date
upon which any determination is to be made pursuant to the terms of the
Securities or the Indenture; provided, that if the applicable Reference Period
is less than four fiscal quarters, the Adjusted Consolidated Fixed Charges of
such person, shall be computed on an annualized basis.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, a liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance
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with GAAP) at the time of such Refinancing; provided, that (A) Refinancing
Indebtedness of a Guarantor shall only be used to refinance outstanding
Indebtedness or Disqualified Capital Stock of such Guarantor, (B) Refinancing
Indebtedness shall (x) not have an Average Life shorter than the Indebtedness or
Disqualified Capital Stock to be so refinanced at the time of such refinancing
and (y) in all respects, be no less subordinated, if applicable, to the rights
of Holders pursuant to the Securities (other than in respect of the Amended
Original Guaranty) than was the Indebtedness or Disqualified Capital Stock to be
refinanced and (C) such Refinancing Indebtedness shall have no installment of
principal (or redemption) scheduled to come due earlier than the scheduled
maturity of any installment of principal of the Indebtedness or Disqualified
Capital Stock to be so refinanced which was scheduled to come due prior to the
Stated Maturity.
"Registrar" shall have the meaning specified in Section 2.3.
"Related Business" means (a) the gaming business conducted (or proposed
to be conducted) by the Company and its Subsidiaries as of the Issue Date and
(b) any and all businesses materially related to the gaming business whether or
not such gaming business is conducted by the Company or its Subsidiaries.
"Required Regulatory Redemption" means a redemption by the Company or
any Subsidiary of the Company of any of such Holder's Securities pursuant to,
and in accordance with, any order of any Governmental Authority with appropriate
jurisdiction and authority relating to a Gaming License, or to the extent
necessary in the reasonable, good faith judgment of the Board of Directors of
the Company to prevent the loss, failure to obtain or material impairment, or to
secure the reinstatement, of any material Gaming License, where in any such case
such redemption or acquisition is required because such Holder or beneficial
owner of such Security is required to be found suitable or to otherwise qualify
under any Gaming Laws and is not found suitable or so qualified within a
reasonable period of time.
"Restricted Investment" means, in one or a series of related
transactions, any Investment other than in Cash Equivalents and the extension of
guarantees described in clause (ii) of the definition of Permitted FF&E
Financing; provided, that (a) the extension of credit to customers of Casinos
consistent with industry practice and in the ordinary course of business shall
not be a Restricted Investment, and (b) Investments in respect of Authorized
Transactions or Additional Transactions, shall not be a Restricted Investment.
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"Restricted Payment" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Capital Stock of such person or any Subsidiary of such person, (b) any payment
on account of the purchase, redemption or other acquisition or retirement for
value of Capital Stock of such person or any Subsidiary of such person (other
than such payments by a person to acquire Capital Stock of a Subsidiary of such
person), (c) any purchase, redemption, or other acquisition or retirement for
value of, or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such person or a Subsidiary of such person (other than any
purchase, redemption or other acquisition or retirement for value by or any
defeasance by a person of any Subordinated Indebtedness of a Subsidiary of such
person) prior to the scheduled maturity, any scheduled repayment of principal,
or scheduled sinking fund payment, as the case may be, of such Indebtedness
(including any payment in respect of any amendment of the terms of any such
Subordinated Indebtedness, which amendment is sought in connection with any such
acquisition of such Indebtedness or seeks to shorten any such due date), and (d)
any Restricted Investment of such person; provided, however, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to Capital Stock of an issuer to the extent payable
solely in shares of Qualified Capital Stock of such issuer; (ii) any dividend,
distribution or other payment to the Company, or to any of its directly or
indirectly wholly owned Subsidiaries (other than CDGC and its Subsidiaries), by
any of its Subsidiaries; (iii) Investments in the Company or any of its directly
or indirectly wholly owned Subsidiaries (other than CDGC and its Subsidiaries),
all of whose capital stock has been pledged as Collateral for the Securities
(other than the Amended Original Guaranty) in favor of the Holders thereof; and
(iv) any dividend, distribution or other payment in respect of Capital Stock
issued or sold, or Indebtedness incurred, in respect of an Authorized
Transaction or Additional Transaction which issuance or sale is described in the
materials submitted to the Advisory Committee in connection with its approval
thereof.
"SEC" means the Securities and Exchange Commission.
"Security" or "Securities" means the 12.0% Senior Secured Notes due
2001 of the Company, as amended or modified from time to time in accordance with
the terms hereof, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
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"Security Agreement" means the Amended and Restated Security Agreement,
dated February 17, 1994 and amended and restated on the date hereof, by and
between the Company, the Guarantor and the Trustee for the benefit of the
Holders (other than in respect of the Amended Original Guaranty), as the same
may be amended from time to time in accordance with the terms thereof.
"Securityholder" See "Holder."
"Stated Maturity" means, when used with respect to any Security, the
fourth anniversary of the Issue Date.
"Subordinated Indebtedness" means Indebtedness of the Company that is
subordinated in right of payment to the Securities (other than the Amended
Original Guaranty) in any respect or has a stated maturity on or after the
Stated Maturity.
"Subsidiary", with respect to any person, means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such person,
by such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person or (ii) any other person (other than a corporation)
in which such person, one or more Subsidiaries of such person, or such person
and one or more Subsidiaries of such person, directly or indirectly, at the date
of determination thereof has at least majority ownership interest.
"Termination Date" means the date on which persons identified as
Designated Directors, which persons, serving as members of the Board of
Directors of the Company, would constitute at least a majority of the members
thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-7bbbb) as in effect on the date of the execution of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust department
(or any successor group) of the Trustee including any vice president, assistant
vice president, secretary, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust officer, any other officer
of the corporate trust
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department (or any successor group) of the Trustee to whom such trust matter is
referred because of his knowledge of and familiarity with the particular
subject.
"U.S. Government Obligations" means direct non-callable obligations of,
or non-callable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"wholly owned" with respect to a Subsidiary of any person means (i)
with respect to a Subsidiary that is a limited liability company or similar
entity, a Subsidiary whose capital stock is 99% or greater beneficially owned by
such person and (ii) with respect to a Subsidiary that is other than a limited
liability company or similar entity, a Subsidiary whose capital stock or other
equity interest is 100% beneficially owned by such person.
Section 1.2. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 13.3. Rules of Construction.
---------------------
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Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in
the plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(vii) references to Sections or Articles means reference to
such Section or Article in this Indenture, unless stated otherwise.
ARTICLE XIV.
THE SECURITIES
Section 14.1. Form and Dating.
---------------
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto, each of
which is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as Exhibit A hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby; provided that none of the Company or any of its Subsidiaries (other
than the Original Guarantor) shall be bound by or have any liability in respect
of, Amended Original Guaranty Obligations.
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Section 2.2. Execution and Authentication.
----------------------------
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Securities for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted, or
reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security, but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the term of this Indenture. The Trustee shall
authenticate Securities for original issue in the aggregate principal amount of
up to $23,100,000 upon a written order of the Company in the form of an
Officers' Certificate. The Officers' Certificate shall specify the amount of
Securities to be authenticated and the date on which the Securities are to be
authenticated. The aggregate principal amount of Securities (other than in
respect of the Amended Original Guaranty) outstanding at any time may not exceed
$23,100,000, except as provided in Section 2.7. The aggregate principal amount
of the Amended Original Guaranty outstanding at any time shall not exceed
$103,200,000, except as provided in Section 2.7. Upon the written order of the
Company in the form of an Officers' Certificate, the Trustee shall authenticate
Securities in substitution of Securities originally issued to reflect any name
change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons in
denominations of $100 and any integral multiple thereof.
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Section 2.3. Registrar and Paying Agent.
--------------------------
The Company and, in respect of the Amended Original Guaranty, the
Original Guarantor, shall maintain an office or agency in St. Paul, Minnesota,
where Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency in St. Paul, Minnesota where Securities
may be presented for payment ("Paying Agent") and an office or agency where
notices and demands to or upon the Company or the Original Guarantor, as the
case may be, in respect of the Securities may be served. The Company may act as
its own Registrar or Paying Agent (including in respect of the Amended Original
Guaranty), except that, for the purposes of Articles III and VII, neither the
Company nor any Affiliate of the Company shall act as Paying Agent. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-Registrars and one or more
additional Paying Agents. The term "Paying Agent" includes any additional Paying
Agent. Each of the Company and the Original Guarantor hereby initially appoints
the Trustee as Registrar and Paying Agent, and the Trustee hereby initially
agrees so to act.
The Company and, in respect of the Amended Original Guaranty, the
Original Guarantor, 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
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company and, in respect of the Amended Original Guaranty, the
Original Guarantor, fail to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
Section 2.4. Paying Agent to Hold Assets in Trust.
------------------------------------
The Company and, in respect of the Amended Original Guaranty, the
Original Guarantor, shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the Securities), and
shall notify the Trustee in writing of any Default by the Company (or any other
obligor on the Securities) in making any such payment. If the Company or a
Subsidiary of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders of the
Securities (other than in respect of the Amended Original Guaranty), the Holders
of the Amended Original Guaranty or the Trustee, as the case may be. The Company
at any time may require a Paying Agent to distribute all assets held by it to
the Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
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Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company (or in the
case of the Amended Original Guaranty, the Original Guarantor) to the Paying
Agent, the Paying Agent (if other than the Company or the Original Guarantor)
shall have no further liability for such assets.
Section 2.5. Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders. The Trustee, the Registrar and the Company shall provide a
current securityholder list to any Gaming Authority upon demand.
Section 2.6. Transfer and Exchange.
---------------------
When Securities are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its reasonable requirements for such transaction
are met; provided, however, that the Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's or co-Registrar's request. No service charge shall be made for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer taxes,
assessments, or similar governmental charge payable upon exchanges or transfers
pursuant to Sections 2.2, 2.10, 3.9, 5.14, 10.5 or 12.1). Except for a Required
Regulatory Redemption pursuant to Section 3.2 of this Indenture or an order of
any Gaming Authority, the Registrar or co-Registrar shall not be required to
register the transfer of or
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exchange of (a) any Security selected for redemption in whole or in part
pursuant to Article III hereof, except the unredeemed portion of any Security
being redeemed in part, or (b) any Security for a period beginning 15 Business
Days before the mailing of a notice of an offer to repurchase pursuant to
Sections 5.14 or redeem Securities pursuant to Article III hereof and ending at
the close of business on the day of such mailing.
Section 2.7. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory to
the Trustee, to the Trustee to the effect that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the Company and the
Trustee, to protect the Company, the Trustee or any Agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge such
Security for its reasonable, out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
Section 2.8. Outstanding Securities.
----------------------
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those canceled by it, those delivered
to it for cancellation and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds U.S. Legal Tender or U.S.
Government Obligations sufficient to pay all of the principal and interest due
on the Securities payable on that date and payment of the Securities called for
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redemption is not otherwise prohibited, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
Section 2.9. Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company, the Guarantor and Affiliates of the
Company or of the Guarantor shall be disregarded, except that, for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, amendment, supplement, waiver or consent, only Securities that the
Trustee knows or has reason to know are so owned shall be disregarded.
Section 2.10. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare, the Guarantor shall endorse and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company reasonably and in
good faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare, the Guarantor shall endorse and the Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as permanent Securities authenticated
and delivered hereunder.
Section 2.11. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel and, in accordance with normal operating procedures, shall dispose of all
Securities surrendered for transfer, exchange, payment or cancellation. Subject
to Section 2.7, the Company may not issue new Securities to replace Securities
it has paid or delivered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 2.11, except as expressly permitted in the form of Securities
and as permitted in this Indenture.
Section 2.12. Defaulted Interest.
------------------
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If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) interest on the
defaulted interest, to the persons who are Holders on a Record Date (or at its
option a subsequent special record date) which date shall be the fifteenth day
next preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day, unless the Trustee fixes
another record date. At least 15 days before the subsequent special record date,
the Company shall mail to each Holder with a copy to the Trustee a notice that
states the subsequent special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
ARTICLE III.
REDEMPTION
Section 3.1. Right of Redemption.
-------------------
Redemption of Securities shall be made only in accordance with this
Article III. At its election, the Company may redeem the Securities (other than
the Amended Original Guaranty forming a part thereof) in whole or in part, at
any time on or after the Issue Date at the Redemption Price of 100% of principal
amount, including accrued and unpaid interest to the Redemption Date (other than
Amended Original Guaranty Obligations). At its election, the Original Guarantor
may redeem the Amended Original Guaranty, in whole or in part, at any time on or
after the Issue Date at the Redemption Price of 100% of the principal amount,
including accrued and unpaid interest to the Redemption Date. Except as provided
in this paragraph, Section 3.3 and paragraph 5 of the Securities, the Securities
may not otherwise be redeemed at the option of the Company.
Section 3.2. Mandatory Sinking Fund; Payments and Credits.
--------------------------------------------
The Securities (but not the Amended Original Guaranty) are subject to
redemption on each of the third anniversary and the fourth anniversary of the
Issue Date through the operation of the mandatory sinking fund provided by this
Section 3.2. The Company shall make a mandatory sinking fund payment on each of
the redemption dates set forth below in an amount sufficient to retire by
redemption on each such mandatory redemption date Securities (other than the
Amended Original Guaranty) having an aggregate principal amount equal to the
principal amount set forth below, at a mandatory sinking fund redemption price
of 100% of the principal amount thereof together with accrued interest to the
redemption date:
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Redemption Date Principal Amount
--------------- ----------------
Third Anniversary of the Issue Date $ 4,620,000
Fourth Anniversary of the Issue Date $ 18,480,000
All sinking fund payments shall be made by depositing immediately
available funds sufficient therefor with the Trustee no later than 10:00 A.M.,
New York City time, on or prior to the respective redemption date. The sinking
fund redemption shall be made by the Trustee in the manner set forth in Section
3.6 hereof and notice shall be given by the Company in the manner set forth in
Section 3.4 hereof.
Section 3.3. Redemption Pursuant to Gaming Laws.
----------------------------------
Notwithstanding any other provision of this Indenture, the Securities
shall also be redeemable at any time pursuant to, and in accordance with, a
Required Regulatory Redemption. If the Company requires the redemption of any
Security pursuant to this Section 3.3, then the redemption price shall be the
principal amount thereof, plus accrued interest to the date of redemption. The
Company or, in the case of the Amended Original Guaranty, the Original
Guarantor, shall tender the redemption price (together with any accrued and
unpaid interest) to the Trustee no later than 30 and no more than 60 days after
the Company gives the Securityholder or owner of a beneficial or voting interest
written notice of redemption or such earlier date as may be ordered by any
Gaming Authority. The Company or, in the case of the Amended Original Guaranty,
the Original Guarantor, shall notify the Trustee of any disposition or
redemption required under this Section 3.3, and upon receipt of such notice, the
Trustee shall not accord any rights or privileges under this Indenture or any
Security to any Securityholder or owner of a beneficial or voting interest who
is required to dispose of any Security or tender it for redemption, except to
pay the redemption price (together with any accrued but unpaid interest) upon
tender of such Security.
Section 3.4. Notices to Trustee.
------------------
If the Company or, in the case of the Amended Original Guaranty, the
Original Guarantor, elects to redeem Securities pursuant to Article III, it
shall notify the Trustee in writing of the date on which the Securities are to
be redeemed ("Redemption Date") and the principal amount of Securities to be
redeemed and whether it wants the Trustee to give notice of redemption to the
Holders.
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If the Company or, in the case of the Amended Original Guaranty, the
Original Guarantor, elects to reduce the principal amount of Securities to be
redeemed pursuant to Paragraph 5 of the Securities by crediting against any such
redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Company or, in the case of the Amended Original Guaranty, the
Original Guarantor, shall give each notice to the Trustee provided for in this
Section 3.4 at least 45 days before the Redemption Date (unless a shorter notice
shall be required by applicable Gaming Laws or by order of any Gaming
Authority).
Section 3.5. Selection of Securities to Be Redeemed
--------------------------------------
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof or, in the case of the Amended Original Guaranty, otherwise,
the Trustee shall select from among such Securities to be redeemed pro rata or
by lot or by such other method as the Trustee shall determine to be fair and
appropriate and in such manner as complies with any applicable legal and stock
exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
or, in the case of the Amended Original Guaranty, the Original Guarantor, in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $100 may be redeemed only in whole. The
Trustee may select for redemption portions (equal to $100 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $100. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
Section 3.6. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company or, in the case of the Amended Original Guaranty, the Original
Guarantor, shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder whose Securities are to be redeemed (unless a shorter
notice shall be required by applicable Gaming Laws). At the Company's or, in the
case of the Amended Original Guaranty, the Original Guarantor's, request, the
Trustee shall give the notice of redemption in the Company's name and at the
Company's or, in the case of the Amended Original Guaranty, the Original
Guarantor's,
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expense. Each notice for redemption shall identify the Securities to be redeemed
and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued and unpaid
interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that the Securities called for redemption must be surrendered to
the Paying Agent at the address specified in such notice to collect the
Redemption Price;
(5) that, unless (a) the Company or, in the case of the Amended
Original Guaranty, the Original Guarantor, defaults in its obligation to
deposit U.S. Legal Tender with the Paying Agent in accordance with Section
3.8 hereof or (b) such redemption payment is prevented for any reason,
interest on Securities called for redemption ceases to accrue on and after
the Redemption Date and the only remaining right of the Holders of such
Securities is to receive payment of the Redemption Price, including accrued
and unpaid interest, upon surrender to the Paying Agent of the Securities
called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon
surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section 3.5 and, if
applicable, pursuant to the redemption provisions of Paragraph 5 of the
Securities; and
(10) that such redemption is in respect of the Amended Original
Guaranty, if that is the case.
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Section 3.7. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.6,
Securities (other than in respect of the Amended Original Guaranty) called for
redemption become due and payable on the Redemption Date and at the Redemption
Price, including accrued and unpaid interest. Upon surrender to the Trustee or
Paying Agent, Securities called for redemption shall be paid at the applicable
Redemption Price, including any interest accrued to and unpaid on the Redemption
Date; provided, that in the case of Securities (other than in respect of the
Amended Original Guaranty), if the Redemption Date is after a regular Record
Date and on or prior to the Interest Payment Date, the accrued interest shall be
payable to the Holder of such redeemed Securities registered on the relevant
Record Date; and provided, further, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
Section 3.8. Deposit of Redemption Price.
---------------------------
On or before the Redemption Date, the Company or, in the case of the
Amended Original Guaranty, the Original Guarantor, shall deposit with the Paying
Agent (other than the Company or an Affiliate of the Company) U.S. Legal Tender
sufficient to pay the applicable Redemption Price of, including accrued and
unpaid interest on, all Securities to be redeemed on that date (other than
Securities or portions thereof called for redemption on that date that have been
delivered by the Company to the Trustee for cancellation). The Paying Agent
shall promptly return to the Company or, in the case of the Amended Original
Guaranty, the Original Guarantor, any U.S. Legal Tender so deposited which is
not required for that purpose upon the written request of the Company or, in the
case of the Amended Original Guaranty, the Original Guarantor.
If the Company or, in the case of the Amended Original Guaranty, the
Original Guarantor, complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not prevented for any reason, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company or, in the case of the Amended Original Guaranty, the
Original Guarantor, to comply with the preceding paragraph and the other
provisions of this Article III, interest shall continue
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to accrue and be paid from the Redemption Date until such payment is made on the
unpaid principal, and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate and in the manner provided in Section
5.1 hereof and the Securities.
Section 3.9. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is redeemed in part, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder,
without service charge, a new Security or Securities equal in principal amount
to the unredeemed portion of the Security surrendered.
ARTICLE IV.
SECURITY
Section 4.1. Security Interest.
-----------------
(a) In order to secure the prompt and complete payment and performance
in full of Indenture Obligations, the Company, each Guarantor and the Trustee
have entered into this Indenture and the Mortgage. Each Holder, by accepting a
Security, agrees to all of the terms and provisions of this Indenture and the
Mortgage, and the Trustee agrees to all of the terms and provisions of the
Indenture and the Mortgage as this Indenture and the Mortgage may be amended
from time to time pursuant to the provisions thereof and hereof.
(b) The Collateral as now or hereafter constituted shall be held for
the equal and ratable benefit of the Holders of Securities (other than in
respect of the Amended Original Guaranty), without preference, priority or
distinction of any thereof over any other by reason of difference in time of
issuance, sale or otherwise, as security for the Indenture Obligations.
(c) The provisions of TIA ss. 314(d), and the provisions of TIA ss.
314(c)(3) to the extent applicable by specific reference in this Article IV, are
hereby incorporated by reference herein as if set forth in their entirety and to
the same extent as if the Indenture were qualified under the TIA.
Section 4.2. Recording; Opinions of Counsel.
------------------------------
(a) Each of the Company and each Guarantor represents that it has
caused to be executed and delivered, filed and recorded and covenants that it
will promptly cause to be executed and delivered, filed and recorded, all
instruments and documents, and have done and will do or will cause to be done
all such acts and other things, at the Company's expense, as are necessary to
effect and maintain valid and perfected security interests in the Collateral.
Each of the Company and each Guarantor shall, as promptly as practicable, cause
to be executed and delivered, filed and recorded all instruments and do all acts
and other things as may be required by law to perfect, maintain and protect the
security interests under the Mortgage and herein.
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(b) The Company shall furnish to the Trustee, promptly after the
execution and delivery of this Indenture and the Mortgage and promptly after the
execution and delivery of any amendment thereto or any other instrument of
further assurance, an Opinion(s) of Counsel stating that, in the opinion of such
counsel, subject to customary exclusions and exceptions reasonably acceptable to
the Trustee, either (i) this Indenture, the Mortgage, any such amendment and all
other instruments of further assurance have been properly recorded, registered
and filed and all such other action has been taken to the extent necessary to
make effective valid security interests and to perfect the security interests
intended to be created by the Indenture and the Mortgage, and reciting the
details of such action, or (ii) no such action is necessary to maintain the
validity and perfection of the security interests under the Mortgage and
hereunder.
(c) The Company shall furnish to the Trustee, within 60 days after
February 1 in each year commencing 1998, an Opinion(s) of Counsel, dated as of
such date, stating that, in the opinion of such counsel, subject to customary
exclusions and exceptions, either (A) all such action has been taken with
respect to the recording, registering, filing, rerecording and refiling of the
Indenture, all supplemental indentures, the Mortgage, financing statements,
continuation statements and all other instruments of further assurance as is
necessary to maintain the security interests under the Mortgage and hereunder in
full force and effect and reciting the details of such action, and stating that
all financing statements and continuation statements have been executed and
filed and such other actions taken that are necessary fully to preserve and
protect the rights of the Holders and the Trustee hereunder and under the
Mortgage or (B) no such action is necessary to maintain the security interests
in full force and effect.
Section 4.3. Disposition of the Collateral.
-----------------------------
(a) Each of the Company and each Guarantor may, without consent of the
Trustee, but otherwise subject to the requirements of this Indenture:
(i) sell, assign, transfer, license or otherwise dispose of,
free from the security interests under the Mortgage and hereunder, any
machinery, equipment, or other personal Property constituting
Collateral that has become worn out, obsolete, or unserviceable or is
being upgraded, upon replacing the same with or substituting for the
same, machinery, equipment or other Property constituting Collateral
not necessarily of the same character but being of at least equal fair
value and at least equal utility to the Company as the Property so
disposed of, which Property shall without further action become
Collateral subject to the security interests under the Mortgage and
hereunder;
(ii) (A) sell, assign, transfer, license or otherwise
dispose of, free from the security interests under the Mortgage and
hereunder, inventory held for resale that is at any time part of the
Collateral in the ordinary course of the Company's or such Guarantor's
business, consistent
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with industry practices, (B) collect, liquidate, sell, factor or otherwise
dispose of, free from the security interests under the Mortgage, accounts
receivable or notes receivable that are part of the Collateral in the ordinary
course of the Company's or such Guarantor's business, consistent with industry
practices, or (C) make Cash payments (including scheduled repayments of
Indebtedness permitted to be incurred hereby) from Cash that is at any time part
of the Collateral in the ordinary course of business; provided, however, that,
except for Cash payments made in accordance with the terms of this Indenture (i)
to consummate an Offer to Purchase or (ii) to redeem the Securities pursuant to
either an optional or mandatory redemption in accordance with Article III hereof
and Paragraph 5 or 6 of the form of Security attached hereto as Exhibit A, as
applicable, such Cash payments may not be made from Cash held in the Cash
Collateral Account;
(iii) abandon, sell, assign, transfer, license or otherwise
dispose of any personal Property the use of which is no longer
necessary or desirable in the proper conduct of the business of the
Company and its Subsidiaries and the maintenance of its earnings and
is not material to the conduct of the business of the Company and its
Subsidiaries;
(iv) sell, assign, transfer, license or otherwise dispose
of, free from the security interests under the Mortgage and hereunder
any assets or Property in accordance with Section 5.14; provided that
the proceeds of such sale, assignment, transfer or other disposition
are applied in the manner set forth in Section 5.14 and, provided,
further, that the Net Cash Proceeds from such disposition required to
be applied to an Offer to Purchase or invested in a Related Business
pursuant to Section 5.14 are held in the Net Cash Proceeds Account,
pending such application or investment in accordance with Section 5.14
and, provided, further, that the Trustee shall have a valid and
perfected security interest in all net proceeds that are not Net Cash
Proceeds from such disposition or any assets or property acquired with
the proceeds from such disposition in the same priority as such assets
or Property so disposed of; and
(v) sell, assign, transfer, license or otherwise dispose of,
free from the security interests under the Mortgage and hereunder, any
Property constituting Collateral, provided that such disposition is in
respect of an Authorized Transaction or an Additional Transaction.
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(b) In the event that any of the Company or any Guarantor has sold,
exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise
dispose of any portion of the Collateral which under the provisions of this
Section 4.3 may be sold, exchanged or otherwise disposed of by the Company or
such Guarantor without consent of the Trustee, and the Company or such Guarantor
requests the Trustee to furnish a written disclaimer, release or quitclaim of
any interest in such Property under the Mortgage, the Trustee shall execute such
an instrument upon delivery to the Trustee of an Officers' Certificate by the
Company or such Guarantor reciting the sale, exchange or other disposition made
or proposed to be made and describing in reasonable detail the property affected
thereby, and stating and demonstrating that such Property is Property which by
the provisions of this Section 4.3 may be sold, exchanged or otherwise disposed
of or dealt with by the Company or such Guarantor without any release or consent
of the Trustee.
(c) Any disposition of Collateral made in compliance with the
provisions of this Section 4.3 shall be deemed not to impair the security
interests under the Mortgage and hereunder in contravention of the provisions of
this Indenture.
(d) The Trustee shall release, modify or subordinate any Lien on, or
security interest in, the Collateral of the Securityholders in the event a Lien
on, or security interest in, the Collateral which ranks superior to or pari
passu with, or exclusive shall arise in accordance with the terms of this
Indenture.
Section 4.4. Net Cash Proceeds Account
-------------------------
(a) All Net Cash Proceeds received by the Company or any Guarantor
from an Asset Sale and as Insurance Proceeds (collectively, the "Cash
Collateral") shall be deposited in an account (the "Net Cash Proceeds Account"),
in which there shall be an exclusive and perfected security interest in favor of
the Trustee for the equal and ratable benefit of the Holders, without
preference, priority, or distinction of any thereof over any other thereof by
reason of difference in time of issuance, sale or otherwise, as security for the
prompt and complete payment and performance in full of the Indenture
Obligations. The funds from time to time on deposit in the Net Cash Proceeds
Account resulting from an Asset Sale may be disbursed from such account only for
the purposes and in the manner provided for pursuant to Section 5.14 hereof. All
other funds may be used at any time (in addition to any other use herein
permitted) to redeem the Securities.
(b) In its discretion, the Company may request the Trustee, as
collateral agent, in writing to, and the Trustee, as collateral agent, shall,
invest any Cash Collateral in the Cash Collateral Account as provided for in the
Security Agreement; provided, that the Trustee shall retain an exclusive, valid
and perfected security interest in the proceeds of the funds so invested.
(c) Interest and other amounts earned on Cash Collateral shall be held
in the Cash Collateral Account as provided in the Security Agreement.
Section 4.5. Certain Releases of Collateral.
------------------------------
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Subject to applicable law, the release of any Collateral from Liens
created by the Mortgage or the release of, in whole or in part, the Liens
created by the Mortgage, will not be deemed to impair the Mortgage in
contravention of the provisions of this Indenture if and to the extent the
Collateral or Liens are released pursuant to, and in accordance with, the
applicable agreement creating the Mortgage and pursuant to, and in accordance
with, the terms hereof. To the extent applicable, without limitation, the
Company and each obligor on the Securities shall cause Trust Indenture Act ss.
314(d) relating to the release of Property or securities from the Liens of the
Mortgage to be complied with. Any certificate or opinion required by TIA ss.
314(d) may be made by one officer prior to the qualification of the Indenture
under the TIA and by two officers after such qualification, except in cases
which Trust Indenture Act ss. 314(d) requires that such certificate or opinion
be made by an independent person.
Upon written request of the Company, subject to applicable law, and
presentation to the Collateral Agent of an Officers' Certificate evidencing
compliance with Section 5.14, the Collateral Agent shall release funds (and the
Trustee's Lien with respect thereto) in accordance with the terms of the Cash
Collateral and Disbursement Agreement; provided, that the Lien on the funds so
released shall immediately attach in like manner to the assets and property
purchased by the Company with such funds (except to the extent such funds are
applied to the repayment of Securities in compliance with the requirements of
this Indenture) to the extent required by this Indenture.
Section 4.6. Payment of Expenses.
-------------------
On demand of the Trustee, the Company forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by the Trustee
under this Article IV, including the reasonable fees and expenses of counsel and
all such sums shall be a Lien upon the Collateral and shall be secured thereby.
Section 4.7. Suits to Protect the Collateral.
-------------------------------
Subject to Section 4.1 of this Indenture and to the provisions of the
Mortgage, the Trustee shall have power to institute and to maintain such suits
and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts which may be unlawful or in violation of the Mortgage or
this Indenture, including the power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid or if the enforcement of, or compliance with, such enactment,
rule or order
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would impair the security interests in contravention of this Indenture or be
prejudicial to the interests of the Holders or of the Trustee. The Trustee shall
give notice to the Company promptly following the institution of any such suit
or proceeding.
Section 4.8. Trustee's Duties.
----------------
The powers and duties conferred upon the Trustee by this Article IV are solely
to protect the security interests and shall not impose any duty upon the Trustee
to exercise any such powers and duties, except as expressly provided in this
Indenture. The Trustee shall be under no duty to the Company or any Guarantor
whatsoever to make or give any presentment, demand for performance, notice of
nonperformance, protest, notice of protest, notice of dishonor, or other notice
or demand in connection with any Collateral, or to take any steps necessary to
preserve any rights against prior parties except as expressly provided in this
Indenture. The Trustee shall not be liable to the Company or any Guarantor for
failure to collect or realize upon any or all of the Collateral, or for any
delay in so doing, nor shall the Trustee be under any duty to the Company or any
Guarantor to take any action whatsoever with regard thereto. The Trustee shall
have no duty to the Company or any Guarantor to comply with any recording,
filing, or other legal requirements necessary to establish or maintain the
validity, priority or enforceability of the security interests in, or the
Trustee's rights in or to, any of the Collateral.
Section 4.9. Excess Cash Collateral Account.
------------------------------
(a) All Excess Cash, as determined pursuant to Section 5.20 hereof,
shall be deposited in an account (the "Excess Cash Collateral Account"), in
which there shall be an exclusive and perfected security interest in favor of
the Trustee for the equal and ratable benefit of the Holders, without
preference, priority, or distinction of any thereof over any other thereof by
reason of difference in time of issuance, sale or otherwise, as security for the
prompt and complete payment and performance in full of the Indenture
Obligations. The funds from time to time on deposit in the Excess Cash
Collateral Account may be disbursed from such account only for the purposes and
in the manner provided for pursuant to Section 5.20 hereof.
(b) In its discretion, the Company may request the Trustee, as
collateral agent, in writing to, and the Trustee, as collateral agent, shall,
invest any Cash in the Excess Cash Collateral Account as provided for in the
Security Agreement; provided, that the Trustee shall retain an exclusive, valid
and
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perfected security interest in the proceeds of the funds so invested.
(c) Interest and other amounts earned on Cash in the Excess Cash
Collateral Account shall be held in the Excess Cash Collateral Account and be
subject to the terms of this Section 4.9 and Section 5.20 hereof.
ARTICLE V.
COVENANTS
Section 5.1. Payment of Securities
---------------------
The Company shall pay the principal of and interest on the Securities
(other than in respect of the Amended Original Guaranty) on the dates and in the
manner provided in the Securities and this Indenture. The Original Guarantor
shall pay the principal of and interest on the Amended Original Guaranty as
provided in Section 13.1. An installment of principal of or interest on the
Securities shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on or before 10:00 a.m. New York City time on that
date, U.S. Legal Tender deposited and designated for and sufficient to pay the
installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities (other than in
respect of the Amended Original Guaranty) compounded semi-annually, to the
extent lawful. The Original Guarantor shall pay interest on overdue principal
and overdue installments of interest at the rate specified in respect of the
Amended Original Guaranty compounded semi-annually, to the extent lawful.
Section 5.2. Maintenance of Office or Agency.
-------------------------------
Each of the Company and each Guarantor shall maintain in Borough of
Manhattan, City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
each of the Company and each Guarantor in respect of the Securities and this
Indenture may be served. Each of the Company and each Guarantor shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time any of the Company or any
Guarantor shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
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surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 14.2.
Any of the Company or any Guarantor may also from time to time
designate one or more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations. Any of the Company or any Guarantor shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency. The Company and the
Guarantor hereby initially designate the Corporate Trust Office of the Trustee
as such office.
Section 5.3. Limitation on Restricted Payments.
---------------------------------
(a) Each of the Company and each Guarantor will not, and none will
permit any of their respective Subsidiaries to, directly or indirectly, make any
Restricted Payment if, immediately prior thereto or after giving effect thereto
on a pro forma basis, (1) a Default or an Event of Default shall have occurred
and be continuing, (2) immediately after giving effect to such Restricted
Payment on a pro forma basis, the Company could not incur at least $1.00 of
additional Indebtedness pursuant to Section 5.11(a) hereof, or (3) the aggregate
amount of all Restricted Payments made by the Company, each Guarantor and their
respective Subsidiaries, including after giving effect to such proposed
Restricted Payment on a pro forma basis, from and after the Issue Date, would
exceed the sum of (a) 50% of the aggregate Consolidated Net Income of the
Company and its Consolidated Subsidiaries for a period (taken as one accounting
period) commencing on the first day of the first fiscal quarter commencing
immediately following the Issue Date and ending on the last day of the last full
fiscal quarter ending immediately preceding the date of such proposed Restricted
Payment (or, in the event Consolidated Net Income for such period is a deficit,
then 100% of such deficit), plus (b) the aggregate Net Cash Proceeds from the
sale of its Qualified Capital Stock (other than to a Subsidiary of the Company)
after the Issue Date.
(b) The foregoing clauses (2) and (3) of the prior paragraph, however,
will not prohibit (i) a Permitted Regulatory Redemption of Capital Stock or of
Indebtedness; (ii) Investments in the form of CDGC Notes by the Company or any
Subsidiary of the Company; (iii) the payment of any dividend on or redemption of
Qualified Capital Stock within 60 days after the date of its declaration or
authorization, respectively, if such dividend or redemption could have been made
on the date of such declaration or authorization in compliance with the
foregoing provisions; (iv) Investments by the Company or any Subsidiary of the
Company in Native American tribes or bands, or Investments in any person formed
or to be formed (and in which the Company or any Guarantor owns Capital Stock (a
"Joint Venture")), as the case may be, in each case in connection with a
proposed or operating Native American Casino, and with respect to which Casino,
the Company or each Guarantor has an effective Native American Casino Management
Contract which has been pledged to the Trustee for the benefit of the Holders of
Securities (other than in respect of the Amended Original Guaranty) pursuant to
an Assignment of Rights, and in the case of an Investment in a Joint Venture,
the Company or any
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Guarantor has pledged the Capital Stock thereof owned thereby, and any and all
rights under any such joint venture agreement in respect of such joint venture,
to the Trustee for the benefit of the Holders of Securities (other than in
respect of the Amended Original Guaranty), in each case for the purpose of
constructing, developing, refurbishing or expanding such Casinos or paying the
costs of any such tribe or band (including, without limitation, legal fees and
Tribal Gaming Commission fees) in connection with a Native American Casino
Management Contract, provided, the aggregate amount of all Investments made
pursuant to this clause (iv) at any time outstanding shall not exceed
$10,000,000; (v) a Qualified Exchange; (vi) a Qualified Restricted Investment;
or (vii) a loan to any officer, director or employee of the Company or its
Subsidiaries, provided that (A) the aggregate amount of all loans to any such
person does not exceed the person's aggregate tax liability with respect to
distributions under the Plan and (B) any such loans are (1) secured by the
securities which are the subject of such distributions and (2) immediately
payable from any cash proceeds (net of taxes) in respect of any sale or
distribution of such securities. Unless in respect of an Authorized Transaction
or an Additional Transaction, the full amount of any Restricted Payment made
pursuant to any of clauses (i), (ii), (iii), (iv), (v), (vi) or (vii) (but in
the case of clauses (v) or (vi) only to the extent Net Cash Proceeds received in
respect of any such transaction, but for this sentence, increased the amounts
available pursuant to clause (3) of the immediately preceding paragraph),
however, will be deducted in the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph.
Section 5.4. Corporate Existence.
-------------------
Subject to Article VI, each of the Company and each Guarantor shall do
or cause to be done all things necessary to preserve and keep in full force and
effect their corporate existence and the corporate or other existence of their
respective Subsidiaries in accordance with the respective organizational
documents of each of them and the rights (charter and statutory) and corporate
franchises of the Company, each Guarantor and each of their respective
Subsidiaries; provided, however, that none of the Company or any Guarantor shall
be required to preserve, with respect to itself, any right or franchise if (a)
the Board of Directors of the Company shall determine reasonably and in good
faith that the preservation thereof is no longer desirable in the conduct of the
business of the Company and (b) the loss thereof is not disadvantageous in any
material respect to the Holders of Securities (other than in respect of the
Amended Original Guaranty).
Section 5.5. Payment of Taxes and Other Claims.
---------------------------------
Each Company and each Guarantor shall, and shall cause each of their
respective Subsidiaries to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company, such
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Guarantor or any of their respective Subsidiaries, or Properties and assets of
the Company, such Guarantor or any such Subsidiaries and (ii) all lawful claims,
whether for labor, materials, supplies, services or anything else, which have
become due and payable and which by law have or may become a Lien upon the
Property and assets of the Company, any Guarantor or any of their respective
Subsidiaries; provided however, that none of the Company or any Guarantor shall
be required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim, the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings and for which disputed
amounts adequate reserves have been established in accordance with GAAP.
Section 5.6. Maintenance of Insurance.
------------------------
From and at all times after the Issue Date, each of the Company and
each Guarantor shall, and shall cause each of their respective Subsidiaries to,
have in effect customary comprehensive general liability insurance on terms and
in an amount reasonably sufficient (taking into account, among other factors,
the creditworthiness of the insurer) to avoid a material adverse change in the
financial condition or results of operation of the Company and its Subsidiaries
taken as a whole.
Section 5.7. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee within 90 days after the
end of its fiscal year an Officers' Certificate complying (whether or not
required) with Section 314(a)(4) of the TIA and stating that a review of its
activities and the activities of its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, whether or not the signer knows of any failure of the
Company, any Guarantor or any Subsidiary of the Company or any Guarantor to
comply with any conditions or covenants in this Indenture and, if such signer
does know of such a failure to comply, the certificate shall describe such
failure with particularity. The Officers' Certificate shall also notify the
Trustee should the relevant fiscal year end on any date other than the current
fiscal year end date.
(b) So long as not contrary to the then current recommendation of the
American Institute of Certified Public Accountants, the Company shall deliver to
the Trustee within 120 days after the end of each of its fiscal years a written
report of a firm of independent certified public accountants with an established
national reputation stating that in conducting their audit for such fiscal year,
nothing has come to their attention that caused them to believe that the Company
or any Subsidiary of the Company was not in compliance with the provisions set
forth in Sections 5.3, 5.10, 5.11, 5.14, 5.15, 5.18 or 5.19 of this Indenture.
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(c) The Company shall, so long as any of the Securities (other than in
respect of the Amended Original Guaranty) are outstanding, deliver to the
Trustee, immediately upon becoming aware of any Default or Event of Default
under this Indenture, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposing to take with
respect thereto. The Trustee shall not be deemed to have knowledge of a Default
or an Event of Default unless one of its trust officers receives notice of the
Default giving rise thereto from the Company or any of the Holders.
Section 5.8. Reports.
-------
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 15 days after it is or would have been
required to file such with the SEC, annual and quarterly consolidated financial
statements substantially equivalent to financial statements that would have been
included in reports filed with the SEC if the Company were subject to the
requirements of Section 13 or 15(d) of the Exchange Act including, with respect
to annual information only, a report thereon by the Company's certified
independent public accountants as such would be so required, together with a
management's discussion and analysis of financial condition and results of
operations which would be so required. Notwithstanding anything to the contrary,
the Trustee shall have no duty to review such documents for purposes of
determining compliance with any provisions of this Indenture.
Section 5.9. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
Each of the Company and each Guarantor covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law wherever enacted which would
prohibit or forgive the Company or any Guarantor from paying all or any portion
of the principal of or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that they may
lawfully do so) each of the Company and each Guarantor hereby expressly waives
all benefit or advantage of any such law insofar as such law applies to the
Securities, and covenants that it shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
Section 5.10. Limitation on Transactions with Affiliates.
------------------------------------------
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(a) Subject otherwise to their compliance with Section 5.18 hereof,
each of the Company and each Guarantor shall not, nor shall any of them cause
any of their respective Subsidiaries to, on or after the Issue Date, directly or
indirectly, enter into any transaction, including any contract, agreement,
understanding, loan, advance or guarantee, and including any series of related
transactions, with or for the benefit of any of their respective Affiliates,
including CDGC and its Subsidiaries but excluding the Company or another
Subsidiary of the Company, none of whose capital stock is owned directly or
indirectly by any Affiliate of the Company other than through the Company or its
Subsidiaries (an "Affiliate Transaction"), except for transactions in respect of
which the aggregate value, remuneration or other consideration (to either party)
of all such transactions and related transactions consummated in the year in
which such transaction is proposed to be consummated (i) is less than or equal
to $500,000, (ii) is greater than $500,000 and less than or equal to $5,000,000,
provided, that, prior to the consummation thereof, the Company, such Guarantor
or such Subsidiary shall deliver Board Resolutions to the Trustee evidencing
that the Board of Directors of the Company, such Guarantor or such Subsidiary,
as applicable, determined in good faith that the aggregate value, remuneration
or other consideration inuring to the benefit of such Affiliate from any such
transaction is not greater than that which would be charged to or extended by
the Company, such Guarantor or such Subsidiary, as the case may be, on an
arm's-length basis for similar Properties, assets, rights, goods or services by
or to a person not affiliated with the Company, each Guarantor or such
Subsidiary, as the case may be, and (iii) greater than $5,000,000; provided,
that prior to the consummation thereof, the Company, such Guarantor or such
Subsidiary shall deliver to the Trustee Board Resolutions as described in clause
(i) of this Section 5.10 and an opinion of a nationally recognized investment
banking firm (or other appropriate expert) unaffiliated with the Company and the
Affiliate which is party to such transaction, to the effect that the aggregate
value, remuneration or other consideration inuring to the benefit of such
Affiliate from any such transaction is not greater than that which would be
charged to or extended by the Company, such Guarantor or such Subsidiary, as the
case may be, on an arm's-length basis for similar Properties, assets, rights,
goods or services by or to a person not affiliated with the Company, such
Guarantor or such Subsidiary, as the case may be.
(b) The provisions of Section 5.10(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the provisions of Section
5.3 hereof, (ii) any agreements between the Company, the Guarantor or any of
their respective Subsidiaries, as applicable, and an Affiliate in existence on
the date hereof, (iii) any issuance of securities, or
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other payments, awards of grants in cash, securities or otherwise pursuant to,
or the funding of, employment arrangements, stock options and stock ownership
plans approved by the Board of Directors, (iv) loans or advances to employees in
the ordinary course of business consistent with past practices, not to exceed
$500,000 aggregate principal amount outstanding at any time, (v) an Investment
described in clause (b) of the proviso to the definition of Restricted
Investments and (vi) the payment of fees and compensation paid to, and indemnity
provided on behalf of officers, directors, employees or consultants of the
Company, each Guarantor or any of their respective Subsidiaries, as determined
by the Board of Directors of the Company in good faith.
Section 5.11. Limitation on Incurrence of Additional Indebtedness.
---------------------------------------------------
Except as set forth below, from and after the Issue Date, the Company
and the Guarantors shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become
directly or indirectly liable with respect to (including as a result of an
acquisition, merger or consolidation), extend the maturity of, or otherwise
become responsible for, contingently or otherwise (individually and
collectively, to "incur," or, as appropriate, an "incurrence"), any
Indebtedness. Notwithstanding the foregoing:
(a) The Company and any Subsidiary of the Company may incur
Indebtedness if (i) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma
basis, to, such incurrence of such Indebtedness and (ii) on the date of the
incurrence of such Indebtedness (the "Incurrence Date"), the Consolidated
Coverage Ratio of the Company for the Reference Period immediately preceding the
Incurrence Date, after giving effect on a pro forma basis to such incurrence of
such Indebtedness, would be at least 1.75 to 1;
(b) The Company and any Subsidiary of the Company may incur
Indebtedness, provided, that the aggregate amount of such Indebtedness of the
Company and its Subsidiaries (exclusive of Permitted FF&E Financing and
Non-recourse Indebtedness) outstanding at any time shall not exceed two million
dollars ($2,000,000);
(c) The Company and any Subsidiary of the Company may incur
Indebtedness evidenced by the Securities and other obligations pursuant to the
Indenture up to the amounts specified herein as of the Issue Date;
(d) The Company and any Subsidiary of the Company may incur
Indebtedness consisting of Permitted FF&E Financing, provided, that the
aggregate amount of Indebtedness incurred pursuant to this paragraph (d)
(including any Indebtedness issued to refinance, replace or refund such
Indebtedness) shall not constitute more than 100% of the cost (reportable on the
balance sheet (including all appropriate notes thereto) of such person in
accordance with GAAP) to the Company, its Subsidiaries or any Native American
Tribe of the FF&E so purchased or leased;
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(e) The Company and any Subsidiary of the Company may incur
Non-recourse Indebtedness; and
(f) The Company and any Subsidiary of the Company may incur
Refinancing Indebtedness with respect to any Indebtedness, as applicable,
described in clauses (a) through (e) of this Section 5.11 so long as, in the
case of Indebtedness used to refinance, refund, or replace Indebtedness in
clause (d), such Refinancing Indebtedness satisfies the applicable requirements
of such clauses.
Notwithstanding the foregoing limitations, the limitations of this
Section 5.11 shall not apply to the incurrence of Permitted Indebtedness.
Section 5.12. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
------------------------------------------
(a) None of the Company or any Guarantor shall, and none shall permit
any of their respective Subsidiaries (other than CDGC and any Subsidiary
thereof, except as provided in Section 5.12(b)) to, directly or indirectly,
create, assume or suffer to exist any consensual encumbrance or restriction on
the ability of any such Subsidiary to pay dividends or make other distributions
to, or to pay any obligation to, or to otherwise transfer assets or make or pay
loans or advances to, the Company or any Subsidiary of the Company, except (a)
restrictions imposed by the Securities or the Indenture, (b) reasonable and
customary provisions restricting subletting or assignment of any lease entered
into in the ordinary course of business, consistent with industry practices, (c)
restrictions imposed by applicable law, (d) restrictions under any Acquired
Indebtedness or any agreement relating to any Property, asset, or business
acquired by the Company or any of its Subsidiaries, which restrictions existed
at the time of acquisition, were not put in place in connection with or in
anticipation of such acquisition and are not applicable to any person, other
than the Property, assets and business so acquired, (e) any restrictions with
respect solely to a Subsidiary of the Company imposed pursuant to a binding
agreement (subject only to reasonable and customary closing conditions and
termination provisions) which has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Subsidiary,
provided such restrictions apply solely to the Capital Stock or assets to be
sold of such Subsidiary, (f) restrictions arising in respect of an Authorized
Transaction or an Additional Transaction which are described in the materials
submitted to the Advisory Committee in connection with its approval thereof, and
(g) replacements of restrictions imposed pursuant to clauses (d) and (f) and
this clause (g) that are not more restrictive than those being replaced and do
not apply to any additional property or assets.
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(b) None of CDGC and any Subsidiary thereof shall be permitted to,
directly or indirectly, create, assume or suffer to exist any consensual
encumbrance or restriction on the ability of CDGC or any such Subsidiary to make
payments in respect of the CDGC Notes.
Section 5.13. Limitation on Liens.
-------------------
None of the Company or any Guarantor shall, and none shall permit any
of their respective Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien in or on any right, title or interest to any
of their respective Properties or assets, except for (a) Permitted Liens, (b)
Liens incurred pursuant to Permitted FF&E Financing or Non-recourse Indebtedness
incurred in accordance with the provisions of paragraph (d) or (e),
respectively, of Section 5.11, which Liens may be exclusive Liens on such
Permitted FF&E or in respect of such Non-recourse Indebtedness, (c) Liens
incurred pursuant to Permitted Indebtedness, (d) Liens incurred in respect of
obligations described in the second proviso to the definition of Indebtedness
and (e) Liens incurred in connection with the incurrence of Refinancing
Indebtedness in accordance with the provisions of paragraph (f) of Section 5.11,
provided, that such Liens (described in this clause (e)) are not more adverse to
the interests of the Holders of the Securities (other than in respect of the
Amended Original Guaranty) than the Liens replaced or extended thereby,
provided, further, that such Liens (described in this clause (e)) replaced or
extended were permitted hereby.
Section 5.14. Limitation on Sales of Assets and Subsidiary
Stock; Event of Loss.
--------------------------------------------
(a) Other than upon an Event of Loss, none of the Company or any
Guarantor shall, and none shall permit any of their respective Subsidiaries
(other than CDGC and its Subsidiaries) to, in one or a series of related
transactions, convey, sell, lease, transfer, assign or otherwise dispose of,
directly or indirectly, any of its Property, business or assets (other than
payments made pursuant to the terms of the Securities), including, without
limitation, (i) upon any sale or other transfer or issuance of any Capital Stock
of any Subsidiary of the Company, (ii) any sale and leaseback transaction,
whether by the Company or a Subsidiary of the Company (other than CDGC and its
Subsidiaries), or (iii) through the transfer or other disposition of any
proceeds from an Event of Loss (each, an "Asset Sale"), unless (1) the Board of
Directors of the Company or such Guarantor determines in good faith, prior to
the consummation of the transaction(s), that the Company or such Guarantor, as
applicable, received fair market value for such Asset Sale; (2) at least 75% of
the value, remuneration or other consideration (other than liabilities to which
the assets transferred in such Asset Sale were subject and liabilities assumed
by or on behalf of the acquiring person in such Asset Sale) for such Asset Sale
(excluding property that promptly after such Asset Sale is converted into U.S.
Legal Tender) consists of U.S. Legal Tender or Cash Equivalents; (3) no Default
or Event of Default shall have occurred
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and be continuing at the time of, or would occur after giving effect, on a pro
forma basis, to such Asset Sale; and (4)(x) within 365 days after the date of
such Asset Sale, the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount")
are applied to the repurchase of the Securities (other than in respect of the
Amended Original Guaranty) pursuant to an irrevocable, unconditional offer (the
"Asset Sale Offer") to repurchase Securities (other than in respect of the
Amended Original Guaranty) at a purchase price (the "Asset Sale Offer Price") of
100% of the principal amount thereof, together with accrued and unpaid interest
on the principal amount purchased to the date of payment, or (y) if the
Securityholders decline such Asset Sale Offer, within 400 days of such Asset
Sale, the Asset Sale Offer Amount is invested in assets and Property (excluding
inventory) directly related to a Related Business of the Company or a Subsidiary
of the Company. Notwithstanding the foregoing provisions of this paragraph:
(i) the Company and any Subsidiary of the Company may in the
ordinary course of business and consistent with past practices,
convey, sell, lease, transfer, assign, or otherwise dispose of assets
acquired and held for resale in the ordinary course of business;
(ii) the Company and any Subsidiary of the Company may
convey, sell, lease, transfer or otherwise dispose of assets pursuant
to and in accordance with the limitation on mergers, sales or
consolidations provisions in the Indenture, provided that any assets
not conveyed, sold, leased, transferred or otherwise disposed of in
each such transaction shall constitute an "Asset Sale" as provided
herein;
(iii) the Company and any Subsidiary of the Company may sell
damaged, worn out or other obsolete Property in the ordinary course of
business so long as such Property is no longer necessary for the
proper conduct of the business of the Company and the Guarantors, as
applicable;
(iv) the Company and any Subsidiary of the Company may
convey, sell, transfer, assign or otherwise dispose of assets to the
Company or any other Subsidiary of the Company;
(v) the Company and any Subsidiary of the Company may sell,
transfer, assign or otherwise dispose of any Securities owned by the
Company, or any Subsidiary of the Company in compliance with all
applicable laws and regulations; provided the Company obtain the prior
approval of the Advisory Committee; and
(vi) in addition to assets sold pursuant to clauses (i),
(ii), (iii), (iv) and (v) above, the Company and any Subsidiary of the
Company may convey, sell, lease,
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transfer, assign, or otherwise dispose of assets in the ordinary
course of business, provided, the fair market value of any assets
disposed of in any single transaction or series of related
transactions does not exceed $10,000 and the aggregate fair market
value of all such assets does not exceed $5,000,000 on or after the
Issue Date.
The Company shall accumulate all Net Cash Proceeds from all Assets
Sales described in clause (iv) above (to be maintained in the Net Cash Proceeds
Account in which the Trustee on behalf of the Holders shall have an exclusive,
perfected security interest, pending reinvestment of such Net Cash Proceeds),
and the aggregate amount of such accumulated Net Cash Proceeds not used for the
purposes permitted by this Section 5.14(a) and within the time provided by this
Section 5.14(a) shall be referred to as the "Accumulated Amount."
(b) For the purpose of this Section 5.14, "Minimum Accumulation Date"
means each date on which the Accumulated Amount exceeds $7,500,000. Not later
than 10 Business Days after each Minimum Accumulation Date, the Company shall
commence an Asset Sale Offer to the Holders to purchase, on a pro rata basis,
for U.S. Legal Tender Securities having a principal amount (the "Asset Sale
Offer Amount") equal to the Accumulated Amount, at a purchase price (the "Asset
Sale Offer Price") equal to 100% of principal amount, plus accrued but unpaid
interest to, and including, the date (the "Asset Sale Purchase Date") of the
Securities (other than in respect of the Amended Original Guaranty) tendered are
purchased and paid for in accordance with this Section 5.14. Notice of an Asset
Sale Offer shall be sent 20 Business Days prior to the close of business on the
Asset Sale Put Date (as defined below), by first-class mail, by the Company to
each Holder at its registered address, with a copy to the Trustee. The notice to
the Holders shall contain all information, instructions and materials required
by applicable law or otherwise material to such Holders' decision to tender
Securities pursuant to the Asset Sale Offer. The notice, which (to the extent
consistent with this Indenture) shall govern the terms of the Asset Sale Offer,
shall state:
(1) that the Asset Sale Offer is being made pursuant to such
notice and this Section 5.14;
(2) the Asset Sale Offer Amount, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), the Asset Sale
Put Date, and the Asset Sale Purchase Date, which Asset Sale Purchase
Date shall be on or prior to 30 Business Days following the date the
Accumulated Amount was at least $7,500,000 million;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest, if interest is
then accruing;
(4) that, unless the Company defaults in depositing U.S.
Legal Tender with the Paying Agent (which
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may not for purposes of this Section 5.14, notwithstanding anything in
this Indenture to the contrary, be the Company or any Affiliate of the
Company) in accordance with the last paragraph of this clause (b), any
Security, or portion thereof, accepted for payment pursuant to the
Asset Sale Offer shall cease to accrue interest after the Asset Sale
Purchase Date;
(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Asset Sale Offer will be required to
surrender their Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security completed, to the
Paying Agent (which may not for purposes of this Section 5.14,
notwithstanding any other provision of this Indenture, be the Company
or any Affiliate of the Company) at the address specified in the
notice prior to the close of business on the third Business Day prior
to the Asset Sale Purchase Date (the "Asset Sale Put Date");
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent (which may not for
purposes of this Section 5.14, notwithstanding any other provision of
this Indenture, be the Company or any Affiliate of the Company)
receives, up to the close of business on the Asset Sale Put Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Securities the Holder
is withdrawing and a statement that such Holder is withdrawing his
election to have such principal amount of Securities purchased;
(7) that if Securities in a principal amount in excess of
the principal amount of Securities to be acquired pursuant to the
Asset Sale Offer are tendered and not withdrawn, the Company shall
purchase Securities on a pro rata basis (with such adjustments as may
be deemed appropriate by the Company so that only Securities in
denominations of $1,000 or integral multiples of $1,000 shall be
required);
(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(9) the circumstances and relevant facts regarding such
Asset Sales.
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Any such Asset Sale Offer shall comply with all applicable provisions
of Federal and state laws, including those regulating tender offers, if
applicable, and any provisions of this Indenture that conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
No later than 12:00 noon New York City time on an Asset Sale Purchase
Date, the Company shall (i) accept for payment Securities or portions thereof
properly tendered pursuant to the Asset Sale Offer (on a pro rata basis if
required pursuant to paragraph (7) above), (ii) deposit with the Paying Agent
U.S. Legal Tender sufficient to pay the Asset Sale Offer Price (plus accrued
interest) for all Securities or portions thereof so accepted and (iii) deliver
to the Trustee Securities so accepted together with an Officers' Certificate
setting forth the Securities or portions thereof being purchased by the Company.
The Paying Agent shall promptly mail or deliver to Holders of Securities so
accepted payment in an amount equal to the Asset Sale Offer Price for such
Securities, and the Trustee shall promptly authenticate and mail or deliver to
such Holders a new Security equal in principal amount to any unpurchased portion
of the Security surrendered. Any Securities not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof.
(c) If the amount required to acquire all Securities tendered by
Holders pursuant to the Asset Sale Offer (the "Acceptance Amount") shall be less
than the Asset Sale Offer Amount, the excess of the Asset Sale Offer Amount over
the Acceptance Amount may be used by the Company for expenditures in conformity
with the terms of this Indenture without regard to the restrictions set forth in
this Section 5.14, unless otherwise restricted, and shall be transferred from
the Net Cash Proceeds Account to the Company or its Subsidiaries, as the case
may be, free and clear of any Lien created by this Indenture or the Mortgage,
but subject to any other applicable restriction in this Indenture by the other
provisions of this Indenture. Upon consummation of any Asset Sale Offer made in
accordance with the terms of Section 5.14(b), the Accumulated Amount (but only
to the extent offered to the Holders pursuant to the terms of Section 5.14(b))
as of the Minimum Accumulation Date shall be reduced to zero and accumulations
thereof shall be deemed to recommence from the date next following such Minimum
Accumulation Date.
(d) Upon an Event of Loss, the Company shall make an Asset Sale Offer
to repurchase at the Asset Sale Price (together with accrued interest) that
principal amount of Notes equal to the Net Proceeds of such Event of Loss (the
"Event of Loss Amount") within 180 days thereafter, unless the Asset Sale Amount
related to such Event of Loss is invested, within 180 days after such Event of
Loss, in assets and property directly related to a Related Business of the
Company or a Subsidiary of the Company.
Section 5.15. Maintenance of Consolidated Coverage Ratio.
------------------------------------------
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Beginning 60 days after the end of the first full fiscal quarter
commencing after the second (2nd) anniversary of the Issue Date, the Company
shall maintain a Consolidated Coverage Ratio, as of the last day of each fiscal
quarter, of at least 1.5 to 1, and shall furnish to the Trustee an Officers'
Certificate within 60 days after the end of each such fiscal quarter (or 60 days
after the fourth fiscal quarter of any fiscal year) setting forth the
calculations of this ratio and stating that the Company is in compliance with
this covenant.
Section 5.16. Conduct of Business.
-------------------
The respective businesses conducted by each of the Company and each
Subsidiary and each of their respective Subsidiaries shall be limited to Related
Businesses; provided, that if such business is not a Related Business it shall
be an Authorized Transaction or an Additional Transaction.
Section 5.17. Limitation on Status as Investment Company.
------------------------------------------
Each of the Company and each Guarantor shall not become "investment
companies" (as that term is defined in the Investment Company Act of 1940, as
amended), or otherwise become subject to regulation under the Investment Company
Act.
Section 5.18. Authorized Transactions.
-----------------------
Until the Termination Date, without the approval of the Advisory
Committee, none of the Company or any Guarantor shall, and none of them shall
permit any of their respective Subsidiaries to, make any expenditure of Cash if:
(a) in respect of any New Project, such expenditure, together with all related
expenditures, exceeds $250,000; (b) in respect of any Developmental Expenses,
such expenditure, together with all other Developmental Expenses in any calendar
year, exceeds $500,000; (c) in respect of any Project (including, without
limitation, the CDGC Project), such expenditure, together with all related
expenditures exceeds the lower of (i) $750,000, (ii) an amount equal to the
excess of $1,200,000 over all expenditures previously incurred (other than such
related expenditures) in respect of such Project during the calendar year in
which such expenditure was incurred, if in each case such expenditure was
disapproved by action of the Advisory Committee or (iii) with respect to every
Project other than the CDGC Project, such lower amount as may be determined by
the Advisory Committee in connection with its authorizing any prior Authorized
Transaction; or (d) such expenditure is in payment of a bonus to Edward M.
Tracy. Anything in this Section 5.18 to the contrary notwithstanding,
expenditures for purposes of this Indenture shall not include (i) payments of
principal, premium or interest in respect of an Indebtedness of the Company or
any Guarantor
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permitted under Section 5.11 of this Indenture, (ii) expenditures
in respect of compensation or other benefits in respect of employees of the
Company or any of its Subsidiaries, (iii) any cost or expense of the Company,
the Guarantor or any of their respective Subsidiaries directly or indirectly
attributable to general administrative expenses or overhead, (iv) any use of
Cash required by this Indenture or the Securities. Anything in this Section 5.18
to the contrary notwithstanding, no approval shall be required for any
Additional Transaction beyond what is provided in Section 5.20(c) hereof.
Section 5.19. Bank Accounts.
-------------
None of the Company or any Guarantor shall, and none of them shall
permit any of their respective Subsidiaries to, deposit any Cash in any bank
other than the Trustee or its Affiliates) which bank has not duly executed and
delivered to the Collateral Agent an Agency Agreement.
Section 5.20. Excess Cash.
-----------
(a) No later than thirty (30) days prior to the end of a fiscal year,
the Company shall submit to the Advisory Committee a budget (the "Proposed
Budget") showing anticipated expenditures for the Company and its Subsidiaries,
on a consolidated basis, for the forthcoming fiscal year and for each fiscal
quarter of such fiscal year (the "Projected Expenditures"). Within five (5)
Business Days after the date the Proposed Budget is submitted, the Advisory
Committee shall inform the Company as to whether it approves or disapproves of
the Proposed Budget, which approval shall not be unreasonably withheld. If the
Advisory Committee informs the Company that it approves of the Proposed Budget,
or if it fails to inform the Company within the required time as to whether or
not it approves, the Proposed Budget shall be the definitive budget for the
forthcoming fiscal quarter (the "Definitive Budget"). If the Advisory Committee
informs the Company that it disapproves of the Proposed Budget, notice of such
disapproval shall be submitted with an affidavit and certification as set forth
in the definition of "Advisory Committee" in Section 1.1 hereof. Any disapproval
by the Advisory Committee of the Proposed Budget solely on the basis of any
payments or expenses (i) pursuant to any contract, agreement, understanding,
loan, advance or guarantee in effect as of the date hereof, or pursuant to any
amendment, modification, replacement or refunding of the same, (ii) in respect
of any Authorized Transaction, (iii) constituting a Restricted Payment or
Affiliate Transaction otherwise permitted to be effected pursuant to the terms
of this Indenture (including without limitation payments described in the
provisos to the definitions of Restricted Payments or Restricted Investments) or
(iv)
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constituting the repayment of any obligation in respect of any Indebtedness
(or any obligation which would have been Indebtedness but for the last proviso
to the definition of Indebtedness in this Indenture), the incursion of which was
permitted under this Indenture (including by operation of such proviso), shall
be deemed an approval. If the Advisory Committee has disapproved the Proposed
Budget on a basis other than those enumerated in the preceding sentence, then
the Company and the members of the Advisory Committee will negotiate in good
faith to determine the Definitive Budget.
(b) At any time during a fiscal year, the Company may submit an
amended Definitive Budget (an "Amended Budget") for approval by the Advisory
Committee. The procedure for approval or disapproval of the Amended Budget shall
be the same as set forth in Section 5.20(a) with respect to the Definitive
Budget. If the Amended Budget is approved, it shall become the Definitive
Budget. If the Amended Budget is not approved, the Definitive Budget shall
remain effective.
(c) At the end of each fiscal quarter, if the consolidated cash
position as determined under GAAP of the Company and its Subsidiaries exceeds
the Projected Expenditures shown in the Definitive Budget by greater than
$200,000, the amount by which the Cash exceeds $200,000 (the "Excess Cash")
shall be deposited into the Excess Cash Collateral Account. In computing the
consolidated cash position of the Company and its Subsidiaries for a given
quarter, (i) no Cash securing any Indebtedness (other than the Securities) of
the Company or any of its Subsidiaries, permissibly incurred pursuant to the
terms of this Indenture, will be included and (ii) all Cash of CDGC will (A) not
be included once a casino managed or operated pursuant to the CDGC Project opens
its doors to the public for business and (B) be reduced by $150,000 until such
time. To the extent any of the Excess Cash is attributable to a Subsidiary of
the Company, the nature of the corporate event by which the Subsidiary transfers
the Cash to the Company shall be determined at the sole discretion of each
Subsidiary.
(d) The Company will provide a certificate to the Trustee within thirty
(30) days after the end of each fiscal quarter certifying the amount of Excess
Cash.
(e) The funds from time to time on deposit in the Excess Cash
Collateral Account may not be disbursed from such account except upon the joint
written authorization of the Company and the Advisory Committee to the Trustee,
as collateral agent, such written authorization stating that the requested
disbursement is for one of the following purposes: (i) to redeem the Securities,
(ii) to make expenditures relating to an
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Authorized Transaction or (iii) to make expenditures relating to an Additional
Transaction. An "Additional Transaction" is any transaction to be entered into
by the Company and/or its Subsidiaries, including any contract, agreement,
understanding, loan, advance or guarantee, and including any series of related
transactions, such transaction having been affirmatively approved by both the
Company and the Advisory Committee. If the Company submits a proposed
transaction to the Advisory Committee for approval as an Additional Transaction
and the Advisory Committee fails to disapprove within five (5) Business Days
after the date on which the proposal in respect thereof was submitted thereto,
such transaction shall be deemed approved and shall for all purposes of this
Indenture be deemed to be an Additional Transaction. If the Advisory Committee
shall disapprove any such transaction, it shall provide to the Company, by
overnight courier or hand delivery, within fifteen (15) Business Days after the
date on which such proposal was submitted, an affidavit setting forth the
reasons for such disapproval and a certificate which certifies that such
disapproval was made in good faith and, in the Advisory Committee's opinion, in
the best interests of the Company and in the best interests of the Holders and
that such decision was not influenced in any way by interests of the members of
the Advisory Committee which are adverse to the interests of the Company;
provided, however if the Advisory Committee disapproves a transaction and fails
to provide the affidavit and certificate within 15 Business Days, the Advisory
Committee shall provide any such affidavit and certificate within ten (10)
calendar days after the date on which a proposal is submitted. If the Advisory
Committee fails to provide such affidavit and certificate within the required
time, such transaction shall be deemed approved and shall for all purposes of
this Indenture be deemed to be an Additional Transaction.
Section 5.21. Issuance of Common Stock.
------------------------
Until the Termination Date, the Company may issue shares of Common
Stock only so long as such issuance does not result in the total number of
shares of Common Stock outstanding exceeding 2,200,000 shares, unless such
issuance is an Authorized Transaction.
ARTICLE VI.
SUCCESSOR CORPORATION
Section 6.1. Limitation on Merger, Sale or Securities Consolidation.
------------------------------------------------------
None of the Company or any Guarantor shall consolidate with or merge
with or into another person, and none of the Company or its Subsidiaries shall,
directly or indirectly, sell,
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lease or convey assets constituting all or substantially all of the assets of
the Company and its Subsidiaries taken as a whole, whether in a single
transaction or a series of related transactions, to another person or group of
Affiliated persons, including any Subsidiary of the Company which is not a
Guarantor, unless:
(1) either (a) the Company or such Guarantor, as the case
may be, is the continuing entity or (b) the resulting, surviving or
transferee entity is a corporation organized under the laws of the
United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of
the Company or such Guarantor, as the case may be, in connection with
the Securities and the Indenture;
(2) no Default or Event of Default shall exist or shall
occur immediately after giving effect on a pro forma basis to such
transaction;
(3) immediately after giving effect to such transaction, on
a pro forma basis, the Consolidated Net Worth of the surviving or
transferee entity is at least equal to the Consolidated Net Worth of
the Company immediately prior to such transaction;
(4) other than in the case of a transaction solely between
the Company and a Subsidiary of the Company, immediately after giving
effect to such transaction, on a pro forma basis, the surviving or
transferee entity would immediately thereafter be permitted to incur
at least $1.00 of additional Indebtedness pursuant to paragraph (a) of
Section 5.11;
(5) such transaction will not result in the loss of any
Gaming License; and
(6) the Company has delivered to the Trustee an Officers'
Certificate stating that such consolidation, merger, assignment, or
transfer and such supplemental indenture comply with this Article VI
and that all conditions precedent herein provided relating to such
transaction have been satisfied.
For purposes of this Section 6.1, the Consolidated Coverage Ratio
shall be determined on a pro forma consolidated basis (giving effect, on a pro
forma basis, to the transaction and any related incurrence of Indebtedness)
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for the four fiscal quarters which ended immediately preceding such transaction.
The sale, lease or conveyance of all or substantially all of the
Properties and assets of one or more Subsidiaries of the Company, which
Properties and assets, if held by the Company or any Guarantor, instead of such
Subsidiaries, would constitute all or substantially all of the Properties and
assets of the Company and the Guarantors on a consolidated basis shall be deemed
to be the transfer of all or substantially all of the Properties and assets of
the Company or the Guarantors, as the case may be.
Section 6.2. Successor Corporation Substituted.
---------------------------------
Upon any consolidation or merger of the Company or any Guarantor, or
any direct or indirect sale, lease or conveyance by the Company or any
Subsidiary of the Company of assets constituting all or substantially all of the
Properties and assets of the Company and its Subsidiaries, taken as a whole, in
accordance with Section 6.1, the successor corporation formed by such
consolidation or into which the Company or such Guarantor, as the case may be,
is merged or to which such transfer is made, shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or such
Guarantor, as the case may be, under the Indenture and the Securities with the
same effect as if such successor corporation had been named therein as the
Company or such Guarantor, as the case may be, and the Company or such
Guarantor, as applicable, will be released from its obligations under the
Indenture and the Securities, except as to any obligations that arise from or as
a result of such transaction.
ARTICLE VII.
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the failure by the Company to pay any installment of
interest on the Securities (other than in
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respect of the Amended Original Guaranty) as and when due and payable
and the continuance of any such failure for 10 days;
(2) the failure by the Company (other than in respect of the
Amended Original Guaranty) to pay all or any part of the principal, or
premium, if any, on the Securities when and as the same become due and
payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, failure to pay any Offer to Purchase
Price, or otherwise;
(3) except as provided in clauses (1) or (2) of this Section
7.1, failure to have obtained Advisory Committee approval of a
Definitive Budget pursuant to Section 5.20(a) or failure of the
Company or any Guarantor or any Subsidiary thereof, as applicable, to
comply with any provision of Section 5.3, 5.10, 5.11, 5.12, 5.13,
5.15, 5.17, 5.18, 5.19, 5.20(d) or Section 6.1 which failure continues
for 30 days;
(4) except as otherwise provided herein, the failure by the
Company or any Guarantor to observe or perform any other covenant or
agreement contained in the Securities or the Indenture (other than in
each case Amended Original Guaranty Obligations) and the continuance
of such failure for a period of 30 days after written notice is given
to the Company by the Trustee or to the Company and Trustee by the
Holders of at least 25% in aggregate principal amount of the
Securities outstanding;
(5) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudging the Company or a
Subsidiary of the Company as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization of the Company or a
Subsidiary of the Company under any bankruptcy or similar law, and
such decree or order shall have continued undischarged and unstayed
for a period of 60 days; or a decree or order of a court of competent
jurisdiction in respect of the appointment of a receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of the Company or a
Subsidiary of the Company, or of the Property of any such person, or
for the winding up or liquidation of the affairs of any such person,
shall have been entered, and such decree, judgment, or order shall
have remained in force undischarged and unstayed for a period of 60
days;
(6) the Company or a Subsidiary of the Company shall
institute proceedings to be adjudicated a voluntary
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bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking
reorganization under any bankruptcy or similar law or similar statute,
or shall consent to the filing of any such petition, or shall consent
to the appointment of a Custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any of its assets or
property, or shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or shall, within the meaning of any
Bankruptcy Law, become insolvent, fails generally to pay their debts
as they become due, or takes any corporate action in furtherance of or
to facilitate, conditionally or otherwise, any of the foregoing;
(7) a default in the payment of principal, premium or
interest when due which extends beyond any stated period of grace
applicable thereto or an acceleration for any other reason of maturity
of any Indebtedness (excluding Indebtedness described in clause (iii)
of the second proviso to the definition of Indebtedness) of the
Company or any Subsidiary of the Company with an aggregate principal
amount in excess of $500,000;
(8) final unsatisfied judgments not covered by insurance
aggregating in excess of $500,000, at any one time rendered against
the Company or a Subsidiary of the Company and not stayed, bonded or
discharged within 60 days;
(9) an event of default specified in the Mortgage; or
(10) any of the documents comprising the Mortgage fails to
become or ceases to be in full force and effect in accordance with the
terms of this Indenture, or ceases (once effective) to create in favor
of the Trustee, with respect to any material amount of Collateral, a
valid and perfected first priority Lien on the Collateral to be
covered thereby (unless a prior or exclusive Lien is specifically
permitted by this Indenture).
If a Default occurs and is continuing, the Trustee must, within 90
days after the occurrence of such default, give to the Holders notice of such
default.
Prior to the declaration of acceleration of the maturity of the
Securities, the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding may waive on behalf of all the Holders any
default,
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except a default in the payment of principal of or interest on any Security not
yet cured, or a default with respect to any covenant or provision which cannot
be modified or amended without the consent of the Holder of each outstanding
Security affected. Subject to the provisions of the Indenture relating to the
duties of the Trustee, the Trustee will be under no obligation to exercise any
of its rights or powers under the Indenture at the request, order or direction
of any of the Holders, unless such Holders have offered to the Trustee
reasonable security or indemnity. Subject to all provisions of the Indenture and
applicable law, the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee.
Section 7.2. Acceleration of Maturity Date; Rescission and Annulment.
-------------------------------------------------------
If an Event of Default (other than an Event of Default specified in
Section 7.1(5) or (6)) occurs and is continuing, then, and in every such case,
unless the principal of all of the Securities shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of then outstanding Securities, by a notice in writing to the
Company (and to the Trustee if given by Holders) (an "Acceleration Notice"), may
declare all of the principal of the Securities (and premium, if applicable),
determined as set forth below, together with accrued interest, thereon, to be
due and payable immediately. If an Event of Default specified in Section 7.1(5)
or (6) occurs, all principal of, premium applicable to, and accrued interest on,
the Securities shall be immediately due and payable on all outstanding
Securities without any declaration or other act on the part of the Trustee or
the Holders. The Holders of no less than a majority in aggregate principal
amount of Securities are authorized to rescind such acceleration if all existing
Events of Default, other than the non-payment of the principal of, premium, if
any, and interest on the Securities which have become due solely by such
acceleration, have been cured or waived.
At any time after such a declaration of acceleration being made and
before any judgment or decree for payment of any money due being obtained by the
Trustee as hereinafter provided in this Article VII, the Holders of a majority
in aggregate principal amount of then outstanding Securities, by written notice
to the Company and the Trustee, may waive, on behalf of all Holders, an Event of
Default or an event which with notice or lapse of time or both would become an
Event of Default if:
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(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities, (other
than in respect of the Amended Original Guaranty),
(B) the principal of (and premium, if any,
applicable to) any Securities (other than in respect of the
Amended Original Guaranty) which would become due otherwise
than by such declaration of acceleration, and interest
thereon at the rate borne by the Securities (other than in
respect of the Amended Original Guaranty),
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities (other than in respect of the Amended
Original Guaranty),
(D) all sums paid or advanced by the Trustee
hereunder and the compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the non-payment of
amounts which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 7.13.
Notwithstanding the previous sentence of this Section 7.2, no waiver shall be
effective for any Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to any covenant or
provision which cannot be modified or amended without the consent of the Holder
of each outstanding Security, unless all such affected Holders agree, in
writing, to waive such Event of Default or event. No such waiver shall cure or
waive any subsequent default or impair any right consequent thereon.
Section 7.3. Collection of Indebtedness and Suits
for Enforcement by Trustee.
--------------------------------------
The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in Section 7.1(1) and (2) occurs and
is continuing, the Company shall pay to the Trustee, for the benefit of the
Holders of the Securities (other than in respect of the Amended Original
Guaranty), the whole amount then due and payable on such Securities for
principal, premium (if any) and interest, and, to the extent that payment of
such interest shall be legally enforceable, interest
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on any overdue principal (and premium, if any) and on any overdue interest, at
the rate borne by such Securities, and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
compensation to, and expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Company fails to pay such amounts to the Trustee, in its own
name and as trustee of an express trust in favor of such Holders, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities 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 Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of such
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 7.4. Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
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 or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise to take any and
all actions under the TIA, including
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agent and
counsel) and of the Holders allowed in such judicial proceeding, and
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(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 8.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 7.5. Trustee May Enforce Claims Without
Possession of Securities.
--------------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
Section 7.6. Priorities.
----------
(a) any money collected by the Trustee pursuant to this Article VII in
respect of Indenture Obligation shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal, premium (if any) or interest, upon presentation
of the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 8.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest
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on, the Securities in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal,
premium (if any) and interest, respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the remainder,
if any.
(b) Any money collected by the Trustee pursuant to this Article VII in
respect of the Amended Original Guaranty Obligations shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, premium (if any) or
interest, upon presentation of the Securities (only in respect of the Amended
Original Guaranty) and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 8.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal, premium (if any) and interest,
respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the remainder,
if any.
Section 7.7. Limitation on Suits.
-------------------
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of
then outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against
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the costs, expenses and liabilities to be incurred or reasonably
probable to be incurred in compliance with such request;
(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(E) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 7.8. Unconditional Right of Holders to
Receive Principal, Premium and Interest.
----------------------------------------
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and interest on, such
Security on the Maturity Dates of such payments as expressed in such Security
(in the case of redemption, the Redemption Price on the applicable Redemption
Date, and in the case of the Offer Price, on the Asset Sale Purchase Date and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 7.9. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the placement or payment
of mutilated, destroyed, lost or stolen Securities in Section 2.7, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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Section 7.10. Delay or Omission Not Waiver.
----------------------------
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VII 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 7.11. Control by Holders.
------------------
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, provided, that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Holders not taking part
in such direction, and
(3) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
Section 7.12. Waiver of Past Default.
----------------------
Subject to Section 7.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding Securities may, by
written notice to the Trustee on behalf of all Holders, prior to the declaration
of the maturity of the Securities, waive any past default hereunder and its
consequences, except a default
(A) in the payment of the principal of, premium,
if any, or interest on, any Security as specified in clauses
(1) and (2) of Section 7.1, or
(B) in respect of a covenant or provision hereof
which, under Article X, cannot be modified or amended
without the consent of the Holder of each outstanding
Security affected.
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Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
Section 7.13. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 7.13 shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the outstanding Securities, or to any suit
instituted by any Holder for enforcement of the payment of principal of, or
premium (if any) or interest on, any Security on or after the Maturity Date of
such Security.
Section 7.14. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, each Guarantor, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
Section 7.15. Cash Proceeds from Collateral.
-----------------------------
After the occurrence of an Event of Default, the Cash proceeds of any
Collateral obtained and/or disposed of pursuant to the terms of the Mortgage
shall be held by the Trustee in a separate custodial account in the name of the
Trustee (the "Trustee Account") for the equal and ratable benefit of the Holders
without preference, priority or distinction of any
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thereof by reason of difference in time of issuance, sale or otherwise.
ARTICLE VIII.
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
Section 8.1. Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied in or read into this
Indenture which are adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 8.1.
(2) The Trustee shall comply with any order or directive of
a Gaming Authority that the Trustee submit an application for any
license, finding of suitability or other approval pursuant to any
Gaming Law and will cooperate fully and completely in any proceeding
related to such application.
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(3) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts.
(4) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 7.12.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 8.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
Section 8.2. Rights of Trustee.
-----------------
Subject to Section 8.1:
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 14.4 and 14.5. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its
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discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Except with respect to Section 5.1, the Trustee shall have no duty
to inquire as to the performance of the Company's covenants in Article V hereof.
In addition, the Trustee shall not be deemed to have knowledge of any Default or
Event of Default except (i) any Event of Default occurring pursuant to Sections
7.1(1), 7.1(2) and 5.1, or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual knowledge.
Section 8.3. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any
Guarantor, any of their respective Subsidiaries, or their respective Affiliates
with the same rights it would have if it were not Trustee. Any agent may do the
same with like rights. However, the Trustee must comply with Sections 8.10 and
8.11.
Section 8.4. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, and it shall not be responsible for any
statement in the Securities, other than the Trustee's certificate of
authentication, or the use or application of any funds received by a Paying
Agent other than the Trustee.
Section 8.5. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice of
the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. Except in the case of a Default or an Event of Default
in payment of principal (or premium, if any) of, or interest on, any Security
(including the payment of the Redemption Price on the Redemption Date and the
Asset Sale Offer Amount on the Asset Sale Purchase Date, as the case may be),
the Trustee may withhold the notice if and so long as a Trust Officer in good
faith determines that withholding the notice is in the interest of the
Securityholders.
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Section 8.6. Reports by Trustee to Holders.
-----------------------------
If required by law, within 60 days after each May 15 beginning with
the May 15 following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA ss.
313(a). If required by law, the Trustee also shall comply with TIA ss.ss. 313(b)
and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
Section 8.7. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel.
The Company shall indemnify the Trustee (in its capacity as Trustee)
and each of its officers, directors, attorneys-in-fact and agents for, and hold
it harmless against, any claim, demand, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel), loss or liability incurred by them without negligence or bad faith on
its part, arising out of or in connection with the administration of this trust
and their rights or duties hereunder including the reasonable costs and expenses
of defending themselves against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall provide reasonable cooperation at the Company's expense in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel; provided, that the Company will not be
required to pay such fees and expenses if it assumes the Trustee's defense and
there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not
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pay for any settlement made without its written consent. The Company need not
reimburse any expense or indemnify against any loss or liability to the extent
incurred by the Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 8.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 7.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 8.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article IX of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
Section 8.8. Replacement of Trustee.
----------------------
The Trustee may resign by notifying the Company in writing. The Holder
or Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Company and the Trustee in writing and
may appoint a successor trustee with the Company's consent. The Company may
remove the Trustee if:
(1) the Trustee fails to comply with Section
8.1(d) or 8.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer
takes charge of the Trustee or its property; or
(4) the Trustee become incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Securities may appoint a
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successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 8.7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 8.7,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 8.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
8.8, the Company's obligations under Section 8.7 shall continue for the benefit
of the retiring Trustee.
Section 8.9. Successor Trustee by Merger, Etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 8.10. Eligibility; Disqualification.
-----------------------------
The Trustee shall at all times satisfy the requirements of TIA ss.
310(a)(1) and TIA ss. 310(a)(5). The Trustee shall have a combined capital and
surplus of at least $25,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA ss. 310(b).
Section 8.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
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The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE IX.
SATISFACTION AND DISCHARGE
Section 9.1. Satisfaction and Discharge of the Indenture.
-------------------------------------------
The Company shall be deemed to have paid and discharged the entire
Indebtedness on the Securities and the provisions of this Indenture shall cease
to be of further effect (subject to Section 9.3), if:
(1) The Company irrevocably deposits in trust with the
Trustee, pursuant to an irrevocable trust and security agreement in
form and substance reasonably satisfactory to the Trustee, (i) U.S.
Legal Tender, (ii) U.S. Government Obligations, or (iii) a combination
thereof, in an amount after payment of all Federal, state and local
taxes or other charges or assessments in respect thereof payable by
the Trustee, which through the payment of principal and interest will
provide, not later than one Business Day before the due date of
payment in respect of the Securities, U.S. Legal Tender in an amount
which, in the opinion of a nationally recognized firm of independent
certified public accountants expressed in a written certification
thereof (in form and substance reasonably satisfactory to the Trustee)
delivered to the Trustee, is sufficient to pay the principal of,
premium, if any, and each installment of principal and interest on the
Securities (other than in respect of the Amended Original Guaranty)
then outstanding on the dates on which any such payments are due and
payable in accordance with the terms of this Indenture and of the
Securities;
(2) Such deposits shall not cause the Trustee to have a
conflicting interest as defined in and for purposes of the TIA;
(3) No Default or Event of Default shall have occurred or be
continuing on the date of such deposit or shall occur on or before the
91st day (or one day after such other greater period of time in which
any such deposit of trust funds may remain subject to bankruptcy or
insolvency laws) after the date of such deposit, and such deposit will
not result in a Default or Event of Default under this Indenture or a
breach or violation of, or
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constitute a default under, any other instrument to which the Company,
any Guarantor or any Subsidiary of the Company or the Guarantor is a
party or by which it or its Property is bound;
(4) The deposit, defeasance and discharge will not be
deemed, or result in, a Federal income taxable event to the Holders of
such Securities and the Holders will be subject to Federal income tax
only in the same amounts and in the same manner and at the same times
as would have been the case if such deposit and defeasance had not
occurred;
(5) The deposit shall not result in the Company, the Trustee
or the trust becoming an "investment company" under the Investment
Company Act of 1940;
(6) After the passage of 91 days (or any greater period of
time in which any such deposit of trust funds may remain subject to
any Bankruptcy Laws insofar as those laws apply to the Company)
following the deposit of the trust funds, such funds will not be
subject to any Bankruptcy Laws affecting creditors' rights generally;
(7) Holders of such Securities will have a valid, perfected
and unavoidable first-priority security interest in the trust funds;
and
(8) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (who may be outside counsel to
the Company, but not in-house counsel to the Company or any of its
Subsidiaries), each in form and substance satisfactory to the Trustee,
stating that all conditions precedent specified herein relating to the
defeasance contemplated by this Section 9.1 have been complied with.
In the event all or any portion of such Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense of
the Company.
In the event that the Company takes the necessary action to comply
with the provisions described in this Section 9.1 and such Securities are
declared due and payable because of the occurrence of an Event of Default, the
Company will remain liable for all amounts due on such Securities at the time of
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acceleration resulting from such Event of Default in excess of the amount of
money and U.S. Government Obligations deposited with the Trustee pursuant to
this Section 9.1 at the time of such acceleration.
Section 9.2. Termination of Obligations Upon
Cancellation of the Securities.
--------------------------------
In addition to the Company's rights under Section 9.1, the Company and
the Guarantor may terminate all of their respective obligations under this
Indenture (subject to Section 9.3) when:
(1) all Securities (other than in respect of the Amended Original
Guaranty) theretofore authenticated and delivered (other than Securities which
have been destroyed, lost or stolen and which have been replaced or paid as
provided in Section 2.7) have been delivered to the Trustee for cancellation;
(2) the Company or a Guarantor has paid or caused to be paid all
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (who may be outside counsel to the
Company, but not in-house counsel to the Company or any of its Subsidiaries),
each stating that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with and that
such satisfaction and discharge will not result in a breach or violation of, or
constitute a Default under, this Indenture or any other instrument to which the
Company, the Guarantor or any of their Subsidiaries is a party or by which it or
their Property is bound.
Section 9.3. Survival of Certain Obligations.
-------------------------------
Notwithstanding the termination of this Indenture and of the
Securities referred to in Sections 9.1 or 9.2, the respective obligations of the
Company, each Guarantor and the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6,
2.7, 2.11, 2.12, Article III, Article IV, 5.1, 5.2, 5.4, 5.6, 7.7, 7.8, 8.7,
8.8, 9.5, 9.6, 9.7, 13.1 (in respect of the Original Guarantor and Amended
Original Guaranty Obligations only), 14.1, 14.2, 14.4, 14.5, 14.7, 14.8, 14.11
and this Section 9.3 shall survive until the Securities are no longer
outstanding, and thereafter the obligations of the Company and the Trustee under
Sections 7.8, 8.7, 8.8, 9.5, 9.6, 9.7, 13.1 (in respect of the Original
Guarantor and Amended Original Guaranty Obligations only), 14.11
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and this Section 9.3 shall survive. Nothing contained in this Article IX shall
abrogate any of the obligations or duties of the Trustee under this Indenture.
Section 9.4. Acknowledgment of Discharge by Trustee.
--------------------------------------
After (i) the conditions of Sections 9.1 or 9.2 have been satisfied,
(ii) the Company or the Guarantor has paid or caused to be paid all other sums
payable hereunder by the Company and (iii) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in clause (i), above, relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon request shall acknowledge in writing the discharge of the Company's
and the Guarantor' obligations under this Indenture except for those surviving
obligations specified in Section 9.3.
Section 9.5. Application of Trust Assets.
---------------------------
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it in the irrevocable trust established pursuant to
Section 9.1. The Trustee shall apply the deposited U.S. Legal Tender or U.S.
Government Obligations, together with earnings thereon, through the Paying Agent
(which may not for purposes of Article IX be the Company or any Affiliate of the
Company), in accordance with this Indenture and the terms of the Securities, to
the payment of principal of and interest on the Securities.
Section 9.6. Repayment to the Company.
------------------------
Upon termination of the trust established pursuant to Section 9.1 by
payment of the trust property to the Holders, the Trustee and the Paying Agent
shall promptly pay to the Company upon request any excess U.S. Legal Tender or
U.S. Government Obligations held by them.
The Trustee and the Paying Agent shall pay to the Company upon
request, and, if applicable, in accordance with the irrevocable trust
established pursuant to Section 9.1, any U.S. Legal Tender or U.S. Government
Obligations held by them for the payment of principal of or interest on the
Securities that remain unclaimed for two years after the date on which such
payment shall have become due; 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 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
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unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining shall be repaid to the Company. After payment to the Company,
Holders entitled to such payment must look to the Company for such payment as
general creditors unless an applicable abandoned property law designates another
person.
Section 9.7. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 9.1 or 9.2 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 9.1 or 9.2 until such time as the Trustee or Paying Agent is
permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in
accordance with Section 9.1 or 9.2; provided, however, that if the Company or
the Guarantor has made any payment of principal of, premium, if any, or interest
on any Securities because of the reinstatement of its obligations, the Company
or the Guarantor shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE X.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 10.1. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holder, the Company or any Guarantor, when
authorized by Board Resolutions, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, or may amend,
modify or supplement the Mortgage, in form satisfactory to the Trustee, for any
of the following purposes:
(1) to cure any ambiguity, defect, or
inconsistency, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall not
be inconsistent with the provisions of this Indenture, provided
such action pursuant to this clause (1) shall not adversely
affect the interests of any Holder in any respect;
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(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or to make any other change that does
not adversely affect the rights of any Holders provided, that the
Company has delivered to the Trustee an Opinion of Counsel
stating that such change does not adversely affect the rights of
any Holder;
(3) to provide for additional collateral for, or
additional Guarantors of the Securities;
(4) to provide for uncertificated Securities in
addition to or in place of certificated Securities in compliance
with this Indenture;
(5) to evidence the succession of another person
to the Company, and the assumption by any such successor of the
obligations of the Company, herein and in the Securities in
accordance with Article VI; or
(6) to comply with the TIA.
Any such amendment or supplement may be limited in application to the Securities
(other than in respect of the Amended Original Guaranty) or to the Securities
(only in respect of the Amended Original Guaranty).
Section 10.2. Amendments, Supplemental Indentures and
Waivers with Consent of Holders.
------------------------------------------
Subject to Section 7.8 and the last sentence of this paragraph, with
the consent of the Advisory Committee (or, at any time as the Advisory Committee
does not exist or so as to comply with Section 10.3 hereof, with the consent of
the Holders of a majority in aggregate principal amount of then outstanding
Securities) by written act of the Advisory Committee (or said Holders, as the
case may be) delivered to the Company and the Trustee, the Company and each
Guarantor, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture, the Mortgage or the Securities or 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, the Mortgage or the Securities or of modifying in any manner the
rights of the Holders under this Indenture, the Mortgage or the Securities.
Subject to Section 7.8 and the last sentence of this paragraph, the Advisory
Committee (or, at any time as the Advisory Committee does not exist or so as to
comply with Section 10.3 hereof, the Holder or Holders of a majority in
aggregate principal amount of then outstanding Securities) may waive compliance
by the Company
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or any Guarantor with any provision of this Indenture, the Mortgage or the
Securities. Notwithstanding the foregoing provisions of this Section 10.2, no
such amendment, supplemental indenture or waiver shall, without the consent of
the Advisory Committee (or at any time as the Advisory Committee does not exist
or so as to comply with Section 10.3 hereof Holders of at least 66 2/3% of the
aggregate principal amount of outstanding Securities) change any provision of
Article IV or Article XIII, or (except for the Stated Maturity, which is
governed by clause (4) (below) extend any Maturity Date of any Securities, and
no such amendment, supplemental indenture or waiver shall, without the consent
of the Holder of each outstanding Security affected thereby:
(1) change the percentage of principal amount of
Securities whose Holders must consent to an amendment, supplement
or waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment
of interest on any Security;
(3) reduce the principal amount of any Security;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article III
in a manner adverse to any Holder;
(6) make any changes in the provisions concerning
waivers of Defaults or Events of Default by Holders of the
Securities or the rights of Holders to recover the principal or
premium of, interest on, or redemption payment with respect to,
any Security;
(7) make any changes in Section 7.4, 7.7 or this
third sentence of this Section 10.2;
(8) make the principal of, or the interest on, any
Security payable with anything or in any manner other than as
provided for in this Indenture and the Securities as in effect on
the date hereof; or
(9) make the Securities subordinated in right of
payment to any extent or under any circumstances to any other
indebtedness.
It shall not be necessary for the consent of the Advisory Committee or
the Holders under this Section to approve
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the particular form of any proposed amendment, supplement or waiver, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
After an amendment, supplement or waiver under this Section 10.2 or
10.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article X, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 10.3. Compliance with TIA.
--------------------
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 10.4. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by written notice to the
Company or the person designated by the Company as the person to whom consents
should be sent if such revocation is received by the Company or such person
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those persons who were Holders at such record date,
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and only those persons (or their duly designated proxies), shall be entitled to
revoke any consent previously given, whether or not such persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 10.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, however, that any
such waiver shall not impair or affect the right of any Holder to receive
payment of principal and premium and interest on a Security, on or after the
respective dates set for such amounts to become due and payable expressed in
such Security, or to bring suit for the enforcement of any such payment on or
after such respective dates.
Section 10.5. Notation on or Exchange of Securities.
--------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue, the
Guarantor shall endorse and the Trustee shall authenticate a new Security that
reflects the changed terms. Any failure to make the appropriate notation or to
issue a new Security shall not affect the validity of such amendment, supplement
or waiver.
Section 10.6. Trustee to Sign Amendments, Etc.
--------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article X, provided, that the Trustee may, but shall
not be obligated to, execute any such amendment, supplement or waiver which
affects the Trustee's own rights, duties or immunities under this Indenture. The
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article X is authorized or
permitted by this Indenture.
ARTICLE XI.
MEETINGS OF SECURITYHOLDERS
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Section 11.1. Purposes for Which Meetings May Be Called.
-----------------------------------------
A meeting of Securityholders may be called at any time and from time
to time pursuant to the provisions of this Article XI for any of the following
purposes:
(a) to give any notice to the Company, the Guarantor or to the
Trustee, or to give any directions to the Trustee, or to waive or to consent to
the waiving of any Default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by Securityholders pursuant
to any of the provisions of Article VII;
(b) to remove the Trustee or appoint a successor Trustee pursuant to
the provisions of Article VIII;
(c) to consent to a waiver pursuant to the provisions of Section 10.2;
or
(d) to take any other action (i) authorized to be taken by or on
behalf of the Holder or Holders of any specified aggregate principal amount of
the Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate in
connection with the administration of this Indenture.
Section 11.2. Manner of Calling Meetings.
--------------------------
The Trustee may at any time call a meeting of Securityholders to take
any action specified in Section 11.1, to be held at such time and at such place
in The City of New York, State of New York or elsewhere as the Trustee shall
determine. Notice of every meeting of Securityholders, setting forth the time
and place of such meeting and in general terms the action proposed to be taken
at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to
the Company, the Guarantor and to the Holders at their last addresses as they
shall appear on the registration books of the Registrar, not less than 10 nor
more than 60 days prior to the date fixed for a meeting. The Company shall pay
the costs and expenses of preparing and mailing such notice.
Any meeting of Securityholders shall be valid without notice if the
Holders of all Securities then outstanding are present in person or by proxy, or
if notice is waived before or after the meeting by the Holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 11.3. Call of Meetings by Company or Holders.
--------------------------------------
In case at any time the Company, pursuant to a Board Resolution, or the
Holders of not less than 10% in aggregate
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principal amount of the Securities then outstanding, shall have requested the
Trustee to call a meeting of Securityholders to take any action specified in
Section 11.1, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within 20 days after receipt of such request, then the
Company or the Holders of Securities in the amount above specified may determine
the time and place in The City of New York, State of New York or elsewhere for
such meeting and may call such meeting for the purpose of taking such action, by
mailing or causing to be mailed notice thereof as provided in Section 11.2, or
by causing notice thereof to be published at least once in each of two
successive calendar weeks (on any Business Day during such week) in a newspaper
or newspapers printed in the English language, customarily published at least
five days a week of a general circulation in The City of New York, State of New
York, the first such publication to be not less than 10 nor more than 60 days
prior to the date fixed for the meeting.
Section 11.4. Who May Attend and Vote at Meetings.
-----------------------------------
To be entitled to vote at any meeting of Securityholders, a person
shall (a) be a registered Holder of one or more Securities, or (b) be a person
appointed by an instrument in writing as proxy for the registered Holder or
Holders of Securities. The only persons who shall be entitled to be present or
to speak at any meeting of Securityholders shall be the persons entitled to vote
at such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company, the Guarantor and their counsel.
Section 11.5. Regulations May Be Made by Trustee; Conduct
of the Meeting; Voting Rights; Adjournment.
-----------------------------------------------
Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any action by
or any meeting of Securityholders, in regard to proof of the holding of
Securities and of the appointment of proxies, and in regard to the appointment
and duties of inspectors of votes, and submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think appropriate. Such
regulations may fix a record date and time for determining the Holders of record
of Securities entitled to vote at such meeting, in which case those and only
those persons who are Holders of Securities at the record date and time so
fixed, or their proxies, shall be entitled to vote at such meeting whether or
not they shall be such Holders at the time of the meeting.
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The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 11.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Securities represented at the meeting and entitled to
vote.
At any meeting each Securityholder or proxy shall be entitled to one
vote for each $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not then outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the proxy to vote on
behalf of other Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 11.2 or Section 11.3 may be adjourned from
time to time by vote of the Holder or Holders of a majority in aggregate
principal amount of the Securities represented at the meeting and entitled to
vote, and the meeting may be held as so adjourned without further notice.
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Section 11.6. Voting at the Meeting and Record to Be Kept.
-------------------------------------------
The vote upon any resolution submitted to any meeting of
Securityholders shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amount of the Securities voted by the ballot. The permanent
chairman of the meeting shall appoint two inspectors of votes, who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to such record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts, setting forth a
copy of the notice of the meeting and showing that such notice was mailed as
provided in Section 11.2 or published as provided in Section 11.3. The record
shall be signed and verified by the affidavits of the permanent chairman and the
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 11.7. Exercise of Rights of Trustee or Securityholders
May Not Be Hindered or Delayed by Call of Meeting.
--------------------------------------------------
Nothing contained in this Article XI shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Securityholders or
any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities.
ARTICLE XII.
INDEMNIFICATION AND EXPENSE REIMBURSEMENT
OF ADVISORY COMMITTEE
Section 12.1. Indemnity; Expenses.
-------------------
The Company shall indemnify the members of the Advisory Committee, and
hold them harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of the member's
agents and counsel),
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loss or liability incurred by them without negligence or bad faith on their
part, arising out of or in connection with their rights or duties hereunder
including the reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of
their powers or duties hereunder. A member of the Advisory Committee shall
notify the Company promptly of any claim asserted against such member for which
it may seek indemnity. The Company shall defend the claim and the member shall
provide reasonable cooperation at the Company's expense in the defense. The
member may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel; provided, that the Company will not be required to
pay such fees and expenses if it assumes the member's defense and there is no
conflict of interest between the Company and the member in connection with such
defense. The Company need not pay for any settlement made without its written
consent. The Company need not reimburse any expense or indemnify against any
loss or liability to the extent incurred by the member through his or her gross
negligence, bad faith or willful misconduct.
The Company shall reimburse the members of the Advisory Committee for
their reasonable out of pocket expenses; provided that such reimbursement shall
not include the fees and expenses of professionals, except for reasonable fees
and expenses of professionals incurred in connection with the Company's requests
for Advisory Committee approvals pursuant to the terms of this Section 12.1 and
in Section 5.20 of this Indenture.
To secure the Company's payment obligations in this Section 12.1,
members of the Advisory Committee shall have a lien prior to the Securities but
subordinate to the lien of the Trustee on all assets held or collected by the
Trustee, in its capacity as Trustee, except assets held in trust to pay
principal and premium, if any, of or interest on particular Securities.
The Company's obligations under this Section 12.1 and any lien arising
hereunder shall survive the resignation or removal of a member of the Advisory
Committee, the discharge of the Company's obligations pursuant to Article IX of
this Indenture and any rejection or termination of this Indenture under any
Bankruptcy Law.
ARTICLE XIII.
GUARANTIES
Section 13.1. Amended Original Guaranty.
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(a) The Mortgage shall not secure any of the Amended Original
Guaranty Obligations.
(b) In consideration of good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Original Guarantor hereby
irrevocably and unconditionally guarantees (the "Amended Original Guaranty") to
each Holder of Securities authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Securities, the Indenture Obligations, the
Amended Original Guaranty or the Amended Original Guaranty Obligations, that the
principal and premium (if any) of and interest on the Original Securities will
be paid in full when due, whether at the maturity or interest payment date, by
acceleration, call for redemption or otherwise.
(c) The Original Guarantor hereby agrees that its obligations with
regard to the Amended Original Guaranty shall be unconditional, irrespective of
the validity, regularity or enforceability of the Original Securities, this
Indenture or the Original Indenture, the absence of any action to enforce the
same, any delays in obtaining or realizing upon or failures to obtain or realize
upon collateral, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstances that might otherwise constitute a
legal or equitable discharge or defense of the Original Guarantor. The Original
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company or right to require the
prior disposition of the assets of the Company to meet its obligations, protest,
notice and all demands whatsoever and covenants that the Amended Original
Guaranty will not be discharged except by complete performance of the
obligations contained in the Original Securities and the Original Indenture.
(d) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Guarantor, or any Custodian,
Trustee, or similar official acting in relation to either the Company or the
Original Guarantor, any amount (in respect of the Original Securities) paid by
either the Original Guarantor to the Trustee or such Holder, in respect of this
Amended Original Guaranty, this Amended Original Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and effect. The
Original Guarantor agrees that it will not be entitled to any right of
subrogation in relation to the Holders in respect of any Amended Original
Guaranty Obligation.
(e) It is the intention of the Original Guarantor that the
obligations of the Original Guarantor hereunder shall be in, but not in excess
of, the maximum amount permitted by applicable law. Accordingly, if the Amended
Original Obligations would be annulled, avoided or subordinated to the creditors
of the Original Guarantor by a court of competent jurisdiction in a proceeding
actually pending before such court as a result of a determination both that the
Amended Original Guaranty was made without fair consideration and, immediately
after giving effect thereto, the Original Guarantor was insolvent or unable to
pay its debts as they mature or left with an unreasonably small capital, then
the obligations of the Original Guarantor under the Amended Original Guaranty
shall be reduced by such court if such reduction would
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result in the avoidance of such annulment, avoidance or subordination; provided,
however, that any reduction pursuant to this paragraph shall be made in the
smallest amount as is strictly necessary to reach such result. For purposes of
this paragraph, "fair consideration", "insolvency", "unable to pay its debts as
they mature", "unreasonably small capital" and the effective times of
reductions, if any, required by this paragraph shall be determined in accordance
with applicable law.
Section 13.2. Guaranty.
(a) In consideration of good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, each Guarantor hereby
irrevocably and unconditionally guarantees (the "Guaranty") to each Holder of a
Security (other than in respect of the Amended Original Guaranty) authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Company under this Indenture or the
Securities, that: (w) the principal and premium (if any) of and interest on the
Securities (other than in respect of the Amended Original Guaranty) will be paid
in full when due, whether at the maturity or interest payment date, by
acceleration, call for redemption, Offer to Purchase or otherwise; (x) all other
obligations of the Company to the Holders or the Trustee under this Indenture or
the Securities (other than in respect of the amended Original Guaranty) will be
promptly paid in full or performed, all in accordance with the terms of this
Indenture and the Securities (other than in respect of the Amended Original
Guaranty); and (y) in case of any extension of time of payment or renewal of any
Securities (other than in respect of the Amended Original Guaranty) or any of
such other obligations, they will be paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration, call for redemption, upon Offer to Purchase or otherwise. Failing
payment when due of any amount so guaranteed for whatever reason, each Guarantor
shall be obligated to pay the same before failure so to pay becomes an Event of
Default.
(b) Each Guarantor hereby agrees that its obligations with regard to
this Guaranty shall be unconditional, irrespective of the validity, regularity
or enforceability of the Securities or this Indenture, the absence of any action
to enforce the same, any delays in obtaining or realizing upon or failures to
obtain or realize upon collateral, the recovery of any judgment against the
Company or any other Guarantor, any action to enforce the same or any other
circumstances that might otherwise constitute a legal or equitable discharge or
defense of such Guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company or right to require the prior disposition of the assets of the Company
to meet its obligations, protest, notice and all demands whatsoever and
covenants that this Guaranty will not be discharged except by complete
performance of the obligations contained in the Securities (other than in
respect of the Amended Original Guaranty) and this Indenture (other than in
respect of the Amended Original Guaranty).
(c) If any Holder or the Trustee is required by any court or otherwise
to return to either the Company or any Guarantor, or any Custodian, Trustee, or
similar official acting in
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relation to either the Company or such Guarantor, any amount paid by either the
Company or any Guarantor to the Trustee or such Holder, this Guaranty, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it will not be entitled to any right of subrogation
in relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. Each Guarantor further
agrees that, as between such Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 7.2 for the purposes of this
Guaranty, notwithstanding any stay, injunction or other prohibition preventing
such acceleration as to the Company of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of those obligations as
provided in Section 7.2, those obligations (whether or not due and payable) will
forthwith become due and payable by the Guarantor for the purpose of this
Guaranty.
(d) It is the intention of each Guarantor and the Company that the
obligations of such Guarantor hereunder shall be in, but not in excess of, the
maximum amount permitted by applicable law. Accordingly, if the obligations in
respect of the Guaranty would be annulled, avoided or subordinated to the
creditors of any Guarantor by a court of competent jurisdiction in a proceeding
actually pending before such court as a result of a determination both that the
Guaranty was made without fair consideration and, immediately after giving
effect thereto, such Guarantor was insolvent or unable to pay its debts as they
mature or left with an unreasonably small capital, then the obligations of such
Guarantor under the Guaranty shall be reduced by such court if such reduction
would result in the avoidance of such annulment, avoidance or subordination;
provided, however, that any reduction pursuant to this paragraph shall be made
in the smallest amount as is strictly necessary to reach such result. For
purposes of this paragraph, "fair consideration", "insolvency", "unable to pay
its debts as they mature", "unreasonably small capital" and the effective times
of reductions, if any, required by this paragraph shall be determined in
accordance with applicable law.
Section 13.3. Execution and Delivery of Guaranty.
To evidence its Guaranty set forth in Section 13.2, each Guarantor
agrees that a notation of the Guaranty substantially in the form annexed hereto
as Exhibit B shall be endorsed on each Security authenticated and delivered by
the Trustee and that this Indenture shall be executed on behalf of the Guarantor
by two Officers or an Officer and an Assistant Secretary by manual or facsimile
signature.
Each Guarantor agrees that its Guaranty set forth in Section 13.2
shall remain in full force and effect and apply to all the Securities
notwithstanding any failure to endorse on each Security a notation of such
Guaranty.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security on which a Guaranty is
endorsed, the Guaranty shall be valid nevertheless.
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The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery that the Guaranty set forth in
this Indenture on behalf of each Guarantor.
Section 13.4. Future Guarantors.
------------------
The Company and each Guarantor covenant and agree that they shall
cause each person (other than CDGC and its Subsidiaries) that is or becomes a
Subsidiary of the Company or any Guarantor to execute a Guaranty in the form of
Exhibit B hereto and will and cause such Subsidiary to execute an Indenture
supplemental hereto for the purpose of adding such Subsidiary as a Guarantor
hereunder and the capital stock of such Subsidiary owned by the Company or any
Subsidiary of the Company shall be pledged, pursuant to an agreement
substantially in form of the Pledge Agreement attached hereto as Exhibit C in
favor of the Trustee for the benefit of the Holders.
Section 13.5. Certain Bankruptcy Events.
-------------------------
Each Guarantor hereby covenants and agrees that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Guarantor shall not file (or join in any filing of), or otherwise
seek to participate in the filing of, any motion or request seeking to stay or
to prohibit (even temporarily) execution on the Guaranty and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1. TIA Controls.
--------
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
Section 14.2. Notices.
-------
Any notices or other communications to the Company or the Trustee
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
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If to the Company or the Guarantor:
Capital Gaming International, Inc.
Bayport One, Suite 250, 8025 Black Horse Pike
West Atlantic City, New Jersey 08232
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Barry N. Seidel, Esq. and
Laurence D. Weltman, Esq.
if to the Trustee:
First Trust National Association
180 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Finance
The Company, the Guarantor and the Trustee by notice to each other
party may designate additional or different addresses as shall be furnished in
writing by such party. Any notice or communication to the Company, the Guarantor
or the Trustee shall be deemed to have been given or made as of the date so
delivered, if personally delivered; when answered back, if telexed, when receipt
is acknowledged, if telecopied; and 5 Business Days after mailing if sent by
registered or certified mail, postage prepaid (except that a notice of change of
address shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 14.3. Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the
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Guarantor, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).
Section 14.4. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 14.5. Statements Required in Certificate or Opinion.
----------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such ` person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
Section 14.6. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
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The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for its
functions.
Section 14.7. Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York are not required to be open. If a payment date is a Legal Holiday in New
York, New York, payment may be made at such place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
Section 14.8. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY AND THE GUARANTOR HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AND THE GUARANTOR IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
Section 14.9. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company, the Guarantor or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 14.10. No Recourse against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Company or the Guarantor shall not
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have any liability for any obligations of the Company or the Guarantor under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their reactions. Each Securityholder by accepting
a Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Section 14.11. Successors.
----------
All agreements of the Company and the Guarantor in this Indenture and
the Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
Section 14.12. Duplicate Originals.
-------------------
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
Section 14.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 14.14. Table of Contents, Headings, Etc.
--------------------------------
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
CAPITAL GAMING INTERNATIONAL, INC.
By: ________________________________
Name:
Title:
Attest: ___________________
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: ______________________________,
Name:
Title:
Attest: ____________________
CAPITAL GAMING MANAGEMENT, INC.
By: ______________________________,
Name:
Title:
Attest: ____________________
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Exhibit A
[FORM OF SECURITY]
CAPITAL GAMING INTERNATIONAL, INC.
12.0% SENIOR SECURED NOTES DUE 2001
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED, EXCEPT PURSUANT TO (i)
A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, or (iii) ANY OTHER
EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY STATE
OF THE UNITED STATES. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE
WITH APPLICABLE GAMING LAWS AND REGULATIONS.
No. ______ $___________
Capital Gaming International, Inc., a New Jersey corporation
(hereinafter called the "Company," which term includes any successor corporation
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to, or registered assigns, the principal sum of Dollars, on 4
years from the Issue Date.
Interest Payment Dates: May 15 and November 15 of each year commencing
November 15, 1997
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
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IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated: ____________, 1997
CAPITAL GAMING INTERNATIONAL, INC.
By: _______________________________
Attest:
- ----------------------------
Secretary
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[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
By:
------------------------------
Authorized Signatory
Dated:
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CAPITAL GAMING INTERNATIONAL, INC.
12.0% Senior Secured Notes Due 2001
1. Interest
--------
Capital Gaming International, Inc., a New Jersey corporation (the
"Company"), promises to pay interest from the Issue Date on the principal amount
of this Security at a rate of 12.0% per annum. To the extent it is lawful, the
Company promises to pay interest on any interest payment due but unpaid on such
principal amount at a rate of 12.0% per annum compounded semi-annually.
The Company will pay interest semi-annually on May 15 and November 15
of each year (each, an "Interest Payment Date"), commencing November 15, 1997.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Issue Date.
Interest will be computed on the basis of a 360-day year consisting of twelve 30
day months.
2. Method of Payment.
-----------------
The Company shall pay principal of and interest on the Securities
(except defaulted interest) to the persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date. Except as provided below, the Company shall pay principal and interest in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by wire transfer
of Federal funds, or interest by its check payable in such U.S. Legal Tender.
The Company may deliver any such interest payment to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar.
--------------------------
Initially, First Trust National Association (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or co-Registrar.
4. Indenture
---------
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The Company issued the Securities under an Amended and Restated
Indenture, dated March 27, 1997 (the "Indenture"), between the Company and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are senior
obligations of the Company limited in aggregate principal amount to $23,100,000.
5. Redemption.
----------
The Securities are redeemable in whole or from time to time in part at
any time on and after the Issue Date at the option of the Company, at the
Redemption Price of 100% of principal amount), together with any accrued but
unpaid interest to the Redemption Date. Except as provided in paragraphs 6 and 7
below, the Securities may not otherwise be redeemed.
6. Mandatory Redemption.
--------------------
The Company shall redeem $4,620,000 and $18,480,000 of the aggregate
principal amount of the Securities issued on the third anniversary of the Issue
Date and the fourth anniversary of the Issue Date, respectively, at a redemption
price equal to 100% of the principal amount thereof together with accrued and
unpaid interest to the redemption date.
7. Redemption Pursuant to Gaming Laws.
----------------------------------
The Securities may also be redeemed at any time pursuant to, and in
accordance with, any order of any Gaming Authority with appropriate jurisdiction
and authority relating to a Gaming License, or to the extent necessary in the
reasonable, good faith judgment of the Board of Directors of the Company to
prevent the loss, failure to obtain or material impairment or to secure the
reinstatement, of any material Gaming License, where in any such case such
redemption or acquisition is required because such Holder or beneficial owner of
such Security is required to be found suitable or to otherwise qualify under any
gaming laws and is not found suitable or so qualified within a reasonable period
of time.
Any redemption of the Securities shall comply with Article III of the
Indenture.
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8. Notice of Redemption.
--------------------
Notice of redemption will be mailed by first class mail at least 30
days but not more than 45 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $100 may be redeemed in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, including any accrued and unpaid interest to the Redemption Date.
9. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $100 and integral multiples of $100. A Holder may register the
transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
10. Persons Deemed Owners.
---------------------
The Registered Holder of a Security may be treated as the owner of it
for all purposes.
11. Unclaimed Money.
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
-----------------------------------------
If the Company at any time deposits into an irrevocable trust with the
Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the
principal of and interest on the Securities to redemption or maturity and
complies with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding
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its obligation to pay the principal of and interest on the Securities).
13. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the consent of the Advisory Committee or, at any
time as the Advisory Committee does not exist or so as to comply with Section
10.3 of the Indenture, with the written consent of the Holder or Holders of a
majority, and in certain cases at least two-thirds, in aggregate principal
amount of the Securities then outstanding, and any existing Default or Event of
Default or compliance with any provision may be waived with the consent of the
Advisory Committee or, at any time as the Advisory Committee does not exist or
so as to comply with Section 10.3 of the Indenture, the Holder or Holders of a
majority in aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Securities to, among other things, cure any
ambiguity, defect or inconsistency, or make any other change that does not
adversely affect the rights of any Holder of a Security.
14. Restrictive Covenants.
---------------------
The Indenture imposes certain limitations on the ability of the
Company and its Subsidiaries to, among other things, incur additional
Indebtedness and Disqualified Capital Stock, make payments in respect of its
Capital Stock, enter into transactions with Affiliates, incur Liens, sell
assets, merge or consolidate with any other person and sell, lease, transfer or
otherwise dispose of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Trustee on compliance with such
limitations.
15. Security.
--------
In order to secure the obligations under the Indenture, the Company,
each Guarantor and the Trustee have entered into certain security agreements in
order to create security interests in and liens upon certain assets and
properties of the Company and each Guarantor.
16. Sale of Assets.
--------------
The Indenture imposes certain limitations on the ability of the
Company or its Subsidiaries to sell assets. In the event the proceeds from a
permitted Asset Sale exceed certain amounts, as specified in the Indenture, the
Company will be
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required either to reinvest the proceeds of such Asset Sale in its business or
to make an offer to purchase each Holder's Securities at 100% of the principal
amount thereof, together with accrued interest, if any, to the purchase date.
17. Successors.
----------
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
18. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture of the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing Default
or Event of Default (except a Default in payment of principal or interest), if
it determines that withholding notice is in their interest.
19. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
20. No Recourse Against Others.
--------------------------
No stockholder, director, officer, employee or incorporator, as such,
past, present or future, of the Company or any successor corporation shall have
any liability for any obligation of the Company under the Securities or the
Indenture. Each Holder of a Security by accepting a Security waives and releases
all such liability. The waiver and release are part of the consideration for the
issuance of the Securities.
21. Authentication.
--------------
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This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
22. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not, as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
23. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
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[FORM OF ASSIGNMENT]
I or we assign this Security to
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
_________ and irrevocably appoint ________ agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
Date: __________ Signed: ______________________________________
- ------------------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Security)
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to any of the following provisions of the Indenture, check the
appropriate box:
[__] Section 5.14;
[__] Article XII.
If you want to elect to have only part of this Security purchased by
the Company pursuant to the Indenture, state the principal amount you want to be
purchased: $__________________
Date:______________ Signature:____________________________________
(Sign exactly as your name appears on the other side of this Security)
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Exhibit B
[FORM OF GUARANTY]
For value received, ______________, a __________ corporation,
hereby unconditionally guarantees to the Holder of the Security upon which this
Guaranty is endorsed the due and punctual payment, as set forth in the Indenture
pursuant to which such Security and this Guaranty were issued, of the principal
of, premium (if any) and interest on such Security when and as the same shall
become due and payable for any reason according to the terms of such Security
and Article XIII of the Indenture. The Guaranty of the Security upon which this
Guaranty is endorsed will not become effective until the Trustee signs the
certificate of authentication on such Security.
________________________________
By: ____________________________
Attest: ________________________
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Exhibit C
[FORM OF PLEDGE AGREEMENT]
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CAPITAL GAMING INTERNATIONAL, INC.
Exhibit "B" To Plan Of Reorganization
Amended and Restated Certificate of Incorporation
115
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CAPITAL GAMING INTERNATIONAL, INC.
This is to certify there is hereby organized a corporation under
and by virtue of N.J.S. 14A:1-1 et seq., the "New Jersey Business Corporation
Act."
1. Name. The name of the Corporation is Capital Gaming
International, Inc.
2. Registered Agent and Registered Office. The name, address (and
zip code) of the Corporation's current registered agent and registered office
are:
William S. Papazian, Senior Vice President and
General Counsel
Capital Gaming International, Inc.
Bayport One, Suite 250
8025 Black Horse Pike
W. Atlantic City, NJ 08232
3. Purpose. The purposes for which this Corporation is organized
are: to engage in any activity within the purposes for which corporations may be
organized under the New Jersey Business Corporation Act.
4. Capitalization. The aggregate number of shares which the
Corporation shall have authority to issue is three million, two hundred thousand
(3,200,000), without par value, of which three million, two hundred thousand
(3,200,000) shall be designated "Common Stock." The Board of Directors shall
have the authority to determine or change the designation, number of shares,
relative rights, preferences and limitations of any class of shares.
No nonvoting equity securities of the Corporation shall be
issued. This provision is included in this Amended and Restated Certificate of
Incorporation in compliance with Section 1123 of the United States Bankruptcy
Code, 11 U.S.C. Section 1123, and shall have no further force and effect beyond
that required by said section and for so long as said section is in effect and
applicable to the Corporation.
5. Board of Directors.
(a) The business and affairs of the Corporation shall be
managed and controlled by a Board of Directors consisting of
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not less than three (3) nor more than seven (7) persons. The exact number of
Directors within the minimum and maximum limitations specified in the preceding
sentence shall be fixed from time to time by the Board of Directors pursuant to
a resolution adopted by a majority of the entire Board of Directors.
The Board of Directors shall be divided into three (3) classes: Class
A, Class B and Class C (each a "Class"), with each Class as nearly equal in
number as possible. The initial Class A Director shall have a term of office to
expire at the third Annual Meeting of Shareholders following ______________,
1997 (the "Effective Date"), the effective date of the Corporation's Plan of
Reorganization, dated December 22, 1996 (the "Plan"). The initial Class B
Director shall have a term of office to expire at the second Annual Meeting of
Shareholders following the Effective Date. The initial Class C Director shall
have a term of office to expire at the first Annual Meeting of Shareholders
following the Effective Date. At each Annual Meeting of Shareholders following
such initial classification and election, Directors elected to succeed the Class
A, B and C Directors whose term expires shall be elected for a term of office to
expire at the third succeeding Annual Meeting of Shareholders after their
election.
(b) Any Director may be removed from office at any time, but only
for cause and only by the affirmative vote of (i) the holders of at least 66
2/3% of the voting power of all the shares of the Corporation entitled to vote
for the election of Directors, or (ii) a majority of the remaining Directors.
Any Director may also be suspended from active service by a majority vote of the
remaining Directors pending a final determination that cause exists for removal.
(c) Newly created directorships resulting from an increase in the
authorized number of Directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled by a majority vote of the Directors then in
office, although less than a quorum exists. Any Director so chosen to fill a
directorship created by an increase in the number of Directors shall become a
member of the Class whose term expires at the next Annual Meeting of
Shareholders; provided that if this would result in any Class having two more
Directors than any other Class, the new Director shall become a member of the
Class whose term expires at the next following Annual Meeting of Shareholders
which does not provide such result. Any Director so chosen to fill a vacancy
shall become a member of the Class of the replaced Director. Any vacancy or
newly created directorship not filled by the Board by the next succeeding Annual
or Special
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Meeting of Shareholders called for this purpose, may be filled by a vote of the
shareholders entitled to vote at such Meeting. No decrease in the number of
Directors constituting the Board of Directors shall shorten the term of any
incumbent Director.
(d) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
66 2/3% of the voting power of all of the shares of the Corporation entitled to
vote for the election of Directors shall be required to amend, repeal or adopt
any provision inconsistent with this Article 5.
6. Current Board. The Board of Directors of the Corporation initially
consists of three (3) Directors and the designated Class and name and post
office address of each person who serves as such a Director is as follows:
NAME CLASS ADDRESS
Edward M. Tracy A Capital Gaming International, Inc.
Bayport One, Suite 250
8025 Black Horse Pike
W. Atlantic City, NJ 08232
Col. Clinton L. Pagano B Capital Gaming International, Inc.
(retired) Bayport One, Suite 250
8025 Black Horse Pike
W. Atlantic City, NJ 08232
William S. Papazian C Capital Gaming International, Inc.
Bayport One, Suite 250
8025 Black Horse Pike
W. Atlantic City, NJ 08232
7. Limitation of Liability. Pursuant to the provisions of Section
14A:2-7(3) of the New Jersey Business Corporation Act, any director or officer
of the Corporation shall not be personally liable to the Corporation or its
shareholders for damages for breach of any duty owed to the Corporation or its
shareholders, except that this provision shall not relieve a director or officer
of Liability for any breach of duty based upon an act or omission (a) in breach
of such person's duty of loyalty to the Corporation or its shareholders; (b) not
in good faith, or involving a known violation of law; or (c) resulting in
receipt by such person of an improper personal benefit.
8. Indemnification.
---------------
(a) Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is
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involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a director,
officer, employee or agent, or if the Board otherwise determines that any
proceeding involving an officer, director, employee or agent could adversely
affect the Corporation or any License held by it, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the New Jersey
Business Corporation Act, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the New Jersey
Business Corporation Act requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which services were or are rendered by such person while a
director or officer, including, without limitation, service to any employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the
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foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under
paragraph (a) of this Section is not paid in full by the Corporation within
thirty (30) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim, and, if successful, in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the New Jersey Business Corporation Act
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, independent legal counsel,
or its shareholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he or she had met the applicable standard of conduct set forth in the
New Jersey Business Corporation Act, nor an actual determination by the
Corporation (including the Board of Directors, independent legal counsel, or its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to an action, or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
shareholders or disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the New Jersey Business Corporation Act.
9. Divestiture of Shares.
---------------------
(a) Notwithstanding any other provision of this
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Certificate, outstanding shares of Capital Stock or Stock Equivalents shall be
subject to divestiture by the holders thereof in the following instances:
(1) if any Gaming Authority orders, requires or
requests the Corporation or any Beneficial Owner of Capital Stock
or Stock Equivalents to take such action as is necessary for such
Beneficial Owner to divest any or all of such holder's Capital
Stock or Stock Equivalents (a "Divestiture Order"), the
Beneficial Owner or holder, after being provided written notice
of the Gaming Authority's determination, shall immediately
transfer the Capital Stock or Stock Equivalents into a
Liquidating Trust ("Trust") administered by an independent
trustee appointed by the Board of Directors of the Corporation
who shall, under the terms of the Trust, be required to sell or
otherwise transfer within a period of twelve months (or such
shorter time period as may be required by the Divestiture Order)
all of the Capital Stock or Stock Equivalents required to be
divested by the Divestiture Order;
(2) if any Gaming Authority determines that
continued beneficial ownership of the Corporation's Capital Stock
or Stock Equivalents by any Beneficial Owner of such securities
shall or may be grounds for the revocation, termination,
suspension, non-renewal, restriction or withholding of any
License granted to or applied for by the Corporation or any of
its Affiliates, or shall or may be grounds for terminating or
suspending any management, consulting or other material contract
of the Corporation or any of its Affiliates or otherwise limiting
the activities of the Corporation or any of its Affiliates (any
of the above a "License Event"), then the Beneficial Owner or
holder, after having been provided written notice of the
Authority's determination, shall immediately transfer the Capital
Stock or Stock Equivalents into a Trust administered by an
independent trustee appointed by the Board of Directors of the
Corporation who shall, under the terms of the Trust, be required
to sell or otherwise transfer within a period of twelve (12)
months (or such shorter period as may be required by the Gaming
Authority to prevent the occurrence of a License Event) all of
the Capital Stock or Stock Equivalents beneficially owned by such
Beneficial Owner.
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(3) if the Board of Directors, in its sole
discretion, shall determine that the continued beneficial
ownership of any Capital Stock or Stock Equivalents by any
Beneficial Owner thereof shall or may, or, when taken together
with the beneficial ownership of Capital Stock or Stock
Equivalents by any other Beneficial Owner thereof shall or may,
result in a License Event, then the Beneficial Owner or holder,
after having been provided written notice of the Board's
determination, shall immediately transfer the Capital Stock or
Stock Equivalents into a Trust administered by an independent
trustee appointed by the Board of Directors of the Corporation
who shall, under the terms of the Trust, be required to sell or
otherwise transfer within a period of twelve (12) months all of
the Capital Stock or Stock Equivalents beneficially owned by such
Beneficial Owner.
(4) If any Gaming Authority determines that the
continued beneficial ownership of the Corporation's Capital Stock
or Stock Equivalents by any Beneficial Owner of said securities
shall require the licensure, certification, approval or
background investigation of such Beneficial Owner, such
Beneficial Holder, after being provided written notice of such
requirement, shall immediately transfer the Capital Stock or
Stock Equivalents into a Trust administered by an independent
trustee appointed by the Board of Directors of the Corporation
who shall, under the terms of the Trust, be required to sell or
otherwise transfer within a period of twelve (12) months (or such
shorter period as may be required by the Gaming Authority to
prevent occurrence of a License Event) following the earlier to
occur of (x) failure of such Beneficial Owner to submit all
required information in connection with such requisite license,
certification, approval or background investigation to the Gaming
Authority and the Corporation within seven (7) days of notice of
such determination being sent to Beneficial Owner and (y) failure
of such Beneficial Holder to receive such requisite licensure,
certification, approval or background investigation clearance
within sixty (60) days following such notice.
(b) The Beneficial Owner's obligation to transfer Capital Stock
and Stock Equivalents to a Trust pursuant to 9(a)(1), (2), (3) or (4) above may
be specifically enforced in any proceeding commenced in any federal or state
court of competent jurisdiction and the Corporation shall be entitled to recover
its attorneys fees and costs incurred in connection with
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such proceeding, as well as any other fees and expenses incurred as a result of
the Beneficial Owner's failure to timely divest. This shall be in addition to
any other rights and remedies which the Corporation may have against such
Beneficial Owner. Failure of the Corporation to provide notice to a Beneficial
Owner after making reasonable efforts to do so shall not preclude the
Corporation from exercising its rights under this Article 9 and shall not be a
defense to any such action by Corporation.
(c) Any Trust established pursuant to Article 9(a)(1,), (2),
(3) or (4) above shall provide that, unless the prior written approval of the
Board of Directors is obtained, which may be granted or denied in their sole
discretion, the Trustee may only sell the Capital Stock or Stock Equivalents in
open market transactions.
(d) Notwithstanding the provisions of Article 9(a)(1), (2),
(3) or (4) above the Corporation may, simultaneously with the sending of
applicable notice to the Beneficial Owner as provided in such sections, as the
case may be, or at any time prior to the complete liquidation of any Trust
established thereunder, give notice of its intent to redeem from the Holders the
Capital Stock or Stock Equivalents (or such remaining portions which are owned
by the Trust) which are owned or held by such Beneficial Holder; and may
thereafter redeem such shares in accordance with subparagraph (e) below.
(e) Whenever the Corporation has the right to acquire shares
of Capital Stock or Stock Equivalents from the holder thereof pursuant to this
Article 9, the price of the shares to be purchased shall be equal to the lesser
of (i) 75% of the Fair Market Value of such shares, or (ii) 75% of the original
purchase price paid for such securities by the relevant shareholder, or such
other purchase price as may be required by pertinent state or Federal law
pursuant to which the purchase is required or made.
(1) If there is no other applicable legal
requirement, any amount payable to the shareholder by the
Corporation will be paid in three equal annual installments
pursuant to the Corporation's unsecured promissory note with
interest equal to the prime rate, as published from
time-to-time in the Wall Street Journal. The Note shall
provide the Corporation with the right to prepay same without
premium or penalty. The purchase price of such Capital Stock
or Stock Equivalents may be paid in cash, Redemption
Securities or any combination thereof.
(2) If less than all the redeemable shares held
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by such shareholders are to be redeemed, the shares to be
redeemed shall be selected in such manner as shall be
determined by the Board of Directors, which may include
selection first of the most recently purchased shares thereof,
selection by lot, or selection in any other manner determined
by the Board of Directors.
(f) If the Corporation or a subsidiary owns a riverboat gaming
vessel and determines that one or more persons who are not citizens of the
United States as determined under the Shipping Act of 1916, as amended, or the
Merchant Marine Act of 1936, as amended ("Foreign Citizens"), own more than 25%
of the Corporation's outstanding Capital Stock, the Corporation may require the
Foreign Citizen(s) who most recently acquired the shares that bring total
Foreign Citizen ownership to more than 25% of the outstanding Capital Stock
("Excess Shares") to divest the Excess Shares to persons who are United States
citizens. If the Foreign Citizen(s) so directed fail to divest all of the Excess
Shares to United States citizens within 30 days after the date on which the
Corporation gives written notice to the Foreign Citizen(s) to divest the Excess
Shares, the Corporation shall also have the right to conduct a Regulatory
Redemption with regard to the shares that the Foreign Citizen failed to divest
as required by the Corporation's notice.
(g) When any Divestiture Order becomes final and non-appealable,
or whenever there is a Gaming Authority or Board determination pursuant to this
Article 9(2) or (4), or when the Corporation tenders the first installment of
consideration for which it may acquire Capital Stock or Stock Equivalents as
described in this Article 9, whichever occurs first, the Capital Stock or Stock
Equivalents in question shall no longer be entitled to any voting, dividend or
other rights, if any, until such time as they have been appropriately placed in
a Trust (in which case the Trustee will have the exclusive right to vote such
securities) or divested, whereupon all such rights shall be restored
respectively from the date of the divestiture.
(h) The foregoing provisions of this Article 9 relating to
required divestiture and permitted redemption by the Corporation of Capital
Stock and Stock Equivalents in certain instances, are in addition to, and not in
replacement of, any applicable legal requirements.
(i) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
66 2/3% of the voting power of all of the shares of the Corporation entitled to
vote for the election of Directors shall be required to amend, repeal or adopt
any provision inconsistent with this Article 9.
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(j) The Board of Directors shall have the authority to direct
the Corporation's transfer agent to transfer Capital Stock or Stock Equivalent
consistent with this Article 9 regardless of the consent or acquiescence of the
Beneficial Owner or Holder.
(k) Definitions. Capitalized terms used in this Article 9 shall
have the meanings provided below.
"Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 under the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Act") .
The term "registrant" as used in said Rule 12b-2 shall mean the
Corporation.
"Beneficial Owner" shall mean any Person who, singly
or together with any of such Person's Affiliates, directly or
indirectly, has "beneficial ownership" of Capital Stock (as
determined pursuant to Rule 13d-3 of the Securities Exchange Act
of 1934, as amended).
"Fair Market Value" of a share of Capital Stock or
Stock Equivalent shall mean the average Closing Price for such a
security over the five (5) most recent days during which
securities of such class or series shall have been traded
preceding the day on which notice of redemption shall have been
given pursuant to Section (a) of Article 9; provided, however,
that if securities of such class or series are not traded on any
securities exchange or in the over-the-counter market, "Fair
Market Value" shall be determined by the Board of Directors in
good faith. "Closing Price" on any day means the reported
closing sales price or, in case no such sale takes place, the
reported closing bid price on the principal United States
Securities Exchange registered under the Act on which such
security is listed, or, if such security is not listed on any
such exchange, the highest closing sales price or bid quotation
for such security on the National Association of Securities
Dealers, Inc., Automated Quotation System (including the
National Market System) or any system then in use, or, if no
such prices or quotations are available, the fair market value
on the day in question as determined by the Board of Directors
in good faith.
"Gaming Authority" shall mean any governmental,
quasi-governmental, Tribal, or other private authority or entity
or any officer or official thereof, with the power to regulate
any form of gaming or to interpret or enforce the laws and
regulations applicable to any form of gaming that has
jurisdiction over any entity in which
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the Corporation has a direct or indirect beneficial, legal or
voting interest, whether now or hereafter in existence.
"License" shall mean any license, permit, franchise,
certificate, approval, designation or other authorization from
any Gaming Authority required to own, lease, operate or
otherwise conduct or manage any gaming operation and/or gaming
business or activity being conducted or to be conducted by the
Corporation or any of its Affiliates, whether now or hereafter
in existence.
"Person" shall mean any natural person, corporation,
firm, partnership, association, government, governmental agency,
or any other entity, whether acting in an individual, fiduciary,
or any other capacity.
"Redemption Securities" shall mean any debt or equity
securities of the Corporation, any subsidiary or any other
corporation, or any combination thereof, having such terms and
conditions as shall be approved by the Board of Directors and
which, together with any cash to be paid as part of the
redemption price, in the opinion of any nationally recognized
investment banking firm selected by the Board of Directors
(which may be a firm which provides other investment banking,
brokerage or other services to the Corporation), has a value, at
the time notice of redemption is given pursuant to paragraph
(4), section (a) of Article 9, at least equal to 75% of the Fair
Market Value of the shares to be redeemed pursuant to Section
(a) of Article 9 (assuming, in the case of Redemption Securities
to be publicly traded, such Redemption Securities were fully
distributed and subject only to normal trading activity).
"Stock Equivalents" shall mean any warrants, options,
or any other securities convertible into Capital Stock (whether
or not currently exercisable).
10. NOL Preservation. Solely for the purpose of permitting the
utilization of the net operating loss carryovers, capital loss carryovers and
future deductions (and "Tax Benefits") to which the Corporation (or any other
member of the consolidated group of which the Corporation is common parent for
federal income tax purposes) is or may be entitled pursuant to the Code (as
defined below), the following restrictions shall apply during the Restriction
Period (as such term is defined below) unless
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such restrictions have been waived in accordance with Subparagraph (f) below.
(a) Certain Definitions.
(i) The term "Five Percent Holder" means any person or entity
that owns, or that is treated as owning after application
of the constructive stock ownership rules of Section
382(1)(3) of the Code, five (5) percent or more of the
Common Stock immediately following the Effective Date of
the Plan.
(ii) The term "Non-Five Percent Holder" means any person that
not a Five Percent Holder.
(iii) The term "the Code" means the Internal Revenue Code of
1986, as amended and the Treasury Regulations (final,
temporary and proposed) issued thereunder.
(iv) The term "Transfer", when applied to any of the Common
Stock, means to issue, sell, transfer, pledge, encumber,
grant an option with respect to, or otherwise dispose of
an interest in such stock, but only if such transaction
would result in a change in the ownership of such stock
after application of the constructive stock ownership
rules of Section 382(1)(3) of the Code.
(v) The term "Tax Advisor" means the person or person
appointed by the Board of Directors to exercise the
powers set forth in Section 7 below.
(vi) The term "Restriction Period" means that time period
beginning on the Effective Date and ending on the date
determined under Subparagraph (f) of this Section 10.
(vii) The term "Acquire", when applied to any of the Common
Stock, means to purchase or otherwise acquire such stock.
The term "Acquire" includes any acquisition of an
interest in stock, including acquisition of an option to
acquire stock, if such acquisition would result in a
change in the ownership of such stock after application
of the constructive stock ownership rules of Section
382(1)(3) of the Code.
(viii)The term "person" includes both entities and natural
persons.
(b) Restrictions Imposed Generally on Five Percent Holders
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(i) During the Restriction Period each Five Percent Holder
may Transfer up to but not in excess of five (5%) percent
of such holder's Initial Allotment (hereinafter, such
Holder's "Unrestricted Shares") without the consent of
the Corporation's Tax Advisor. Any proposed Transfer by a
Five Percent Holder during the Restriction Period of
shares other than, or in excess of, its Unrestricted
Shares must be approved by the Corporation's Tax Advisor.
(ii) If any Five Percent Holder reduces its ownership of
Common Stock at any time during the Restriction Period to
an amount that is less than its Initial Allotment, such
holder shall not be permitted thereafter to Acquire any
additional shares of Common Stock during the Restriction
Period.
(c) Stock Escrow. In order to insure compliance with the trading
restrictions imposed on Five Percent Holders, unless otherwise waived by the
Corporation, all stock certificates representing shares of Common Stock issuable
to any Five Percent Holder in excess of such holder's Unrestricted Shares shall
be held in escrow by the Corporation during the Restriction Period, unless
released earlier in connection with an assignment of trading rights (as provided
in Subparagraph (d) below) or to permit the settlement of a proposed Transfer
approved by the Corporation's Tax Advisor. Each Five Percent Holder (or its
nominee or depositary, if applicable), shall be deemed to be the record owner
of, and shall be entitled to vote, all shares represented by stock certificates
held in escrow by the Corporation pursuant to this Subparagraph (c).
(d) Assignment of Trading Rights. At any time during the
Restriction Period, any Five Percent Holder may assign to any other Five Percent
Holder the right to Transfer an amount of shares of Common Stock equal to or
less than the assignor's Unrestricted Shares that have not, as of the date of
the assignment, been Transferred. In the event of such an assignment, the
assignor's and assignee's remaining shares will be appropriately reclassified as
restricted and unrestricted to reflect that assignment.
(e) Consent of the Corporation's Tax Advisor. The Board of
Directors shall appoint a person or persons to serve as Tax Advisor. The Tax
Advisor shall be responsible for considering requests for the Transfer of stock
by Five Percent Holders in excess of their Unrestricted Shares, as provided in
this Subparagraph (e). The Corporation shall indemnify the Tax Advisor against
any liability to any person for any action taken in the exercise of its
discretion under this Subparagraph (e).
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Neither the Corporation nor any Five Percent Holder shall issue, sell,
Transfer, pledge, encumber, receive a pledge or encumbrance of, grant or Acquire
an option with respect to, or otherwise dispose of or Acquire an interest in any
Common Stock of the Corporation (other than, in the case of a Five Percent
Holder, its Unrestricted Shares) without obtaining a prior determination from
the Tax Advisor as to whether such transaction constitutes a Transfer of such
stock within the meaning of Section (a)(iv) of this Section 10. If the Tax
Advisor determines that such transaction constitutes a Transfer of such stock,
in the case of a proposed transaction by the Corporation, the Tax Advisor shall
notify the Board of Directors of such determination, and in the case of a
proposed transaction by a Five Percent Holder, the restrictions of this Section
10 shall apply.
Upon application (hereinafter, the "Application") by any Five Percent
Holder (hereinafter, the "Applicant") for the Tax Advisor's consent to the
Transfer of any of the Common Stock of the Corporation held by such Five Percent
Holder in excess of such Five Percent Holder's Unrestricted Shares, the Tax
Advisor shall send notice to all Five Percent Holders (including the Applicant)
of the Application (hereinafter a "Notice of Application"). Such Notice of
Application shall specify the number of shares for which the Applicant seeks
approval. Within 10 days of the Notice Effective Date (as hereinafter defined)
of such Notice of Application, any other Five Percent Holder may notify
(hereinafter a "Notification") the Tax Advisor that it requests the right to
Transfer a specified amount of its Initial Allotment, which shall not exceed its
Initial Allotment multiplied by a fraction. The numerator of such fraction shall
be the number of shares specified in the Application and the denominator of such
fraction shall be the Initial Allotment of the Applicant. The Notice of
Application or any amendment thereof shall be deemed effective on the date (the
"Notice of Effective Date") on which the Notice of Application is actually
received by the last Five Percent Holder to receive such Notice of Application
(as evidenced by a signed receipt or comparable documentary evidence of
delivery).
Following the expiration of such 10-day period, the Tax Advisor shall
make a determination as to whether the Transfer of all of the shares specified
in the Application and all Notifications would create an unreasonable risk of
loss of, or material limitation on, the Corporation's use of its net operating
loss carryforwards. Such determination shall be made in the Tax Advisor's sole
discretion after reviewing all information available to it, including, but not
limited to all Form 13-d's filed with the Securities and Exchange Commission. If
the Tax Advisor determines that the Transfer of all such
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shares would not create an unreasonable risk of loss of, or material limitation
on the Corporation's use of its net operating loss carryforwards, it shall
notify the Applicant and all other Five Percent Holders of its consent to such
Transfers (hereinafter a "Notice of Final Consent"). If the Tax Advisor
determines that it cannot consent to all proposed Transfers, it shall determine
the maximum number of shares the Transfer of which it can approve (hereinafter,
the "Maximum Amount") without creating an unreasonable risk of loss of, or
material limitation on, the Corporation's use of its net operating loss
carryforwards. The Maximum Amount shall be allocated among the Applicant and the
other Five Percent Holders that submitted Notifications to the Tax Advisor in
accordance with this Subparagraph (e), if any, as follows. The Applicant shall
be permitted to sell that portion of the Maximum Amount equal to the ratio that
the number of shares specified in the Application bears to the sum of the number
of shares specified in such Application and all of the Notifications submitted
to the Tax Advisor in accordance with this Subparagraph (e), if any. Each other
Five Percent Holder that submitted a Notification submitted to the Tax Advisor
in accordance with this Subparagraph (e), if any, shall be permitted to sell
that portion of the Maximum Amount equal to the ratio that the number of shares
specified in such Notification bears to the sum described in the preceding
sentence. The Tax Advisor shall send Notice of Final Consent to the Applicant
and such other Five Percent Holder or Five Percent Holders, if any, of the
number of shares that each may sell based on the foregoing calculations, which
notice shall constitute final consent to the Transfer of such shares.
The Transfer of any shares of stock pursuant to a Notice of Final
Consent shall be completed, (i) in the case of a Five Percent Holder that has
submitted a Notification not later than the later of (a) 35 days after the
Notice Effective Date of the relevant Notice of Final Consent and (b) 45 days
after the Notice Effective Date of the relevant Notice of application and (ii)
in the case of the Applicant, not later than 35 days after the Notice Effective
Date of the relevant Notice of Final Consent. Each Five Percent Holder that
Transfer shares pursuant to a Notice of Final Consent shall give notice to the
Tax Advisor that such Transfer has been completed within 5 days after the
Transfer has been completed. If any such Transfer has not been completed by the
end of the relevant time period (as determined under the first sentence of this
paragraph), final consent shall be deemed to have been withdrawn as to such
Transfer. If a Five Percent Holder that submitted a Notification does not
complete such a Transfer by the end of the relevant time period, the Tax Advisor
shall consent to the Transfer by the Applicant of a number of shares (in
addition to the number of shares to be Transferred by the Applicant pursuant to
the relevant Notice of final Consent)
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equal to the number of shares the Transfer of which was not completed. In no
event, however, shall the Tax Advisor consent to the Transfer by the Applicant
of a number of shares that, in the aggregate, exceeds the number of shares
specified in the Application. The Tax Advisor shall notify the Applicant and all
other Five Percent Holders that it has consented to the Transfer of such
additional shares (hereinafter, an "Amended Notice of Final Consent"). The
Applicant shall complete the Transfer of such additional shares within 10 days
after the Notice Effective Date of the Amended Notice of Final Consent, and if
it does not do so, consent to the Transfer of such additional shares shall be
deemed to be withdrawn.
The Tax Advisor shall use its best efforts to take all actions
required under this Subparagraph (e) as promptly as practicable.
(f) Restriction Period. Except as otherwise provided in this
Subparagraph (f), the Restriction Period shall end on the date that is two years
after the Effective Date.
If the Corporation determines either that (A) the Plan does not
qualify under Section 382(1)(5) of the Code (the "Bankruptcy Exception") or (B)
chooses to make an election under Section 382(1)(5)(H) of the Code not to have
the Bankruptcy Exception apply to the Plan, then the Restriction Period shall
end immediately upon notification thereof by the Gatekeeper to all 5% Holders.
If at any time the Board of Directors in its reasonable business
judgment determines that either (A) the restrictions are not longer necessary to
avoid a loss of the Corporation's net operating loss carryforwards, or (B)
significant net operating loss carryforwards are no longer available to, or
reasonably usable by, the Corporation for any reason, including through passage
of time, usage, restriction or disallowance, the Board of Directors shall
declare the Restriction Period terminated. If at any time the Board of Directors
in its reasonable business judgment unanimously determines that preservation of
the net operating loss carry forwards is no longer in the best interests of the
Corporation and its stockholders, the Board of Directors may declare the
Restriction Period terminated.
The Board of Directors may, in its sole discretion, determine that the
Restriction Period is to extend beyond the date that is two years after the
Effective Date, if the Board determines that such extension of the Restriction
Period would be in the best interests of the Corporation and its stockholders.
In no event, however, will the Restriction Period end later than the date that
is three years after the Effective Date.
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(g) Consequences of Prohibited Transfer
(i) Unless a Transfer is permitted under this Section 10 or approved
by the Tax Advisor, any attempted Transfer of Common Stock in excess of the
Common Stock that could be Transferred to the transferee without restriction
under Section 10 shall not be effective to Transfer ownership of such Common
Stock (the "Prohibited Shares") to the purported acquirer thereof, who shall not
be entitled to any rights as a stockholder of the Corporation with respect to
such Prohibited Shares (including, without limitation, the right to vote or to
receive dividends with respect thereto).
(ii) Upon a determination by the Corporation that there has been or is
threatened a purported Transfer of Prohibited shares, the Corporation may take
such action in addition to any action as it deems advisable to give effect to
the provisions of Section 10, including, without limitation, refusing to give
effect on the books of the Corporation to such purported Transfer or instituting
proceedings to enjoin such purported Transfer.
(iii) The Corporation may require as a condition to the registration
of the Transfer of any shares of its Common Stock that the proposed transferee
furnish to the Corporation all information reasonably requested by the
Corporation and reasonably available to the proposed transferee and its
affiliates with respect to the direct or indirect ownership interests of the
proposed transferee (and of persons to whom ownership interests of the proposed
transferee would be attributed for purposes of Section 382 of the Code) in
Common Stock.
(iv) All certificates evidencing ownership of shares of Common Stock
that are subject to the restrictions on Transfer contained in this Section 10
shall bear a conspicuous legend referencing the restrictions set forth in this
Section 10 substantially as follows:
"TRANSFER OF THE COMMON STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS PURSUANT TO
SECTION 10 OF THE AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION OF CAPITAL GAMING INTERNATIONAL,
INC., AND HOLDERS ARE REFERRED TO SUCH AMENDED AND
RESTATED CERTIFICATE FOR A FULL AND COMPLETE
UNDERSTANDING THEREOF."
In addition, the certificate issued to each person which will, pursuant
to the distributions under the Plan, beneficially own (within the meaning of
Rule 13d-3 under the 1934 Act as in
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effect on the date hereof) 10 percent or more of the total Common Stock will
bear a conspicuous legend substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND WERE ISSUED PURSUANT TO
AN EXEMPTION PROVIDED BY 11 U.S.C. 1145 UNDER AN
ORDER CONFIRMING THE PLAN OF REORGANIZATION IN THE
CASE ENTITLED IN RE CAPITAL GAMING INTERNATIONAL,
INC., CASE NO. 96 19829 (JHW), IN THE UNITED
STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW
JERSEY. TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS SET
FORTH IN THE REGISTRATION RIGHTS AGREEMENT BETWEEN
CAPITAL GAMING INTERNATIONAL, INC. AND CERTAIN
OTHER PERSONS, AND HOLDERS ARE REFERRED TO SUCH
AGREEMENT FOR A FULL AND COMPLETE UNDERSTANDING
THEREOF."
(v) The Board of Directors shall have the authority to take such other
action to the extent permitted by law as it deems necessary or advisable to
protect the Corporation and the interests of the holders of its securities in
preserving the Tax Benefits, provided that no such action prevents a Transfer
which would otherwise be permitted under this Section 10, and that prior to
taking any such other action, the Board of Directors shall consider the benefits
and detriments of such action to the stockholders of the Corporation as a whole.
(vi) The Corporation and the Board of Directors shall be fully
protected in relying in good faith upon the information, opinions, reports or
statements of the chief executive officer, the chief financial officer, or the
chief accounting officer of the Corporation or of the Corporation's legal
counsel, independent auditors, transfer agent, investment bankers and other
employees and agents in making the determinations and findings contemplated by
this Section 10 to the fullest extent permitted by law. Any determination by the
Board of Directors pursuant to this Section 10 shall be conclusive.
(vii) If any provision of this Section 10 or any application of such
provision is determined to be invalid by any federal or state court having
jurisdiction over the issue, the validity of the remaining provision shall not
be affected and other applications of such provision shall be affected only to
the extent necessary to comply with the determination of such court.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officer, this _____ day of _________________,
1997.
CAPITAL GAMING INTERNATIONAL, INC.
By:_______________________________
Edward M. Tracy
President and Chief Executive Officer
c:\restated.cer
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CAPITAL GAMING INTERNATIONAL, INC.
Exhibit "C" To Plan Of Reorganization
Post-Confirmation Employee Stock Incentive Plan
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CAPITAL GAMING INTERNATIONAL, INC.
1997 STOCK OPTION PLAN
1. Purpose. The purpose of the 1997 Stock Option Plan of Capital
Gaming International, Inc. is to provide incentive to employees, including
officers, directors and consultants of the Company or any Subsidiary, as defined
below, to encourage such individuals' proprietary interest in the Company or any
Subsidiary, to encourage such individuals to remain in the employ of the Company
or any Subsidiary, and to attract to the Company or any Subsidiary individuals
of experience and ability.
2. Definitions.
(a) "Advisory Committee" shall have the same meaning as such term
has in the Company's plan of reorganization, as confirmed by
order of the United States Bankruptcy Court for the District
of New Jersey on or about March __, 1997.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Committee" shall means the full Board, the Compensation
Committee of the Board or such other committee appointed by
the Board to administer the Plan in accordance with Section 4
of the Plan.
(e) "Common Stock" shall mean the Common Stock of the Company, no
par value per share.
(f) "Company" shall mean Capital Gaming International, Inc., a
New Jersey corporation.
(g) "Disability" shall mean the condition of an Employee who is
unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or which
lasted or can be expected to last for a continuous period of
not less than twelve (12) months, all within the meaning of
Section 22(e)(3) of the Code.
(h) "Employee" shall mean any individual (including an officer or
a director) who is an employee of the
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Company or any Subsidiary (within the meaning of Section 422
of the Code and the regulations thereunder).
(i) "Exchange Act" means the Securities Exchange Act of 1934.
(j) "Exercise Price" shall mean the exercise price set for an
Option described in Section 7(c).
(k) "Fair Market Value" on a given date means (i) if the Share is
listed on a national securities exchange, the mean between
the highest and lowest sale prices reported as having
occurred on the primary exchange with which the Share is
listed and traded on the date prior to such date, or, if
there is no such sale on that date, then on the last
preceding date on which such a sale was reported; (ii) if the
Share is not listed on any national securities exchange but
is quoted in the National Market System of the National
Association of Securities Dealers Automated Quotation System
on a last sale basis, the average between the high bid price
and low ask price reported on the date prior to such date,
or, if there is no such sale on that date, then on the last
preceding date on which a sale was reported; or (iii) if the
Share is not listed on a national securities exchange nor
quoted in the National Market System of the National
Association of Securities Dealers Automated Quotation System
on a last sale basis, the amount determined by the Committee
to be the fair market value based upon a good faith attempt
to value the Share accurately.
(l) "Incentive Stock Option" shall mean an Option described in
the Code Section 422.
(m) "Nonqualified Option" shall mean an Option which is not an
Incentive Stock Option.
(n) "Non-Vested Option" shall mean any Option which is not
currently exercisable under the provisions of an Option
Agreement.
(o) "Option" shall mean either an Incentive Stock Option or
Nonqualified Stock Option granted pursuant to the Plan.
(p) "Optionee" shall mean a person to whom an Option
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has been granted.
(q) "Option Agreement" shall mean any agreement pursuant to which
an Option is granted hereunder.
(r) "Senior Executive" shall mean an Employee who is the Chief
Executive Officer, President, an Executive Vice-President or
a Senior Vice-President of the Company.
(s) "Subsidiary" means any corporation 50% or more of whose stock
having general voting powers is owned by the Company, or by
another Subsidiary, as herein defined, of the Company.
(t) "Plan" shall mean the Capital Gaming International, Inc. 1997
Stock Option Plan.
(u) "Purchase Price" shall mean the Exercise Price times the
number of whole Shares with respect to which an Option is
exercised.
(v) "Share" shall mean one share of Common Stock.
(w) "Ten Percent Shareholder" shall mean any Employee who, at the
time of the grant of an Option, owns (or is deemed to own,
under Sections 422(b)(6) and 424 (d) of the Code) more than
ten percent of the total combined voting power of all classes
of outstanding stock of the Company or any Subsidiary.
(x) "Vested Option" shall mean any Option which is currently
exercisable under the provisions of an Option Agreement.
3. Effective Date. This Plan is conditioned upon its approval by the
shareholders of the Company on or before ______________ __, 1997 by the vote of
the holders of a majority of the stock of the Company voting at such meeting in
person or by proxy; except that this Plan is adopted and approved by the Board
of Directors effective ________________ __, 1997 to permit the grant of Options
prior to the approval of the Plan by shareholders of the Company as aforesaid.
In the event the Plan is not approved by shareholders of the Company as
aforesaid, this Plan and any Options granted hereunder shall be void and of no
force and effect. Approval of the Plan of Reorganization by the Bankruptcy Court
and any creditors of the Company who are entitled to vote with respect thereto
pursuant to the applicable provisions of the Bankruptcy Code shall be deemed to
constitute
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shareholder approval for purposes of this Section 3.
4. Administration. The Plan shall be administered by the Board or a
Committee appointed by the Board consisting of not less than two members, each
member of which, at the time he takes any action with respect to an Option under
the Plan, shall be a "non-employee director," as defined in Rule 16b-3 under the
Exchange Act or any successor rule or regulation. The Board may from time to
time remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. The Board or Committee
shall from time to time at its discretion determine who shall be granted
Options, the number of Shares to be optioned to each, the designation of such
Options as Incentive Stock Options or Nonqualified Options, and the Exercise
Price thereof. All such determinations and the interpretation and construction
by the Board or the Committee of any provisions of the Plan or of any Option
granted thereunder shall be binding and conclusive on all Optionees and their
legal representatives and beneficiaries.
A majority of the members shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, and
any acts approved in writing by all of the members without a meeting, shall be
the acts of the Committee.
5. Eligibility. Any Employee may be granted Incentive Stock Options
under the Plan and any Employee or officer, director, consultant of, or other
person rendering services to, the Company or any Subsidiary may be granted
Nonqualified Options under the Plan if, in each instance, the Board or Committee
determines that such person performs services of special importance to the
management, operation and development of the business of the Company or any
Subsidiary.
6. Stock. The stock subject to Options granted under the Plan shall be
Shares of authorized but unissued or reacquired Common Stock. The aggregate
number of Shares which may be issued under Options exercised under this Plan
shall not exceed Two Hundred Thousand (200,000); provided, however, with respect
to any Option granted to any Employee who was employed by the Company prior to
the effective date of the Company's Plan of Reorganization in the Company's
chapter 11 case, Case Number 96-19829 ("Plan of Reorganization"), no more than
100,000 of the Shares authorized hereunder may be to subject to Options awarded
under the Plan and with respect to any other Employee of the Company, the
remaining 100,000 Shares authorized hereunder may be subject to Options awarded
under the Plan. The number of Shares subject to Options outstanding under the
Plan at any time may not exceed the number of Shares remaining available for
issuance
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under the Plan. In the event that any Option outstanding under the Plan expires
for any reason or is terminated, the Shares allocable to the unexercised portion
of such Option shall again be available for the grant of Options under the Plan.
The limitations established by this Section 6 shall be subject to
adjustment upon the occurrence of the events specified and in the manner
provided in Section 9 hereof.
7. Terms and Conditions of Options. Options granted pursuant to the
Plan shall be evidenced by Option Agreements in such form as the Board or the
Committee shall from time to time determine, which agreements shall comply with
and be subject to the following terms and conditions:
(a) Date of Grant. Each Option shall specify its Effective Date
(the "date of grant"), which shall be the date specified by
the Board or Committee in its action relating to the grant of
the Option, but which date shall not be earlier than the date
of the determination by the Board or Committee to grant such
Option nor more than ten days after such date.
(b) Number of Shares. Each Option shall state the number of
Shares to which it pertains and shall provide for the
adjustment thereof in accordance with the provisions of
Section 9 hereof.
(c) Exercise Price. Each Option shall state the Exercise Price,
which Exercise Price shall be $1.75 or such lesser amount
approved by the Advisory Committee. The Exercise Price of an
Option shall be subject to adjustment in accordance with
Section 9 hereof.
(d) Exercise of Options and Medium and Time of Payment. Except
for Senior Executives, to exercise an Option, the Optionee
shall give written notice to the Company specifying the
number of Shares to be purchased and accompanied by payment
in cash or by certified check of the full Purchase Price
therefor and the amount of any withholding tax obligation of
the Company or any Subsidiary as described in Section 14(a)
hereof. No Share shall be issued until full payment therefor
has been made.
Senior Executives may pay the aggregate Purchase Price for
the purchased shares in one or more of
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the following alternative forms: (A) full payment, in cash or
by check payable to the Company's order, in the amount of the
Purchase Price for the Option Shares being purchased; (B)
full payment in the shares of common stock of the Company
having an aggregate Fair Market Value on the day of exercise
equal to the Purchase Price for the Option Shares being
purchased (provided the such Shares have been held by the
Senior Executive for at least six months); (C) a combination
of shares of common stock of the Company valued at Fair
Market Value on the day of exercise and cash or check payable
to the Company's order, equal in the aggregate to the
Purchase Price for the Option Shares being purchased
(provided the such Shares have been held by the Senior
Executive for at least six months).
(e) Term and Exercise of Options; Nontransferability of Incentive
Stock Options; Transferability of Nonqualified Options.
Subject to Section 10 hereof, Options may be exercised as
determined by the Board or Committee and as stated in the
written agreement evidencing the Option, provided, however,
that (i) no Option granted hereunder can be exercised until
one (1) year after the date of grant; (ii) no Incentive Stock
Option granted to an Employee who is not a Ten Percent
Shareholder shall be exercisable after the expiration of ten
(10) years from its date of grant, and (iii) no Incentive
Stock Option granted to an Employee who is a Ten Percent
Shareholder shall be exercisable after the expiration of five
(5) years from its date of grant. In addition, the aggregate
fair market value (determined at the time an Incentive Stock
Option is granted) of Shares with respect to which Incentive
Stock Options are exercisable for the first time by the same
Optionee during any calendar year (under this Plan and all
other plans maintained by the Company or any Subsidiary)
shall not exceed $100,000. During the lifetime of the
Optionee, the Incentive Stock Option shall be exercisable
only by the Optionee and shall not be assignable or
transferable. In the event of the Optionee's death, no
Incentive Stock Option shall be transferable by the Optionee
otherwise than by will or by the laws of descent and
distribution. All Nonqualified Options granted pursuant to
the Plan are transferable subject to compliance with the
Securities Act of 1933, as amended, and any
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applicable state securities or Blue Sky Laws. Upon surrender
of a Nonqualified Option to the Company or to the office of
its stock transfer agent, if any, with the funds sufficient
to pay any transfer tax, the Company shall, without a charge,
execute and deliver a new Nonqualified Option in the name of
the transferee named in such instrument of assignment and the
Nonqualified Option shall promptly be canceled. The
Nonqualified Option may be divided or combined with other
Nonqualified Options which carry the same rights upon
presentation thereof at the office of the Company or at the
office of its stock transfer agent, if any, together with a
written notice specifying the names and denominations in
which new Nonqualified Options are to be issued and signed by
the Optionee thereof. The term "Option" as used herein
includes any Nonqualified Options into which a Nonqualified
Option may be divided or exchanged.
(f) Termination of Employment.
(i) If an Optionee is a Senior Executive, the following shall
apply:
(a) If the Senior Executive is terminated for cause, (as
defined in such Senior Executive's Employment Agreement),
then all Non-vested Options shall terminate. All Vested
Options which are Incentive Stock Options shall be
exercisable for a period of three (3) months after the
date of termination, and all Vested Options which are
Nonqualified Stock Options shall be exercisable until the
date set forth for their termination in the applicable
Option Agreement.
(b) If the Senior Executive is terminated without cause
or voluntarily resigns or retires, all Options shall vest
immediately to the extent they are not already Vested
Options, and the Senior Executive shall have three (3)
months within which to exercise Incentive Stock Options
and thirty-six (36) months within which to exercise
Nonqualified Options.
(c) In the event of the death or Disability
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of a Senior Executive, all Options shall vest immediately
to the extent they are not already Vested Options. All
Options which are Incentive Stock Options must be
exercised within twelve (12) months of the date of death
or Disability and all Non-Incentive Options must be
exercised within thirty-six (36) months of the date of
death or Disability.
(ii) For all employees and consultants other than Senior
Executives, the following shall apply:
(A) If the employee/consultant is terminated for cause
(as determined in good faith by the Committee), then all
Non-Vested Options shall terminate. The Committee may, in
its discretion, terminate Vested Options or permit their
exercise within three (3) months of the date of
termination.
(B) If the employee/consultant is terminated without
cause or voluntarily resigns or retires, such termination
shall have no effect on all Nonqualified Options, which
shall continue to vest and be exercisable as set forth in
the Option Agreement. All Incentive Stock Options which
are Vested Options may be exercised for a period of three
(3) months of the day of termination. All Non-Vested
Options shall automatically terminate.
(C) In the event of death or Disability, all Options
which are Vested Incentive Stock Options must be
exercised within twelve (12) months of the date of death
or Disability and all Vested Non-Incentive Options must
be exercised within thirty-six (36) months of the date of
death or Disability. All Non-Vested Options shall
terminate.
(iii) For the purposes of (i) and (ii) above, the employment
relationship will be treated as continuing intact while
the Optionee is on military leave, sick leave or other
bona fide leave of absence (to be determined in the sole
discretion of the Board and, in the case of an Optionee
who has received an Incentive Stock Option, only to the
extent permitted under Section
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422 of the Code and the regulations promulgated thereunder).
Moreover, in the case of an Optionee who has been granted an
Incentive Stock Option, employment shall, in no event, be
deemed to continue beyond the ninetieth (90th) day after the
Optionee ceased active employment, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.
(g) Rights as a Shareholder. An Optionee or a transferee of a
deceased Optionee shall have no rights as a shareholder with
respect to any Shares covered by his or her Option until the
date of the issuance of a stock certificate for such Shares.
No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property)
or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as
provided in Section 9.
(h) Modification, Extension and Renewal of Options. Subject to
the terms and conditions and within the limitations of the
Plan, the Board or Committee may modify, extend or renew
outstanding Options granted under the Plan, or accept the
cancellation of outstanding Options (to the extent not
theretofore exercised) for the granting of new Options in
substitution therefor. Notwithstanding the foregoing,
however, no modification of an Option shall, without the
consent of the Optionee, alter or impair any rights or
obligations under any Option theretofore granted under the
Plan. Moreover, in the case of any modification, extension or
renewal or an Incentive Stock Option, all of the requirements
set forth herein shall apply in the same manner as though a
new Incentive Stock Option had been granted to the Optionee
on the date of such modification, extension or renewal, but
only if such modification, extension or renewal is treated,
under Section 424(h) of the Code, as the granting of a new
Option.
(i) Identification of Option. Each Option granted under the Plan
shall clearly identify its status as an Incentive Stock
Option or Nonqualified Option.
(j) Other Provisions. Except for Senior Executives, the Option
Agreements authorized under the Plan
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shall contain, in addition to those provisions provided in
Section 7(e) hereof, such other provisions not inconsistent with
the terms of the Plan, including, without limitation,
restrictions upon the exercise of any Option, and restrictions
upon the transfer of Shares received upon exercise of Options, as
the Board or Committee shall deem advisable. With respect to
Senior Executives, the Option Agreements shall not impose any
further restrictions, limitations or qualifications on the rights
to exercise the Options set forth herein, but may contain such
other terms which are not inconsistent with the terms of the Plan
as the Board or Committee shall deem advisable.
8. Term of Plan. Options may be granted pursuant to the Plan for up to
ten years from the Effective Date of the Plan.
9. Recapitalization. Subject to any required action by the
shareholders of the Company and the last sentence of subsection 7(h) hereof, the
number of Shares covered by this Plan as provided in Section 6, the number of
Shares covered by each outstanding Option, and the Exercise Price thereof shall
be proportionately adjusted for the increase or decrease in the number of issued
Shares resulting from a subdivision or consolidation of Shares, stock split, or
the payment of a stock dividend.
Subject to any required action by the shareholders of the Company and
the last sentence of Subsection 7(h) hereof, if the Company shall be the
surviving corporation in any merger or consolidation, each outstanding Option
shall pertain and apply to the securities to which a holder of the number of
Shares subject to the Option would have been entitled. A dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not the surviving corporation shall cause each outstanding Option to terminate,
unless the agreement of merger or consolidation shall otherwise provide,
provided that each Optionee shall, in such event, have the right immediately
prior to such dissolution or liquidation, or merger or consolidation in which
the Company is not the surviving corporation to exercise the Option in whole or
in part, subject to limitations on exercisability of Options under Section 7
hereof, to the extent the Option is exercisable without regard to this sentence
at the date of such dissolution, liquidation, merger or consolidation.
In the event of a change in the Common Stock as presently constituted,
which is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par value, the
shares
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resulting from any such change shall be deemed to be Shares of Common
Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board or
Committee, whose determination in that respect shall be final, binding and
conclusive.
Except as hereinbefore expressly provided in this Section 9, the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, stock split, or the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class
or by reason of any dissolution, liquidation, merger, or consolidation or
spin-off of assets or stock of another corporation, and any issue by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of Shares subject to the Option.
The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
10. Securities Law Requirements. No Shares shall be issued upon the
exercise of any Option unless and until the Company has determined that: (i) it
and the Optionee have taken all actions required to register the Shares under
the Securities Act of 1933 or perfect an exemption from the registration
requirements thereof (including the furnishing by the Optionee of an appropriate
investment letter); (ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed has been satisfied; and (iii) any
other applicable provision of state or Federal law has been satisfied.
11. Amendment of the Plan. The Board or Committee may, insofar as
permitted by law, from time to time, with respect to any Shares at the time not
subject to Options, suspend or discontinue the Plan or revise or amend it in any
respect whatsoever except that the term of the Plan shall not be extended and,
without approval of the shareholders of the Company if the Board or Committee
determines that such approval is necessary to comply with any requirement of law
or rule of any stock exchange on which the Company's equity securities are
traded. With the express written consent of individual Option holders, the Board
or Committee may cancel or reduce or otherwise alter outstanding
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Options.
12. Application of Funds. The proceeds received by the Company from
the sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes.
13. No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
14. Withholding.
(a) Nonqualified Options. Whenever Shares are to be delivered
upon exercise of a Nonqualified Option, the Company shall
be entitled to require as a condition of delivery that
the Optionee remit to the Company an amount sufficient to
satisfy the Company's federal, state and local
withholding tax obligations with respect to the exercise
of the Option.
(b) Incentive Stock Options. The acceptance of Shares upon
exercise of an Incentive Stock Option shall constitute an
agreement by the Optionee (unless and until the Company
shall notify the Optionee that it is relieved, in whole
or in part, of its obligations under this Section 14(b))
(i) to notify the Company if any or all of such Shares
are disposed of by the Optionee within two years from the
date the Option was granted or within one year from the
date the Shares were transferred to the Optionee pursuant
to his exercise of the Option, and (ii) to remit to the
Company, at the time of and in the case of any such
disposition, an amount sufficient to satisfy the Company
's federal, state and local withholding tax obligations
with respect to such disposition, whether or not, as to
both (i) and (ii), the Optionee is in the employ of the
Company or any Subsidiary at the time of such
disposition.
15. S-8 Registration. The Options authorized by this Plan and the
shares of Common Stock underlying all Options authorized by this Plan shall be
registered with the Securities and Exchange Commission under the Act on Form
S-8. The Company shall file such Form S-8 with the Securities and Exchange
Commission within one (1) year of the Effective Date of this Plan and shall pay
all costs and expenses in connection with the same.
16. Governing Law. The Plan shall be governed by the laws
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of the State of New Jersey.
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CAPITAL GAMING INTERNATIONAL, INC.
Exhibit "D" To Plan Of Reorganization
Schedule of Assumed Executory Contracts
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Schedule of Assumed Executory Contracts
-----------------------------------------
United States Realty & Investment Co. Lease on nonresidential real property
Muckleshoot Indian Tribe Gaming management agreement with
Capital Gaming Management, Inc.
acting as manager for the Muckleshoot
Indian Tribe
Cory H. Morowitz Employment contract
Edward M. Tracy Employment contract (as modified)
Col. Clinton L. Pagano Employment contract (as modified)
William S. Papazian, Esq. Employment contract (as modified)
Joel H. Sterns, Esq. Consulting agreement
Michael W. Barozzi Consulting agreement
Pitney Bowes Lease for postage equipment
Mossman's Business Machines, Inc. Lease for photocopying and facsimile
equipment
Advanced Business Machines Lease for office equipment
Lewan & Associates, Inc. Lease for facsimile equipment
Lackland Storage Lease for storage space
Capital Gaming Management, Inc. Management services agreement
Bernstein, Simpson, Gilbert & Morowitz Accounting services agreement
Alco Capital Resource, Inc. Lease for facsimile equipment
Ikon Office Solutions Facsimile equipment maintenance
agreement
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TO BUSINESS EDITOR:
Capital Gaming International, Inc. Reports Successful
Completion of Financial Restructuring: Election
of Chairman
ATLANTIC CITY, N.J., March 20 /PRNewswire/ -- Capital Gaming
International, Inc. (OTC Bulletin Board: GDFI) (The "Company") reported today
that its Plan of Reorganization was confirmed by the Federal Court for the
District of New Jersey on March 19, 1997. The Company's financial restructuring
consisted of the issuance by the Company of a combination of equity and debt
securities in exchange for approximately $104.6 million in Senior Secured Notes,
as well as all of the Company's remaining unsecured debt. As a result, the
Company has issued new debt securities consisting of $23.1 million in Senior
Secured Notes due 2001. The Company also announced the election of Edward M.
Tracy, President and CEO, to the position of Chairman of the Board of Directors.
Colonel Clinton L. Pagano, Executive Vice President of Compliance and William S.
Papazian, Senior Vice President and General Counsel, were also elected to the
Board of Directors.
Mr. Tracy stated: "We are pleased with the success of our
financial restructuring and to have completed this process as expeditiously as
we anticipated. The Company will continue to aggressively pursue new development
projects."
Based in Atlantic City, New Jersey, Capital Gaming
International, Inc. is a multi-jurisdictional casino management and development
company with interests in the Native American gaming markets.
SOURCE Capital Gaming International, Inc. 03/20/97
CONTACT: Edward M. Tracy, Chairman, President and Chief Executive Officer of
Capital Gaming International, 609-383-3333/ (GDFI)
<PAGE>
Part I, Item 1
CAPITAL GAMING INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
September 30, June 30
1996 1996
------------- ----------
[Unaudited]
CURRENT ASSETS:
Cash and Cash Equivalents $ 3,145 $ 2,102
Cash Held in Escrow 1,437 500
Interest Receivable 42 616
Native American Management Fees and
Expenses Receivable 794 667
Current Portion - Native American Loan
Receivable 3,748 3,696
Notes Receivable -- 35,000
Prepaid Expenses and Other Current Assets 189 206
------------- -------------
TOTAL CURRENT ASSETS 9,355 42,787
------------- -------------
FURNITURE, FIXTURES AND EQUIPMENT, net 117 127
OTHER ASSETS:
Native American Loan Receivable 6,474 7,630
Investments in Native American Management
Agreements, net 2,461 2,677
Deferred Financing Costs, net 4,573 6,213
Deposits and Other Assets 188 188
Goodwill, net 416 426
------------- -------------
TOTAL OTHER ASSETS 14,112 17,134
------------- -------------
TOTAL ASSETS $ 23,585 $ 60,048
============= =============
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
1
<PAGE>
Part I, Item 1
CAPITAL GAMING INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
September 30, June 30
1996 1996
------------- ---------
[Unaudited]
CURRENT LIABILITIES:
Accounts Payable and Accrued
Expenses $ 3,011 $ 9,943
Accrued Professional Fees 1,932 1,917
Accrued Interest 27,130 23,277
Equipment Notes Payable - Current
Maturity 892 1,290
Bondholder Consent Fee Note 1,350 1,350
Bank Line of Credit 2,000 2,000
11.5% Senior Secured Notes Payable -
[net of Original Issue Discount of
$2,196 and $2,980] 124,804 124,020
Funds held/paid by Trustee for/to
Senior Secured Noteholders (49,986) (22,489)
Unsecured 11.5% Term Note Payable 19,000 19,000
TOTAL CURRENT LIABILITIES: $ 130,133 $ 160,308
LONG-TERM DEBT: -- --
STOCKHOLDERS' DEFICIT:
Preferred Stock, No Par Value, Authorized
5,000,000 Shares; -- --
Common Stock, No Par Value, Authorized
75,000,000 Shares:
Issued and Outstanding 19,329,574 Shares 37,617 37,617
Additional Paid In Capital 7,877 7,877
Accumulated Deficit (152,042) (145,754)
-------------- --------------
TOTAL STOCKHOLDERS' DEFICIT: (106,548) (100,260)
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT: $ 23,585 $ 60,048
============= =============
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
2
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Part I, Item 1
CAPITAL GAMING INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
(In thousands)
Three months ended
September 30,
1996 1995
------------ -------------
REVENUE
Native American Casino Management
Fees $ 2,137 $ 2,718
COSTS AND EXPENSES
Salaries, Wages and Related Costs 473 756
Gaming Development Costs 296 650
Professional Fees 439 693
General and Administrative 488 469
Depreciation and Amortization 235 175
Write-off of Deferred Charges -- 64
Reorganization Costs 243 --
------------- -------------
Total Costs and Expenses 2,174 2,807
------------- -------------
Loss From Continuing Operations
before Other Income/[Expense] (37) (89)
Other Income [Expense]:
Interest Income 168 515
Interest Expense (4,306) (4,775)
Gain From Sale of Development Agreement -- 221
Sale of Management Contract -- 3,000
------------- -------------
Total Other Income [Expense], net (4,138) (1,039)
-------------- --------------
Loss From Continuing Operations Before
Income Tax (4,175) (1,128)
Provision for State Income Taxes (115) --
-------------- -------------
Loss From Continuing Operations (4,290) (1,128)
Discontinued Operations:
Loss from Operations of Discontinued
Business and Other Reorganization
Items -- (1,600)
------------- --------------
Net Loss Before Extraordinary Item $ (4,290) $ (2,728)
Extraordinary Item - Loss From Early
Extinguishment of Debt (1,998) --
Net Loss (6,288) (2,728)
Earnings Per Share:
Loss From Continuing Operations $ (.22) $ (.06)
Loss From Operations of Discontinued
Business (.00) (.08)
Extraordinary Item (.11) (.00)
-------------- -------------
Net Loss $ (.33) $ (.14)
============== =============
Weighted Average Number of Shares
Outstanding (in thousands) 19,330 19,330
============== =============
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
3
<PAGE>
Part I, Item 1
CAPITAL GAMING INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
[UNAUDITED]
(In thousands)
[CAPTION]
<TABLE>
Common Stock Additional Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance - June 30, 1996 19,330 $ 37,617 $ 7,877 $ (145,754)
Net loss for the three
months ended September 30, 1996 -- -- -- (6,288)
----------- ----------- ----------- ------------
Balance - September 30, 1996 19,330 $ 37,617 $ 7,877 $ (152,042)
=========== =========== =========== ============
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
4
<PAGE>
Part I, Item 1
CAPITAL GAMING INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
(In thousands)
Three months ended
September 30,
1996 1995
-------------- ------------
<CAPTION>
</TABLE>
<TABLE>
<S> <C> <C>
REVENUE
Net Loss from Continuing Operations $ (4,290) $ (1,128)
Adjustments to Reconcile Net Loss to
Net Cash Provided by Continuing Operations:
Depreciation and Amortization 235 174
Write-off of Deferred Charges -- --
Amortization of Deferred Finance Charges
and Original Issue Discount and
Extraordinary Loss From Early
Extinguishment of Debt 426 519
Gain From Sale of Development Agreement -- (221)
Changes in Assets and Liabilities:
[Increase] Decrease in:
Interest Receivable 140 399
Prepaid Expenses and Other Current Assets 18 --
Management Fees and Expenses Receivable (128) 976
Deposits and Other Assets -- 8
Increase [Decrease] in:
Accounts Payable and Accrued Expenses 83 (358)
Accrued Interest Expense 3,852 4,175
------------- -------------
Total Adjustments 4,626 5,736
------------- -------------
Net Cash - Continuing Operations $ 336 $ 4,608
Loss From Discontinued Operations -- (1,600)
Adjustments to Reconcile Loss to Net
Cash Used in Discontinued Operations:
Equity in Losses of River City Joint
Venture -- 831
Change in Net Assets of Discontinued
Operations -- (192)
------------- --------------
Net Cash - Discontinued Operations -- (961)
------------- --------------
Net Cash - Operating Activities $ 336 $ 3,647
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
5
<PAGE>
Part I, Item 1
CAPITAL GAMING INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
(In thousands)
Three months ended
September 30,
1996 1995
------------- --------------
<CAPTION>
</TABLE>
<TABLE>
<S> <C> <C>
INVESTING ACTIVITIES:
Investment in Property, Vessel and Equipment $ -- $ (453)
Advances to Joint Venture -- (630)
Net Transfers from Restricted Cash -- 4,064
Investments in Management Agreements -- (149)
Native American Casino Development Advances -- (1,070)
Repayment of Native American Notes Receivable 1,104 9,660
------------- -------------
Net Cash - Investing Activities $ 1,104 $ 11,422
FINANCING ACTIVITIES:
Funds Held by Trustee -- (14,386)
Reduction in Equipment Notes (397) (428)
Proceeds From Sale of Development Agreement -- 292
------------- -------------
Net Cash - Financing Activities $ (397) $ (14,522)
============== ==============
NET DECREASE IN CASH $ 1,043 $ 547
Cash and Cash Equivalents - Beginning of Periods $ 2,102 $ 1,187
------------- -------------
Cash and Cash Equivalents - End of Periods $ 3,145 $ 1,734
============= =============
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
6
<PAGE>
Part I, Item 1
CAPITAL GAMING INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
Supplemental Disclosures of Cash Flow Information:
- --------------------------------------------------
Three months ended
September 30,
1996 1995
Cash paid during the periods for:
Interest $ 27 $ --
Income Taxes $ -- $ --
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
- -----------------------------------------------------------------------
On July 29, 1996, the Indenture Trustee for the Company's Senior
Secured Noteholders distributed an aggregate of $49,986,000 in cash and
Purchaser's Notes to the Senior Secured Noteholders on account of principal and
accrued interest ("Noteholder Distribution"). The Noteholder Distribution
included $28 million in Purchaser's Notes, as well as cash from the sale of CCCD
to CMC, proceeds from the early payment of the development loan to the
Muckleshoot Tribe, proceeds from the buyout of the Cow Creek contract, $3.2
million in unused restricted cash and other sources. Subsequently, in August
1996 the Purchaser's Notes were redeemed by CMC at 100% of the principal amount
plus accrued interest. The remainder is held by the trustee of the Company's
Senior Secured Noteholders, including cash escrow balances of $413,030 and
$524,017 to secure current and future fees for services of the trustee.
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
7
<PAGE>
CAPITAL GAMING INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
[A] BASIS OF PRESENTATION
Capital Gaming International, Inc. (the "Company"), together with its
subsidiaries, is a multi-jurisdictional gaming company with gaming
management interests with Native American Tribes in several states. The
management of Native American gaming facilities is conducted through
Capital Gaming Management, Inc. ('CGMI"), a wholly-owned subsidiary of the
Company. The development of the Narragansett Casino project is conducted
through Capital Development Gaming Corp., ('CDGC"), a wholly-owned
subsidiary of the Company.
The Company's CGMI subsidiary currently manages and operates three
Native American gaming facilities, which CGMI has developed or expanded into
Class III facilities:
[] Muckleshoot Tribe - Auburn, Washington (Class III facility became
operational in April 1995)
[] Tonto Apache Tribe - Payson, Arizona (Class III facility became
operational in April 1995)
[] Umatilla Tribes - Pendleton, Oregon (Class III facility became
operational in March 1995)
CGMI also has a management contract to develop a Class III facility for
the Jena Band of Choctawas Tribe in Louisiana.
The Company's CDGC subsidiary has a management and development contract
with the Narragansett Tribe for the development of a Class III gaming facility
in Charlestown, Rhode Island.
The Company previously had an interest in Crescent City Capital
Development Corp. ('CCCD"), a wholly owned subsidiary which had a 50% interest
in a joint venture riverboat gaming facility in new Orleans, Louisiana (the
"River City Joint Venture"). Due primarily to unforeseen failure of projected
market conditions which have been widely reported to have severely and
negatively impacted the entire New Orleans riverboat and land-based gaming
industry, the gaming facility voluntarily ceased operations in June of 1995 and
the River City Joint Venture was terminated in July of 1995. On July 28, 1995,
CCCD consented to the entry of an order for relief under Chapter 11 of the U.S.
Bankruptcy Code. Since such order, CCCD continued to manage its business and
properties as a debtor-in-possession. On May 13, 1996, the Company sold the
assets and its remaining interest in CCCD to a wholly owned subsidiary of Casino
Magic Corporation (CMC) for an aggregate consideration of $50 million in cash
and notes and the assumption of up to $6.5 million in certain equipment
liabilities.
As a result of CCCD's reorganization and sale, the Company is now
focusing all of its efforts on (i) restructuring the Company's debt, (ii)
maintaining its remaining gaming management contracts with Native American
Tribes, (iii) developing the Narragansett Casino, and (iv) seeking new gaming
opportunities. In order to restructure its debt, the Company intends to file a
consensual, pre-negotiated Plan of Reorganization under Chapter 11 of the
Bankruptcy Code which will have the approval of the Steering Committee for its
Senior Secured Noteholders (the "Restructuring Case"). The Company believes that
a pre-negotiated plan of reorganization has many benefits including an expedited
time frame for confirmation of approximately 120 days or less. See "Going
Concern and Planned Restructuring".
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, such statements include all
adjustments [consisting only of normal recurring items] which are considered
necessary for a fair presentation of the financial position of the Company at
September 30, 1996, and the results
8
<PAGE>
of its operations and cash flows for the periods then ended. Results of
operations for interim periods are not necessarily indicative of a full
year of operations. The expenses incurred by CCCD to maintain the physical
assets and maintain certain administrative requirements are reflected as
part of Discontinued Operations in the Statement of Operations for all
periods presented. It is suggested that these financial statements be read
in conjunction with the financial statements and notes included in the
Capital Gaming International, Inc. Form 10-K for the fiscal year ended June
30, 1996 and as filed with the Securities and Exchange Commission ('SEC").
Certain reclassifications have been made to the prior period financial
statements to conform to classifications used in the current period.
[B] CONSOLIDATION
The accompanying consolidated financial statements include the accounts
of the Company and all of its wholly owned subsidiaries. Intercompany
transactions and balances have been eliminated in consolidation.
[C] SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Company are set forth in the
Company's Form 1o-K, as amended, for the year ended June 30, 1996, as filed with
the Securities and Exchange Commission.
[D] GOING CONCERN AND PLANNED RESTRUCTURING
As shown in the accompanying financial statements, the Company has a
stockholders' deficit of approximately $107 million. At September 30, 1996 the
Company's current liabilities exceeded its current assets by approximately $121
million. Additionally, the Company is a party to various legal and other actions
as a result of the cessation of certain operations and defaults on debt. Those
factors created uncertainty about the Company's ability to continue as a going
concern. The ultimate liability resulting from those matters cannot presently be
determined.
Management is taking the following steps to revise its operating and
financial requirements, which it believes are sufficient to provide the Company
with the ability to continue in existence: (1) restructure substantially all of
the Company's indebtedness, (2) continue to provide management services under
the Company's Native American gaming operations, (3) develop the Narragansett
Casino, and (4) seek new gaming opportunities. The ability of the Company to
continue as a going concern is dependent on the success of those plans. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
In connection with the restructuring of the Company's outstanding debt,
the Company anticipates that it will file a consensual, pre-negotiated Plan of
Reorganization (the "Prenegotiated Plan") under Chapter 11 of the U.S.
Bankruptcy Code which will have the approval of the Steering Committee for its
Senior Secured Noteholders which is comprised of greater than two-thirds of the
Senior Secured Noteholders (the "Restructuring Case"). The Company believes that
the filing of a Prenegotiated Plan has many benefits including an expedited time
frame for confirmation of approximately 120 days or less. AT this time the
Company cannot project the terms of the Prenegotiated Plan or any other plan of
reorganization and their is no assurance that any plan of reorganization filed
by the Company will be consummated. The consummation of a plan of reorganization
will be dependent upon the satisfaction of numerous conditions, including, among
others, the acceptance of such plan by at least one class of impaired claims and
confirmation by the Bankruptcy Court. Acceptance by a class of creditors
requires the approval of holders of two-thirds in principal amount and more than
one-half in number of those voting in such class. There is no assurance that the
required conditions of any plan of reorganization filed by the Company will be
met. If the Company does file a voluntary petition for
9
<PAGE>
relief under Chapter 11, it is not possible to predict the length of time the
Company will be able to operate under the protection of Chapter 11, the outcome
of the Chapter 11 proceedings in general, or the effect of such proceedings on
the remaining business of the Company.
While the Company cannot predict the terms of its restructuring, the
Restructuring Case is most likely to take the form of an exchange of all or a
substantial portion of the Company's debt for equity. Given the secured position
of the Company's Senior Secured Noteholders and the substantial amount by which
the Company's liabilities exceeds its assets, it is likely that the consummation
of any plan of reorganization proposed with respect to the Company will result
in substantial dilution of the Company's shareholders which could result in
their retaining little, if any, equity interest in the Company.
The Company believes that any plan of reorganization consummated by the
Company will not require a restructuring of the operations of CGMI or CDGC.
Furthermore, the Company does not believe it will be necessary and does not
intend to file any Restructuring Case for CGMI or CDGC. The Company does not
believe that the Restructuring Case will adversely affect the existing
management and development contracts of CGMI and CDGC and does not constitute a
default under any such agreements. However, there can be no assurance that the
Company's Native American casino management contracts will not be adversely
affected by the Restructuring Case.
The management contract with the Muckleshoot Indian Tribe provides that
any decree or judgment of insolvency against "Capital" (defined collectively as
the Company and CGMI) is an event of default allowing the tribe to terminate the
contract. The management contracts with the Tonto Apache Tribe and the Umatilla
Tribe generally provide that the tribe may terminate the agreement if CGMI files
or consents to the filing of an involuntary petition in bankruptcy under Chapter
7. The Company does not believe that the Restructuring Case will constitute an
event of default under any of these provisions.
Section 382 of the Internal Revenue Code of 1986 provides that in the
event of an "Ownership Change" within the meaning of such Section, the Company's
use of its tax net operating loss carryforwards could be severely limited.
Although there can be no assurance, the Company believes that an "Ownership
Change" within the meaning of such Section will not occur. Additionally, it is
possible that the Company's net operating loss carryforwards will be
substantially reduced or eliminated by cancellation of debt income in connection
with the contemplated planned restructuring.
The issuance of common stock in the restructuring to any holder of debt
resulting in such holder becoming a substantial stockholder of the Company
(greater than 5%) may require such stockholder to obtain certain licensing and
other consents.
[E] FUNDS HELD (PAID) BY TRUSTEE FOR (TO) SENIOR SECURED NOTEHOLDERS
On July 29, 1996, the trustee for the Senior Secured Noteholders
distributed a total of $49,986,000 to the Senior Secured Noteholders as follows:
(i) $21,986,000 in funds previously held by the trustee, and (ii) $28,000,000 in
Casino Magic notes from the sale of the Company's CCCD subsidiary. Due to the
Company's previous default on the Senior Secured Note obligation, the specific
application of these repayments is not known at this time. The balance sheet as
of September 30, 1996 therefore reflects a $49,986,000 contra-liability related
to Senior Secured Noteholder indebtedness. Interest expense for the period
subsequent to July 29, 1996 has been recorded based on an estimated liability
after the repayment of approximately $99,000,000. The cash balances remaining
with the trustee after the Senior Secured Note repayment have been reclassified
as current assets as of September 30, 1996.
10
<PAGE>
[F] RHODE ISLAND DEVELOPMENT PROJECT
Native American Casino [Rhode Island] - In August 1994, a Tribal-State
Compact was entered into between the Narragansett Indian Tribe and Governor
Bruce Sundlun of Rhode Island. In October and November of 1994, two lawsuits
were filed (including one by Rhode Island Attorney General Pine) seeking to void
the Tribal-State Company on the grounds that the Governor lacked the authority
to bind the State absent legislative approval. In 1995, the State's new
governor, Governor Almond, joined in the Pine Case.
In February of 1996, the United States District Court for the District
of Rhode Island held that the Compact was void. The State has subsequently
refused to negotiate with Tribe.
In addition, in September of 1996, federal legislation was entered as
an amendment (introduced by U.S. Senator John Chaffee of Rhode Island) to the
Omnibus Appropriations Bill which has the effect of excluding the Narragansett
Tribe's reservation (where the gaming facility is currently planned to be built)
from the benefits of IGRA.
Although there can be no assurance, the Company believes that there is
a chance that the Chaffee amendment may be overturned in the next Congressional
session. In addition, the Secretary of the Interior has requested comments as to
whether the Secretary can enact Secretarial procedures to permit gaming under
IGRA for Tribe's in States (such as Rhode Island) that refuse to negotiate
Tribal-State Compacts in good faith. If the Secretary concludes that he has such
authority, the Company believes that the Secretary may adopt such procedures
sometime in 1997. On April 16, 1996, the Narragansett Tribe filed a petition
with the Secretary requesting that the Secretary adopt procedures applicable to
gaming by the Tribe. Unless the Chaffee amendment is overturned, however, there
can be no assurance that the Secretary will have the authority to impose a
compact on the State of Rhode Island. In spite of the set-back caused by the
Chaffee amendment, the Company intends to pursue the Narragansett development
project.
CDGC has entered into a management contract with the Narragansett Tribe
(the "Narragansett Contract"). As amended, the Agreement provides for CDGC to
receive an annual management fee of 30% of net revenues (as defined) of the
facility for the first five years and 20% for the remaining two years. As part
of the amended management contract, the Company will advance a construction loan
to be repaid over a seven year period. The amended Narragansett Contract was
submitted to the NIGC for approval in June of 1995 and until approved is not
legally binding, or enforceable against the Tribe. No assurance can be given
that, or when, such approval will be obtained. It is possible, as a condition of
obtaining such approval, that the NIGC will require modifications to be made to
the contract, some of which may be material.
In August 1996, the NIGC submitted comments on the Narragansett
Contract. In light of the decision by the United States District Court
invalidating the Tribal-State Compact, the NIGC has informed the Company and the
Tribe that they will only consider at this time a contract relating solely to
Class II gaming. In light of this, the Company currently intends to bifurcate
the Narragansett Contract and submit only the portions relating to Class II
gaming and return the Class III contract as a development contract until such
time as a compact for Class III gaming is signed. Unless the Chaffee amendment
is overturned, however, there can be no assurance that the Chairman of the NIGC
will have the authority to approve the Narragansett contract.
[G] INCOME TAXES
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 109 "Accounting for Income Taxes." The Statement
requires that deferred income taxes reflect the tax consequences on future years
of differences between the tax bases of assets and liabilities and their
financial reporting amounts. The effect of the adoption is not material to the
financial statements.
11
<PAGE>
As of September 30, 1996, the Company has a net operating loss
carryforward in excess of approximately $72 million which begins to expire in
2009. As a result the Company has recorded a deferred tax asset of approximately
$24.5 million which has been offset by an allowance of $24.5 million as
realization cannot be assured at this time. Additionally, it is possible that
the Company's net operating loss carryforwards will be substantially reduced or
eliminated by cancellation of debt income in connection with the contemplated
planned restructuring.
[H] SALE OF CRESCENT CITY CAPITAL DEVELOPMENT
On May 13, 1996, the Company sold substantially all of its remaining
assets in the CCCD subsidiary to a wholly owned subsidiary of Casino Magic Inc.
("CMC") for $56,500,000 as follows:
Notes $35,000,000
Cash 15,000,000
Assumption of Equipment Liability 6,500,000
-----------
$56.500,000
During the quarter ending September 30, 1996, the trustee for the
Senior Secured Noteholders transferred $28,000,000 of the CMC notes to the
Senior Secured Noteholders. In addition, the remaining $7,000,000 of notes were
transferred to the CCCD bankruptcy trustee in settlement of previously recorded
liabilities. In August 1996 the CMC notes were redeemed by CMC at 100% of the
principal amount plus accrued interest.
[I] EXTRAORDINARY LOSS FROM EARLY EXTINGUISHMENT OF DEBT
The payment to the Senior Secured Noteholders resulted in a loss from
early extinguishment of debt of approximately $1,998,000. The loss is primarily
a result of the write-off of unamortized original issue discount and unamortized
deferred finance costs related to the principal amount of the notes retired (See
Note E).
12
<PAGE>
</TABLE>
